Loading judgment…
Facts
The assessee, RND Hospitality Pvt. Ltd., failed to file its income tax return for AY 2012-13. The AO initiated reassessment proceedings under Section 147 and made an addition of Rs. 82,83,000 under Section 69A for unexplained credit entries in the assessee's bank account. The assessee failed to appear or respond to notices during assessment and appellate proceedings.
Held
The ITAT admitted additional evidence filed by the assessee, citing the company's dispute among directors and being struck off from the register as a substantial cause for non-compliance. The Tribunal found a substantial cause for the assessee's failure to produce evidence earlier and restored the matter to the AO.
Key Issues
Whether the additions made under Section 69A for unexplained credit entries are justified, and whether the assessee should be granted an opportunity to produce additional evidence due to substantial cause for non-compliance.
Sections Cited
144, 147, 133(6), 69A, 142(1), 148, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAHUL CHAUDHARY, JM
RND Hospitality Pvt. Ltd. (assessee /appellant) against the appellate order passed by National Faceless Appeal Centre, Delhi [the learned CIT (A)] for A.Y. 2012-13, on 11th July, 2023, wherein the appeal filed by the assessee against the assessment order passed on 11th December, 2019 under Section 144 read with section 147 of the Income-tax Act, 1961 (the Act) by the ITO Ward, 13(3)(2), Mumbai, (the learned Assessing Officer), was dismissed.
“EX-PARTE ORDER:
1. On the facts, circumstances of the case and in law, the Ld. CIT (A) erred in disposing the appeal ex-parte without allowing the assesse an opportunity to file the necessary details without appreciating the fact that the company is striken off by Registrar of Companies and the other two directors were non cooperative, therefore the present available director was only saddled with the responsibility of pursuing the present appeal and to avoid the personal liability. The appellant was in the process of collating the data from parties as the matter was very old and therefore it prayed to your honour to provide an opportunity of being heard in the preset case.
Without prejudice to above ground, the appellant pray to your honour to permit the appellant to file the documentary evidence in accordance with Rule 29 of the ITAT Rules.
ADDITION U/S. 69A OF RS. 82,83,000/-:
3. On the facts, circumstances of the case and in law, the Ld. CIT (A) erred in upholding the additions of Rs. 82,83,000 made U/s 69A of the Income Tax Act, 1961, being aggregate of all credit entries in the bank account of HDFC Bank without appreciating the complete facts of the case. It is submitted that Ld. CIT (A) failed to appreciate the fact that substantial part of the credit entries pertains to the loan taken
Your appellant craves to add, alter, or amend any of the grounds of appeal on or before the date of hearing of appeal.”
Brief facts of the case show that assessee did not file its return of income for A.Y. 2012-13. The reasons were recorded for reopening of assessment as it was found that cash deposit in the bank account of the assessee of ₹12 lacs and assessee is a non filer despite assessee has to file return mandatorily. Notice under Section 148 of the Income-tax Act, 1961 (the Act) was issued on 25th March, 2019. The notice was also issued through ITBA portal, as well as by post. The postal notice sent, returned unserved with the remark “Left the address”. Thereafter by affixture notice under Section 148 of the Act was served on 3rd April, 2019. Notice under Section 142(1) of the Act was issued on 30th September, 2019, was also sent through post, which returned back as “Left” and thereafter notice was served by affixture. The assessee did not comply with the same. The learned Assessing Officer issued notice under Section 133(6) of the Act to the banker who submitted the bank statement and it was found that in the bank account total credit of ₹82.83 lacs was made out of which ₹6 lacs was deposited by cash. This bank account was closed on 16th June, 2016. From the KYC details of the bank account, the address of three directors were found and notices under Section 142(1) of the Income-tax Act, 1961 (the Act) was issued to all the three directors. The notices were served to the two directors and one notice returned with
4. The assessee aggrieved with the same preferred the appeal before the learned Commissioner of Income-tax (Appeals). The learned CIT (A) fixed the hearing on nine occasions, out of which only of two occasions adjournment petitions were filed and rest all the notices were not responded. Therefore, the learned CIT (A) confirmed the order of the learned Assessing Officer. Against that order assessee is in appeal before us.
Before us, the assessee made an application for filing of additional evidences stating that due to the severe dispute among the directors of the company the name of the assessee was struck off from the register of the Ministry of Corporate Affairs company master data and as the directors were not on talking terms and therefore, none of the directors complied with the notices. It was also the fact that the business of the company did not start at all and therefore, the assessee was not in a position to furnish the necessary evidences called for. It was further submitted that the learned Assessing Officer has made the addition of total sums credited in the bank account of the assessee. It was submitted that the additional evidences show that assessee is able to substantiate the credit of ₹67.75
During the course of hearing, director of the company Mr. Santosh Mayekar was also present who also stated that due to the bad situation the information could not be furnished and he promised to co-operate during the assessment proceedings if one more opportunity is granted.
The learned Departmental Representative submitted vehemently, that the assessee has been granted enough opportunities by the learned Assessing Officer as well as by the learned CIT (A) but the assessee has not co-operated by making any representation. She extensively read the assessment order, wherein the notices were sent to the directors also along with the company during the assessment proceedings and assessee was granted eleven opportunities to put fourth its case and therefore, now it would be improper to give one more opportunity to the assessee.
Order pronounced in the open court on 05.01.2024.