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Facts
The assessee, engaged in trading various minerals and metals, filed a return declaring a loss. The Assessing Officer (AO) made additions regarding sundry creditors, unsecured loans, and demonetization period deposits, and disallowed expenses under Section 14A. The assessment was completed under Section 144 as the assessee failed to respond to notices. The CIT(A) dismissed the assessee's appeal due to non-appearance.
Held
The Tribunal noted that both the assessment order and the CIT(A)'s order were ex-parte. Given that the assessee failed to appear before the AO and CIT(A) and provide necessary details, the Tribunal felt that in the interest of justice, one more opportunity should be granted to the assessee.
Key Issues
Whether the ex-parte assessment and appellate orders, passed without granting proper opportunity to the assessee, are sustainable in law, and whether the matter should be remanded for fresh consideration.
Sections Cited
14A, 143(2), 142(1), 144, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, BENGALURU “C” BENCH, BENGALURU
IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU “C” BENCH, BENGALURU Before Shri Chandra Poojari, Accountant Member and Shri Soundararajan K., Judicial Member ITA No. 731/Bang/2024 (Assessment Year:2016-17)
Aastha Minimet India Ltd. ACIT, Circle 1(1)(1) No. 402, Motatimeadow BMTC Building, 80 Feet Road CV Raman Nagar 6th Block, Koramangala vs. Old Madras Road Bengaluru 560095 Bengaluru 560093 PAN – AAGCA5748Q (Appellant) (Respondent) Assessee by: ----- None ----- Revenue by: Ms. Neera Malhotra, CIT-DR Date of hearing: 03.06.2024 Date of pronouncement: 19.06.2024 O R D E R Per: Soundararajan K., J.M. This is an appeal filed by the assessee against the order of the CIT(A)-1, Bangalore dated 30.10.2019 passed under Section 250 of the Income Tax Act, 1961 (the Act) in respect of Assessment Year (AY) 2016-17.
The assessee is a company engaged in trading of coal, steel, scrap materials, iron ore, chrome ore, manganese ore and other minerals in India and other foreign countries. The assessee filed its return of income on 31.03.2018 declaring a loss of Rs. 12,42,630/-. The assessee’s case was selected for scrutiny through CASS and notice under Section 143(2) of the Act was issued on 09.08.2018 and thereafter notice under Section 142(1) was issued on 11.12.2018 seeking more details about the return of income filed by the
2 ITA No. 731/Bang/2024 Aastha Minimet India Ltd. assessee. Since the assessee had not responded, a show cause notice was issued in which the ld. Assessing Officer (AO) had restricted the sundry creditors to 50% of the actuals and treated the unsecured loans as unexplained cash credit and also treated the cash deposits made during the demonetization period as unexplained cash credit. The AO also invoked Sec 14A r/w. rule 8D of the Act and Rules to deny the expenditure incurred for earning exempt income. The assessee did not file any reply to the show cause notice and therefore the assessment was completed under Section 144 of the Act by confirming the proposals made in the show cause notice. Challenging the said order of the AO the assessee preferred an appeal before the CIT(A) and contended that the ex-parte assessment order is bad in law since no proper opportunity has been granted to the assessee. The learned CIT(A) sent notices of hearing through post as well as by email i.d. available with the department. The assessee had failed to appear before the CIT(A) and therefore the CIT(A) dismissed the appeal filed by the assessee. Aggrieved, the assessee is in appeal before us raising the following grounds of appeal: - “1. On the facts and in circumstances of the case and in law, the learned CIT(A) erred in confirming addition of Rs. 483027941/- of the Income Tax Act, 1961 for furnishing inaccurate particulars of income which was in respect of addition made and the reason assigned by him for doing so are wrong and contrary to the facts and circumstances of the case, provisions of Income Tax Act, 1961 and rules made there under. 2. The appellant craves leave to add, amend, alter, modify and/or delete any of the above grounds of appeal on or before the date of hearing.” 3. The appeal was taken up for hearing on today and none appeared on behalf of the assessee and no application for adjournment was filed by the assessee. Since both the orders are exparte we proceeded to dispose the appeal after hearing the learned D.R.
The learned D.R. submitted that there is no merit in the case of the assessee and prayed to dismiss the appeal.
3 ITA No. 731/Bang/2024 Aastha Minimet India Ltd. 5. We have heard the arguments of the ld DR and perused the material on record. On going through the assessment order we found that the additions were made on the basis of non appearance of the assessee before the AO . The learned CIT(A) has also confirmed the order of the AO due to the failure on the part of the assessee to appear before him. Eventhough the assessee has filed the return of income, it failed to satisfy the AO and the CIT(A) by furnishing the required particulars and therefore the AO has passed a best judgement assessment and the CIT(A) also confirmed the same. We have also perused the assessment order and found that the same is a best judgement assessment in which additions were made in respect of the sundry creditors, unsecured loans treated as unexplained cash credits, deposits made during the demonetization period treated as unexplained cash credits and disallowance made u/s 14A r.w. Rule 8Dsince both the assessment order and the appellate order are ex-parte. By making the additions the ld. AO raised demands and therefore we feel that, in the interest of justice, one more opportunity is to be granted to the assessee for producing the documents and other records before the AO so that the issues can be adjudicated in accordance with law. We, therefore, set aside the order of the authorities below and remand the matter back to the file of the AO for de novo consideration after granting an opportunity of hearing to the assessee. The assessee is also directed to cooperate with the authorities by providing the necessary documents/evidences for an early disposal of the appeal.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 19th June, 2024.
Sd/- Sd/- (Chandra Poojari) (Soundararajan K.) Accountant Member Judicial Member Bengaluru, Dated: 19th June, 2024 n.p.
4 ITA No. 731/Bang/2024 Aastha Minimet India Ltd. Copy to: 1. The Appellant 2. The Respondent 3. The CIT, concerned 4. The DR, ITAT, Bengaluru 5. Guard File By Order //True Copy// Assistant Registrar ITAT, Bengaluru