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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ : NEW DELHI
Before: SHRI KULDIP SINGH & SHRI PRASHANT MAHARISHI
PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, Income Tax Officer, Ward 36 (3), New Delhi (hereinafter referred to as ‘the revenue’), by filing the present appeal sought to set aside the impugned order dated 29.11.2013 passed by the Commissioner of Income-tax (Appeals)-XXVII, New Delhi qua the assessment year 2009-10 on the grounds inter alia that :-
“1. On the facts and in the circumstances of the case, the order of the ld. CIT (A) is bad in law and not in consonance with facts of the case.
On the facts and in the circumstances of the case, the ld. CIT (A) had erred in reducing the net profit from 2% to 1% of the turnover by estimating the net profit at 1% i.e. Rs.23,81,671/- instead of 2% i.e. Rs.47,63,383/- of the turnover of Rs.23,81,67,172/- as was made by the A.O.
On the facts and in the circumstances of the case, the ld. CIT (A) erred in deleting the addition of Rs.1,74,97,833/- made by the A.O. on account of unsecured loans and sundry creditors u/s 41 (1) of the Act.
On the facts and in the circumstances of the case, the appellant craves leave to add, allow or amend any or all the grounds of appeal before or during the course of hearing of the appeal.”
2. Briefly stated the facts of this case are : during the scrutiny proceedings, notice u/s 143(2) and 142(1) of the Income-tax Act, 1961 (hereinafter ‘the Act’) along with questionnaire were issued on 19.07.2011 but none appeared on behalf of the assessee on 05.08.2011, the date for which the case was listed. Assessee has declared turnover of Rs.23,81,67,172/- during the year under consideration. AO found the credits appearing in the bank accounts unverifiable in the absence of any details furnished by the assessee and thereby rejected the trading results declared by the assessee u/s 145 (3) of the Act and concluded the proceedings u/s 144 of the Act. Assessee declared the net profit @ 0.57% for which he has failed to furnish the details. AO, however, estimated the net profit rate @ 2% of the declared turnover which comes to Rs.47,63,383/-, which has been taken as income from the business for the year under consideration. AO also made an addition of Rs.1,74,97,833/- u/s 41(1) of the Act on account of unsecured loans and sundry creditors on the ground that the assessee has not furnished requisite details to prove the creditworthiness of the lenders in case of unsecured loans and assessed the total taxable income to the tune of Rs.2,22,85,216/-.
3. Assessee carried the matter before the ld. CIT (A) who has partly allowed the appeal by reducing the NP from 2% to 1% of the turnover and by deleting the addition of Rs.1,74,97,833/-. Feeling aggrieved, the revenue has come up before the Tribunal by way of filing the present appeal.
4. Assessee has not preferred to put in appearance despite issuance of the notice of 01.02.2016 and 26.05.2016 and consequently, we proceeded to decide the present appeal with the assistance of the ld. DR as well as on the basis of documents available on the file.
We have heard the ld. Departmental Representative for the revenue to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Bare perusal of the impugned order passed by the ld. CIT (A) as well as assessment order passed by the AO apparently go to prove that the assessee has not been given adequate opportunity of being heard to put forth his case before the AO, who has proceeded on the basis of guesswork and estimation so far as enhancing the NP rate from 0.57% claimed by the assessee to 2% without any material available on record. At the same time, CIT (A) again proceeded on the basis of guesswork and estimation and reduced the NP from 2% as assessed by the AO to 1%. CIT (A) has also deleted the addition of Rs.1,74,97,833/- merely on the averments made in the grounds no.9 & 10 that such an addition after rejecting the books of accounts is not correct, without going into the merit.
So, without entering into the merits of the case, we are of the considered view that both AO as well as ld. CIT (A) being quasi- judicial authority are under legal obligation to provide an opportunity of being heard to the assessee, which has not been provided. So, let the file be restored to the AO to decide afresh after providing an opportunity of being heard to the assessee.
In view of what has been discussed above, the impugned order passed by the ld. CIT (A) is hereby set aside and consequently, the present appeal is hereby allowed for statistical purposes.
Order pronounced in open court on this 31st day of May, 2016.