UNISHIRE PROMOTERS PRIVATE LIMITED,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE-7(1)(1), BANGALORE
Facts
The assessee is in appeal against an order of the NFAC for AY 2016-17. The NFAC dismissed the appeal for non-prosecution as the assessee did not respond to notices. The original assessment order was passed ex-parte under section 144 of the Income Tax Act, 1961.
Held
The Tribunal found that the assessee failed to appear before the AO and NFAC, and did not respond to notices. However, considering the facts and circumstances, the Tribunal decided to remit the issue to the AO for a fair opportunity of hearing. The assessee was directed to cooperate and provide necessary documents.
Key Issues
Whether the ex-parte assessment and appellate orders are valid, and if the matter should be remanded for fresh adjudication with a fair opportunity of hearing.
Sections Cited
250, 144, 282, 282A, 37, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
ITA No.880/Bang/2023 Unishire Promoters Pvt. Ltd., Bangalore
IN THE INCOME TAX APPELLATE TRIBUNAL “B’’ BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No.880/Bang/2023 Assessment Year: 2016-17 Unishire Promoters Pvt. Ltd. No.42, Cstle Street Ashok Nagar ACIT Vs. Bangalore 560 025 Circle-7(1)(1) Karnataka Bangalore PAN NO : AABCU2654G APPELLANT RESPONDENT Appellant by : Ms. Gowi Trasi, A.R. Respondent by : Shri G. Manoj Kumar, D.R. Date of Hearing : 25.01.2024 Date of Pronouncement : 25.01.2024 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by assessee is directed against order of NFAC dated 12.9.2023 for the assessment year 2016-17 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). The assessee has raised following grounds of appeal:
“The order passed by the Learned Commissioner of Income-tax Appeals ('CIT(A)') is void and bad in law and hence, is liable to be quashed; 2. The notices for hearing issued by the Learned CIT(A) on 18 May 2023, 05 July 2023 and 8 August 2023 is in contravention of section 282 and 282A q£ the Act r.w. Rules 127 and 127A of the Income Tax Rules, 1962 r.w. notifications issued by the CBDT and consequently not in accordance with law;
ITA No.880/Bang/2023 Unishire Promoters Pvt. Ltd., Bangalore Page 2 of 4 3. The order of the Hon’ble CIT(A) is impugned and bad in law as it was passed without providing the appellant with a reasonable opportunity of being heard;
That the appellant craves leave, to add, to amend, modify, rescind, supplement, or alter any of the Grounds stated here-in-above, either before or at the time of hearing of this appeal; Notwithstanding and without prejudice to the above- mentioned grounds, 5. The appellant for reasons beyond its control was unable to respond to the notices issued by the Ld. AO during the assessment proceedings. It is accordingly prayed that in light of facts and circumstances of the case, the matter be remanded back to the Ld, AO for a just and fair adjudication. Notwithstanding and without prejudice to the above- mentioned grounds, 6. That on the facts and in the circumstances of the case, the Ld. AO has erred is disallowing 20% of the Sundry creditors without providing any basis for the disallowance; 7. The Ld. AO has erred in disallowing interest expenses of Rs.3,89,84,542 on the ground that the same is not for the purpose of business.
The Ld. AO has erred in facts and in law in disallowing interest expense of Rs.4,98,30,199 for the sole reason that the appellant had not recognized any revenue from operations during the said year;
The Ld. AO has erred in disallowing 50% of the commission and consultancy expenses without stating the basis for the same and disregarding the fact that they have been incurred in connection with the business of the appellant and is allowable under section 37 of the ™ Income-tax Act, 1961.
The ld. AO has erred in initiation of penalty proceedings under section 271(1)(c) which is consequential to the above-mentioned grounds.”
ITA No.880/Bang/2023 Unishire Promoters Pvt. Ltd., Bangalore Page 3 of 4 2. At the outset, it is observed that the assessment order passed herein is u/s 144 of the Act, wherein the ld. AO has made following additions:
Addition of Sundry creditors 49,62,707/- 2. Interest of diversion of funds 3,89,84,542/- 3. Interest expenses disallowed as there was 4,98,30,199/- no revenue operations 4. Commission consultancy expenses 99,27,381/- disallowed 10,37,04,829/- Total 2.1. On appeal, the NFAC has given various notices to the assessee on following dates: Sl.No. Notice Due date of reply Reply issued on submitted by the appellant 1. 27.01.2021 11.02.2021 No response 2. 02.01.2022 Communication No response window open 3. 18.05.2023 29.05.2023 No response 4. 05.07.2023 20.07.2023 No response 5. 08.08.2023 14.08.2023 No response
2.2 However, there is no response from the assessee. Hence, the appeal has been dismissed by the NFAC for non-prosecution. Against this assessee is in appeal before us.
We have heard the rival submissions and perused the materials available on record. The ld. A.R. pleaded that the assessee has not noticed the various mails sent by the NFAC and failed to take corrective measures in replying to the notices issued by the NFAC. Even before the ld. AO, assessee has not participated in the assessment proceedings and assessment order was passed u/s 144 of the Act. Considering the facts and circumstances of the case, in our opinion, it is appropriate to remit the entire issue in dispute to the file of ld. AO for giving a fair opportunity of hearing to the assessee. As such, he shall cooperate with the department and file
ITA No.880/Bang/2023 Unishire Promoters Pvt. Ltd., Bangalore Page 4 of 4 necessary documents in support of the claim of the assessee. Even in second round also, if the assessee is not cooperating with the department, the AO/NFAC is at liberty to take decision in accordance with law.
In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 25th Jan, 2024
Sd/- Sd/- (Beena Pillai) (Chandra Poojari) Judicial Member Accountant Member Bangalore, Dated 25th Jan, 2024. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order
Asst. Registrar, ITAT, Bangalore.
