M/S. CENTRE FOR URBAN RURAL DEVELOPMENT SOCIETY,BENGALURU vs. INCOME TAX OFFICER, (EXEMPTIONS) WARD-1 , BANGALORE

This appeal is filed by the assessee against Order of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC] dated 16.11.2023 for the assessment year 2018-19.

The brief facts of the case are that the assessee AOP filed its return of income on 31.8.2018 declaring loss of Rs.32,78,801. In the return the assessee offered Rs.1,58,17,054 under the head ‘Other sources’ and out of the same claimed expenditure of Rs.1,90,95,855, thus showing a loss of Rs.32,78,801 under the head ‘Other sources’. The case was selected for limited scrutiny on the issue of “Deductions from Income from other sources.”

Various notices u/s. 142(1) was issued to the assessee for which there was no response from the assessee. After issue of another letter, the assessee uploaded auditor’s report and financial statements. The AO noted that the return was not in consonance with the audited financials. Hence the assessee was called for to explain the deductions claimed under the head Other sources with evidence. Since there was no response, a show cause notice was issued by the AO as to why the deduction claimed of Rs.1,90,55,955should not be disallowed u/s. 69C. The assessee sought further time for furnishing the details. In view of the time barring of the assessment proceedings, the AO noted that the assessee failed to furnish requisite information since initiation of assessment proceedings and in view of time barring of assessment proceedings, further time sought by the assessee was not justifiable and he proceed complete the assessment disallowing the above claim of deduction.

On appeal, the CIT(Appeals) issued various notices but due to non-compliance from the assessee nor any adjournment sought for, the CIT(Appeals) dismissed the appeal of the assessee in the absence of evidence from the assessee. Aggrieved, the assessee is in appeal before the Tribunal.

The ld. AR submitted that the notices issued by the revenue authorities were not received by the assessee and hence there was no proper representation of its case from the assessee. He requested for another opportunity before the revenue so as to represent its case properly with documentary evidence.

The ld DR objected to another opportunity to the assessee since the assessee did not respond to various opportunities provided by the authorities.

After hearing both the sides and perusing the material on record, in the interest of justice, we deem it fit that the assessee must be granted another opportunity to substantiate its case before the AO. Accordingly, we restore the appeal to the file of Assessing Officer for fresh decision after giving reasonable opportunity of being heard to the assessee. The assessee is also directed to properly respond to the notices issued by the department and substantiate its case with documentary evidence without seeking adjournment for early disposal of the case.

In the result, the appeal by the assessee is allowed for statistical purposes.