CARIS PURE PROCESSING COMPANY PRIVATE LIMITED,CHENNAI vs. DCIT CORP CIRCLE 1(1), CHENNAI

These appeal filed by the assessee are directed against the common order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2015-16 dated 15.03.2024.

The brief facts of the case are that, the assessee is a resident company engaged in the business of processing, 1453, 1454 & 1455/Chny/2024 exporting and retail supply of whole chicken, portioned chicken meat. The assessee filed its return of income for the assessment year 2015-16 on 31.10.2015 claiming a current year loss of Rs.2,64,15,124/-. The scrutiny assessment u/s. 143(3) of the Act was completed on 30.11.2017 with an addition of Rs.16,09,074/- towards disallowance of interest on TDS and loss assessed at Rs.2,77,44,770/-. Subsequently, as per the details available on record, the Assessing Officer noted that the assessee has debited a sum of Rs.2,17,08,268/-in P&L Account towards feeding and growing expenditure, whereas the assessee is in the business of process of chicken meat and marketing as per the business activity of the assessee. Since the feeding and growing of chicken is performed by the suppliers of the assessee, the said expenditure is not allowable and thereby the Assessing Officer has reasoned the believe that the provisions of section 147 of the Act are applicable to the facts of this case and deemed to be a case wherein income chargeable to tax as escaped assessment and reopened the assessment u/s. 147 of the Act.

The notice u/s. 148 of the Act dated 30.03.2021 was issued and in response, the assessee has neither filed return 1453, 1454 & 1455/Chny/2024 nor submitted any reply. Further, notice u/s. 142(1) of the Act dated 12.01.2022 was issued to the assessee with detailed questionnaire and the assessee had requested for an adjournment on 19.01.2022. Later the Assessing Officer sent a draft assessment order and confirmed the same by disallowing the entire expenditure of Rs.2,17,08,268/- on account of feeding and growing expenditure by passing an exparte order u/s. 147 r.w.s. 144B of the Act dated 30.03.2022. Further, the Assessing Officer initiated a penalty proceedings u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income. The Assessing Officer also initiated 271D of the Act proceedings separately for receiving cash loan more than Rs.20,000/-. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld.CIT(A).

The ld.CIT(A), confirmed the additions made by the Assessing Officer by holding as under: “5.4 With regard to the disallowance of Rs.2,17,08,268/- relating to ‘feeding and growing expenses’. I find weight in the assessing officers argument that appellant is only doing the work of processing of chicken meat and not growing live-chicken where chick-feed would be necessary. Furthermore, the appellant has not furnished any supporting evidences regarding its contention that it also conducts the activity of feeding and growing of chicken/live 1453, 1454 & 1455/Chny/2024 birds therefore this argument of the appellant fails. The disallowance made by the Assessing Officer is therefore upheld.”

The ld.AR contended that proper opportunity had not been given by the ld.AO during the assessment proceedings and passed an exparte order. Further, he also contended that the ld.CIT(A) has not dealt the issue completely and has not considered the submissions of the assessee. During the appellate proceedings before the ld.CIT(A), the assessee has stated that the company is not only carrying on the trading business but their main objective of business is of farming, poultry, feeding and growing of live birds, buying selling, importing, preparing, preserving, dealing and trading of products. The company also carried on the business of a particular seed, pure breed, inbred poultry, meat, cattle and other live and dead stock, eggs, preserved meat etc. The ld.AR argued that these facts have not been considered by both the lower authorities and decided the issue arbitrarily. Hence, prayed for setting aside the order back to the file of the Assessing Officer for fresh adjudication by setting aside the impugned order of the ld.CIT(A).

We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that assessee is engaged in processing, exporting and retail supply of whole chicken, portioned chicken meat and due to non- participation before the AO by the assessee and hence, the exparte order has been passed by the Assessing Officer. The plea of the assessee was that the non-appearance/participation was not deliberate and the ld. AR undertakes to appear before the authorities, provided an opportunity is given. Since, the AO also has passed the exparte order U/s.147 r.w.s. 144B of the Act, we are inclined to remit back the file to the AO for denovo assessment to meet the ends of justice. We direct the assessee to participate in the assessment proceedings diligently and at liberty to submit all the necessary evidences and documents in support of the case.