What did the Tribunal hold?

The Tribunal restored the matter to the AO for fresh assessment, granting the assessee an opportunity to present its case. The assessee was directed to cooperate fully with the AO.

The assessee, a partnership firm, failed to respond to notices from the AO regarding bank deposits made during demonetization. The AO made an addition of Rs. 26,98,887/-. The CIT(A) dismissed the appeal ex-parte for non-prosecution.

What were the issues?

Whether the assessee should be given an opportunity to present its case before the AO when the original appeal was dismissed ex-parte due to non-compliance.

Sarthak Irrigation and Tractors… vs ITO | ITAT Indore 2024

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI

For Appellant: Shri S.N.Agrawal, AR

For Respondent: Shri Ashish Porwal, Sr. DR

Hearing: 09.05.2024Pronounced: 10.05.2024

आदेश / O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by appeal-order dated 30.12.2023 passed by learned Commissioner of Income-Tax (Appeals), NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 25.09.2019 passed by Income-tax Officer, Sendhwa [“AO”] u/s 144 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal.

The background facts leading to present appeal are such that the appellant ‘M/s Sarthak Irrigation and Tractors’ is a partnership firm, hereinafter referred to as “assessee”. The AO, on the basis of information

Sarthak Irrigation and Tractors, Barwani. I.T.A.No. 36/Ind/2024 A.Y. 2017-18 available in ITBA module of department, noticed that the assessee-firm made deposits in a bank a/c during demonetization period. Accordingly, the AO issued statutory notice u/s 142(1) calling assessee to file return of income but the assessee did not submit. Then, the AO issued some more notices which too remained un-complied by assessee. Ultimately, the AO, based on information in his possession including the information called directly from bank u/s 133(6), passed assessment-order u/s 144 whereby he made an addition of Rs. 26,98,887/- in respect of deposits/credit entries in bank account of assessee. Aggrieved, the assessee carried matter in appeal but did not make any response to the notices of hearing issued by CIT(A). Therefore, the CIT(A) passed ex-parte order dismissing assessee’s appeal for non-prosecution as well as on merit. Now, the assessee has come in next appeal before us.

Ld. AR for assessee carried us to certain documents placed in the paper-book more particularly the auditors’ report and audited financial statements of the concern ‘M/s Sarthak Irrigation and Tractors’ in an attempt to demonstrate that the said concern was originally a partnership- firm but subsequently converted into a proprietorship concern with proprietor ‘Smt. Kavita Kamal Parmar’. He submitted that during AY 2017- 18 under consideration, it was a proprietary concern and the impugned deposits/credits in bank a/c related to the business of proprietary concern and not to assessee-firm. He further submitted that the deposits/credit

Sarthak Irrigation and Tractors, Barwani. I.T.A.No. 36/Ind/2024 A.Y. 2017-18 entries were relatable to the sale-proceeds of business carried on by proprietary concern. However, these facts could not be placed before lower- authorities because the assessee-firm had already ceased to exist and the notices issued by lower-authorities could not be compiled. Ld. AR submitted that had the relevant facts been submitted to AO, there would not have been any addition. Ld. AR requested that in the interest of justice, an opportunity should be given to assessee to explain all facts with documents to AO so that the AO can take a proper view in accordance with law and thereby make a proper assessment. Ld. DR fairly agreed to the request of Ld. AR but prayed to direct the assessee/present proprietor to extend full co-operation to AO and ensure participation in proceedings.

In view of above submissions of parties, we are persuaded to accept that an opportunity must be given to assessee in the interest of justice. This would also enable the AO to assess income properly in accordance with the provisions of law after due consideration of assessee’s representation.

Therefore, we are restoring this matter to the file of AO for assessment afresh after hearing assessee and after considering assessee’s submission.

The assessee/present proprietor is also directed to make adequate representation before AO and extend full co-operation. Ordered accordingly.

Sarthak Irrigation and Tractors, Barwani. I.T.A.No. 36/Ind/2024 A.Y. 2017-18

Resultantly, this appeal is allowed for statistical purpose.

Order pronounced in open court on 10.05.2024.

SARTHAK IRRIGATION AND TRACTORS,BARWANI vs. ITO, SENDHWA, SENDHWA

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