SRI KEERTHI PROJECTS,GUNTUR vs. ASSISTANT COMMISSIONER OF INCOME, CIRCLE-1(1), GUNTUR

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ITA 181/VIZ/2024Status: DisposedITAT Visakhapatnam31 May 2024AY 2018-19Bench: SHRI DUVVURU RL REDDY, HON’BLE (Judicial Member), SHRI S BALAKRISHNAN, HON’BLE (Accountant Member)6 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee was not given a proper opportunity of being heard before the CIT(A). Therefore, the matter was remitted back to the CIT(A) to provide an opportunity of hearing to the assessee.

What were the facts?

The assessee, a partnership firm, filed its return of income for AY 2018-19. The Assessing Officer made additions for excess provident fund payment, estimated gross profit on unraised bills, and disallowed TDS on interest. The CIT(A) upheld these additions and dismissed the assessee's appeal.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal ex-parte without affording a proper opportunity of hearing to the assessee.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 40(a)(ia),Section 36

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE

For Appellant: Shri G.V.N.Hari, AR
Hearing: 27.05.2024Pronounced: 31.05.2024

अपीलधथी की ओर से/ Appellant by : Shri G.V.N.Hari, AR प्रत्यधथी की ओर से / Respondent by : Dr.Aparna Villuri, DR सुनवधई की तधरीख / Date of Hearing : 27.05.2024 घोर्णध की तधरीख/Date of Pronouncement : 31.05.2024 आदेश /O R D E R

Per Shri Duvvuru RL Reddy, Judicial Member :

1.

This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi, vide DIN & Order No.ITBA/NFAC/S/250/2023-24/1061713926(1) dated 29.02.2024, arising out of order passed u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) dated 09.03.2021 for the Assessment Year (A.Y.) 2018-19.

Sri Keerthi Projects, Guntur 2. Brief facts of the case by the assessee are that the assessee is a partnership firm, deriving income from contracts, e-filed it’s return of income for the A.Y.2018-19 on 29.10.2018, admitting an income of Rs.15,25,100/-. The assessment is completed by adding Rs.23,49,302/- for excess payment of statutory provident fund gross profit of Rs.57,70,407/-, estimating at 34.75% on unraised bills for contracts of Rs.1,66,05,488/- and Rs.1,61,015/- u/s 40(a)(ia) on non-deduction of TDS on interest paid on loans. During the course of assessment proceedings, the assessee submitted required information in support of statutory provident fund payments, reasons for non-deduction of tax at source and requested to estimate net income on contract. The Assessing Officer (AO) has not considered the assessee’s plea and completed the assessment and passed order by disallowing expenditure towards statutory payments estimating profit applying GP rate instead of NP rate and making addition u/s 40(a)(ia) of the Act.

3.

On being aggrieved, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) upheld the addition made by the AO and dismissed the appeal of the assessee. 3. On being aggrieved, the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal :

Sri Keerthi Projects, Guntur 1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.

2.

The learned Commissioner of Income Tax (Appeals) is not justified in deciding the appeal ex-parte.

3. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.23,49,302 made by the assessing officer u/s 36 of the Act towards disallowance of excess contribution to Employees Provident Fund.

4.

The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.57,70,407 made by the assessing officer by estimating the gross profit @34.75% on the difference between the receipts as per Form 26AS and receipts admitted in the income tax return instead of estimating the net profit.

5. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.1,61,015 made by the assessing officer towards disallowance of interest paid to HDB Finance Services u/s 40(a)(ia) of the Act.

6.

Any other grounds may be urged at the time of hearing.

4. The only contention of the Ld.AR is that the Ld.CIT(A) is not justified in dismissing the appeal of the assessee ex-parte by sustaining the additions made by the AO of Rs.23,49,302/- u/s 36 of the Act towards disallowance of excess contribution to employees provident fund, Rs.57,70,407/- by estimating the gross profit @34.75% on the difference between the receipts as per Form 26AS and receipts admitted in the income tax return instead of estimating the net profit and Rs.1,61,015/- towards disallowance of interest paid to HDB Finance Services u/s Sri Keerthi Projects, Guntur 40(a)(ia) of the Act, without giving sufficient opportunity of being heard to the assessee. He, therefore, pleaded for an opportunity of being heard before the Ld.CIT(A) in the interest of justice, otherwise, the assessee would suffer great financial loss.

5.

Per contra, the Ld.DR submitted that the assessee was given sufficient opportunities before the Ld.CIT(A), but the assessee failed to avail the same. Hence, the Ld.CIT(A) is justified in dismissing the appeal of the assessee. The Ld.DR therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee.

6. We have heard both the parties and perused the material available on record. In the instant case, assessment in the case of the assessee was completed u/s 143(3) of the Act and the total income of the assessee was assessed at Rs.86,40,720/- by making additions. On appeal before the CIT(A), the Ld.CIT(A) sustained the additions made by the AO and dismissed the appeal of the assessee. As contended by the Ld.AR that the assessee was not given proper opportunity of being heard before the Ld.CIT(A) to controvert the findings of the revenue authorities, pleaded for an opportunity of being heard before the Ld.CIT(A) in the interest of justice. Keeping in view the aforesaid facts and circumstances of the case and in order to meet the principles of natural justice, we are inclined to Sri Keerthi Projects, Guntur remit the matter back to the file of the Ld.CIT(A) with a direction to afford an opportunity of being heard to the assessee. The assessee is also directed to adhere to the notices issued by the revenue authorities and cooperate during the proceedings.

7.

In the result, appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on 31st May, 2024.

Sd/- Sd/- (एस बाला कृष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 31.05.2024 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Sri Keerthi Projects, D.No.3-20-14, Near Recruiting Office, Pattabhipuram, Guntur 2. रधजस्व/The Revenue – The Asst.Commissioner of Income Tax, Circle- 1(1), Income Tax Office, CR Buildings, Kannavari Thota, Guntur 3. The Principal Commissioner of Income Tax, Guntur 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER

Sr. Private Secretary ITAT, Visakhapatnam

Sri Keerthi Projects, Guntur

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