R SUBBARAJU,RAJAHMUNDRY vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, RAJAHMUNDRY

This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)]-2, Gurugram vide DIN & Order No. ITBA/APL/S/250/2023-24/1060352765(1) dated 31.01.2024, arising out of order passed u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) dated 27.03.2014 for the Assessment Year (A.Y.) 2011-12.

Brief facts of the case are that the assessee firm engaged in the business of execution of civil contract works, e-filed it’s return of income R.Subba Raju, Rajahmundry for the A.Y.2011-12 on 29.09.2011, declaring total income at Rs.Nil. The case was selected for scrutiny under CASS and notices u/s 143(2) and 142(1) of the Act were issued. The assessee firm submitted information as directed by the Assessing Officer (AO). The AO estimated net profit @8% on total contract receipts including sub contracts also @8%. In computing the income, the AO did not allow deduction for remuneration to partners and interest on partners capitals. 3. Against the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) upheld the order of the AO and dismissed the appeal of the assessee ex-parte. 4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal :

The learned Commissioner of Income Tax (Appeals) ought to have considered the mistakes in allowing credit for TDS and computing the interest u/s 234B.

Per contra, the Ld.DR submitted that the assessee was given sufficient opportunities to prosecute it’s case, but the assessee never complied with the notices issued and served to controvert the findings of the revenue authorities. Hence, the revenue authorities are justified in R.Subba Raju, Rajahmundry dismissing the appeal of the assessee for non prosecution. The Ld.DR, therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee.

We have heard both the parties and perused the material available on record. In the instant case, it is evident that the net profit of the assessee was estimated @8% on total contract receipts including sub contracts by the Ld.AO and the appeal of the assessee was dismissed ex- parte by the Ld.CIT(A). As submitted by the Ld.AR, the reasons for non prosecution of the appeal before the Ld.CIT(A) was due to the unavoidable reasons, which were neither intentional nor deliberate. The Ld.AR pleaded for an opportunity before the Ld.CIT(A) to substantiate it’s case with evidences. 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 remit the matter back to the file of the Ld.CIT(A) to afford an opportunity of being heard to the assessee and direct the Ld.CIT(A) to pass order after verification. The assessee is also directed to adhere to the notices issued by the revenue authorities and cooperate with the department during the proceedings.

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