SHAILAJA KUNCHALA,HYDERABAD vs. ITO., WARD-15(1), HYDERABAD

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ITA 697/HYD/2024Status: DisposedITAT Hyderabad19 September 2024AY 2021-22Bench: SHRI PRAKASH CHAND YADAV (Judicial Member)6 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the case was not heard on merits by the CIT(A) and, in the interest of natural justice, restored the issue to the CIT(A) for a fresh decision on merits after providing an opportunity of hearing to the assessee.

What were the facts?

The assessee's appeal before the CIT(A) was dismissed for non-prosecution due to non-compliance with notices. The assessee had made additions of Rs. 16,41,58,541/- for bogus purchases and Rs. 5,04,000/- for house property income.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal for non-prosecution without considering the merits, and whether proper notice was served electronically.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 143(3),Section 144B,Section 282

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” , HYDERABAD

Before: SHRI PRAKASH CHAND YADAV & SHRI MADHUSUDAN SAWDIA, ACCOUNANT MEMBER

For Respondent: Shri Kumar Pranav – CIT-DR
Hearing: 17.09.2024Pronounced: 19.09.2024

O R D E R PER MADHUSUDAN SAWDIA, A.M.

This appeal is filed by Ms. Shailaja Kunchala (“the assessee”), feeling aggrieved by the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 22.05.2024 for the A.Y. 2021-22.

2.

The grounds raised by the assessee read as under :

“ 1. The order passed by Ld. Commissioner of Income-Tax (Appeals)/NFAC is bad in law, in as much as the appellate authority merely supported the order passed by Assessing Officer without appreciation of facts and legal position presented before him through statement of facts and grounds of appeal

2. The Ld. Commissioner(Appeals)-NFAC erred in dismissing the Appeal on the ground of non-prosecution that too without properly considering and deciding merits of the case.

3. The Ld. Commissioner(Appeals)-NFAC ought to have appreciated that service of notice through electronic mode, being a new phenomenon, during the transitory phase the Ld. Commissioner(Appeals) should have issued a notice through the other modes of service prescribed under section 282, particularly w.r.t. the businesses carried by Assessees in unorganised sector and thus a notice by registered post or a service through inspector ought to have been made before passing an Ex-parte order.

4. The Ld. Commissioner(Appeals)-NFAC erred in confirming the arbitrary addition of Rs. 16,41 ,58,541/- made by the Assessing Officer referable to the purchases made by the Appellant on the ground that purchases made by the Appellant are doubtful since return of income was not filed by the suppliers but the fact remains that Assessing Officer has neither doubted the sales made pursuant to the aforementioned purchase nor rejected books of account and thus addition made on this count is bad in law.

5. The Ld. Commissioner(Appeals)-NFAC erred in confirming the arbitrary addition of made by the Assessing Officer referable to the income from house property on the ground of deemed let out property but the fact remains that Appellant owns only single property that too joint property and infact this was brought to the notice of the Assessing Officer.

6. The Ld. Commissioner(Appeals)-NFAC erred in mentioning that Assessee/Appellant failed to discharge her onus during the stage of assessment proceedings since an elaborate reply along with supporting material was furnished during the course of the Assessment Proceedings to substantiate the case of the Appellant.

7. For these and other grounds that may be urged at the time of hearing, the appellant submits that the Hon ble ITAT may be pleased to quash the assessment order as it is bad in law or in the alternative delete the arbitrary additions upheld by the CIT(Appeals)-NFAC.”

3.

Brief facts of the case are that the assessee is an individual filed her return of income on 31.03.2022 for the assessment year 2021-22 declaring total income of Rs.19,62,340/-. The case of the assessee was selected for Scrutiny under CASS. The assessment was completed by the Learned Assessing Officer (“Ld. AO”) u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961 (‘the Act’) on 23.12.2022 making addition of Rs.16,41,58,541/- u/s 37(1) of the Act on account of bogus purchases and Rs.5,04,000/- being income under the head ‘Income from House Property’.

4.

Feeling aggrieved by the order passed by the Ld. AO, assessee filed appeal before the Ld. CIT(A). The assessee did not make any compliances to the notices issued by Ld. CIT(A). Hence, the Ld. CIT(A) dismissed the appeal of the assessee on account of non-prosecution.

5.

Adjournment petition has been filed by the assessee. However, we found from the records that the Ld. CIT(A) has dismissed the appeal of the assessee due to non-prosecution and therefore, the case of the assessee has not been heard on merits before the Ld. CIT(A). Hence without considering the adjournment petition filed by the assessee, the present matter is being heard in the absence of assessee.

6.

Ld. DR placed heavy reliance on the orders of the Ld. CIT(A) and submitted that sufficient opportunity has already been given by the authorities, but the assessee failed to avail the same. Therefore, he requested to uphold the order of the Ld. CIT(A).

7.

We have heard the Ld. DR and also gone through the record in the light of the submissions made. It could be seen from the orders of the Ld. CIT(A) that in spite of many opportunities given, the assessee failed to substantiate her case by providing necessary documentary evidence, which resulted in passing the orders without consideration thereof. Hence the case of the assessee has not been heard on merits before the Ld. CIT(A). It is a fact that the assessee does not stand to gain by not prosecuting her case on merits. In the interest of natural justice, we are of the opinion that the case must be decided on merits and therefore we provide one last opportunity to the assessee to produce all the necessary documentary evidence in support of her contentions before the Ld. CIT(A) and get the matter disposed of on merits. Therefore, we set aside the impugned order and restore the issue to the file of the Ld. CIT(A) for passing a fresh order on merits after affording the opportunity of hearing to the assessee. Grounds of appeal are answered accordingly.

8.

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

Order pronounced in the Open Court on 19th September, 2024.

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