KARVY INSIGHTS LIMITED,HYDERABAD vs. DCIT, CIRCLE 2(1), HYDERABAD

The Ld. CIT(A), NFAC, erred in observing that notices/dated 21- 032023, 05-04-2024, 12-04-2024 & 17-04-2024 were served on the assessee. No Such notices were received by the assessee.

Ld. AO / Ld. CIT (A), NFAC failed to appreciate that the Email addresses of the Erstwhile Employees were given in the tax return and Form No.

The Employees who were handling Tax matters left the Company and Emails may have given to their Emails.

Ld. AO / Ld. CIT(A), NFAC, failed to appreciate that the Orders were passed Exparte without serving the notices.

Ld. AO / Ld. CIT (A), NFAC failed to notice that all the Employees had left the Company.

Ld. CIT (A), ought not have confirmed the addition of Rs. 10,64,04,646 by the Ld. AO, without going adequate opportunity. Ld. CIT(A) erred in disallowing a sum of Rs.10,64,04,646/- which was incurred wholly and Exclusively for the purpose of business and is completely supported by the Evidence.

Facts of the case, in brief, are that the assessee e-filed its return of income for the Assessment Year 2020-21 on 02/01/2021 declaring a loss of Rs.2,11,35,052/- and thereafter, case has been selected for complete scrutiny under CASS and notice u/s 143(2) dated 29/06/2021 has been issued and served on the assessee. The assessee initially failed to provide the requested details, prompting the issuance of a notice under section 142(1) on 10/11/2021. In response, the assessee requested additional time, which led to another notice on 25/11/2021. The assessee continued to seek extensions, eventually furnished partial details on 21/01/2022. Out of twelve queries, responses were provided for ten, but the details for queries 11 and 12 were not submitted, despite claims to the contrary. The assessee explained that Rs.5,87,38,675/- was debited under Direct Expenses (Project Cost) while TDS was deducted as professional charges. However, no details were provided for the remaining project cost of Rs.10,64,04,646/- out of a total of Rs.16,51,43,321/-. Consequently, a Show Cause Notice was issued on 26/08/2022, but the assessee failed to respond. As a result, the amount of Rs.10,64,04,646/- was disallowed and taxed, leading to the initiation of penalty proceedings under Section 270A for under-reporting income. The assessment was completed under section 143(3) r.w.s. 144B on 12.09.2022.

Feeling aggrieved by the order passed by the Assessing Officer, assessee filed appeal before the Ld. CIT(A) / NFAC, who dismissed the appeal of assessee.

Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before us.

Before us, ld.AR submitted that the assessee has failed to provide necessary information and appear before the lower authorities. Hence, the ld. AR requested the Bench to remand the matter back to the file of ld.CIT(A). Ld.AR further submitted that as the assessee has sufficient cause from putting in appearance before the lower authorities, matter may kindly be remitted back to the authorities below for afresh adjudication.

Per contra, the ld.DR submitted that assessee is a company and not an individual and hence, no lenient view should be taken as the assessee failed to produce the documentary evidence as called for.

We have heard the rival contentions of both the parties and perused the material available on record and also the orders passed by the lower authorities. On perusal of the impugned order passed by ld.CIT(A), we found that ld.CIT(A) dismissed the appeal of assessee exparte as the assessee did not make any submissions to rebut the arguments of Assessing Officer. However, in our view, the ends of justice will be met if the matter is remanded back to the file of Assessing Officer. Hence, the matter is posted for hearing before the Assessing Officer on 23.10.2024 with a direction to assessee and the ld.AR to appear before the Assessing Officer on the said date and on any other date as may be fixed by the Assessing Officer and shall not take any adjournments. The Assessing Officer is directed to decide the issue after considering the documents available on record and affording the opportunities of hearing to the assessee in accordance with law subject to payment of costs of Rs.15,000/- (Rupees Fifteen Thousand only) in favour of Prime Minister National Relief Fund which shall be payable within one month or from the date of receipt of this order or whichever is earlier.

The assessee shall produce all the details as called for by the Assessing Officer in his show cause notice dt.26.08.2022 to prove its case and the Assessing Officer shall examine all those documents / evidence filed by the assessee and any other documents which may be filed by the assessee as additional evidence. Based on the above said observation, the Assessing Officer shall decide the issue in accordance with law and thereafter, pass a detailed speaking order dealing with the contentions of the assessee. Needless to say, we have not adjudicated any other ground, all the grounds are required to be adjudicated by the Assessing Officer. Accordingly, the appeal of the assessee is allowed for statistical purposes.

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