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Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the assessee against the order of Ld.Commissioner of Income Tax(Appeals)[NFAC], passed under section 250 of the Income Tax Act, 1961 dated 26.10.2023. The assessee for A.Y.2015-16 has raised the following grounds of appeal :
1. The Ld.AO erred in making and Ld. CIT(A) erred in confirming an addition of Rs.30,71,906/- u/s 41(1) of the income Tax Act on account of unpaid sundry creditors.
2. without prejudice to above, The Ld AO and Ld CIT(A) may please be directed to delete that the addition of Rs. 19,40,152/- on account of creditor namely "Asawari trading corporation" as it result in double addition. The unpaid balance is outstanding from the purchases made during the FY 2012-13 and in FY 2012-13, 50% of the purchases were already disallowed by AO. The appeal against those addition is pending at CIT(A).
3. Without prejudice to above, The Ld AO and Ld CIT(A) may please be directed to delete the addition w.r.t following outstanding creditors which were paid in subsequent years.
Sr Name Remark No. Amount o/s as on 31-3-2015 Jyoti Weighing System Ltd 1 65,000/- Rs. 65,000/- Paid during FY 21-22 Live Wire 2 9,955/- Rs. 9,955/-Paid in FY 2015-16 Protect Sales Pvt.Ltd. 3 1,73,500/- Rs. 1,00,000/- Paid in FY 2016-17 Riya Die Designs and Work 4 1,14,687/- Rs. l,14,687/-Paid in FY 2017-18 Rohan and Vinod Electrical 5 2,76,319/- Rs. 2,76,319/-Paid in FY 2017-18 Shiv Sakshi Electricals 6 4,92,293/- Rs. 4,92,293/-Paid in FY 2017-18 Asawari Trading corporation 7 19,40,152/- Rs. 6,00,000/- paid in FY 2015-16 TOTAL 30,71,906/-
The appellant craves its right to add to or alter the Grounds of Appeal at any time before or during the course of hearing of the case.”
Brief facts of the case: 2. In this case, assessee filed e-Return on 29.09.2015. In the assessment order, AO has made addition of Rs.30,71,796/-. The relevant paragraph 4 of the assessment order is reproduced here as under:
“4. Disallowance of Sundry Creditors of Rs 30.71.796/- During the year under consideration, on perusal of the Balance Sheet, it is seen that the assessee has shown liability of Sundry Creditors for the amount of Rs. 1,38,00,463/-. Assessee was asked to produce the details of Sundry Creditors in requisite format vide order sheet noting dated 30.11.2017. In response, assessee filed his submission on 06.12.2017. On going through the submission, it is seen that many of the sundry creditors have made no transaction, and the opening balance and closing balance are same during the year. Therefore, assessee was asked to give reason vide order sheet noting dated 06.12.2017 that why it should not be treated as 'liability no more exists’ and produce the ledger of parties (sundry creditors) in support of his claim. However, assessee could not produce any evidence of the same till the date of disposal of the assessment order. The undersigned was left with no option except disallowing the sundry creditors whose opening and closing balance remained same during the year, which amounts to Rs.30,71,906/-. The same is added back to the total income of the assessee. Penalty u/s 271(1)(c) is hereby initiated for furnishing inaccurate particulars of income.”
Aggrieved by the assessment order, the assessee filed appeal before the ld.CIT(A). Before ld.CIT(A), assessee failed to file any submission, though ld.CIT(A) had issued five notices. Therefore, ld.CIT(A) confirmed the addition as no submission was filed by assessee to rebut the addition.
Submission of ld.AR : 4. The ld.Authorised Representative(ld.AR) for the assessee submitted that there were various creditors and Assessing Officer(AO) has added the entire amount appearing in the balance sheet without making any verification. The ld.AR requested for one more opportunity may kindly be granted so that assessee will file all details before the ld.CIT(A) or AO.
The ld.Departmental Representative(ld.DR) for the Revenue relied on the order of the AO & ld.CIT(A).
Findings & Analysis : 6. We have heard both the parties and perused the records. On perusal of the assessment order & ld.CIT(A)’s order, it is observed that they have not verified any facts and has dismissed the appeal without discussing merits, as assessee failed to file submission in response to notices issued by ld.CIT(A). The ld.CIT(A) has not adjudicated grounds raised by the assessee on merits.
6.1 The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF)(Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.
Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.
Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” Unquote.
Namdeo Indarrao Gore [A] 6.2. Thus, the Hon’ble Bombay High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does not have any power to dismiss appeal for non-prosecution.
In view of this, the order of the ld.CIT(A) is set-aside to ld.CIT(A) for denovo adjudication. The ld.CIT(A) shall provide opportunity of hearing to the assessee.
Accordingly, appeal of the assessee in is allowed for statistical purpose.
Order pronounced in the open Court on 27th March, 2024.