DINESH RAMNANI,NEEMUCH vs. ITO, NEEMUCH

Per Vijay Pal Rao, JM:

This appeal by the assessee is directed against the order dated 12.04.2023 of Commissioner of Income Tax(Appeal), National Appeal Centre, Delhi for A.Y.2018-19.

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ITA No.280/Ind/2023 Dinesh Ramnani Page 2 of 6 3. The assesse challenged the assessment order before the CIT(A) but again there was no representation before the Ld. CIT(A) despite various notices issued to the assesse and consequently the CIT(A) has dismissed the appeal of the assessee for want of any reply and appearance on behalf of the assesse. Accordingly the bench proposes to hear and dispose of this appeal ex-parte.

“1. Because the Ld CIT Appeal had erred in law in disposing exparty appeal without giving any chance as no notice on portal had been in the knowledge of appellant/assesse in the light of natural justice a chance of hearing may kindly be granted to the appellant/assessee. Which had not been granted CIT(A)N FAC. 2. Because on proper consideration of facts and circumstances of the case the addition of net profit amounting to Rs. 13,40,086/- Into business income applying net profit rate under Section 44AD and disallowance of commission expenses amounting to Rs. 40,90,292/- is arbitrary, unjustified, unwarranted, factually and legally not correct, therefore, entire addition amounting to Rs. 58,75,448/- is liable to be deleted. 3.Because the assessment framed under Section 143(3) read Section 1448 of Income Tax Act, 1961 dated 22-04-2021 is without allowing reasonable opportunity for submissions before Assessing Authority National E- Assessment Centre, Delhi. Due to Covid situation, as stated in the Statement of Facts, were prevailing on those days with the Assessee Appellant, therefore, submissions placed herein before your honour at First Appellate stage may very kindly be considered for the disposal of this appeal and submission as well as additional evidencesas submitted in Statement of Facts & Grounds of Appeal as well as by way of Written Submissions at the time of faceless hearing is liable to be accepted as an addition evidences. 4. Because National E-Assessment Centre Delhi has erred in facts as well as law both in applying Section 44AD of Income Tax Act, 1961 upon the facts of the case of Assessee Appellant in as much as lower profit was declared after duly compliance of provisions of Section 44AD. The books of account is maintained, audited by Chartered Account. Purchase, sales as well as expenses are vouched and verifiable, no specific justification has been brought by the Assessing Authority on record as to how and what expenses are not justified, the rate of net profit @ 8% upon total turnover or gross receipt application is neither factually justified nor legally valid and differential amount of addition amounting to Rs. 13,40,086/- (8% N.P. Page 2 of 6

ITA No.280/Ind/2023 Dinesh Ramnani Page 3 of 6 of Turnover Rs. 18,18,157 minus declared Rs. 5,45,071) is liable to be deleted. 5.Because disallowance of alleged commission expenses dy detaced in trading A Profiles account is not able to be disablond specifically when the provisions of Section 44AD is being invoked by the Assessing money applying net proht rate @ By, thereafter no other expenses deed in Pront/Loss account may again the added in Business fret Profit and Income of the assessee Appellant. The disallowance of expenditure basiness incerti under the head Commission express es debited in Trading & account by way of addition into business income amount to Rs 40/0,201 Rable to be deleted. 6.Because alternatively, as stated in preceding Grounds of Appeal serialy numbered 4, the disallowance of commission expenses amounting to s 40,90,292/ is not factually justified in as much as the commission expenses has not been directly paid by the assessee to the sub-dealerts) and becau of this reason there was no T.D.S. tability upon Assessee/hopeat. The accounting to business incentive awarded by the Reliance Jio Mobile Netwo Company to sub-dealer(s) appointed by them is accounted for in our trading account. The Incentive by way of commission is awarded and paid by Peliance Jio Company to respective sub-dealers and not by the assessee Appellant. But the TDS is deducted by the Principal M/s. Reliance Jol Company on assesses account because of fact that assessee was his distributor of wide ares Instead of deducting separate TDS upon payment of incentive/commission to such respective sub-dealers. This being the reason the assessee Appellant accounted for such transaction rotated through him in his trading account crediting commission account and debiting commission expenses from the amount related to payment of sub-dealers, directly paid by Reliance Jo Company.. This factual position itself justify the head "Commission Experces debited in our Trading Account, therefore, no disallowance on such business Incentive commission may be made and the amount of alleged commission expenses may not be added into business income of Asse. 7. Because in any case and under all the facts & circumstances of the case the addition/disallowance Into business income of the assessee as stated herein above preceding paras of Grounds of Appeal is factually and legally not liable to be disallowed or added into total income of assessee Appellant, therefore, entire disputed addition of Rs. 58,75,448 is liable to be deleted.” 5. The AO has framed the assessment by estimating the income of the assessee for want of any details and response to various notices issued

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ITA No.280/Ind/2023 Dinesh Ramnani Page 4 of 6 u/s 142(1). The CIT(A) has dismissed the appeal of the assessee by recording the reasons in para 3 & 4 as under:

“3. That National E-Assessment Centre, Delhi made following additions/disallowances into the total income of assessee:- a. National E-Assessment Centre Delhi rejected the business net profit declared by the Assessee Appellant at Rs. 5,45,071/-. The reason is assigned that this net profit is exactly 2.31% of total turnover of Rs. 2,35,64,461/-. The other reason is assigned that assessee has not furnished any details and justification of any expenditure claimed by him. Simply because of this reason he rejected the declared net profit and estimated the net profit by applying the provisions of Section 44AD of Income Tax Act, 1961 upon turnover and gross receipts of the assessee. 8% Net profit is worked out by him at Rs. 18,85,157/- upon turnover of Rs. 2,35,64,461/-. The net profit declared by the assessee is Rs. 5,45,071/-. The differential amount of Rs. 13,40.086/-has been added by him into total business income of the assessee. b.The addition of Rs. 40,90,292/- has been added into the total business income of assessee on account of non-justification of commission expenses amounting to Rs. 40,90,292/- which is debited in trading & Profit/loss account. The assumption is also Rs. 40,90,292/- 3 inferred against the assesse Appellant that T.D.S. upon such commission has been deduced or not? The position is not clear. The total amount of commission expenses rejected and added into the business income. inferred against the assessee/Appellant that T.D.S. upon such commission has been deduced or not? The position is not clear. The total amount of commission expenses rejected and added into the business income. TOTAL ADDITION Rs.58,75,448/- 4. That as regards application of Provision of Section 44AD it is submitted that assessee has declared lower profit as prescribed under Section 44AD. The assessee has applied the provisions relating thereto. The tax audit under Section 44AB of his books of account was completed and tax audit report was obtained. The tax audit report is well uploaded in the Income Tax E-filing Portal. However, the application of 8% net profit upon total turnover of gross receipt of assessee is not justified at all. The net business profit as declared in the trading and profit-loss account i.e. Rs. 5,45,071/-, Account Books and records are duly audited by the Chartered Accountant. Purchases, Sales as well as Expenses are vouched and verifiable and Audited, therefore, is liable to be accepted. No specific reason has been brought out on record as to what head of Expenditures debited in profit-loss account are jot justified. This being the reason application of Section 44AD is not justified. Net Profit declared in Page 4 of 6

ITA No.280/Ind/2023 Dinesh Ramnani Page 5 of 6 Trade & Profit/Loss account amounting to Rs. 5,45,070/- is liable to be accepted. The differential amount of net profit being applied 8% Net Profit i.e. Rs. 18,85,157/- minus Net Profit declared in return Rs. 5,45,071/-i.e. addition of Rs. 13,40,086/- is liable to be deleted.” 6. Thus it is clear that due to non-appearance on behalf of the assesse the CIT(A) has dismissed the appeal of the assesse. The Sr. DR has fairly submitted that this matter requires a reconsideration at the level of the AO as the assesse has not appeared either before the AO or before the CIT(A) and the necessary records and details as well as books of accounts of the assesse are required to be verified. We further note from the statement of facts that the assesse has given reasons for non-appearance before the AO due to prevailing Covid-19 pandemic and some of the family members of the assessee were affected with the virus and hospitalized during the month of April 2021. However, the assesse has not given any reasons for non-attendance or appearance in the proceedings before the CIT(A) as well as for not filing any submission or supporting evidence. Accordingly in the facts and circumstance of the case and in the interest of justice by taking a lenient view we set aside the impugned order of the CIT(A) and remand the matter to the record of the AO for fresh adjudication after giving one more opportunity of hearing to the assesse.

Order pronounced in the open court on conclusion of hearing on 23.11.2023

Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member

Indore, 23 .11.2023 Patel/Sr. PS

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ITA No.280/Ind/2023 Dinesh Ramnani Page 6 of 6 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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