NEPTUNE BUILDCON LLP,VADODARA vs. THE INCOME TAX OFFICER, WARD-1(2)(2) (PREVIOUSLY WARD-1(2)(3)), VADODARA
What did the Tribunal hold?
The Tribunal held that the CIT(A) erred in dismissing the appeal ex-parte without providing a reasonable opportunity of being heard, especially considering the pandemic. The principles of natural justice require a fair opportunity for the assessee to present its case.
What were the facts?
The assessee, Neptune Buildcon LLP, converted from a company during the assessment year 2014-15. The Assessing Officer made additions to the income, and the CIT(A) dismissed the assessee's appeal ex-parte due to alleged non-compliance during the COVID-19 pandemic.
What were the issues?
Whether the CIT(A) erred in dismissing the appeal ex-parte without affording a reasonable opportunity of being heard to the assessee, and whether the additions made by the AO were justified.
Which sections of the Income-tax Act were involved?
Section 143(3),Section 28(iv),Section 41(2)(b)(i),Section 2(31)(iv),Section 72A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A ” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI MAKARAND V. MAHADEOKAR
PER MAKARAND V. MAHADEOKAR, AM:
This appeal by the Assessee is directed against the order dated 08-04-2024 passed by the Ld.Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”], for the Assessment Year (AY) 2014-15 arising from the order passed by the Assessing Officer (hereinafter referred to as “AO”) u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). Asst. Year : 2014-15
2
The assessee has raised the following grounds of appeal:
The Ld. CIT (Appeals), National Faceless Appeal Centre (NFAC), Delhi has grossly erred in law and in facts in dismissing the appeal ex-parte without affording reasonable opportunity of being heard to the appellant.
The appeal of the appellant may kindly be restored to the file of the Ld. CIT (Appeals) and may please be directed to afford reasonable opportunity of being heard.
The Ld. CIT(A), NFAC has erred in law and in facts in confirming the action of the Ld. A. O. in the addition of an amount Rs. 58,57,259/- u/s. 28(iv) r.w.s. 41(2)(b)(i) r.w.s. 2(31)(iv) r.w. Sub-section (23)(i) of the Act, being the amount of loss incurred by the Company, prior to conversion to LLP, adjusted against the balance of Unsecured Loans of the shareholders of the Company. The addition of Rs. 58,57,259/- being bad in law and in facts is prayed to be deleted
The Ld. CIT(A), NFAC has erred in law and in facts in confirming the action of the Ld. A.O. in holding that the appellant has not complied with the conditions stipulated in section 72A and thereby denying the claim of carry forward of losses of Rs. 58,57,259/-. The Ld. AO be directed to allow the claim of carry forward of loss of Rs. 58,57,259/- as claimed.
The Ld. CIT(A), NFAC has erred in law and in facts in confirming the action of the Ld. A. O. in treating the amount of business loss of Rs. 78,512/- as excess amount of carried forward without appreciating the material available on record. The addition thus, made of Rs. 78,512/- is bad in law and in facts, is prayed to be deleted.
Your appellant craves liberty to add, alter, amend substitute or withdraw any of the ground(s) of appeal hereinabove contained Facts of the Case:
The assessee- company underwent a conversion into a Limited Liability Partnership (LLP) during the assessment year under consideration. It is engaged in the business of real estate who filed its return of income for the A.Y. 2014-15 on 28-11-2014 declaring NIL income after setting off Asst. Year : 2014-15
3 business losses. Later on, the case was selected for the complete scrutiny on the following grounds: i. That, unsecured loans from persons, who have not filed their Return of income (Form 3CD). ii. That, high Interest expenditure against new capital added in work in progress or addition made to fixed assets. iii. That, mismatch in sales turnover reported in Audit Report and ITR.
The Assessing Officer, after issuing notices u/s 143(2) and 142(1) of the Act, completed the scrutiny after making following additions:
Rs. 58,57,259/- being business income within the meaning of Section 28(iv) r.w.s. 41(2)(b)(ii) r.w.s. 2(31)(iv) r.w. sub-section 23(i) of the Act.
Rs.78,512/- being business income within the meaning of Section 28(iv) of the Act.
The assessee preferred an appeal before the Ld.CIT(A), who dismissed the appeal due to non-compliance.
The assessee is aggrieved by the order of the Ld.CIT(A), which was passed ex-parte due to the alleged non-compliance of the assessee during the COVID-19 pandemic period.
It is observed that only one notice on 22-02-2021 was issued to the assessee during this period, which was not complied with, leading to the dismissal of the appeal by the Ld.CIT(A), without affording a reasonable opportunity of being heard. Asst. Year : 2014-15
The Ld.Authorised Representative (AR) of the assessee argued that the appeal before the Ld.CIT(A), who was dismissed without affording any reasonable opportunity of being heard to the assessee. Therefore, the matter may be set aside to the Ld.CIT(A). Considering the facts, the Ld.Departmental Representative (DR) did not raise any objection to that.
We have heard the contentions of both the parties. It is noted that the assessee has specifically raised the ground that the Ld.CIT(A) has dismissed the appeal ex-parte, without providing a reasonable opportunity of being heard to the assessee, especially during the challenging circumstances of the COVID-19 pandemic. The Hon’ble Supreme Court, in the suo moto Writ Petition (Civil) No. 3 of 2020, has extended the period of limitation for all judicial and quasi-judicial proceedings due to the pandemic. In light of this, the principles of natural justice demand that the assessee be afforded a fair opportunity to present its case.
Considering the extraordinary situation arising from the COVID-19 Asst. Year : 2014-15
In the result, the appeal filed by the Assessee is treated as allowed for statistical purposes.
Order pronounced in the Open Court on 05th September, 2024 at Ahmedabad. (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER
अहमदाबाद/Ahmedabad, "दनांक/Dated 05/09/2024
ट".सी.नायर, व."न.स./T.C. NAIR, Sr. PS
आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त ( अपील ) / The CIT(A)-(NFAC), Delhi
"वभागीय ""त"न"ध , आयकर अपील"य अ"धकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड" फाईल /Guard file.
आदेशानुसार/ BY ORDER,
स"या"पत ""त ////
सहायक पंजीकार (Asstt.
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