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Income Tax Appellate Tribunal, “ A ” BENCH, AHMEDABAD
Before: SHRI T.R. SENTHIL KUMAR & SHRI MAKARAND V. MAHADEOKAR
आदेश/O R D E R
PER MAKARAND V. MAHADEOKAR, AM:
This appeal has been filed by the assessee, against the order dated 19- 12-2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as “CIT(A)”, for the Assessment Year 2008-09 u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). The appeal before the CIT(A) was dismissed due to the assessee's non-appearance despite the issuance of four notices dated 05- 03-2020, 12-01-2021, 04-12-2023, and 18-12-2023.
Facts of the case
The facts of the case are such that the assessee, a resident individual and Proprietor of M/s. Shiyon Enterprise, engaged in the trading of gold bullion, filed his return of income on 30/09/2008, declaring a total income of Rs. 1,55,210/-. This return was processed u/s 143(1) of the Act. Subsequently, the assessment was reopened u/s 147 of the Act, and a notice u/s 148 was issued on 27/03/2015, to which the assessee responded by treating the original return as filed in response to the notice u/s 148. The AO completed the assessment and later the reassessment proceedings were initiated following an order dated 14/11/2017 passed by the Principal Commissioner of Income Tax-1, Ahmedabad ("Pr. CIT"), under Section 263 of the Act. The Pr. CIT found that the assessment order passed u/s 143(3) r.w.s. 147 on 18/03/2016 was erroneous and prejudicial to the interest of the Revenue. The Pr. CIT observed that the Assessing Officer (AO) had failed to conduct necessary inquiries and investigations regarding the alleged business activities of the assessee, which were suspected to be accommodation entries rather than genuine transactions.
3. During the reassessment proceedings, the AO, following the directions of the Pr. CIT, undertook detailed inquiries, including spot inspections and the examination of third parties involved in transactions with the assessee. The AO, based on the information gathered during the investigation by the DDIT (Inv.), Mumbai, and the statements recorded, the AO concluded that the assessee was involved in providing accommodation entries in the guise of trading in gold bullion. Consequently, the AO estimated an unaccounted commission income of Rs. 15,03,95,431, computed @ 3.5% on the turnover of Rs. 429,70,12,328. This estimation was made on the basis of statements and presumptions without any concrete evidence of actual income earned by the assessee. The AO also disallowed various expenses amounting to Rs. 4,82,229, holding that the assessee was not engaged in any genuine business activity. Aggrieved by the reassessment order, the assessee filed an appeal before the CIT(A). However, the CIT(A) dismissed the appeal due to the assessee's non- appearance, despite the issuance of four notices as mentioned earlier. It is pertinent to note that during this period, the assessee had filed an appeal before the Tribunal challenging the order passed by the Pr. CIT under Section 263 of the Act. The assessee was of the opinion that if the Tribunal ruled in his favour, it would render the reassessment proceedings invalid. Therefore, he chose not to pursue the appeal before the CIT(A) actively, expecting relief from the Tribunal, but the Tribunal dismissed the assessee's appeal against the order u/s 263, holding that there was indeed a lack of inquiry by the AO, which justified the Pr. CIT's action under Section 263 of the Act. This development led to the assessee's current appeal before us with following grounds:
4 1. The learned CIT(A) has erred in confirming the estimated commission of Rs. 15,03,95,431 @ 3.5% on turnover of Rs. 429,70,12,328 as unaccounted commission income based on the statements taken by DDIT(Inv.) Mumbai and based on presumptions without any evidences of earning the income in as much as the entire addition is without any evidence.
2. The appellant says and submits that without affording the opportunity of cross examination, the entire addition is bad in law.
The learned CIT(A) has confirmed the various expenses of Rs. 4,82,229 on the ground that the assessee has no any business activity in as much as the assessee has carried out the genuine business and that the expenses incurred are genuine and actually incurred.
During the course of the hearing before us, Authorised Representative (AR), of the assessee stated that the AO has added the commission on estimation basis without rejecting the books of accounts. He further stated that the sale and purchase of the assessee were also not questioned by the AO. The AR also stated that the books of accounts of the assessee were audited and the quantitative details, as per the audit report, were also not questioned by the AO. The AR submitted the quantitative details as annexed to the tax audit report. He also placed reliance on judicial precedents. The AR also submitted that the issues involved require a detailed examination on merits. The AR also explained that the failure to appear before the CIT(A) was not due to negligence but was based on the genuine belief that relief would be granted by the Tribunal in the appeal against the Section 263 order. Considering the facts and circumstances of the case and the submissions made before us, we are of the view that the appeal deserves to be remitted back to the file of the CIT(A) for adjudication on merits.
The Departmental Representative did not raise any objection to restoring the matter back to the CIT(A) for a decision on merits.
In view of the above, we deem it appropriate to set aside the impugned order of the CIT(A) and restore the matter back to his file. The CIT(A) is directed to provide the assessee with a fair opportunity to present his case and to decide the appeal afresh on merits. The appeal filed by the assessee is accordingly allowed for statistical purposes.
Order pronounced in the Open Court on 28th August, 2024 at Ahmedabad.