KAMLESH GHANSHYAMDAS THAWANI,KUBERNAGAR, AHMEDABAD vs. INCOME TAX OFFICER, WARD 7(2)(1) AHMEDABAD, INCOME TAX OFFICE, PRATYAKSHA KAR BHAWAN

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ITA 618/AHD/2024Status: DisposedITAT Ahmedabad21 June 2024AY 2016-17Bench: Ms. SUCHITRA KAMBLE (Judicial Member)3 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the CIT(A) passed an ex-parte order without discussing the merits of the case. Therefore, the matter was remanded back to the CIT(A) for proper adjudication on merits, ensuring the assessee is given an opportunity of hearing.

What were the facts?

The Assessing Officer made an addition of Rs. 3,71,367/- under Section 28(iv) on account of freebies received by the assessee from M/s. Asian Paints Ltd. The assessee contended that these were business trips for attending conferences and not for personal enjoyment. The CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the freebies received by the assessee were taxable under Section 28(iv) and if the CIT(A) erred in passing an ex-parte order without considering the merits of the appeal.

Which sections of the Income-tax Act were involved?

Section 28(iv),Section 37(1),Section 40(a)(2)(ia),Section 194H,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD

Before: Ms. SUCHITRA KAMBLE

For Appellant: Shri Palak Pavagadhi, CA
For Respondent: Shri Purushottam Kumar, Sr. DR
Hearing: 12.06.2024Pronounced: 21.06.2024

This appeal is filed by the assessee against order dated 04.10.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2016-17.

2.

The assessee has raised the following ground of appeal :-

1. Addition of Rs.3,71,367/- u/s.28(iv) of the Act on account of freebies received from M/s. Asian Paints Ltd.:

The Ld. CIT(A) has grossly erred in making addition of Rs.3,71,367/- on account of freebies received by the appellant from M/s. Asian Paints as he has gone for attending business conference arranged by M/s Asian Paints and not for personal enjoyment. Also, it was business trip and not leisure trip. Moreover, audit objection raised against M/s Asian Paints is also dropped and it is clearly written in the order of M/s Asian Paints that assessment order was not prejudicial to the interest of Revenue and no further remedial action was required to be taken in case of dealers of the assessee. Therefore, the addition made by the Ld. CIT(A) should be deleted. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at or before the time of hearing of the appeal.”

Assessment Year: 2016-17 Page 2 of 3 3. The assessee is an individual. On verification of the records, the Assessing Officer observed that in the case of M/s. Asian Paints Limited assessment proceedings for Assessment Year 2016-17 was completed on 28.12.2018 and the Assessing Officer disallowed expenditure of Rs.130,68,39,954/- under both the provisions of Section 37(1) of the Income Tax Act, 1961 by not treating it as wholly and exclusively for the purpose of business and also under Section 40(a)(2)(ia) of the Act treating the transaction as commission attracting deduction of TDS Section 194H of the Act. The assessee is one of the beneficiaries of the said transactions and has taken benefit to the dune of Rs.3,71,367/-. Notice under Section 148 of the Act was issued on 23.05.2022 and duly served upon the assessee. The statutory notices were also issued and served upon the assessee. The Assessing Officer held that the value of the benefit received by the assessee is chargeable to tax under Section 28(iv) of the Act and, therefore, chargeable to tax in respect of unexplained transaction of Rs.3,71,367/- by way of commission in the form of freebies and accordingly made addition.

4.

Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5.

The Ld. AR submitted that the CIT(A) has dismissed the appeal ex-parte and, therefore, matter may be remanded back to the file of the CIT(A) for proper adjudication of the issuers contested therein on merits.

6.

The Ld. DR relied upon the Assessment Order and the order of the CIT(A).

7.

Heard both the partiers and perused all the relevant material available on record. The Ld. AR submitted that there is a delay of 123 days in filing the present appeal for which the assessee submitted that the order passed by the CIT(A) was not received by the assessee within the stipulated time and, therefore, the delay was not deliberate. The assessee has explained the delay and, therefore, the delay is condoned. From the perusal of the order passed by the CIT(A), it appears that the CIT(A) though issued the notices has not given any details as to the service of those notices and passed ex-parte order without

Assessment Year: 2016-17 Page 3 of 3 making any discussion on merit. It will be appropriate to remand back this matter to the file of the CIT(A) for proper adjudication of the issues contested by the assessee on merit. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice.

8.

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

Order pronounced in the open Court on this 21st June, 2024.

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