ACIT, NEW DELHI vs. M/S. PLANET ENTERPRISES, NEW DELHI

The assessee filed its return on 2/11/2007 declaring income of Rs.16,20,747/-. Case was selected for scrutiny and notice u/s 143(2) dated 18/7/2008 was issued and served upon the assessee. Notice u/s 143(2) and u/s 142(1) dated 17/8/2009 was once again given to the assessee along with questionnaire. However, on the date fixed assessee did not attend the hearing. On 3/12/2009 Shri Manoj Kumar assessee’s representative attended the hearing and requested for adjournment to 4/12/2009. On the said date, no one attended the hearing. Thereafter another questionnaire u/s 142(1) was issued to the assessee. On 10/12/2009 the case was adjourned to 16/12/2009. On 16/12/2009 Shri Manoj Kumar assesses representative once again attend the hearing. The Assessing Officer recorded in Assessment Order dated 21.12.2009 that “..in the event of non furnishing of the required details by the next dated of hearing and also in case of non production of books of account for examination I shall be constrained to complete the assessment as best judgment assessment as per the provision of Section 144 of the Income Tax Act.” The Assessing Officer observed that during the financial year under consideration the assessee received consultancy fee amounting to Rs.80,80,402/- and making adjustment for the various expenses debited to their profit and loss account. The assessee declared the total income of Rs.16,20,747/-, and debited the profit and loss account with huge expenses under the head repair and maintenance, tour and travel, interest on car loan, salary and wages etc. The Assessing Officer held that in the absence of the complete details having furnished in respect of the occurrence of these expenses the genuineness as well as adequacy of these expenses was not open for variation. Therefore, the Assessing Officer estimated the income of the assessee at Rs.35 lacs.

The DR submitted that the assessment order has been properly passed by the Assessing Officer as there was no satisfactory answers to the queries raised by the Assessing Officer and the assessee did not furnish books of account along with other materials during the course of assessment proceedings. The DR further held that Ld. CIT(A)’s finding at page 13 of the order was totally erroneous and is not tenable.

The AR submitted that the Assessing Officer has not taken proper expenditure and in-fact the details were properly furnished before the Assessing Officer. The AR submitted that assessee’s non-attendance of the hearing before the Assessing Officer was due to serious accident of the power of attorney holder and the said medical certificate was furnished to the second power of attorney holder. The AR further submitted that the finding given by the Ld. CIT(A) are proper and just and prayed that the appeal of the Revenue be dismissed.

We have heard rival submissions and perused the relevant material on record. It is observed that the AO kept on requesting the assessee to furnish the necessary details for enabling him to complete the assessment, but the assessee did not properly comply with. However, the Ld. CIT(A) has deleted the addition by taking into consideration several documents/evidence, which were not furnished before the AO, without giving any opportunity to the AO in terms of Rule 46A. As such, his action cannot be countenanced. Under the given circumstances, we are of the considered opinion that the ends of justice would meet adequately, if the impugned order is set aside and the matter is restored to the file of the AO for making a de novo assessment, we order accordingly. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in such fresh assessment proceedings.

In result, the Revenue’s appeal is partly allowed for statistical purposes.