M/S. AARVEE INTERNATIONAL, ,RAJKOT vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1),, RAJKOT
What did the Tribunal hold?
The Tribunal restored the matter to the Assessing Officer for de novo consideration, allowing the assessee an opportunity to present its case on merits. The Tribunal noted the assessee's past non-cooperation but agreed to set aside the order in the interest of justice.
What were the facts?
The Assessing Officer made additions for undisclosed interest income and disallowed expenses due to the assessee's non-appearance. The CIT(A) dismissed the assessee's appeal for non-prosecution, confirming the additions. The assessee appealed to the ITAT, arguing the additions were ad hoc and requesting a de novo consideration.
What were the issues?
Whether the additions and disallowances made by the Assessing Officer and confirmed by the CIT(A) were justified, especially given the assessee's failure to appear and present its case.
Which sections of the Income-tax Act were involved?
Section 68,Section 144,Section 250,Section 234A,Section 234B,Section 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This assessee’s appeal for A.Y. 2015-16, arises from order of the CIT(A)-2, Rajkot dated 08-10-2018, in proceedings under section 250 of the Income Tax Act, 1961; in short “the Act”.
Page No 2 M/s. Aarvee International vs. DCIT
The assessee has taken the following grounds of appeal:
“We state the grounds of appeal as under are without prejudice to one another. These are alternate grounds and one ground may be treated as independent of others. l.The Assessment Order under section 144 of the Act, is bad in law as well as facts. 2.The Order of the learned Commissioner of Income Tax (Appeals) is bad in law as well as facts.
3. The learned Commissioner of Income Tax (Appeals) erred on facts as well as in law by in confirming the addition in respect of undisclosed interest income received during the year amounting to Rs.6,78,382/-u/s 68 of the IT Act. 4.The learned Commissioner of Income Tax (Appeals) erred on facts as well as in law by in confirming the disallowance of Rs.42,70,152/- out of various expenses amounting to Rs.4,27,01,527/- being 10% of the same.
5. The learned Commissioner of Income Tax (Appeals ) erred on facts as well as in law in confirming the charging of interest u/s. 234A, 234B, and 234C of the Act, when addition itself not sustainable. Your Honour's appellant craves leave to add, amend, alter or withdraw any one or more grounds of appeal on/or before hearing of appeal.”
3. The brief facts of the case are that the assessing officer during the course of assessment proceedings gave several opportunities of hearing to the assessee. However, none appeared on behalf of the assessee despite several opportunities. Accordingly, the assessing officer made an addition of � 6,78,382/- on account of undisclosed interest income and further disallowed expenses amounting to � 42,70,152/- being 10% of the expenses claimed by the assessee in its profit and loss account.
The assessee filed appeal against the aforesaid order, before Ld. CIT(Appeals). The Ld. CIT(Appeals) issued several notices of hearing to the assessee, however, none appeared on behalf of the assessee to file relevant details in support of its appeal. Accordingly, the Ld. CIT(Appeals) dismissed Page No 3 M/s. Aarvee International vs. DCIT the appeal of the assessee on account of non-prosecution and confirmed the additions made by the assessing officer. While dismissing the assessee’s appeal, the Ld. CIT(Appeals) made the following observations:
“Coming to the merits of addition I find that the addition made by A.O. u/s 68 and adhoc disallowance out of expenses, in absence of any details from assessee is justified. Thus on the merits also I find that the contested additions are justified. The additions are therefore confirmed on merits as well. 4. For statistical purpose, the appeal of the assessee is to be treated as dismissed.”
The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) dismissing the appeal of the assessee on account of non-prosecution. Before us, the counsel for the assessee submitted that the additions have been confirmed by the Ld. CIT(Appeals) are purely on ad hoc basis, and therefore, the same are not liable to be sustained. The counsel for the assessee submitted before us that if given an opportunity, the assessee would be able to produce substantial documentary evidence in support of deletion of the aforesaid additions. Accordingly, the counsel for the assessee submitted that the matter may be set aside to the file of the assessing officer for de novo consideration, after giving assessee due opportunity of hearing to present its case on merits. Further, the counsel for the assessee also submitted/assured us that there shall be no further non-compliance on the part of the assessee before the assessing officer. The Ld. DR has also not objected to the matter being restored to the file of assessing officer, in the interest of justice.
Page No 4 M/s. Aarvee International vs. DCIT
Accordingly, the matter is being restored to the file of assessing officer for de novo consideration, after giving due opportunity of hearing to the assessee to present his case on merits. We further observed that during the course of proceedings before assessing officer and Ld. CIT(Appeals), the assessee has been largely unresponsive to notices issued by the Department. In case there is further non-cooperation on part of the assessee before the assessing officer, the assessing officer is at liberty to pass order on the basis of materials available on record, in accordance with law.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 16-05-2023
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