SH. KAPIL GUPTA,PATIALA vs. THE DY.C.I.T., C.C., PATIALA
What did the Tribunal hold?
The Tribunal found that the assessee claimed not to have received notices for hearings before the CIT(A). Therefore, in the interest of justice, the case was restored to the CIT(A) for a fresh decision after providing a reasonable opportunity of being heard.
What were the facts?
During a survey operation, excess cash, unbooked renovation expenses, unexplained advances, and unexplained stock were found. The Assessing Officer made additions based on these findings. The assessee's appeal before the CIT(A) was dismissed ex-parte.
What were the issues?
Whether the CIT(A) erred in dismissing the appeal ex-parte without considering the merits, and whether the additions made by the AO were justified.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH
Before: SHRI A.D.JAIN & SHRI VIKRAM SINGH YADAV
आदेश/ORDER
PER A.D.JAIN, VICE PRESIDENT
This is assessee's appeal for assessment year 2018-19 against the order dated 05.09.2023 passed by the ld. CIT(A)- 5, Ludhiana. The following grounds have been taken :
1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in passing an ex-parte order dismissing the appeal in limine without discussion on merits which is against the Principles of Natural Justice and as such the order passed is arbitrary and unjustified.
2. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the order ITA 557/CHD/2023 A.Y. 2018-19 2 of the Assessing Officer treating excess cash of Rs.9,50,000/- surrendered during the course of survey to be deemed income u/s 69 A of the Act as against business income which is arbitrary and unjustified.
3. That the Ld. Commissioner of Income Tax(Appeals) has further erred in upholding the order of the Assessing Officer treating expenses incurred on business building renovation of Rs.7,00,000/- surrendered during the course of survey to be deemed income u/s 69 of the Act as against business income which is arbitrary and unjustified.
That the Ld. Commissioner of Income Tax(Appeals) has further erred in upholding the order of the Assessing Officer treating business advances made of Rs.8,00,000/- surrendered during the course of survey to be deemed income u/s 69 of the Act as against business income which is arbitrary and unjustified.
5. That the Ld. Commissioner of Income Tax(Appeals) has further erred in upholding the order of the Assessing Officer treating investment in unexplained stock of Rs.75,70,000/-surrendered during the course of survey to be deemed income u/s 69 of the Act as against business income which is arbitrary and unjustified.
6. That the Ld. Commissioner of Income Tax(Appeals) has further erred in upholding the rejection of books applying the provisions of Section 145(3) which is arbitrary and unjustified.
7. That the Ld. Commissioner of Income Tax(Appeals) has further erred in upholding the net profit at Rs.36,30,191/- as computed by the assessing officer by applying average net profit rate of 4.25% as against Rs.15,23,708/- declared by the assessee resulting in an addition of Rs.21,06,483/- which is arbitrary and unjustified.
That the Ld. Commissioner of Income Tax(Appeals) has further erred in upholding the addition of Rs. 1,04,570/- made on account disallowance of interest expenditure which is arbitrary and unjustified.
That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 10.That the order of the Ld. CIT(A) is erroneous, arbitrary, opposed to the facts of the case and thus untenable.
ITA 557/CHD/2023 A.Y. 2018-19 3
The brief facts of the case are that the assessee is proprietor of M/s Gupta and Sons engaged in the business of trading in school textbooks and stationery. A survey operation u/s 133A of the Income Tax Act, 1961 was conducted at business premises of the assessee on 11.04.2017. During the course of survey, a total cash of Rs.9,95,837/- was found. However, as per the trial balance as on the date of survey, the cash in hand shown in the books was found to be Rs.45,837/-. Accordingly, the assessee was given Show Cause Notice on 11.02.2021. In reply, the assessee contended that the source of excess cash found during the survey was from business receipt. The AO, being not satisfied with the reply of the assessee, made addition of Rs.9,50,000/-.
The survey team noticed that the assessee had booked the building expenses amounting to Rs.1,84,000/-only. The expenses incurred towards interior decoration, false ceiling, flooring etc. were not booked by the assessee. In order to explain the said discrepancies, the assessee voluntarily disclosed Rs.7,00,000/-. The AO was not satisfied with the explanation of the assessee and made addition of Rs.7,00,000/-. The Assessing Officer also made addition of Rs.8,00,000/-on account of unexplained advances, Rs.75,50,000/- on account of unexplained stock, Rs.21,06,483/- on account of net profit, Rs.1,04,570/- on account of interest expenditure. Accordingly, the Assessing
ITA 557/CHD/2023 A.Y. 2018-19 4 Officer made total additions/disallowances amounting to Rs.1,22,11,053/-, against which the assessee went in appeal before the ld. CIT(A).
4. Before ld. CIT(A), the appeal of the assessee was fixed for hearing and various notices were issued to the assessee i.e., on 24.05.2022, 20.06.2022, 29.08.2022, 20.09.2022, 10.10.2022, 19.10.2022, 08.02.2023, 12.05.2023 and 04.09.2023, out of which only for one hearing i.e., on 20.09.2022, a request for adjournment was made. On other dates, the assessee did not turn up for hearing nor made any request for adjournment was made. Accordingly, the ld. CIT(A) dismissed the appeal of the assessee confirming the additions and disallowances made by the Assessing Officer.
Aggrieved, the assessee is in appeal before this Tribunal.
We have heard the rival submissions and perused the material available on record. The notices were issued on the ITBA Portal but the assessee states that he did not receive any notice of hearing. Further, there is nothing on record to prove that the assessee has been served notice of hearing to furnish the relevant information/explanations etc. Therefore, in the interest of justice, the file is restored to the file of ld. CIT(A) to decide the matter afresh in accordance with law after giving reasonable
ITA 557/CHD/2023 A.Y. 2018-19 5 opportunity of being heard to the assessee. The assessee, no doubt, shall cooperate in the fresh proceedings before the CIT(A).
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 21.02.2024.
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