RAKA SINGH,LUCKNOW vs. ITO WARD 1(3) LUCKNOW, LUCKNOW

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ITA 361/LKW/2023Status: DisposedITAT Lucknow20 June 2024AY 2014-15Bench: HON’BLE SHRI SUDHANSHU SRIVASTAVA (Judicial Member), SHRI G. D. PADMAHSHALI (Accountant Member)4 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the impugned order and remitted the file back to the NFAC for de-novo adjudication. This was due to the assessee's failure to prosecute her first appeal, which was attributed to personal and health reasons that were accepted by the NFAC for condoning the delay.

What were the facts?

The assessee, engaged in mineral water business, filed a revised return with a significantly higher turnover than her original return. The Assessing Officer rejected her books of account and made an assessment to the best of his judgment due to failure to file a tax audit report and produce supporting documents.

What were the issues?

Whether the assessment made to the best of judgment was justified, and whether the assessee was prevented by reasonable cause from attending to her case in the first appeal.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 145(3),Section 144,Section 250,Section 253(1)(a)

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Income Tax Appellate Tribunal, ‘B’ BENCH LUCKNOW

Before: HON’BLE SHRI SUDHANSHU SRIVASTAVA & SHRI G. D. PADMAHSHALI

Pronounced: 20/06/2024

ORDER Per G. D. Padmahshali, AM; Against the DIN & Order ITBA/NFAC/S/250/2023-24/1057011178(1) dt. 12/10/2023 passed u/s 250 of the Act by the National Faceless Appeal Centre, Delhi [‘NFAC/CIT(A)’] the assessee filed the present appeal u/s 253(1)(a) of the Income Tax Act [‘the Act’].

2.

The case was called thrice, none appeared at the bequest of the assessee. After primary briefing from the Revenue, we deem it fit to reject the adjournment request & proceed to adjudicate the matter ex- parte u/r 24 of ITAT Rules, 1963.

3.

Tersely stated facts borne out of the case records are that; ITAT-Pune Page 1 of 4

1.

Raka Singh Vs ITO 3.1 The assessee was engaged in proprietary business of processing & sales of mineral water in the name of ‘M/s Axiss International. The assessee filed her original return declaring total income of ₹2,19,450/- in the category of no-account case with a total business turnover of ₹20,12,500/-. Subsequently maintaining the total income intact, the assessee revised her return with the business turnover of ₹12,32,84,615/-. 3.2 The case of the assessee was selected for scrutiny and in the event of assessee’s failure to file tax audit report [‘TAR’] as required by section 44AB of the Act within the prescribed due date, failure to produce books of account & vouchers for verification and failure to adduce cogent evidence in support of turnover claimed to have been achieved, the Ld. Income Tax Officer, Ward-1(3), Lucknow [‘AO’] rejected the books of the assessee u/s 145(3) of the Act and consequently framed the assessment to the best of his judgement u/s 144 of the Act by determining the total income @ 8% of total turnover reported in the revised return filed by her on 18/08/2015. 3.3 The assessee unsuccessfully contested the aforestated rejection of books and determination of income u/s 144 of the Act in an appeal before first appellate authority. Aggrieved by the actions of tax authorities below, the assessee came in present appeal on following grounds; ‘1. That Ld. Commissioner of Income Tax (Appeal) erred in law and on facts that Assessing officer have made the addition on estimated basis after rejecting Books of Accounts without referring any specific ground and even in presence of Tax Audit Report with him.

ITAT-Lucknow Page 2 of 4

2. That Ld. Commissioner of Income Tax (Appeal) erred in law and on facts that addition u/s 144 Can not be made on the basis of rejection of books of account specially when Assessee maintains regular Books of Account. It is settled law that Addition on the basis of Books cannot be made when books of accounts have rejected by Ld. AO. books of account.

3. That Ld. Commissioner of Income Tax (Appeal) erred in law and on facts that Assessing Officer have not specified any Law or specific fact for making addition in returned income. Addition was made only on the basis of estimate and surmise.

4.

The above grounds of appeal

s are independent and without prejudice to one another. The appellant may be allowed to add / withdraw or amend any ground of appeal at the time of hearing.

4. We have heard the Ld. Revenue, and subject to rule 18 of ITAT Rules, 1983 perused the material placed on record.

5. We observed that, owing to non-production of books, voucher and failure to file the TAR in time, the genuineness of turnover reported in the revised return went for toss. In absence of cogent material substantiating unchanged taxable income in-spite of astronomical surge in turnover the assessment in this case was framed u/s 144 of the Act to the best of judgement. Aggrieved by such determination the appellant did file an appeal before first appellate authority but failed to prosecute the same, which resulted into dismissal ex-parte in the light of judicial precedents including ‘CIT Vs BN Bhattacharjee’ [118 ITR 461 (SC)].

6. We however from para 5 of impugned order observed that, owing to abrupt/sudden cancellation of business by major vendor UP State ITAT-Lucknow Page 3 of 4 Raka Singh Vs ITO Road Transport Corp. [‘UPSRTC’], the appellant landed in financial crises. Depression & aggravated poor health constrained the assessee to relocate for those reasons first appeal could not be instituted in time before Ld. NFAC. This fact was examined and accepted while condoning the delay by the Ld. NFAC. The same reasoning is attributable to assessee’s non-appearance and failure to produce books, audit report and supporting documents etc., which resulted in ex-parte dismissal. Having considered the facts and circumstances holistically we are of the view that the former reasons are solitarily sufficient to hold that the appellant was for reasonable cause prevented from attending notices and representing her case in first appeal, thereof necessitating us to accord one more opportunity to represent the case before Ld. NFAC. In view thereof we set-aside the impugned order and remit the file back to the Ld. NFAC for de-novo adjudication in accordance with law preferably in three effective hearings.

7.

The appeal in result is ALLOWED FOR STATISTICAL PURPOSE. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Thursday, 20th day of June, 2024

-S/d- -S/d- SUDHANSHU SRIVASTAVA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER Lucknow ; िदनांक / Dated : 20th day of June, 2024 आदेश की �ितिलिप अ�ेिषत / Copy of the Order forwarded to :

1. 1. अपीलाथ� / The Appellant. 2. ��थ� / The Respondent.

3. The CIT(A)-NFAC, Delhi (India) 4. The Concerned CIT 5. DR, ITAT, Bench ‘B’, Lucknow6. गाड�फ़ाइल / Guard File. आदेशानुसार / By Order, व�र� िनजी सिचव / Sr. Private Secretary आयकर अपीलीय �ायािधकरण, / ITAT, Lucknow ITAT-Lucknow Page 4 of 4

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