2015 (1) TMI 153 - AT - Income Tax

Ex-parte order - Assessment of income u/s 144 Inability to attend proceedings Reasonable cause for not attending proceedings present or not Held that - The assessment was framed by the AO u/s 144 of the Act due to non-appearance of the assessee before him on the date fixed for hearing - this happened as criminal cases were going on against the Directors of the assessee s company and therefore, the notices of the lower authorities could not be complied with by the assessee - There was a reasonable cause for the assessee for not complying with the notices issued by the AO as well as the by the CIT(A) - the assessment order was passed ex-parte qua the assessee u/s 144 of the Act and the appeal before the CIT(A) was also decided ex-parte qua the assessee - the assessee should be granted one more opportunity to present its case before the CIT(A) - thus, the matter is remitted back to the CIT(A) for fresh adjudication - the assessee shall suo-moto appear before the CIT(A) within 30 days from the receipt of this order for fixing the hearing of this appeal by the CIT(A) Decided in favour of assessee.

Issues Involved:
1. Assessment under section 144 of the Income Tax Act
2. Disallowance of expenses and additions to income
3. Disallowance of share application money and unsecured loans
4. Disallowance of depreciation and other expenses
5. Disallowance of expenses without evidence
6. Disallowance of expenses due to non-deduction of tax at source
7. Disallowance of expenses equivalent to a percentage of total expenses
8. Addition of current liabilities
9. Addition of unexplained creditors
10. Disallowance of material cost increase
11. Disallowance of increased administration and other expenses
12. Disallowance of increased salary expenses
13. Disallowance of interest and financial charges
14. Disallowance of provisions created
15. Disallowance of increase in liabilities due to unpaid duties and taxes
16. Disallowance of claimed expenses
17. Disallowance of unexplained investments/sales
18. Addition of undisclosed income from joint venture
19. Request for appeal modifications

Analysis:
1. The appellant challenged the assessment under section 144 of the Income Tax Act, citing the inability to attend proceedings due to business disruptions and litigations. The appellant argued for the production of books of accounts and relevant submissions to rectify the assessment.
2. The appellant contested the assessment of total income, disallowing losses and making additions deemed illegal and unjustified. The appellant sought deletion of the additions and disallowances.
3. The appellant objected to various additions and disallowances, including increased material consumption, expenses, salary expenses, interest charges, creation of provisions, and unexplained investments. The appellant argued against the enhancement of income by a substantial amount.
4. Disputes arose regarding the disallowance of share application money and unsecured loans, contending that these amounts were received from company directors and should not be considered unexplained.
5. The appellant contested the disallowance of depreciation and various expenses, urging that these claims were genuine and should be allowed.
6. Issues arose concerning disallowances related to expenses without evidence, non-deduction of tax at source, and disallowance of a percentage of total expenses, all of which the appellant argued were unwarranted and should be allowed.
7. The appellant challenged the addition of current liabilities, unexplained creditors, and various disallowances of expenses, claiming these were duly accounted for and should not have been disallowed.
8. Disputes arose over the disallowance of material cost increases, administration and other expenses, salary expenses, interest charges, provisions created, liabilities due to unpaid duties and taxes, and claimed expenses, all of which the appellant argued were accounted for and should not have been disallowed.
9. The appellant contested the addition of undisclosed income from a joint venture, arguing that the observations and findings were baseless and should be canceled.
10. The Tribunal granted the appellant an opportunity to present its case before the Commissioner of Income Tax (Appeals) afresh due to reasonable causes for non-compliance with notices, ensuring substantial justice in the case.

This detailed analysis covers the various issues raised in the legal judgment, providing insights into the appellant's challenges and the Tribunal's decision to grant a fresh opportunity for presenting the case.

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