2024 (4) TMI 188 - AT - Income Tax

Condonation of delay filling appeals - application for admission of Additional Evidence under rule 46A - Addition u/s 69 made on difference in 26AS statement and return of income - HELD THAT - We are of the opinion that admittedly the Assessee failed to comply notices issued by the Assessing Officer, but the Assessing Officer also failed to carry out necessary investigations and to understand the facts in totality. Assessing Officer always have access to the return of income of the assessee for earlier years. The AO has not bothered to study the details shown in the Balance sheets of earlier years. The aim of the Assessment Proceedings is to assessee the correct income of the Assessee. Also, the ld.CIT(A) has not adjudicated each and every ground raised by the Assessee on merits. CIT(A) also failed to consider the documents filed by the Assessee under Rule 46A. In these facts and circumstances of the case, we are of the opinion that substantial justice is more important than the technical delays . On identical facts in the case of Gupta Emerald Mines (P.) Ltd. 2023 (10) TMI 1287 - SC ORDER , the Hon ble Supreme Court has condoned the delay of the assessee and set aside the order of the ITAT .In the case of Gupta Emerald Mines P Ltd the Appellant claimed that Appellant had not received the copy of the order of the CIT(A). Also in HINDALCO INDUSTRIES LIMITED 2024 (1) TMI 1039 - BOMBAY HIGH COURT principle of advancing substantial justice is of prime importance, while considering the question of condonation. Thus we condone the delay in filling the appeal. CIT(A) has to decide the appeal on merit and CIT(A) does not have any power to dismiss appeal for non-prosecution.In these facts and circumstances of the case we set aside the order of the CIT(A) to CIT(A) for de-novo adjudication after giving opportunity to the assessee. Appeal of the assessee is allowed for statistical purpose.

Issues Involved:
1. Validity of the ex-parte order passed by the CIT(A).
2. Consideration of facts and grounds of appeal by the CIT(A).
3. Justification of the ex-parte order under section 144 of the Income Tax Act.
4. Assessment of sundry creditors and cash deposits under sections 68 and 69 of the Act.
5. Verification of figures by the AO.
6. Consideration of merits in the ex-parte order.
7. Genuineness of sundry creditors.
8. Opportunity for the appellant to respond to notices.
9. Explanation of cash deposits as part of disclosed income.
10. Fair opportunity to submit evidence before the appellate order.
11. Excessiveness and arbitrariness of the addition made by the AO.
12. Confirmation of interest under sections 234A and 234B.

Summary of Judgment:

1. Validity of the Ex-Parte Order:
The assessee challenged the ex-parte order passed by the CIT(A) as being opposed to law and against the principles of natural justice. The Tribunal observed that the assessee had filed a written submission containing various documents, but the CIT(A) dismissed the appeal without considering these submissions.

2. Consideration of Facts and Grounds by CIT(A):
The Tribunal noted that the CIT(A) did not discuss the submissions made by the assessee and merely confirmed the assessment order. The CIT(A) failed to adjudicate each ground of appeal on its merits.

3. Justification of Ex-Parte Order under Section 144:
The assessee argued that the ex-parte order under section 144 was unwarranted as the return of income was duly supported by the 44AB report. The Tribunal found that the AO added the entire amount of sundry creditors and other amounts without proper investigation.

4. Assessment of Sundry Creditors and Cash Deposits:
The AO added Rs. 6,22,72,638/- under section 68 and Rs. 37,23,200/- and Rs. 2,39,272/- under section 69. The Tribunal observed that some sundry creditors were renowned companies and the AO could have collected information directly from them. The AO also failed to consider carry-forward amounts from earlier years.

5. Verification of Figures by AO:
The assessee contended that the AO made an addition of Rs. 5,07,087/- without verifying the figures correctly. The Tribunal found discrepancies in the AO's additions and noted that the AO should have called for details from the concerned bank and companies.

6. Consideration of Merits in Ex-Parte Order:
The Tribunal emphasized that the merits of the case should be considered even in ex-parte orders. The CIT(A) failed to consider the documents filed by the assessee under Rule 46A.

7. Genuineness of Sundry Creditors:
The assessee argued that the sundry creditors shown in the balance sheet were genuine transactions. The Tribunal noted that the AO could have verified the details directly from the creditors.

8. Opportunity to Respond to Notices:
The assessee claimed that notices were issued only through the portal, and they were unable to respond. The Tribunal highlighted the importance of giving a fair opportunity to the assessee.

9. Explanation of Cash Deposits:
The assessee contended that the cash deposits were part of withdrawals and disclosed income. The Tribunal found that the AO did not investigate the details properly.

10. Fair Opportunity to Submit Evidence:
The assessee argued that they were not given a fair opportunity to submit evidence. The Tribunal stressed the importance of substantial justice over procedural delays.

11. Excessiveness and Arbitrariness of Additions:
The Tribunal found the additions made by the AO to be excessive, arbitrary, and unreasonable.

12. Confirmation of Interest under Sections 234A and 234B:
The assessee challenged the confirmation of interest under sections 234A and 234B. The Tribunal did not specifically address this issue as it set aside the order for de-novo adjudication.

Conclusion:
The Tribunal set aside the order of the CIT(A) for de-novo adjudication after giving the assessee an opportunity to present their case. The appeal was allowed for statistical purposes.

← Previous Next →