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2020 (9) TMI 913 - AT - Income TaxBogus purchase - information received from the Sales Tax Department, Govt of Maharashtra that the assessee has obtained bogus purchase bills - HELD THAT - During the course of assessment proceedings, the AO asked the assessee to produce the party i.e Hanuman Steels (Prop. Shri Jignesh K Desai) along with evidence to verify the identity of the party and the genuineness of the purchase transactions. In response to it, the assessee filed before the AO ledger extracts of the said party thereby stating that payments have been made through account payee cheque only. The assessee could not produce the said party before the AO. Issue revolves around the genuineness of the purchases and also the fact that the assessee had sought adjournment before the Ld. CIT(A) on 05.11.2018 and 10.01.2019, whereas the assessee failed to appear before him on the final opportunity given by the Ld. CIT(A) on 17.01.2019, we are of the considered view that the assessee may be given another opportunity by the first appellate authority before deciding the appeal on merit. Therefore, we set aside the order of the Ld. CIT(A) and restore the matter back to him to decide the case on merit - Decided in favour of assessee for statistical purposes.
Issues Involved:
Appeal against order u/s. 143(3) r.w.s. 147 of the Act, Ex-parte order by CIT(A), Failure to consider grounds of appeal, Disputed purchases treated as bogus, Taxation of entire purchase amount instead of profit element, Lack of compliance by assessee in appellate proceedings. Analysis: 1. Appeal against order u/s. 143(3) r.w.s. 147 of the Act: The appeal was filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2009-10 under section 143(3) read with section 147 of the Income Tax Act, 1961. The grounds of appeal challenged the legality and factual accuracy of the Assessing Officer's order. 2. Ex-parte order by CIT(A): The CIT(A) dismissed the appeal ex-parte, citing non-attendance of the appellant at the hearings. The appellant contended that there was no failure to attend the hearings and objected to the ex-parte decision. The appellant argued that the CIT(A) adjourned the hearing multiple times, and the appellant did not default in attending any scheduled hearing. 3. Failure to consider grounds of appeal: One ground of appeal highlighted the Assessing Officer's failure to address objections to the issuance of notice u/s 148. The CIT(A) was criticized for not considering this ground, which alleged a contravention of a Supreme Court directive. The failure to address this ground was a point of contention in the appeal. 4. Disputed purchases treated as bogus: The CIT(A) held that purchases totaling a specific amount were unsubstantiated and should be considered as bogus purchases. The decision was based on the appellant's failure to provide evidence supporting the genuineness of the purchases, especially in the context of the appellant's business operations as a civil contractor. 5. Taxation of entire purchase amount instead of profit element: The CIT(A) was criticized for taxing the entire purchase amount without considering the profit element embedded in the purchases. The appellant argued that only the profit component should be taxed, not the entire purchase amount. This issue raised concerns about the correct taxation treatment of the disputed purchases. 6. Lack of compliance by assessee in appellate proceedings: The Departmental Representative pointed out the lack of compliance by the assessee during the appellate proceedings. Despite multiple opportunities for hearings, the appellant or its representatives did not attend. This lack of compliance led to the CIT(A) deciding the case on merit based on the available records. In conclusion, the ITAT Mumbai allowed the appeal for statistical purposes, setting aside the CIT(A)'s order and remanding the case for a fresh decision after providing the assessee with a reasonable opportunity to be heard. The decision highlighted the importance of procedural fairness and the right to be heard in appellate proceedings.
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