2022 (7) TMI 63 - AT - Income Tax

Determination of income - adopting the profit margin of 8% on the turnover - case of the assessee was selected for cash deposits in savings bank account(s) more than the turnover - HELD THAT - As AO in the order passed u/s 143(3) after analyzing the submissions made by the assessee found that the assessee has a turnover and thereafter adopting the profit rate of 8% determined the total income of the assessee - We find the CIT (A) in her ex-parte order sustained the additions made by the AO since nothing was brought before her to take a contrary view than the view taken by the AO - It is the submission for the assessee that in the interest of justice, the assessee should be given an opportunity to explain his case before the CIT (A). Considering all deem it fit and proper to restore the issue to the file of the CIT (A) with a direction to grant one final opportunity to the assessee to substantiate his case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the CIT (A) without seeking any further adjournment under any pretext failing which the CIT (A) is at liberty to pass appropriate order as per law - The grounds raised by the assessee are accordingly allowed for statistical purposes.

Summary

Issues:
1. Condonation of delay in filing appeal
2. Assessment based on estimation of income
3. Opportunity granted to the assessee by CIT (A)

Condonation of Delay in Filing Appeal:
The appeal was filed with a delay of 1054 days, and the assessee submitted a condonation petition citing health issues, hospitalization, and COVID-19 pandemic as reasons for the delay. The affidavit filed by the assessee detailed the medical conditions causing the delay and referenced the Supreme Court's extension of time limits due to the pandemic. The Tribunal, after considering the contents of the condonation application and affidavit, relied on a Supreme Court decision and decided to condone the delay in filing the appeal.

Assessment Based on Estimation of Income:
The assessee's return of income for A.Y 2015-16 was selected for limited scrutiny to verify cash deposits in savings accounts. The Assessing Officer determined the income by adopting an 8% profit margin on the turnover, resulting in a total income of Rs. 15,96,200. The CIT (A) sustained the additions made by the Assessing Officer in an ex-parte order as the assessee did not appear before her. The assessee raised grounds of appeal challenging the estimation of income and the assessment order. The Tribunal found that the CIT (A) did not grant sufficient opportunity to the assessee to substantiate his case and decided to restore the issue to the CIT (A) for granting one final opportunity to the assessee to explain his case.

Opportunity Granted to the Assessee by CIT (A):
The Tribunal considered the arguments of both sides regarding the opportunity granted by the CIT (A) to the assessee. The counsel for the assessee requested another opportunity to substantiate the case, while the DR opposed, stating that sufficient opportunities were already given. The Tribunal, after reviewing the orders and submissions, decided to grant one final opportunity to the assessee to present his case before the CIT (A) in the interest of justice. The grounds raised by the assessee were allowed for statistical purposes, and the appeal was allowed on those grounds.

In conclusion, the Tribunal allowed the appeal for statistical purposes, condoning the delay in filing the appeal, directing the CIT (A) to grant the assessee one final opportunity to substantiate the case, and deciding in favor of the assessee on the grounds raised.