Sachin Nagraj Chhajed Vs ITO (ITAT Pune)
The Pune Bench of the Income Tax Appellate Tribunal heard an appeal filed by the assessee against the order dated 28.06.2024 passed by the Commissioner of Income Tax (Appeals)/NFAC, Delhi for Assessment Year 2014-15. The dispute arose from an assessment framed under Sections 147 and 144 read with Section 144B of the Income Tax Act.
The assessee challenged the appellate order on several grounds, including violation of principles of natural justice, denial of adequate opportunity of hearing, confirmation of assessed income of Rs.63,26,560, and dismissal of the appeal without considering the facts and material available. The assessee also contended that replies intended for the appeal against the assessment order were inadvertently uploaded in the separate appeal proceedings relating to penalty under Section 271(1)(b).
The assessee was engaged in the business of civil construction as a contractor. Information gathered by the Department showed that during Assessment Year 2014-15, the assessee had received contract receipts amounting to Rs.7,90,82,498 from various parties. Since no return of income had been filed for the year, the Assessing Officer formed a belief that income had escaped assessment and issued notice under Section 148 through the e-filing portal.
The assessee did not file a return in response to the notice. Statutory notices under Section 142(1) and a show cause notice proposing best judgment assessment under Section 144 were also issued, but the assessee failed to respond. Based on Form 26AS reflecting contractual receipts subject to tax deduction under Section 194C, the Assessing Officer estimated net profit at 8% of gross receipts and added Rs.63,26,560 as undisclosed business income under Section 194C read with Section 44AD. The assessment was completed ex parte on 23.03.2023 under Sections 147 and 144 read with Section 144B.
The assessee challenged the ex parte assessment before the Commissioner (Appeals). Although there was a delay of 14 days in filing the appeal, the delay was condoned. However, the Commissioner (Appeals) dismissed the appeal ex parte due to non-compliance with notices issued during appellate proceedings. The Commissioner (Appeals) observed that despite repeated notices, the assessee failed to furnish supporting evidence or arguments and therefore the addition made by the Assessing Officer was sustained.
On merits also, the Commissioner (Appeals) upheld the Assessing Officer’s estimation of profit at 8% of contractual receipts, observing that sufficient opportunities had been granted during assessment proceedings as well as appellate proceedings, but the assessee did not cooperate.
Before the Tribunal, the authorised representative submitted that there was no deliberate non-compliance of notices issued by the Commissioner (Appeals)/NFAC. Referring to the affidavit of the assessee, it was explained that the ex parte assessment proceedings coincided with a robbery at the assessee’s residence and the murder of his mother, due to which the assessee could not properly respond during assessment proceedings.
The authorised representative further submitted that in appellate proceedings, the response intended for the appeal against the assessment order was inadvertently uploaded in the wrong electronic window relating to the penalty appeal under Section 271(1)(b). According to the assessee, all relevant documents and evidence had in fact been filed, though in the incorrect portal window. Reliance was placed on the decision of the Punjab and Haryana High Court in CIT v. Dev Raj holding that an inadvertent mistake is not equivalent to gross negligence or wilful neglect. The assessee requested another opportunity to present the case on merits.
The Departmental Representative did not object to the request for remand.
After examining the record, the Tribunal observed that there existed sufficient cause for non-compliance during assessment proceedings. The Tribunal also accepted the explanation that replies meant for the assessment appeal were mistakenly uploaded in the penalty appeal window. It noted that the assessee had supporting documentary evidence which had been filed, though unintentionally in a different proceeding.
The Tribunal further observed that the Commissioner (Appeals) had simply concurred with the findings of the Assessing Officer without independently examining the merits of the case. According to the Tribunal, this amounted to violation of Section 250(6) of the Income Tax Act.
Considering the facts and circumstances, the Tribunal set aside the order of the Commissioner (Appeals)/NFAC and restored the matter back for fresh adjudication on merits. The Tribunal directed that a speaking order be passed after granting reasonable opportunity of hearing to the assessee and after considering the supporting documents and evidence to be produced by the assessee. Accordingly, the appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
