Case Law Details
Saiganapath Hotel Pvt. Ltd. Vs ITO (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT) Bangalore has remitted the appeal filed by Saiganapath Hotel Pvt. Ltd. for the assessment year (AY) 2012-13 back to the Commissioner of Income Tax (Appeals) [CIT(A)] for reconsideration. The appeal stemmed from the assessee’s failure to respond to multiple notices issued by the CIT(A), which led to an ex-parte order confirming the additions made by the Assessing Officer (AO). The AO had reassessed the company’s income, specifically due to a significant cash deposit of Rs. 2,55,78,317/- and had concluded an income of Rs. 1,31,95,698/-.
The core issue in the appeal was the lack of response from the assessee to the CIT(A)’s notices issued between February 2021 and June 2024. The assessee argued that its non-responsiveness was due to an ongoing legal dispute with the State Bank of India (SBI) before the Debt Recovery Tribunal, which had involved substantial amounts and diverted the company’s attention away from the income tax appeal. The Tribunal noted this explanation and emphasized the importance of fair play and natural justice, directing the CIT(A) to review the case on its merits once again and provide an opportunity to the assessee to submit the necessary documents.
The ITAT’s decision highlights the principle of natural justice, ensuring that the assessee receives a fair chance to present its case. The Tribunal’s remittance order allows the CIT(A) to seek the necessary documents from the assessee and re-evaluate the matter with all available information. This case underscores the importance of responding to notices, but also acknowledges that genuine legal issues, such as the SBI litigation, can impede an assessee’s ability to fully participate in tax proceedings.
The ITAT has granted the appeal for statistical purposes, and the matter will now be reconsidered by the CIT(A) in light of the facts provided.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [CIT(A)] dated 16.07.2024 for AY 2012-13.
2. The assessee has filed the following grounds of appeal: –
“I. The order of the learned Commissioner of Income-tax (Appeals) is opposed to the law, facts and circumstances of the case.
II. The order is passed against the principle of natural justice and thus, liable to be quashed.
III. The order passed by Learned CIT(A) indicates issuance of notices on multiple dates not responded to by the Assessee. However, no notices were received on the email id updated on the IT Therefore, the order passed is against the principles of natural justice as no reasonable opportunity was afforded to the Assessee to present the case.
IV. The learned CIT(A) has erred in concluding that the cash deposits remained un-explained in line with the original order passed by Learned AO despite the submission of Directors statement of affairs indicating the source & application of funds.
V. The Appellant craves leave to add, alter, substitute, and delete any or all the grounds of appeal urged ”
3. The case was selected for reassessment u/s. 147 of the Income Tax Act, 1961 (the Act) for the reason that there is a cash deposit of Rs. 2,55,78,317/-. The Assessing Officer (AO) issued notices u/ss. 148 & 142(1) of the Act calling on the assessee to produce relevant details. The assessee submitted details such financial statements, bank statement, ledger account and other relevant details along with acknowledgement of having file the return of The AO completed the assessment u/s. 143(3) r.w.s. 147 of the Act assessing the income of the assessee at Rs. 1,31,95,698/- towards cash deposit made during the financial year 2011-12.
4. Aggrieved, assessee filed further appeal before the CIT(A). The CIT(A) passed an exparte order confirming the addition made by the AO for the reason that the assessee has not responded to the notices issued. Aggrieved, assessee filed appeal before the Tribunal.
5. We have heard the rival contentions and perused the material on record. The assessment was completed u/s. 143(3) r.w.s. 147 in which the AO has made an addition of Rs. 1,31,95,698/-. The assessee in the statement of facts has submitted before the CIT(A) that the assessee was in the pre-operative construction stage and had no business income. The assessee further had stated that as on 31.03.2012 the investment in capital work-in-progress was Rs. 14,8,17,317/- and since the company had no income, the assessee did not file any return of income. We notice that the CIT(A) has issued 4 notices u/s. 250 of the Act from February, 2021 to June, 2024. Since the assessee did not respond to the notices, the CIT(A) has dismissed the appeal after considering the materials available on record. When queried by the bench on the reasons for not responding to the notices issued by the ld. CIT(A), the learned A.R. submitted that the assessee had a litigation proceeding going on with the State Bank of India (SBI) before the Debt Recovery Tribunal wherein the amount involved were substantial and that the assessee was tied up in the said proceedings hence could not attend the appellate proceeding before CIT(A). The learned A.R. brought on record the final order passed by the Debt Recovery Tribunal of Bangalore, Karnataka in support of the claim that the assessee was engaged in litigation with the SBI. The learned A.R., therefore, prayed that one more opportunity may be given to the assessee to contend the impugned issue on merits before the CIT(A). Considering the facts and circumstances of the case, in the interest of natural justice and fair play, we are of the considered view that the assessee be given one more opportunity and accordingly we remit the appeal back to the ld. CIT(A). The CIT(A) is directed to call for necessary details as may be required to adjudicate the impugned issue on merits. The assessee is directed to furnish the necessary details as may be called for by the ld. CIT(A) and cooperate with the appellate proceedings. It is ordered accordingly.
6. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 24th October, 2024.
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