Case Law Details
Surya Homes Vs ITO (ITAT Bangalore)
ITAT Bangalore remitted the matter back to CIT(A) so that assessee can file necessary documents with regard to disallowance made under section 37 of the Income Tax Act as order was passed by CIT(A) without adjourning the matter as sought by assessee.
Facts- During assessment proceedings, AO noted that assessee has made payment to Nikhil Deepak Singh of Rs.30 lakhs and TDS has been deducted. In this regard assessee was asked to provide details of payment made to Nikhil Deepak Singh. However, assessee did not provide any details relating to payment made to Nikhil Deepak Singh amounting to Rs.30 lakhs. AO noticed that assessee is unable to prove the payment made to Nikhil Deepak Singh for business purpose. No any proof of services rendered was submitted to the AO. Accordingly the amount appearing in Form 26AS of Rs.30 lakhs was disallowed and added back to total income of assessee. There was similar observation in regard to payment of Rs. 10 lakhs made to Himani Rajasekar Naidu. Accordingly he disallowed Rs.40 lakhs u/s. 37 and added back to total income of assessee.
First Appellate Authority (FAA) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the ld. FAA gave opportunity to the assessee, adjournment was sought by the assessee. Case was fixed on 17.7.2024 and assessee has filed adjournment petition and sought time for two weeks. However, the ld. FAA has passed the order on 01.08.2024. Considering the facts of the case and in the interest of justice, we remit the issue to the file of CIT(Appeals) for fresh consideration and decision as per law. The assessee is directed to file necessary documents that would be essential and required for substantiating his case and for proper adjudication by the revenue authorities. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings and in case of further default, the assessee shall not be entitled to any leniency.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal is filed by the assessee against the order dated 01.08.2024 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2018-19.
2. Briefly stated the facts of the case are that the assessee filed return of income on 29.10.2018 declaring total income of Rs.51,31,500. The case was selected for complete scrutiny and statutory notices issued to the assessee. The assessee filed reply. From the details the AO noted that assessee has made payment to Nikhil Deepak Singh of Rs.30 lakhs and TDS has been deducted. In this regard assessee was asked to provide details of payment made to Nikhil Deepak Singh. However, assessee did not provide any details relating to payment made to Nikhil Deepak Singh amounting to Rs.30 lakhs. A show cause notice was issued to assessee that as per Form 26Q payment was made to Nikhil Deepak Singh u/s. 194H of Rs.30 lakhs. The assessee filed reply on 17.02.202 1 and submitted that actual payment is Rs. 15 lakhs only, by mistake assessee has paid TDS twice, first at the time of payment and then at the time of receipt of bill. Later on same was rectified in the TDS return. Further in the case of assessee, there was no invoice raised by Nikhil Deepak Singh, no agreement was produced for verifying kind of services/work to be done. Acknowledgement of payment made is also not showing nature of works done (kind of payment). In the copy of ledger, there is no separate payment made of Rs. 15 lakhs and lumpsum payment under the head ‘commission’ is recorded. Accordingly the AO noticed that assessee is unable to prove the payment made to Nikhil Deepak Singh for business purpose. No any proof of services rendered was submitted to the AO. Accordingly the amount appearing in Form 26AS of Rs.30 lakhs was disallowed and added back to total income of assessee. There was similar observation in regard to payment of Rs. 10 lakhs made to Himani Rajasekar Naidu. Accordingly he disallowed Rs.40 lakhs u/s. 37 and added back to total income of assessee. Aggrieved from the above order, the assessee filed appeal before the First Appellate Authority (FAA).
3. The ld. FAA allowed five opportunities to the assessee. The assessee on two occasions sought for adjournment and did not respond to two notices and on 15.11.2022 there was enabling of communication window issued by NFAC. However, the assessee did not file any submission in the grounds of appeal and only sought adjournment, without giving any cogent reasons. He dismissed the appeal. Aggrieved, the assessee is in appeal before the ITAT.
4. The ld. AR submitted that during the course of assessment proceedings before the CIT(Appeals), assessee sought for adjournment for gathering documents and information from various sources and asked time for two weeks. The ld. FAA has decided the issue ex parte without giving any further opportunity to the assessee. He further submitted that on merits of the case that the AO has also not considered the submission of the assessee, there was payment made to Nikhil Deepak Singh of only Rs. 15 lakhs, however the AO has wrongly considered it as Rs.30 lakhs, whereas Form 26Q has been Accordingly he requested that the matter may be sent back to the ao for verification of actual payment made to Nikhil Deepak Singh and for proving genuineness of payments made to Himani Rajasekar Naidu.
5. The ld. DR relied on the order of the lower authorities and submitted that both the authorities below provided proper opportunity to the assessee for substantiating its case. The genuineness of the payments could not be proved with cogent material. Therefore the AO has rightly disallowed payment made of Rs.40 lakhs (30+ 10 lakhs) u/s. 37 of the Act. Before the ld. FAA, the assessee sought for adjournment only, he could have filed the documents available during the course of assessment and after revising Form 26Q for proving the payment of Rs. 15 lakhs as argued by the ld. AR of the assessee. Even before the ITAT, the assessee has not produced anything.
6. Considering the rival submissions and perusing the entire material on record in the light of order of authorities below, we note that the ld. FAA gave opportunity to the assessee, adjournment was sought by the assessee. Case was fixed on 17.7.2024 and assessee has filed adjournment petition and sought time for two weeks. However, the ld. FAA has passed the order on 01.08.2024. Considering the facts of the case and in the interest of justice, we remit the issue to the file of CIT(Appeals) for fresh consideration and decision as per law. The assessee is directed to file necessary documents that would be essential and required for substantiating his case and for proper adjudication by the revenue authorities. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings and in case of further default, the assessee shall not be entitled to any leniency.
7. In the result, the appeal by the assessee is allowed for statistical purposes.
Pronounced in the open court on this 12th day of November, 2024.
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