Case Law Details
Grand Venezia Commercial Towers Pvt. Ltd. Vs ACIT (ITAT Delhi)
Introduction: In the case of Grand Venezia Commercial Towers Pvt. Ltd. vs. ACIT, the Income Tax Appellate Tribunal (ITAT) Delhi addressed a critical issue of notices for hearings being sent to the wrong address. The ITAT directed a reevaluation of the case due to the violation of principles of natural justice. This article delves into the details of the case, offers a comprehensive analysis of the situation, and concludes with the significance of adhering to principles of natural justice in tax matters.
Detailed Analysis:
1. Background of the Case: The case revolves around an appeal filed by Grand Venezia Commercial Towers Pvt. Ltd. (the “assessee”) against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated March 20, 2023, concerning the assessment year 2016-17. The assessee raised several grounds of appeal challenging the order.
2. Incorrect Notices Sent: The central issue in this case was that the notices for hearings were sent to the wrong address. Instead of reaching the correct address (28, Raja Garden, New Delhi-110015), the notices were sent to 133A Mohan Cooperative Industrial Estate, Mathura Road, Delhi-110044. Additionally, email notices were also dispatched to the wrong email address.
3. Assessment and Ex Parte Decision: The assessee, engaged in real estate, construction, and development, had initially filed its return of income electronically, declaring a loss of Rs. 4,95,87,002. The assessing officer (AO) conducted a scrutiny assessment, resulting in several additions to the returned income, including disallowances under various sections of the Income Tax Act.
4. Ex Parte Dismissal by CIT(A): Subsequently, the assessee appealed the AO’s decision before the Commissioner of Income-tax (Appeals) (CIT(A)). However, the CIT(A) dismissed the appeal ex parte, citing the assessee’s failure to respond and participate in the appeal proceedings, despite notices being served. The dismissal was made without examining the merits of the case.
5. ITAT’s Decision: The ITAT found that the dismissal of the appeal by the CIT(A) without considering the merits of the case was premature. It noted that the notices for hearings were sent to the wrong address, which amounted to a violation of principles of natural justice. In the interest of justice, the ITAT set aside the impugned order and directed the CIT(A) to restore the grounds of appeal for fresh consideration. The ITAT emphasized the importance of affording the assessee a reasonable opportunity to be heard and to evaluate the merits of the case.
Conclusion: The case of Grand Venezia Commercial Towers Pvt. Ltd. vs. ACIT before the ITAT Delhi serves as a reminder of the critical importance of adhering to principles of natural justice in tax matters. Notices sent to incorrect addresses or communication errors can potentially infringe upon the rights of taxpayers to a fair and just hearing.
In this instance, the ITAT’s decision to set aside the impugned order and direct the reconsideration of the appeal highlights the commitment to ensuring that legal proceedings are conducted in a just and equitable manner. The case underscores the significance of granting taxpayers a reasonable opportunity to present their case and have their appeals considered on merit.
Ultimately, adherence to principles of natural justice is not only a legal requirement but a fundamental aspect of a fair and transparent tax assessment and appeals process.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 20.03.2023, pertaining to the assessment year 2016-17. The assessee has raised following grounds of appeal:
“1. That CIT(A) has grossly erred in law and on facts in passing an order against the principle of natural justice and against the principles of law.
2. That CIT(A) has grossly erred in law and on facts in making an addition of Rs. 3,44,700/- u/s 14A of the Act.
3. That the CIT(A) has failed to appreciate that assessee has not earned any tax exempt income during the year and therefore no disallowance can be made u/s 14A of the Act.
4. That CIT(A) has erred in law and on facts in making addition of Rs. 77,55,5 73 u/s 37(1) of the Act
5. That CIT(A) has erred in law and on facts in making addition of Rs. 3,23,000 u/s 40(a)(i) of the Act
6. That CIT(A) has erred in law and on facts in making addition of Rs. 60,000 u/s 40(a)(ia) of the Act
7. That CIT(A) has erred in law and on facts in passing assessment order without considering material on record.
8. That CIT(A) has erred in law and on facts in passing assessment order on surmises and conjectures.
9. The appellant craves leave to add, amend, alter and/or delete any of the above grounds of appeal at or before the time of hearing.”
2. Facts giving rise to the present appeal, in brief, are that in this case the assessee had filed its return of income through electronic mode on 20.10.2017, declaring loss of Rs. 4,95,87,002/-. The assessee is engaged in the business of real estate, construction and development. The case was taken up for scrutiny assessment and assessment u/s 143(3) of the Income-tax Act, 1961, hereinafter referred to as the “Act”, was framed vide order dated 23.12.2018. Thereby the AO made various additions to the returned income. The AO by invoking the provisions of Section 14A of the Act made addition of Rs. 3,44,700/-. He disallowed expenditure u/s 37(1) of the Act at Rs. 77,54,573/-; and further made disallowance u/s 40(a0(i) at Rs. 3,23,000/- and disallowance u/s 40(a)(ia) of the Act at Rs. 60,000/-. Thus, the AO assessed loss at Rs. 4,11,04,729/- as against the returned loss of Rs. 4,95,87,002/-. Aggrieved against this the assessee preferred appeal before the learned CIT(A), who dismissed the appeal ex parte to the assessee. Aggrieved, the assessee is in appeal before this Tribunal.
3. At the outset learned counsel for the assessee pointed out that notices of hearing issued by the AO were at a wrong address. He contended that the notice was required to be issued at 28, Raja Garden, New Delhi-110015. However, the notice was issued at 133A Mohan Cooperative Industrial Estate, Mathura Road, Delhi-110044. Further, notice through e-mail was also sent at the wrong mailing
4. Learned DR, however, supported the impugned order of the learned CIT(A).
5. We have heard rival submissions. We find that the learned CIT(A), without adverting on merits of the case, has dismissed the appeal by observing as under:
“4. During the appeal proceedings, the assessee was provided an opportunity of being heard on 24.07.2020, 21.01.2021, 24.01.2023 and 20.02.2023 however, no details are filed despite the fact that notices were duly served. The approach of the assessee amply shows that it is not interested in prosecuting the appeal. Therefore, having considered the entire facts of the case and evidence available on record, the appeal so filed is dismissed.”
5.1. Therefore, looking to the fact that notices were sent at a wrong address, it would sub serve the interest of principles of natural justice if the impugned order is set aside and the grounds of appeal are restored to the file of learned CIT(A) for decision afresh after affording reasonable opportunity of being heard to the assessee and adverting on merit of the case. We order accordingly. Grounds raised in this appeal are allowed for statistical purposes.
6. In the result, appeal of the assessee stands allowed for statistical purposes only.
Order pronounced in open court on 10th October, 2023.
