Case Law Details
Tera Naturals Resources Pvt. Ltd. Vs ITO (ITAT Mumbai)
Introduction: In a recent case involving Tera Naturals Resources Pvt. Ltd. versus the Income Tax Officer (ITO), the Income Tax Appellate Tribunal (ITAT) in Mumbai issued an order directing the assessee to deposit a cost of Rs 25,000 in the Prime Minister Relief Fund. This action was taken due to the non-compliance behavior exhibited by the assessee during the appellate proceedings. This article provides an in-depth analysis of the case, including the background, reasons for the ITAT’s decision, and the implications for the assessee.
Analysis by Subheading:
1. Background of the Case: Provide an overview of the case, highlighting the issues under consideration and the initial assessment by the Income Tax Officer.
2. Non-Compliance by the Assessee: Explain how the assessee failed to comply with the statutory notices and provide the specific instances of non-compliance during the assessment and appellate proceedings.
3. Assessment and Addition: Discuss the assessment made by the Income Tax Officer, including any additions or adjustments made to the assessee’s income or liabilities.
4. Appeal to the CIT(A): Describe the actions taken by the assessee when appealing to the Commissioner of Income Tax (Appeals) and how those actions contributed to the non-compliance behavior.
5. ITAT’s Decision: Explain the rationale behind the ITAT’s decision to impose a cost of Rs 25,000 on the assessee and direct them to deposit it in the Prime Minister Relief Fund.
6. Implications for the Assessee: Analyze the impact of the ITAT’s decision on the assessee, including any financial penalties and the requirement to deposit the specified amount.
7. Legal Provisions and Rules: Provide insights into the relevant legal provisions and rules that empower the ITAT to impose such costs for non-compliance.
8. The Significance of Compliance: Emphasize the importance of compliance with statutory notices and proper engagement in the assessment and appellate proceedings.
9. Potential Remedies for the Assessee: Explore the options available to the assessee to address the situation, such as rectification, additional evidence submission, or further appeals.
Conclusion: The ITAT’s decision to direct Tera Naturals Resources Pvt. Ltd. to deposit a cost of Rs 25,000 in the Prime Minister Relief Fund due to non-compliance behavior underscores the significance of adhering to procedural requirements and actively participating in the tax assessment and appellate processes. Non-compliance can lead to financial penalties and unfavorable outcomes for taxpayers. Assessees should prioritize timely and thorough responses to statutory notices and engage proactively in resolving tax disputes to avoid adverse consequences. This case serves as a reminder of the consequences of non-compliance in tax matters and highlights the need for a responsible and cooperative approach when dealing with tax authorities.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal by the assessee is directed against order dated 25.01.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 20 18-19, raising following grounds:
1. (a) The Ld. CIT (Appeals) erred in law and facts in confirming the addition made by the National e-Assessment Center (NeAC) amounting to Rs.54,61,29,865/-u/s.68 and 69 of the Act without conducting any independent enquiries to pursue the actual facts of the case and merely relying on findings of the NeAC which itself was based on surmises and conjectures.
2. Briefly stated facts of the case are that for the year under consideration, of income filed the assessee was
consideration, the return of income filed by the assessee was
2. Briefly stated facts of the case are that for the year under consideration, the return of income filed by the assessee was selected for limited scrutiny for verification of foreign outward remittances sent by the assessee. The statutory notices under the Income- tax Act, 1961 (in short ‘the Act’) were issued and complied with. However, no details were submitted by the assessee to the Assessing Officer. The Assessing Officer (AO) in para 4 of the , has assessment order passed on 07.05.202 1 u/s 143(3) of the Act, has mentioned e various notices issued of which no compliance was made except seeking adjournment by the assessee. The Assessing Officer verified the available records and observed that in the profit and loss account, sales and purchases were disclosed at Rs. Nil. The other income was only Rs.500 and net loss of Rs.23,256/- was only claimed in the profit and loss account. The Assessing Officer also observed that the information collected from DBS Bank Ltd. was not found matching with the outward and inward foreign remittance. The assessee took the plea of the prevailing Covid situation and death of the accountant for seeking adjournment but still after availing the adjournments, ultimately no information was filed before the AO, thus, the AO decided the assessment on the basis of the evidence available on record and made addition for unexplained expenditure of outward foreign remittance amounting to Rs 54,61,29,865/- u/s 68 & 69 of the Act. On further appeal, the assessee took two adjournments before the Ld. CIT(A) and thereafter no compliance was made on other two occasions. In the circumstances, the Ld. CIT(A) dismissed the appeal of the assessee in default observing as under:
“6.2 The facts of the case as noted above are that the appellant has not pursued the appeal despite assessee being granted several opportunities. In response to the notices dated 29.08.2022 & 22.09.2022 the assessee had requested for adjournments which were considered at that time and further opportunities were given to the assessee. Vide notices dated 01.11.2022 & 10.01.2023 it was also made clear that already adjournments had been provided twice and in case no reply was received then it shall be deemed that you have nothing to say in this matter and the case would be adjudicated as per material available on record. Clearly therefore no details, documents or submissions have been provided to come to any conclusion other than those arrived at by the assessing officer in the assessment order. Being quite aware of these facts and the possible conclusions that may be drawn the assessee did not file any written submissions. That clearly Connotes that the assessee deems itself to be on weak footing and thus remained incommunicado. On perusal of assessment order also it gets revealed that assessee was not cooperating during assessment proceedings. As per assessment order, at first the assessee denied any foreign outward remittance then on being confronted with evidence from DBS bank in possession of the department the assessed decided, in its own wisdom, not to respond even after adjournments had been granted. If is evident from insight portal as well as the information provided by.DBS Bank the filetlas caffed for wis 133(6) of the IT Act that the assessee company remitted (substantial amounts through DBS Bank. The DBS Bank in its compliance furnished KYC of the accounts and bank statement of the assessee company.On close perusal of bank statement of the assessee total of remitted amount and remitting charges of 399 counts comes to Rs. 54,61,29,865/ and corresponding credits of 215 counts comes to Rs.54,61,16,548/On going through the underlying information elements, it was also evident that the remitted amount was notcommensurate with the balance sheet or profit or loss accounts of the company.
The department in the absence of any pursuance in the matter of any sort even till the date of passing order is left with no choice but to finalize the case against the assessee. There is no evidence propounded in respect of what was claimed in the “Statement of facts” namely wrong addition of Rs. 54,61,29,865/u/s 68 & 69 of the Act on account of outward foreign remittances. There are no evidences canvassed in respect of the other claims made in the ‘Statement of Facts’ either. The AO’s order needs no intervention. There is nothing to rebut what had been arrived at by the AO after diligent enquiries and sufficient opportunities. The findings, in respect of all the above issues,clearly require no” intervention.
3. Before the Tribunal, in response to the notice sent on, 22.05.2023 for hearing dated 19.06.2023none attended. Thereafter, another notice was issued for hearing dated 24.07.2023. On that day none attended but only a written request was filed for adjournment. The case was adjourned to 27/07/23 and a notice for intimation was issued through registered post and one copy of which was also served through income tax Department. The service. Depart report submitted by the ld mental Representative (DR) along with Inspector report is reproduced as under:
3.1 On hearing dated 27/7/23, again none attended however a written request was made on behalf of the authorised signatory of the assessee for seeking further time. Accordingly, matter was posted for hearing on 08.08.2023. On said date again an on behalf of Advocate Shri adjournment was filed Dharan V. Gandhi by his junior, but no letter of authority by the assessee was filed. So in first round of call, adjournment request was rejected and the person attended was asked to file letter of authority in favour of Mr Dharan V Gandhi. In second round of call of case, Mr Djaran V that he Gandhi appeared and submitted would file the said letter of authority by 2.00 P.M. of that day. Accordingly, on his undertaking, arguments on behalf of the assessee were heard. He also complied with his undertaking of filing the letter of authority before the time permitted.
4. We have heard rival submission of the parties. We find that the assessee is non-compliant not only before the Ld. CIT(A) but also before the Assessing Officer . The issue in dispute raised before us has not been decided on merit by the Ld. CIT(A) also. Before us the ld Counsel pleaded for restoring the case back to the Assessing AO, there will officer for the reason that once it is restored to the not be any liability to pay outstanding tax demand. We don’t agree before with said prayer, because us the assessee has not filed any additional evidences to be examined by the AO. It is the case of no representation before the ld CIT(A) ex-partee representation before the ld CIT(A). If the assesssee is so advised for filing additional evidence before the ld CIT(A), then he may follow the procedure laid down Rule 46A of Income-tax Rules, 1962 and then the ld CIT(A) may decide the issue in accordance with law. Therefore, we feel it , but looking appropriate to restore this issue back to the Ld. CIT(A) to the non-compliance behavior of the assessee before the lower, authorities and wastage of their time and energy, we impose a cost of Rs.25,000/-. The appeal is accordingly restored back to the Ld. CIT(A) subject to deposit of said cost to the Prime Minister Relief is order Fund within 15 days of receipt of this order. The Ld. CIT(A) shall verify deposit of the cost by the assessee before commencing the proceeding before him.
5. In the result, the appeal filed by the assessee is allowed for statistical purposes.
