Case Law Details
Shree Construction Vs ITO (ITAT Pune)
Shree Construction challenged an assessment order for AY 2013-14, which resulted in a significant income adjustment due to alleged discrepancies in tax deducted at source (TDS). The Assessing Officer (AO) determined that the firm failed to deduct TDS on expenses amounting to ₹4.05 crore, leading to an addition of ₹6.52 crore to the total income. The assessee’s appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] was dismissed as the firm failed to provide supporting documents. However, the assessee argued that it was not given a fair opportunity to present its case, citing unavoidable circumstances and errors in tax audit reporting.
Upon review, the Income Tax Appellate Tribunal (ITAT) Pune found that CIT(A) had denied adjournment requests without proper reasoning and relied heavily on the AO’s assessment. ITAT held that in the interest of justice, the case should be reconsidered, allowing the assessee to submit the required evidence. The matter was remanded to CIT(A) for fresh adjudication, instructing the assessee to actively participate and avoid unnecessary adjournments. ITAT also permitted CIT(A) to seek a remand report from the AO, ensuring a thorough review before a final decision is made. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee pertaining to the Assessment Year 2013-14 is directed against the order dated 13.08.2024 passed by the National Faceless Appeal Centre, Delhi [in short ‘NFAC’) which inturn is arising out of the Assessment order dated 22.09.2021 passed u/s.147 r.w.s.144 r.w.s.144B of the Act.
2. Briefly, the facts of the case are that the assessee is a Partnership firm and has filed the return of income for the A.Y. 2013-14 declaring total income of Rs.4,35,425/- on 30.09.2013. Assessment was completed u/s.143(3) of the Act determining total income at Rs.15,36,750/-. Thereafter, based on the information that the income chargeable to tax has escaped assessment, the case was reopened by issuance of notice u/s.148 of the Act. Various other notices were also issued to the assessee to which there was no compliance from the side of assessee. In the event, ld. AO based on the profit and loss account which was filed by the assessee along with return of income, noticed that on an amount of Rs.4,05,75,513/- relating to the various expenses the assessee has not deducted TDS. Further, the AO noticed various discrepancies and eventually made addition to the tune of Rs.6.52 crore and determined the total income of the assessee at Rs.6.56 crore as against the returned income of Rs.4,35,425/- vide order dated 24.08.2021 passed u/s.147 r.w.s.144/144B of the Act.
3. Aggrieved assessee filed an appeal before the ld.CIT(A) who vide impugned order dated 13.08.2024 affirmed the action of the Assessing Officer on the ground that the assessee failed to produce documentary evidence and other satisfactory explanations.
4. Now the assessee is in appeal before the Tribunal by raising the following grounds :
“1. On facts and circumstance prevailing in the case and as per provisions and scheme of the Act, it be held that the notice issued under section 148 of the Act is bad in law and contrary to the provisions of the Act. The Appellant be granted just and proper relief in this respect.
2. On facts and circumstances prevailing in the case and as per provisions and scheme of the Act, it be held that the order passed by Commissioner of Income-tax “CIT(A)” is without providing adequate opportunity of being heard in accordance with the principles of natural justice. The assessment so framed be set aside. Appellant be granted just and proper relief in this respect.3
3. On facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 (‘the Act’) it be held that addition of Rs.4,05,75,513/- made under section 40(a)(ia) of the Act by the NaFAC and further upheld by the First Appellate Authority is unwarranted, unjustified and contrary to the provisions of the Act and facts prevailing in the case. The addition so made shall be deleted. The Appellant be granted just and proper relief in this respect.
4. On facts and circumstances prevailing in the case and as per provisions & scheme of the Act it be held that addition of Rs.35,55,175/- made under section 40 of the Act by the NaFAC and further upheld by the First Appellate Authority is unwarranted, unjustified and contrary to the provisions of the Act and facts prevailing in the case. The addition so made shall be deleted. The Appellant be granted just and proper relief in this respect.
5. On facts and circumstances prevailing in the case and as per provisions & scheme of the Act it be held that addition of Rs. 2,00,00,000/- made by the NaFAC and further upheld by the First Appellate Authority is unwarranted, unjustified and contrary to the provisions of the Act and facts prevailing in the case. The addition so made shall be deleted. The Appellant be granted just and proper relief in this respect.
6. On facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 (‘the Act’) it be held that addition of Rs.11,31,665/- made by the NaFAC and further upheld by the First Appellate Authority is unwarranted, unjustified and contrary to the provisions of the Act and facts prevailing in the case. The addition so made shall be deleted. The Appellant be granted just and proper relief in this respect.
5. During the course of hearing, ld. Counsel for the assessee submitted ld.CIT(A) has not given proper opportunity to the assessee. Given an opportunity, the assessee is now in a position to substantiate its case before the lower authorities with documentary evidences. Further, the ld. Counsel for the assessee referred to the certificate issued by Tax Auditor that he has mistakenly selected ‘No’ instead of ‘Yes’ in the relevant column in Form No.3CD in respect of clause 27(a). It is therefore prayed for remanding the matter to the file of ld.CIT(A) for afresh adjudication.
7. On the other hand, ld. Departmental Representative opposed for remanding the matter on the ground that sufficient opportunities have been provided to the assessee and it could not avail them. Therefore, the authorities were right in dismissing the appeal confirming the additions.
8. We have heard both the sides and perused the record placed before us. It is an admitted fact that the assessee has neither participated in the proceedings before the AO as well as ld.CIT(A). A perusal of para No.6.2 would reveal that in response to notice of hearing dated 25.06.2024, 05.07.2024 and 22.07.2024, the assessee sought adjournment. It appears that the ld.CIT(A) has neither given any reasons for rejection of such adjournment applications or otherwise and chose to dismiss the appeal and mainly relied on the Assessment order. Contents of para 7.1 of the impugned order with regard to Ground No.1 will make clear the aforesaid position and the same is reproduced below :
“7.1 I have perused the this ground of addition by the AO and the explanation given by him for adding the amount of Rs.4,05,75,513/-. The AO during the course of the assessment proceeding issued multiple notices to the appellant to provide the books of accounts. But the appellant has not responded to the same.
The appellant was asked for substantiating his contention with evidence at the time of appellate proceedings also. However, no response or evidence of any type has been filed by the appellant.
After considering the above I am of the opinion that no interference is called for in the AO’s order and therefore, this ground of appeal is dismissed and addition of Rs.4,05,75,513/- is sustained.”
Similar finding has been given with respect to Ground Nos. 2, 3 and 4. In light of these facts, we are of the view that in the larger interest of justice, assessee should be given an opportunity to represent its case effectively before the authorities. In view thereof, without dwelling into merits of the issue, the issues on merits are being remitted to the file of ld.CIT(A). If required, the ld.CIT(A) may call for the remand report from the Jurisdictional Assessing Officer and after obtaining the counter comments from the assessee he should decide the appeal in accordance with law after giving reasonable opportunity of hearing to the assessee. Assessee is also directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause, failing which the ld.CIT(A) shall be free to proceed in accordance with law. Findings of the ld.CIT(A) is set aside and effective grounds of appeal raised by the assessee are allowed for statistical purposes.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 21st day of January, 2025.
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