The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) held that giving an opportunity to the assessee to produce all the relevant documents before the Assessing Officer for fact verification would meet the ends of justice.
The assessee is a company, engaged in the business of metals, filed its return of income for the assessment year 2013-14 on 18/10/2013, declaring a total income of Rs. 76,44,000/-. After examining the material on record, Assessing Officer completed the assessment under section 144 of the Income Tax Act, 1961, by making addition under section 68 of the Act at Rs. 1,03,72,593/- and Rs. 79,94,090/- towards un-explained expenses.
Aggrieved by the said order of the Assessing Officer, assessee preferred appeal before the CIT(A). Order of the CIT(A) reads that in spite of several opportunities granted during the appellate proceedings, to file the submissions and documents in support of grounds of appeal, assessee failed to avail the same.
CIT(A), therefore, found no infirmity in the assessment order and accordingly confirmed the addition made by the Assessing Officer and also relying on the decisions of various Hon’ble High Courts, dismissed the appeal of assessee both on account of non-prosecution and on merits.
After hearing both the parties, the tribunal noted that it could be seen from the orders of the authorities below that the assessment order is an order passed under section 144 of the Act and the assessee did not enter appearance. It could be seen from the record that appeal was filed before the CIT(A) on 11/06/2016.
It is also fact that during the appellate proceedings also, the assessee failed to submit any substantive evidence to prove the identity, creditworthiness and genuineness of the current liabilities/unsecured loans and trade creditors and genuineness of the expenses incurred by it for business purposes.
Therefore, Assessing Officer treated such current liabilities/unsecured loans as un-explained cash credits under section 68 of the Act and made an addition and in the absence of any evidence, disallowed 5% of the expenses debited in profit and loss account. Sustaining the same, CIT(A) dismissed the appeal of assessee.
It is pertinent to mention here that Covid Pandemic ensued in India in March, 2020. There is nothing to disbelieve the contention of the assessee that due to that the employees of the company could not attend the office and hence they could not arrange the necessary documents/papers with regard to this appeal.
The tribunal was of the considered opinion that giving an opportunity to the assessee to produce all the relevant documents before the Assessing Officer for fact verification would meet the ends of justice.
At the same time however, the bench wanted to indicate their mind to the assessee that this sort of non co-operation will not be without any consequences and for that purpose, the assessees was directed to pay costs of Rs. 5,000/- to the appeal to the credit of the Prime Minister’s Relief Fund, within one month from the date of service of this order on the assessee.
The two member bench consisting of Rama Kanta Panda (Vice President) and K. Narasimha Chary (Judicial member) held that the Assessing Officer will entertain the appeal of the assessee, producing the proof of remitting costs.
Hence, the tribunal bench quashed the orders of the authorities below and restored the issue to the file of the Assessing Officer to decide it, after hearing the assessee. It was made clear that it is the last opportunity to the assessee and no further lenience will be taken. Thus the appeal was allowed.
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