The Income Tax Appellate Tribunal (ITAT), Jaipur Bench ruled that the crisis due to non-recovery of Bank Dues is a ‘Reasonable Cause’ for not producing documents during Assessment.
The assessee, M/s Ishika Foods (P) Ltd. has filed its return of income declaring loss of Rs. 36,710/-. The assessment was completed under section 144 of the Act wherein the assessed income was determined by AO at Rs. 7,25,02,276/-.
Being aggrieved, the assessee carried the matter in appeal before the CIT(A), Alwar, and also submitted the additional evidence before the ld. CIT(A). Thereafter, the CIT(A) called for the remand report from the Assessing Officer wherein the Assessing Officer examined the additional evidence, as well as submission made by the assessee, and various additions made by the Assessing Officer during the course of assessment proceedings, were held not sustainable on account of additional evidence, submissions, the books of accounts, bank statement and other details submitted by the assessee during the remand proceedings.
Taking into consideration the remand report submitted by the AO and the submissions and additional evidence, the additions made by the Assessing Officer were substantially reduced by the CIT(A).
The only dispute which has been raised by the Revenue is regarding the acceptance of additional evidence by the CIT(A), though, on merits, the Revenue does not have any grievance and has not contested the findings of the CIT(A).
The notice under section 143(2) was issued and in compliance thereof. Rajesh Kumar, the authorized representative appeared on behalf of the assessee. However, subsequent notices issued during the year 2014 onwards have remained non complied with and the assessment was thereafter completed under section 144 of the Act.
At the same time, it is a matter of record that due to non-payment of dues, Jammu and Kashmir Bank has taken over the possession of the assessee’s factory premises in December 2014, and the properties are disposed off and thereafter, the matter was taken up before the Debt Recovery Tribunal.
In such circumstances, where the business of the assessee is discontinued and the premises have been taken over by the Bank as part of its recovery proceedings, it is quite likely that the focus of the assessee company and its directors is directed towards the crisis being faced by them due to nonrecovery of the Bank dues and consequent action taken by the Bank and it is therefore likely that the notices issued by Assessing Officer have remained non complied with and there was the reasonable cause which prevented the assessee from submitting the requisite information/documents.
The coram of Sandeep Gosain and Vikram Singh Yadav said that especially where the assessment has been completed under section 144 of the Act, the CIT(A) where he deemed it appropriate to admit the additional evidence under rule 46A(1) to adjudicate the grounds of appeal and also on the principle of natural justice.
The ITAT did not find any infirmity in such action of the CIT(A) in admitting such additional evidence. It is also noted that this additional evidence has been sent to the Assessing Officer for necessary examination and therefore, as far as Revenue’s interest is concerned, the same has been duly safeguarded by way of providing a reasonable opportunity to the AO.
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