AGNEE GAS AGENCY,AHMEDABAD V. THE INCOME TAX OFFICER, WARD-5(3)(3), AHMEDABAD

ITA 1604/AHD/2024

AI Insights

The case involves Agnee Gas Agency, a partnership firm engaged in the business of LPG gas agency, which appealed against the ex parte assessment order and subsequent appellate order confirming the additions made to their income for the Assessment Year 2017-18. The AO had made significant additions to the assessee's income citing unexplained loans, creditors, and other disallowances, which the CIT(A) upheld. The Tribunal noted procedural irregularities and the absence of a hearing on merits, leading to the decision to remand the case for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 29622 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: HARDIK VORA OFFICE
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Unexplained cash credit; Principle of natural justice; Initiation of penalty proceedings
• Section: 144; 142(1); 143(2); 250; 143(1); 69A; 44AB

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदा बा द \u0012ा यपीठ “सी“, अहमदा बा द । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD सु\u0017ी सुिच\u0019ा का \u001aले, \u0012ा ियक सद एवं \u0017ी मकरंद वसंत महा देवकर, लेखा सद क े सम\"। ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.1604/Ahd/2024 िनधा \u0010रण वष\u0010 /Assessment Year : 2017-18 Agnee Gas Agency 13, Sukhram Chambers Khodiarnagar Char Rasta Bapunagar Ahmedabad – 380 024 बनाम/ v/s. The Income Tax Officer Ward-5(3)(3) Ahmedabad \u0014थायी लेखा सं./PAN: AAHFA 7561 M अपीलाथ%/ (Appellant) &' यथ%/ (Respondent) Assessee by : Hardik Vora office Revenue by : Shri Rignesh Das, Sr.DR सुनवाई की तारीख/Date of Hearing : 25 /03/2025 घोषणा की तारीख /Date of Pronouncement: 26 /03/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: This appeal is filed by the assessee against the order dated 23.10.2023 passed by the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as “CIT(A)”], confirming the ex parte assessment order dated 22.12.2019 passed under section 144 of the Income Tax Act, 1961 [hereinafter referred to as \"the Act\"] by the Income Tax Officer, Ward 5(3)(3), Ahmedabad [hereinafter referred to as “AO”] for Assessment Year (AY) 2017–18. ITA No.1604/Ahd/2024 Agnee Gas Agency vs. ITO Asst. Year : 2017-18 2 Condonation of Delay 2. At the outset, it is noted that the appeal before us has been filed with a delay of 259 days. In support of the condonation, the assessee has filed a duly sworn affidavit dated 19.03.2025 executed by Shri Ashvin Nanalal Dagla, partner of the assessee-firm. It is averred that although the email ID provided in Form 35 was [e-mail], subsequent notices under section 250 and the order of the CIT(A) were issued to different email IDs ([e-mail] and [e-mail]), due to which the assessee remained unaware of the disposal of the appeal. The affidavit further explains that the assessee came to know about the dismissal of appeal only during a routine check of the income tax portal in the last week of August 2024, and upon becoming aware, immediately filed the present appeal before the Tribunal on 06.09.2024. 2.1. Considering the submissions and the affidavit and noting that the Departmental Representative has not raised any serious objection to the condonation, we are satisfied that the delay of 259 days has been explained with bona fide reasons. Accordingly, the delay is condoned. Facts of the case: 3. The assessee is a partnership firm engaged in the business of LPG gas agency. It filed its return of income for A.Y. 2017–18 on 30.10.2017, declaring a total income of Rs.4,01,560/-, which was processed under section 143(1) of the Act. The books of account of the assessee were audited under section 44AB, and the audit report in Form 3CB–3CD was filed on the same date. No adverse remarks were made by the auditor. The case was selected for scrutiny under CASS, and notice under section 143(2) of the Act was issued on ITA No.1604/Ahd/2024 Agnee Gas Agency vs. ITO Asst. Year : 2017-18 3 09.08.2018. Subsequently, several notices under section 142(1) of the Act were issued; however, in the absence of compliance, the AO proceeded to frame an ex parte assessment under section 144 of the Act. In the said order dated 22.12.2019, the AO made the following additions/disallowances: • Unexplained unsecured loans – Rs.10,84,600/- • Unexplained creditors – Rs.27,98,009/- • Ad hoc disallowance of expenses (20%) – Rs. 3,71,556/- • Addition under section 69A of the Act (8% of demonetized deposits) – Rs.11,84,025/- 3.1. Total assessed income was thus enhanced to Rs.58,39,750/- as against returned income of Rs.4,01,560/-. The AO also initiated penalty proceedings under section 271AAC of the Act and charged interest under sections 234A, 234B, 234C and 234D of the Act. 4. The appeal filed before the CIT(A), NFAC was also disposed of ex- parte, confirming the additions without considering merits of the case. 5. Aggrieved by the order of the CIT(A), the assessee has raised the following substantive grounds before us: The following grounds are raised against the addition /disallowances made by the Income Tax Officer, Ward 5(3)(3), Ahmedabad (hereinafter referred to as the Learned A.O.) in his order passed u/s 144 of the Income tax Act 1961 (hereinafter referred to as the Act.) for A.Y. 2017-18 which are without prejudice to one another and in the alternative. 1. The Id. A.O. has erred in law and on facts while making aggregate additions / disallowances of Rs.54,38,190/- to the total income without realizing the circumstantial facts that the accounts of the appellant is audited u/s 44AB of the Act and therefore without giving sufficient opportunity of being heard the Id. A.O. has passed the order u/s 144 of the Act, which is against the principle of natural justice and therefore the same is required to be deleted in total. ITA No.1604/Ahd/2024 Agnee Gas Agency vs. ITO Asst. Year : 2017-18 4 2. The Ld. A.O. has erred in law and facts while making addition of Rs.10,84,600/- on account of unexplained unsecured loans, which is required to be deleted. 3. The Ld. A.O. has erred in law and facts while making addition of Rs.27,98,009/- on account of unexplained Creditors, which is required to be deleted. 4. The Ld. A.O. has erred in law and facts while making addition of Rs.3,71,556/- on account of various expense on adhoc basis, which is required to be deleted. 5. The Ld. A.O, has erred in law and facts while making addition of Rs.11,84,025/- on account of unexplained money u/s 69A of the Act, which is required to be deleted. 6. Initiation of Penalty proceedings u/s 271AAC of the Act. The learned A.O. has grossly erred in assuming jurisdiction to initiate penalty proceedings in as much as the appellant denies to have any unexplained money or cash credit, as addition made by the learned AO which forms the basis of initiation of penalty proceedings are fully untenable both in the eye of law as well as on facts of the case. It is therefore prayed that initiation of penalty proceedings may kindly be quashed/cancelled. 7. Charging of interest u/s 234A, 234B, 234C and 234D of the Act. The appellant denies to pay interest as there being no default as per section 234A, 234B, 234C & 234D of the Act. The additions/disallowance made by the learned A.O. could not be predicted at the time of payment of advance tax. The learned A.O. should be directed to delete the said interest for alleged failure u/s. 234A, 234B, 234C & 234D of the Act. Considering the aforesaid grounds the additions / disallowances made by the Ld. A.O. are deserves to be deleted. The appellant reserves its right to add, alter or substitute or modify any of the grounds of appeal till the appeal is finally heard and decided. 6. The assessee in the statement of facts submitted that the books of account were duly audited, and no adverse remarks were made. The entire evidence and documents were submitted to the authorized representative, but due to a bona fide misunderstanding, the same were not uploaded on the ITA No.1604/Ahd/2024 Agnee Gas Agency vs. ITO Asst. Year : 2017-18 5 IT portal. The assesse in the same statement of facts the assessee contended that cash deposits during the demonetization period were duly accounted in the books, and LPG gas agencies were exempted from the restriction on accepting old notes. Thus, applying 8% addition under section 69A is unjustified. 7. Considering the fact that both the lower authorities have passed order without considering the merit of the case, the Authorized Representative (AR) of the assessee submitted that the assessee should be granted one more opportunity to present its case before the AO. 8. The Departmental Representative (DR) however objected to restoring the matter back to the file of AO stating that the assessee is non-compliant. 9. We have carefully considered the rival submissions and perused the material available on record. It is observed that both the assessment order passed under section 144 of the Act and the appellate order passed by the Ld. CIT(A), NFAC, were concluded ex-parte, primarily on account of the assessee’s non-compliance with statutory notices. However, the assessee has placed on record material to demonstrate that an adjournment request was duly submitted in response to the notice under section 250 of the Act, along with an explanation that relevant documents were under compilation. While the conduct of the assessee in not fully responding to subsequent notices may have contributed to the ex-parte orders, the contemporaneous correspondence indicates that the assessee was not entirely negligent and had made attempts to engage with the proceedings. Considering the cumulative circumstances, including the nature of additions, the absence of hearing on merits, and the ITA No.1604/Ahd/2024 Agnee Gas Agency vs. ITO Asst. Year : 2017-18 6 principles of natural justice, we are of the view that it would be just and proper to provide one more opportunity to the assessee to present its case before the AO. 9.1. In view of the foregoing discussion and considering the procedural irregularities in the completion of assessment and appellate proceedings, coupled with the assessee’s explanation supported by contemporaneous material, we are of the considered opinion that this is a fit case where the matter ought to be remanded to the file of the AO. While the assessee cannot be fully absolved of responsibility for non-compliance, the explanation offered appears to be bona fide and merits consideration. 9.2. Accordingly, the assessment order passed u/s 144 of the Act and the appellate order passed by the Ld. CIT(A) are set aside. The matter is restored to the file of the AO with a direction to examine the case afresh, after providing adequate opportunity of being heard to the assessee. The assessee is also directed to cooperate in the proceedings and file necessary documents and evidence without seeking unnecessary adjournments. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 26th March, 2025 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 26/03/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS ITA No.1604/Ahd/2024 Agnee Gas Agency vs. ITO Asst. Year : 2017-18 7 आदेश की #ितिलिप अ$ेिषत/Copy of the Order forwarded to : 1. अपीलाथ% / The Appellant 2. #&थ% / The Respondent. 3. संबंिधत आयकर आयु' / Concerned CIT 4. आयकर आयु' ) अपील ( / The CIT(A)-(NFAC), Delhi 5. िवभागीय #ितिनिध , आयकर अपीलीय अिधकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u0010 फाईल / Guard file. आदेशानुसार/ BY ORDER, स&ािपत #ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 26.3.2025 2. Date on which the typed draft is placed before the Dictating Member. : 26.3.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 26.3.25 7. Date on which the file goes to the Bench Clerk. : 26.3.25 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : "