AP RAJIV SWAGRUHA CORPORATION LIMITED,VIJAYAWADA V. DCIT., CIRCLE-1(1), HYDERABAD

ITA 756/HYD/2025

AI Insights

The case involves AP Rajiv Swagruha Corporation Limited, which appealed against the order of the Commissioner of Income-Tax (Appeals) at the National Faceless Appeal Center, Delhi. The appeal was directed against the additions and disallowances made by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 for the assessment year 2017-18. The main issues included disallowances related to labor cess, non-deduction of TDS, and differences in stock, among others. The assessee argued that it was not given a fair opportunity to present additional evidence due to a lack of awareness of a Show Cause Notice issued during the e-assessment proceedings. The Tribunal agreed with the assessee's contention that the nascent stage of the e-assessment system might have led to the oversight and thus directed a re-evaluation of the case with the additional evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712446 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Revised return; Principle of natural justice; TDS
• Section: 143(3); 43B; 40(a)(ia)

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad श्री मंजूनाथ जी, माननीय लेखा सदस्य एवं श्री रवीश सूद, माननीय न्याययक सदस्य SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER आयकरअपीलसं./I.T.A.No.756/Hyd/2025 (निर्धारण वर्ा/ Assessment Year: 2017-18) A.P. Rajiv Swagruha Corporation Limited, Vijayawada. PAN : AAGCA5561K Vs. The Deputy Commissioner of Income Tax, Circle- 1(1), Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Ms. DVN Manasa, C.A. (appeared through HYBRID mode) राजस्व का प्रतततितित्व/ Department Represented by : Shri U Mini Chandran, CIT-DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 21.07.2025 घोर्णध की तधरीख/ Date of Pronouncement : 30.07.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income-Tax Printed from counselvise.com 2 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 18.02.2025, which in turn arises from the order passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 for short “the Act”), dated 05.12.2019 for A.Y. 2017-18. The assessee company has assailed the impugned order on the following grounds of appeal before us: “1.The Appellant submits that the order of the Commissioner of Income Tax Appeals (CIT) passed order u/s. 250 dated 18.02.2025 is contrary to law, facts and circumstances of the case and is opposed to the principles of natural justice, equity and fair play. 2. The Appellant submits that the disallowance u/s 43B for labour cess is unwarranted in the facts of this case 3. The Appellant submits that the disallowance u/s 40(a)(ia) for TDS non deduction is incorrect 4. The Appellant submits that the disallowance for difference in stock is not required to be made in the facts and circumstances of the case 5. The Appellant submits that the disallowance u/s. 43B for service tax is unwarranted in the facts of this case.” 2. Succinctly stated, the assessee company had e-filed its return of income for A.Y. 2017-18 on 31.10.2017, admitting a loss of (-) Rs. 21,81,73,812/-. Thereafter, the assessee company filed a revised return on 31.03.2019, disclosing a loss of (-) Rs.3,67,16,356/-. Subsequently, the case of the assessee company Printed from counselvise.com 3 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada was selected for scrutiny assessment under Section 143(2) of the Act. 3. Thereafter, the A.O. framed the assessment vide his order passed under Section 143(3) of the Act, dated 05.12.2019 wherein the income of the assessee company was determined at Rs. 2,74,19,480/- after making the following additions/disallowances : 4. Aggrieved, the assessee company carried the matter in appeal before the CIT(A). Printed from counselvise.com 4 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada 5. During the course of the appellate proceedings before the CIT(A), the assessee company filed an application seeking admission of certain documents as “additional evidence” under Rule 46A of the Income Tax Rules, 1962. On a perusal of the record, we find that the assessee company had sought for admission of the following documents as additional evidence in its application filed under Rule 46A of the Income Tax Rules, 1962 : 1. Ledger extract of Service Tax Liability. 2. R.A. Bills. 3. Financials of the Assessee. 6. The assessee company in its application while seeking liberty for admission of additional evidence, had submitted that it is a Government company which was in the course of the assessment proceedings issued a “Show Cause Notice” (SCN) on 26.11.2019 through e-proceedings wherein it was called upon to put forth an explanation that as to why its claim for deduction of certain expenses may not be declined. The assessee company submitted that as it had remained unaware about the “Show Cause Notice” (SCN), dated 26.11.2019, therefore, for the said reason, it failed to participate in the assessment proceedings. Elaborating further on Printed from counselvise.com 5 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada its contention, the assessee company submitted before the CIT(A) that as it had for bonafide reasons failed to respond to the “Show Cause Notice” (SCN), dated 26.11.2019, the A.O., without providing any further opportunity, had framed the assessment, wherein its claim for deduction of expenditure was declined by him. 7. It was the claim of the assessee company that though it had, in the course of the assessment proceedings, submitted most of the evidence to substantiate its claim for deduction of expenditure, but in addition to the same, it was seeking liberty to place on record as additional evidence the ledger extracts of the its service tax liability, RA Bills, and its financials for F.Y. 2016-17. However, we find that the CIT(A) did not find favour with the application filed by the assessee company for admission of the aforesaid documentary evidence as additional evidence. 8. Ostensibly, the CIT(A), after deliberating at length on the e- assessment proceedings that was launched by the CBDT during October 2015, wherein the taxpayers were assessed vide online communications through e-portal, SMS and e-mail and further Printed from counselvise.com 6 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada drawing support from various CBDT instructions, observed as under: 9. The CIT(A), based on his aforesaid observations, was of the view that all the communications/notices/reminders, etc., in the backdrop of the facts and circumstances of the case were to be considered as having been duly served upon the assessee. Also, it was observed by him that as per Clause (23C) of Section 2 of the Income Tax Act, 1961, as applicable from 01.06.2016, the term “hearing” includes communication of data and documents through electronic mode. It was thus, observed by him that adequate and sufficient opportunity of hearing was afforded by the A.O. to the Printed from counselvise.com 7 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada assessee in the course of the assessment proceedings carried out through electronic mode. Accordingly, the CIT(A) rejected the assessee’s claim that it was not aware of the proceedings/Show Cause Notice, due to which, it had failed to place on record the aforementioned documents that were now being filed before him as an “additional evidence”. Thereafter, the CIT(A), holding a firm conviction that the case of the assessee did not fall within either of the situations contemplated in Rule 46A(1), declined its request for admission of the aforementioned documents as “additional evidence”. 10. Thus, the CIT(A), after declining the assessee’s application for admission of additional evidence proceeded with the adjudication of the appeal on merits. The CIT(A), finding no infirmity in the view taken by the A.O., upheld his order and dismissed the appeal. 11. The assessee, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us. 12. Ms. DVN Manasa, C.A. the learned Authorized Representative (for short “Ld.AR”) for the assessee company, at the threshold of hearing of the appeal, submitted that the CIT(A) had grossly erred Printed from counselvise.com 8 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada in law and on facts of the case by most arbitrarily rejecting the assessee’s request for admission of certain documents as additional evidence without giving any cogent reason for doing so. Elaborating further on her contention, the Ld. AR submitted that as the documents filed by the assessee company had a strong bearing on the additions/disallowances made by the A.O., which were assailed before the CIT(A), therefore, the latter, in all fairness, ought to have admitted the same. Explaining the reason for not filing the aforementioned documents in the course of the assessment proceedings before the A.O., it was submitted that the same was due to the negligence on the part of the assessee’s erstwhile counsel and the assessee remained oblivion of the same. 13. Per contra, Shri U. Mini Chandran, Learned CIT- Departmental Representative (for short “CIT-DR”) relied upon the orders of lower authorities. 14. We have thoughtfully considered the contentions advanced by the learned authorized representatives of both parties in the backdrop of the orders of the lower authorities. Printed from counselvise.com 9 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada 15. We deem it apposite to cull out Rule 46A of the Income Tax Rules, 1962, as the controversy involved in the present appeal hinges around the sustainability of the view taken by the CIT(A), who had declined to admit the documentary evidence as an “additional evidence” that was filed by the assessee before him, which reads as under: “46A. Production of additional evidence before the Deputy Commissioner (Appeals) and Commissioner (Appeals). (1) The appellant shall not be entitled to produce before the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely :- (a) where the Assessing Officer has refused to admit evidence which ought to have been admitted ; or (b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer ; or (c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal ; or (d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. (2) No evidence shall be admitted under sub-rule (1) unless the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission. (3) The Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) shall not take into account any evidence Printed from counselvise.com 10 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity- (a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or (b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant. (4) Nothing contained in this rule shall affect the power of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.” 16. On a careful perusal of Rule 46A, we find that the same carves out a set of four circumstances, wherein the assessee is permitted to adduce certain evidence, whether oral or documentary, other than the documentary evidence produced by him during the course of assessment proceedings before the A.O. On a careful perusal of the exceptions, we find that the same contemplates situations, viz., (i) where the A.O. has refused to admit evidence which ought to have been admitted; (ii). where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer; (iii). where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of Printed from counselvise.com 11 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada appeal; and (iv). where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. 17. As is discernible from the petition filed by the assessee company before the CIT(A), we find that it had been the claim of the assessee company that as it had remained unaware about the “Show Cause Notice” (SCN), dated 26.11.2019, wherein the A.O. had called upon it to explain why its claim for deduction of certain expenses may not be disallowed, therefore, it had failed to place on record the supporting documentary evidence to substantiate its claim for deduction to the satisfaction of the A.O. Accordingly, we find that the assessee company had claimed that its case was covered within the exceptions carved out in Clause (b) and Clause (c) of Rule 46A(1) of Income Tax Rules, 1962. 18. We have given our thoughtful consideration to the facts involved in the present case, which the assessee claims had resulted in the non-filing of the documents substantiating its claim for deduction of certain expenses in the course of the assessment proceedings. In our view, as the e-Assessment/e-Proceedings, Printed from counselvise.com 12 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada which was launched by the CBDT under the “Digital India” Campaign for e-Governance as a pilot project for online assessments (called e-Assessment Proceedings) in October 2015, wherein the taxpayers were to be assessed through the online communications through e-portal, SMS and e-mail, was in its nascent stage, there was a strong probability that the “Show Cause Notice” (SCN), dated 26.11.2019, which was claimed to have been served upon the assessee company in the course of e-Proceedings, calling upon it to explain why certain additions or disallowances may not be made in its case, might have missed his attention for bona fide reasons. We are of the firm conviction that as the Faceless Proceedings Scheme was in its infancy and nascent stage, therefore, the failure on the part of the assessee for bonafide reasons to effect compliance with “Show Cause Notice” (SCN), dated 26.11.2019, cannot be ruled out. Accordingly, we are of the view that, as the assessee company was prevented by sufficient cause from producing evidence which was relevant for adjudicating its entitlement for the claim of deduction of the expenditure in question, the CIT(A), in all fairness, ought to have admitted the same. Printed from counselvise.com 13 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada 19. We, thus, not being able to persuade ourselves to concur with the summary rejection of the assessee’s application for admission of additional evidence by the CIT(A), set aside his order and direct him to admit the same and re-adjudicate the appeal after considering the said documents. Needless to say, the CIT(A) shall, in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee company. As we have set aside the matter to the file of the CIT(A) for de novo adjudication, we refrain from adverting to the grounds based on which the assessee company has assailed the sustainability of the additions/ disallowances made by the A.O., which are, thus, left open. 20. Resultantly, the appeal of the assessee company is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the Open Court on 30th July, 2025. Sd/- Sd/- (मंजूनाथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Hyderabad, dated 30.07.2025. *TYNM/sps Printed from counselvise.com 14 ITA No.756/Hyd/2025 AP Rajiv Swagruha Corporation Ltd., Vijayawada आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : AP Rajiv Swagruha Corporation Limited, D.No.5-21, Near Ford Show Room, Prasadampadu, Vijayawada – 521108, Andhra Pradesh. 2. रधजस्व/ The Revenue : The Deputy Commissioner of Income Tax, Circle 1(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad Printed from counselvise.com "