ARVIND KUMAR SINGH,LUCKNOW V. INCOME TAX OFFICER-1(1), LUCKNOW

ITA 802/LKW/2024

AI Insights

The case involves an appeal by Arvind Kumar Singh against the order of the Commissioner of Income Tax (Appeals)/NFAC, Delhi, which upheld the additions made by the Assessing Officer under sections 143(3) and 250 of the Income Tax Act, 1961. The AO had rejected the assessee's audited books of accounts and made additions based on a flat rate of profit applied to the gross receipts and unexplained capital introduced. The CIT(A) upheld these additions due to the assessee's failure to comply with the procedural requirements and provide sufficient evidence. The Tribunal, considering the circumstances and the evidences presented, decided to remand the case back to the AO for a detailed examination, emphasizing the need for the assessee to comply fully with the procedural requirements.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712576 (ITAT-LUCKNOW)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNEET KUMAR
• Assessee Lawyers: G. S. OJHA
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Principle of natural justice; Audi alteram partem
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “B”, LUCKNOW BEFORE SHRI SUBHASH MALGURIA, JUDICIAL MEMBER AND SHRI, NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No. 802/LKW/2024 Assessment Year: 2016-17 Arvind Kumar Singh 1205/20, D- Block, Indira Nagar, Lucknow, Uttar Pradesh- 226016. v. ITO-1(1) Pratyaksh Kar Bhawan, 57, Ram Tirath Marg, Lucknow-226001. PAN:AVUPS2851C (Appellant) (Respondent) Appellant by: Shri G. S. Ojha, Adv Respondent by: Shri Puneet Kumar, CIT- DR Date of hearing: 15 07 2025 Date of pronouncement: 31 07 2025 O R D E R PER NIKHIL CHOUDHARY, ACCOUNTANT MEMBER.: This is an appeal filed by the assessee against the order of the learned Commissioner Income Tax (Appeals)/NFAC, Delhi u/s 250 of the Income Tax Act, 1961 (“Act”, for short) dated 22.11.2024 wherein the Ld. CIT(A) has dismissed the appeal of the assessee that was filed against the order of the Assessing Officer u/s 143(3) of the Act on 23.12.2018. The grounds of appeal are as under: - “01. Because that the Ld. AO issued notice u/s 143(2) is time barred hence therefore that the whole assessment order passed by the Id. AO is nullity. 02. Because that the Id. AO has passed assessment order u/s 143(3), of the Income Tax Act, in absent of Show Cause Notice, hence therefore that the assessment Order passed by the Id. AO is libel to be quashed. 03. Because that the Id. AO has made addition of Rs.16,00,182/- @ 5% of Rs.3,20,03,653/-, after rejecting audited books of accounts, hence therefore that the rejection of audited books of account is not justified by law and liable to be deleted. Printed from counselvise.com ITA No.802/LKW/2024 Page 2 of 5 04. Because the Ld. CIT (A) has failed to know about the facts and circumstances of the case, and has arbitrarily give the decision thereof is bad in law and liable to set aside. 05. Because the Ld. CIT (A) has erred while not giving adequate opportunity of being heard like thereof is bad in law and against the Principle of Natural Justice “Audi Alteram Partem” of Constitution of India. 06. Because the Assesses financial condition is very poor that’s why the assessee does not hire the proper council, since requested to you please set aside the case. 07. Because the appellant craves leave to add to or alter, by deletion, substitution, modification or otherwise, the above grounds of appeals, either before or during the hearing of the appeal.” 2. The facts of the case are that the assessee filed a return of income at Rs.5,62,454/- and the case was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS). The Ld. AO records that the several opportunities were given to the assessee but the assessee did not respond to these notices in any meaningful way and did not also produce his books of account. In the absence of such production of books of account, the Ld. Assessing Officer thereafter asked the assessee to show cause as to why the books may not be rejected and why a flat rate of 5% should not be applied, as being the average rate of profit booked by other assessee’s of the same trade. The assessee did not reply to this show cause notice in any meaningful way. Therefore, the Assessing Officer rejected the books of the assessee and applied a profit percentage of 5% to the gross receipt of 3,20,03,653/- and made addition of Rs.16,00,182/- in this regard. It was also observed by the AO that the assessee had introduced a capital of Rs.36,68,982/-. He asked the assessee to explain the source of the same but records that the assessee failed to explain the source. Therefore, he made an addition of Rs.36,68,982/- in this regard. 3. Aggrieved with the said additions, the assessee filed an appeal with the Ld. CIT(A). However, it appears that the assessee Printed from counselvise.com ITA No.802/LKW/2024 Page 3 of 5 did not make any proper compliance before the Ld. CIT(A). The Ld. CIT(A) records that the over a period of three years and ten months, the assessee was afforded seven opportunities of being heard but the assessee have failed to avail any of the opportunities. Accordingly, he decided to proceed with the case on the basis of materials on record. He considered the statement of facts filed by the assessee and pointed out that the assessee had not submitted how he was prevented by sufficient cause from producing the books or details before the AO. He also observed that the assessee placed reliance on various documentary evidences such as the bank statement of PNB and ICICI Bank, books of account, auditor’s report, liquor license, fee receipt etc., but did not produce the same during the course of appellate proceedings despite numerous opportunities. Therefore, the Ld. CIT(A) held that the assessee had failed to prove the genuineness of capital introduced and also failed to prove the genuineness of his books of account and therefore he upheld both the additions made by the Assessing Officer. 4. The assessee is aggrieved with these disallowances and has accordingly filed this appeal. It was submitted that the assessee had evidences to demonstrate that its books were complete and correct and to explain the capital introduced by it. However, it had not been able to produce the same due to genuine causes. It was submitted that the assessee had produced the bank statements of Shri Arvind Kumar Singh of PNB Bank and ICICI Bank, the books of account for re- assessment year 2016-17, Auditor’s report for the A.Y. 2016-17 and Liquor License, fee receipt, as additional evidences before the Ld. CIT(A) but the Ld. CIT(A) had failed to take cognizance of the Printed from counselvise.com ITA No.802/LKW/2024 Page 4 of 5 same and had decided the matter without rejecting the additional evidences that was submitted. It was submitted that if the Ld. CIT(A) was unable to locate the said documents, he could always ask the assessee to uphold the same again, rather than to dismiss the appeal. It was submitted that if the assessee was given an opportunity, he would be able to substantiate that the additions made, were uncalled for. On the other hand, Shri Puneet Kumar, Ld. CIT-DR submitted that it was evident from the assessment order and the order of the Ld. CIT(A), that the assessee had been non-compliant before the lower authorities. He, therefore, submitted that the clear-cut instructions should be issued to the assessee to make full compliance before the Assessing Officer, in case the Tribunal in its wisdom, decided to send the matter back. 5. We have duly considered the facts and circumstances of the case. It is seen from the Form No. 35 that the certain evidences were filed or were desired to be filed during the course of appellate proceedings but could not be located by the Ld. CIT(A) on the portal, as a result the additions have been sustained only on account of non-compliance, without any finding that the books of the assessee are unreliable or that the capital introduced by the assessee is unexplained due to either a lack of creditworthiness of the introducers or lack of genuineness of the transaction. Therefore, in the interest of justice, we deem it appropriate to restore this matter back to the file of the Ld. AO, with direction to assessee to make full compliance before the Ld. AO, so as to help the AO to arrive at the truth of the case. We would caution the assessee that the failure to make compliance creates doubts on the genuineness of his claims, and therefore, it Printed from counselvise.com ITA No.802/LKW/2024 Page 5 of 5 is the duty of the assessee to effectively explain the accounts submitted by him during the course of assessment and produce such evidences that the Assessing Officer may desire. Since the matter has been restored to the file of the Assessing Officer for fresh consideration, the appeal of the assessee is treated as allowed for statistical purposes. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 31/07/2025. Sd/- Sd/- [SUBHASH MALGURIA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/07/2025 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard file By order // True Copy// Sr. Private Secretary ITAT, Lucknow Printed from counselvise.com "