BHAGWATI CONSTRUCTION,BHAGALPUR V. DCIT/ACIT CENTRAL CIRCLE-3, PATNA

ITA 229/PAT/2023

AI Insights

The case involves Bhagwati Construction appealing against the order of the Commissioner of Income Tax (Appeals), Patna-3, which was passed on 26th May 2023 for the Assessment Year 2019-20. The primary contention of the assessee was the alleged violation of the principles of natural justice by the Assessing Officer, who issued notices demanding voluminous compliance with very short deadlines, particularly during the COVID-19 pandemic. The Tribunal found that the Assessing Officer did not provide adequate time for compliance, which constituted a procedural irregularity. Consequently, the Tribunal set aside the orders and remanded the matter back to the Assessing Officer for a fresh assessment after providing a proper opportunity to the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 27005 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-09-2024
• Assessment Year: 2019-2020
• Appeal Filed On: 20-07-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Principle of natural justice
• Section: 142(1); 143(2); 133A

Judgement Text

" ITA No. 229/PAT/2023 (A.Y. 2019-2020) Bhagwati Construction 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA-PATNA ‘e-COURT’, KOLKATA [Hybrid Court Hearing] Before Shri Rajpal Yadav, Vice-President (KZ) & Dr. Manish Borad, Accountant Member I.T.A. No. 229/PAT/2023 Assessment Year: 2019-2020 Bhagwati Construction,………………..…….……Appellant Ganjee Mill Compound, Bhagalpur Central Jail Road, Bihar, PIN 812001 [PAN:AALFB4517E] -Vs.- Deputy Commissioner/Assistant Commissioner of Income Tax,……………………………………..……Respondent Central Circle-3, Lok Nayak Bhawan, Dak Bunglow Road, Bihar-800001 Appearances by: Shri A.K. Rastogi, Sr. Advocate and Shri Rakesh Kumar, Advocate, appeared on behalf of the assessee Smt. Rinku Singh, CIT (DR), appeared on behalf of the Revenue Date of concluding the hearing: September 23, 2024 Date of pronouncing the order: October 07, 2024 O R D E R Per Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), ITA No. 229/PAT/2023 (A.Y. 2019-2020) Bhagwati Construction 2 Patna-3 dated 26th May, 2023 passed for Assessment Year 2019- 20. 2. The assessee has taken eight grounds of appeal. In Grounds No. 1, 2 & 3, a common grievance is involved. The assessee has pleaded in these grounds of appeal that the ld. CIT(Appeals) has erred on facts and in law in not appreciating that ld. Assessing Officer has violated the principle of natural justice, who had issued notice seeking voluminous compliance but given time of few days only. 3. Brief facts of the case are that a survey operation under section 133A was carried out at the business premises of the assessee on 28.02.2019. The assessee has filed its return of income declaring total income at Rs.75,15,963/-. Since survey was conducted at the premises of the assessee, therefore, its case was selected for scrutiny assessment and a notice under section 143(2) was issued and served on 28.09.2020. The ld. Assessing Officer thereafter observed that he has received the case on transfer on 02.08.2021. He issued questionnaires under section 142(1) and passed the assessment order on 30.09.2021. The ld. Assessing Officer has determined the taxable income of the assessee at Rs.7,46,25,580/-, which includes the declared income of the assessee. A perusal of the record would indicate that ld. Assessing Officer has made following additions:- Head Amount Advance from customers 1,44,29,847/- Miscalculation of Closing Stock 1,28,49,404/- ITA No. 229/PAT/2023 (A.Y. 2019-2020) Bhagwati Construction 3 Miscalculation of Opening Stock 3,27,05,378/- Expenses under the head ‘Repair & Maintenance’, Servicing expense of Civil & Equipment 46,01,457/- Security Deposit 11,00,000/- Service Tax penalty 14,23,527/- 4. Dissatisfied with the additions, the assessee carried the matter before the ld. CIT(Appeals) and contended that the ld. Assessing Officer has made substantial addition to the declared income of the assessee, but did not grant sufficient opportunity to submit the required details. The assessee has tabulated the following details in its submission filed before the ld. CIT(Appeals) as well as before the ITAT:- Sl. No. Date of Notice Date fixed for compliance Time provided 1. 25.08.2021 31.08.2021 6 2. 20.09.2021 22.09.2021 2 3. 21.09.2021 23.09.2021 2 5. On the strength of the above, it was contended by the ld. Counsel for the assessee that both the revenue authorities have erred in not appreciating the real challenge faced by the assessee during COVID period. The ld. CIT(Appeals) ought to have called for a detailed remand report from the ld. Assessing Officer by providing fresh opportunity, but the ld. CIT(Appeals) has recorded a very brief finding on this issue. He took us through page no. 15 of the impugned order, wherein ld. CIT(Appeals) has observed as under while dealing with this issue:- “I have gone through the assessment order and the submission of the appellant. It is found that the AO had provided sufficient opportunities to the appellant to ITA No. 229/PAT/2023 (A.Y. 2019-2020) Bhagwati Construction 4 explain the entries. However, the appellant failed to explain the accounting entries with the relevant documents. During the appellate proceedings also, the appellant failed to come up with any corroborative documentary evidence to explain the accounting entries. Accordingly, the addition of Rs.1,44,29,287/- is allowed and the ground taken is dismissed”. The ld. Counsel for the assessee further submitted that the issue be remitted back to the file of ld. Assessing Officer for re- verification and re-adjudication. 6. The ld. CIT(DR), on the other hand, relied upon the orders of revenue authorities and submitted that additions have been made after appreciating the accounts of the assessee and, therefore, no interference is called for at the end of the Tribunal. 7. We have duly considered the rival contentions and gone through the record carefully. We find that the ld. Assessing Officer has himself observed that this case was received on transfer on 02.08.2021. He completed the assessment order on 30.09.2021. The dates of hearing mentioned in the assessment orders are 14.10.2020, 31.08.2021, 22.09.2021, 23.09.2021 and then assessment order. Thus, as far as 14.10.2020 is concerned, it was a date when notice under section 143(2) was issued on 28.09.2020. Section 143(2) provides an opportunity to the assessee, what he wants to submit in support of the claim made in the return. It is not an opportunity qua the issues required to be investigated by the ld. Assessing Officer during the assessment proceeding. It is a date only for providing an opportunity to the assessee to submit all requisite details in support of its claim in ITA No. 229/PAT/2023 (A.Y. 2019-2020) Bhagwati Construction 5 the return. Thus, it cannot be construed as a date vide which opportunity was given to the assessee. Thereafter proceeding remained dormant about more than eleven months. The ld. Assessing Officer recommenced the proceeding by issuing a notice on 25.08.29021 and given a time of six days only. Within one month, he has completed the assessment and expected that assessee should submit every detail during COVID period. To our mind, it is not the right step at the end of Revenue, therefore, the assessment order is not sustainable. We set aside both the orders and restore all the issues to the file of ld. Assessing Officer for fresh adjudication after providing due opportunity of hearing to the assessee. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 07/10/2024. Sd/- Sd/- (Manish Borad) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 7th day of October, 2024 Copies to :(1) Bhagwati Construction, Ganjee Mill Compound, Central Jail Road, Bihar, PIN 812001 (2) Deputy Commissioner/Assistant Commissioner of Income Tax, Central Circle-3, Lok Nayak Bhawan, Dak Bunglow Road, Bihar-800001 (3) Commissioner of Income Tax (Appeals), Patna-3; ITA No. 229/PAT/2023 (A.Y. 2019-2020) Bhagwati Construction 6 (4) CIT - , Patna; (5) The Departmental Representative; (6) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. "