BLUEFROG MOBILE TECHNOLOGIES PRIVATE LIMITED,VISAKHAPATNAM V. DCIT, CIRCLE- 1(1), VISAKHAPATNAM

ITA 93/VIZ/2025

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The case involves Bluefrog Mobile Technologies Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Center, Delhi. The appeal was initially against an order by the Assessing Officer under sections 144 and 144B of the Income Tax Act, 1961, concerning an alleged undisclosed turnover of Rs.4,98,26,305 for the assessment year 2020-21. The Assessing Officer had added this amount to the company's income due to a discrepancy between the turnover reported in the company's profit and loss account and the turnover reported in Form 26AS. The CIT(A) upheld this addition, leading to the company's appeal to the ITAT. The ITAT found procedural lapses in the notice for the hearing and remanded the case back to the CIT(A) for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46526 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; TDS; FORM 26AS
• Section: 144; 142(1)

Judgement Text

"आयकर अपीलीय अधिकरण, विशाखापटणम पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL Visakhapatnam Bench श्री रिीश सूद, माननीय न्याययक सदस्य एिं श्री मिुसूदन सािडिया, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.93/Viz/2025 (निर्धारण वर्ा/ Assessment Year : 2020-21) Bluefrog Mobile Technologies Private Limited, Visakhapatnam. PAN : AADCB7207L The Deputy Commissioner of Income Tax, Circle -1(1), Visakhapatnam. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri P. Vinod, Advocate राजस्व का प्रतततितित्व/ Department Represented by : Dr. Satyasai Rath, CIT(DR) सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 24.03.2025 घोर्णध की तधरीख/ Date of Pronouncement : 26.03.2025 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- 2 ITA No.93/Viz/2025 Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 07.01.2025 which in turn arises from the order of Assessing Officer u/s 144 r.w.s 144B of the Income Tax Act, 1961 (for short “the Act”) dated 16.09.2022 for A.Y. 2020-21. 2. The assessee company has assailed the impugned order on the following grounds of appeal before us: “1. On the facts and in the circumstances of the case, the order passed by the NFAC/CIT(A) is erroneous and unsustainable on facts and in law apart from being passed in violation of principles of natural justice. 2. The NPAC/CIT(A) erred in sustaining the addition of Rs.4,98,26,305 on account of alleged difference of income as per books and income as per TDS statement, without affording proper opportunity.” 3. Succinctly stated, the Assessing Officer while framing the assessment observed that there was a discrepancy of Rs.4,98,26,305/- in the assessee’s turnover appearing in Form 26AS, as against the turnover disclosed in its profit and loss account for the subject year. As the assessee company had failed to come forth with any plausible explanation as regards the aforesaid discrepancy of Rs.4,98,26,305/- (supra), therefore, the Assessing Officer made an addition of the same to its income that was earlier summarily processed under Section 143(1)(a) of the Act. 3 ITA No.93/Viz/2025 Accordingly, the Assessing Officer vide his order under Section 144 r.w.s. 144B of the Act, dt.16.09.2022 determined the income of the assessee company at Rs. 5,53,77,725/-. 4. Aggrieved, the assessee company carried the matter in appeal before the CIT(A) but without success. As the assessee company had failed to participate in the proceedings before the CIT(A), therefore, the latter was constrained to proceed with and dispose of an appeal vide an exparte order. Ostensibly, the CIT(A) held a conviction that as the assessee company had failed to come forth with an explanation as regards its suppressed turnover of Rs.4,98,26,305/- (supra), thus, he approved the addition made by the Assessing Officer. For the sake of clarity, the observations of the CIT(A) are culled out as under : “3. Ground numbers 3 to 7 object to addition of Rs.4,98,26,305/- being difference of income as per books and income as per TDS statement. It is seen that the assessee has shown only an amount of Rs.6,10,56,700/- as revenue in its profit and loss account. The assessee has not been able to establish the reasons of difference between the turnover in the profit and loss account and the turnover appearing in Form 26AS. It has not been able to submit any documentary evidence to explain the difference between turnover in the profit and loss account and the turnover appearing in Form 26AS despite specific questions asked in the 142(1) notices to explain the causes of difference in the revenue as per profit and loss account and the income appearing in Form 26AS for A.Y. 2020-21 does not belong to the same assessment year. Accordingly, the income appearing in Form 26AS is being considered as the correct turnover for the year, and the turnover figure is being increased to the level of income appearing in Form 26AS. Therefore, the 4 ITA No.93/Viz/2025 difference of (11,08,83,005 6,10,56,700) = Rs.4,98,26,305/- is being added to the income of the assessee as undisclosed sales. The assessee was also issued a show cause notice dated 18.08.2022 proposing the above addition. However, the assessee did not reply to the show cause notice. This shows that the assessee has nothing to say in this regard. The addition of Rs.4,98,26,305/- is confirmed.” 5. The assessee company being aggrieved with the order of CIT(A) has carried the matter in appeal before us. 6. We have heard the learned Authorized Representatives of both the parties, perused the orders of lower authorities and the material available on record. 7. Shri P. Vinod, the learned Authorized Representative (for short “LD.AR”) for the assessee company, at the threshold of hearing of the appeal, submitted that the assessee company without having been validly put to notice about the fixation of the hearing of the appeal before the CIT(A) had suffered the dismissal of the same. Elaborating further on his contention, the ld. AR submitted that though, the assessee company had in its Memorandum of Appeal, filed before the CIT(A) i.e., “Form-35” specifically opted out of receipt of notices/communications through e-mail but despite that no hard/physical copy of a notice intimating the fixation of the appeal was ever served upon it. The ld. AR to substantiate his contention 5 ITA No.93/Viz/2025 had taken us through “Form-35” which substantiated his aforesaid claim. The ld. AR on specifically being queried as to whether or not any notice intimating the fixation of the appeal was ever physically served upon the assessee company, answered in the negative. The ld. AR stated at Bar that no hard/physical notice intimating the fixation of the hearing of the appeal was ever served upon the assessee company by the office of the CIT(A). The ld. AR submitted that as the CIT(A) had disposed of the appeal without affording any opportunity of being heard to the assessee company, therefore, the matter in all fairness be restored to his file with a direction to him to re-adjudicate the same. 8. Per contra, the Learned Departmental Representative (in short “Ld. DR”) relied on the orders of the lower authorities. The Ld. DR submitted that as the service of notices intimating the fixation of the appeal through physical mode had been dispensed with way back, therefore, the grievance of the assessee company of not having been validly put to notice about the fixation of the appeal vide a hard/physical copy of the intimation was irrelevant. 6 ITA No.93/Viz/2025 9. We have thoughtfully considered the contentions advanced by the Learned Authorized Representatives of both parties. Admittedly, it is a matter of fact borne from the record that the assessee company had in its memorandum of appeal i.e., “Form-35” specifically opted out of receipt of notices/communications from the office of the CIT(A) through email. For the sake of clarity, the “Form- 35” is culled out as under (relevant extract): 10. As the assessee company had specifically opted out of service of notices/communications from the office of the CIT(A) through email, therefore, we find substance in the ld. AR’s claim that as no hard/physical copy of the notice intimating the fixation of the hearing of the appeal before the CIT(A) was ever served upon the assessee company, therefore, it can safely be concluded that it was not validly put to notice. Although, it is the Ld. DR’s claim that the Department had way back done away with the service of hard/physical copies of notices, but, we are of the firm conviction 7 ITA No.93/Viz/2025 that as the assessee-appellants in “Form-35” are still provided with an option as to whether or not the notices/communications be sent to them on email, therefore, the aforesaid contention of the Department is bereft of any substance and does not merit acceptance. 11. Be that as it may, we are of the firm conviction that as the assessee company/appellant had not been validly put to notice about the fixation of the hearing of the appeal before the CIT(A), therefore, it had for no fault on its part remained divested of an opportunity to assail the additions made by the A.O before the said first appellate authority. 12. Considering the aforesaid facts, we are of a firm conviction that the matter in all fairness be restored to the file of the CIT(A) with a direction to re-adjudicate the same. 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 which shall remain at liberty to substantiate its claim based on fresh documentary evidence, if any. The Ground of appeal No.1 is allowed for statistical purposes. 8 ITA No.93/Viz/2025 13. As we have set-aside the matter to the file of the CIT(A) for fresh adjudication, therefore, we refrain from adverting to and adjudicating the merits of the case, which, thus, is left open. The Ground of appeal No. 2 is left open. 14. Resultantly, the appeal filed by the assessee company is allowed for statistical purposes in terms of our aforesaid observations. 26th मार्च, 2025 को खुली अदालत में सुनाया गया आदेश। Order pronounced in the Open Court on 26th March, 2025. Sd/- Sd/- (मिुसूदन सािडिया) (MADHUSUDAN SAWDIA) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- Sd/- (रिीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Sd Hyderabad, dated 26.03.2025. *TYNM/sps 9 ITA No.93/Viz/2025 आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Bluefrog Mobile Technologies Private limited, 2-68, Kotha Paradesapalem Village, Near by UCIM Church, Chinagadilimandal, Madhurawada Rural, 5th Ward, GVMC, Visakhapatnam – 530041. 2. रधजस्व/ The Revenue : The Deputy Commissioner of Income Tax, Circle – 1(1), Visakhapatnam. 3. The Principal Commissioner of Income Tax, Visakhapatnam. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, विशाखापटणम / DR, ITAT, Visakhapatnam. 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "