D H POLYMER PVT. LTD.,KANPUR V. CIT, KANPUR

ITA 554/LKW/2024

AI Insights

The case involves DH Polymers Pvt. Ltd., which appealed against the orders of the AO and the National Faceless Appeal Centre (NFAC). The AO had disallowed certain payments made to the directors of the company, adding them to the company's income, which increased the assessed income significantly. The NFAC dismissed the appeal ex-parte. The Tribunal noted procedural irregularities in the AO's handling of the case, specifically that the order was issued before the hearing date, thus not allowing the Assessee a fair opportunity to present its case. Consequently, the Tribunal restored the case to the AO for a re-assessment, emphasizing the need for adherence to principles of natural justice.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 32653 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 11-09-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KRISHNA SHARMA
• Keywords: Principle of natural justice
• Section: 143(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, LUCKNOW BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.554/LKW/2024 Assessment Year: 2018-19 DH Polymers Pvt. Ltd. F-37, Site-2, Panki Industrial Area Kanpur v. The CIT(A) Kanpur TAN/PAN:AABCD0681J (Appellant) (Respondent) Appellant by: None Respondent by: Shri Sanjeev Krishna Sharma, D.R. Date of hearing: 10 10 2024 Date of pronouncement: 14 11 2024 O R D E R This appeal has been preferred by the assessee against the order dated 15.07.2024, passed by the ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi for Assessment Year 2018-19. 2. The brief facts of the case are that the assessee filed its return of income for the year under consideration on 31.01.2019, declaring a total income of Rs.21,36,360/-. The assessment was completed under section 143(1) of the Income Tax Act, 1961 (hereinafter called “the Act’), assessing the total income of the assessee at the declared income of Rs.21,36,360/-. Subsequently, the case was selected for Limited Scrutiny Assessment. During the course of scrutiny assessment, the Assessing Officer (AO) observed that the Bonus, Ex-gratia and ITA No.554/LKW/2024 Page 2 of 5 Commission paid to two Directors of the assessee-company, to the tune of Rs.11,05,856/- were not allowable as per the provisions of section 36(1)(ii) of the Act and accordingly, he disallowed the same and added them to the income of the assessee. Finally, he completed the assessment under section 143(3) r.w.s. 143(3A) and 143(3b) of the Act, assessing the total income of the assessee at Rs.32,42,210/-. 3. Aggrieved, the assessee preferred an appeal before the NFAC, who dismissed the appeal of the assessee ex-parte qua the Assessee. 4. Now, the assessee has approached this Tribunal challenging the orders passed by the AO as well as the NFAC by raising the following grounds of appeal: 1. Order of Learned Commissioner of Income Tax appeal is bad in Law and illegal. 2. The Learned Assessing Officer has erred in Law while making an order 27 days before date of hearing. Date of hearing fixed as per show Cause Notice Date 31.01.2021 received on 02.02.2021 Fixing Date 05.03.2021 Date of Order Passed 06.02.2021 Hence Learned Assessing officer has not complied with provision of sec 142(3) of Income Tax Act 1961. ITA No.554/LKW/2024 Page 3 of 5 Thus no opportunity was given to appellant to make his submission. 3. Because no proper & sufficient opportunity has been afforded to the appellate assessee to make out the case sought to be launched against the assessee and there has been gross defiance of the principles of natural justice. 4. Because on the facts and circumstances of the case, the additions made are arbitrary, illegal and void. 5. None was present on behalf of the assessee when the appeal was called out for hearing. However, looking into the facts of the case, I proceed to adjudicate the appeal ex-parte qua the assessee. 6. It is noticed from the letter dated Nil of the Director of the assessee-company, received by the Registry of this Office on 13.9.2023, enclosing therewith seven documents, that the AO had issued show cause notice dated 31.01.2021 (As per document No.7 placed on record) fixing the case of the assessee for hearing on 05.03.2021. However, the order was passed by the AO on 06.02.2021, which is prior to the date fixed for hearing on 05.03.2021. Therefore, it is amply clear that no sufficient opportunity was afforded to the assessee by the AO for presenting its case before him, as the AO, without waiting for any compliance on behalf of the assessee on the date fixed by him for hearing, i.e. on 05.03.2021, passed the order in haste on 06.02.2021, which is 27 days prior to the date fixed for hearing. ITA No.554/LKW/2024 Page 4 of 5 In this view of the matter, this matter needs to be restored to the file of the AO for affording due opportunity of hearing to the assessee. 7. The ld. Senior D.R. had no objection to the restoration of appeal to the AO. 8. I have heard the ld. Senior Departmental Representative and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the Assessee deserves one more opportunity to present its case and, therefore, in the interest of substantial justice, I restore this file to the Office of the AO with the direction to provide one more opportunity to the Assessee to present its case and I also caution the Assessee to fully comply with the directions of the AO in the set-aside proceedings when called upon to do so, failing which, the AO shall be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex-parte qua the Assessee. 9. In the result, the appeal of the Assessee stands allowed for statistical purposes. Order pronounced in the open Court on 14/11/2024. Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:14/11/2024 JJ: ITA No.554/LKW/2024 Page 5 of 5 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR By order Assistant Registrar "