GAUTAM TECHNO SANITATION PVT. LTD.,DELHI V. DCIT, CIRCLE- 10(1), NEW DELHI, NEW DELHI

ITA 1073/DEL/2024

AI Insights

The case involves Gautam Techno Sanitation Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), NFAC, New Delhi, concerning the Assessment Year 2014-15. The primary issues in the appeal included the taxability of mismatched receipts, disallowance of job work expenses, and the chargeability of interest and penalties under various sections of the Income Tax Act, 1961. The Tribunal noted procedural lapses by the CIT(A) in not addressing the grounds of appeal on merits and not providing a speaking order, leading to the decision to remit the case back for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 22848 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Other Referred Cases: Jitender Kumar vs. ITA No. 8568/Del/2023, H. Guruswami & Others vs. Civil Appeal No. 317/2025, Collector, Land Acquisition vs. MST Katiji, CIT vs. Premkumar Arjundas Luthra HUF, MARC Laboratories Ltd. vs. ITA No.2731, 2732, 2733, 2730, 2734 & 2735/DEL/ 2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANISTA
• Assessee Lawyers: ANANYA KAPOOR
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Reasonable cause; Period of limitation; Principle of natural justice; TDS; FORM 26AS
• Section: 143(3); 271(1)(c); 133(6); 234B; 191; 37(1); 5(2)

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’: NEW DELHI BEFORE SHRI YOGESH KUMAR US, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.1073/Del/2024, A.Y. 2014-15 Gautam Techno Sanitation Pvt. Ltd. 122A/17, Flat No. 2, UGF Anand Apartment, Gautam Nagar,New Delhi PAN:AADCG3871F Vs. DCIT, Circle-10(1),New Delhi (Appellant) (Respondent) Appellant by Mrs. Ananya Kapoor, Advocate Respondent by Sh. Rajesh Kumar Dhanista, Sr. DR Date of Hearing 29/01/2025 Date of Pronouncement 29/01/2025 ORDER PER AVDHESH KUMAR MISHRA, AM This appeal for the Assessment Year (hereinafter, the ‘AY’) 2014-15 filed by the assessee is directed against the order dated 30.06.2023 passed by the Commissioner of Income Tax (Appeals), NFAC, New Delhi [hereinafter, the ‘CIT(A)’]. 2. Following grounds have been raised in this appeal:- “1. That the assessment order dated 06.12.2016 passed under Section 143(3) of the Income Tax Act, 1961 ('the Act') for Assessment Year ('AY') 2014-15 ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 2 by the Assessing Officer (AO), and the additions/disallowances made therein are illegal, bad in law, without jurisdiction, and not in accordance with the provisions of the Act. 2. That in view of the facts and circumstances of the case, the National Faceless Appeal Centre ('NFAC') vide order dated 30.06.2023 ('impugned order\") has erred in law and on facts in not adjudicating the appeal of the Appellant on merits of the additions made. 3. That in view of the facts and circumstances of the case, the NFAC has erred in holding that the Appellant has no intention to avail the benefit of the Direct Tax Vivad Se Vishwas Act, 2020 ('DTVSV Act'). 4. That in view of the facts and circumstances of the case, the AO has erred in law and on facts in making the disallowance of expenditure of Rs. 64,95,000/- under Section 37(1) of the Act on account of job work expenses. 5. That in view of the facts and circumstances of the case, the AO has erred in law and on facts in making the disallowance of Rs. 3,49,50,567/- on account alleged mismatch of receipts reflected in Form 26AS and ITR. 6. That in view of the facts and circumstances of the case, the NFAC has erred in dismissing the appeal of the Appellant without considering the submissions and documents filed by the Appellant and without giving a reasonable opportunity of being heard to the Appellant. 7. That in view of the facts and circumstances of the case and in law, the additions/disallowances made by AO are incorrect, illegal, bad in law & based on surmise and conjectures. 8. That the documents, explanations filed by the Appellant, and the material available on record have not been properly considered and judicially interpreted and have been wrongly ignored. 9. That the NFAC has ignored the basic principle that the cause of substantial justice should not be ignored in view of the technicalities and as such the order passed is incorrect, against the spirit of justice and also the principles of natural justice. ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 3 10. That the NFAC has erred in law and in facts by ignoring the basic principle that the right of the Appellant to pursue the statutory remedy of appeal cannot be taken away and any order passed in the contrary is liable to be set aside. 11. That without prejudice, the Appellant was under the bonafide impression that the application filed under the DTVSV Act would be accepted and as such it had paid all the taxes and as such the dismissal of appeal without giving reasonable opportunity is illegal, unjust, and against the principles of natural justice. 12. That in view of the facts and circumstances of the case and in law, the AO has erred in charging interest under Sections 234B and 234D of the Act. The interest is also wrongly calculated. 13. That in view of the facts and circumstances of the case and in law, the AO has erred in initiating the penalty proceedings against the assessee under Section 271(1)(c) of the Act. 14. The Appellant craves leave to add to, alter, amend, and/or withdraw any ground or grounds of appeal either before or during the course of hearing the appeal.” 2.1 In nutshell, four issues have been raised in this appeal (i) the taxability of mismatched receipts of Rs.3,49,50,567/- as per 26AS and receipts as per the Income Tax Return (hereinafter, the ‘ITR’), (ii) disallowance of job work expenses of Rs.64,95,000/-, (iii) chargeability of interest under Sections 234B and 234D of the Income Tax Act, 1961 (hereinafter, the ‘Act’) and initiation of penalty under section 271(1)(c) of the Act. ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 4 3. There is delay of 191 days in filing this appeal. As per the application for condonation of delay annexed with the appeal memo, the reason for delay is that the appellant/assessee, in belief that the VSVS filed by it in 2021 would attain finality, did not see the portal regularly for pending appeal before the CIT(A). At the outset, the Ld. Authorized Representative (hereinafter, the ‘AR’) prayed for condonation of delay on the reasoning that the appellant/assessee, after filing VSVS in 2021, became reluctant to update about the appeal in this case pending before the Ld. CIT(A) and did not check the fate of this case through/on e-mail, ITBA/Income Tax system. Therefore, the delay had taken place. The Ld. AR, placing emphasis on the decision of the Co-ordinate Bench in the case of Jitender Kumar, ITA No. 8568/Del/2023, prayed for condonation of delay as the appellant/assessee had not derived any benefit by filing the appeal after due date. For deciding the case on merit, the Ld. AR prayed for remitting the matter back to the Ld. CIT(A) as the same was passed ex-parte. 4. On the other hand, the Ld. Sr. Departmental Representative (hereinafter, the ‘Sr. DR’) with the help of facts mentioned in the assessment order and appellate order submitted that reasonable opportunities of being heard were provided to the appellant/assessee by the AO and the Ld. CIT(A) but the appellant/assessee tactfully ensured noncompliance to avoid the proper investigations. Hence, he prayed for not ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 5 condoning the delay and upholding of orders of the lower authorities. He, placing reliance on the decision of the Hon’ble Supreme Court in the case of H. Guruswami & Others [Civil Appeal No. 317/2025 order dated 08.01.2025], prayed for dismissal of the appeal. 5. We have heard the rival contentions and have perused the material available on record. There is no dispute and is an admitted fact that there has been a delay in filing the present appeal by 191 days. There is also no dispute that the Tribunal, under section 253(5) of the Act, may admit an appeal filed beyond the period of limitation where it is satisfied that there exists a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation of the assessee therefore becomes relevant to determine whether the same reflects sufficient and reasonable cause on its part in not presenting the present appeal within the prescribed time. In the instant case, the CIT(A) was made aware of the pending VSVS application of the assessee. However, he passed the ex-parte order. As soon as the assessee came to know of the appeal, he consulted his Counsel and filed the present appeal as per advice of the Counsel. 6. In case of Collector, Land Acquisition vs. MST Katiji (Supra), the Hon'ble Supreme Court has held that the expression ‘Sufficient Cause’ employed by the legislature is adequately elastic to enable the Courts to ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 6 apply the law in a meaningful manner to sub-serves the ends of justice that being the life-purpose of the existence of the institution of Courts. It was further held by the Hon’ble Supreme Court that such liberal approach is adopted on one of the principles that refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Another principle laid down by the Hon’ble Supreme Court is that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. It was also held by the Hon’ble Supreme Court that there is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of male fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. 7. In the instant case, applying the same principles, we find that there is no culpable negligence or malafide on the part of the assessee in delayed filing of the present appeal and he does not stand to benefit by resorting to such delay more so considering the fact of the case. Further, the facts of the case of H. Guruswami & Others (supra) are quite different and there is ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 7 no abnormal delay. Therefore, in the factual matrix of the present case, we find that there exists sufficient and reasonable cause for condoning the delay in filing the present appeal and as held by the Hon’ble Supreme Court, where substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserved to be preferred. 8. In light of aforesaid discussions, in exercise of powers under section 253(5) of the Act, we hereby condone the delay in filing the present appeal as we are satisfied that there is sufficient cause for not presenting the appeal within the prescribed time and the appeal is hereby admitted and is being decided accordingly. 9. The brief facts of the case relevant for deciding this appeal are that the assessee, engaged in the business of Plumbing and Fire Fighting Contract works, filed its Income Tax Return (hereinafter, the ‘ITR’) on 01.11.2014 declaring income of Rs.1,06,45,280/-. The case was picked up for scrutiny on the reasoning that there was mismatch in the income credited in Profit & Loss Account of the assessee and income as per 26AS of the assessee. During the course of assessment proceedings, the Assessing Officer (hereinafter, the ‘AO’) noticed that the contract receipts as per 26AS of the assessee was Rs.3,49,50,567/- higher than that credited in its Profit & Loss Account. The AO, therefore, show-caused the assessee to ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 8 explain the same. The assessee filed its explanation. However, the AO, being dissatisfied with the said explanation, taxed the difference of Rs.3,49,50,567/- observing as under:- “During the course of assessment proceedings on perusal of Profit & Loss Statement with 26AS of the assessee company it was noticed that there is a mismatch of Rs. 3,49,50,567/-in the same. Accordingly, the All of the assessee company vide ordersheet entry dated 20.10.2016 was asked to furnish reconciliation of 26AS statement and ITR w.r.t. receipts of TDS and also to show cause as to why the difference of Ra. 3,49,50,567/- be not added to the income of the assessee. In compliance thereto, the reconciliation statement as submitted by the assessee vide letter dated 14.09.2016 is reproduced below: Particulars Amount (in Rs.) 1. Amount of Contract Receipt as per Service Tax Return F.Y. 2013-14 22,62,46,266/- 2. Amount of Contract Receipt on which service tax deposited but not shown in Service Tax Return in F.Y. 2013-14 & 2014-15 1,97,64,731/- 3. Bill Booked & Service Tax Payable in March 2014 but this amount shown in Service Tax Return April-Sept. 2014-15 2,15,60,349/- Total Work done amount on which service tax payable 26,75,71,346/- Contract Receipt as Tally/P & L A/c 22,87,34,904/- Difference Amount on which we have service tax deposited till March, 2014, in this amount some amount is last year contract receipt booked in tally & some 3,88,36,442/- ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 9 amount is contract receipt booked in this year but payment receipt after March 2014 Since, no documentary support or party wise breakup was provided with the same, the assessee was asked to explain the same. The assessee company further vide their submissions dated 26.10.2016 submitted the reconciliation statement as under: Particulars Amount (in Rs.) Receipt as per our books 22,98,13,451/- Add:- Life Style due to work order cancelled Service Tax including in 26AS of all parties TDS Deducted but not booked JP Mobilization/Other 15,00,000/- 1,09,60,775/- 1,74,39,191/- 1,16,38,526/- Less:- TDS not deducted of J.P. 65,87,913/- Total Amount receipt as per 26AS 26,47,64,030/- On the scrutiny of the aforesaid reconciliation statement, it is observed that the statement is in contradiction and does not match with the submission of the assessee vide letter dated 14.09.2016 (mentioned above) wherein the assessee has admitted that the said difference is on account of TDS deducted on Service Tax. Further, the assessee has not placed on record any documentary evidence in support of the advances received from M/s JaiprakashAssociates Ltd. &Mrs Life Style Bulldoon Pvt. Ltd., and TDS deducted thereon. The assessee did not produce/submit on record any copies of ledger account or confirmation from Me Life Style Buildcon Pvt. Lid. & M/s JaiprakashAssociates Ltd. confirming the said claim of assessee of TDS deducted on advances. The assessee has claimed to receive mobilization advance of Rs.15,00,000/- from M/s Life Style Buildcon Pvt. Ltd but no confirmation for the same has been filed by the assessee thus, it can be inferred that the assessee has ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 10 nothing to prove in this regard. Further, the assessee has not recognized an amount of Rs.1,74,39,191/- received from M/s Jaiprakash Associates Ltd, as revenue, on which TDS has already been deducted by this party and no explanation/justification has been furnished in this regard. The assessee company has not produced any documentary evidence to justify the difference and has merely quantified the figures in form of reconciliation statement. The assessee totally failed to produce any documentary evidences in support of the figures mentioned in the reconciliation statements and did not justify the difference. Therefore, the sum of Rs. 3,49,50,567/- (being the amount of difference as Gross Receipts as per Form 26AS and Gross Receipts as per Profit & Loss Account) is added back to the total income of the Assessee Company. Consequently, I am satisfied that to the extent of Rs.3,49,50,567/- the assessee has concealed furnished inaccurate particulars of its income and penalty proceedings u/s 271(1)(c) have been initiated separately. (Addition of Rs. 3,49,50,567/-)” 9.1 The AO issued notices under section 133(6) of the Act to those persons whom job work charges of Rs.5,14,63,284/- had been claimed to have been paid by the assessee. However, the notices sent to 8 parties whom payment of Rs.64,95,000/- claimed having done returned unserved. Thereafter, the assessee was show-caused by the AO to explain and to justify the genuineness of these expenditures. In compliance, the assessee submitted that their addresses might have been changed though their PAN and TDS details available on the record established the genuineness of the questioned expenditure of Rs.64,95,000/-. However, the AO, being not convinced with the explanation, disallowed the same. ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 11 9.2 Aggrieved, the assessee filed appeal. The Ld. CIT(A) dismissed the said appeal observing as under: “4.3.1. The appellant has opted for Vivad se Vishwas Scheme and already filed Form 1 & 2 vide acknowledgement number 866509800221220 dated 22.12.2020 and subsequently the certificate in Form 3 was also issued by the department vide CERTIFICATE NUMBER 221272180200121 dated 20.01.2021. But the appellant did not pay tax amount of Rs.86,22,834/- determined as payable in Form 3 by filing Form 4. In this context, whether the appeal can be decided on merits arises. ………. 4.3.4. Thus, upon issuing Form 3 to the appellant by the designated authority, being the jurisdictional Pr.CIT, the appeal is deemed withdrawn. In appellant’s case the Form 3 was issued on 20.01.2021. The appellant should have paid the tax intimated in Form 3 and filed Form 4 with proof of withdrawal, for the designated authority to pass order under section 5(2) by which the immunity from penalty, litigation etc is provided to the appellant. However, in the present case, the appellant did not file the Form 4 and intimate the payment of arrear to the designated authority. The last date for making the payment and filing the Form 4 has been extended from the 15 days of receipt of Form 3 to 31.10.2021 by various notifications of the CBDT, the last extension being notified by Notification No. 94/2021 F.No. IT(A)/01/2020-TPL (Part-I)- (Part-I) dt: 30.08.2021. As the last date for payment and intimation vide Form 4 is over, the question remains as to the status of the appeal.” 10. The Ld. AR submitted that the Ld. CIT(A) had not decided the appeal on merit. The Ld. CIT(A) had not passed the speaking order while sustaining the addition and disallowance under dispute. Accordingly, the Ld. AR requested that the matter may be remitted back to the Ld. CIT(A) to decide the case on merit. On the other hand, the Ld. Sr. DR, drawing our ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 12 attention to various paras of the assessment order and impugned appellate order, requested for dismissal of the appeal. 11. We have heard both the parties and have perused the material available on the record. We take note of the fact that the Ld. CIT(A) has not decided each ground of appeal after discussing the issues in detail and his reasons for agreeing with the assessment order. As per provisions of section 250(6) of the Act, the CIT(A) is obliged to dispose of the appeal in writing after stating the points for determination and to then pass an order on each of the points which has arisen for his consideration. The CIT(A) is further obliged to state the reason for his/her decision on each such point of determination. The CIT(A) is duty-bound to dispose of the appeal through a speaking order on merits on all the points for determination including each ground of appeal. It is evident from the perusal of section 251(1)(a), 251(1)(b) and Explanation of section 251(2) of the Act that the CIT(A) is required to apply his/her mind to all the issues which arise from the impugned order before him/her, whether or not these issues have been raised by the assessee before him/her. 12. Section 251(1)(a) of the Act provides that while disposing of an appeal against assessment order, the CIT(A) shall have the power to confirm, reduce, enhance or annul the assessment. Similarly, the section 251(1)(b) ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 13 of the Act provides that in disposing of an appeal against an order imposing a penalty, the CIT(A) may confirm or cancel such orders or vary it so as to either to enhance or to reduce the penalty. On cumulative consideration of the provisions of section 250(6) of the Act read with sections 250(4), 250(5), 251(1)(a), 251(1)(b) of the Act and Explanation of section 251(2) of the Act, it is concluded that the CIT is not empowered to dismiss the appeal without disposing the same on merits. In this regard, it is worth mentioning the finding of the Delhi Bench in the case of MARC Laboratories Ltd. in ITA No.2731, 2732, 2733, 2730, 2734 & 2735/DEL/ 2022 wherein it has been held as under: “5. We straightway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for the decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex parte order. In view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution. This view is also taken by the Hon'ble Bombay High Court in case of CIT vs. Premkumar Arjundas Luthra HUF, (2017) 291 CTR 614 (Bom.). A bare glance of the order of the CIT(A) shows that CIT(A) has not addressed itself on various points placed for its determination at all and dismissed the appeal of assessee for default in non-appearance. Needless to say, the CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non- compliance without addressing the issue on merits. 6. In the totality of the circumstances, we consider it just and expedient to restore the matter back to the CIT(A) in the larger interest of justice with a view to enable the assessee to avail proper opportunity for disposal of appeal by the CIT(A) on various points. The assessee is cautioned to extend full co-operation to the CIT(A) without any demur, failing which, the ITA No.1073 /Del/2024 Gautam Techno Sanitation Pvt. Ltd. 14 CIT(A) shall be at liberty to conclude the appellate proceedings in accordance with law. Hence, the order of the CIT(A) appealed against, is set aside and all the issues raised in the impugned appeal are restored back to the file of the CIT(A) for fresh adjudication in accordance with law after giving reasonable opportunity of hearing to the assessee.” 13. In view of the above observations and without offering any comment on merit of the case, we deem it fit to set aside the impugned order and remit the matter back to the file of the Ld. CIT(A) for deciding the case in accordance with law, after providing adequate opportunity of being heard to the appellant/assessee. 14. In the result, the appeal is allowed for statistical purposes. Order pronounced in open Court on 29th January, 2025 Sd/- Sd/- (YOGESH KUMAR US) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 29t h/01/2024 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT/PCIT 4. CIT(Appeals) 5. Sr. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "