GURKRIPA ENTERPRISES,KOLKATA V. ITO, WARD 40(3), KOLKATA

ITA 1594/KOL/2025

AI Insights

Gurkripa Enterprises appealed against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, which was passed under section 250 of the Income Tax Act, 1961 for the assessment year 2017-18. The primary grievances included the denial of a proper hearing, erroneous income determination, and improper treatment of sales receipts during the demonetization period as income. The Tribunal found that the assessee was not adequately represented at earlier stages and thus decided to set aside the lower authorities' orders and remit the case back to the Assessing Officer for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 788424 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 18-07-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Business expenditure; Principle of natural justice
• Section: 144; 142(1); 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.: 1594/KOL/2025 Assessment Year: 2017-18 Gurkripa Enterprises Vs. ITO, Ward-40(3), Kolkata (Appellant) (Respondent) PAN: AACFG8182D Appearances: Assessee represented by : D.K. Gupta, CMA. Department represented by : Sanjib Kumar Paul, Addl. Sr. D.R. Date of concluding the hearing : 22-October-2025 Date of pronouncing the order : 25-November-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 15.05.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: 1.The impugned order was passed by the Learned CIT (Appeals) without affording the assessee its right to have proper and meaningful opportunity of being heard, in violation of the principles of natural justice and Article 21 of the Constitution of India. The procedure adopted through the National Faceless Appeal Centre failed to ensure effective participation and representation, rendering the impugned order bad in law and liable to be set aside. 2. The Learned CIT (Appeals) was in error in law and fact in determining the total income of the assessee at Rs. 15,73,030/-. The order shockingly ignores substantial amounts received from partners and debtors, which form part of the assessee's financial transactions and are Printed from counselvise.com Page | 2 ITA No.: 1594/KOL/2025 Assessment Year: 2017-18 Gurkripa Enterprises crucial for determining the correct taxable income. Furthermore, the determination of taxable income was made in complete disregard of the assessee's genuine business expenditure, which is a mandatory component under Section 30 to 36 of the Act. Such a determination is arbitrary, contrary to law, and results in an excessive assessment. 3. The Learned CIT (Appeals) was wholly wrong in making an addition of Rs. 13,15,500/- by treating the said amount as income. The said amount represents sales receipts received during the period of demonetization (8th November, 2016 to 31st December, 2016) and was erroneously characterized as income. The assessment proceedings failed to consider the unique economic circumstances prevailing during demonetization and the assessee's legitimate business transactions, which are evidenced by the filed VAT returns. 4. The Learned CIT (Appeals) was in error in law in denying legitimate business expenditure without assigning any valid, legal, or factual reasons. The assessee was fully entitled to claim deductions in respect of statutory payments, which became due and paid during the relevant assessment year, in accordance with the provisions of Section 43 B of the Act. Ilie impugned order fails to address or justify the disallowance of these statutorily permissible expenditures. 5. The assessee consistently and diligently filed its Value Added Tax (VAT) returns for the Financial Year 2016-17, correctly disclosing the details of purchases and sales. These VAT returns form part of the relevant records and accurately reflect the assessee's trading activities during the said period, which were completely ignored by the Learned CIT (Appeals). 6. The assessee incurred a genuine and substantial business loss of Rs. 15,28,890/- for the Financial Year 2016-17, as per its audited Profit & Loss Account and filed VAT returns. Despite this, the Learned CIT (Appeals) failed to appreciate that the assessee was entitled to file a belated return under Section 119(2Xb) of the Act to claim this loss, especially considering the assessee's inability to file the return by the due date due to unavoidable circumstances. The impugned order does not address this aspect and wrongly disallows the assessee's claim for the loss. 7. The assessee prays that this Hon’ble Tribunal may be pleased to allow this appeal, set aside the impugned order dated 3/11/2022, and pass a fresh order in its stead, consistent with the findings of this Tribunal. The assessee further craves leave to add, alter, amend, or withdraw any or all of the grounds of appeal stated herein, or to add any further grounds of appeal, before or at the time of hearing. 3. The Registry has informed that the appeal is time barred by 1850 days in filing the appeal by the assessee. However, Shri Angrez Singh Printed from counselvise.com Page | 3 ITA No.: 1594/KOL/2025 Assessment Year: 2017-18 Gurkripa Enterprises Anand, partner of the assessee-firm filed an affidavit before the ITAT dated 15th July, 2025 in support of the condonation of delay of 1850 days mentioning that due to his medical exigencies and suffering from age related ailments, chronic hypertension and prostatic complications, presently in a semi-bedridden state, which require continuous medical supervision during the crucial period for filing the appeal. The appeal could not be filed in time. He also stated that the delay in filing the appeal was purely unintentional and occurred due to circumstances beyond his control. He also stated that he was not aware of any notices of hearing and the order passed by the ld. CIT(Appeals) and when he came to know about the order passed by the ld. CIT(Appeals), he approached the ld. A.R. to prefer an appeal, due to which there is a delay of 1850 days in filing the appeal before the Tribunal. Therefore, he pleaded to condone the delay. 4. Considering the facts and circumstances of the case, we are of the view that the assessee had sufficient cause and was prevented in filing the appeal within the stipulated time. Therefore, we are inclined to condone the delay of 1850 days. Hence the delay is condoned and the appeal is adjudicated. 5. Brief facts of the case are that the assessee is a firm, and there was definite and credible information available with the ld. Assessing Officer that the assessee-firm had deposited cash to the tune of Rs.15,15,500/- during the period of demonetization i.e. 09.11.2016 to 31.12.2016. There was no compliance to the notice under section 142(1) of the Act which issued to the assessee calling for the return of income. Subsequently a letter was issued under section 133(6) to the Syndicate Printed from counselvise.com Page | 4 ITA No.: 1594/KOL/2025 Assessment Year: 2017-18 Gurkripa Enterprises Bank calling for KYC and other documents including copies of Bank statement. The Bank provided the relevant details and documents. A show-cause notice was issued on 03.09.2019 requesting the assessee to explain the nature and source of cash deposits into the Bank during the period of demonetization as well as total deposits in the Bank account. But there was no compliance from the assessee. Thereafter, the assessee has furnished certain details and documents submitting that the deposits in the Bank account included receipt from debtors, loans and funds provided by the partners. The submission of the assessee was perused by the ld. Assessing Officer. As no books of account, cash flow chart, cash book were furnished explaining the nature and source of cash deposited in the Bank account during the period of demonetization, therefore, the profit was taken at 8% on the turnover. The turnover till 08.1.1.2016 was worked out to Rs.12,58,187/- and the net profit at 8% was applied for the period of demonetization and there was cash deposited to the tune of Rs.15,15,500/- and the details of date-wise deposits mentioned in the assessment order. The ld. Assessing Officer did not allow any benefit of cash sales and added to the sum of Rs.13,15,000/- under section 69A of the Act to the total income of the assessee. There were cash and non- cash deposit of Rs.19,67,180/- and in absence of any books of account, the net profit on such sales was computed at 8% of turnover, which worked out at Rs.,157,374/-. The ld. Assessing Officer treated the amount of Rs.1,57,374/- as undisclosed income from business and added to the total income of the assessee under section 144 of the Act. Finally, ld. Assessing Officer determined the total income of the assessee at Rs.15,73,030/-. Printed from counselvise.com Page | 5 ITA No.: 1594/KOL/2025 Assessment Year: 2017-18 Gurkripa Enterprises 6. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who issued several notices for hearing to the assessee but as there was no compliance from the side of assessee, he dismissed the appeal after perusing the contents of the assessment order on account of non-prosecution and without considering the provisions of section 250(6) of the Act. 7. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 8. Rival contentions were heard and the submissions made have been examined. At the outset, the ld. A.R. of the assessee submitted that the assessee was not properly represented in its case before the ld. Assessing Officer and ld. CIT(Appeals). The ld. Counsel requested before the Bench to set aside the order of lower authorities and remit the matter back to the file of ld. Assessing Officer for deciding it afresh. In the appeal before us, the ld. Counsel for the assessee stated that the assessee has sufficient evidence for cash deposits and for the entire sale proceeds, which has not been accepted by the ld. Assessing Officer. 9. We have considered the submissions made by both the parties and are of the view that since representation was not properly made before the ld. Assessing Officer as well as Ld. CIT(Appeals), therefore, the lower authority dismissed the appeal of the assessee. After considering the totality of the facts and circumstances of the case and in the interest of justice and fair play, we are inclined to set aside both the orders of the lower authorities and remit the matter back to the file of ld. Assessing Officer to decide the matter afresh after providing one more opportunity of being heard to the assessee. The assessee shall be at liberty to raise all legal issues raised in the grounds of appeal before Printed from counselvise.com Page | 6 ITA No.: 1594/KOL/2025 Assessment Year: 2017-18 Gurkripa Enterprises us and shall not seek unnecessary adjournments and Rule 46A of the I.T. Rules, 1962 shall also be followed. At the same breath, we also hereby caution the assessee to promptly co-operate with the proceedings before the ld. Assessing Officer failing which the ld. Assessing Officer shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. Thus, the grounds raised by the assessee are partly allowed for statistical purposes. 10. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 25th November, 2025. Sd/- Sd/- SSSd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 25.11.2025 Printed from counselvise.com Page | 7 ITA No.: 1594/KOL/2025 Assessment Year: 2017-18 Gurkripa Enterprises Copy of the order forwarded to: 1. Gurkripa Enterprises, 14, Princep Street, G.C. Avenue, Kolkata- 700072. 2. ITO, Ward-40(3), Kolkata, 3, Govt. Place (West), Kolkata- 700001. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Laha Printed from counselvise.com "