HOTEL SONIYA,AURANGABAD V. ITO WARD 1 (5) AURANGABAD, AURANGABAD MAHARASHTRA

ITA 1431/PUN/2024

AI Insights

The case involves M/s Hotel Soniya, a partnership firm engaged in the veg-restaurant business, which faced an ex-parte assessment under section 144 of the Income Tax Act, 1961, for the assessment year 2017-18. The assessment was based on a survey conducted under section 133A, where certain income was declared and later not included in the tax return. The Income Tax Officer (ITO) treated a portion of the declared income as unexplained investment under section 69 of the Act. The first appeal was dismissed ex-parte due to lack of evidential support. The Income Tax Appellate Tribunal (ITAT) decided to remand the case for a fresh examination, providing the appellant another opportunity to present their case.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26631 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 28-06-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BS RAJPUROHIT LD.
• Assessee Lawyers: RAMESH THETE LD.
• Keywords: Unexplained expenditure; Unexplained investment
• Section: 144; 142(1); 250; 69; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘SMC’ BENCH PUNE ITAT-Pune Page 1 of 4 BEFORE HON’BLE SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER AND HON’BLE SHRI VINAY BHAMORE, JUDICIAL MEMBER ITA No. 1431/PUN/2024 Assessment Year : 2017-18 M/s Hotel Soniya Gut No. 83, Zhalta Phata, Beed Rd., Ch. Sambhaji Nagar. PAN: AAKFH1989D. . . . . . . . Appellant V/s The Income Tax Officer, Ward-1(5), Ch. Sambhaji Nagar. . . . . . . . Respondent Appearances Assessee by : Mr Ramesh Thete [‘Ld. AR’] Revenue by : Mr BS Rajpurohit [‘Ld. DR’] Date of conclusive Hearing : 11/09/2024 Date of Pronouncement : 01/10/2024 ORDER PER G. D. PADMAHSHALI, AM; This appeal agitates DIN & Orders ITBA/APL/S/250/2024- 25/1064475124(1) dt. 30/04/2024 passed by the first appellate authority [‘Ld. NFAC/ CIT(A)’ hereinafter] u/s 250 of the Income- tax Act, 1961 [‘the Act’ hereinafter] which in turn confirms the ex- parte order of assessment passed u/s 144 of the Act by the Income Tax Officer, Ward-1(12), Ch. Sambhaji Nagar [‘Ld. AO’ hereinafter] for assessment year 2017-18 [‘AY’ hereinafter]; M/s Hotel Soniya Vs ITO ITA No. 1431/PUN/2024 AY: 2017-18 ITAT-Pune Page 2 of 4 2. Succinctly stated facts of the cases are that, the assessee is a partnership firm carrying on veg-restaurant business on which a survey action u/s 133A of the Act on 06/10/2017 was carried out. During the survey on the basis of documents impounded a statement was recorded u/s 131A of the Act whereby the assessee declared certain income. The assessee filed its return of income for the year under consideration on 19/03/2018 declaring NIL income. The return was subjected to scrutiny wherein the assessee was called upon to explain as to why the income declared in survey proceedings should not be added to total income. When notices issued u/s 143(2), 142(1) of the Act remained un- responded, the Ld. AO after putting assessee to show cause notice culminated the proceedings to the best of judgement by treating the amount of ₹35,00,00/- as unexplained investment u/s 69 of the Act which represented the portion of unexplained expenditure incurred by the assessee on construction of its hotel building and framed the assessment accordingly u/s 144 of the Act. 3. The first appeal challenging the former addition was dismissed ex-parte in absence of evidential documents in support of claims/grounds raised in appeal before the Ld. NFAC. M/s Hotel Soniya Vs ITO ITA No. 1431/PUN/2024 AY: 2017-18 ITAT-Pune Page 3 of 4 4. Without touching merits of the case, we have heard rival parties on the limited issue of ex-parte dismissal of first appeal and subject to rule 18 of ITAT-Rules, 1963 perused material placed on record. We observed that, during survey a notebook ‘3D-Art’ was found & impounded u/s 133A(3)(ia) of the Act. The said notebook revealed that the appellant in constructing its hotel building had incurred a total expenditure of ₹1,25,00,00/-. When confronted one of its partners while confirming the expenditure & sources on statement recorded u/s 133A(1) of the Act stripped its sources as funded out of (a) bank loan of ₹90,00,00/- and (b) balance ₹35,00,00/- out of additional investment, which was admitted for taxation. In scrutiny assessment when it has come to the notice that the portion of income admitted/declared in the recorded statement was not offered to tax by the appellant and no explanation vis-à-vis material placed in refuting the taxability of such unexplained source, the Ld. AO treated the same as unexplained investment u/s 69 of the Act and made the addition while framing the ex-parte assessment. On the other hand, in the event of non-prosecution of appeal the Ld. NFAC reiterated the Ld. AO’s findings in confirming the addition ex-parte vide para 12 of the impugned order. M/s Hotel Soniya Vs ITO ITA No. 1431/PUN/2024 AY: 2017-18 ITAT-Pune Page 4 of 4 5. We note that, neither during assessment nor during first appellate proceeding the appellant could produce any convincing documents in support of its claim that such amount is not exigible to tax. Per contra, there was complete non-representation / non- prosecution before both the tax authorities below and the appellant is indifferent even in present proceedings. In these circumstances it would lead to unjust to either party if we advance the adjudication ducking the verification of corroborative & cogent evidences by tax authorities below first. In view thereof without offering any comments on merits of the case, we deem it fit to accord one more opportunity to the appellant for effective representation vis-à-vis compliance so as to enable the Ld. NFAC on remand to adjudicate this issue de-novo in accordance with law. Ordered accordingly. 6. In result, the appeal is ALLOWED FOR STATISTICAL PURPOSES. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Tuesday 01st Day of October, 2024 -S/d- -S/d- VINAY BHAMORE G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 01st Day of October, 2024 आदेश की प्रतितिति अग्रेतिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT Concerned. 4. The CIT(A)/NFAC Concerned. 5. DR, ITAT, ‘SMC’ Bench, Pune 6. ग र्डफ़ इल / Guard File. आिेश नुस र / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune. "