INDIA CONSTRUCTION,DIAMOND HARBOUR V. ITO, WARD - 25(1), KOLKATA

ITA 2592/KOL/2024

AI Insights

The case involves India Construction, a partnership firm engaged in civil contract and labor supply, which appealed against the order of the CIT(A) for the assessment year 2018-19. The firm had initially filed a return showing a total income of ₹53,17,130, which was later assessed at ₹98,02,997 due to additions made by the Assessing Officer (AO) based on discrepancies noted in the accounts of M/s Patton International Ltd. (PIL) and variations in sundry debtors. The CIT(A) dismissed the firm's appeal due to non-prosecution as the firm failed to comply with hearing notices. The ITAT found that the CIT(A) had not adjudicated the appeal on merits and thus remitted the matter back for a detailed examination and reasoned decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716858 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 18-12-2024
• Other Referred Cases: Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras), Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay)
• 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; TDS
• Section: 143(3); 133(6)

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA श्री संजय शमाा, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction Vs. ITO, Ward-25(1), Kolkata (Appellant) (Respondent) PAN: AABFI8650D Appearances: Assessee represented by : None. Department represented by : Bonnie Debbarma, Addl. CIT, Sr. DR. Date of concluding the hearing : 22-July-2025 Date of pronouncing the order : 21-August-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the 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 2018-19 dated 22.01.2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 23.04.2021. None appeared on behalf of the assessee and the case was heard with the assistance of the Ld. DR. Printed from counselvise.com Page | 2 I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction. 1.1. The Registry has informed that the appeal filed by the assessee is barred by limitation by 262 days. An application along with an affidavit seeking condonation of delay has been filed by the assessee stating as under: “All related papers of filing of Form No.36 were given to an honourable practicing Chartered Accountant but he could not file the appeal papers due to his sudden demise moreover, he had no such assistant who could have been inform to the appellant. Recently the appellant came to know the fact and arrange to file the appeal. Thus the delay of 262 days has been caused due to reasons beyond the Central of the Appellant. In view of the above fact you are requested to kindly condone the delay of 262 days. For this act of kindness the appellant shall ever remain obliged.” 1.2. Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1) That on the facts and circumstances of the case the order of the learned Assessing Officer is bad in Law. 2) That on the facts and circumstances of the case the Learned A.O. was not justified disallowing a sum of Rs 4,27,58,040/- being on account of bills raised and net profit of Rs 11,88,673/- and the same is added to the income of your petitioner. 3) That on the fact and circumstances of the case the Learned A.O, was not justify disallowed a sum of Rs 32,97,194/- being on account of Sundry Debtor and same to the income of your petitioner. 4) That the petitioner craves leave to add to, alter, amend, modify, substitute, delete and/or rescind all or any of the Grounds of Appeal on or before the final hearing, if necessity so arises.” 3. Brief facts of the case are that the assessee is a partnership firm and had filed the return of income showing total income of ₹53,17,130/- and the case was selected for limited scrutiny on the ground of’ high Printed from counselvise.com Page | 3 I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction. ratio of refund to TDS and low net profit shown by construction contractors and claim of large refund. It was submitted before the Ld. AO that the assessee was in the business of civil contract and labour supply contract and it provided labours and executed civil contracts for various concerns, M/s Patton International Ltd. (‘PIL’), being one of them. The Ld. AO issued notice under section 133(6) to PIL and on verification of the ledger account, noted certain discrepancy on account of undisclosed works contract which was worked out at ₹4,27,15,040/- when compared with the books of account of the assessee. The assessee contended that all payments were received by cheque, but PIL had shown false bills and payments which resulted in some difference. However, the Ld. AO applied the disclosed net profit rate of 2.78% to the undisclosed turnover worked out and the undeclared profit of ₹11,88,673/- was added to the income of the assessee. Further, the details of sundry debtors were also examined and there was a variation of ₹32,97,194/- in the amount to be received from PIL. The assessee’s explanation regarding the debtor showing some false entries/bills and payments was not accepted by the Ld. AO and the sum of ₹32,97,194/- was also added to the income of the assessee and the total income was assessed at ₹98,02,997/-. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who, vide the impugned order dismissed the appeal on account of non-prosecution as the assessee failed to comply with the notices issued for hearing of the appeal. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 4. We have considered the submissions made in the statement of facts, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Ld. DR submitted that despite being granted Printed from counselvise.com Page | 4 I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction. opportunities, proper compliance was not made before either the Ld. AO or even before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal on account of non-prosecution as despite issuing several notices, neither any written submission was filed not the assessee appeared keen to pursue the appeal and no material/argument had been brought on record by the appellant against the order of the AO and in support of the grounds of appeal taken. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld. 5. We have heard the rival submissions, gone through the facts of the case and perused the record and the submissions made by the Ld. DR. A perusal of the appellate order shows that while the Ld. CIT(A) has discussed non-compliance on the part of the assessee as the notices sent were not complied with but he has not adjudicated the appeal on merit. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.” 6. Thus, section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. The Ld. CIT(A) has neither adjudicated various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose the assessee's appeal merely by holding that Assessing Officer's Printed from counselvise.com Page | 5 I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction. order is a self-speaking order which requires no interference. The relevant extract from the order is as under: 6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion. 7. In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard. 7. It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. The relevant extract is as under: 8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the Printed from counselvise.com Page | 6 I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction. appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non- prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. 8. After examining the facts of the case and the law, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. CIT(A) for disposal of the grounds of appeal taken by the assessee on merit by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall also be followed and an opportunity of being heard may be provided to the Ld. AO, if required. Accordingly, the grounds taken by the assessee in his appeal are partly allowed for statistical purposes. 9. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 21st August, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 21.08.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 7 I.T.A. No.: 2592/KOL/2024 Assessment Year: 2018-19 India Construction. Copy of the order forwarded to: 1. India Construction, 2 Falta Special Economic Zone, Diamond Harbour, Kolkata, West Bengal, 743504. 2. ITO, Ward-25(1), Kolkata. 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 Printed from counselvise.com "