Golden Traders, Amroha V. ITO Ward 1(4), Amroha

ITA 1023/DEL/2023

AI Insights

The case involves Golden Traders, a partnership firm engaged in the business of trading scrap, which appealed against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi. The appeal arose from an assessment order passed under Section 144 read with Section 144B of the Income Tax Act, 1961 for the Assessment Year 2018-19. The primary contention of the assessee was that the assessment was made arbitrarily without proper consideration of facts, especially under the unprecedented circumstances of the COVID-19 pandemic, which hindered their ability to comply with procedural requirements. The Tribunal found merit in the assessee's plea for a fair opportunity to present their case and thus remitted the matter back to the Assessing Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121561 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 09-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 144; 10; 69B; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI YOGESH KUMAR US, JUDICIAL MEMBER I.T.A. No.1023/DEL/2023 Assessment Year 2018-19 Golden Traders Pathkuli Road, Joya, Amroha Uttar Pradesh. Vs. ITO Ward-1(4) Amroha TAN/PAN: AARFG0927H (Appellant) (Respondent) Appellant by: Shri Nitin Gulati, Adv Shri Vicky Kapoor, CA Respondent by: Shri K. K. Mishra, Sr.DR Date of hearing: 04 07 2023 Date of pronouncement: 31 08 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The capt ioned appeal has been fi l ed b y t he assessee agai nst t he or der of t he ld. Commi ssioner of I nco me Tax (Appeal s) , Nat i onal Facel ess Appeal Centre ( NFAC), Delhi (‘CI T(A) ’ i n s hor t) dated 17. 03. 2023 ari si ng f ro m the assess ment or der dat ed 22. 04. 2021 passed b y t he Assessi ng Of fi cer ( AO) unde r Secti on 144 r. w. Sect ion 144B of t he I nco me Tax Act, 1961 (t he Act) concerni ng AY 2018- 19. 2. The gr ounds of appeal raised b y the assessee read as un der: “ 1 . T h a t t h e L d A O h a s e r r e d i n l a w a n d o n f a c t i n m a k i n g w r o n g a n d i n c o r r e c t a s s e s s m e n t u / s . 1 4 4 o f I n c o m e T a x A c t 1 9 6 1 w i t h o u t a p p ra i s i n g a l l f a c t s a n d f i g u r e s a n d o n m e r e I m a g i na r y g r o u n d s b a s e d I.T.A. No.1023/Del/2023 2 o n c o n j e c t u r e s a n d su r m i s e s . 2 . T h a t t h e L d . C I T ( A ) a l s o e r r e d i n u p h o l d i n g t h e i n c o r r e c t o rd e r c o n t r a r y t o t h e s e t t l e d p r o v i s i o n s o f a c t p a s s e d b y t h e L d . A . O . T h u s , b o t h t h e o rd e r s a r e l i a b l e t o b e s e t a s i d e . 3 . T h a t t h e L d A O h a s e r r e d i n l a w a n d o n f a c t i n th e a s s e s s m e n t o r d e r m a k i n g t h e a d d i t i o n o f R s . 5 3 , 0 7 , 0 4 6 / - b e i n g di f f e r e n c e i n p u r c h a s e a n d R s . 8 3 , 5 1 , 0 0 0 / - r e l a t i n g t o s q u a r e d u p u n s e c u r e d lo a n s, w h i c h i s b a d i n l a w a n d L d . C I T ( A ) a l s o i g n o r e d t h e v i t a l f a c t s w h i c h a r e a p p a r e n t l y a p p e a r i n g o n t h e f a c t s o f t h e c a s e bu t i n s t e a d h e u p h o l d t h e o r d e r o f t h e A . O . 4 . T h a t t h e I d . A O h a s e r r e d i n l a w a n d o n f a c t s i n p a s s i n g a s s e s s m e n t o r d e r u / s . 1 4 4 a s t h e a s s e s s m e n t h a s b e e n f r a m e d a rb i t r a r i l y w i t h o u t e n s u r i n g p ro p e r o p p o r t u n i t y o f b e i n g h e a rd i n r e s p ec t o f b o t h a d d i t i o n s b y n o t s e r v i n g t h e n o t i c e o n c o r r e c t a d d re s s o f a p p e l l a n t a s s t i p u l a t e d u / s . 2 8 2 o f I T A c t , 1 9 6 1 a n d L d . C I T (A ) h a s e r r e d i n u p h o l d i n g t h e sa m e . 5 . T h a t t h e r e h a s b e e n v i o l a t i o n o f p r i n c i p l e o f n at u ra l j u s t i c e a n d e q u i t y a s t h e A p p e l l a n t w a s p r e v e n t e d f r o m m a k i n g a r e p l y t o t h e s h o w c a u s e n o t i c e d u e t o u n p r e c e d e n t e d s i t u a t i o n o f C o v id - 1 9 . 6 . T h a t t h e A p p e l l a n t h a s n e v e r r e c e i v e d a n y n o t i c es d u r i n g t h e p r o c e e d i n g s b e f o r e C o m m i s s i o n e r A p p e a l a s t h e s a m e w e r e s e n t o n l y b y E m a i l s t o s a n t o s h k u m a r .9 6 5 @ r e d i f f m a i l . c o m w h i c h a d m i t t e d l y d o e s n o t b e l o n g t o a p p e l l a n t a n d w a s n e v e r c o n v e y e d t o th e a p p e l l a n t f r o m t h e s a i d p e r s o n t o wh o m t h e s a i d e m a i l i d b e l o n g s . 7 . T h a t t h e I d . C I T ( A ) d i s m i s s e d t h e a p p e a l o f a p p el l a n t o n t h e g r o u n d o f n o n - s u b m i s s i o n o f e x p l a n a t i o n w h i c h t h e y c o u l d no t p r e s e n t d u e t o c i r c u m s t a n c e s b e y o n d t h e i r c o n t r o l a n d i n t h e i n t e re s t o f n a tu r a l j u s t i c e , i t i s t h e r e f o r e p r a y e d o n e m o r e o p p o r t u n i ty m a y b e g i v e n t o t h e a s s e s s e e t o s u b s t a n t i a t e h i s c a s e o n m e r i t s . 8 . T h a t t h e a p p e l l a n t r e s e r v e s t h e r i g h t t o a d d a l te r a n d a m e n d o r t o d e l e t e a n y o r a l l t h e g ro u n d s o f a p p e a l o n o r b e f o re t h e d a t e o f h e a r i n g . 9 . T h a t t h e f a c t s a n d c i r c u m s t a n c e s w o u l d u n d o u b t e dl y d e m o n s t r a t e t h a t t h e a p p e l l a n t i s a v i c t i m o f c i r c u m s t a n c e s w h ic h h a p p e n e d d u e t o t h e r e a s o n s b e y o n d t h e c o n t r o l p a r t i c u l a r l y o n a c c ou n t o f u n p r e c e d e n t e d s i t u a t i o n o f t h e C o v i d - 1 9 w h i c h a f f e c te d t h e e n t i r e g l o b e . T o m e e t t h e e n d s o f i n t e r e s t o f j u s t i c e , p r es e n t i s a f i t c a s e , w h e r e t h e a p p e l l a n t s h o u ld b e a f f o r d e d a n o p p o r t u n it y t o m a k e a l l h i s s u b m i s s i o n s a l o n g w i t h t h e f a c t s a n d r e c o rd s b e f o r e t h e a u t h o r i t y t o r e c o n s i d e r t h e a s s e s s m e n t o r d e r . ” 3. When t he matt er was cal l ed for hearing, t he l d. counsel for t he assessee sub mit t ed t hat ; I.T.A. No.1023/Del/2023 3 3. 1 The assessee is a partn ershi p fir m havi ng PAN AAR FG0927H and was for med on 21. 04. 2017 wit h t he obj ect to d o business of tr adi ng of Scrap etc. The assessee pr ocures the scr ap f r o m t he f actor ies / i ndust ries and sel ls t hem i n t he same f or m or aft er di s ma ntl ing. D ur i ng t he AY 2018-19, bei ng the subj ect mat te r of t he pr esent pr ocee di ngs, assessee had undert ake n t otal scrap purchases f or Rs. 3, 55, 59, 446/- and out of t hat made t ot a l sales for Rs. 2, 78, 57, 115/- and l ef t wi th cl osing stoc k a mount i ng t o Rs. 97, 76, 370/ -. The assessee had ma i nt ai ne d pr oper books of account, whi ch w ere audited under Inc o me Ta x Act 1961 and Audi t Repor t in For m 3CB -3CD was upl oaded on I nc ome Tax P ort al along wi th a udi te d bal ance sheet and Pr ofi t and L oss account . The Assessee fi led t heir Inc o me Tax Return wi thi n t he due dat e i n For m I TR- 5 on 31. 10. 2018. F urt her, all the purc hase and sal es bi ll s are dul y recor ded, aut henti cated & s ubst anti at ed b y t he cor respondi ng GST ret ur ns. T he assessee’s case f or the su bject assess ment yea r was sel ect ed for scrut i n y for t he reasons "Large squared up l oans duri ng t he year" as per t he Ta x Audit Report and “Low inc o me fr o m TCS r ecei pts - Scr ap. " i n co mp arison to For m 26AS. A not i ce u/s. 143(2) was i ssued on 28. 09. 2019 f or the pur poses of scrut in y. The assess ment pr oceedi ngs were however under ta ken duri ng the per i od of Covid- 19 whe n t he ent i re Gl obe was under co mplet e l oc kdow n and mo ve ment wi t hin our count r y w as al so severel y restri cted. T he assessee was t hus unabl e t o c o mpi l e t he dat a and in for mat i on s ought b y Ld. A O duri ng the assess ment pr oceedings due t o una vai la bi li t y of t hei r accou ntant a nd bac k up st aff handl ing I.T.A. No.1023/Del/2023 4 thei r assess ment ma tt er due t o ongoi ng C ovid- 19 pande mi c. The appli ca nt was totall y ha ndi capped and hel pl ess to compl y wi t h the noti ces. 3. 2 Conse quentl y, t he Assessing Of fic er passed assessme nt or der u/s. 144 on 22. 04. 2021 b y recor di ng reas ons and made fol lowi ng addit ion s: a) A s seen f rom the A nnu al Inf ormati on S tate ment i.e., For m- 26A S ava il a ble wi th the depar tment, the assessee has made pu rc hase s t o the tune of Rs. 4, 08, 66, 492 /- from M/s Indus Towe rs L i mi ted and TCS w as deducted at Rs. 4,08, 665/ -, w he reas t he purc hases repo rted i n t he P &L accou nt is Rs. 3, 55, 59, 446/ -. Si nce, the ass essee ha s not submi t te d a n y info rma tion, the differ enc e amount of Rs. 53, 07, 046 ( 4, 08, 66, 492 - 3,5 5, 59, 446 ) is t re ated as unex plai ne d expen di tu re a nd a dded back to tota l i ncome . b) As s een f rom For m-3 CD d uri ng t he yea r under reference, t he ass essee has show n squared u p l oa ns to dif ferent part ies t o the tune of R s. 83, 51, 000 /- and s ince, the assessee has not fu rnis he d an y e vi de nce or reply, the ent ire a mou nt o f Rs. 83, 51, 000/- is treated as unexpla ined inves t ment u/s 69B . 3. 3 As a res ult of aggregat e ad dit i ons of Rs.1, 36,58,046/- thus made, a t ax de ma nd f or Rs. 1, 10, 48, 800/ - was fast ened on the assessee. 3. 4 The l d. counsel sub mit s t hat the assessee coul d not explai n the f acts of hi s case due t o an unpr ecedente d si tuat ion of C ovi d- 19 and t he Assessing Of f i cer made addi ti on b y not app reciati ng t he facts and data i n cor rect pers pe cti ve t he assess ment or der i s pre mi sed under misc oncei ved fact s as under: I.T.A. No.1023/Del/2023 5 a) Wr ongl y co mpare d t he f i gur es of a mou nt paid / credit ed f or TCS purp oses to t he t une of Rs. 4, 08, 66, 492/- as reflect ed in For m 26 AS wi t h the pur chases as per bo oks of account and incor rect l y added th e di ffer ence a mount of Rs. 53, 07, 046/ - to the i nco me as une xpl ai ned expense, whi ch ot her wi se, i s the a mount of GS T pai d and not an y u nexpl ai ned expe nse or undisclosed inco me. b) i ncor rectl y consi der ed t he unsecur ed l oans mar ked squar ed up i n t he Tax Audi t report as loan repai d and add back t he m as unexpl ai ned i nvest me nts u/s. 69B. Whereas t he ent i re a mount of unsecure d l oans of Rs. 83, 51, 000 was received b y pro per banki ng channel an d dul y r ecor ded i n a udi te d books of account s, out o f whi ch onl y Rs. 14, 00, 000 was act ual l y repai d duri ng the ye ar as r ecor ded in books of accou nt and r e mai ning Rs. 69, 51, 000/ - w as cont inued t o re mai n out st andi ng as r efl ect ed under li abil it y head of audi ted bal ance-she et as on 31. 3. 2018. However, this mat er ial aspect and recor d was t otal l y i gnore d. 3. 5 The l d. counsel thus sub mi ts t hat both t he addit i ons made b y t he Assessi ng Of ficer a re wit hout an y s ubst ance and a gai nst the r udi ment ar y pr inci ples of accounti ng owi ng to err oneous understa ndi ng of fact s. 3. 6 Ci ti ng reasons for non co mpli ance before t he CIT( A), t he ld. counsel c ont ends t hat all t he par tners of the assessee fi r m hav e done t hei r school i ng up to i nt er medi at e l evel f ro m t heir Vi l lage i n Ut tar Prades h. None of t he m are well versed wi t h I.T.A. No.1023/Del/2023 6 the c o mpl ex sc heme of faceless appell at e pr ocee dings, i t s mode and manner of ser vin g of not ices and co mpli ance there on. T hus, t he y were co mpl et el y depe ndent on t he Char tered Acc ount ant operati ng nea r t o their pl ace of busi ness assi gned t o han dle t he appell at e pr oceedi ngs. The Assessee had pr ovi ded ful l i nfor mat i on, reconci li at i on, d ocu me nts and dat a in t hei r support and access t o t heir l ogi n on I nco me T ax Po rtal to the consult ant . It was poi nted out that assessee ne ver receive d an y n ot i ces t owar ds t he pr oceedi ngs bef ore Co mmi ssi oner of I nco me Tax (A ppeal s) as emai l s wer e being sent t o santos hku mar .96 5@redif f ma il . co m whi c h does not bel ong t o the m. I t i s sub mit te d t hat t he assessee never r ecei ved an y ph ysi cal not i ces for t he a bove s aid CI T( A) heari ngs eit her . It was sub mi tt ed t hat bei ng t he begi nner in t he t rade, t he assessee had no pr i or experi ence t o f ace t he pr oceedi ngs bef or e the Inco me Tax A uth ori ti es and t he issue i n quest ion was t heir fi rst exper ience. 3. 7 The ld. counsel next sub mi t ted t hat the assessee was vi gil ant and re gul arl y i n foll ow up wit h the consulta nt t o know the progress of t heir appeal but t he AR never i nformed an y pen di ng co mpli a nce. The assessee was t aken b y surprise about the di s missal of a ppeal bef ore CIT( A) on 17. 03. 2023 and f or non-f ur ni shi ng of sub missi on b y t he consul ta nt i n supp ort of thei r gr ounds of appe al . 3. 8 The Ld. counsel , i n essence, sub mi t ted that t he l d. CIT( A) di s missed t he a ppeal ex -part e and confi r me d t he addit ion made b y Ld. AO due t o f ail ure of consul t ant in t hi s I.T.A. No.1023/Del/2023 7 regar d and due to Covi d- 19 pande mi c bef or e Assessing Of fi cer. The Ass essee was t hus agai n depri ved to make hi s sub mi ssi ons and doc u me nts wi t h correct fact s before t he CIT( A) due to negl igence on the par t of hi s AR. 3. 9 I n t he backdrop, t he l d. counsel cont ends t hat the a ppeal bef ore C IT( A) was di smissed wit hout t he opport uni t y whi ch has result ed i n an i ncor rect addi t ion agai nst t he m. 3. 10 On me rit s, t he l d. cou nsel a dve rted t o t he mismatc h in t he val ue of suppli es r eceive d fr o m I n dus Tower Lt d. a mo unti ng t o Rs.53,0 7, 046/ - a nd poi nt ed out that t he TCS @1% has been col l ected on t he gr oss value of pur chases i ncl udi ng GST co mponent where as t he assessee has boo ked t he purchases at net value an d t he GST co mp onent as well as advance co mponent were exclu ded. The mi s mat ch is thus f ul l y explai na bl e on fact s. As regar ds the addit i on on account of une xplained in ves t ments, i t was submi t ted t hat t he t ransact ions ar e ful l y support ed b y t he c onfi r ma ti on a nd ot her cogent evi de nces to dis char ge onus l a y upon t he asses see. An oppor tuni t y i n t hi s regar d c oul d not be uti l ized due t o ong oing pan de mi c. 3. 11. I n the ci rc u mst ances nar rated above, t he l d. counsel ur ged f or an opport uni t y t o pl ace corr ect f acts and detail s for app reciati on of the Revenue Aut hor i t ies. The l d. counsel thus sought suit abl e r el ief in t he mat ter. 4. The l d. DR, on t he other ha nd, suppo rted the acti on of t he Assessi ng Offi cer and C IT( A) and sub mi tt ed that t he assessee I.T.A. No.1023/Del/2023 8 is a habi tual d efaul ter and nei ther at t ended bef ore t he Assessi ng Of fi cer nor avail ed t he oppor tunit y gi ve n at t he stage of C IT( A) a nd t heref ore, on t he face of s uch a pr over bial neglect displ a ye d b y t he assessee, t he acti on of t he Reve nue Aut hor it ies wer e cor rect and ri ght eous and t here fore, no interference t herewit h i s cal led for . 5. We have car ef ull y consi der ed t he ri val sub mi ssi ons and per used the fir st appel late or der under chall enge as we ll as t he assess ment orde r. The mat er ial ref erred t o and relied up on i n the course of heari ng has al so been peruse d. 6. The a ct ion of t he Assessing Of f icer i n maki ng addit ions towar ds all e ged mi smat ch in t he pur chases shown i n t he books vi s- à-vis A nnual I nf or mat ion Repor t in 2 6AS a nd unexpl ai ned invest ment s t owa rds sett l eme nt /re pa yment of loan etc. i s subj ect mat ter of cont rovers y. It i s the cont ent ion of t he assessee that i t was ha mstr ung a nd handi ca pped i n adduci ng the r equi sit e evidences t o supp ort t he cor r ectness of purchases decl are d and s our ce of pa yme nts of l oan etc. due t o ong oing pan de mi c and consequent t ra vel diff icul ti es and strict gover n me nt regul at ions t o assuage due to safet y co nce rns. 7. I t is common knowl ed ge that Covi d-19 ca used unprecedente d di srupt ion acr oss t he globe at the rele vant ti me when t he assess ment a nd the fi rst appell at e or der were made. Hence, we fi nd some f orce in the pl ea of t he assessee agai nst an y deli ber at e complace nc y. Ho we ver , in t he sa me vei n, i n t he absence of r el eva nt fact s avai l abl e bef ore t he l ower aut hori ti es it i s not possi bl e to dra w an y concl usi on on t he cor rectness of I.T.A. No.1023/Del/2023 9 the pl ea on mer i ts b y t he Tri bunal at t hi s st age. In t he ci rcu mstances, we consi der it j ust and pr op er t o s umma ri l y rest ore t he matt er back t o the fi l e o f t he Assessi ng Off icer f or de novo consi der at ion of t he subj ect matt er a nd fresh det er mi nat i on of the i ssues involved i n the l ight of r el eva nt fact s and in accor dance wi th law af ter gi vi ng pr oper oppor tuni t y t o t he assessee. The assessee i s di rected to ext end ful l co- operat i on t o the Assessi ng Off icer i n thi s r egar d fai l ing whic h t he Assessing O ffi cer shal l be at l ibert y to dra w app ropri at e i nfer ence. T her efor e, al l the i ssues i nvol ved i n t he present appeal are set asi de a nd r e mi t ted bac k t o the f il e of t he Assessi ng Offi cer for deter mi nati on t here of afresh. 8. In t he r esult, th e appeal of the as sessee is al low ed for sta tis ti ca l purpos es . Order pronounced in the open Court on 31/08/2023 Sd/- Sd/- [YOGESH KUMAR US] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /08/2023 prabhat