Alaska Infrastructure Private Limited, Raipur V. Assistant Commissioner of income tax, Circle- 4(1), Raipur

ITA 14/RPR/2020

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The case involves Alaska Infrastructure Pvt. Ltd., a real estate development company, which appealed against the order of the Commissioner of Income Tax (Appeals)-II, Raipur. The appeal challenged the addition of Rs. 18,44,985 to the company's income for the assessment year 2015-16, which was disallowed by the AO under section 40A(2)(b) of the Income Tax Act, 1961, due to excessive development expenses claimed. The first appellate authority upheld the AO's decision. The ITAT, however, allowed the appeal on the basis that the statutory notice for the assessment was issued beyond the permissible time limit, thus invalidating the assessment.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 136332 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-09-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 19-01-2020
• Other Referred Cases: DCIT Vs Mahi Valley Hotels & Resorts, PCIT Central Vs Cherian Abraham, CIT Vs Laxman Das Khandelwal
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 250; 292BB; 143(2)

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, रायपुर न्यायपीठ, रायपुर में ॥ (Through Virtual Hearing) ITAT-Raipur Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, AT RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No. 14/RPR/2020 निर्धारण वर्ा / Assessment Year : 2015-2016 Alaska Infrastructure Pvt. Ltd., Floral City, Near Kamal Vihar, Dunda, Raipur – 492001, Chhattisgarh PAN:AAGCA1147H . . . . . . . अपऩलधथी / Appellant बनाम / V/s. Asst. Commissioner of Income Tax, Circle 4(1), Raipur. . . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : None Revenue by : Shri Choudhary N.C. Roy सपिवधई की तधरऩख / Date of conclusive Hearing : 12/09/2022 घोर्णध की तधरऩख / Date of Pronouncement : 30/11/2022 आदेश / ORDER PER G. D. PADMAHSHALI, AM; This appeal challenges the order of Commissioner of Income Tax (Appeals)-II, Raipur [for short “CIT(A)”] dt. 10/10/2019 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”], which ascended out of assessment order dt. 20/02/2017 passed u/s 143(3) by the Asst. Commissioner of Income Tax, Circle-4(1), Raipur [for short “AO”] for assessment year [for short “AY”] 2015-16. M/s. Alaska Infrastructure Pvt. Ltd. ITA No. 14/RPR/2020 AY: 2015-16 ITAT-Raipur Page 2 of 6 2. The grounds raised for adjudication are; “1. The Ld. Assessing Officer erred in law as well as in facts while making an addition of Rs.18,44,985.00 on account of disallowance under section 40A(2)(b) of the Income Tax Act, 1961, further the first appellate authority (CIT Appeals) also erred in law by sustaining the addition made by the AO. The same is bad in law and is liable to be deleted. 2. The appellant reserves the right to add, amend or alter any ground or grounds at the time of hearing.” 3. Laconically stated the facts of the case are; 3.1 The assessee is a private limited company engaged in the work of real estate developer, filed its return of income electronically [for short “ITR”] on 22/03/2016 for the AY 2015-16 declaring income of ₹51,64,090/- which was subjected to CASS by service of statutory notice dt. 03/10/2017, on being unsatisfied with the explanation furnished by the assessee on the claim of development expenses paid to related person, the Ld. AO disallowed 30% of such expenditure u/s 40A(2)(b) treating it as excessive and culminated the assessment with an addition of ₹18,44,985/-. M/s. Alaska Infrastructure Pvt. Ltd. ITA No. 14/RPR/2020 AY: 2015-16 ITAT-Raipur Page 3 of 6 3.2 In an appeal before first appellate authority [for short “FAA”] the appellant reiterated the submission made before the Ld. AO and drawn the attention of Ld. CIT(A) to the absence of any adverse inference or computation of excessiveness of development expenditure paid to related person, however same did not yield any result for the want of evidential documents, consequently the appellant is before this Tribunal on the grounds of appeal set in para 2 herein before. 4. When the matter called for hearing, none represented the assessee, bearing in mind contents of the appeal, in the interest of justice we proceeded to adjudicate the matters ex-parte on merits following rule 24 of the ITAT- Rules, which empowers this Tribunal to decide the appeal filed by the appellant ex–parte on merits where the appellant does not appear in person or through an authorised representative and the same is done placing on record a no-objection the learned departmental representative [for short “DR”]. It is further needless to mention that, the proviso to the said rule carves out an M/s. Alaska Infrastructure Pvt. Ltd. ITA No. 14/RPR/2020 AY: 2015-16 ITAT-Raipur Page 4 of 6 exception by empowering the Tribunal to recall the ex– parte order if the assessee appears afterwards and satisfies, placing an evidential material before the Tribunal that, there was sufficient cause for his non–appearance when the appeal was called for and conversely where the assessee fails to substantiate the absence with reasonable cause, loses right to recall. 5. At the hearing, the Ld. DR adverting to para 2 of the assessment order, candidly submitted that, prima-facie the statutory notice u/s 143(2) of the Act was issued after the expiry of statutory time limit and fact that assessee did not challenge the validity of statutory notice, however on merits he relied on the orders of tax authorities below. 6. We have heard the rival contentions of both the parties; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”] perused the material placed on record, case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position forewarned to either parties. M/s. Alaska Infrastructure Pvt. Ltd. ITA No. 14/RPR/2020 AY: 2015-16 ITAT-Raipur Page 5 of 6 7. Ostensibly, the ITR was filed on 22/03/2016 and statutory notice u/s 143(2) of the Act in the extant case found issued on 03/10/2017 i.e. after the expiry of statutory period of six months from the end of the financial year in which ITR was filed i.e. 2015-16, consequently in the absence of service of valid notice within the prescribed time limit, the assessment framed turns out contra-legem in the light of decision of Hon’ble Gujarat High Court in “DCIT Vs Mahi Valley Hotels & Resorts” reported in 287 ITR 360 and of Hon’ble Karnataka High Court in “PCIT Central Vs Cherian Abraham” reported in 444 ITR 420. Needless to mention that, section 292BB of the Act seeks to cure the infirmity in the manner of service and not intended to cure the legal defect or absence of statutory notice as laid by the Hon’ble Lordships in “CIT Vs Laxman Das Khandelwal” reported in 417 ITR 325. 8. Since we have adjudicated the matter ex-parte on legal ground without going into the merits of the case, the sole and substantive ground of the appeal thus rendered academic. M/s. Alaska Infrastructure Pvt. Ltd. ITA No. 14/RPR/2020 AY: 2015-16 ITAT-Raipur Page 6 of 6 9. Resultantly, the appeal of the appellant assessee is allowed in above terms. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Wednesday 30 th day of November, 2022. -S/d- -S/d- RAVISH SOOD G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 13 th day of December, 2022. आदेश की प्रधिधलधपअग्रेधिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT-II, Raipur (C.G.-India) 4. The CIT(A)-II, Raipur (C.G.-India) 5. DR, ITAT, Raipur Bench, Raipur. 6. ग र्डफ़ इल / Guard File. आिेश नुस र / BY RDER, वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune.