Dhara Enterprise, Surat V. Income Tax Officer, Ward 2(3)(6), Surat, Surat

ITA 18/SRT/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2577 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-05-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 07-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Set aside
• Section: 68; 143(3); 142(1); 143(1); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JIDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.18/SRT/2024 Assessment Year: (2018-19) (Hybrid Hearing) Dhara Enterprise T.P. No.8, F.P.No.73, Nr. L.P. Savani School, Palanpur, Surat-395009 Vs . Assistant Director of Income-tax, CPC, Bengaluru (jurisdictional Assessing Officer) Income Tax Officer, Ward- 2(3)(6) Surat, Income Tax Office, Anavil Business Center, Adajan Hazira Road, Adajan, Surat-395007 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAKFD 4943 K (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Appellant by Shri Sapnesh R Sheth, CA राजˢ की ओर से /Respondent by Shri Vinod Kumar, Sr. DR अपील पंजीकरण/Appeal instituted on 08.01.2024 सुनवाई की तारीख /Date of Hearing 02.05.2024 घोषणा की तारीख /Date of Pronouncement 02.05.2024 आदेश / O R D E R PER BIJAYANDA PRUSETH, AM: This appeal by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi (for short, “NFAC/Ld.CIT(A)”) under section 250 of the Income-tax Act, 1961 (for short, ‘the Act’) dated 26.12.2023. Assessment was framed by National e-Assessment Centre, Delhi / Assessing Officer (for short, “AO”) vide order u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act dated 31.03.2021 for Assessment Year (AY) 2018-19. The grounds raised by the appellant are as under: - 2 ITA No.18/SRT/2024 / AY.18-19 Dhara Enterprise “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A), NFAC has erred in passing ex-parte order without providing reasonable opportunity of hearing to assessee. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of Assessing Officer in making addition of Rs.1,19,00,000/- on account of unsecured loan received as unexplained cash credit u/s 68 of the I.T. Act, 1961 although the loans have been repaid in the same year. 3. On the facts and circumstances of the case as well as law on the subject, the learned Assessing Officer has erred in invoking provisions of Section 115BBE of the Act and in thereby taxing entire receipts of Rs.1,19,00,000/- at 60% & levying surcharge at 25% which is not applicable on above amount. 4. It is therefore prayed that above addition made by Assessing Officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2. Facts of the case, in brief, are that the assessee filed its return of income on 24.09.2018 declaring income of Rs.1,31,25,040/- for AY 2018- 19. The return was processed u/s 143(1) by Central Processing Centre, Bengaluru on 10.02.2019. The case was taken up for limited scrutiny under CASS on the issues of “income from real estate business” and “unsecured loans”. The AO issued statutory notices u/s 143(2) and 142(1) of the Act and after hearing, passed the above order. The assessee had constructed residential flats under name “Green Orchid”. The assessee was specifically asked to furnish information with documentary evidence to substantiate creditworthiness of various lenders. After perusing the details filed by the assessee, the AO found that before extending loans to the assessee there 3 ITA No.18/SRT/2024 / AY.18-19 Dhara Enterprise is immediate credit entries in respect of each and every lender. The assessee was asked to prove the creditworthiness of the lenders and genuineness of such transactions. The assessee replied that it has already submitted confirmation, return of income (ITR) and bank statements of the lenders. Further, out of 20 parties, only 3 parties have outstanding loan payable as on the year-end. The other 17 parties have already repaid the amounts during the year itself. Regarding other 3 parties, whose loans are outstanding as on year-end, they were also repaid the loan in the month of April, 2018. 3. The AO considered the reply of assessee but accepted the explanation about 2 parties only and observed that genuineness of transactions in respect of 18 remaining parties are not proved. These parties are persons no means. He observed that assessee’s own money is being routed through accommodation entries providers by way of transactions of unsecured loan which are squared off during the year. As the assessee failed to substantiate and explain the source of deposits, the AO applied provisions u/s 68 of the Act. In response to the show-cause notice, assessee reiterated its stand taken earlier. The Ld.Counsel for the assessee was also reluctant to furnish ITR for the last three years of the lenders to prove the creditworthiness and genuineness of the unsecured loans. Hence, he added Rs.1,19,00,000/- u/s 68 of the Act and taxed same u/s 115BBE of the Act @ 60%. Penalty proceedings u/s 271AAC were also 4 ITA No.18/SRT/2024 / AY.18-19 Dhara Enterprise initiated. Aggrieved by the order of AO, the appellant filed appeal before Ld.CIT(A). 3. In response to the notice of hearing issued by Ld.CIT(A), the appellant filed reply on-line through e-filing portal as detailed in para-4 of the order of Ld.CIT(A). The Ld. CIT(A) has noted that four notices were issued through e-mail portal of assessee but assessee has not furnished any response. Therefore, Ld.CIT(A), held that the assessee is not serious in pursuing its case. He has relied on various decisions and held that since the appellant chose not to attend the hearing and does not want to pursue the appeal, the appeal deserves to be dismissed. 4. On merit also, the Ld.CIT(A) sustained the addition made by the AO by stating that though the appellant has challenged the addition, it has not submitted any evidence or counter agreement in respect of its claim. He observed that despite repeated opportunities, the appellant did not attend to substantiate its claim before AO. In absence of details and evidence, the action of AO was upheld by Ld.CIT(A). Further aggrieved by the order of Ld.CIT(A), the assessee has filed present appeal before the Tribunal. 5. The Ld.AR of the assessee has filed paper book containing 82 pages and submitted that all details were submitted before the AO but he did not consider those details and evidence and passed order making the impugned addition. In the paper book, filed before us, letter filed before the AO during assessment proceedings, list of the parties from whom 5 ITA No.18/SRT/2024 / AY.18-19 Dhara Enterprise unsecured loans were taken and repaid and ITRs ledger confirmation, bank statements of the unsecured loans taken for the subject-assessment year have been given. The Ld.AR argued that without examining details, the assessment order has been erroneously passed casting a heavy burden on the assessee. The Ld. Counsel, therefore, requested that one more opportunity may be given to the assessee to plead its case before Assessing Officer. 6. On the other hand, Learned Senior-DR for the Revenue supported the orders of lower authorities. However, he does not have any objection if the matter is remitted back to the file of Assessing Officer for fresh assessment. 7. We have heard both parties and considered the facts of the case. We note that NFAC/Ld. CIT(A) has not passed the order on merits and has dismissed the appeal ex parte due to non-compliance. We find that the case has not been decided after due consideration of the details and evidence filed by the assessee. The Ld.CIT(A) has dismissed the appeal both on the ground of non-compliance as well as on merit. However, the evidence and details furnished by the assessee have not been considered or discussed in the appellate order or the assessment order. We therefore, deem it proper to restore the matter back to the file of AO to consider the submission of assessee including the details furnished before us. One more opportunity should be given to the assessee to plead its case before the 6 ITA No.18/SRT/2024 / AY.18-19 Dhara Enterprise Assessing Officer. It is settled law that the principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to present its case. Accordingly, we set aside the order of NFAC/Ld. CIT(A) and restore the issue back to the file of the Assessing Officer for de novo assessment. We also direct the assessee to provide relevant documents and details before the Assessing Officer, as and when required by him and assessee shall co-operate in the proceedings before the Assessing Officer for early disposal of its case. For statistical purposes, the appeal of the assessee is treated as allowed. 8. In the result, appeal filed by the assessee is allowed for statistical purposes. Order is pronounced in open court on Thursday, 2 nd May 2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER स ू रत/Surat Ǒदनांक/ Date: 02/05/2024 DKP Outsourcing Sr.P.S Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat