SHRI MANDEEP SINGH , AMRITSAR V. INCOME TAX OFFICER WARD-1 ( 2 ) , AMRITSAR

ITA 199/ASR/2022

AI Insights

This case involves an appeal by Sh. Mandeep Singh against the order of the CIT(A), National Faceless Appeal Centre, Delhi, which upheld the AO's decision. The AO had added a 10% net margin of the imports as profit, based on assumptions and without adequate opportunity for the assessee to respond, which was contested as a violation of the principles of natural justice. The Tribunal found that the AO and CIT(A) had not followed the principles of natural justice in their proceedings, leading to the decision to remand the case back to the AO for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114567 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-12-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 11-10-2022
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 199/Asr/2022 Assessment Year: 2017-18 Sh. Mandeep Singh, 1 st Floor, Khanna Market Katra Parja, Amritsar 143001, Punjab [PAN: ABSPS 9198J] (Appellant) V. Income Tax Officer, Ward 1(2), Amritsar (Respondent) Appellant by Sh. Amit Handa, CA Respondent by Ms. Priyanka Singla, Sr. DR Date of Hearing : 21.12.2022 Date of Pronouncement : 31.01.2023 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the order of the Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 25.08.2022 in respect of Assessment Year 2017-18. 2. The assessee has raised the following grounds of appeal: ITA No.199/Asr/2022 Mandeep Singh v. ITO 2 “1. That the Ld. CIT(A) is unjustified in upholding the order of Ld. A.O. calculating income of the appellant by arbitrarily applying 10% of the Import Value which is highly unfair and entirely based on assumptions. There is no logical reasoning behind the income calculated by the Ld. A.O. and it is liable to be set aside. 2. That the Ld. A.O. has not followed the principles of natural justice in while issuing order against the appellant. The Ld. A.O. has demanded details of the goods imported by the appellant of Rs. 2,24,09,847 through the notices issued but has not provided any necessary details of the amount notified to the appellant for verification and explanation. 3. The appellant craves leave to add, alter, delete, modify or withdraw any of the grounds at the time of hearing of the appeal.” 3. None appeared for the assessee, the adjournment application filed by the assessee is rejected for insufficient reasons. Considering the grounds of appeal challenging therein the issue of violation of principles of natural justice, it is decided to hear the ld. Addl. DR and decide the appeal. 4. Appellant assesse is an individual, carrying on trading business activity. The appellant’s case was selected for Limited scrutiny on the ground that the value of Imports as per CBEC data is significantly large whereas the appellant has filed non-business or presumptive business return of income. The Appellant assesse has filed reply to first notice issued by the AO on 30.08.2019 in respect of allegedly abnormally high cash deposits during the demonetization period, explaining that the assesse had not deposited any substantial cash. However, the AO being ITA No.199/Asr/2022 Mandeep Singh v. ITO 3 not satisfied, passed assessment under section 144 of the Income Tax Act 1961, with an addition of 10% net margin of the imports based on assumption and presumption. 5. In appeal, the Ld. CIT(A) has confirmed the finding of the A.O. by observing as under: “Appeal proceedings commenced online and Hearing notices were issued to the appellant on 23.12.2020, 07.04.2022, 24.05.2022 & 05.08.2022 fixing the date for filing online submissions on or before 07.01.2021, 22.04.2022, 08.06.2022 & 22.08.2022. In response to the above hearing notices, appellant did not choose to file written submissions or documentary evidences through mail. From the above, it is construed that the appellant is not interested in prosecuting the appeal. However, in the interest of justice, the appeal filed has been considered on merits taking into account the factual matrix and the grounds of appeal and arguments / findings of the Assessing Officer in the assessment order.” “Adjudication: The averment of the assessing officer and submissions made by the appellant were carefully considered. The assessing officer issued statutory notices on several occasions and asked for the explanations of the appellant about the import of goods as per CBEC database. The assessing issued show cause letter also before concluding the assessment u/s 144 of the income tax act. Despite providing several opportunities, the appellant reminded silent on the said import transactions. Hence the assessing officer was justified in concluding the assessment u/s 144 of the income tax act. As seen from the above factual matrix, its noticed that the appellant had declared the gross receipts as Rs. 18,45,784 only and the profit was declared on presumptive basis and the appellant did not explain the huge imports and his sources for such imports. The appellant remained silent and did not deny such transaction during assessment proceeding. Even during the appellate proceedings, the appellant chooses not to reply to any of the hearing notices. The appellant did not submit any details to deny the transaction and embedded profit on such import and sale of goods. The onus is on the appellant to submit the documentary proof to disprove the additions made by the assessing officer. Hence the assessing officer was fair in ITA No.199/Asr/2022 Mandeep Singh v. ITO 4 his approach and his action of adding 10 percent of such imports as profit on sale of such imported goods was justified. Hence the addition made by the assessing officer is upheld and all these grounds are dismissed.” 6. The appellant raised the contention in the grounds that the Ld. CIT(A) was not justified in upholding the order of Ld. A.O. calculating income of the appellant by arbitrarily applying 10% of the Import Value which is highly unfair and entirely based on assumptions; that there was no logical reasoning behind the income calculated by the Ld. A.O. and confirmed by the Ld. CIT(A) and that the Ld. A.O. and CIT(A) has not followed the principles of natural justice while passing order against the appellant. 7. The Ld. AR stands by the impugned order. 8. Heard the Ld. DR at length and perused the material on record. Admittedly, the case was selected for limited scrutiny to verify whether the value of imports, as per CBEC data, whether it was properly accounted for? The AO after issuing statutory notices, passed the assessment under section 144 of the Income Tax Act, by adding a sum of Rs.22,40,984 as net profit on sale of the imported items without taking rebuttal of the assesse on record by way of granting adequate opportunity of being heard in view of principles of natural justice. It is noted that no reasonable opportunity was given to the appellant for filling the details of the imports of assesse ITA No.199/Asr/2022 Mandeep Singh v. ITO 5 reflected in the CBEC data and made an illogical and entirely assumptive addition of 10% net margin of the imports. 9. The Ld. CIT(A) observed that appellant did not choose to file written submissions or documentary evidences through mail and he construed that the appellant is not interested in prosecuting the appeal and confirmed the ex-parte assessment order. In our view, the addition made by the AO and confirmed by the CIT(A) by way of proceedings ex-parte qua the assesse is in gross violation of principles of natural justice. Therefore, we consider it deem fit to restore the matter back to the file of the AO to decide the matter afresh with the direction to pass a speaking assessment order de novo after taking on record the written submission and evidences of the assessee in support of its claim during the afresh proceedings, by granting sufficient opportunity of being heard to the assessee. No doubt, the assessee shall cooperate in the fresh assessment proceedings. 10. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 on 31.01.2023. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr./P.S.* ITA No.199/Asr/2022 Mandeep Singh v. ITO 6 Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order