Nalsons India, Noida V. ITO Ward 5(2)(3), Noida

ITA 2154/DEL/2023

AI Insights

The case involves Nalsons India, which filed an appeal against the order of the CIT(A), National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2016-17. The primary contention was the incorrect assessment of income by the Assessing Officer (AO) under section 143(3) of the Income Tax Act, which was significantly higher than the returned income. The AO had disallowed the claim under section 44AD, leading to a higher assessed income. The CIT(A) dismissed the appeal ex parte without considering the merits. The Tribunal found that the CIT(A) had not addressed the substantive issues raised and thus remanded the case back to the CIT(A) for a detailed examination and a fair hearing.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115859 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-09-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 26-07-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VAIBHAV AHUJA
• Keywords: Set aside
• Section: 271(1)(c); 44AD; 143(3); 40(b); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.2154/Del/2023 Assessment Year: 2016-17 Nalsons India, B-7, Sector-39, Gautam Budh Nagar, Noida, Uttar Pradesh – 201301. PAN: AAGFN7464F Vs ITO, Ward-5(2)(3), Noida. (Appellant) (Respondent) Assessee by : Shri Gaurav Jain, Advocate & Shri Vaibhav Ahuja, CA Revenue by : Shri Om Parkash, Sr. DR Date of Hearing : 11.09.2023 Date of Pronouncement : 11.09.2023 ORDER This appeal by the assessee pertaining to Assessment Year 2016-17 is filed against the order of the ld.CIT(A), National Faceless Appeal Centre, Delhi, dated 02 nd June, 2023. The assessee has raised the following grounds of appeal:- “1. That on the facts and circumstances of the case and in law, the Ld. Commissioner (Appeals) has erred in affirming the order of the Learned Assessing Officer (the “Ld. AO”) of assessing the total income of the Appellant under section 143(3) of the Act, for the subject assessment year at INR 9,39,530 as against the returned income of INR 54,160. 2. That on the facts and circumstances of the case and in law, the Ld. Commissioner (Appeals) has failed to appreciate that the Ld. AO has ITA No.2154/Del/2023 2 exceeded his jurisdiction given to him vide CBDT instruction number 20/205 dated 29 December 2015 for assessment of cases selected for Limited Scrutiny. 3. That on the facts and circumstances of the case and in law, the Ld. Commissioner (Appeals) has erred in affirming the act of the Ld. AO to deny the benefit of section 44AD of the Act and computing the net profit at 20% of sales as against the net profit of 8% on sales declared by the Appellant. 3.1. That on the facts and circumstances of the case and in law, the Ld. Commissioner (Appeals) and Ld. AO have failed to appreciate that conditions laid down to avail the benefit of section 44AD of the Act have been duly satisfied by the Appellant in the captioned assessment year. 3.2. That on the facts and circumstances of the case and in law, the Ld. AO has failed to appreciate that the Appellant had duly submitted the import details for the financial year 2015-16, however, the name of the Appellant in the software (Tally) of the consultant hired by the Appellant has been mentioned as ‘Nalsons India (Noida - 2014-15)'. 4. Without prejudice to above, that on the facts and circumstances of the case and in law, the Ld. AO has erred in making double addition to the extent of INR 54,160, firstly, income disclosed by the Appellant and again, while computing the 20% of net profit on sales by the Ld. AO. 5. Without prejudice to above, that on the facts and circumstances of the case and in law, the Ld. AO has erred in not allowing the deduction of remuneration of INR 3,00,000 payable to the partners under section 40(b) of the Act. 6. That on the facts and circumstances of the case and in law, the Ld. AO has erred in levying / charging interest under sections 234B and 234C of the Act. 7. That, on the facts and circumstances of the case, the Ld. AO has erred in initiating penalty proceedings under section 271(1)(c) of the Act mechanically and without recording any adequate satisfaction for such initiation. Each of the above grounds are independent and without prejudice to the other grounds of appeal preferred by the Appellant. The Appellant prays for leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before, or at, the time of hearing of the appeal.” ITA No.2154/Del/2023 3 2. The facts giving rise to the present appeal are that the assessee has filed its return of income declaring income at Rs.54,160/-. The case was taken up for scrutiny assessment and the AO made addition of Rs.8,85,370/- by disallowing the claim of the assessee regarding application of provisions of section 44AD of the Act. Aggrieved by this, the assessee preferred appeal before the CIT(A) who dismissed the appeal ex parte qua the assessee without adverting to the merits of the case. 3. Apropos the grounds of appeal, the ld. Counsel submitted that the assessee has claimed the benefit of section 44AD and it had duly reflected in the return of income. However, the AO rejected the claim purely on the basis that the assessee failed to claim the benefit in its return of income. 4. On the other hand, the ld. DR opposed the submissions of the assessee and supported the orders of the lower authorities. 5. I have heard the rival contentions and perused the material available on record. I find that the ld.CIT(A) has not given any finding on merit of the case. The case of the assessee is that it had claimed in the return of income the benefit of section 44AD. As per computation of income also the assessee has claimed income u/s 44AD. Therefore, looking to the totality of the facts, I set aside the impugned order and restore the matter to the file of the ld. CIT(A) to decide the same on merit, after providing adequate opportunity of hearing to the assessee. The grounds raised in this appeal are allowed for statistical purposes. ITA No.2154/Del/2023 4 6. In the result, the appeal of the assessee is allowed for statistical purposes only. Order pronounced in the open court on 11.09.2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER Dated: 11 th September, 2023. dk Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi