Reena Jain , Muzaffarnagar V. ITO, ward 3(2)(4) , Muzaffarnagar

ITA 2577/DEL/2022

AI Insights

The case involves two appeals by the assessee, Reena Jain, against the orders of the Income Tax Officer and the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the assessment year 2018-19. The primary issues in the appeals were the imposition of a penalty for non-compliance with notices and the disallowance of business expenditures. The assessee contended that the non-compliance was due to her and her counsel suffering from Covid-19, which was not deliberate. The Tribunal found that the lower authorities did not adequately consider the assessee's circumstances and failed to provide a proper opportunity to be heard, leading to the decision to allow the appeals and set aside the penalties and disallowances.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 112651 (ITAT-DELHI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-02-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 20-10-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Set aside
• Section: 142(1)

Judgement Text

1 ITA Nos. 2577 & 2578/Del/2022 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.2577/DEL/2022 [ A.Y. 2018-19] & ITA No.2578/DEL/2022 [ A.Y. 2018-19] U/s 272A(1)(d) Reena Jain, 34, Jansath Road, Prem Vihar, Muzaffarnagar-251001 PAN- ABAPJ8050E Vs Income-tax Officer, Ward-3(2)(4), Muzaffarnagar. APPELLANT RESPONDENT Assessee represented by Shri Sanjeev Jain CA Department represented by Shri Sanjay Nargas, Sr. DR Date of hearing 15.02.2023 Date of pronouncement 21.02.2023 O R D E R PER KUL BHARAT, JM: Both these appeals, preferred by the assessee, pertaining to the assessment year 2018-19, were heard together and are being disposed of by this consolidated order for the sake of convenience. ITA No. 2578/Del/2022 2. This appeal preferred by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre 2 ITA Nos. 2577 & 2578/Del/2022 (NFAC), Delhi, dated 26.08.2022, pertaining to the assessment year 2018-19. The assessee has raised following grounds of appeal: “1. That on the facts and circumstances of the case, the addition made by the Ld. Assessing Officer and confirmed by the Ld. Commissioner of Income Tax (Appeals), hereinafter referred as Ld. Assessing Officer, is bad in law being against the principles of natural justice. 2. That the Ld. Assessing Officer grossly erred on the facts as well as in law by disallowing the business expenditures debited to Profit & Loss A/c aggregating to Rs. 13,66,750/- merely on the basis of "Assessee has furnished only ledger accounts of the expenses in question, which are not supported by sufficient documentary evidences hence not allowable” which is not justified and against the principles of natural justice. 3. That the Ld. Assessing Officer erred in considering the copies of ledgers furnished by the Assessee during the course of penalty/ appeal proceeding in support of salaries paid, power and fuel, telephone, Travelling and other expenses debited to Profit and Loss Account, were forming a part of books of account of the Assessee. 4. That the Ld. Assessing Officer erred by passing an order u/s 272A(l)(d) of the Income Tax Act, 1961 for non-compliance to notices by the assessee. The assessee and her counsel were suffering from Covid-19 during that time and hence could not attend the date of hearing. The same was also brought to the notice of the Ld. Assessing Officer and the Ld. Commissioner of Income Tax (Appeals). 5. That the Ld. Assessing Officer erred in giving proper opportunity of being heard to the assessee for submission of other documentary evidences in support of copies of ledgers submitted by the assessee during the penalty/ appeal proceedings. 6. That addition made by the Ld. Assessing Officer is arbitrary, illegal, uncalled for and deserves to be deleted. 7. That the assessee craves leave to add to amend modify rescind supplement or alter any of the grounds stated hereinabove either before or at the time of hearing of this appeal.” 3 ITA Nos. 2577 & 2578/Del/2022 3. Facts, in brief are that the Assessing Officer during the assessment proceedings issued a notice u/s 142(1) of the income-tax Act, 1961, hereinafter referred to as the “Act”. As per the Assessing officer, the notice remained un- complied. In para 5 of the order dated 29.11.2021 passed u/s 272(1)(d) of the Act, it is stated that the show cause notice issued to the assessee remained un-complied. Therefore, the assessing Officer imposed a penalty of Rs. 10,000/- u/s 272(1)(d) of the Act. Aggrieved against this, the assessee preferred appeal before the learned CIT(Appeals), who also sustained the penalty. Aggrieved against this the assessee is in appeal before this Tribunal. 4. Learned counsel for the assessee submitted that the authorities below failed to appreciate the fact that the assessee and her counsel were suffering from Covid- 19 and, therefore, the proceedings could not be attended. Learned counsel submitted that the non-attendance of the proceedings was not deliberate but due to unprecedented spread of disease prevented the assessee and her counsel to attend the proceedings. 5. On the other hand, learned DR opposed the submissions. 6. I have heard the learned Authorized representatives of the parties. The assessee has stated that the assessee had been suffering from infection of Covid-19. 4 ITA Nos. 2577 & 2578/Del/2022 Looking to the unprecedented spread of disease, where large number of people have lost their lives, in my considered view the authorities below ought to have adopted a liberal approach. I, therefore, set aside the orders of the authorities below and direct the Assessing Officer to delete the penalty levied u/s 272A(1)(d) of the Act. 7. Appeal of the assessee is allowed. ITA No. 2577/Del/2022: 8. This appeal preferred by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 26.08.2022, pertaining to the assessment year 2018-19. The assessee has raised following grounds of appeal: “1. That on the facts and circumstances of the case, the addition made by the Ld. Assessing Officer and confirmed by the Ld. Commissioner of Income Tax (Appeals), hereinafter referred as Ld. Assessing Officer, is bad in law being against the principles of natural justice. 2. That the Ld. Assessing Officer grossly erred on the facts as well as in law by disallowing the business expenditures debited to Profit & Loss A/c aggregating to Rs. 13,66,750/- merely on the basis of "Assessee has furnished only ledger accounts of the expenses in question, which are not supported by sufficient documentary evidences hence not allowable” which is not justified and against the principles of natural justice. 3. That the Ld. Assessing Officer erred in considering the copies of ledgers furnished by the Assessee during the course of assessment/ appeal proceeding in support of salaries paid, power and fuel, telephone, Travelling and other expenses debited to Profit and Loss Account, were forming a part of books of account of the Assessee. 5 ITA Nos. 2577 & 2578/Del/2022 4. That the Ld. Assessing Officer erred in giving proper opportunity of being heard to the assessee for submission of other documentary evidences in support of copies of ledgers submitted by the assessee during the assessment/ appeal proceedings. 5. That addition made by the Ld. Assessing Officer is arbitrary, illegal, uncalled for and deserves to be deleted. 6. That the assessee craves leave to add to amend modify rescind supplement or alter any of the grounds stated hereinabove either before or at the time of hearing of this appeal.” 9. Facts, in brief are that for the assessment year under consideration the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) read with sections 143(3A) & 143(3B) of the Income-tax Act, 1961, hereinafter referred to as the “Act” was framed vide order dated 7.2.2021. Vide impugned order, the Assessing officer made addition in respect of disallowance of business expenditure amounting to Rs. 13,56,750/- and assessed income at Rs. 2,56,670/-. Aggrieved against this, the assessee preferred appeal before the learned CIT(Appeals), who also sustained the addition. Aggrieved against this, the assessee is in appeal before this Tribunal. 10. Apropos to the grounds of appeal, learned counsel for the assessee submitted that the assessee was not given adequate opportunity to effectively represent her case before the authorities below. Learned counsel submitted that the impugned 6 ITA Nos. 2577 & 2578/Del/2022 order suffers from gross violation of principles of natural justice. He drew my attentions to the submissions made before the learned CIT(Appeals). 11. On the other hand, learned DR opposed the submissions and submitted that reasonable opportunity was granted to the assessee by the authorities below and there is no infirmity into the orders of the authorities below. 12. I have heard rival submissions and perused the material available on record. I find that before the learned CIT(Appeals) the assessee had also submitted certain evidences, however, dismissed the appeal by observing as under: “I have carefully considered the facts of the case. As per the findings of the AO in the case, it is noticed that as contended by the appellant the business expenses of Rs. 1366750 was disallowed by the Assessing Officer for the assessment year 2018-19. The Assessing Officer, on careful consideration of the submission did not find the same acceptable. After intensive study of the case, the contentions of the appellant have been carefully examined. This order is being passed due to lack of concrete evidence and full facts of the case. All the grounds of appeal are dismissed. In the result the appeal is dismissed.” 13. The above order of the learned CIT(Appeals) is a non-speaking order and merely stated that the Assessing Officer did not find acceptable explanation of the assessee, which, in my considered view, is not the correct approach. The learned CIT(Appeals) ought to have considered the evidences filed by the assessee and could have very well sought remand report from the Assessing Officer. Therefore, looking to the totality of the facts and submissions placed before me, I hereby set 7 ITA Nos. 2577 & 2578/Del/2022 aside the impugned order and restore the assessment to the file of the Assessing Authority to frame de novo assessment after providing reasonable opportunity to the assessee. The Assessing Officer would also verify the veracity of the evidences furnished by the assessee. Grounds are allowed for statistical purposes. 14. Assessee’s appeal is allowed for statistical purposes. 15. In the result, ITA No. 2278/Del/2022 is allowed and ITA No. 2277/Del/2022 stands allowed for statistical purposes only. Order pronounced in open court on 21 st February, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI