Bluoak Agro Commodities Limited, Medak V. ITO, Ward-1(3), Hyderabad

ITA 277/Hyd/2023

AI Insights

The case involves Bluoak Agro Commodities Limited, which appealed against the order of the CIT(A) - National Faceless Appeal Centre, Delhi, concerning the assessment year 2017-18. The assessee, engaged in cotton trading, filed a return declaring nil income under normal provisions and a profit under section 115JB, along with a claim for loss carry forward. The Assessing Officer made several additions to the income based on discrepancies noted in the audit report and other observations. The CIT(A) dismissed the appeal due to non-response from the assessee despite multiple notices. The Tribunal found that the CIT(A) did not adequately address the merits of the case and the additions made, leading to the decision to set aside the CIT(A)'s order and remand the case for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133400 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 21-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R.V. SUBRAMANYAM
• Keywords: Unexplained cash credit; TDS; Set aside
• Section: 115JB

Judgement Text

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “SMC”, HYDERABAD BEFORE SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No. 277/Hyd/2023 (निर्धारण वर्ा / Assessment Year: 2017-18) Bluoak Agro Commodities Limited, Sadasivpet, Medak District [PAN No. AAACO7864M] Vs. Income Tax Officer, Ward-1(3), Hyderabad अपीलधर्थी / Appellant प्रत्‍यर्थी / Respondent निर्धाररती द्वधरध / Assessee by: Shri R.V. Subramanyam and Shri A.V.Raghuram, ARs for Shri N. Narasimha Rao रधजस्‍व द्वधरध / Revenue by: Ms. P. Sumitha, DR सुिवधई की तधरीख/Date of hearing: 27/06/2023 घोर्णध की तधरीख/Pronouncement on: 04/07/2023 आदेश / ORDER Aggrieved by the order dated 19/03/2023 passed by the learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Bluoak Agro Commodities Limited (“the assessee”) for the assessment year 2017-18, assessee preferred this appeal. 2. Brief facts of the case are that, assessee is a company and engaged in the business of trading in cotton. It filed the return of income for the assessment year 2017-18 on 29/10/2017 declaring Nil income under the normal provisions of the Income Tax Act, 1961 (for short “the Act”) ITA No. 277/Hyd/2023 Page 2 of 5 and Rs. 38, 810/- under the provisions of section 115JB of the Act, and claimed current year loss carry forward of Rs. 7,395/-. 3. While processing the return of income, learned Assessing Officer noticed that as per the audit report, the assessee had shown net profit at 0.01% compared to the net profit of 0.03% on the turnover on the earlier year, increase in cash deposits during the demonetization period as compared to the pre-demonetisation period and also that the assessee did not affect TDS on the rent paid towards godowns. Learned Assessing Officer, therefore, added the sums of Rs. 87,490/-, Rs. 23 lakhs and Rs. 1,25,405/- respectively. Apart from the same, learned Assessing Officer also added a sum of Rs. 3 lakhs towards ‘unexplained credits’ on account of the other current liabilities. 4. Aggrieved by such an action of the learned Assessing Officer, assessee preferred appeal before the Ld. CIT(A). Ld. CIT(A) recorded that in spite of giving several notices, the assessee did not respond to the same nor did it file any written submissions, and therefore, no option is left to him except to proceed ex parte. Ld. CIT(A) further recorded that since the assessee did not add anything in this matter despite granting opportunities, and no written submissions were filed, no interference was required. Ld. CIT(A), accordingly, affirmed the additions and dismissed the appeal. 5. Aggrieved by the dismissal of the appeal, assessee filed this appeal before the Tribunal and contended that the principles of natural justice demand that reasonable opportunity must be granted to the assessee and since the notice was not properly served on the assessee, the assessee could not prosecute its case properly. It is further submitted on behalf of the assessee that due to the ill-health of the representative, the assessee could not prosecute the case diligently. It is further submitted that giving an opportunity the assessee is ready to submit the confirmation letters and all other material before the Ld. CIT(A) to get his case disposed of on ITA No. 277/Hyd/2023 Page 3 of 5 merits. It is submitted that the assessee does not stand to gain by allowing the appeal to be dismissed ex parte. 6. Per contra, learned DR submits that more than an opportunity is granted to the assessee and all the notices were sent to the assessee to the email ID furnished by the assessee in Form No. 35 and the assessee consented for the notices to be sent by the emails and, therefore, the law cannot help the persons who do not pursue the rights diligently. 7. I have gone through the record in the light of the submissions. It is a fact that the Ld. CIT(A) recorded that four opportunities were granted to the assessee by sending the notice to the email address furnished in Form 35. I further noticed that in Form 35, the assessee consented for the notices to be communicated through email. It is therefore, clear that there is proper notice in this matter. 8. It could, however, be seen that the Ld. CIT(A) having decided to proceed ex parte, justified his action in the light of the law laid down by various decisions, but he did not advert to the facts of the case, merits thereof and the desirability of sustaining the additions. What all the Ld. CIT(A) had stated is that since the assessee had nothing to add in this matter, nor did it file any written submissions, no interference is needed. This approach suggests that the Ld. CIT(A) assumed that the assessment was otherwise proper and correct and it would only be verified if any new material has come to the record. As a matter of fact, Ld. CIT(A) could have referred to the propriety of the additions made and given a finding on merits which makes the order justifiable. Even in the absence of the assessee, Ld. CIT(A) has to pass the order under section 250(6) of the Act which says that the first appellate authority shall dispose of the appeal in writing and shall state the points of determination, the decision thereon and the reasons for such a decision. ITA No. 277/Hyd/2023 Page 4 of 5 9. In view of these facts, for non-compliance with the requirement of law under section 250(6) of the Act, I am of the considered opinion that an opportunity must be granted to the assessee to put forth its claim in the material if any, before the Ld. CIT(A) and the Ld. CIT(A) will pass an order in compliance with the requirement of law. For such purpose, I set aside the impugned order and restore the issue to the file of the Ld. CIT(A). Ld. CIT(A) will take a call according to law, after affording an opportunity to the assessee to put forth their claim and material, if any. The grounds of appeal, are, therefore, treated as allowed for statistical purpose. 10. In the result, appeal of the assessee is treated as allowed for statistical purpose. Order pronounced in the open court on this the 4 th day of July, 2023. Sd/- (K. NARASIMHA CHARY) JUDICIAL MEMBER Hyderabad, Dated: 04/07/2023 TNMM ITA No. 277/Hyd/2023 Page 5 of 5 Copy forwarded to: 1. Bluoak Agro Commodities Limited, M/s. P. Srinivasan and Co., 12-13-424, Street No. 1, Tarnaka, Secunderabad. 2. Income Tax Officer, Ward-1(3), Hyderabad. 3. DR, ITAT, Hyderabad. 4. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD