Varniraj Taxtiles, Surat V. The Income tax officer, Ward-1(2)(5), Surat

ITA 461/SRT/2023

AI Insights

The case involves Varniraj Textiles appealing against the order of the National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals) dated 24/05/2023 for the Assessment Year 2014-15. The primary contention was the dismissal of the appeal by the CIT(A) in an ex parte order without adjudicating the issues on merit, particularly concerning disallowances under Sections 40A(3) and 40(a)(ia) of the Income Tax Act. The assessee argued that they were in the process of retrieving assessment records under the Right to Information Act (RTI) and needed more time to present a comprehensive case. The CIT(A) had dismissed the appeal citing delays in the appellate proceedings. The ITAT found that the assessee deserved another opportunity to contest the appeal on merit, leading to the restoration of the case to the Assessing Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302170 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 06-07-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 40A(3); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 461/SRT/2023 (AY: 2014-15) (Virtual Hearing) Varniraj Textiles, M-31, Bombay Market, Umarwada, Surat-395010. PAN No. AAIFV 0327 P Vs. I.T.O., Ward-1(2)(5), Surat. Appellant/ assessee Respondent/ revenue Assessee represented by Shri Hiren Vepari, C.A. Department represented by Shri Vinod Kumar, Sr.DR Date of Institution of Appeal 07/07/2023 Date of hearing 19/09/2023 Date of pronouncement 19/09/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)) dated 24/05/2023 for the Assessment Year (AY) 2014-15. The assessee has raised following grounds of appeal: “(I) Validity: (1)The learned CIT(A) ought to have cancelled the order when the appellant was deprived of the opportunity of being heard. (2) The appellate order passed in post haste is required to be cancelled, particularly when the appellant submitted that it was retrieving “assessment records” under the RTI and that it would enable the appellate to present bolter, ITA No. 461/Srt/2023 Varniraj Textiles Vs ITO 2 while the learned CIT(A) interpreted as if the appellant was retrieving “assessment order”. (II) Disallowance u/s 40A(3) of Rs. 26,58,848/-: (1) On the facts and circumstances of the case, the confirmation of disallowance u/s 40A(3) is unjustified. (2) The learned CIT(A) ought to have granted opportunity to present its case. (III) Disallowance u/s 40(a)(ia) of Rs. 34,66,163: (1) On the facts and circumstances of the case and as per the law, the disallowance is uncalled for (2) The learned CIT(A) ought to have granted opportunity to present its case. (3) In any case, out of the disallowance of Rs. 34,66,163/-, Rs. 24,26,392 being disallowance of job charges (out of Rs. 26,56,848/-) already considered for the purpose of 40A(3) (Ground II), it has resulted in disallowance of expense two times. (IV) Disallowance u/s 40(a)(ia) of Rs. 34,66,163: (1) On the facts and circumstances of the case and as per the law, the disallowance is uncalled for (2) The learned CIT(A) ought to have granted opportunity to present its case. (V) Miscellaneous: (1) All of the above grounds are prejudice to one another (2) The appellant craves leave to add, alter or vary any of the grounds of appeal.” 2. Rival contentions of both the parties have been heard and record perused. At the outset of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that appeal of assessee was dismissed by the ld. CIT(A) in an ex parte order without adjudicating the issues on merit and passing the order as per mandate of Section 250(6) of the Income Tax Act, 1961. The assessee has sought adjournment as the assessee has filed application under the provisions of Right to ITA No. 461/Srt/2023 Varniraj Textiles Vs ITO 3 Information Act (RTI Act) for seeking certain information and document from the record of Assessing Officer. The ld. CIT(A) instead of granting sufficient time to the assessee, confirmed the action of Assessing Officer by taking a view that the assessee is in delay in appellate proceedings. The ld. AR of the assessee submits that the assessee is interested in pursuing his appeal and seeking time/adjournment for valid reasons. The application for adjournment are duly acknowledged by the ld. CIT(A) in para 5 of his order. The ld. AR of the assessee submits that the assessee deserve one more opportunity to contest the case on merit. 3. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue opposed the plea of ld. AR of the assessee and would submit that the assessee was seeking copy of his own record without assigning any reason. The ld. Sr. DR for the revenue submits that the assessee has not shown any reasonable and plausible explanation for not furnishing submission before the ld. CIT(A). 4. We have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. We find that the Assessing Officer while passing the assessment order made disallowance under Section 40(A)(3) of Rs. 26,58,848/- and disallowance under Section 40(a)(ia) of the Act by taking a view that no submission is filed by assessee. The ld. CIT(A) confirmed the action of Assessing Officer in an ex parte proceeding. Considering the facts and circumstances of the ITA No. 461/Srt/2023 Varniraj Textiles Vs ITO 4 case that it is not the case of complete absence on behalf of assessee before the ld. CIT(A), rather the assessee was seeking time, on the ground that they have filed application for seeking information under the provisions of RTI ACT. The ld. CIT(A) instead of considering the submissions of assessee rejected the adjournment application and confirmed the addition. The ld. CIT(A) has not discussed the merit of the case. 5. Considering the overall facts and circumstances of the case, we are of the view that the assessee deserve one more opportunity to contest the appeal on merit. Keeping in view the facts and circumstances of the case and considering the plea of ld. AR of the assessee that the grounds of appeal raised by assessee are restored back to the file of Assessing officer, instead of ld. CIT(A), as the addition in the assessment order was made for want of explanation of evidence if any. Needless to direct that before passing the order afresh, the Assessing officer shall grant opportunity to the assessee and pass order afresh in accordance with law. The assessee is also directed to be more vigilant in future and not to cause further delay and seek adjournment without any valid reason and to furnish all the details and his submissions and evidences on various grounds of appeal raised by it, as soon as possible, if so desired without any further delay. In the result, the grounds of appeal raised by the assessee are allowed for statistical purposes. ITA No. 461/Srt/2023 Varniraj Textiles Vs ITO 5 6. In the result, the appeal of assessee is allowed for statistical purposes only. Order announced in open court on 19 th September, 2023 at the time of hearing. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 19/09/2023 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR 5. Guard File By order Sr. Private Secretary, ITAT, Surat