Shubh Ply and Veneers Pvt. Ltd., Gandhidham V. The Pr. CIT-3, Ahmedabad

ITA 47/AHD/2021

AI Insights

The case involves Shubh Ply and Veneers Private Limited, which appealed against the order of the Principal Commissioner of Income Tax, Ahmedabad-3, under Section 263 of the Income Tax Act, 1961. The appeal was directed against the assessment order passed by the Income Tax Officer, which had made several disallowances, including 10% of sundry creditors and various expenses. The PCIT found that the AO had not adequately verified the details of these transactions and directed a de novo assessment. The appellant contended that they had responded to the show cause notice, but their replies were not considered by the PCIT. The Tribunal agreed with the appellant, emphasizing the need for adherence to the principles of natural justice and fair play.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125046 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 03-07-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 04-04-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ I. T. A. No . 47/Ahd/202 1 ( नधा रण वष / A ss es sment Year : 2016-17) Sh ub h Ply a n d V e ne e r s Pri v a t e L im it e d 10 9, Fi r s t Fl oo r , P l ot N o. 4 5 , Se c t or 9, G a nd hid h a m बनाम/ Vs . Pr. C o mm is s i o ne r o f I n c o m e T ax - 3 A h m e da b ad थायी लेखा सं./जीआइआर सं./P A N / G I R N o . : A A LC S 3 4 4 9 M (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Hem Chhajed, AR यथ क ओर से/Respondent by : Shri Sudhendu Das, Sr. D.R. स ु नवाई क तार ख / D a t e o f H e a r i ng 04/07/2023 घोषणा क तार ख /D a t e o f P ro n o u nc e me n t 05/07/2023 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the appellant is directed against the order dated 30.03.2021 passed by the Ld. Principal Commissioner of Income Tax, Ahmedabad-3 (in short ‘PCIT’) under Section 263 of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) arising out of the order dated 22.12.2018 passed by the ITO, Ward-4(1)(3), Ahmedabad under Section 143(3) of the Act for Assessment Year 2016-17. ITA No. 47/Ahd/2021 (Shubh Ply And. Veneers P. Ltd. vs.PCIT) A.Y.– 2016-17 - 2 - 2. The appellant filed its return of income for A.Y. 2016-17 on 05.10.2016 declaring total loss at Rs.25,47,202/-. Upon selection of the case for limited scrutiny through CASS, the matter was finalized on 22.12.2018 assessing total income at Rs.3,72,47,387/- upon making disallowance in the following manner: Disallowance of 10% of sundry creditors Rs. 36, 93,433 Disallowed 10% & Administrative of expenses on Manufacturing Expenses Rs. 13, 64, 632 Disallowance of 10% of cost material/purchase Rs. 2,77,38,227 10% of unsecured loans raised Rs. 64,27,039 10% of interest expenses on Unsecured loan Rs. 5, 71, 258 Total Rs.3,72,47,387 3. Upon verification of the case records, it was found by the Ld. PCIT that during the assessment period Ld. AO asked for details with regard to sundry creditors, unsecured loan and interest on unsecured loan for the year under consideration. Instead of filing the details, reply, the appellant furnished general information i.e. return of income and copy of audit report, whereupon the assessment was completed upon making addition @ 10% of sundry creditors, unsecured loan and interest on unsecured loan. The Ld. PCIT was of the opinion that as the details/documents relevant to the above transactions during the course of assessment proceedings remained unexplained/unverified, the full amount of transaction was required to be added back and show cause notice, therefore, was issued to the appellant on 18.03.2021 followed by a reminder dated 19.03.2021 calling for compliance by 25.03.2021 and were ITA No. 47/Ahd/2021 (Shubh Ply And. Veneers P. Ltd. vs.PCIT) A.Y.– 2016-17 - 3 - served upon the appellant through available email id as the appellant was not found available at the address mentioned in the record. The appellant failed to respond the said show cause notice either responding online or by filing written submission and in the absence of no explanation offered by the appellant, the Ld. PCIT disposed of this matter under Section 263 of the Act by directing the Ld. AO to make requisite enquiries and proper verification with regard to the issues mentioned therein with certain guidelines cancelling the order of assessment passed by the Ld. AO. 4. The appellant joins issues here. It was pointed out by the Ld. Counsel that reply to the show cause was duly furnished alongwith the written notes of submission before the Ld. PCIT but the same was not considered by him. He has further drawn our attention to such reply annexed to paper book filed before us appearing from Sl. Nos. 1 to 8 mentioned therein. In that view of the matter, he prays for consideration of such reply furnished by the appellant against the show cause issued by the Ld. PCIT and further contended that non consideration of the same, vitiates the impugned order itself issued under Section 263 of the Act. Such contention made by the Ld. AR has not been able to be controverted by the Ld. DR. 5. Having heard the Ld. Counsel appearing for the parties and having regard to the facts and circumstances of the case and upon perusal of the records, particularly, the documents relied upon by the appellant submitted to the Ld. PCIT in compliance with the show cause notice which were admittedly not been considered by the Ld.PCIT while issuing orders directing the Ld. AO to proceed with the de novo assessment, we find the impugned order itself is arbitrary, whimsical, erroneous and liable to be set aside. ITA No. 47/Ahd/2021 (Shubh Ply And. Veneers P. Ltd. vs.PCIT) A.Y.– 2016-17 - 4 - Further that, having regard to the principle of natural justice and fair play, the appellant be given another opportunity of being heard by the Ld. PCIT. In that view of the matter, we dispose of the appeal by restoring the issue to the file of the Ld. PCIT to consider the same afresh and to pass a reasoned order upon giving an opportunity of being heard to the appellant and upon considering the evidence on record as relied upon by the appellant or any other document which the appellant may like to prefer to substantiate its claim. However, we also make it clear that in the event, the appellant fails to cooperate with Ld. PCIT, the Ld. PCIT will be at liberty to proceed with the matter and finalize the same strictly in accordance with law. 6. In the result, appellant’s appeal is allowed for statistical purposes. This Order pronounced on 05/07/2023 Sd/- Sd/- (ANNAPURNA GUPTA) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 05/07/2023 True Copy S. K. SINHA आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं%धत आयकर आय ु 'त / Concerned CIT 4. आयकर आय ु 'त(अपील) / The CIT(A)- 5. *वभागीय -त-न%ध, आयकर अपील य अ%धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड3 फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad