Grace Drinks Private Limited, Chandigarh V. ITO, Ward-4(5), Chandigarh

ITA 71/CHANDI/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8955 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2017-2018
• Appeal Filed On: 06-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA DHAR
• Keywords: Set aside

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “एकल सद यीय’, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘SMC’ CHANDIGARH ीमती दवा संह, या#यक सद य BEFORE: SMT. DIVA SINGH, JM आयकर अपील सं./ ITA No. 71/CHD/2022 नधा रण वष / Assessment Year : 2017-18 Grace Drinks Pvt.Ltd., Village Daria, Railway Station Road, Village Daria, Chandigarh. बनाम VS The ITO, Ward 4(5), Chandigarh. थायी लेखा सं./PAN No: AADCG2800L अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Amitoz Singh Kamboj, CA राज व क! ओर से/ Revenue by : Smt. Priyanka Dhar, Sr.DR स ु नवाई क! तार&ख/Date of Hearing : 19.05.2022 उदघोषणा क! तार&ख/Date of Pronouncement : 09.06.2022 आदेश/ORDER The present appeal has been filed by the assessee wherein the correctness of the order dated 14.12.2021 of CIT(A) (NFAC i.e. National Faceless Appeal Centre) Delhi pertaining to 2017-18 assessment year is assailed on the following grounds : “1. The Ld. CIT(A) has erred in passing exparte appeal order under the National Faceless Appeal Scheme without providing a personal hearing through video conference and the appeal be considered to meet the principles of natural justice on the ground that the notices being served were on accountant's mail-id, who have left the company and the assessee was not aware of the notices being served. 2. The Ld. CIT(A) has erred in confirming the addition of Rs.10,51,000/- on account of cash deposits during the demonetization period without giving the opportunity of being heard. The same has been confirmed despite the fact that ITA/71/CHD/2022 A.Y. 2017-18 Page 2 of 5 assessee's financials are audited and due to the huge amount of transactions, regular cash deposits are made by the assessee. Further, during the demonetization period, banking entities were not accepting huge amounts in one go, due to which assessee had to bifurcate the deposits in different accounts of firm on different dates but within stipulated guidelines of Government. 3. That the Ld. CIT(A)has erred in confirming the addition of Rs. 4,06,261/- by disallowing the interest expenses ignoring the fact that the advances were made in the course of business and assessee otherwise also had owned funds.” 2. The ld. AR inviting attention to the respective orders submitted that aggrieved by the additions made by the AO, the assessee filed an appeal before the First Appellate Authority. It was his submission that present order has been passed without affording an effective opportunity of being heard. It was not disputed that the notices as stated in para 5 of the impugned order may possibly have been sent, however, these, it was submitted, were never made available to the assessee as these possibly were sent to the available Accountant’s e-mail ID. The Accountant, it was submitted, had left the company. Accordingly, it was his submission that the impugned order may be set aside in order to afford an effective opportunity of being heard to the assessee. 3. The ld. Sr.DR relied upon the order however, considering the fact that the assessee's appeal has been dismissed on the grounds of non-representation before the CIT(A), accordingly, she agreed that the order may be set aside. 4. I have heard the submissions and perused the material on record. In the facts of the present case, it is seen that the ITA/71/CHD/2022 A.Y. 2017-18 Page 3 of 5 assessee returned an income of Rs.21,99,160/-. As per record, the assessee firm is stated to be engaged in trading of Pepsi Products and act as its distributor. 4.1 The AO considering the fact that the assessee was found to have advanced Rs.35,02,250/- for purchase of land in Baddi, required the assessee to explain why interest @ 12% on these loans should not be disallowed as no business benefit was noticed to have been derived from this investment. The assessee, as per record has given the following reply : "...the assessee company has given advances for the opening outin the state of Himachal Pradesh. Since the property is situated in Himachal Pradesh and lots of formalities required to get it registered and its lying pending till the end of the Financial Year. The said advance is in the course of business." 4.2 The Assessing Officer did not accept the explanation offered considering the fact that the bank had charged interest @ 11.60% on working capital overdraft loan he made a proportionate disallowance amounting to Rs.4,06,261/-. 4.2.1 Apart from this, the AO also noticed that in the bank accounts 3199093407, 3202486227, 3213605889 & 3927370897 maintained with Central Bank of India, huge cash deposits were made. Considering the fact that cash deposit of Rs. 34.05 lacs was made after 08.11.2016 in old currency after considering the explanation, addition of Rs.10,51,00/- was made in the hands of the assessee. ITA/71/CHD/2022 A.Y. 2017-18 Page 4 of 5 4.2.2 The explanation that the cash deposits were regular activity of the assessee was discarded by the Assessing Officer holding as under : “Since currency of 1000 & 500(old) was banned w.e.f midnight of 8 th Nov, 2016 and bank was closed 9 th Nov, 2016, therefore, after considering the reply filed by the counsel of the assessee company and facts of the case, cash deposited in the bank after 10 th of Nov, 2016 is treated as unexplained income of the assessee from undisclosed sources. The assessee has deposited cash in old currency after 10 th Nov, 2016 is Rs.15,01,000/-. Since the assessee has already disclosed/ surrendered in PMGKY Rs.4,50,000/- and paid due taxes thereon. Therefore, an addition of Rs.10,51,000/- is made to the returned income of the assessee on account of unexplained cash deposit from undisclosed sources.” 5. These issues were raised before the CIT(A). Before the said authority, the assessee admittedly did not participate. Additions made by the AO was confirmed in appeal. 6. I have heard the submissions and perused the reply available. It is seen that on behalf of the assessee, it has been pleaded that the notices presumably sent would have been sent to the e-mail ID of the Accountant, however, these were not communicated to the assessee as he had left the assessee company on account of which fact, the assessee could not participate in the proceedings. This reply of the assessee has not been disputed by the Revenue. Accordingly on a consideration of facts, it is deemed appropriate to set aside the impugned order. It is also a matter of fact that lack of supporting evidences has been questioned by the CIT(A) which documents, the ld. AR has stated he is in a position to file. Application dated 17.05.2020 on record seeking time to file these on record has been seen. Accordingly, in the interests of substantial ITA/71/CHD/2022 A.Y. 2017-18 Page 5 of 5 justice considering the prayer of the parties before the Bench, the impugned order is set aside back to the file of the CIT(A) with a direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. 7. While so directing, it is made clear that the assessee shall not abuse the trust reposed and shall participate in the proceedings fully and fairly. It is made clear that in the eventuality of abuse of the trust reposed, the CIT(A) will be at liberty to pass an order on the basis of material available on record. Said order was pronounced in the Open Court at the time of hearing itself. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 09 th June,2022. Sd/- ( दवा संह ) (DIVA SINGH) या#यक सद य/Judicial Member “प ू नम” आदेश क! त,ल-प अ.े-षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant – 2. . यथ / The Respondent 3. .आयकर आय ु /त/ CIT 4. .आयकर आय ु /त (अपील)/ The CIT(A) 5. -वभागीय त न2ध, आयकर अपील&य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar