HARI CONSOLIDATE PRIATE LIMITED, NEW DELHI V. ITO,Ward-11(1), Delhi

ITA 850/DEL/2023

AI Insights

The case involves Hari Consolidate Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, pertaining to the Assessment Year 2012-13. The primary contention was the non-compliance and lack of proper opportunity to be heard due to notices being sent to an email controlled by a disgruntled ex-employee, which the management was unaware of. The original assessment included additions under sections 68 and 69C of the Income Tax Act, 1961, based on alleged accommodation entries and unexplained expenditure. The CIT(A) dismissed the appeal due to non-response to notices, which the assessee argued was due to the aforementioned communication failure. The Tribunal found merit in the assessee's arguments and remitted the case back to the CIT(A) for a fresh decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302628 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 26-03-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Opportunity of being heard; Accommodation entries
• Section: 68; 148; 69C; 143(3); 22

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE DR. BRR KUMAR, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No. 850/Del/2023 Asstt. Year: 2012-13 O R D E R PER ASTHA CHANDRA, JM The appeal filed by the assessee is directed against the order dated 30.11.2022 of the Ld. Commissioner of Income Tax (Appeals) -NFAC, Delhi (“CIT(A)”) pertaining to Assessment Year (“AY”) 2012-13. 2. The assessee has taken the following grounds:- “1. IN THE PRESENT CASE THE CIT(A) ERRED IS DISALLOWING THE GROUNDS OF APPEALS.ALL THE NOICES WERE ISSUED VIDE EMAIL WHICH WHICH WAS UNDER CONTROL OF DISGRUNTLED EX- EMPLOYEE WHO DID NOT INTENTIONALLY COMMUNICATED THE NOTICE THUS RESULTING IN NON COMPLIANCE.HOWEVER THE ORDER WAS PHYSICALLY DELIVERED BUT THE NOTICE WERE NEVER DELIVERED PHYSICALLY.THIS LACK OF INITIATIVE BY THE LEARNED CIT(A) RESULTED IN NON COMPLIANCE THUS RESULTING IN NO Hari Consolidate Private Limited A-64/3 G.T. Karnal Road, Industrial Area, New Delhi – 110 033 PAN AAACH2595N Vs. ITO, Ward-11(1) Delhi. (Appellant) (Respondent ) Assessee by: Shri Deepak Malik, CA Department by: Sh. Vivek Kumar Upadhyay, Sr. DR Date of Hearing: 31.08.2023 Date of pronouncement: 21.09.2023 ITA No. 850/Del/2023 2 PROPER OPPORTUNITY OF BEING HEARD WAS PROVIDED TO THE ASSESSEE THE SITUATION PREVAILING AT THE TIME OF APPEAL WAS SUCH THAT ASSESSEE WAS UNABLE TO PROVIDE EVIDENCE AND SUPPORTING DOCUMENT.THE ASSESSEE ESEEKS THE RIGHT TO ADD AMEND OR DELETE ANY GROUNDS OF APPEAL ON OR BEFORE THE TIME OF HEARING DETAILS GROUNDS OF APPEALS IS ATTACHED ALONG WITH THIS APPEAL REGISTRATION FORM.” 1. On the facts and circumstances of the cases, the learned CIT(Appeal) has erred in adding Rs 38,06,250/- under section 69(c) of the income tax act. The said addition may please be deleted. 2. On the facts and circumstances of the cases, the learned CIT(Appeal) has erred in dismissing the grounds of appeals on the basis that there has been no response to notices issued by him. 3. In this regard we would like to submit that the official email id that was used by the CIT(appeal) to communicate the notices was an email id which under the control of recently fired employee who was handling income tax related matters. The employee was highly disgruntled with management when he was expelled from his job and there were few disputes between the management and the ex-employee. Since these disputes were existing at the time off issuance of notice(s) the ex- employee never handed over this email id neither communicated the same to the management, thus the management was not aware of the fact that notice were issued to them, thus, resulting in non-compliance. 4. In the regard to above mentioned facts we would like bring to your kind notice that the assessment order was received by the management physically when it was delivered to their registered office. Our request is when the respected CIT(Appeal) was aware that no submission nor any request for adjournment had been sought by the assessee and he had the option to send the notice physically as well which was later used for communication of order), why was that option not used earlier. It is grossly unfair to assessee that for deliverance of order, the method of physically posting is acceptable but not for communication of notice(s). If any of notice(s) would have been delivered physically it would had come to notice for the management that there is non-compliance and the assessee would have made all the due submission(s). 5. Thus lack of initiative taken by the CIT(Appeal) had resulted in non-compliance, and no proper opportunity of being heard was provided to our assessee which is a gross injustice in eye of law. 6. Thus we would like to hereby request to you to please accept this appeal, so, that a proper opportunity of being heard is provided to our assessee.” 3. Briefly stated, it is a case of re-assessment. The original assessment was framed on 27.02.2015 under section 143(3) of the Income Tax Act, 1961 ITA No. 850/Del/2023 3 (the “Act”). The case was re-opened on the basis of information received from the Investigation Wing coupled with analysis of the record of the assessee revealing that the receipt by the assessee of share application money of Rs. 30,00,000/- from M/s. G.T. Comex Pvt. Ltd. and Rs. 7,50,000/- from M/s South Asia Impex Pvt. Ltd. represented actually accommodation entries for which the assessee had paid equivalent cash and commission thereon from its undisclosed income earned during the previous year relevant to AY 2012-13. Notice under section 148 of the Act was therefore issued on 30.03.2019. The assessee replied that the return filed by the assessee on 13.08.2012 may be treated as return filed in response to notice under section 148. During re-assessment proceedings, notice(s) issued remained uncomplied with. Therefore, the Ld. Assessing Officer (“AO”) passed ex parte assessment order on 5.12.2019 determining the total income of the assessee at Rs. 50,10,420/- including therein addition of Rs. 37,50,000/- under section 68 of the Act and an amount of Rs. 56,250/- as unexplained expenditure under section 69C of the Act. 4. Aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who dismissed the appeal of the assessee for the reason that assessee had not effectively pursued the appellate proceedings and failed to respond to various notices issued. This has brought the assessee before the Tribunal. 5. The appeal was filed late by 22 days. The assessee filed petition for condonation of delay. On considering the reason given for the delay we condone the delay. 6. We have heard the Ld. Representative of the parties. The Ld. AR submitted that the assessee does not deny sending of notices by the Department via mail. However non-compliance happened due to the fact that the official entrusted with handling income tax matters failed to inform the management of the assessee company. This resulted in passing ex-parte order. It was urged that the matter be restored to the file of the Ld. CIT(A) to enable the assessee to put forth its case before him. The Ld. DR had no objection. ITA No. 850/Del/2023 4 7. On the facts and in the circumstances of the case, we think it proper, in the interest of justice and fair play, to remit the matter back to the file of the Ld. CIT(A) for decision afresh after allowing reasonable opportunity of being heard to the assessee. We direct the assessee to co-operate in the appellate proceedings. We order accordingly. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 21 st September, 2023. sd/- sd/- (DR. BRR KUMAR) (ASTHA CHANDRA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 21/09/2023 Veena Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order