JOEL JEWELLERY WORKS,THRISSUR V. ITO WD-2(2), THRISSUR

ITA 555/COCH/2024

AI Insights

The case involves Joel Jewellery Works, a partnership firm engaged in the business of jewellery, which appealed against the order of the National Faceless Appeal Centre, Delhi, for the Assessment Year 2016-17. The firm had initially filed a return disclosing a total income of Rs. 5,00,140, which was later assessed at Rs. 45,71,593 by the Income Tax Officer, Thrissur. The assessment included significant additions alleging diversion of interest-bearing funds for non-business purposes and non-deduction of tax at source on interest payments. The CIT(A) upheld these additions without substantial discussion, leading to the firm's appeal to the Tribunal. The Tribunal found procedural inadequacies in the CIT(A)'s handling of the appeal and remanded the case for a fresh examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23425 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Other Referred Cases: Comm87unication Services India Pvt. Lt. v. CIT [2012] 18 Taxman 144, Mak Data 358 ITR 593
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Section: 143(3); 271(1)(c); 274; 40(a)(ia)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA No. 555/Coch/2024 Assessment Year: 2016-17 Joel Jewellery Works .......... Appellant Chiyaram P.O., Thrissur 680006 [PAN: AAGFJ1072R] vs. The Income Tax Officer .......... Respondent Ward - 2(2), Thrissur Appellant by: ------- None ------- Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 17.01.2025 Date of Pronouncement: 22.01.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 29.12.2023 for Assessment Year (AY) 2016-17. 2. Brief facts of the case are that the appellant is a partnership firm engaged in the business of jewellery. The return of income for AY 2016-17 was filed on 26.01.2017 disclosing total income of Rs. 5,00,140/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward 2(2), Thrissur (hereinafter called \"the AO\") vide order dated 10.12.2018 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income 2 ITA No. 555/Coch/2024 Joel Jewellery Works of Rs. 45,71,593/-. While doing so, the AO made addition of Rs. 40,00,000/- by holding that interest bearing funds have been diverted for non business purposes. The AO also made addition of Rs. 71,453/- u/s. 40(a)(ia) of the Act being 30% of the interest amount of Rs. 2,38,178/- paid to Ary Gold Designers on the ground that no tax was deducted at source. The AO also initiated penalty proceedings u/s. 271(1)(c) of the Act by alleging that the appellant is guilty of furnishing inaccurate particulars of income. There is nothing on record to show that the appellant contested the addition before the appellate forum. The appellant responded to the show cause notice issued u/s. 274 r.w.s. 271(1)(c) of the Act. The appellant filed detailed explanation stating that the appellant cooperated with the Department in the assessment proceedings and has not furnished inaccurate particulars of income. However, the AO proceeded with levy of penalty of Rs. 12,58,100/- vie order dated 26.06.2019. 3. Being aggrieved, an appeal was filed before the CIT(A) contending that the AO made addition on estimate basis, it does not amount furnishing of inaccurate particulars of income. Further, it was contended that mere disallowance of a claim does not amount to furnishing of inaccurate particulars of income relying on the decision of the Hon'ble Delhi High Court in the case of Comm87unication Services India Pvt. Lt. v. CIT [2012] 18 Taxman 144 and also Hon'ble Supreme Court judgement in the case of Mak 3 ITA No. 555/Coch/2024 Joel Jewellery Works Data 358 ITR 593. The CIT(A), after extracting the written submissions and statement of facts, confirmed the findings of the AO without giving any findings. 4. Being aggrieved, appellant is in appeal before me in the present appeal. 5. When the appeal was called nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR. 6. The solitary issue arises in the present appeal is whether the CIT(A) is justified in confirming the action of the AO in levying penalty u/s. 271(1)(c) of the Act. A mere perusal of the CIT(A)’s order, it would clearly show that there is no independent application of mind to the facts of the case and the law governing the issue. The CIT(A), after merely extracting the statement of facts, grounds of appeal and written submissions jumped to the conclusion that the appellant furnished inaccurate particulars of income without discussing the factual position of the case. The CIT(A) also has not dealt with the grounds of appeal raised by the appellant. In the above circumstances, I am of the considered opinion that in the interest of justice the matter requires remand to the file of the CIT(A) for de novo adjudication in accordance with law after affording opportunity of hearing to the appellant. Ordered accordingly. 4 ITA No. 555/Coch/2024 Joel Jewellery Works 7. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 22nd January, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 22nd January, 2025 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "