NARENDRA SACHIN ENTERPRISES,LUCKNOW V. ITO NFAC, LUCKNOW

ITA 665/LKW/2024

AI Insights

The case involves Narendra Sachin Enterprises, which appealed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2017-18. The primary contention was the dismissal of their appeal on the grounds of limitation without proper inquiry or opportunity for the appellant to explain the delay. Additionally, the assessee contested the additions made to their income and disallowances under Section 40A(3) of the Income-tax Act, 1961. The Tribunal's decision to set aside the CIT(A)'s order was based on procedural lapses in handling the limitation period and the need for a fair hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779815 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 14-11-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: R.R.N. SHUKLA
• Keywords: Set aside; Opportunity of being heard; Period of limitation; Principle of natural justice; Time period of passing order; FORM 26AS
• Section: 143(3); 40A(3)

Judgement Text

"I.T.A. No.665/Lkw/2024 Assessment Year:2017-18 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “B”, LUCKNOW BEFORE SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER AND SHRI SUBHASH MALGURIA, JUDICIAL MEMBER I.T.A. No.665/Lkw/2024 Assessment year:2017-18 Narendra Sachin Enterprises, 512E/286, 5th Lane, Nishatganj, Lucknow. PAN:AANFN0282E Vs. Income Tax Officer, NFAC, Lucknow. (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA, A.M. (A) This appeal vide I.T.A. No.665/Lkw/2024 has been filed by the assessee for assessment year 2017-18 against impugned appellate order dated 19/09/2024 (DIN & Order No. ITBA/NFAC/S/250/2024- 25/1068852245(1) of Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. Grounds of appeal are as under: “1. Because the learned Commissioner of Income Tax (Appeals), NFAC, erred in law and on facts in passing the impugned appellate order dated 19/02/2024 under Section 250 of the Income-tax Act, 1961, without affording any opportunity of being heard to the appellant, either through personal hearing or Appellant by None Respondent by Shri R.R.N. Shukla, Addl. CIT (D.R.) Printed from counselvise.com I.T.A. No.665/Lkw/2024 Assessment Year:2017-18 2 by way of allowing submission of written arguments. This constitutes a gross violation of the principles of natural justice, rendering the order bad in law, null, and void ab initio. 2. Because he learned Commissioner of Income Tax (Appeals), NFAC, has erred in law and on facts in rejecting the appellant's appeal in limine on the alleged ground of limitation, without proper inquiry, without issuing a show cause notice, and without providing an opportunity to the appellant to explain or seek condonation of the alleged delay. 3. Because The learned Assessing Officer has erred in law and on facts in making an addition of Rs.5,38,027/- to the total income of the appellant, allegedly on account of differences in purchase figures and application of gross profit (GP) rate, without proper appreciation of facts, books of accounts, and the legal status of the partnership firm. 4. Because there is Legal Error in Assessing Purchases Prior to Formation of the Partnership Firm purchases of Rs.1,72,88,617/-, which correctly represent transactions post- formation of the firm. However, the AO has adopted the total purchase figure of Rs.2,01,45,903/- (as per Form 26AS) which is an error on facts & and in law. 5. The learned Assessing Officer has erred in law and on facts in disallowing cash payments amounting to Rs.62,41,644/- under the provisions of Section 40A(3) of the Income-tax Act, 1961, without properly verifying the timing and legal status of the transactions Upon detailed reconciliation of the transactions listed in the said table, it is clearly evident that only Rs.15,49,876/- of the cash payments were made after the firm was legally constituted, and only these, if at all, could be considered in the hands of the firm for disallowance purposes. 6. The learned Assessing Officer has erred in law and on facts in invoking the provisions of Section 40A(3) to disallow cash payments, without appreciating the applicability of statutory exceptions under Rule 6DD and without examining the genuine and bona fide nature of the transactions.” Printed from counselvise.com I.T.A. No.665/Lkw/2024 Assessment Year:2017-18 3 (B) The facts of the case, in brief, are that the assessee is doing business of retail sale of country made liquor through licensed shop. The assessee filed its return of income for the year under consideration on 25/10/2017 declaring total income of Rs.1,23,060/-. Assessment order dated 23/12/2019 was passed by the Assessing Officer u/s 143(3) of the I.T. Act whereby the assessee’s total income was assessed at Rs.69,02,730/-. In the aforesaid assessment order, addition of Rs.5,38,027/- was made on account of additional gross profit and further addition of Rs.62,41,644/- was made for violation of section 40A(3) of the I.T. Act. Aggrieved, the assessee carried the matter in appeal before the learned CIT(A). Vide impugned appellate order dated 19/09/2024, the assessee’s appeal was dismissed by the learned CIT(A) on limitation ground. Aggrieved further, the assessee is in appeal before the Income Tax Appellate Tribunal. (C) At the time of hearing before the Tribunal, none was present on behalf of the assessee. In absence any representation from assessee’s side, learned Departmental Representative was heard and materials available on record were perused. On perusal of records, it is seen that the CIT(A) has dismissed the appeal of the assessee on limitation ground. However, for computation of limitation period, the learned CIT(A) presumed that the assessment order (against which the appeal was filed by the assessee in the office of the learned CIT(A)) was served on the assessee within one week of the date of order. There is no material to support this presumption of the learned CIT(A). The learned CIT(A) should not only have ascertained the date of service of order on the appellant assessee but should also have provided reasonable opportunity to the assessee to explain the reasons for delay in filing of the appeal, if it was found that the appeal was filed beyond the time limit prescribed u/s 249(3) of the I. T. Act. Printed from counselvise.com I.T.A. No.665/Lkw/2024 Assessment Year:2017-18 4 (D) The learned D.R. expressed no objection if the impugned order of the learned CIT(A) was set aside with the direction to pass fresh order in accordance with law after providing reasonable opportunity to the assessee and after correctly ascertaining the exact date of service of the assessment order on the assessee. (E) In view of the foregoing, the impugned order of learned CIT(A) is set aside with the direction to ascertain the exact date of service of assessment order on the assessee and to pass fresh appellate order in accordance with law after providing reasonable opportunity to the assessee. (F) In the result, the appeal is allowed for statistical purposes. (Order pronounced in the open court on 15/10/2025) Sd/. Sd/. (SUBHASH MALGURIA) (ANADEE NATH MISSHRA) Judicial Member Accountant Member Dated:15/10/2025 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., Lucknow Printed from counselvise.com "