PARTH BUS SERVICES PRIVATE LIMITED,VADODARA, GUJARAT V. INCOME TAX OFFICER, WARD 2(1)(3), VADODARA, GUJARAT

ITA 1925/AHD/2024

AI Insights

The case involves Parth Bus Services Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, concerning multiple additions and disallowances made by the Assessing Officer under various sections of the Income Tax Act, 1961 for the Assessment Year 2017-18. The additions included unexplained money and cash deposits, disallowances of cash payments exceeding permissible limits, and adjustments to book profit under Section 115JB. The CIT(A) dismissed the appeal ex-parte due to non-appearance of the assessee, leading to the current appeal before the Income Tax Appellate Tribunal. The Tribunal noted the procedural lapse and restored the matter to the CIT(A) for a decision on merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472260 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: VIDHI V. PANDYA
• Keywords: Opportunity of being heard; Business expenditure; Procedural lapse
• Section: 250; 69A; 40A(3); 115JB

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “सी“, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD \u0016ी िस\u0017ाथ\u0019 नौिटयाल, \u0011ाियक सद\u001d एवं \u0016ी मकरंद वसंत महादेवकर, लेखा सद\u001d क े सम$। ] ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.1925/Ahd/2024 िनधा \u000fरण वष\u000f /Assessment Year : 2017-18 Parth Bus Services Pvt.Ltd. F-33-34, Maruti Complex Nizampura Main Road Vadodara – 390 002 (Gujarat) बनाम/ v/s. The Income Tax Officer Ward-2(1)(3) Vadodara – 390 007 \u0013थायी लेखा सं./PAN: AAHCP 3756 E (अपीलाथ%/ Appellant) (&' यथ%/ Respondent) Assessee by : Ms. Vidhi V. Pandya, CA Revenue by : Shri Rignesh Das, Sr.DR सुनवाई की तारीख/Date of Hearing : 11 /03/2025 घोषणा की तारीख /Date of Pronouncement: 12 /03/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: This appeal has been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as “CIT(A)”] dated 28/11/2023 passed under section 250 of the Income Tax Act, 1961[hereinafter referred to as “the Act”] for the Assessment Year (AY) 2017-18. Facts of the Case: ITA No.1925/Ahd/2024 Parth Bus Services Pvt.Ltd. vs. ITO Asst. Year : 2017-18 2 2. The assessee filed its return of income for A.Y. 2017-18 declaring NIL income after setting off current losses, with tax under Section 115JB of the Act amounting to Rs.31,76,959/-. The case was selected for scrutiny under CASS. The Assessing Officer (AO) made multiple additions and disallowances, including: o Addition of Rs.35,58,300/- under Section 69A of the Act for unexplained money and cash deposits. o Disallowance of Rs.30,66,985/- under Section 40A(3) of the Act for cash payments exceeding the permissible limit. o Disallowance of Rs.15,50,857/- (25%) of maintenance expenses as unverifiable. o Disallowance of Rs.22,73,825/- (25%) of trip expenses as unsubstantiated. o Disallowance of Rs.77,09,557/- (25%) of diesel and petrol expenses as unverifiable. o Addition of Rs.31,76,959/- under Section 115JB of the Act as an adjustment to book profit. (ii) The AO also initiated penalty proceedings under Sections 270A and 271AAC of the Act for misreporting of income. 3. The assessee challenged the AO’s order before the CIT(A), but the appeal was dismissed ex-parte due to non-appearance by the assessee. The CIT(A) upheld all the additions made by the AO without adjudicating the matter on merits. 4. Aggrieved by the order of the CIT(A), the assessee is in appeal before us with following grounds of appeal: ITA No.1925/Ahd/2024 Parth Bus Services Pvt.Ltd. vs. ITO Asst. Year : 2017-18 3 1. Addition of Rs.35.58.300/- u/s 69A on account of unexplained money and cash deposits. On facts and in the circumstances of the case and in law, Ld. CIT(A) by confirming the order passed by the Ld. AO has grossly erred in making addition of Rs.35,58,300/- to the income of the appellant on account of unexplained money and cash deposits. 2. Disallowance u/s 40A(3) of Rs.30,66,985/-. On facts and in the circumstances of the case and in law, Ld. CIT(A) by confirming the order passed by the Ld. AO has grossly erred in making disallowance of Rs.30,66,985/- u/s 40A(3) to the income of the appellant. 3. Addition of Rs.15,50,857/- being 25% of the total Maintenance Expenses. On facts and in the circumstances of the case and in law, Ld. CIT(A) by confirming the order passed by the Ld. AO has grossly erred in making disallowance of Rs.15,50,857/- being 25% of total maintenance expenses on grounds that the same are unreasonable, unverifiable and non-business expenses. 4. Addition of Rs.22,73,825/- being 25% of the total Trip Expenses. On facts and in the circumstances of the case and in law, Ld. CIT(A) by confirming the order passed by the Ld. AO has grossly erred in making disallowance of Rs.22,72,825/- being 25% of total trip expenses on grounds that the same are unreasonable, unverifiable and non-business expenses. 5. Addition of Rs.77,09,557/- being 25% of the total Diesel & Petrol Expenses. On facts and in the circumstances of the case and in law, Ld. CIT(A) by confirming the order passed by the Ld. AO has grossly erred in making disallowance of Rs.77,09,557/- being 25% of total Diesel & Petrol expenses on grounds that the same are unreasonable, unverifiable and non-business expenses. 6. Additional Addition as per section 115JB of Rs.31,76,959/- on account of book profit. ITA No.1925/Ahd/2024 Parth Bus Services Pvt.Ltd. vs. ITO Asst. Year : 2017-18 4 On facts and in the circumstances of the case and in law, Ld. CIT(A) by confirming the order passed by the Ld. AO has grossly erred in making addition of Rs.31,76,959/-u/s 115JB without giving the explanation of the same. 7. Initiating penalty proceeding u/s 271AAC of the Act. On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in initiating the proceedings for levy of penalty u/s. 271AAC of the Act when no such penalty is leviable. The proceedings initiated by the Ld. AO should be dropped as it is wrongly initiated. 8. Initiating penalty proceeding u/s 270A of the Act. On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in initiating the proceedings for levy of penalty u/s. 270A of the Act when no such penalty is leviable. The proceedings initiated by the Ld. AO should be dropped as it is wrongly initiated. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any grounds of appeal at the time of or before the hearing of the appeal. 5. During the course of hearing before us, the Authorized Representative (AR) of the assessee requested an adjournment stating that the assessee is in the process of preparing various documents to be presented before the Tribunal. 6. On the other hand, the Departmental Representative (DR) pointed out that the order of the CIT(A) was passed ex-parte due to non-appearance of the assessee and, therefore, the CIT(A) has not decided the matter on merits. The DR submitted that in the interest of justice, the matter should be restored to the CIT(A) to allow the assessee an opportunity to present its case. ITA No.1925/Ahd/2024 Parth Bus Services Pvt.Ltd. vs. ITO Asst. Year : 2017-18 5 7. We have noted that the CIT(A) passed the order without considering the merits of the case due to the non-appearance of the assessee. It is a settled principle of law that no one should be condemned unheard. The assessee should be given a fair opportunity to present its case before the appellate authority. 7.1. We further note that the assessment order involves multiple additions and disallowances, some of which require proper examination of evidence. Since the CIT(A) dismissed the appeal without assessing the evidentiary value of the submissions, substantive justice has been denied due to a procedural lapse. 7.2. While non-compliance by the assessee before CIT(A) is noted, it is equally important to ensure that taxation is based on merit and not merely on procedural defaults. By restoring the matter, the assessee gets one more opportunity to defend its case. Courts and Tribunals have consistently held that in cases of ex-parte orders, where the merits have not been considered, the matter should be restored for fresh adjudication. This ensures fair adjudication and prevents undue hardship to the taxpayer. 7.3. In view of the above, we are of the opinion that the matter should be restored back to the CIT(A) for adjudication on merits. Accordingly, the matter is restored to the file of the CIT(A) with a direction to decide the appeal on merits after providing a reasonable opportunity of being heard to the assessee. The assessee is also directed to cooperate in the proceedings before the CIT(A) and file necessary documents/evidence in support of its claim within the stipulated time frame. ITA No.1925/Ahd/2024 Parth Bus Services Pvt.Ltd. vs. ITO Asst. Year : 2017-18 6 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 12th March, 2025 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 12/03/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की \"ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. \"%थ$ / The Respondent. 3. संबंिधत आयकर आयु& / Concerned CIT 4. आयकर आयु& ) अपील ( / The CIT(A)-(NFAC), Delhi. 5. िवभागीय \"ितिनिध , अिधकरण अपीलीय आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स%ािपत \"ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 11.3.2025 2. Date on which the typed draft is placed before the Dictating Member. : 11.3.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 12.3.25 7. Date on which the file goes to the Bench Clerk. : 12.3.25 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : "