SAI PROJECTS & SYSTEMS PVT LTD.,BENGALURU V. INCOME TAX OFFICER, WARD-6(1)(1), BENGALURU

ITA 2622/BANG/2024

AI Insights

The case involves M/s. Sai Projects & Systems Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the Assessment Year 2018-19. The assessee, engaged in interior works, had filed a nil return showing a loss of Rs. 1,82,80,191. The AO, not satisfied with the explanations provided, rejected the books of accounts and estimated the income based on the gross profit rate applicable to the previous assessment year. The assessee's appeal to the CIT(A) was dismissed for non-prosecution, leading to the current appeal before the Tribunal. The Tribunal considered the financial difficulties and disputes faced by the assessee, which hindered their ability to respond to the CIT(A), and decided to grant another opportunity for the assessee to present their case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32817 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRAMANIAN S
• Assessee Lawyers: DAYANAD K
• Keywords: Set aside; Rejection of books of accounts
• Section: 144

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 2622/Bang/2024 Assessment Year : 2018-19 M/s. Sai Projects & Systems Pvt. Ltd., No. 22/A, 3rd Main, 1st Phase, KIADB Industrial Area, Peenya, Bangalore – 560 058. PAN: AAKCS9100J Vs. The Income Tax Officer, Ward – 6 (1)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Dayanad K, CA Revenue by : Shri Subramanian .S, JCIT-DR Date of Hearing : 18-02-2025 Date of Pronouncement : 26-02-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 11/10/2024 in respect of the A.Y. 2018-19. 2. The brief facts of the case are that the assessee is engaged in the business of interior works and for the A.Y. 2018-19 filed Nil return of income and shown a loss of Rs. 1,82,80,191/-. Thereafter the case was Page 2 of 4 ITA No. 2622/Bang/2024 selected for complete scrutiny and the AO sought for explanations and not satisfied with the said explanations had rejected the books of accounts and estimated the income by adopting gross profit at 23.31% which was applicable to the earlier assessment year 2017-18. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and raised various grounds on merits. The Ld.CIT(A) had dismissed the appeal for non- prosecution. As against the said order, the assessee is in appeal before this Tribunal. 3. At the time of hearing, the Ld.AR submitted that the assessee was in financial crisis and also various disputes arose with the banks and institutions and therefore the assessee was not able to concentrate on the day today activities and therefore they were not able to appear before the Ld.CIT(A) and filed their submissions and prayed one more opportunity to appear before the Ld.CIT(A). 4. The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal. 5. We have heard the arguments of both sides and perused the materials available on record. 6. We have perused the assessment order which was made u/s. 144 of the Act since the assessee had not furnished relevant materials. Thereafter the Ld.CIT(A) also dismissed the appeal for non-prosecution. We have also considered the various problems faced by the assessee which is extracted in the statement of facts in ground nos. (g) and (h) which reads as follows: “[g.] The Appellant submits that, the gross sales of Appellant has been drastically reduced from Rs. 24.79 crores in FY 2017-18 to Rs. 5.70 crores in FY 2018-19 and further reduced to Rs. 0.68 crore in FY 2019-20 and eventually to Rs. 0.32 crore in FY 2020-21. This led to a drastic financial debacle of the Appellant and the bank loans were classified as non-performing assets. The Page 3 of 4 ITA No. 2622/Bang/2024 directors of the Appellant Company were in distress to revival of the business and struggling to settle the dispute with the banks and financial institutions. Therefore, the Appellant was not in a position to concentrate on the on- going income tax appeal proceedings and was totally depending on the tax expert who was handling the appeal proceedings and unaware of the non- submission of response to notices issued on various dates as contemplated in the order of the Hon'ble Commissioner of Income Tax [Appeals], National Faceless Appeal Centre(NFAC), Delhi. [h.] The Appellant submits that, the response was not submitted to the enablement of communication window hearing notice dated 15/11/2022, hearing notices dated 05/04/2024, 27/06/2024 and 25/09/2024 for hearing/filing submissions on or before 01/10/2024 due to the various financial disputes arose between various vendors/financial institutions/banks/customers and other administrative difficulties faced by the Appellant and was not at all an intentional as stated in the order of the Hon'ble Commissioner of Income Tax [Appeals], National Faceless Appeal Centre(NFAC), Delhi, dated 11/10/2024.” 7. We have also considered the submissions made by the Ld.AR that the assessee is having all the documents and undertake to produce the same before the assessing officer at any time. We have considered the said reasons stated by the assessee as a genuine one and in order to adjudicate the issue on merits, we are of the view that one more opportunity should be granted to the assessee to put forth their case before the authorities. 8. We, therefore set aside the orders of both the authorities and remit the issue to the file of the AO for deciding the issue afresh after hearing the assessee as well as by considering the documents to be filed by the assessee. Page 4 of 4 ITA No. 2622/Bang/2024 9. In the result, the appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 26th February, 2025. Sd/- Sd/- (WASEEM AHMED) (SOUNDARARAJAN K.) Accountant Member Judicial Member Bangalore, Dated, the 26th February, 2025. /MS / Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Bangalore "