SHRI VENEER SPOT,SURAT V. THE INCOME TAX OFFICER, WARD 2(3)(4), SURAT , SURAT

ITA 588/SRT/2024

AI Insights

The case involves an appeal by Shri Veneer Spot against the order of the Commissioner of Income Tax (Appeals), which confirmed various additions and disallowances made by the Assessing Officer for the Assessment Year 2017-18. The primary issues in the appeal included the validity of the assessment order, the addition of Rs. 7,09,519 to fixed assets, disallowances related to depreciation, vehicle expenses, insurance charges, and various other expenses, and an addition of Rs. 3,25,000. The Tribunal found that the assessee was not given a fair and reasonable opportunity to present their case at various stages, particularly at the assessment and appellate levels, which warranted a remand to the Assessing Officer for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470574 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 18-05-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: HIREN VEPARI
• Keywords: Opportunity of being heard; Depreciation; Unexplained investment; Principle of natural justice

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT (SMC) BENCH BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 588/SRT/2024 for AY: 2017-18 (Physical hearing) Shri Veneer Spot, SNS Inferior, G-14, B/s Singhvi Mill Near Althan Tenement, Bhatar Char Rasta, Surat – 395007 PAN : ACUFS0201M Vs The ITO, Ward – 2(3)(4), Surat APPELLANT RESPONDEDNT Appellant by Shri Hiren Vepari, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Institution 20/05/2024 Date of hearing 16/10/2024 Date of pronouncement 16/10/2024 Order under Section 254(1) of Income tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of learned Commissioner of Income Tax (Appeals), Addl./JCIT(A), Panaji dated 30.03.2024 for Assessment Year (AY) 2017-18. The assessee has raised following grounds of appeal: (I) Ex-parte order: (1) The learned CIT(A) was not justified in passing ex-parte order. (2) The matter may be remitted back to the CIT(A) as the appellant deserves on opportunity of being heard in the interest of natural justice. (II) Validity of the assessment (1) The assessment order having been passed without hearing the appellant, is bad in law and is required to be cancelled. (2) The assessment order passed in post haste is required to be quashed. (III) Addition of Rs. 7,09,519: (1) The learned CIT(A) ought to have called for the underlying documents while confirming addition of Rs. 709,519 being addition to the fixed assets like Motor Car and Motor Cycle. (2) With the addition to the fixed assets reflecting in the balance sheet with copies of bills of additions furnished and payments made for acquisition of assets through account payee cheques, there was no justification in treating the additions as unexplained investment. ITA No.588/SRT/2024/AY.2017-18 Shri Veneer Spot 2 (3) On the facts and circumstances of the case, the addition is uncalled for. (IV) Disallowance of depreciation of Rs. 56,178. vehicle expenses Rs. 27,027 and insurance charges Rs. 61,754: (1) Corollary to the Ground No. Ill, the learned CIT(A) was not justified in confirming disallowance deprecation of Rs. 56,178, vehicle expenses of Rs. 27,027 and insurance changes of Rs.61,754. (2) The disallowance being unwarranted needs to be knocked down. (V) Disallowance of Rs. 379497 being 20% of various expenses of Rs. 18,97,485. (1) The learned CIT(A) was not justified in confirming 20% out of various expenses when no details were sought by the AO and only on the basis that details earlier although alleging as if the appellant had failed to furnish the details. (2) On the facts and circumstances of the case, the disallowance is unjustified. (VI) Addition of Rs. 3,25,000: (1) The learned CIT(A) was not justified in confirming addition of Rs.3,25,000 without comprehending that the amount was paid directly by M.K. Creations Pvt. Ltd. directly to Silicon Motors and all that the appellant had done was to give credit to M.K. Creations Pvt. Ltd. for direct remittance on behalf of the appellant. (2) On the facts and circumstances of the case, the learned CIT(A) was not justified in confirming addition of Rs.3,25,000 to the total income of the appellant. (VII) Miscellaneous: (1) All of the above grounds are prejudiced to one another. (2) The appellant craves leave to add, alter or vary any of the grounds of appeal.” 2. Rival submissions of both the parties and perused the record. The learned Authorized Representative (ld. AR) of the assessee submits that lower authorities have not given fair and reasonable opportunity to the assessee. The ld. AR for the assessee fairly accepted that in response to notice issued by ld. CIT(A) on three occasions, the assessee sought adjournment. The assessee sought adjournment for valid reasons, copy of adjournment application and screenshot of ITBA portal is filed on record. The ld. CIT(A) in para 4 of his order has recorded that case was fixed for hearing on various occasions and that the assessee has sought adjournment. The ld. ITA No.588/SRT/2024/AY.2017-18 Shri Veneer Spot 3 CIT(A) dismissed the appeal of assessee in confirming the addition made by Assessing Officer. Facts remain the same that ld. CIT(A) confirmed the addition without giving fair and reasonable opportunity to the assessee. it is not the case of ld CIT(A) that the assessee has not responded to the notices issued by him. The ld. AR of assessee further submits that during assessment the Assessing Officer issued various notices to assessee for seeking various details, which were duly furnished by assessee. Such facts are clearly discernable from para 2 of the assessment order. The Assessing Officer finally issued show cause notice dated 09.12.2019 with the direction to furnish required details by 12.12.2019. Such fact is mentioned in para 5 on page no.3 of the assessment order. The Assessing Officer recorded that required details were not furnished by assessee, thus, the Assessing Officer made addition on account of unexplained investment in furniture, disallowance of depreciation and 20% disallowance of various expense and addition of Rs.3,25,000/- on account of unsecured loan. The ld. AR submits that assessee is really interested in contesting the case on merit. Thus, the matter may be restored back to the file of Assessing Officer, instead of ld. CIT(A) to avoid the long drown process for seeking remand report, in the event of filing reply and evidence to substantiate various expenses and claim. The ld. AR submits that on behalf of the assessee to be more vigilant in future and making timely compliance. 3. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities. The ld. Sr. DR submitted that assessee was allowed reasonable and sufficient opportunity ITA No.588/SRT/2024/AY.2017-18 Shri Veneer Spot 4 to the assessee. The assessee failed to avoid such opportunity. Thus, the assessee does not deserve any further opportunity. The ld. Sr. DR in alternative submission submitted that in case bench is of the view that assessee deserves any further opportunity, the matter may be restored back to the file of ld. CIT(A) with appropriate direction. 4. I have considered the submission of both the parties and gone through the orders of lower authorities below. On careful perusal of assessment order, I find that Assessing Officer has mentioned that he issued various notices to the assessee for seeking details, which were submitted by assessee. The Assessing Officer issued final show cause notice on 09.12.2019 seeking various details as mentioned in para 2 to 5 of his show cause notice. The assessee was asked to submit reply on 12.12.2019, thus, the Assessing Officer given two days’ time to furnish all such details. I find that all the additions made by assessee are basically based of this of show cause notice dated 09.12.2019. Thus, in my view reasonable and sufficient opportunity was not allowed by Assessing Officer. Before ld. CIT(A), the assessee sought adjournment. The ld. CIT(A) instead of giving further time, confirmed the action of Assessing Officer. I further find that appeal before ld. CIT(A) was filed in 2019 and it was summarily rejected in March, 2024. Considering the overall facts and circumstances of the case and nature of addition, I deem it appropriate to allow one more opportunity to the assessee to contest the all the additions on merit. Further, considering the fact that the additions involves in all grounds of appeal may require detailed explanation and / or evidence to substantiate various claims additions, ITA No.588/SRT/2024/AY.2017-18 Shri Veneer Spot 5 which includes the ad hoc disallowance of various expenses, unsecured loan, depreciation and addition on fixed assets. Thus, to avoid the long drown process of remand report or comment on Assessing Officer on such evidences, all the grounds of this appeal is restored back to the file of Assessing Officer to decide all the issues / claims afresh in accordance with law. Needless to direct before passing the order, assessee should be given reasonable opportunity. The assessee has directed to be more vigilant in future and not to seek adjournment without any valid reason. For statistical purposes, the appeal of the assessee is allowed. 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 16/10/2024 in the open court. Sd/- (PAWAN SINGH) JUDICIAL MEMBER Surat, Dated: 16/10/2024 SAMANTA Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order // TRUE COPY // Assistant Registrar/Sr.PS/PS, ITAT, Surat "