THE ONE WORLD ENTERPRISE,RAJKOT V. THE INCOME-TAX OFFICER, WARD 1(1)(1), RAJKOT, RAJKOT

ITA 211/RJT/2024

AI Insights

The case involves The One World Enterprise appealing against an order from the National Faceless Appeal Centre (NFAC) which upheld an addition of Rs. 50,19,000 to the assessee's income, citing it as unexplained capital introduced by one of its partners, Shri Harshad D. Patel. The assessee argued that the capital was verifiable and sourced from another partnership, M/s. Vijay Enterprises. Initially, the CIT(A) dismissed the appeal due to non-response from the assessee, who later claimed that the notices were not received directly but through a tax consultant. The Tribunal, considering the principles of natural justice, decided to remand the case back to the CIT(A) for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47185 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV. LD.
• Assessee Lawyers: D.M. RINDANI; LD
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 142(1); 143(2); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकरअपीलसं./ITA No.211/RJT/2024 Assessment Year: (2018-19) (Hybrid Hearing) The One World Enterprise The One World site Office R. S. No. 516, 150ft Ring Road, Ayodhya Circle, Rajkot - 360005 Vs. The ITO, Ward – 1(1)(1), Rajkot New Aayakar Bhavan, Race Course Ring Road, Rajkot – 360001 èथायीलेखासं./जीआइआरसं./PAN/GIR No.:AANFT0251F (Appellant) (Respondent) Appellant by : Shri D. M. Rindani, Ld. A.R. Respondent by : Shri Abhimanyu Singh Yadav. Ld. Sr. DR Date of Hearing : 29/01/2025 Date of Pronouncement : 11 /04/2025 आदेश/ O R D E R PER DINESH MOHAN SINHA, JM: Captioned appeal filed by the assessee is directed against the order passed by the National Faceless Appeal Centre [(in short “NFAC/Ld. CIT(A)”] vide order dated 26.02.2024, which in turn assessment order passed by Income Tax Department/Assessing Officer under section 143(3) r.w.s. 144B of the Income Tax Act, 1961 (in short “the Act”), vide order dated 08.06.2021. 2. Grounds of appeal raised by the assessee are as follows: ITA No.211/RJT/2024 (A.Y. 2018-19) The One World Enterprise v. ITO 2 1) The Income Tax Officer, National e-assessment Centre, Delhi erred in making an addition of Rs. 50,19,000/- u/s. 68 of the Act by way of unexplained source of capital of one of the partners of the appellant firm Shri Harshad D. Patel. 2) The ITO, National e-assessment Centre, Delhi failed to appreciate that the appellant firm had discharged cast upon it u/s. 68 of the Act in respect of capital of Rs. 50,19,000/- received from one of the partners of the appellant-firm Shri Harshad D. Patel. The appellant craved leave to add, amend, alter or withdraw all or any ground of appeal at anytime upto the date of hearing of the appeal. 3. Facts of the case are that the assessee firm has e-filed the ITR for AY 2018-19 by declaring a total income of NIL on 14.10.2018. Subsequently, the appellant’s case was selected for complete scrutiny under the e-assessment scheme, 2019 for the reasons – “Share Capital/Other Capital”. Therefore, notice u/s. 143(2) of the Act was issued on 23.09.2019. Further, notices u/s. 142(1) of the Act were issued on various dates. In response thereto, the assessee has filed certain information as called for. The AO has issued show cause notice calling for details in respect of the capital introduced by the one of the partner, i.e., Shri Harshad Bhai D. Patel of Rs. 50,19,000/- out of the total capital introduced of Rs. 3,13,61,000/- by the partners of the assessee-firm. In response thereto, the assessee-firm stated that the share of the investments in the case of the partner Shri Harshad Bhai D Patel was made from the another partnership partner firm M/s. Vijay Enterprises whereas the assessee-firm claimed that capital was introduced by Shri Harshad Bhai D Patel and it is also noticed by the balance sheet submitted by the M/s. Vijay Enterprises that, four partners have made the investment of Rs. 51,19,000/-. Therefore, the sources of investments made by Shri Harshad Bhai D. Patel are not verifiable. The Ld. AO passed an Assessment Order on 08.06.2021 and made an addition of Rs. 51,19,000/-. 4. That the assessee filed an appeal against the order of the AO vide order dated 08.06.2021 in the office of the Ld. CIT(A). However, The Ld. CIT(A) issued several notices through e-mail for hearing on 21.07.2023, 01.08.2023, ITA No.211/RJT/2024 (A.Y. 2018-19) The One World Enterprise v. ITO 3 08.08.2023, 17.01.2024 and 05.02.2024. That the assessee neither response to the notices nor submit any explanation/ evidences/ documents during the appellate proceedings. The Ld. CIT(A) dismissed the appeal with following observation: 5. That the assessee filed an appeal against the impugned order passed by the Ld. CIT(A), vide order dated 26.02.2024 before this Tribunal. 6. During the course of hearing, the Ld. AR of the assessee submitted, that the notices were served on the email-id which is belong to tax consultant/CA of the assessee, who did not inform to the assessee about notice for hearing issued by the Ld. CIT(A). Therefore, the Ld. AR of the assessee prayed one more opportunity should be given to the assessee to represent his case before the Lower Authority. 7. On the contrary, the Ld. Sr. DR for the revenue, relied on the order of the Ld. CIT(A) and not objected to the prayer of the Ld. AR of the assessee. 8. We have heard both the parties and perused the material available on record. The Ld. CIT(A) has issued several notices for hearing of the case. The assessee neither furnished any details/ documents nor response to the notices of hearing. That the Ld. CIT(A) has dismissed the appeal of the assessee in limine without going into merits of the case. We noted that the notice was issued of hearing on the e-mail-id which is belongs to the tax consultant/CA, and the same was not in the knowledge of the assessee. Therefore, one more opportunity should be given to the assessee to plead his case before the Ld. CIT(A). It is settled law that principles of natural justice and fair play require that the affected party should be granted sufficient opportunity of being heard to ITA No.211/RJT/2024 (A.Y. 2018-19) The One World Enterprise v. ITO 4 contest his case. Keeping in view, in the interest of justice, we set aside the order of the Ld. CIT(A) and remitted the matter back to the file of the Ld. CIT(A) for fresh adjudication after giving due opportunity to the assessee. In the result, the appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 11/04/2025. Sd/- Sd/- d/- Sd/- (Dr. A. L. SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot (True Copy) Ǒदनांक/ Date: 11/04/2025 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Rajkot "