2021 (4) TMI 388 - AT - Income Tax

Tribunal orders fresh hearing on deletion of addition, parties to be notified.

M/s Shiv Edibles Limited Versus ACIT, Circle-1, Kota

M/s Shiv Edibles Limited Versus ACIT, Circle-1, Kota - [2021] 90 ITR (Trib) 669 (ITAT [Jai]) Issues Involved:1. Delay in filing the miscellaneous application.2. Glaring and patent mistakes apparent from the face of the record.3. Rejection of books of accounts and estimation of Gross Profit (G.P) rate.4. Reliance on decisions not cited by either party.5. Violation of principles of natural justice.Detailed Analysis:1. Delay in filing the miscellaneous application:The assessee filed a miscellaneous application with a delay of 89 days. The delay was justified due to the COVID-19 pandemic and consequent lockdowns. The assessee cited the Supreme Court's decision dated 23.03.2020, which extended the limitation period for all proceedings from 15.03.2020 until further orders. Additionally, the Supreme Court's order dated 22.05.2020 extended the limitation period for 15 days post-lockdown. The Revenue had no objection to the delay, and the Tribunal admitted the application as filed within the extended due date in terms of section 254(2) of the Act.2. Glaring and patent mistakes apparent from the face of the record:The assessee argued that the Tribunal's order contained mistakes that required rectification under section 254(2) of the Act. Specifically, the Tribunal's findings contradicted the facts on record, particularly regarding the G.P rate. The Tribunal had held that the CIT(A) did not consider specific facts affecting the business, whereas the CIT(A) had recorded detailed findings on the fall in the G.P rate. The Tribunal's reliance on certain High Court decisions without providing the assessee an opportunity to rebut them was also challenged.3. Rejection of books of accounts and estimation of Gross Profit (G.P) rate:The Assessing Officer (AO) rejected the books of accounts under section 145(3) and estimated the income by applying a G.P rate of 3.03%, resulting in a trading addition of Rs. 2,28,55,077/-. The CIT(A) upheld the rejection but applied a G.P rate of 2.65%, sustaining an addition of Rs. 39,74,797/- and deleting Rs. 1,88,80,279/-. The Tribunal dismissed the assessee's cross-objection challenging the rejection of books and sustenance of addition, noting that the issue was not in dispute in the Revenue's appeal.4. Reliance on decisions not cited by either party:The Tribunal relied on decisions from the Rajasthan High Court in CIT vs. Gupta K.N. Construction Co. and Clarity Gold Pvt. Ltd vs. Principal CIT, which were not cited by either party during the hearing. The assessee argued that these decisions did not establish a legal proposition that only past history should be considered and that the Tribunal's reliance on these decisions without providing an opportunity to the assessee to rebut them violated the principles of natural justice.5. Violation of principles of natural justice:The Tribunal acknowledged that relying on decisions not cited by either party, especially when such reliance influences the outcome, can violate the principles of natural justice. The Tribunal referred to the Bombay High Court's decision in Inventure Growth and Securities Ltd vs. ITAT, which held that parties should be given an opportunity to address decisions that the Tribunal intends to rely upon. The Tribunal found that the distinguishing features in the cited decisions and the specific facts affecting the G.P rate in the assessee's case were not adequately considered.Conclusion:In light of these issues, the Tribunal recalled its earlier order and directed that the matter be heard afresh, specifically regarding the deletion of the addition of Rs. 1,88,80,279/-. The Registry was instructed to list the matter in due course and issue notice to both parties. The miscellaneous application filed by the assessee was disposed of with these directions. The order was pronounced in the Open Court on 05/04/2021.