2022 (4) TMI 1266 - AT - Income Tax

Tribunal allows appeal delay, upholds income determination, dismisses appeal for non-appearance.

Pepperazzi Hospitality Pvt. Ltd. Versus The ITO, Ward-3 (1) (2) Ahmedabad

The Tribunal condoned the delay in filing the appeal due to sufficient cause, emphasizing the importance of justice. The rejection of the books of ... Rejection of books of accounts - AO assessed income @ 8% of gross receipts - HELD THAT:- Before us the Ld. Counsel for the assessee has submitted that the assessee never received notice of hearing from the CIT(A) and hence could not cause appearance before first appellate authority. Revenue on the other hand has not contested the claim of the assessee that the assessee was never served with the notice of hearing by Ld. CIT(A). In the interests of justice, we are restoring the file to the Ld. CIT(A) for carrying out a detailed inspection of books of accounts of the assessee and carry out a verification of their genuineness and authenticity. In this regard, opportunity may also be given to the Ld. Assessing Officer for cross verification. The assessee is also directed to kindly co-operate in the matter and provide assistance to the Revenue Issues involved:1. Delay in filing appeal before ITAT.2. Admissibility of appeal after the expiry of the prescribed period.3. Condonation of delay in filing appeal.4. Rejection of books of accounts by the Ld. AO.5. Determination of total income by Ld. AO.6. Lack of appearance by the assessee before the Ld. CIT(A).7. Restoration of the file to Ld. CIT(A) for further inspection.Issue 1: Delay in filing appeal before ITATThe appellant filed an appeal against the order of the Ld. Commissioner of Income Tax(Appeals)-9, Ahmedabad after a delay of 655 days. The appellant attributed the delay to not receiving the notice of hearing or the order passed by Ld. CIT(A) in time. The Tribunal considered the delay and cited legal precedents emphasizing the need for a liberal construction of 'sufficient cause' for condonation of delay. Ultimately, the Tribunal, noting the absence of refutation from the Revenue and in the interests of justice, condoned the delay in filing the appeal.Issue 2: Rejection of books of accounts by the Ld. AODuring the assessment proceedings, the Ld. AO rejected the appellant's books of accounts under section 145(3) of the Act. The rejection was based on discrepancies noted in the accounts, such as unverifiable expenses and lack of supporting evidence. Consequently, the Ld. AO assessed the income at 8% of the gross receipts, resulting in a total income determination of Rs. 22,88,154. The Ld. CIT(A) upheld this decision due to the appellant's non-appearance and failure to provide necessary documentation.Issue 3: Lack of appearance by the assessee before the Ld. CIT(A)The appellant did not appear before the Ld. CIT(A) during the proceedings. As a result, the Ld. CIT(A) confirmed the Ld. AO's order, emphasizing the estimation of income at 8% of turnover due to the absence of submitted details and failure to produce books of accounts. The appeal was dismissed by the Ld. CIT(A) based on these grounds.Issue 4: Restoration of the file to Ld. CIT(A) for further inspectionUpon appeal before the Tribunal, the Ld. Counsel for the assessee highlighted the non-receipt of the notice of hearing from the Ld. CIT(A), leading to the lack of appearance. The Tribunal, considering the interests of justice, decided to restore the file to the Ld. CIT(A) for a detailed inspection of the books of accounts, verification of genuineness, and authenticity. The Ld. Assessing Officer was also directed to cross-verify, and the assessee was instructed to cooperate.In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the need for a thorough inspection and verification of the books of accounts for a fair assessment.