2024 (11) TMI 757 - AT - Income Tax

Assessee's absence leads to section 144 assessment but appellate order set aside for lack of merit-based examination

ITAT Raipur set aside CIT(A) NFAC's order and remanded the matter for fresh adjudication. The assessee remained absent before AO and CIT(A), leading to ... Non disposal of appeal on merits by CIT(A) - as alleged CIT(A), NFAC decided the issue on ex-parte basis without considering the merits of the issue - HELD THAT:- In the present case, admittedly, the conduct of assessee cannot be taken at a par with a compliant assessee. The assessee remained absent before Ld. AO as well as before the Ld. CIT(A). Ld. AO was compelled to complete the assessment u/s 144, wherein certain additions / disallowances were made and the same were approved by the Ld. CIT(A) in absence of any further explanations / supporting corroborative evidence furnished by the assessee. However, Ld. CIT(A) have not decided the issues on merits also the information regarding rectification of assessee’s assessment for which, though the order of rectification dated 12.02.2019 could not be placed before us by the either party, Ld. CIT(A) would have inquired on this issue from the Ld. AO to clarify as to what was the fate of the said rectification order. Since, the original demand imposed on the assessee as per order u/s 144 has been reduced to Rs. 4.73 Crore by the Ld. AO on account of rectification carried out, as emanating from Ld. AO’s letter dated 09.04.2019, the entire addition / disallowances confirmed by the Ld. CIT(A) found to be misconceived and under improper appreciation of facts on record. The order of Ld. CIT(A) has no discussion on merits of the issues rather, his attention was totally on the non-compliance on the part of the assessee, shows that Ld. CIT(A), NFAC has decided the issue on ex-parte basis without considering the merits of the issue, in light of the settled judicial precedents on the issue that “to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support.”, therefore, we are of the considered view that the order of Ld. CIT(A) is suffering with error which needs to be corrected by fresh adjudication. Thus as CIT(A) has not disposed of the appeal of the assessee on merits, then the matter requires to be restored back to the files of Ld. CIT(A) to decide the same after due deliberations on the merits. Issues Involved:1. Legality of additions sustained by the CIT(A).2. Addition due to mismatch in turnover.3. Penalty under Section 269SS.4. Penalty under Section 269T.5. Addition under Section 68.6. Suppression of turnover.7. Consideration of additional evidence and rectification.Issue-wise Detailed Analysis:1. Legality of Additions Sustained by CIT(A):The assessee challenged the order of the CIT(A) as being 'bad in law as well as on facts,' arguing that the additions sustained were erroneous and should be deleted. The Tribunal noted that the CIT(A) confirmed the additions due to the assessee's non-compliance and failure to submit any supportive documents or explanations. The Tribunal highlighted that the CIT(A) did not address the merits of the issues, focusing instead on the procedural non-compliance by the assessee.2. Addition Due to Mismatch in Turnover:The CIT(A) upheld the addition of Rs. 3,66,35,032/- made by the AO for a mismatch in the turnover reported in the service tax return and the income tax return. The Tribunal observed that the assessee failed to provide any satisfactory explanation or evidence to counter this addition, leading to its confirmation by the CIT(A).3. Penalty Under Section 269SS:The CIT(A) confirmed the addition of Rs. 2,00,12,280/- related to penalties under Section 269SS, which pertains to accepting loans or deposits otherwise than by an account payee cheque or bank draft. The Tribunal noted that the assessee did not furnish any satisfactory explanation or evidence to justify the transactions, resulting in the upholding of the addition.4. Penalty Under Section 269T:Similarly, the CIT(A) confirmed the addition of Rs. 4,90,89,280/- under Section 269T for repayment of loans or deposits otherwise than by account payee cheque or bank draft. The Tribunal emphasized that the assessee's non-compliance and lack of evidence led to the confirmation of this addition as well.5. Addition Under Section 68:The addition of Rs. 5,10,33,244/- under Section 68, concerning unexplained cash credits, was also upheld by the CIT(A). The Tribunal pointed out that the assessee failed to provide any corroborative evidence or satisfactory explanation regarding the source of the credits, resulting in the confirmation of this addition.6. Suppression of Turnover:The CIT(A) confirmed the addition of Rs. 64,32,971/- for the alleged suppression of turnover. The Tribunal noted that the assessee did not provide any evidence or explanation to refute this addition, leading to its confirmation.7. Consideration of Additional Evidence and Rectification:The assessee submitted additional evidence before the Tribunal, which was objected to by the Revenue. The Tribunal rejected the additional evidence, stating that the assessee had failed to provide such information before the lower authorities. Additionally, the Tribunal noted that the CIT(A) did not consider the rectification application under Section 154, which allegedly reduced the demand. The Tribunal observed that the CIT(A) did not inquire about the rectification order, which was crucial for the case.Conclusion:The Tribunal concluded that the CIT(A) failed to address the merits of the issues and did not consider the rectification information provided by the assessee. The Tribunal restored the matter to the CIT(A) for fresh adjudication, emphasizing the need for a decision based on merits and proper inquiry into the rectification issue. The appeal was partly allowed, with directions for the CIT(A) to provide the assessee with a reasonable opportunity to present evidence and explanations.