Income Tax Appellate Tribunal - Delhi
Golden Traders, Amroha vs Ito Ward 1(4), Amroha on 31 August, 2023
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "B" DELHI
BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
&
SHRI YOGESH KUMAR US, JUDICIAL MEMBER
I.T.A. No.1023/DEL/2023
Assessment Year 2018-19
Golden Traders Vs. ITO
Pathkuli Road, Joya, Amroha Ward-1(4)
Uttar Pradesh. Amroha
TAN/PAN: AARFG0927H
(Appellant) (Respondent)
Appellant by: Shri Nitin Gulati, Adv
Shri Vicky Kapoor, CA
Respondent by: Shri K. K. Mishra, Sr.DR
Date of hearing: 04 07 2023
Date of pronouncement: 31 08 2023
ORDER
PER PRADIP KUMAR KEDIA, A.M.:
The captioned appeal has been filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi ('CIT(A)' in short) dated 17.03.2023 arising from the assessment order dated 22.04.2021 passed by the Assessing Officer (AO) under Section 144 r.w. Section 144B of the Income Tax Act, 1961 (the Act) concerning AY 2018-19.
2. The grounds of appeal raised by the assessee read as under:
"1 . Tha t th e Ld AO has erred in law a nd on fa ct in making wrong an d in co rrect a ssessmen t u/s.1 44 of In come Ta x Act 19 61 witho ut ap p ra ising a ll fa cts a nd fig u res an d on mere Imag ina ry g roun d s ba sed I.T.A. No.1023/Del/2023 2 on con jectu res an d su rmises.
2 . Tha t th e Ld . CIT(A) a lso erred in upho ld ing the in co rrect o rd er con trary to th e settled pro visio n s o f a ct pa ssed b y the Ld . A.O. Thu s, bo th th e o rd ers a re lia b le to b e set a sid e.
3 . That the Ld AO ha s erred in la w and on fa ct in th e a ssessment o rder ma king th e add itio n of Rs.5 3 ,07,046 /- b eing d ifferen ce in pu rcha se and Rs.83 ,51 ,000/- rela tin g to squa red up un secu red loa n s, wh ich is bad in la w and Ld . CIT(A) also igno red the vital fa cts which a re app aren tly app earing on th e facts of th e case bu t in stea d he up ho ld the o rd er o f th e A.O. 4 . Tha t th e Id. AO ha s erred in la w a nd on fa cts in p assing a ssessment o rder u/s. 144 a s th e a ssessmen t ha s b een fra med a rb itra rily witho ut en surin g p rop er oppo rtun ity o f b ein g hea rd in resp ect of bo th ad d itio n s b y not serving th e no tice on co rrect a dd ress o f ap pellant a s stip ula ted u /s. 2 82 of IT Act, 19 61 and Ld . CIT(A) h as erred in up ho lding th e sa me.
5 . Tha t th ere ha s b een vio la tio n of prin ciple o f n a tu ra l ju stice an d equ ity a s th e Ap p ella nt wa s p reven ted from making a rep ly to th e show cau se notice d u e to unp reced en ted situ a tio n of Covid-19 .
6 . Tha t th e App ella nt h a s never received any notices d u ring the p roceed ing s b efo re Co mmissio n er App ea l as th e sa me were sen t on ly b y Ema ils to san tosh ku ma r.965@red iffma il.co m which ad mitted ly do es no t b elo ng to a ppella nt a nd was n ever con veyed to th e app ella n t fro m th e sa id p erson to wh om th e said ema il id b elo ng s.
7 . Th a t th e Id. CIT(A) d ismissed th e a pp ea l o f a p p ella n t on th e g round o f n on-sub missio n o f exp lan ation wh ich they cou ld no t p resen t d u e to circu msta n ces b eyond th eir contro l and in th e in terest o f na tu ral ju stice, it is th erefore p rayed o n e mo re oppo rtun ity may b e g iven to th e a ssessee to sub stan tia te h is ca se o n merits.
8 . Tha t th e a pp ella n t reserves th e rig h t to ad d a lter a nd amend or to d elete a n y or all th e g rounds o f appeal on o r b efo re th e da te of h ea ring .
9 . Th a t th e fa cts and circu msta nces wo u ld u ndoub ted ly d emonstra te th a t th e appellan t is a vic tim o f circu mstances wh ich happ en ed due to th e reason s b eyond th e con tro l pa rticu la rly on a cco un t of un p recedented situ a tion o f th eCo vid -19 wh ich a ffected th e entire g lob e. To meet th e e nd s o f in terest o f justice, present is a fit ca se, wh ere th e app ella n t sho u ld b e afford ed an op po rtun ity to ma ke all h is submissio n s along with the fa cts and reco rd s b efo re the au th ority to recon sid er th e a ssessmen t o rd er."
3. When the matter was called for hearing, the ld. counsel for the assessee submitted that;
I.T.A. No.1023/Del/2023 33.1 The assessee is a partnership firm having PAN AARFG0927H and was formed on 21.04.2017 with the object to do business of trading of Scrap etc. The assessee procures the scrap from the factories / industries and sells them in the same form or after dismantling. During the AY 2018-19, being the subject matter of the present proceedings, assessee had undertaken total scrap purchases for Rs. 3,55,59,446/- and out of that made total sales for Rs. 2,78,57,115/- and left with closing stock amounting to Rs. 97,76,370/-. The assessee had maintained proper books of account, which were audited under Income Tax Act 1961 and Audit Report in Form 3CB-3CD was uploaded on Income Tax Portal along with audited balance sheet and Profit and Loss account. The Assessee filed their Income Tax Return within the due date in Form ITR-5 on 31.10.2018. Further, all the purchase and sales bills are duly recorded, authenticated & substantiated by the corresponding GST returns. The assessee's case for the subject assessment year was selected for scrutiny for the reasons "Large squared up loans during the year" as per the Tax Audit Report and "Low income from TCS receipts - Scrap." in comparison to Form 26AS. A notice u/s. 143(2) was issued on 28.09.2019 for the purposes of scrutiny. The assessment proceedings were however undertaken during the period of Covid-19 when the entire Globe was under complete lockdown and movement within our country was also severely restricted. The assessee was thus unable to compile the data and information sought by Ld. AO during the assessment proceedings due to unavailability of their accountant and back up staff handling I.T.A. No.1023/Del/2023 4 their assessment matter due to ongoing Covid-19 pandemic. The applicant was totally handicapped and helpless to comply with the notices.
3.2 Consequentl y, the Assessing Officer passed assessment order u/s. 144 on 22.04.2021 by recording reasons and made following additions:
a) As seen from the Annual Information Statement i.e., Form-26AS available with the department, the assessee has made purchases to the tune of Rs. 4,08,66,492/- from M/s Indus Towers Limited and TCS was deducted at Rs.4,08,665/-, whereas the purchases reported in the P&L account is Rs. 3,55,59,446/-. Since, the assessee has not submitted any information, the difference amount of Rs.53,07,046 (4,08,66,492 - 3,55,59,446) is treated as unexplained expenditure and added back to total income.
b) As seen from Form-3CD during the year under reference, the assessee has shown squared up loans to different parties to the tune of Rs. 83,51,000/- and since, the assessee has not furnished any evidence or reply, the entire amount of Rs.83,51,000/- is treated as unexplained investment u/s 69B.
3.3 As a result of aggregate additions of Rs.1,36,58,046/- thus made, a tax demand for Rs.1,10,48,800/- was fastened on the assessee.
3.4 The ld. counsel submits that the assessee could not explain the facts of his case due to an unprecedented situation of Covid-19 and the Assessing Officer made addition by not appreciating the facts and data in correct perspective the assessment order is premised under misconceived facts as under:
I.T.A. No.1023/Del/2023 5a) Wrongl y compared the figures of amount paid / credited for TCS purposes to the tune of Rs.4,08,66,492/-
as reflected in Form 26 AS with the purchases as per books of account and incorrectly added the difference amount of Rs. 53,07,046/ - to the income as unexplained expense, which otherwise, is the amount of GST paid and not any unexplained expense or undisclosed income.
b) incorrectly considered the unsecured loans marked squared up in the Tax Audit report as loan repaid and add back them as unexplained investments u/s. 69B. Whereas the entire amount of unsecured loans of Rs. 83,51,000 was received by proper banking channel and duly recorded in audited books of accounts, out of which only Rs.14,00,000 was actually repaid during the year as recorded in books of account and remaining Rs.69,51,000/- was continued to remain outstanding as reflected under liability head of audited balance-sheet as on 31.3.2018. However, this material aspect and record was totally ignored.
3.5 The ld. counsel thus submits that both the additions made by the Assessing Officer are without any substance and against the rudimentary principles of accounting owing to erroneous understanding of facts.
3.6 Citing reasons for non compliance before the CIT(A), the ld. counsel contends that all the partners of the assessee firm have done their schooling up to intermediate level from their Village in Uttar Pradesh. None of them are well versed with I.T.A. No.1023/Del/2023 6 the complex scheme of faceless appellate proceedings, its mode and manner of serving of notices and compliance thereon. Thus, they were completely dependent on the Chartered Accountant operating near to their place of business assigned to handle the appellate proceedings. The Assessee had provided full information, reconciliation, documents and data in their support and access to their login on Income Tax Portal to the consultant. It was pointed out that assessee never received any notices towards the proceedings before Commissioner of Income Tax (Appeals) as emails were being sent to [email protected] which does not belong to them. It is submitted that the assessee never received any physical notices for the above said CIT(A) hearings either. It was submitted that being the beginner in the trade, the assessee had no prior experience to face the proceedings before the Income Tax Authorities and the issue in question was their first experience.
3.7 The ld. counsel next submitted that the assessee was vigilant and regularly in follow up with the consultant to know the progress of their appeal but the AR never informed an y pending compliance. The assessee was taken by surprise about the dismissal of appeal before CIT(A) on 17.03.2023 and for non-furnishing of submission by the consultant in support of their grounds of appeal.
3.8 The Ld. counsel, in essence, submitted that the ld. CIT(A) dismissed the appeal ex-parte and confirmed the addition made by Ld. AO due to failure of consultant in this I.T.A. No.1023/Del/2023 7 regard and due to Covid-19 pandemic before Assessing Officer. The Assessee was thus again deprived to make his submissions and documents with correct facts before the CIT(A) due to negligence on the part of his AR.
3.9 In the backdrop, the ld. counsel contends that the appeal before CIT(A) was dismissed without the opportunity which has resulted in an incorrect addition against them.
3.10 On merits, the ld. counsel adverted to the mismatch in the value of supplies received from Indus Tower Ltd. amounting to Rs.53,07,046/- and pointed out that the TCS @1% has been collected on the gross value of purchases including GST component whereas the assessee has booked the purchases at net value and the GST component as well as advance component were excluded. The mismatch is thus fully explainable on facts. As regards the addition on account of unexplained investments, it was submitted that the transactions are full y supported by the confirmation and other cogent evidences to discharge onus lay upon the assessee. An opportunity in this regard could not be utilized due to ongoing pandemic.
3.11. In the circumstances narrated above, the ld. counsel urged for an opportunity to place correct facts and details for appreciation of the Revenue Authorities. The ld. counsel thus sought suitable relief in the matter.
4. The ld. DR, on the other hand, supported the action of the Assessing Officer and CIT(A) and submitted that the assessee I.T.A. No.1023/Del/2023 8 is a habitual defaulter and neither attended before the Assessing Officer nor availed the opportunity given at the stage of CIT(A) and therefore, on the face of such a proverbial neglect displayed by the assessee, the action of the Revenue Authorities were correct and righteous and therefore, no interference therewith is called for.
5. We have carefully considered the rival submissions and perused the first appellate order under challenge as well as the assessment order. The material referred to and relied upon in the course of hearing has also been perused.
6. The action of the Assessing Officer in making additions towards alleged mismatch in the purchases shown in the books vis-à-vis Annual Information Report in 26AS and unexplained investments towards settlement/repayment of loan etc. is subject matter of controvers y. It is the contention of the assessee that it was hamstrung and handicapped in adducing the requisite evidences to support the correctness of purchases declared and source of payments of loan etc. due to ongoing pandemic and consequent travel difficulties and strict government regulations to assuage due to safety concerns.
7. It is common knowledge that Covid-19 caused unprecedented disruption across the globe at the relevant time when the assessment and the first appellate order were made. Hence, we find some force in the plea of the assessee against any deliberate complacency. However, in the same vein, in the absence of relevant facts available before the lower authorities it is not possible to draw any conclusion on the correctness of I.T.A. No.1023/Del/2023 9 the plea on merits by the Tribunal at this stage. In the circumstances, we consider it just and proper to summarily restore the matter back to the file of the Assessing Officer for de novo consideration of the subject matter and fresh determination of the issues involved in the light of relevant facts and in accordance with law after giving proper opportunity to the assessee. The assessee is directed to extend full co-operation to the Assessing Officer in this regard failing which the Assessing Officer shall be at liberty to draw appropriate inference. Therefore, all the issues involved in the present appeal are set aside and remitted back to the file of the Assessing Officer for determination thereof afresh.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 31/08/2023 Sd/- Sd/-
[YOGESH KUMAR US] [PRADIP KUMAR KEDIA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
DATED: /08/2023
prabhat