This case involves V & S Projects Pvt Ltd (the appellant) and the Income Tax Officer (ITO), Ward – 26(1), New Delhi (the respondent), concerning the Assessment Year (AY) 2010-11. The key issues in this appeal revolve around non-compliance due to a change of address and the non-cooperation of the authorized representative.
The appellant, V & S Projects Pvt Ltd, failed to file its return of income for AY 2010-11 under section 139 of the Income Tax Act, 1961, due to an inadvertent omission by their chartered accountant. The company was under the bona fide impression that the return had been filed. Consequently, the Assessing Officer (AO) issued a notice under section 148 on 31.03.2017 for AY 2010-11. The notice was handed over to the chartered accountant, but he did not attend the assessment proceedings, leading to an ex-parte assessment under sections 144 and 147, with a total income determined at Rs. 15,63,435/-.
The appellant subsequently appealed the assessment order, but the appeal was dismissed by the Commissioner of Income Tax (Appeals) [CIT(A)] on account of non-prosecution. The notices for the hearing were sent to an old address, and the appellant did not receive them.
The appellant raised several grounds in the appeal against the order of the CIT(A), dated 07.03.2019:
The appeal was heard by the ITAT Delhi Bench “S.M.C.”, with Shri Challa Nagendra Prasad, Judicial Member, presiding. The appellant was represented by Shri Suraj Bhan Nain, Advocate, and the respondent was represented by Shri Sumesh Swani, Sr. DR.
During the hearing on 29.06.2022, the appellant’s counsel argued that the CIT(A) was not justified in denying the admission of additional evidence. The assessment was completed ex parte due to the non-cooperation of the chartered accountant and the change of address, which led to the appellant not receiving the hearing notices. The appellant submitted a medical certificate and affidavit to explain the absence of the Managing Director due to illness, but these were not properly considered by the CIT(A).
The respondent’s counsel supported the order of the CIT(A) and argued that the appellant failed to meet the conditions laid down in Rule 46A.
The ITAT carefully considered the rival submissions, assessment order, and first appellate order. It found that the CIT(A) denied the additional evidence based on alleged inconsistencies in the appellant’s stand. The CIT(A) did not make any enquiry into the authenticity of the medical certificate and affidavit submitted by the appellant.
The ITAT held that the denial of additional evidence on technical grounds, without proper enquiry into the truthfulness of the appellant’s explanations, was unjustified. The appellant’s medical certificate and affidavit were uncontroverted, and the CIT(A) failed to give a cogent finding on their authenticity. Therefore, the ITAT admitted the additional evidence in the interest of natural justice.
The ITAT restored the matter to the file of the CIT(A) for de novo adjudication, allowing the appellant an opportunity to present the additional evidence. The CIT(A) was directed to provide a fair hearing and consider the additional evidence in making a fresh assessment.
This case highlights the importance of adhering to principles of natural justice and providing adequate opportunities for taxpayers to present their case. The ITAT’s decision to admit additional evidence and remand the matter for fresh adjudication underscores the need for a fair and thorough examination of all relevant facts and documents in tax proceedings.
Order pronounced in the open court on 23rd August 2022.
Judicial Member: Shri Challa Nagendra Prasad
Date of Order: 23.08.2022
Copy forwarded to:
Assistant Registrar, ITAT, New Delhi
Non-Compliance Due to Address Change: V & S Projects Pvt Ltd vs ITO for AY 2010-11
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