Appeal Restored for Verification of Creditworthiness – Asha Rani Mendiratta vs DCIT Circle, Bulandshahr

Case Summary: Asha Rani Mendiratta vs DCIT Circle, Bulandshahr

Case Number: ITA 6063/DEL/2019
Appellant: Asha Rani Mendiratta, Hapur
Respondent: Deputy Commissioner of Income Tax (DCIT), Circle, Bulandshahr
Assessment Year: 2015-16
Case Filed On: 16th July 2019
Order Type: Final Tribunal Order
Date of Order: 18th July 2022
Pronounced On: 18th July 2022

Introduction

The case of Asha Rani Mendiratta vs DCIT Circle, Bulandshahr, revolves around an appeal filed by the appellant challenging the additions made by the Assessing Officer (AO) regarding unexplained creditors for the assessment year 2015-16. The appeal was initially dismissed ex-parte by the Commissioner of Income Tax (Appeals) [CIT(A)] due to non-appearance by the appellant. However, the Income Tax Appellate Tribunal (ITAT) restored the appeal to the Assessing Officer for fresh verification of the facts.

Background of the Case

Smt. Asha Rani Mendiratta, a resident of Hapur, filed her income tax return for the assessment year 2015-16. During the assessment proceedings, the Assessing Officer (AO) raised concerns about the genuineness and creditworthiness of certain creditors appearing in the appellant’s books of accounts. As a result, the AO made additions amounting to Rs. 77,41,110/-, treating them as unexplained creditors.

The appellant challenged these additions before the CIT(A), Ghaziabad. However, the CIT(A) passed an ex-parte order on 31st May 2019, dismissing the appeal due to the appellant’s failure to prosecute the case despite four opportunities provided. The CIT(A) noted that the appellant had requested adjournments via email but did not provide a medical certificate to substantiate her inability to appear. Consequently, the CIT(A) dismissed the appeal based on non-prosecution, relying on the decision in CIT vs. Multiplan India Pvt. Ltd., 38 ITD 320 (Del).

Tribunal’s Decision to Restore the Appeal

The ITAT, consisting of Shri Challa Nagendra Prasad, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member, heard the appeal on 23rd June 2022. The Tribunal noted that the CIT(A) had dismissed the appeal primarily due to the appellant’s non-appearance and failure to provide supporting documentation for the adjournment requests. However, the Tribunal also observed that the CIT(A) did not adequately address the merits of the case and relied solely on the findings of the AO without conducting a detailed examination of the evidence.

During the hearing, the appellant’s representatives, Shri Rajeev Saxena and Ms. Sumgla Saxena, argued that the liability related to the creditors had either been discharged by payment or written back in subsequent assessment years. They contended that the tax had been collected on these amounts, and the additions made by the AO were unwarranted.

In light of these submissions and considering that the CIT(A) had passed an ex-parte order without fully addressing the merits of the case, the Tribunal deemed it appropriate to restore the appeal to the AO for fresh adjudication. The Tribunal directed the AO to verify the facts, particularly regarding the discharge of liability by payment or write-back in subsequent years. The AO was instructed to conduct a thorough inquiry and provide the appellant with an opportunity to present evidence supporting her claims.

The Tribunal emphasized the importance of allowing the appellant to substantiate her case and directed her to cooperate fully with the AO during the fresh assessment proceedings. The Tribunal also cautioned the appellant against seeking unnecessary adjournments and instructed the AO to make a decision based on the merits of the case, following a detailed verification of the facts.

Conclusion

The appeal filed by Asha Rani Mendiratta against the ex-parte order of the CIT(A), Ghaziabad, was allowed for statistical purposes by the ITAT. The case was remanded back to the Assessing Officer for fresh verification of the facts regarding the unexplained creditors and the discharge of liability. The Tribunal’s decision underscores the importance of providing taxpayers with a fair opportunity to present their cases and ensuring that tax authorities conduct a thorough examination of the evidence before making additions.

This case highlights the procedural safeguards in place to protect the rights of taxpayers and the role of the Tribunal in ensuring that appeals are adjudicated on merits, rather than dismissed solely due to procedural lapses or non-appearance.

Order Pronounced in Open Court: 18th July 2022

Judicial Member: Shri Challa Nagendra Prasad
Accountant Member: Shri Pradip Kumar Kedia

Assistant Registrar: ITAT, New Delhi

Appeal Restored for Verification of Creditworthiness – Asha Rani Mendiratta vs DCIT Circle, Bulandshahr