ITAT Remands Interest Addition to CIT(A) for Fresh Adjudication Due to Email Access Issues:

Rangoli Hotel is a partnership firm engaged in the hospitality business, filed its return of income for Assessment Year 2020–21 on January 4, 2021, declaring total income of Rs. 13,08,328 under the presumptive taxation scheme prescribed under Section 44AD of the Income Tax Act, 1961. Subsequently, the AO received information through the Insight Portal indicating a mismatch between the interest income available in the Department's records and the income disclosed by the assessee. After issuing a notice under Section 133(6) of the Act, the AO initiated reassessment proceedings by issuing a notice under Section 148 on March 26, 2024. In response, the assessee filed its return on October 25, 2024, declaring total income of Rs. 13,08,328.

During reassessment, the assessee disclosed gross receipts of Rs. 1,49,58,204 and computed business income of Rs. 11,96,656 by applying the presumptive rate of 8%. It also disclosed interest income of Rs. 24,155 in its return. The AO observed that the assessee had advanced Rs. 10,82,14,751 to M/s Raj Corporation and received interest of Rs. 1,18,35,991. According to the AO, the agreed interest rate was 12.25%, whereas the assessee had received interest at 10.90%. Accordingly, the AO made an addition of Rs. 5,77,271 towards the differential interest. The CIT(A) dismissed the appeal. 

The assessee's counsel submitted that the non-compliance with the notices issued by the CIT(A) was neither intentional nor deliberate. It was argued that the assessee could not access its previous email account following a change in its email address and, therefore, had a reasonable cause for failing to participate in the appellate proceedings.

After hearing both parties and examining the material available on record, the Tribunal noted that the CIT(A) had dismissed the appeal because of the assessee's non-compliance with the notices. Considering the explanation furnished by the assessee and in the interest of substantial justice, the Tribunal found it appropriate to restore the matter to the file of the CIT(A) for fresh adjudication on merits.

The Tribunal directed the CIT(A) to issue notices to the updated email address provided by the assessee in Form No. 36, reconsider the grounds of appeal, examine the relevant documentary evidence and pass an order in accordance with law after granting the assessee a reasonable opportunity of being heard.