ITAT Remands Rs 4.29 Crore Tax Disallowance Case for Fresh Hearing:

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has granted a further chance to SEPC Limited to oppose a Rs. 4,29,30,623 tax addition for the Assessment Year 2023-24. The company had filed an appeal before the CIT(A) against an order of the CIT(A) dismissing the appeal for non-appearance during appellate proceedings.

SEPC submitted that the order of CIT(A) has been passed without giving them proper opportunity of being heard. The company also challenged the disallowance of Rs. 4,29,30,623 made under Section 37 of the Income Tax Act, arguing that there was no proof that the purchase transactions were only accommodation entries. It further contended that the expenditure was incurred for business purposes and that, in any event, the entire purchase amount could not have been disallowed.

The ITAT after going through the records observed that the CIT(A) had not considered the merits of the case. Rather, the appeal was dismissed due to the company’s failure to respond to 6 notices during the appellate proceedings. The Tribunal noted that the first appellate authority did not take into consideration the supporting documents and the legal arguments put forth by the assessee.

In view of the principles of natural justice, the ITAT directed to give one more chance to SEPC to present its case. Hence, it set aside the ex parte order of the CIT(A) and remanded the matter for fresh adjudication. The Tribunal directed the company to cooperate fully with the proceedings and to provide all relevant documentary evidence to substantiate its claims.

The ITAT further directed the CIT(A) to examine the matter afresh and examine the evidence filed by the assessee and decide the appeal on merits as per law. The appeal was allowed for statistical purposes as the Tribunal had not decided the actual tax-dispute but had only remanded the matter for fresh consideration.