Ex parte assessment remanded as assessee was a defunct company ceased to function

Ex parte best judgment assessment remanded as the assessee was a defunct company which ceased to function and therefore could not submit documents 

ABCAUS Case Law Citation
ABCAUS 3531 (2021) (07) ITAT

In this case appeal was filed by the assessee against the order of the CIT(A) confirming addition for unexplained cash credit u/s 68 of the Income Tax Act, 1961 (the Act) made by Assessing Officer (AO) in the assessment order u/s 144 of the Act.

The assessee was a private limited company. The return of the assessee was taken up for scrutiny and assessment was completed ex-parte as best judgment assessment u/s 144 of the Act because of non-appearance of the assessee.

The AO had made an addition u/s 68 as unexplained credit because the assessee did not explain and prove the genuineness and creditworthiness of the loans and advances received.

The AO also disallowed some expenditure for lack of supporting evidence.

Even before the CIT(A), the assessee failed to substantiate his claim therefore the CIT (A) confirmed the order of the AO.

The assessee requested the Tribunal to admit the additional evidence filed under Rule 29 of the ITAT Rules, 1963 and pleaded to remit back the matter to the file of the AO for denovo consideration.

It was further submitted that the assessee company had ceased to function for more than two years and therefore, it was unable to submit the requisite documents at the time of hearing before the Revenue Authorities.

The Tribunal noted that the assessee company was a defunct   company and was grasping for survival. Therefore, considering the plight of the assessee sympathetically and in the interest of justice the Tribunal remitted the matter back to the file of the AO for denovo consideration granting liberty to the assessee to file any evidence to substantiate its case.

In the result, appeal was allowed in favour of the assessee.

Download Full Judgment Click Here >>

• Merely twofold increase in share prices no reason to doubt or disbelieve the transaction
• Income tax authority duty bound to comply with the decision of Supreme Court
• Appeal withdrawn against rejection u/s 12AB as assessee was availing benefit u/s 10(23C)(iiiad)
• When delay not mala fide, right of hearing on merit not to be rejected – ITAT
• Exemption u/s 54 allowed despite failure to deposit in Capital Gains Accounts Scheme