ITAT grants relief to Rajpal Yadav over his non-appearance before AO

Case Details: Shree Naurang Godavari Entertainment Ltd. v. ACIT - [2022] 136 taxmann.com 280 (Mumbai - Trib.)

Judiciary and Counsel Details

• • Pramod Kumar, Vice-President and Amarjit Singh, Judicial Member
  • Staney Saldhana for the Appellant.
  •  A.K. Kardam for the Respondent.

Facts of the Case

Assessee-company was promoted by Bollywood artist and comedian Rajpal Yadav and his wife, Radha Yadav. Rajpal Yadav formed this company to try his luck in film production and entertainment software, but this initiative turned out to be a complete disaster.
Film ‘Atta PataLapata’ produced by the assessee was a complete flop. The company’s offices had to be shut down as the assessee was not in a position to honour its financial commitments.

One of the Delhi based creditors of the assessee even filed criminal cases against the company and its directors. Rajpal Yadav had to face imprisonment, and things went completely haywire. Due to this, there was no compliance to the assessment notices issued to the company, and, resultantly, an ex parte assessment was finalized by the Assessing Officer.

The assessee carried the matter before CIT(A) but didn’t comply with the hearing notices. Accordingly, the appeal was dismissed, and the assessee filed an instant appeal before the Mumbai Tribunal.

ITAT Held

The Mumbai Tribunal has held that the assessee was prevented by sufficient cause from appearing before the authorities below. In any case, when someone goes through such an unfortunate patch of time, everything else takes a back seat for a while.
In the last few weeks of the relevant previous year, the criminal proceedings were initiated against the assessee and its directors. These proceedings culminated in prison time for the key person behind this company.

The non-appearance before the authorities below, in such circumstances, cannot be put against the assessee to confirm the impugned additions and this ex-parte assessment. The assessee had also made a statement at the bar that given one more opportunity, the assessee will fully cooperate in expeditious disposal of the remanded proceedings and submit all such requisitioned information as possible.

Thus, the matter was remanded to the file of the AO, and the assessee was given one opportunity to produce the requisitioned information and explanations and make his submissions.