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Facts
The revenue filed an appeal against the assessee after a delay of 43 days, seeking condonation of delay, which was granted by the Tribunal. The appeal was filed against the CIT(A)'s order upholding the Assessing Officer's action.
Held
The Tribunal condoned the delay in filing the revenue's appeal. The revenue's appeal was dismissed on grounds of low tax effect. The assessee's cross-objection regarding the CIT(A) upholding the Assessing Officer's notice under Section 148 was restored to the AO for verification.
Key Issues
Whether the delay in filing the revenue's appeal should be condoned and whether the appeal should be dismissed due to low tax effect. Also, whether the CIT(A) erred in upholding the Assessing Officer's action in issuing a notice under Section 148 and in disallowing a loss claimed by the assessee.
Sections Cited
250, 68, 148, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI GIRISH AGRAWAL
Date of Hearing 01.10.2025 Date of Pronouncement 27.11.2025 ORDER PER SANDEEP GOSAIN, JM:
This appeal has been filed by the revenue and CO filed by the assessee challenging the impugned order dt. 24.04.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2009-10, first of all we take up A.Y 2009-10.
We noticed from the records that there is delay of 43 2. days in filing the present appeal by the revenue and in this regard an application for seeking condonation of delay has been filed by the revenue, wherein it has been mentioned as under:
In the case of M/s. Chandra Financial Services Pvt Ltd, PAN: AABCC5331Q, for AY 2009- 10, Copy of the CIT(A) order no. ITBA/NFAC/S/250/2025-26/1075798707(1) dated 24/04/2025 was received in the office of the PCIT-2, Mumbai on 24/04/2025. The last date of filing the appeal was 30.06.2025. However, due to the following circumstances and the reasons, further appeal could not be filed within the due date.
3. It is humbly submitted that the undersigned has joined this office only on 25.02.2025. The last date for submission of scrutiny report in the PCIT office was 25.05.2025. However, due to DTVSV, 2024 time barring work and other scrutiny reports against ITAT/HC orders, staffs were not able to process this scrutiny report on time. Further, the undersigned was occupied with time barring assessment, set aside proceedings and reopening proceedings getting time barred on 31.03.2025. The scrutiny report was finalized and submitted on 29.07.2025. Authorization memo from PCIT-2, Mumbai was received on 11.08.2025.
In view of the above circumstances, there has been 43 days delay in filing the appeal before the Hon'ble ITAT. Therefore, I humbly request your goodself to condone the delay in filing & Co. 264/Mum/2025 Chandra Financial Services Pvt Ltd., Mumbai. appeal in the case of M/s. Chandra Financial Services Pvt Ltd, PAN: AABCC53310, for AY 2009-10.
Considering the entire factual position as explained before us and, and also keeping in view the principles laid down by Hon’ble Supreme Court in the case of Land Acquisition Collector Vs. Mst. Katiji& Ors., [1987] AIR 1353 (SC), wherein it has been held that where substantial justice is pitted against technicalities of non-deliberate delay, then in that eventuality substantial justice is to be preferred. In our view the principals of advancing substantial justice is of prime importance. Hence considering the explanation put forth by the Assessee by justifiably and properly explaining the delay which occurred in filing the appeal and construing the expression "sufficient cause" liberally we are inclined to condone the delay in filing the appeal before the Tribunal. Therefore we condone the delay and admit the appeal to be heard on merits.
4. At the very outset, it has been pointed out that the present appeal filed by the revenue requires dismissal on account of low tax effect but in this regard Ld. DR relied upon the CBDT Circular No. 05/2024 dated 15.03.2024, the relevant portion of the said circular is reproduced herein below:
“cases involving organized tax evasion including cases of bogus capital gain/loss through penny stocks and cases of accommodation entries,”
After having heard the counsels for both the parties on the maintainability of the present appeal and after going through the CBDT Circular No. 05/2021 dated 15.03.2024 relied upon by the revenue. We find that the appeal did not fall under any of the exceptions as mentioned by Ld. DR as in the present case additions were made u/s 68 of the Act with regard to loan transaction. Whereas it has been categorically mentioned by Ld. CIT(A) that the unsecured loans availed by the assessee has already been repaid in the subsequent financial year and assessee had successfully proved the genuineness and creditworthiness of the transactions. Since the appeal is not falling under any of the exceptions as relied upon by the revenue. Therefore the present appeal filed by the department stands dismissed account of on low tax effect.
CO No. 264/Mum/2025, A.Y 2009-10
The Commissioner of Income-tax (Appeals) at National Faceless Appeal Centre (NFAC) (hereinafter referred to as the CIT(A)) erred in upholding the action of the Deputy Commissioner of Income-tax, 2(1)(1), Mumbai (hereinafter referred to as the Assessing Officer) in issuing a notice under section 148 of the Act. The cross objectors contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in issuing notice under section 148 inasmuch as the same is without jurisdiction and consequently, the assessment order ought to have been quashed. The cross objectors further, contend that on the facts and in the circumstances of the case and in law, the reasons recorded by the Assessing Officer are insufficient, vague and without application of mind and hence, the notice issued under section 148 is bad in law and consequently, the assessment order needs to be quashed.
2. The CIT(A) erred in upholding the action of the Assessing Officer in disallowing loss of Rs 1,62,503 of the Act on the ground that the said loss is fictitious and non-genuine through client code modification. The cross objectors contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer to disallow the impugned loss inasmuch as the cross objectors have not claimed any such loss and as such, the impugned disallowance is not warranted, and hence, the impugned addition ought to be deleted. Ground No. 1
After having heard the counsels for both the parties, We found that no such specific ground was ever taken by the assessee before Ld. CIT(A) and moreover no objections were filed before the AO regarding challenging the reopening initiated by the department. Whereas Ld. AR refuted the claim by submitting that they had raised objections before Ld.AO. Since both the parties have taken conflicting arguments which needs factual verification from the assessment record therefore keeping in view the said fact the Bench is of the view that the matter needs to be & Co. 264/Mum/2025 Chandra Financial Services Pvt Ltd., Mumbai. restore back to the file of AO to verify and decide this ground in accordance with law. Accordingly this ground raised by the assessee stands allowed for statistical purpose.
Ground No.2
This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in upholding the disallowance the loss of Rs. 1,62,503/- on the ground that the said loss is fictitious and non-genuine through client code modification.
We have heard the counsels for both the parties, perused the material placed on record, judgements cited before us and also the orders passed by the revenue authorities. From the records we found that this ground has already been decided by Ld. CIT(A) in detail in its order, the operative portion of order of Ld. CIT(A) is in para 4.8, the same is reproduced herein below:
4.8 Further, the appellant categorically denied the transaction made in respect of the disallowance of loss of Rs.1,62,503/- and contended that they have not claimed the impugned loss. However, the appellant could not substantiate its claim in absence of substantial proof. The data in case of the appellant was mapped and analysed by the investigation wing as well as the AO. On perusal of the records it is concluded that the appellant has entered into the said transaction as an modified client and thereby shifted the profit by booking loss of Rs.1,62,503/-. Therefore, the addition of Rs.1,62,503/- is hereby confirmed.
& Co. 264/Mum/2025 Chandra Financial Services Pvt Ltd., Mumbai. 10. After having gone through the same, we found that assessee itself has not claimed the impugned loss. But the date was mapped and analysed by the investigation wing and also by AO, which goes to show that assessee had entered into the said transaction as a modified client and shifted the profit by booking loss of Rs. 1,62,503/-.
11. No new facts or circumstances have been placed on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, we see no reasons to interfere into or to deviate from the lawful findings so recorded by Ld. CIT(A). Hence, the ground raised and by the assessee stands dismissed. Accordingly, the CO filed by the assessee stands partly allowed for statistical purposes.
In the result, the appeal filed by the revenue stands dismissed and CO filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 27/11/2025