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Facts
The assessee, a domestic company, filed its ITR for A.Y. 2022-23, opting for the tax rate under Section 115BAA. The CPC processed the return under Section 143(1), taxing income at normal rates and reducing the claimed TDS credit, leading to increased tax liability. The Ld.CIT(A) dismissed the assessee's appeal ex-parte, denying the Section 115BAA benefit and interest claims, while only partly allowing verification of TDS credit.
Held
The Tribunal found that the Ld.CIT(A) decided the appeal ex-parte without providing an effective opportunity of hearing to the assessee, which is a fundamental requirement (sine qua non). Concluding that this resulted in a miscarriage of justice, the Tribunal set aside the Ld.CIT(A)'s order and restored the matter for fresh adjudication, directing the assessee to present its case within sixty days.
Key Issues
Whether the CIT(A) erred in deciding the appeal ex-parte, denying claims under Section 115BAA and TDS credit, without providing effective opportunity of hearing to the assessee.
Sections Cited
115BAA, 143(1), 250, 234A, 234B, 234C, 34(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI VIKRAM SINGH YADAV & SHRI RAJ KUMAR CHAUHAN
O R D E R Per : Raj Kumar Chauhan (JM) : This appeal is directed against the order of Learned Commissioner of Income-tax (Appeal)-47, Mumbai [in short, ‘Ld.CIT(A)]passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 23/6/2025 wherein the appeal of the assessee was decided exparte and out of 3 reliefs claimed, only one relief with respect to TDS claim was referred to Ld. Assessing Officer and the other two claims with respect of relief u/s 115BAA and relief in charging of interest u/s 234A, 234B & 234C were declined by allowing the appeal partly.
2 ITA 5172/Mum/2025 Mangal Compusolution Ltd 2. The facts in brief as culled out from the proceedings before the lower authorities are that the assessee is a domestic company and had filed the return of income for A.Y. 2022-23 declaring total income at Rs.2,04,09,680/- and paid the tax on the total income u/ 115BAA of the Act. The said return of income was processed by Central Processing Centre (CPC), Bengaluru u/s 143(1) of the Act vide intimation dated 07/08/2023 assessing the total income at Rs.2,04,09,680/- being the same income as shown by the assessee company in its return of income; however, the total income was taxed at the normal rates in the intimation order u/s 143(1) of the Act, instead tax @22% u/s 115BAA of the Act for the year under consideration. Accordingly, the tax liability was increased in the intimation by Rs.20,38,254/-. Further, the TDS credit of Rs.46,18,271/- which has been claimed in the return of income was reduced to Rs.38,42,406/- and total shortfall in the claim of TDS is Rs.7,75,865/-. Aggrieved by the intimation order for the above reasons, the assessee preferred appeal before the Ld.CIT(A), who has decided the same exparte. However, on merit he dismissed the grounds 1 & 3 pertaining to relief u/s 115BAA which has been denied on the ground that assessee has not filed submission / documents to verify whether the substantial compliance as required by section115BAA of the Act has been complied with or not. Further, the challenge to the order of the AO charging interest u/s 234A, 234B & 2345C has also been dismissed. The only partial relief was given by Ld.CIT(A) with respect to the claim of credit of TDS amount by directing the AO to verify the availability of TDS credit against the PAN of the appellant and allow the credit to the extent to which gross receipts corresponding to the claim of TDS are offered to tax. Aggrieved by the impugned order, the assessee has preferred appeal before the Tribunal by raising the following grounds:-
3 ITA 5172/Mum/2025 Mangal Compusolution Ltd “The Commissioner of Income-tax (Appeals) 47, Mumbai (hereinafter referred to as (II(A)) erred in upholding the action of the Deputy Commissioner of Income- tax. Central Circle 1(1), Mumbai (hereinafter referred to as the Assessing Officer) in determining the tax on total income at normal rate of tax as against the rate of 22 per cent per section 115BAA of the Act, opted by the appellants The appellants 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 inasmuch as the appellants have filed the prescribed Form no 10IC:”
We have heard the Ld.AR and the Ld.AR relied on the record. The Ld.AR, at the very outset, submitted that the impugned order is exparte as effective opportunity of hearing has not been given to the assessee to submit the details which were required by the Ld.CIT(A) and as such, the disposal of the appeal exparte on merit resulted into miscarriage of justice. It is furtheof the Act has been denied without any justification and similarly, the increase in the interest amount because of denial of claim of the TDS despite sufficient proof has also been done without any legal justification. It is also submitted that no notice has been received by the assessee / appellant as claimed in the impugned order; therefore, the assessee be given one more opportunity to represent its case, in the interest of justice and the matter be restored to the file of the Ld.CIT(A) for deciding the same afresh.
The Ld.DR, on the other hand, while supporting the judgement of the Ld.CIT(A), has left it to the Tribunal to consider the submission of the appellant, if deemed fit, in the given facts and circumstances of the case.
We have considered the rival submissions and carefully examined the record. The matter has been decided exparte and there is no proof of service of the notice issued on various dates as found mentioned in the impugned order. It shall become evident by extracting paragraphs 6, 6.1 & 6.2 of the impugned order, which is as under:- “6. Opportunity of being heard:
4 ITA 5172/Mum/2025 Mangal Compusolution Ltd 6.1 Several notices were issued giving opportunities of being heard to the appellant, which were duly served upon the appellant through registered which the notices were sent was email. The email on mukesh@mangalcompusolution.com. This email detail is provided by the assessee at the time of filing of returns. No response has been received till date. The particulars of notices issued are as under:
Sr.No. Date of Notce Date of hearing Remarks 1 18.03.2024 12.04.2024 No response received 2 07.05.2024 16.05.2024 No response received 3 24.05.2024 03.06.2024 No response received 4 07.10.2024 20.06.2024 No response received 5 19.12.2024 24.12.2024 No response received 6 202.02.2025 27.02.2025 No response received 7 30.04.2025 08.05.2025 Response submitted on 23.05.2025 stating that they are in the process of submission and hence sought adjournment. 8 09.06.2025 16.06.2025 No response received 6.2 In view of the above, it appears that the non-appearance to notices is deliberate as all the notices have been duly served upon the appellant on the registered email account. Thus, the appellant has failed to make any compliance. There is no gainsaying that once the appeal is filed by the appellant, it is obligatory on its part to purposefully and co-operatively pursue the same in a worthwhile manner, which the appellant has evidently failed to do. It clearly appears that the appellant has not even bothered to pursue this appeal in any productive manner. Hence, in view of the aforesaid total non-compliance/non-prosecution of the instant appeal on the part of the appellant, the instant appeal is adjudicated and disposed, ex-parte, primarily on the basis documents/details available on record, which is as under.
6.3 At the outset, that in the situation as obtained in the instant case, as evidently seen from the above, this appeal is liable to be dismissed in terms of the ratio of the judgements of the Hon'ble Apex Court and the various High Courts including the Hon'ble Apex Court which held in CIT v. B. N. Bhattarcharjee and Another (10 CTR 354) that an appeal means an effective appeal and that to "prefer an appeal would mean effectively prosecuting an appeal. Purposefully and constructively interpreted, preferring an appeal means more than formally filing it but effectively pursuing it and if a party retreats before the contest begins, it is as good as not having entered the fray.”
Section 250(2)(a) reads as under:-
5 ITA 5172/Mum/2025 Mangal Compusolution Ltd “250 (1) The Appellate Assistant Commissioner shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the Income-tax Officer against whose order the appeal is preferred. (2) The following shall have the right to be heard at the hearing of the appeal— (a) the appellant, either in person or by an authorised representative;” It is thus, evident that opportunity of hearing at the time of hearing of the appeal is not formality, but is a sine qua non for disposal of the appeal by the Ld.CIT(A). On examining the impugned order as extracted above, there is nothing to satisfy that the notice sent on various dates which were not responded were ever served on the assessee / appellant. Admittedly, the appeal was adjudicated and disposed of exparte and the assessee / appellant did not get the opportunity to represent its case. In these circumstances, we are satisfied that the impugned order has resulted into miscarriage of justice as the effective opportunity has been denied to the assessee / appellant. For these reasons, we set aside the impugned order and restore the matter to the file of the Ld.CIT(A) for deciding the same afresh. The assessee / appellant shall present its case before the Ld.CIT(A) within sixty days of this order.