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Facts
The assessee filed an appeal against an order by the NFAC, which was passed ex-parte. The assessee contended that the Assessing Officer (AO) erred in reopening the assessment without proper approval and on weak grounds, and that the addition made was arbitrary. The assessee also pointed to a delay in filing the appeal before the Tribunal.
Held
The Tribunal condoned the delay in filing the appeal, citing a liberal approach adopted by higher courts for substantial justice. On merits, the Tribunal noted that the CIT(A) order was ex-parte and that the assessee could not present its case due to the unavailability of a professional. The matter was therefore remanded to the CIT(A) for verification of evidence and a decision on merits.
Key Issues
Whether the reopening of assessment was valid without proper approval and sufficient grounds? Whether the ex-parte order by CIT(A) and additions made by AO were justified?
Sections Cited
147, 148, 151, 145(3), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & MS. PADMAVATHY S
Per: Smt. Beena Pillai, J.M.: The Present appeal is filed by the assessee against order dated 06/03/2025 past by NFAC Delhi for assessment year 2011-12 on following grounds of appeal :
“1. The Id.AO erred in not taking the approval from the higher authority u/s 151 of the Act, therefore notice u/s 148 is bad in law.
2 ITA 5322/Mum/2025; A.Y. 2011-12 Hitesh Pawanraj Mehta 2. The Id.AO erred in re-opening of the assessment on the basis of third party information without providing the opportunity of cross- the third party and providing the necessary documents on which basis the ld.AO reopened the assessment u/s 147 of the Act and made the addition.
3. The ld.AO reopened the assessment only on the basis of suspect and not on reason to belief.
The Id.AO erred in not providing the copy of the information received by the Id.AO or provided the name of the supplier who stated that he has given accommodation to the entries.
The Id.AO erred in not appreciating the books of accounts and details submitted before the ld.AO nor rejected the books of accounts u/s 145(3) of the Act.
On the facts and in the circumstances of the case and in law, the learned AO has erred in making an addition of 12.5% on account of non-genuine purchases of Rs. 28,34,634/-. On the basis of third party information 7. The Id.CIT(A)(F) erred in passing ex-parte order u/s 250 in absence of counsel on record without providing the opportunity to the assessee is erroneous, devoid of merits and contrary to the provisions of the law and accordingly, liable to be quashed.
On the facts and in the circumstances of the case Ld. CIT (A) New Delhi New Delhi has erred both on facts and in law in upholding the impugned order passed by the respondent illegally. violating the principles of natural justice, without fair and objective application of mind to the facts of the case and the law applicable and without being guided by the binding decisions of courts and tribunals and hence liable to be set aside and quashed and declared non est. in law.
On the facts and in the circumstances of the case Ld. CIT (A) New Delhi has erred both on facts and in law, in sustaining the action of AO as no incriminating material whatsoever was found/unearthed as a result of search.
The Id.CIT(A) erred in confirming the order of Id.AO without passing a reasoned order as it is mandatory if ex-parte order is to be passed by the authority it should have been passed on merits and with reasons therefore bad in law and needs to be quashed.
3 ITA 5322/Mum/2025; A.Y. 2011-12 Hitesh Pawanraj Mehta 11. Both the authorities did not investigate the actual Gross-Profit rate and made addition at 12.5% by the Id. AO and confirmed by the Id.CIT(A). In fact the GP rate for the three consecutive years i.e. 2009-10, 2010-11 and 2011-12 is 2.66, 2.18 and 2.09 respectively.
The Id.AO erred in presuming profit margin at 12.5% when data for three years is in the range of 2.09 to 2.66 for three years and without investigating the documents available with the Id.AO made exorbitant addition of 12.5%.”
2. At the outset, the Ld.AR submitted that there is a delay of 89 days in filing the present appeal before this Tribunal. He placed support of condonation petition filed by the assessee, wherein it is stated that, the chartered accountant who handled the assessment proceedings expressed his inability to file appeal before this Tribunal. As assessee could not find another professional, there caused delay of about eighty-nine (89) days in filing the present appeal. 2.1 The Ld.AR humbly prayed for the delay to be condoned as assessee was in a genuine hardship by not able to file the appeal, without any assistance from an expert in the professional. 2.2 The Ld.AR pointed out that, for assessment year 2010-11 also similar circumstances prevailed and this Tribunal vide order dated 23/09/2025 in assessee’s own case in condoned the delay and remit the issue back to the file of the Ld.AO to decide the issue on merits.
On the contrary, the Ld.DR relied on the orders passed by the authorities below. It is submitted that in the present facts the assessee had represented himself before the Ld.AO. We have perused the submissions advanced by both sides in the light of the records placed before us.
4 ITA 5322/Mum/2025; A.Y. 2011-12 Hitesh Pawanraj Mehta 4. In the present facts, on examining whether the reason stated by the assessee to seek condonation of delay before this Tribunal are sufficient to condone the delay. Reliance is placed on following observations by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji&Ors., reported in (1987) 167 ITR 471 wherein, Hon’ble Court observed as under:- “The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits". The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy.
And such a liberal approach is adopted on principle as it is realized that :
Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.” Accordingly the delay in filing the present appeal before this Tribunal stands condoned.
5 ITA 5322/Mum/2025; A.Y. 2011-12 Hitesh Pawanraj Mehta 5. On merits of the case, we note that the orders passed by the Ld.CIT(A) is an ex-party order. It is also noted that the submission of Ld.DR is correct. The assessment order is not an ex-parte order. As the facts that prevailed for A.Y.2010-11 is not clear, the same cannot be followed. 5.1 It is noted that the assessee due to non availability of the professional could not represent its case before the Ld.CIT(A). The claim therefore has not been verified in accordance with law having regards to the evidences filed by the assessee. The assessee is directed to furnish all necessary evidences/documents in support of its claim. The Ld.CIT(A) is directed to verify the documents/evidences and to consider the claim in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee. Accordingly, the grounds raised by assessee in all the appeals stands partly allowed for statistical purposes. In the result, all the appeals filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 30/09/2025 Sd/- Sd/- (PADMAVATHY S) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 30/09/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to:
(1)The Appellant (2) The Respondent 6 ITA 5322/Mum/2025; A.Y. 2011-12 Hitesh Pawanraj Mehta (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.