MEDIHUB SCIENCETEC PVT. LTD.,KANCHEEPURAM vs. ITO, KANCHEEPURAM

The Assessee raised the following grounds of appeal : “1. The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of 1,40,63,292/- made under section 37 of the Income-tax Act, 1961 towards contract payments, without appreciating that the appellant had furnished all relevant documentary evidences including invoices, payment vouchers, PAN details of parties, and proof of TDS deduction.

Briefly, the facts of the case are that the appellant is a Company duly incorporated under the provisions of the Companies Act. It is engaged in the business of manufacturing and selling of medical devices for Cardiac Surgery, Airway Management and Blood Transfusion. The Return of Income for the Assessment Year 2018-19 was filed on 22.09.2018 disclosing a total income of Rs.16,45,190/- under normal provisions of Income Tax Act and income of Rs.44,17,178/- under the provisions of section 115JB of the Income Tax Act, 1961. Against the said Return of Income, the assessment was completed by National E-Assessment Centre(hereinafter called ‘AO’) vide order dated 23.04.2020 passed u/s.143(3) read with section 144B of the Income Tax Act at a total income of Rs.1,57,08,482/-. While doing so, the Assessing Officer made disallowance of payment made to contractors of Rs.1,40,63,292/- by drawing an adverse inference that the payment made to the contractors are bogus for the failure of the contractors to respond to notices issued by the Assessing Officer u/s.133(6) of the Income Tax Act.

Being aggrieved by the above assessment order, the appellant preferred an appeal before ld.CIT(A) contending that the appellant had discharged the onus of proving the genuineness of the payments by filing details of copies of invoices and tax deducted at source and PAN Numbers of the parties etc. However, the ld.CIT(A) confirmed the action of the Assessing Officer by holding that the appellant had failed to substantiate genuineness of the expenditure with credible documentary evidence.

Being aggrieved by the order of ld.CIT(A), the appellant is in appeal before us in the present appeal. At the outset, there is a delay 32 days in presenting appeal before this Tribunal. The appellant had filed a petition seeking condonation of delay on the ground that the delay had occurred as the appellant had wrongly filed appeal with the Office of CIT-DR office in the Tribunal, later on realizing the mistake that the appeal was filed with delay before this Tribunal. Thus, it was submitted that delay occurred on account of appeal filed the appeal with the Office of CIT-DR in the Tribunal wrongly. Immediately, thereafter on realizing the mistake, the appeal was filed with delay of 32 days before this Tribunal.

We have perused the Affidavit and the averments made in the Affidavit. The averments made in the affidavit remain uncontroverted by Learned CIT-DR. The Hon’ble Supreme Court in the case of M.Kalappa Sethi Vs. M.V.Laxmi Narain Rao AIR 1973 SC 627, held that an uncontroverted affidavit shall be taken as an affidavit on fact. In the light of this legal position, we are of the considered opinion that the delay had occurred in filing the appeal on account of Bonafide reasons and the explanation cannot be brushed aside. Therefore, we are of considered opinion that there is a reasonable and sufficient cause for the delay, hence, the delay is condoned. Accordingly, we admit the appeal for adjudication on merits.

The ld.Counsel submits that the appellant had discharged the onus of proving the genuineness of the expenditure by filing copies of invoices, payment vouchers, PAN Number details of the parties, details of TDS Deduction. He further contends that the fact that the contractors had not responded to notices issued u/s.133(6) of the Act, does not lead to the conclusion that the payments were not genuine. Thus, he submits that the ld.CIT(A) fell in error in confirming disallowance made by the Assessing Officer.

We heard rival submissions and perused the material available on record. The issue that arises for our consideration is whether the ld.CIT(A) was justified in confirming the disallowance of payment of contractors of Rs.1,40,63,292/- solely for the reason that the contractors did not respond to the notice issued u/s.133(6) of the Income Tax Act, 1961. We find from the assessment order that the assessment proceedings were taken up during the Covid-19 Pandemic period. When the appellant was called-upon to substantiate the genuineness of the expenditure of payment to the contractors of Rs.1,40,63,292/-, the appellant had failed to provide evidence to substantiate the genuineness of the expenditure. However, during the course proceedings before the ld.CIT(A), the appellant filed details such as PAN Numbers of the contractors and details of Tax deduction at source made by the appellant etc. The ld.CIT(A) took the view that mere furnishing of details such as PAN Numbers and the details of TDS does not prove the genuineness of the expenditure in the absence of any other corroborative evidence. However, keeping in view the fact that assessment proceedings were taken up during Covid-19 Pandemic period and in view of the dictum laid by the Hon’ble Supreme Court in the case of Cognizance for Extension of Limitation, In re (2022) 441 ITR 722 (SC) dated 10.01.2022, wherein, the limitation prescribed by various statutes was suo motu extended on account of difficulties faced by the citizens of the country on account of Pandemic Covid-19, we are of the considered opinion that the appellant was prevented by sufficient and reasonable cause for not causing appearance before the Assessing Officer. Therefore, we are of the considered opinion that the matter requires remand to the file of Assessing Officer for denovo assessment in accordance with law after affording an opportunity of being heard to the appellant.

In the result, appeal filed by the Assessee partly allowed for statistical purpose. Order pronounced in the open Court on 16th July, 2026.