SANSKRUT INFRASPACE LIMITED LIABILITY PARTNERSHIP,AHMEDABAD vs. ITO, WARD 5(3)(2), AHMEDABAD, AHMEDABAD

ITA 1181/AHD/2026Status: DisposedITAT Ahmedabad08 July 2026AY 2017-186 pages

AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal, acknowledging the assessee's explanation regarding non-receipt of notices and the order. The matter was set aside to the lower appellate authority for fresh adjudication on merits, with directions for proper service of notices.

What were the facts?

The assessee filed an appeal with a significant delay, attributing it to non-receipt of the order from the lower appellate authority due to email communication issues. The assessee had opted out of email communication in Form 35. The Assessing Officer had disallowed interest expenses on the grounds of diversion of funds for non-business purposes.

What were the issues?

Whether the delay in filing the appeal should be condoned due to non-receipt of communication. Whether the assessee should be granted another opportunity to present its case on merits before the lower appellate authority.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Prakash D Shah, AR

For Respondent: Smt. Mamta Singh, SR-DR

Hearing: 25.06.2026Pronounced: 08.07.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of Commissioner of Income Tax, Addl/JCIT (Appeal) – Delhi, [hereinafter referred to as “Addl. CIT(A)”] dated 30.01.2024 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 143(3) of the Income Tax Act [hereinafter referred as “the Act”].

There was delay of 734 days in filing of this appeal. The assessee has filed a condonation application explaining the reason for delay. It has been explained that the order of Ld. Addl. CIT(A) was received on the e-

ITA No.1181/Ahd/2026 Sanskrut Infraspace Limited Liability Partnership Vs ITO, AY- 2017-18 2 mail id darshinshah4@gmail.com, who was a part-time staff of the Chartered Accountant firm. The said person did not communicate the notices as well as the final order of Ld. Addl. CIT(A). As a result, no compliance was made before the Ld. Addl. CIT(A) and the assessee was also not aware about the passing of the order by him. It is submitted that in Form No. 35, the assessee had opted that no communication should be sent on the e-mail id mentioned therein. The Ld. AR of the assessee explained that the delay in filing of the application was due to non-receipt of the physical order of the Ld. Addl. CIT(A).

We have considered the explanation of the assessee. It is found from the Form No. 35 that the e-mail id mentioned therein was darshinshah4@gmail.com and the assessee had given an option that no notice/communication should be sent on this e-mail id. The fact that no physical copy of the order was served on the assessee, has not been controverted by the Revenue. Therefore, the delay in filing of the appeal is condoned.

The brief facts of the case are that the assessee had filed its return of income for A.Y. 2017-18 on 26.10.2017 declaring total income of Rs. 60,170/-. The case was selected for scrutiny under CASS. In the course of assessment, the AO noticed that the assessee had paid interest @ 9% to 12% on the partners’ capital and the loans taken by it. However, the assessee had also advanced loan to different parties on which no interest was charged. The AO, therefore, concluded that the interest bearing funds were diverted for non-business purpose. Accordingly, he made disallowance of interest of Rs. 11,87,260/- in respect of interest bearing

ITA No.1181/Ahd/2026 Sanskrut Infraspace Limited Liability Partnership Vs ITO, AY- 2017-18 3

funds diverted for non-business purposes. The assessment was completed u/s. 143(3) on 18.12.2019 at total income of Rs.12,47,430/-.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. Addl. CIT(A), vide the impugned order and the appeal of the assessee was dismissed. Th

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

That the notice issued under section 143(2) of the Act is not in a format issued by the Honourable Central Board of Direct Taxes and therefore the notice issued under section 143(2) of the Act, by the learned ITO, Ward 5(2)(3), Ahmedabad is bad in law and therefore the notice issued under section 143(2) is to be held as invalid consequently the assessment order passed. 2. That the learned ADDL/JCIT (A)-12 DELHI has erred in law and facts by not quashing the assessment order under section 143(3) of the Act passed by the Ld. ITO Ward 5(2)(3), Ahmedabad as the proceeding u/s 143(3) of the Act is without jurisdiction, against the law and facts, and therefore the Order passed by Ld. ITO is required to be quashed. 3. That the learned ADDL/JCIT (A)-12 DELHI has erred in law and facts by confirming the addition made on account of disallowance of interest paid on borrowed funds for Rs.11,87,260/- u/s 36 treated as diversion of funds for the purpose other than business purpose and therefore, the learned AO should be directed to allow the interest expense while computing the total income. 4. That your appellant craves a leave to add, alter or amend any grounds at the time of hearing.

Shri Prakash D Shah, the Ld. AR of the assessee did not press the Ground Nos. 1 and 2. Hence, both these grounds are dismissed.

ITA No.1181/Ahd/2026 Sanskrut Infraspace Limited Liability Partnership Vs ITO, AY- 2017-18 4 8. Ground No. 3 pertains to addition of Rs. 11,87,260/- on account of disallowance of interest. The Ld. AR submitted at the outset that no compliance could be made before the Ld. CIT(A) and, therefore, he had dismissed the appeal of the assessee without adjudicating the grounds taken on merits. He explained that all the notices of the Ld. Addl. CIT(A) were received on the e-mail id only which could not be accessed by the assessee. He further submitted that the assessee had opted not to receive any notice on the e-mail id as mentioned in Form No. 35. He, therefore, requested that the assessee may be allowed another opportunity of being heard by setting aside the matter to the file of Ld. Addl. CIT(A).

Smt. Mamta Singh, the Ld. SR-DR had no objection if the matter was set aside to the file of Ld. Addl. CIT(A) for allowing another opportunity of being heard to the assessee.

10.

We have considered the submissions of the assessee. It is found from Form No. 35 that the assessee had specifically opted not to receive any notice and communication on the e-mail id darshinshah4@gmail.com as mentioned therein. According to the assessee, all the notices were received on the email id only, which could not be accessed by the assessee in time. It is further submitted by the assessee that no physical copy of any notice issued by the Ld. Addl CIT(A) was received by him. Therefore, the assessee could not make any compliance before the Ld. Addl. CIT(A), who had dismissed the appeal of the assesse due to non- persecution. The interest of justice cannot be served by rejecting the application of the assessee without giving proper opportunity of being heard to the assessee. When an option was given to the assessee

ITA No.1181/Ahd/2026 Sanskrut Infraspace Limited Liability Partnership Vs ITO, AY- 2017-18 5 regarding the mode of service of the notices and the assessee had opted not to receive any notice through e-mail; physical notice should have been served on the assessee in such circumstances. In the facts and circumstances of the present case, we deem it appropriate, in the interest of justice, to set aside the impugned order and restore the matter to the file of the Ld. Addl. CIT(A) for fresh adjudication. The Ld. Addl. CIT(A) is directed to ensure that all future notices of hearing and communications are issued to the correct and duly verified e-mail address of the assessee along with at least one physical notice, so that the assessee is afforded an effective opportunity to participate in the appellate proceedings. The assessee is also directed to check the email accounts regularly and promptly respond to the notices issued by the Ld. Addl. CIT(A). The Ld. Addl. CIT(A) shall afford adequate opportunity of being heard to the assessee and thereafter adjudicate the grounds taken by the assessee on merits, after considering the reply and explanation of the assessee. Accordingly, the impugned order is set aside and the matter is restored to the file of the Ld. Addl. CIT(A) for de novo consideration. The grounds raised by the assessee are allowed for statistical purposes.

11.

In the result, the appeal of the assessee is partly allowed for statistical purpose.

Order pronounced in the Court on 08/07/2026 at Ahmedabad.

Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 08th July, 2026 Neelesh, Sr. PS (True Copy)

ITA No.1181/Ahd/2026 Sanskrut Infraspace Limited Liability Partnership Vs ITO, AY- 2017-18 6

आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद

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