M/S. BHARAT UDYOG LIMITED ,MUMBIA vs. ACIT, CIRCLE 15(1)(2), MUMBAI

Ground No. 1 raised by the assessee relates to challenging the order of the Ld. CIT(A) in upholding the disallowance made by the AO under Section 40(a)(ia) of the Act. In this regard, we have heard the counsel for both the parties, perused the material placed on record, the judgments cited before us, as well as the orders passed by the Revenue Authorities. From the records, we notice that the assessee remained ex parte before the AO. Consequently, the assessment order was passed under Section 144 read with Section 147 of the Act on 04.12.2018, thereby making a disallowance under Section 40(a)(ia) of the Act.

In this regard, we further noticed that the assessee had furnished additional evidence during the course of appellate proceedings; however, the said additional evidence was rejected by the Ld. CIT(A). It was categorically submitted that the primary dispute in the present appeal relates to the disallowance under Section 40(a)(ia) of the Act. However, the disallowance was made solely on the basis of the tax audit report (Form 2 3CD) without conducting any independent verification. In this regard, it was also submitted by the assessee that the tax had already been paid by the recipient of the income and, in support thereof, Form 26A had already been furnished.

Be that as it may, without going into the merits of the claim raised by the assessee, we are of the view that the assessee, having remained ex parte, could not lead any evidence before the AO to substantiate its claim. Thereafter, an application for admission of additional evidence was filed before the Ld. CIT(A), which came to be rejected on the ground that the AO had made every reasonable attempt to obtain the information and that no exceptional circumstances had been shown by the assessee. However, considering the facts of the present case, we are of the view that the ends of justice would be met if the additional evidence placed on record by the assessee is admitted, as the same goes to the root of the matter in determining the rights of the assessee.

Keeping in view our aforesaid discussion, we restore the matter back to the file of the AO to adjudicate this ground afresh by way of a de novo assessment. The AO shall decide the issue afresh after providing adequate opportunity of being heard to the assessee, subject to payment of costs of Rs. 5,000/- by the assessee. The said amount shall be deposited in the Prime Minister’s Relief Fund, and a copy of the receipt shall be placed on record before the AO within 30 days from the date of receipt of this order. The assessee shall not seek adjournment on frivolous grounds and shall remain cooperative during the course of the proceedings. The assessee shall also be at liberty to raise new grounds or file fresh evidence in support of its case.

Before parting, we make it clear that our decision to restore the matter to the file of the AO shall in no manner be construed as having any bearing on the merits of the dispute, which shall be adjudicated independently by the AO in accordance with law. Needless to mention, the AO shall provide adequate opportunity of being heard to the assessee.

Ground No. 2 raised by the assessee relates to challenging the order of the Ld. CIT(A) in upholding the additions made by the AO under Section 43B of the Act. In view of our findings in relation to Ground No. 1, Ground No. 2 raised by the assessee is rendered consequential in nature and, therefore, does not require separate adjudication.

In the result, the appeal filed by the assessee stands allowed for statistical purposes.

As the facts and circumstances in this appeal is identical to ITA 9084/MUM/2025 for the A.Y 2014-15 therefore, the decision rendered in above paragraphs would apply mutatis mutandis for this appeal also.