ECOTRAIL PERSONAL CARE PRIVATE LIMITED,AHMEDABAD vs. THE ITO, WARD-2(1)(1), AHMEDABAD

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ITA 533/AHD/2026Status: DisposedITAT Ahmedabad13 May 2026AY 2023-244 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the CIT(A)'s order and restored the matter to the Assessing Officer for a de novo assessment. This was done to provide the assessee an opportunity to represent its case, subject to a cost of Rs. 10,000 to the Prime Minister's National Relief Fund.

What were the facts?

The assessee's appeal was against an ex-parte assessment order passed due to a server crash preventing the submission of details. The assessee also failed to appear before the CIT(A) due to non-receipt of notices by the company's director.

What were the issues?

Whether the ex-parte assessment order and the appellate order confirming it were arbitrary and violative of natural justice due to the assessee's inability to present its case.

Which sections of the Income-tax Act were involved?

Section 144,Section 250,Section 40(a)(ia),Section 37(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: Shri Sanjay Garg & Smt. Annapurna Gupta

For Appellant: Shri Krutesh Patel, AR
Hearing: 21/04/2026Pronounced: 13/05/2026

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘Ld.CIT(A)’] dated 04.12.2025 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2023-2024. 2. The assessee has raised the following grounds of appeal:

“…1. The learned CIT(A) has erred in law and on facts in confirming an assessment order passed u/s 144 which is arbitrary, mechanical, and violative of principles of natural justice. Asst.Year 2023-24 2

2.

The learned CIT(A) failed to appreciate that the assessment order suffers from patent arithmetical errors, as the additions made do not reconcile with the assessed loss, rendering the computation itself invalid.

3.

The learned CIT(A) erred in confirming the assessment despite clerical and internal inconsistencies, particularly the contradictory figures of 15,11,63,426 and 21,51,63,426 appearing in the same order.

4.

The learned CIT(A) erred in confirming the addition of ₹14,44,661 towards Short-Term Capital Gain, which was already disclosed in the return and duly set- off against business losses.

5.

The learned CIT(A) erred in law in confirming the disallowance of 276,72,076 u/s 40(a)(ia) by mechanically applying 30% disallowance without examining statutory thresholds, nature of payments, or the inapplicability of sections 194-0, 194-R and 194-Q.

6.

The learned CIT(A) erred in confirming the disallowance of 1,51,63,426 towards scheme discount, which represents legitimate post-sale trade discounts and marketing expenses allowable u/s 37(1), without calling for any ledger, vouchers, or evidence.

7.

The learned CIT(A) failed to discharge the role of a first appellate authority by dismissing the appeal for non-appearance without adjudicating the issues on merits, despite sufficient material being available on record.

8.

The impugned order, being based on incorrect facts, erroneous arithmetic, and non-application of mind, deserves to be quashed or set aside.…”

3.

At the outset, the Ld. Counsel for the assessee has invited our attention to the impugned assessment order and submitted that the same is an ex-parte best judgement Assessment Order. The Ld. Counsel for the assessee explained that the server of the assessee-company had crashed during the assessment proceedings and a certificate to that effect was also furnished before the Ld. CIT(A). Because of the aforesaid reason, the assessee could not furnish the requisite details before the Assessing Officer, resulting into passing of the impugned ex-parte assessment order. Even before the Ld. CIT(A), the case of the assessee remained unrepresented. The Ld. Counsel for the assessee further explained that the assessee-company had been incurring severe business losses for the last several years and ultimately it was taken over by another investor. During the appellate Asst.Year 2023-24 3 proceedings, notices, if any, issued by the Ld. CIT(A) did not come to the notice of the Director of the company and, therefore, the case of the assessee remained unrepresented before the Ld. CIT(A).

4.

The Ld. Counsel for the assessee submitted that the assessee has a fair case on merits and that the impugned additions made by the lower authorities are not justified. He further submitted that, in the interest of justice, the assessee may be given an opportunity to represent his case before the Assessing Officer.

5.

The Ld. DR, however, relied upon the findings of the lower authorities.

6.

Considering the rival submissions, we are of the view that the assessee has explained the reasons for non-representation of its case before the lower authorities. In our view, the interest of justice would be well served if the assessee is given an opportunity to represent its case before the Assessing Officer. However, for the lapses on the part of the assessee, the assessee can be burdened with reasonable costs. Accordingly, we direct the assessee to deposit a sum of Rs. 10,000/- to the Prime Minister’s National Relief Fund within 30 days from the receipt of a copy of this order. The assessee shall furnish proof of such payment before the Assessing Officer. Subject to fulfilment of the aforesaid condition, the impugned order of the Ld. CIT(A) is set aside and the matter is restored to the file of the Assessing Officer for de novo assessment.

7.

With the above observations, the appeal of the assessee is treated as allowed for statistical purposes.

Order pronounced in the Open Court on 13.05.2026. (Annapurna Gupta) Judicial Member अहमदाबाद/Ahmedabad, िदनांक/Dated 13.05.2026 Asst.Year 2023-24 4

आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : अपीलाथ" / The Appellant 1. 2. ""थ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु" अपील ( ) / The CIT(A)-(NFAC) िवभागीय "ितिनिध अिधकरण अपीलीय आयकर 5. अहमदाबाद /DR,ITAT, Ahmedabad. , , 6. गाड" फाईल /Guard file. आदेशानुसार/ BY ORDER,

सहायक पंजीकार (Asstt.

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