KHODIYAR BUILDERS,UMBERGAON vs. ITO WARD 5, VAPI

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ITA 402/SRT/2025Status: PendingITAT Surat28 October 2026AY 2013-144 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the Commissioner of Income Tax (Appeals) had not taken cognizance of the details filed by the assessee and had passed ex parte orders without proper adjudication on merits. For AY 2010-11, the Tribunal noted that the depreciation claimed needed verification and that the CIT(A)'s order was ex parte. Therefore, the matter was remanded back to the file of the AO/JAO for proper verification of details and adjudication as per the Income Tax Act, ensuring the assessee is given an opportunity of hearing following the principles of natural justice. A similar reasoning was applied to AY 2013-14, where the CIT(A) had also passed an ex parte order without verifying details. The Tribunal found it appropriate to remand the matter to the AO for proper verification and adjudication, with an opportunity of hearing for the assessee. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, Khodiyar Builders, filed appeals against orders of the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre (NFAC), Delhi, for Assessment Years (AY) 2010-11 and 2013-14. For AY 2010-11, the assessee declared an income of Rs. 50,50,376/- including depreciation of Rs. 5,20,269/-. The return was processed under Section 143(1) of the Income Tax Act, 1961, with an addition of Rs. 5,20,269/-. A rectification application under Section 154 was rejected. The CIT(A) dismissed the assessee's appeal ex parte. For AY 2013-14, the assessee declared income of Rs. 16,90,050/- and claimed set-off of losses, including depreciation loss of Rs. 10,94,366/-. The return was processed under Section 143(1), limiting the set-off of loss and adding Rs. 10,94,366/-. A subsequent order under Section 154 made further changes. The CIT(A) again dismissed the assessee's appeal ex parte.

What were the issues?

1. Whether the disallowance of depreciation of Rs. 5,20,269/- in proceedings under Section 143(1) of the Income Tax Act, 1961, is permissible (for AY 2010-11)? 2. Whether the charging of interest under Sections 234A, 234B, 234C, and 234D is justified (for AY 2010-11)? 3. Whether the addition of Rs. 10,94,366/- on account of disallowed set-off of depreciation loss under Section 143(1) is correct (for AY 2013-14)? Assessee's contentions: The assessee argued that the CIT(A)'s orders were ex parte and no adjudication on merits was made. For AY 2010-11, the assessee requested a remand to the Assessing Officer (AO) for proper verification of depreciation details. For AY 2013-14, the argument was identical to AY 2010-11, emphasizing the ex parte nature of the CIT(A)'s order. Revenue's contentions: The Revenue relied on the intimation order under Section 143(1), the rectification order under Section 154, and the order of the CIT(A) for both assessment years.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 154,Section 234A,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

For Respondent: Shri Ashish Kumar, Sr. DR
Pronounced: 28.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA Nos.401 & 402/SRT/2025 (िनधा�रण वष�/Assessment Years: 2010-11 & 2013-14) KHODIYAR BUILDERS ITO 9, MAHARAJA SHOPPING WARD-5, VAPI CENTRE, PLOT NO.26, GIDC, Vs. AAYKAR BHAVAN UMBERGAON, GUJARAT-396171 VADODARA-390007, GUJARAT अपीलाथ� (APPELLANT) ��थ� (RESPONDENT)

Permanent Account Number of Assessee: AABTS2595R

अपीलाथ� �ारा/Appellant represented by: Shri Parin Shah, CA ��थ� �ारा/Respondent represented by: Shri Ashish Kumar, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 19.08.2026 घोषणा की तारीख / Date of pronouncement: 28.10.2026

O R D E R PER : SUCHITRA KAMBLE, J M: These two appeals filed by the assessee are against the separate orders passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “CIT(A)”] both dated 06.01.2025.

2.

Firstly, we take up ITA No.401/SRT/2025 for A.Y. 2010-11.

3.

The assessee has raised the following grounds of appeal: “1. The order passed by lower authorities is bad in law and required to be quashed. 2. Ld. NFAC erred in law and on facts in disallowing depreciation of Rs. 520269/-which is not permissible in proceedings u/s 143(1) of the Act.

ITA Nos.401 & 402/SRT/2025 (A.Y.2010-11 & 2013-14) KHODIYAR BUILDERS vs. ITO

3.

Charging of Interest u/s 234A,234B,234C & 234D are unjustified.” 4. The assessee filed return of income on 15.10.2010 declaring income of Rs.50,50,376/- thereby claiming depreciation of Rs.5,20269/-. Return was processed and the addition of Rs.5,20,269/- was made to the income of the assessee and the assessed income was at Rs.55,70,650/- and demand of Rs.1,84,685/- was raised against the assessee. As against this, the intimation u/s 143(1) of the Income Tax Act, 1961 (in short, ‘the Act’) dated 24.02.2011, the assessee filed rectification application u/s 154 of the Act. There was no change made as per the order u/s 154 of the Act passed by the JAO, Ward-5, Vapi and, thus, rejected the rectification of intimation u/s 143(1) of the Act.

5.

Being aggrieved by the rectification order u/s154 of the Act, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal ex parte.

6.

The Ld. Authorized Representative (in short “the Ld. AR”) for the assessee submitted that the matter may be remanded back to the file of the Assessing Officer (in short, ‘the AO’) for proper verification of the details filed at page 45 & 46 as well as the other details filed by the assessee for claiming depreciation. The Ld. AR submitted that the CIT(A) order is ex parte and no adjudication on merit was made by the CIT(A).

7.

The Ld. Departmental Representative (in short “Ld. DR”) relied upon the intimation order u/s 143(1) of the Act, rectification order u/s 154 of the Act and order of the CIT(A).

8.

We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the CIT(A) has not taken cognizance of the details filed by the assessee during appellate proceedings and there is no detail given in para 4 of the order whether the notices were properly served to the assesse or not. Since, the depreciation claimed needs to be verified, it will be appropriate to remand back this

ITA Nos.401 & 402/SRT/2025 (A.Y.2010-11 & 2013-14) KHODIYAR BUILDERS vs. ITO matter to the file of the AO/JAO for proper verification of the details and adjudication, the same as per Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. Thus, ITA No.401/SRT/2025 is partly allowed for statistical purposes.

9.

As relates to ITA No.402/SRT/2025 for A.Y. 2013-14, the assessee filed return of income on 31.10.2013 declaring gross total income of Rs.16,90,050/- and claimed set off of loss of Rs.12,19,357/- which includes set off of brought forward business loss of Rs.1,24,991/- and depreciation loss of Rs.10,94,366/-. The return was processed u/s 143(1) of the Act dated 02.09.2014, wherein, the set off of loss was limited to Rs.1,24,991/- and depreciation loss of Rs.10,94,366/-. The return was processed u/s 143(1) of the Act dated 02.09.2014, wherein the set off of loss was limited to Rs.1,24,991/- and the excess loss claimed by the assessee was added amounting to Rs.10,94,366/-. The income of the assessee be assessed at Rs.27,84,420/- and demand of Rs.4,84,620/- was raised against the assessee. The assessee filed rectification application against the intimation u/s 143(1) of the Act. However, the order u/s 154 of the Act was passed by the JAO, wherein new changes were made to the intimation passed u/s 143(1) of the Act, thereby passing order dated 01.02.2023.

10.

Being aggrieved by the rectification order u/s154 of the Act, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal ex parte.

11.

The argument of the Ld. AR was identical to that of the earlier A.Y. 2010-11 as the CIT(A) has passed ex parte order.

12.

The Ld. DR also relied upon the order u/s 143(1) & 154 of the Act, and order of the CIT(A).

ITA Nos.401 & 402/SRT/2025 (A.Y.2010-11 & 2013-14) KHODIYAR BUILDERS vs. ITO 13. We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the CIT(A) has not verified the details filed by the assessee at the time of the original assessment as well as passed the ex parte order and has not given the details of service of notice in para 4 of the order dated 06.01.2010. Therefore, it will be appropriate to remand back this matter to the file of the AO for proper verification and adjudication as per Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice. Thus, ITA No.402/SRT/2025 is partly allowed for statistical purposes.

14.

In result, both the appeals filed by the assessee trust are partly allowed for statistical purposes.

Order pronounced in the open court on 28.10.2026

Sd/- Sd/- (B.M. BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER //True Copy// Surat; Dated: 28.10.2026 * SKS, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By order, Digitally signed by HEMA HEMA KISHORE KISHORE JAKKA JAKKA Date: 2026.10.30 11:47:29 +05'30' Assistant Registrar/Sr.PS/PS ITAT, Surat Bench

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