SHREE GAYATRI CONSTRUCTIONS AND DEVELOPERS ,MUMBAI vs. INCOME TAX OFFICER -42(1)(5), MUMBAI

PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the orderof Ld. Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre, Delhi [hereinafter referred to as the “CIT(A)”],passed under Shree Gayatri Constructions & Developers section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated 13.06.2025for the A.Y. 2007-08 wherein the disallowance made vide assessment order dated 14.12.2018 u/s 40(a)(ia) of the Act to the tune of Rs. 23,98,767/- was confirmed.However in view of the order of ITAT dated 31.08.2017, the AO was directed to verify the facts of the case of assessee and if double disallowance of Rs. 23,98,767/- has been made, then delete one. 2. Aggrieved by the impugned order, the assessee preferred the appeal before us raising the following grounds:- The National Faceless Appeal Center (hereinafter referred to as the CIT(A)) erred in upholding the action of the Income-tax Officer 32(3)(4), Mumbai (hereinafter referred to as the Assessing Officer) in making disallowance under section 40(a)(ia) of Rs 23,98,767, being the aggregate expenses debited in the profit and loss account on which tax is not deducted at source by the appellants. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the impugned disallowance without appreciating the facts of the case in its entirety. The appellants further, contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought to have restricted the impugned disallowance to Rs 7,19,630, being 30 per cent of Rs 23.98.767 in accordance with the provisions of section 40(a)(ia) of the Act. Shree Gayatri Constructions & Developers The appellants crave leave to add to, alter or amend the aforestated ground of appeal. 3. We have heard Ld. DR and examined the record. It is brought to our notice that the impugned order has been passed ex-parte which is evident from para 2, 4 and 4.6 of the impugned order. It is noticed that assessee has explained the reason for non appearance before Ld. CIT(A), by filing an affidavit. The contents of the affidavit are in para 4, which are extracted below:- 4. That the delay in filing the appeal is for the following reasons:- (a) the Firm is not actively engaged in the business activity and is working with skeleton staff; (b) no notice was received on the e-mail address specified on the e-filing portal or mentioned in Form No 35 and as such, the Firm was not aware not about the proceedings initiated by the CIT(A); (c) the firm received a letter dated 20.02.2025 from the Tax Recovery Officer on 7th March 2025. The said letter was immediately forwarded to the regular Chartered Accountants, who after going through the portal appraised about the fact that CIT(A) has passed the order for the impugned income-tax assessment year; (d) thereafter, the impugned order of the CIT(A) was downloaded from the e-filing portal and that the Chartered Accountants after perusing the order of the CIT(A), advised to file the appeal. Shree Gayatri Constructions & Developers 4. From the above, it transpires that Ld. CIT(A) has failed to offer effective opportunity of hearing to the assessee and has dismissed the appeal of the assessee. Hence, the impugned order suffers from illegality and miscarriage of justice and liable to be set aside and assessee be given proper opportunity of hearing and the matter be restored to the file of Ld. CIT(A) for fresh adjudication of the case. 5. Ld. DR on the other hand supported the judgment of the Ld. CIT(A) and submitted that effective opportunity of hearing was given to the assessee and there is no justification for non-appearance, hencethere is no merit in the appeal and same is liable to be dismissed. 6. We have considered the rival submissions and examined the record. On perusal of the finding and decision of Ld. CIT(A), it is noticed that 5 notices dated 25.12.2020, 04.10.2022, 16.01.2024, 02.04.2024 and 20.05.2024 were issued to the assessee u/s 250 of the Act, but no compliance was made by the assessee. From perusal of the records, we notice that there is no evidence or material to show that the said notice of short period was served upon the assessee, moreover only 7days time given in the last notice, is not sufficient to file the reply. We are of the considered opinion that Ld. CIT(A) has not given effective opportunity Shree Gayatri Constructions & Developers of hearing to the assessee which is against the principle of natural justice. Section 250 sub section 2(a) of "the Act"which provides as under: “Section 250 (2) The following shall have the right to be heard at the hearing of the appeal: - a. The appellant, either in person or by an authorised representative;” 7. It is evident from the provision that the hearing to be given is not a formality but an effective hearing is sine qua non for the purpose of upholding the principal of natural justice. It is thus evident from the contents of the impugned order extracted above that no effective opportunity of hearing has been given by the Ld. CIT(A) while passing the impugned order. 8. For these reasons, we are of the considered opinion that matter needs to be restored to the file of the Ld. CIT (A) for giving effective hearing to the assessee who shall present its case before the Ld. CIT(A) within 60 days. The impugned order is accordingly set aside and appeal filed by the assessee is allowed in above terms. 9. In the result, appeal filed by the assessee is allowed for statistical purposes. Shree Gayatri Constructions & Developers Order pronounced in the open court on 08.08.2025. (OM PRAKASH KANT) (RAJ KUMAR CHAUHAN) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Mumbai / Dated 08.08.2025 Dhananjay, Sr.PS

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(Asstt.