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Facts
The assessee company, engaged in financial services, filed its return declaring 'Nil' income. Following a search in a related group's case, the assessee's case was reopened for assessment year 2015-16. An addition of Rs. 65,14,594 was made as unexplained cash credit.
Held
The Tribunal condoned the delay in filing the appeal. While the Assessing Officer made an addition of Rs. 65,14,594 as unexplained cash credit, the first appellate authority passed an ex-parte order upholding the addition without considering merits. The Tribunal remanded the case back to the CIT(A) for a fresh adjudication.
Key Issues
Whether the appeal was to be adjudicated on merits given the ex-parte order of the CIT(A) and the assessee's request for another opportunity due to procedural lapses.
Sections Cited
250, 132(1), 147, 148, 143(2), 142(1), 144B, 68, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
(Assessment Year: 2015-16) Visagar Financial Service Limited Income Tax Officer, Ward 907/908, 9th Floor, Dev Plaza, SV Road, 11(3)(1), Mumbai Vs. Andheri West, Mumbai – 400058. PAN/GIR No. AAACI1375B (Appellant) : (Respondent) Assessee by : Ms. Darshana Bhaiya Respondent by : Ms. Kavitha Kaushik, SR DR Date of Hearing : 22.07.2025 Date of Pronouncement : 31.07.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2015-16.
It is observed that the assessee has filed the present appeal with a delay of 75 days beyond the period of limitation for which the assessee is said to have filed an application along with an affidavit for condoning the said delay. The ld. DR vehemently opposed for condoning the delay. On hearing the contentions and on perusal of the affidavit filed by the assessee, we deem it fit to condone the delay on the ground that the assessee had “sufficient cause” for the delay. Delay condoned.
(A.Y. 2015-16) Visagar Financial Services Limited 3. The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law, the reopening of the assessment is illegal, invalid, barred by limitation, violative of the principle of natural justice and which deserves to be quashed as per law.
2. On the facts and circumstances of the case and in law, the CIT(A) grossly erred in dismissing the appeal of the Appellant ex-parte, without giving proper opportunity of hearing and without considering the facts and merits of the case, which makes the order of CIT(A) illegal and violative of principles of natural justice and accordingly liability to be set aside and the appeal of the appellant deserves to be properly adjudicated on merits as per law and in the interest of justice.
3. On the facts and circumstances of the case and in law, the addition made of Rs. 65,14,594 under section 68 of the Income Tax Act, 1961 representing alleged sale consideration on sale of shares of PMC transaction pertaining to regular business of the Appellant and consequently the benefit of purchase consideration paid for the same deserves to be allowed as per law and in the interest of justice.
7. On the facts and circumstances of the case and in law, the net income from sale of shares of PMC Fincorp Limited as has been offered to tax by the Appellant deserves to be accepted as such as per law and in the interest of justice.”
4. Brief facts of the case are that the assessee company is a financial institution engaged in the business of financial services. The assessee had filed its return of income dated 30.09.2015, declaring total income at Rs. Nil under normal provisions of the Act after claim of set off of brought forward losses to the extent of Rs. 11,56,268/- and book profit of Rs. 11,28,745/- as per MAT provisions of the Act. Pursuant to the search u/s. 132(1) of the Act carried out in the case of M/s. PMC Fincorp Group, dated 11.10.2018, who was alleged to be an accommodation entry provider in which the assessee was said to be one of the beneficiaries of the bogus Long-Term Capital Gain (‘LTCG’ for short), the assessee’s case was reopened u/s. 147 of the Act and notice u/s. 148 dated 30.03.2021 was issued and served upon the assessee. In response to the same, the assessee filed its return of income on 15.04.2021. Further, notices u/s. 143(2) and (A.Y. 2015-16) Visagar Financial Services Limited 142(1) of the Act were issued and served upon the assessee. The learned Assessing Officer (ld. A.O. for short) then passed the assessment order dated 30.03.2022, u/s. 147 r.w.s. 144B of the Act, thereby determining total income at Rs. 65,14,594/-, after making addition of Rs. 65,14,594/- as unexplained money u/s. 68 r.w.s. 115BBE towards transaction in the scrip PMC Fincorp Ltd. alleged to be a penny stock.
5. Aggrieved the assessee was in appeal before the first appellate authority, who vide an ex parte order dated 20.12.2024 upheld the addition made by the ld. AO on the ground that the assessee has failed to substantiate its claim.
6. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).
We have heard the rival submissions and perused the materials available on record. It is the observed that the ld. AO alleged that the amount of Rs. 65,14,594/- is the unaccounted money of the assessee which was through Sham accommodation entries by way of transactions done in the scrip PMC Fincorp Limited alleged to be a penny scrip thereby making an addition as unexplained cash credit u/s. 68 r.w.s. 115BBE of the Act. It is observed that the assessee has challenged the said addition made by the ld. AO before the first appellate authority but has not substantiated its claim by cogent evidences and has also been non-compliant throughout the appellate proceeding, where the ld. CIT(A) at para 4 of his order had stated that several opportunities were granted to the assessee which was not availed and hence, he proceeded to pass an ex parte order based on the materials available on record.
(A.Y. 2015-16) Visagar Financial Services Limited 8. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee has got a good case on the merits and prayed that the assessee may be given one more opportunity to present its case before the ld. CIT(A).
The learned Departmental Representative ('ld. DR' for short) vehemently opposed to setting aside the issue to the file of the ld. CIT(A) for the reason that the assessee was given several opportunities by the ld. CIT(A) which was not availed by the assessee.
On the above facts of the case, we are of the considered view that the assessee may be given one more opportunity to present its case before the first appellate authority by adhering to the principles of natural justice and in the interest of justice dispensation. We, therefore, remand all these issues back to the file of the ld. CIT(A) for de novo adjudication. The assessee is directed to strictly comply with the proceedings without any undue delay on its side and the ld. CIT(A) is also directed to decide the issue on the merits of the case based upon the submission of the assessee and in accordance with law.