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Facts
The assessee's appeal against an addition of Rs. 58,76,385 under Section 40(a)(ia) of the Income-tax Act was dismissed ex-parte by the CIT(A). This dismissal occurred because notices were sent to the email address of a senior accountant who had since resigned, and the assessee, due to oversight, had not updated the correct contact information with the CIT(A).
Held
The Tribunal, considering the facts and in the interest of justice, decided to restore the matter back to the Ld. CIT(A) for fresh adjudication on merits. This restoration provides the assessee with due opportunity to present their case, and the assessee is directed to ensure requisite compliance before the Ld. CIT(A).
Key Issues
Whether the CIT(A) was justified in dismissing the assessee's appeal ex-parte due to non-compliance when notices were sent to an outdated email of a former employee, and if the disallowance under Section 40(a)(ia) should be re-adjudicated on merits.
Sections Cited
250, 40(a)(ia), 143(3)
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Before: SHRI ANIKESH BANERJEE & SMT. RENU JAUHRI
A.Y. 2018-19 K Mordani Constructions Private Limited (Formerly known as K Mordani Constructions LLP) आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Assessment Centre [CIT(A)] dated 16.01.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2018-19.
The assessee has raised the following grounds of appeal:
“1. The learned Commissioner of Income Tax (Appeals), National Faceless Assessment Centre (NFAC) has erred in law and facts by confirming the disallowance of Rs. 58,76,385/- made u/s. 40(a)(ia) of the Act by the learned Assessing Officer which was made by the learned Assessing Officer without appreciating the fact that the appellant is following Percentage Completion Method ('POCM') for revenue recognition and thereby disallowance u/s 40(a)(ia) of the Act, being 30% of entire expenditure of Rs. 5,25,99,220/- is not justified as the appellant has claimed expenses to an extent of 62 76% ie. cost of construction completed till 31.03.2018 in the Profit and Loss Account of AY 2018-19 and remaining amount was not claimed as an expenditure in the Profit and Loss Account while deriving profit for the year under consideration.
2. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal
.”
3. Brief facts of the case are that the assessee filed its return declaring income of Rs. 13,40,820/- on 25.03.2019 for A.Y. 2018-19. The case was selected for limited scrutiny and assessment was completed at an income of Rs. 7217205/- vide order u/s. 143(3) dated 16.04.2021 after making addition of Rs. 5876385/- on account of disallowance u/s. 40(a)(ia) of the Act. Aggrieved with the order, the assessee preferred an appeal before the Ld. CIT(A). As there was A.Y. 2018-19 K Mordani Constructions Private Limited (Formerly known as K Mordani Constructions LLP) no compliance to various notices issued by the Ld. CIT(A), the appeal was dismissed him ex-parte vide order dated 16.01.2025.
4. The assessee has filed an appeal before the Tribunal against the order of Ld. CIT(A). Before us, Ld. AR has submitted that no compliance was made during the first appellate proceedings as the e-mail of a senior accountant of the assessee was mentioned in form 35 who had subsequently resigned from the company. Due to oversight, the company did not update the office of Ld. CIT(A) and hence the notices issued on the e-mail of ex-employee were not received by the assessee. He has prayed that the matter may be restored back to Ld. CIT(A) for a fresh decision on merits. Ld. DR has also not objected to the said proposition.
5. In view of the facts and circumstances narrated hereafter, and in the interest of justice, we deem it appropriate to restore the matter to Ld. CIT(A) for fresh adjudication on merits after giving due opportunity to the assessee. The assessee is also directed to make requisite compliance before Ld. CIT(A).
In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 14.07.2025.