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Facts
The assessee, a partnership firm engaged in Mandap Decorations, filed its return of income. The AO made an addition of Rs. 1,00,00,500/- for alleged bogus expenditure under Section 69C. The assessee failed to furnish details despite notices and opportunities.
Held
The Tribunal held that the assessee should be given one more opportunity to present its case before the first appellate authority, adhering to principles of natural justice. The issue was remanded to the CIT(A) for de novo adjudication.
Key Issues
Whether the CIT(A) order upholding additions made by AO was passed without providing adequate opportunity of being heard and observing principles of natural justice.
Sections Cited
250, 194C, 143(2), 142(1), 69C, 143(3), 144B, 271AAC(1), 234A, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
(Assessment Year: 2021-22) H Karmali and Co. DCIT Circle 17(1) Shop No. 6, Sharif Mansion, 115, Kautilya Bhavan, Mumbai - 400051 Vs. S.V.P. Road, Dongri, 400009 PAN/GIR No. AABFH9983N (Appellant) : (Respondent) Assessee by : Shri. Vimal Punmiya : Shri. Ajit Pal Singh, SR. DR. Respondent by : 16.04.2025 Date of Hearing Date of Pronouncement : 30.04.2025 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) 2021-22.
The assessee has raised the following grounds of appeal: Having regard to the facts and circumstances of the case, Ld. CIT(Appeals) has erred in law and on facts in passing an order without giving an adequate opportunity of being heard and by not observing the principles of natural justice The Ld. AO erred in making an addition of business expenses to the tune of Rs 1,00,00,500/- as bogus expenditure under section 69C of the Income Tax Act without considering the facts & circumstances of the case.
(A.Y. 2021-22) H Karmali and Co. Without prejudice to the above The Ld. AO based on clerical error of smisprint of PAN No. disallowed genuine business expenses of Rs 51,00,00,500/- as bogus expenditure under section 69C of the Income Tax Act. Without prejudice to the above The Ld. AO disallowed the expenses son the ground that 80% of the labor expenses was in March 2021 without considering the fact that 70% (Approx) of sales was in March 2021. On the facts and circumstances of case and in law, Ld. Assessing officer erred in initiating penalty u/s 271AAC(1). On the facts and circumstances of case and in law, Ld. Assessing officer erred in levying interest u/s 234A, 234B and 234C of the Income Tax Act, 1961. The Ld. AO erred in passing assessment order without providing sufficient opportunity of being heard.”
Brief facts of the case are that the assessee is a partnership firm engaged in the business of Mandap Decorations. The assessee had filed its return of income dated 01.02.2022, declaring total income at Rs. 19,55,250/-. The assessee’s case was selected for scrutiny on the issue of large payments made u/s. 194C to persons who have not filed return of income. Notices u/s. 143(2) and 142(1) of the Act were duly issued and served upon the assessee. As the assessee failed to furnish the complete details/information as required vide statutory notices issued by the ld. AO, inspite of several opportunities, the ld. AO made addition of Rs. 1,00,00,500/- u/s. 69C of the Act, with respect of issue of payments u/s. 194C of the Act to third parties who were non-filers of ITR. The learned Assessing Officer ('ld. A.O.' for short) had passed the assessment order u/s. 143(3) r.w.s. 144B of the Act, dated 29.12.2022, determining total income at Rs. 1,19,55,750/- after making the said addition u/s. 69C of the Act.
(A.Y. 2021-22) H Karmali and Co.
Aggrieved the assessee was in appeal before the first appellate authority, who vide an ex parte order dated 14.02.2025, upheld the additions made by the ld. AO on the ground that the assessee has been non-compliant and has failed to substantiate its claim.
The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).
The learned Authorised Representative (ld. AR for short) contended that the assessee could not make compliances before the ld. CIT(A) due to the reason that the Authorised Representative was suffering from ill health, which rendered him unable to adequately prepare and represent the case before the ld. CIT(A). The assessee further stated that owing to a close and long-term connection with the ld. AR and due to the sensitive nature of the matter, the assessee was unable to make alternate arrangements for representation within the given period of time. For the above reason, the assessee was non-compliant during the appellate proceedings The ld. AR contended that the assessee has got a good case on merit and prayed that the assessee be given one more opportunity to present its case before the first appellate authority.
The learned Departmental Representative (‘ld. DR’ for short) vehemently opposed to setting aside the issue back to the file of the ld. CIT(A) for the reason that the assessee has been given several opportunities which were not availed by it neither before the ld. CIT(A). The ld. DR relied on the orders of the lower authorities.
We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has challenged the assessment order before the ld. CIT(A) but has been non-compliant throughout the appellate authority proceeding.
(A.Y. 2021-22) H Karmali and Co.
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 this issue back to the file of the ld. CIT(A) for de novo adjudication. The assessee is directed to comply with the proceedings without any undue delay on its side and needless it is to say that sufficient opportunity of hearing is to be given to the assessee.