Loading judgment…
Facts
The assessee, Leela Enterprises, filed a return of income for AY 2014-15. The AO reopened the assessment based on a discrepancy in expenses claimed, leading to an addition and a revised loss. The original assessment u/s 143(3) was completed on 22.12.2016, and the reopening was done on 30.07.2022.
Held
The Tribunal held that the assessee should be given one more opportunity to present its case before the CIT(A). The CIT(A) is directed to condone the delay in filing the appeal and decide the issue denovo on merits, adhering to natural justice.
Key Issues
Whether the reopening of assessment was valid, and whether the CIT(A) erred in dismissing the appeal without considering the merits due to a short delay in filing.
Sections Cited
147, 144B, 143(3), 148, 40(a), 142(1), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
(Assessment Year: 2014-15) Leela Enterprises ITO Ward 41(2)(3), Mumbai Mam Mension, Sane Guruji Nagar, V. Kautilya Bhavan, Mumbai – 400051. B. Phadke Marg, Mulund (East) – Vs. 400081. PAN/GIR No. AADFL0489P (Appellant) : (Respondent) Assessee by : Shri. Hasmukh Ravaria : Shri. Shekhar L. Gajbhiye CIT DR. Respondent by : 23.04.2025 Date of Hearing Date of Pronouncement : 29.04.2025 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) 2014-15.
The assessee has raised the following grounds of appeal:
1. On the facts of the case and in Law, order passed u/s 147 r.w.s 144B is bad-in-law both in respect of re-opening of assessment u/s 147 and in passing final order, as A.O had neither any information nor any cogent evidence to show escapement of income due to the fact that A.O has shown basis of forming reason to believe stating that he has credible details in the form of computation sheet and assessment records submitted by assessee, which means reason for re-opening is mere change in opinion.
2. On the facts of the case and in law reopening is bad in law, as there was no information/evidence to show the escapement of income and also due to the fact that the (A.Y. 2014-15) Leela Enterprises original assessment u/s 143(3) was completed by the then A.O on 22/12/2016, thus, the reopening is beyond 4 years of original assessment and assessee had disclosed all the material facts fully and truly and there was no omission in this respect on the part of the assessee.
3. On the facts of the case and in law, Ld. A.O is not justified in not considering the final reply filed by the assessee stating that, the reply was only enclosure of the old reply made against proposed reopening u/s 148.
4. On the facts of the case and in law, A.O was not justified in ignoring the final reply of the assessee which contained binding decisions also, thus, he violated principle of natural justice 5. On the facts of the case and in law, 'Ld. A.O was not justified in making additions of expenses to the tune of Rs. 1,21,07,583/-, though the assessee had submitted all the details in the matter, which was not considered.”
Brief facts of the case are that the assessee is a firm in the name and style as M/s. Leela Enterprises. The assessee had filed its return of income dated 22.12.2016, declaring total income at Rs. 1,66,02,574/-. The ld. AO observed from the assessee’s Profit and Loss account that the assessee had claimed a business loss of Rs. 45,66,274/-. It is also noticed from the assessee’s computation sheet that the assessee had deducted a sum of Rs. 1,09,18,664 towards construction expenses, and Rs. 1,88,919/- towards Electrical fitting expenses aggregating to Rs. 1,11,07,583/- stating that these expenses are admissible u/s. 40(a) of the Act and computed taxable income at a loss of Rs. 1,11,07,583/- which according to the learned Assessing Officer ('ld. A.O.' for short) has escaped assessment. The assessee’s case was selected for scrutiny and assessment order u/s. 143(3) was passed on 22.12.2016. Subsequent to this, the assessee’s case was reopened vide notice u/s. 148 of the Act, dated 30.07.2022, but the assessee has failed to comply with the same. Subsequent statutory notices u/s. 142(1) were also issued and served upon the assessee. The learned Assessing Officer (ld. A.O. for short) then passed (A.Y. 2014-15) Leela Enterprises the assessment order dated 19.05.2023, u/s. 147 r.w.s. 144B of the Act, determining total loss at Rs. -54,94,991/-, after making an addition of Rs. 1,11,07,583/-.
Aggrieved the assessee was in appeal before the first appellate authority, challenging the assessment order.
The ld. CIT(A) vide order dated 30.12.2024, dismissed the appeal filed by the assessee on the ground that the assessee has not provided any plausible explanation with supporting documentary evidence for the delay of 2 days in filing the appeal before the first appellate authority without getting into the merits of the case.
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 observed that the assessee has filed the appeal before the first appellate authority with a delay of 2 days for which the learned Authorised Representative (‘ld. AR’ for short) contends that, was due to the reason of health issue. The same was not accepted by the ld. CIT(A) stating that the assessee has failed to submit the documentary evidence to show that the concerned person had health issues during the said period. The ld. CIT(A) has also not decided the issue on the merits of the case for the above-mentioned reason.
The ld. DR on the other hand controverted the said fact and stated that the assessee has been non-compliant before both the lower authorities. The ld. DR relied on the order of the lower authorities.
In the above facts of the case, we are of the considered opinion that the assessee may be given one more opportunity to present its case before the ld. CIT(A) by furnishing the documentary evidence proposed to be filed by the assessee in order to substantiate (A.Y. 2014-15) Leela Enterprises its claim. The ld. CIT(A) is directed to condone the delay in filing the appeal and to decide the issue denovo based on the submission of the assessee and on the merits of the case. We therefore remand all these issues back to the file of the ld. CIT(A) by adhering to the principles of natural justice and in the interest of justice dispensation.