Loading judgment…
Facts
The assessee filed an appeal against an order of the CIT(A) which disallowed a contingent liability of Rs. 21,42,503/- due to an inconsistency between the Income Tax Return and Form 3CD. The assessee claimed they did not receive notices and therefore could not contest the appeal.
Held
The Tribunal found that the CIT(A) did not examine the merits of the case due to the assessee's non-appearance. To ensure fair disposal, one opportunity is granted to the assessee to prosecute the appeal before the CIT(A).
Key Issues
Whether the CIT(A) erred in disallowing the contingent liability without considering that it was not claimed in the Profit & Loss Account, and whether the assessee should be granted another opportunity to present their case.
Sections Cited
143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: JUSTICE (RETD.) C.V. BHADANG & SHRI AMARJIT SINGH
PER JUSTICE (RETD.) C.V. BHADANG, PRESIDENT :
This appeal by the assessee is filed against the order dated 25.11.2024 passed by the learned Commissioner of Income Tax (Appeals) (‘CIT(A)’ for short), which in turn arose out of an adjustment under Section 143(1) of the Income Tax Act, 1961 (‘Act’ for short) made disallowing contingent liability of Rs.21,42,503/-. This is on account of the inconsistency in the said liability in Income Tax Return (ITR) and Form 3CD. The appeal pertains to assessment year 2021-22.
We have heard parties. Perused record.
A perusal of the impugned order dated 25.11.2024 would indicate that the appellant failed to appear or contest the appeal inspite of three notices dated Nakodiam Diamonds Pvt. Ltd. 05.10.2023, 21.02.2024 and 18.07.2024 which were posted on the ITBA portal. The learned CIT(A) has observed in para 5.5 of the order that the appellant had the opportunity to correct the mistake in Form 3CD, which opportunity the appellant did not avail of. It is further observed that the appellant had not filed any reply or evidence before the appellate authority to establish that there was a mistake in reporting Form 3CD. In such circumstances, the learned CIT(A) has observed that the appellant was not interested in pursuing the appeal leading to dismissal of the same.
The learned counsel for the appellant has submitted that the appellant had not received the notices and hence the appellant failed to appear and contest the appeal. On merits, it is submitted that the learned CIT(A) was in error in making the disallowance of contingent liability without appreciating the fact that the same has not been claimed by the assessee in its Profit & Loss Account.
We find that the learned CIT(A) had neither the benefit nor the occasion to examine this contention on merits as there was no appearance on behalf of the appellant. In the circumstances and in the interest of justice and fair disposal of the matter we find that appellant can be granted one opportunity to prosecute the appeal before the learned CIT(A). In that view of the matter, the appeal is allowed. The appeal filed by the appellant is restored to the file of leaned CIT(A) for disposal according to law. The appellant shall diligently prosecute the appeal and shall be at liberty to produce such material before the learned CIT(A) as may be deemed fit. The appeal is allowed for statistical purpose in the aforesaid terms.
Order pronounced in the open court on 12/02/2025.