HAMON COOLING SYSTEMS PRIVATE LIMITED,GOREGAON EAST vs. COMMISSIONER OF INCOME TAX APPEALS, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH,
MUMBAI
BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER
&
SMT. RENU JAUHRI, ACCOUNTANT MEMBER
Hamon Cooling Systems
Pvt. Ltd.
3A-8A, Main Frame, Royal
Palms Complex, Goregaon
East, Mumbai-4000065
v/s.
बनाम
ACIT, Circle 12(2)(2),
Mumbai
Aayakar Bhavan, Maharshi
Karve Road, New Marine
Lines,
Mumbai-400020
स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACT2254Q
Appellant/अपीलार्थी
..
Respondent/प्रतिवादी

Assessee by :
Shri Piyush Agarwal
Revenue by :
Shri Balwanth Das

Date of Hearing
27.01.2025
Date of Pronouncement
29.01.2025

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), Mumbai/National Faceless Appeal
Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 19.01.2023 passed u/s.
250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2017-18. 2. The assessee has raised the following grounds of appeal:
“During the previous year relevant to the Assessment Year 2017-18, the appellant had declared losses of Rs. 22.49 crores. It's GP ratio fell from 5.60%
in AY 2016-17 to 2.21% in AY 2017-18. The appellant Company had Inventory

P a g e | 2
A.Y. 2017-18

Hamon Cooling Systems Pvt. Ltd.

of raw materials and components of Rs. 1.78 crores as 31-03-2017 and work- in-progress/unbilled revenue of Rs. 53.97 crores. As on 31-03-2017, it also had advance billing of Rs. 5.50 crores, advance from customers of Rs. 10.88 crores, retention money of Rs. 26.82 crores and trade receivable of Rs. 61.07 crores.

2 Party-wise details of all the above stated figures were duly e-filed by the appellant. However, the same were delayed to be filed due to shifting of accounts department of the appellant Company to Chennai and due to Transfer Pricing audit for AY 2019-20 which was completed only on 30-11-
2019. Due to the delayed filing, the AO without considering the submissions made, rejected the books of accounts and considered amount of unbilled revenue of Rs. 53.97 crores as turnover of the assessee and post that estimating GP of the appellant Company at 11% of the revised turnover. Thereby the AO went on to calculate additions of Rs. 7,87,68,204/- after making an arbitrary estimate of GP.
3.During the previous year relevant to the Assessment Year 2017-18, the appellant Company had claimed amortisation of leasehold land of Rs.
2,37,738/-. The same was claimed in the Profit and Loss Account under the head 'Depreciation and Amortisation Expenses”
4. The fact that the amortisation claimed is on leasehold land was brought to the notice of the AO. Also the fact that the expense has been claimed in the Profit
& Loss Account can be clearly seen in Note No. 11 of the 'Audited Financial
Statements' for FY 2016-17 which was duly filed with the AO. However, ignoring the facts and without considering the submissions made by the assessee, the AO has disallowed amortisation claimed by the appellant of Rs.
2,37,738/-.
5 During the previous year the appellant Company had Sundry Creditors to the tune of Rs. 57.98 crores. A detailed list of the same along with aging was provided to the AO during the assessment proceedings. Some of the creditors were outstanding for more than 3 years.
6. Without considering the reason for non-payment of the specific creditors and without giving the assessee an opportunity to explain the current status of the specific creditors, the AO went on to add the amount outstanding to 25
creditors totalling to Rs. 66,72,827/- on account of cessation of liability.
7. During the previous year the appellant Company had Sundry Creditors to the tune of Rs. 57.98 crores. A detailed list of the same along with aging was provided to the AO during the assessment proceedings. Some of the creditors were outstanding for more than 3 years.
8. Without considering the reason for non-payment of the specific creditors and without giving the assessee an opportunity to explain the current status of the specific creditors, the AO went on to add the amount outstanding to 25
creditors totalling to Rs. 66,62,827/- on account of cession of liability.

Hamon Cooling Systems Pvt. Ltd.

assessment was finalised u/s 143(3) of the Act at a loss of Rs. 39,12,678/- after making various disallowances.
4. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). Since no reply to the notices issued by the Ld. CIT(A) was furnished by the assessee, Ld. CIT(A) dismissed the appeal exparte vide order dated 19.01.2023. 5. Aggrieved with the order of Ld. CIT(A), the assessee preferred an appeal before the Tribunal.
6. It is noticed that the appeal is delayed by 542 days and has been filed on 12.09.2024 as against the due date of 19.03.2023. In this regard, Ld. AR has submitted that there was a medical emergency in his family as his minor son was diagnosed with Leukaemia. Accordingly, he was unable to attend to his work for almost a year, and therefore, he missed to file the appeal against the order of Ld. CIT(A) which the assessee had sent to him in time. Further, the assessee himself was going through financial as well as management distress as his ultimate holding company Hemon and Cia International based in Brussels had filed for bankruptcy. Accordingly, Ld. AR has requested for condonation of delay in filing of the appeal. Requisite application for condonation as well as an affidavit has been filed in this regard.
7. Considering the genuine hardship explained by the Ld. AR and the assessee, we hold that there was a reasonable cause for a delay of 542 days in filing of appeal. Considering that it is a fit case for condonation, we hereby

P a g e | 4
A.Y. 2017-18

Hamon Cooling Systems Pvt. Ltd.

condone the delay of 542 days in filing of appeal. Ld. AR has, further, submitted that the assessee could not make any compliance even during the proceedings before Ld. CIT(A) because the main group company was undergoing liquidation. All the available manpower was busy in dealing with the liquidation matters, as such, no proper compliance could be made before Ld. CIT(A) also.
He has, therefore, requested that the matter may be remanded back to Ld.
CIT(A) for a fresh decision on merits.
Ld. DR has not objected to the request made by Ld. AR.
8. Accordingly, in the interest of justice, we deem it appropriate to restore the case to the Ld. CIT(A) who is directed to decide the matter afresh on merits after giving due opportunity to the assessee. The assessee is also directed to make requisite compliance before Ld. CIT(A).
9. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 29.01.2025. KAVITHA RAJAGOPAL
RENU JAUHRI
(न्यातयक सदस्य/JUDICIAL MEMBER)
(लेखाकार सदस्य/ACCOUNTANT MEMBER

Place: म ुंबई/Mumbai
दिनाुंक /Date 29.01.2025
अननकेत स ुंह राजपूत/ स्टेनो
आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant

P a g e | 5
A.Y. 2017-18

Hamon Cooling Systems Pvt. Ltd.

सत्यावपि प्रवि ////
आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt.