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Facts
The assessee, engaged in manufacturing and trading of irrigation systems, appealed against the CIT(A)'s order which confirmed additions made by the AO. The additions included disallowances of purchases, commission payments, interest expenses, discount, miscellaneous expenses, and rent due to lack of verification or failure to deduct TDS.
Held
The Tribunal noted the assessee's negligence in pursuing the case before the lower authorities, despite multiple notices. While imposing a cost, the Tribunal set aside the lower authority's order and remanded the matter back for fresh adjudication on merits.
Key Issues
Whether the disallowances made by the AO were justified and if the assessee was negligent in pursuing the appeal before the CIT(A).
Sections Cited
37(1), 36(1)(iii), 40(a)(ia), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & DR. DINESH MOHAN SINHA
आदेश / ORDER Per, Dr. Dinesh Mohan Sinha, JM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2023-24, is directed against the order passed by the Learned Commissioner of Income Tax(Appeals), National Faceless Appeal Centre, Delhi [in short “the Ld. CIT(A)/NFAC”], dated 13.10.2025, which in turn arises out of an assessment order passed by Assessing Officer (in short ‘the AO”) u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), vide order dated 22.03.2025. 2. Grounds of appeal
raised by the assesse, are as follows: “1. The grounds of appeal mentioned hereunder are without prejudice to one another.
2. The order of the learned AO in so far as he assessed the total income at Rs. 4,95,07,604/- as against the returned income of Rs. 3,08,27,380/- is totally bad on facts as also in law.
3. The learned AO grievously erred on facts as also in law in disallowing the purchases made from various parties amounting to Rs. 31,67,088/- u/s 37(1) of the Act on the alleged ground that these parties are not filing their returns of income. The disallowance is made in total disregards to the facts of the case and submissions made and totally unjustified on facts as also in law and deserves to be deleted and may kindly be deleted.
4. The learned AO grievously erred on facts as also in law in disallowing the purchases made from various parties amounting to Rs. 1,02,58,562/- u/s 37(1) of the Act on the alleged ground that these parties are not filing their returns of income. The disallowance is made in total disregards to the facts of the case and submissions made and totally unjustified on facts as also in law and deserves to be deleted and may kindly be deleted.
The learned AO grievously erred on facts as also in law in disallowing interest paid on borrowings from various parties amounting to Rs.50,64,794/- u/s 36(1) (iii) of the Act for the want of verification. The disallowance is made in total disregards to the facts of the case and submissions made and totally unjustified on facts as also in law and deserves to be deleted and may kindly be deleted.
The learned AO grievously erred on facts as also in law in disallowing whole of discount expenses and miscellaneous expenses amounting to Rs.16,48,578/- u/s 37(1) of the Act for the want of verification. The disallowance is made in total disregards to the facts of the case and submissions made and totally unjustified on facts as also in law and deserves to be deleted and may kindly be deleted.
The learned AO grievously erred on facts as also in law in alleging that the appellant failed to deduct tax at source from Rent of Rs. 6,32,600/- and thereby disallowed Rs. 1,89,780/- u/s 40(a)(ia) of the Act. The disallowance is made in total disregards to the facts of the case and submission made and totally unjustified on facts as also in law and deserves to be deleted and may kindly be deleted.
The learned AO erred in initiating penalty proceedings u/s. 270A of the Act”
Brief facts of the case are that the appellant, a private limited company, is assessed to tax by National Faceless Assessment Centre, Delhi. It is engaged in the business of manufacturing and trading of all types of sprinkler pipes and couplers, drip irrigation system, underlying dripper system and mini sprinkler system, plastic pipes & fittings. Return of income for the assessment year under consideration was filed on 30.10.2023 declaring the Total Income at Rs. 3,08,27,380/-.Regular books of account are maintained, which are duly audited as per the provisions of Companies Act, 2013 as also u/s. 44AB of the Income Tax Act, 1961. The AO, in order dated 22.03.2025 assessed the total income at Rs.4,95,07,604/- by adding in income of Rs. 31,67,088/- on account of Page 2 of Dff Bhumi Ploymers Pvt. Ltd. disallowance of purchase u/s 37(1) of the Act, and Rs. 1,02,58,562/- on account of disallowance of commission payment u/s 37(1) of the Act.
That the assessee filed an appeal against the order before the Ld.CIT(A) which was dismissed by following remarks: “Conclusion: In view of the foregoing discussion and findings, all grounds of appeal
raised by the appellant are dismissed. I find no reason to interfere with the decision of the Assessing Officer. The additions made on account of disallowance of purchases of Rs. 31,67,088/- u/s 37(1), disallowance of commission payments of Rs. 1,02,58,562/- u/s 37(1), disallowance of interest expenditure of Rs. 50,64,794/- u/s 36(1)(iii), disallowance of discount and miscellaneous expenses of Rs. 16,48,578/- u/s 37(1) and disallowance of rent u/s 40(a)(ia) of Rs. 1,89,780/- as made by the Assessing Officer are therefore, confirmed. The appeal is disposed of accordingly.
9. In the result, the appeal is dismissed.”
5. That the assessee filed an appeal against the impugned order dated 13.10.2025 of the Ld.CIT(A), before this Tribunal. i. During the course of hearing, the Ld.AR of the assesse prayed for one more opportunity to be given to the assessee to represent the case before the lower authority. ii. On the other hand, the Ld.DR for the revenue submitted that the assessee is negligent in pursuing the case, therefore a cost must be imposed on the assessee. The Ld. DR further relied on the order of the Ld.CIT(A).
8. We have heard both the parties and perused the material available on record. We note that the assessee has not gave due care and attention to the notice issued by the Ld.CIT(A) and remain negligent in pursuing the case before the Ld.CIT(A). The appellate authority has issued several notices for hearing of the case but the appellant has not responded to the notices, for this non-cooperative attitude in pursuing the case. We direct the assessee to deposit a cost of Rs.1000/- , and the same is to be deposited with Prime Minster Relief fund (Government of Page 3 of Dff Bhumi Ploymers Pvt. Ltd. India), within 10 days from today, and the receipt is to be submitted with the Registrar of this Tribunal. Keeping in view, and in the interest of justice, we grant an opportunity to the assessee to present the case before the Ld.CIT(A). We set aside the order of lower authority and remit the matter back to the file of the Ld.CIT(A) for fresh adjudication on merit after giving due opportunity to the assessee of being heard., in accordance with law.
In the result, appeal of the assessee, is allowed for statistical purpose.
Order is pronounced in the open court on 12/03/2026.