Loading judgment…
Facts
The assessee declared a total income of ₹74,81,790 for AY 2009-10. During scrutiny, the AO determined the total income at ₹2,77,84,400 by disallowing a manufacturing loss of ₹2,03,02,614 under Section 40(a)(ia) for alleged non-deduction of TDS under Section 194C.
Held
The Tribunal noted that both the assessment order and the appellate order were passed ex parte due to the assessee's non-compliance. Considering the principles of natural justice, the Tribunal decided to grant the assessee one final opportunity to substantiate its claim.
Key Issues
Whether the ex parte orders passed by the lower authorities without granting a fair opportunity of hearing to the assessee should be set aside and the matter remanded for fresh adjudication.
Sections Cited
250, 143(2), 142(1), 194C, 40(a)(ia)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH KOLKATA
Before: Shri Sonjoy Sarma & Shri Rakesh Mishra
Assessment Year: 2009-10 Keshvan Jewellers………….…………………....…………………....Appellant 80, Burtolla Street, Barabazar, Kol-7. [PAN: AAEFK3801F] vs. ACIT, Circle-32, Kolkata..……………....…..………………….…..... Respondent Appearances by: None appeared on behalf of the appellant. Shri P. N. Barnwal, CIT, DR, appeared on behalf of the Respondent. Date of concluding the hearing : October 09, 2025 Date of pronouncing the order : October 13, 2025 आदेश / ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal filed by the assessee is directed against the order of the NFAC, Delhi (hereinafter referred to as “ld. CIT(A)”) dated 21.02.2024 passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).
Brief facts of the case are that the assessee filed its return of income for the assessment year 2009-10 declaring a total income of ₹ 74,81,790/-. During the course of scrutiny proceedings under sections 143(2) and 142(1) of the Act, the Assessing Officer determined the total income at ₹2,77,84,400. The addition was made on account of disallowance of loss claimed in the manufacturing process, amounting to ₹ 2,03,02,614. The Assessing Officer observed that the assessee had claimed a process-loss of about 3.38% of the value of goods Keshvan Jewellers manufactured and held that such loss represented job-work or contractual charges on which tax ought to have been deducted at source under section 194C. Treating the assessee as having failed to deduct tax at source, the Assessing Officer invoked the provisions of section 40(a)(ia) and disallowed the aforesaid amount of ₹ 2,03,02,614, thereby enhancing the assessed income.
Aggrieved by the order of the assessing officer, the assessee preferred an appeal before the learned CIT(A). However, the appeal was decided ex parte, as the assessee did not appear despite service of notices, and the order of the Assessing Officer was sustained in full.
The assessee has now filed the present appeal before the Tribunal contending that both the orders below were passed ex parte without granting a fair and proper opportunity of hearing. There was also a delay of 441 days in filing the appeal, for which a petition for condonation has been filed and considering the same we condone the delay and adjudicate the appeal on merits of the case.
Since no one turned up on the part of the assessee although notices were issued to the assessee from the registry. Therefore we have heard the matter with the assistance of the learned DR and perused the record it is noticed that both the assessment order and the appellate order were passed ex parte due to non-compliance on the part of the assessee. Considering the submissions and the principle of natural justice, we are of the view that the assessee deserves one final opportunity to substantiate its claim regarding the manufacturing loss. Accordingly, in the interest of justice and fair play, we set aside the impugned order of the CIT(A) and restore the matter to the file of the Keshvan Jewellers Assessing Officer with a direction to examine the issue afresh after granting due opportunity to the assessee to present evidence in support of its claim. The assessee is directed to extend full cooperation and to appear on the date fixed by the Assessing Officer.
In view of the above, the appeal of the assessee is allowed for statistical purposes. Kolkata, the 13th October, 2025.