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Facts
The assessee filed an appeal against the order of the CIT(A), which was passed ex-parte. The appeal was delayed by 119 days due to incorrect email addresses being used for communication, leading to the assessee being unaware of the proceedings. The assessee's income was from carting and retail business, and interest expenses paid to non-banking financial institutions were disallowed for non-deduction of TDS.
Held
The Tribunal condoned the delay in filing the appeal, finding that the delay was due to circumstances beyond the assessee's control, specifically incorrect email communication. The Tribunal set aside the order of the CIT(A) and remitted the matter back to the CIT(A) for fresh adjudication.
Key Issues
Whether the CIT(A) erred in confirming the addition of interest expenses due to non-deduction of TDS, and whether the ex-parte order passed by the CIT(A) violated the principles of natural justice due to non-service of notices.
Sections Cited
40(a)(ia), 194A, 143(3), 250, 253(3)
AI-generated summary — verify with the full judgment below
Before: MS SUCHITRA RAGHUNATH KAMBLE & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), dated 30.10.2023 by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short ‘CIT(A)’] for the Assessment Year (AY) 2014-15.
Grounds of appeal
raised by the assessee are as under:
1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.23,69,338/- on account of disallowing of interest expenses u/s 40(a)(ia) of the Income-tax Act, 1961.
/AY.2014-15 Dharmesh D Patoliya 2. On the facts and circumstances of the case as well as law on the ssubject, the learned Commissioner of Income Tax (Appeals) has not considered the submission of the appellant and passed the order u/s 143(3) of the I.T. Act, 1961.
On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has not offered adequate opportunities to hear the case and passed ex-parte order and hence the case may please be set aside and restored back to the CIT(A) or AO.
4. It is therefore, prayed that the above addition may please be deleted as learned members of the Tribunal may deem it proper.
Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
3. The appeal filed by the assessee is barred by limitation by 119 days in terms of provisions of section 253(3) of the Act. The assessee filed an affidavit and submitted that appeal could not be filed within 60 days because the order of CIT(A) was passed ex-parte and uploaded on the online portal, but the assessee was unaware of the hearing notices and the order of the CIT(A). In Form 35, he has mentioned email Id ‘ca.mihirthakk@gmail.com’, but the notices of hearing were sent to a wrong e-mail Id ‘bharatgkikania@gmail.com’. After knowing that the CIT(A) passed an ex-parte order, he visited to his Authorized Representative (AR), who downloaded the order of CIT(A) passed on 30.10.2023 and filed appeal on 26.04.2024 before the Tribunal. Hence, the appeal was delayed by 119 days. The delay was not deliberate and intentional. The ld. AR of the assessee requested that the delay in filling appeal may be condoned in the interest of justice.
On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that Bench may decide the issue as thinks fit.
/AY.2014-15 Dharmesh D Patoliya 5. We have heard both the parties on this preliminary issue of delay in filing appeal. We find that the assessee was unable to pursue his case as the notice of hearing issued to the wrong e-mail address. The CIT(A) passed the ex-parte order on 30.10.2023 and uploaded the same on e-filing portal. The appellant was unaware of the appellate proceedings and did not receive the notice of hearing in his e-mail address mentioned in Form 35. We find that the reasons given in the application for condonation of delay are reasonable and the same would constitute ‘sufficient cause’ for the delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing on merit.
The facts of the case in brief are that the assessee filed his return of income on 24.11.2014 declaring total income of Rs.8,93,970/-. The case was selected for limited scrutiny. Various notices u/s 143(2), 142(1) r.w.s. 129 of the Act were issued to the assessee. The assessee derives income from carting work and retail business. The Assessing Officer (in short, ‘AO’) noticed that the assessee has paid interest to loan for secured loans taken from L & T Finance of Rs.21,78,406/-, Mahindra & Mahindra Finance of Rs.35,13,609/-, Shree Ram Finance of Rs.13,43,143/- and Tata Motors Finance of Rs.56,99,623/-, totalling to amount of Rs.1,27,34,781/-. The assessee had paid Rs.23,69,338/- on loan to these non-banking institutions. It was found that no TDS has been deducted on the interest payment. All the financial institutions are non-banking financial institution and TDS has to be deducted as per the provisions of section 194A of the Act. Therefore, provisions of section 40(a)(ia) of the Act were clearly attracted in the present case. The AO asked the assessee as /AY.2014-15 Dharmesh D Patoliya to why the interest should not be disallowed. In absence of any supporting evidence in support of the reply by the assessee, the AO had disallowed interest expenses of Rs.23,69,338/- u/s 40(a)(ia) of the Act for non-deduction of TDS on interest paid to NBFI and added the same to the total income. The AO assessed the total income of Rs.32,63,308/- against the returned income of Rs.8,93,970/-. Penalty proceedings u/s 271(1)(c) of the Act were also initiated for furnishing inaccurate particulars of income.
Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) has condoned the delay in filing appeal. The CIT(A) issued five notices fixing dates of hearing on 19.12.2018, 08.02.2021, 23.08.2023, 25.09.2023 and 19.10.2023. The CIT(A) observed that there was non-compliance on the part of the appellant. As there were no written submission, or any documentary evidence filed by the appellant in support of the grounds of appeal
, the CIT(A) did not allow any relief to the appellant and dismissed the appeal of the appellant.
8. Further aggrieved by the order of CIT(A), the assessee has filed present appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee submitted that the CIT(A) passed the order u/s 250 of the Act on 30.10.2023 without hearing the assessee in violation of the principles of natural justice. The assessee could not appear before the CIT(A) due to non-service of notice to the e-mail Id, ‘ca.mihirthakkar@gmail.com’, mentioned in the Form
35. The assessee had specifically mentioned that the notice/ communication may be sent on the e-mail by stating as follows: “Whether notices/communication may be /AY.2014-15 Dharmesh D Patoliya sent on email? – Yes”. The e-mail Id for issue of notice and communication was ‘ca.mihirthakkar@gmail.com’, but the notices were sent to ‘bharatgkikania@gmail.com’. The ld. AR submitted a copy of e-filing portal of Income-tax Department in support of the contention and also submitted that adequate and reasonable opportunity of hearing was not given to the assessee. Therefore, he requested that one more opportunity should be given to the assessee to plead his case on merit before the CIT(A).
9. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) of the revenue supported the order of lower authorities. He submitted that during the appellate proceedings, the assessee was negligent and non-cooperative. However, he did not have any objection if the matter is restored to the file of CIT(A).
We have heard both the parties and perused the materials available on record. It is an undisputed fact that assessee has been non-cooperative during the appellate proceedings. However, ld. AR has submitted that notices issued u/s 250 of the Act was served on wrong address and not at the address given in Form No.35. The assessee had filed return of income declaring total income of Rs.8,93,970/-, but in the order u/s 143(3), the AO made disallowance of Rs.23,69,338/- u/s 40(a)(ia) of the Act. The same was confirmed by CIT(A) based on the findings in the assessment order due to non-compliance by assessee before CIT(A). The CIT(A) had issued five notices which were sent on wrong e-mail Id and not at the official e-mail Id given in Form No.35. Considering all these facts, we are of the view that the assessee was unable to comply before CIT(A) due to circumstances beyond his control. The Id. AR /AY.2014-15 Dharmesh D Patoliya submitted that non-compliance was neither deliberate nor intentional. He requested that another opportunity may be granted to the assessee to submit all the required explanations and details and plead his case on merit. We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we set aside the order of CIT(A) and remit the matter to the file of CIT(A) for fresh adjudication in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and to furnish all the details and explanations as needed by the CIT(A) by not seeking adjournment without valid reasons.
In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 17/07/2025.