Loading judgment…
Facts
The assessee, Chennai Metro Rail Limited (CMRL), filed its return declaring a loss and claiming a refund for AY 2018-19. The return was processed, and a refund was issued. During the assessment proceedings, the Assessing Officer (AO) proposed adjustments including disallowance of gratuity and an addition for the difference between receipts reported in Form 26AS and income in the ITR.
Held
The Tribunal noted that the CIT(A) dismissed the appeal due to non-compliance with notices issued through the ITBA portal. The assessee claimed these notices were not received. Considering the COVID-19 pandemic context and the principles of natural justice, the Tribunal decided to provide another opportunity to the assessee.
Key Issues
Whether the assessee's appeal should be dismissed for non-compliance with ITBA portal notices, especially given the COVID-19 pandemic, and whether the disallowance of gratuity and addition on account of difference in receipts require further examination.
Sections Cited
139(1), 143(1), 244A, 143(2), 142(1), 40A(7), 43B, 144B, 2(45)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI INTURI RAMA RAO & SHRI MANU KUMAR GIRI
आदेश / O R D E R PER MANU KUMAR GIRI, JM:
This appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-19 dated 26.06.2025.
Registry has noted delay of 100 days in filing appeal. We have gone through the reasons and find the reasons sufficient hence condone the delay and admit the appeal for adjudication.
Chennai Metro Rail Limited (CMRL) is a Government Company u/s. 2(45) of the Companies Act, 2013. It is a Special Purpose Vehicle (SPV)
ITA No.3738/Chny/2025 (AY:2018-19) :- 2 -: jointly owned by the Government of India and the Government of Tamil Nadu, each holding 50% shareholding, for implementing the Chennai Metro Rail Project in Chennai, Tamil Nadu. For Assessment Year (AY) 2018-19, CMRL filed its return of income u/s.139(1) on 30.10.2018, declaring a loss of Rs.791,60,31,085/- and claiming a refund of Rs.8,39,53,709/-. The return was processed by the Assistant Director of Income Tax, Centralized Processing Centre (CPC), Bangalore u/s.143(1) of the Income Tax Act, 1961 through an intimation dated 12.05.2020, and a refund of Rs.9,21,25,241/- (including interest u/s. 244A) was issued. Assessment proceedings for AY 2018-19 were initiated through notice u/s.143(2) dated 22.09.2019 under the e-assessment mechanism. Further notices u/s.142(1) with questionnaires were issued, to which the Assessee responded. During assessment, the Assessing Officer (AO) proposed adjustments, including disallowance of gratuity amounting to Rs.37,58,066 u/s. 40A(7) on the ground that it was reported in the Tax Audit Report (Form 3CD) but not disallowed in the ITR-6. The Assessee contended that the gratuity amount had already been disallowed in the ITR u/s. 43B, and therefore the AO’s action resulted in double disallowance of the same amount. The assessing officer (‘AO’) also identified a difference between receipts reported in Form 26AS (Rs.254,01,15,594/-) and income reported in the ITR (Rs.155,03,23,456/-) and proposed to add the difference of Rs.98,97,92,138/- to the total income. A notice u/s. 142(1) dated 16.04.2021 required the Assessee to respond by 20.04.2021, but due to Covid-19 pandemic, the Assessee could not submit the response within the stipulated time. In the absence of a response, the AO added the differential amount to income in the final assessment order. The Assessee filed an appeal against the assessment order dated 26.04.2021, passed u/s. 143(3) read with Section 144B of the Income Tax Act, 1961 before the ld.CIT(A).
ITA No.3738/Chny/2025 (AY:2018-19) :- 3 -: 4. The ld. CIT(A) dismissed the assessee’s appeal on merits on the ground that there was no compliance or response from the assessee to the notices issued through the ITBA portal.
Aggrieved by the same, the assessee has preferred an appeal before us. The ld. Authorised Representative (AR) submitted that the notices issued by the ld. CIT(A) through the ITBA portal were not noticed by the assessee and, therefore, the assessee could not effectively represent its case. On the other hand, the ld. Departmental Representative (DR) supported the order passed by the ld. CIT(A).
We have heard the rival submissions and perused the material available on record. It is observed that the ld. CIT(A) dismissed the appeal of the assessee on merits primarily on account of non-compliance to the notices issued through the ITBA portal. The contention of the assessee before us is that the notices issued by the ld. CIT(A) through the ITBA portal were not noticed and therefore the assessee could not present its case. Considering the facts and circumstances of the case, we note that the issues involved in the present appeal, inter alia, relating to the disallowance of gratuity and the addition made on account of difference between the receipts as per Form 26AS and the income reported in the return, require proper examination of the factual matrix and supporting evidences. It is also noticed that the assessment proceedings culminating in the impugned order were conducted during the period affected by the COVID-19 pandemic.
In the interest of substantial justice and keeping in view the principles of natural justice, we are of the considered view that the assessee should be provided one more opportunity to present its case. Accordingly, we deem it appropriate to set aside the orders of the authorities below on the issues raised in the present appeal and restore the matter to the file of the
ITA No.3738/Chny/2025 (AY:2018-19) :- 4 -: Assessing Officer for de novo adjudication in accordance with law. The Assessing Officer shall examine the contentions and evidences that may be filed by the assessee and pass a reasoned order after providing adequate opportunity of being heard to the assessee.
The assessee is also directed to cooperate in the proceedings and promptly furnish all necessary details and explanations as may be called for by the Assessing Officer.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 10th day of March, 2026 at Chennai.
Sd/- Sd/- (इंटूरी रामा राव) (मनु कुमार िग�र) (Inturi Rama Rao) (Manu Kumar Giri) लेखा सद�य /Accountant Member �ाियक सद� / Judicial Member
चे�नई/Chennai, �दनांक/Dated: 10th March, 2026. SP आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF
ITA No.3738/Chny/2025 (AY:2018-19) :- 5 -: