Loading judgment…
Facts
Devtech M2M Limited, engaged in manufacturing electrical machinery, filed a nil return for AY 2020-21. Its case was selected for scrutiny regarding high creditors/liabilities and deduction for scientific research. The Assessing Officer made additions of Rs. 4,86,67,784/- for unsecured loan under section 68 r.w.s. 115BBE and Rs. 1,43,980/- for disallowing scientific research expenditure. The CIT(A)/NFAC subsequently dismissed the assessee's appeal ex-parte for non-compliance, sustaining the additions.
Held
The Tribunal observed that the CIT(A) dismissed the appeal for non-prosecution without deciding on merits. Considering the facts and the interest of justice, the Tribunal restored the issue to the file of the CIT(A)/NFAC, directing them to grant one final opportunity to the assessee to substantiate its case. A cost of Rs. 2,000/- was levied on the assessee due to its non-compliance.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte for non-compliance; validity of additions made under section 68 and disallowance of scientific research expenditure; granting a final opportunity to the assessee to present its case.
Sections Cited
143(3), 144B, 143(2), 142(1), 68, 115BBE, 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
This appeal filed by the assessee is directed against the ex-parte order dated 19.03.2025 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2020-21.
Although a number of grounds have been raised by the assessee, however, these all relate to the ex-parte order of the Ld. CIT(A) / NFAC in confirming the addition of Rs.4,88,11,764/- made by the Assessing Officer in the order passed u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 22.09.2022.
Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacturing of electrical machinery and apparatus. It filed its return of income on 14.01.2021 declaring nil income. The case was selected for limited scrutiny to verify the following: a) High Creditors/liabilities b) Deduction on Account of Donation for Scientific Research
Accordingly, statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee in response to which the assessee made some part compliance. The Assessing Officer during the course of assessment proceedings noted that the assessee could not substantiate with documentary evidence regarding the creditworthiness of Mrs. Suvarna Vinod Jadhav from whom the assessee has received unsecured loan of Rs.4,86,67,784/- during the year. Rejecting the various explanations given by the assessee and relying on various decisions, the Assessing Officer made addition of Rs.4,86,67,784/- by invoking the provisions of section 68 r.w.s. 115BBE of the Act. Similarly, the Assessing Officer, on the basis of Form 3CL submitted by the assessee, determine the eligible expenditure at Rs.17.09 lakhs as allowable expenditure out of the expenditure claimed by the assessee at Rs.18,52,980/- and made addition of Rs.1,43,980/- by disallowing the same.
Since the assessee did not make any submission before the Ld. CIT(A) / NFAC despite number of opportunities, the Ld. CIT(A) / NFAC dismissed the appeal filed by the assesse by sustaining the addition / disallowance made by the Assessing Officer.
Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.
The Ld. Counsel for the assessee at the outset submitted that due to some mistake on the part of employee of the assessee, the assessee could not communicate the notices issued by the office of the Ld. CIT(A) / NFAC for which all these unfortunate events happened. Further, he has not decided the appeal on merit and has simply dismissed for want of prosecution. He submitted that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details.
The Ld. DR on the other hand referring to the order of the Ld. CIT(A) / NFAC submitted that the Ld. CIT(A) / NFAC has given as many as 4 opportunities out of which the assessee sought an adjournment on one occasion and did not comply to the notices issued on the other 3 occasions. Therefore, some cost should be levied on the assessee for such non-compliance.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. It is an admitted fact that due to persistent non- compliance of the assessee to the statutory notices issued by the office of the Ld. CIT(A) / NFAC, he was constrained to pass the ex-parte order dismissing the appeal filed by the assessee. It is also an admitted fact that the Ld. CIT(A) / NFAC has not decided the appeal on merit as per provisions of section 250(6) of the Act which reads as under: “250….. …..…… (6) The order of the Joint Commissioner (Appeals) or the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.”
Since the Ld. CIT(A) / NFAC in the instant case has dismissed the appeal for non-prosecution and has not decided the appeal on merit, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of Ld. CIT(A) / NFAC with a direction to grant one last opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to submit the requisite details before the Ld. CIT(A) / NFAC on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(A) / NFAC is at liberty to pass appropriate order as per law. At the same time, because of the non-compliance attitude of the assessee in not complying to the statutory notices issued by the Ld. CIT(A) / NFAC, we levy a cost of Rs.2,000/- on the assessee to be paid within one month from the date of receipt of the order. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 4th February, 2026.