KONICA MINOLTA MARKETING SERVICES INDIA PRIVATE LIMITED,MALAD (W), MUMBAI vs. ACIT, CIRCLE 12(2)(1), MUMBAI

ITA 5043/MUM/2024Status: DisposedITAT Mumbai24 December 2024AY 2017-184 pages

AI SummaryRemanded

What did the Tribunal hold?

The Tribunal considered the rival submissions and material on record. In the interest of justice, the Tribunal deemed it appropriate to restore the case back to the file of the Assessing Officer (AO) for denovo assessment. This decision was made to provide the assessee with an adequate opportunity to be heard. The assessee was also directed to make the requisite compliance before the AO to enable the AO to pass a fresh order on merits. The Tribunal found that both the AO and the CIT(A) had passed ex-parte orders, and the primary grievance of the assessee was the lack of adequate opportunity of being heard. The Tribunal's reasoning was that a fair hearing is a fundamental principle of natural justice, and to ensure this, a fresh assessment was necessary. The ratio decidendi is that where assessment and appellate orders are passed ex-parte without affording a proper opportunity of being heard to the assessee, the matter should be remanded for fresh adjudication.

What were the facts?

The assessee, Konica Minolta Marketing Services India Pvt. Ltd., filed an appeal against the order of the Commissioner of Income-tax (Appeals) [CIT(A)] dated 25.10.2023 for Assessment Year 2017-18. The Assessing Officer (AO) had passed an ex-parte order under Section 144 of the Income-tax Act, 1961, making certain ad-hoc disallowances. The assessee appealed to the CIT(A), who also passed an ex-parte order on 25.12.2019, confirming the AO's additions due to the assessee's lack of submission despite opportunities. The assessee then appealed to the Income-Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the order passed by the AO under Section 144 of the Income-tax Act, 1961, is void ab initio and invalid, and should be quashed, as argued by the assessee. 2. Whether the CIT(A) erred in confirming ad-hoc disallowances made by the AO without providing the assessee with an adequate opportunity of being heard, as contended by the assessee. 3. Whether the matter should be remanded back to the AO or CIT(A) for fresh adjudication, as both orders were ex-parte, according to the assessee's submission. Assessee's Contention: The assessee argued that both the AO and CIT(A) failed to provide adequate opportunities for the assessee to be heard, rendering their orders liable to be set aside. The assessee also specifically challenged ad-hoc disallowances of Rs. 38,43,108/- (10% of employee benefit expenses), Rs. 60,746/- (10% of finance cost), Rs. 2,98,309/- (10% of depreciation and amortization), and Rs. 18,75,338/- (10% of other expenses), stating these were based on assumptions without any deficiency in the nature or genuineness of the expenditure being expressed. Revenue's Contention: The Revenue's representative agreed that since both orders were ex-parte, the case could be remanded back for fresh adjudication as requested by the assessee's representative.

Which sections of the Income-tax Act were involved?

Section 144,Section 250

AI-generated summary — verify with the full judgment below

Before: SHRI SANDEEP SINGH KARHAIL & SMT. RENU JAUHRI

For Appellant: Ms. Bharati Malasur

For Respondent: Shri Kiran Unavekar

Hearing: 24.12.2024Pronounced: 24.12.2024

Assessee by : Ms. Bharati Malasur Revenue by : Shri Kiran Unavekar Date of Hearing 24.12.2024 Date of Pronouncement 24.12.2024 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 25.10.2023 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2017-18.

The assessee has raised following grounds of appeal: “1. That the order passed u/s 144 of the Income tax is void ab initio and is an invalid order in the eyes of law and therefore should be quashed.

2. That the Ld. CIT (A) erred in confirming the adhoc disallowances made by Ld. AO by passing order u/s 144 of the Act by passing an exparte order without giving the appellant an adequate opportunity of being heard.

3. That an adequate opportunity must be granted to the appellant and the matter may kindly be sent back to the Ld. AO or Ld. CIT (A) as both the orders are exparte orders.

That the AO erred in law and on facts in assessing the income of the assessee by an order passed u/s 144 of the Act without giving the assessee an adequate opportunity of being heard and without contacting the assessee regarding non-compliance of notices, if any, during the assessment proceedings. 5. That the Ld. CIT (A) erred in confirming adhoc disallowance made by Ld. AO Rs. 38,43,108/-being 10% of the total employees benefit expenses incurred by the assessee company merely on the basis of assumptions and presumptions and without expressing any deficiency in the nature/genuineness of the expenditure incurred. 6. That the Ld. CIT (A) erred in confirming adhoc disallowance made by Ld. AO Rs. 60,746/- being 10 percent of the total finance cost incurred by the assessee company merely on the basis of assumptions and presumptions and without expressing any deficiency in the nature/genuineness of the expenditure incurred. 7. That the Ld. CIT (A) erred in confirming adhoc disallowance made by Ld. AO Rs. 2,98,309/-being 10 percent of the total depreciation and amortization expenses incurred by the assessee company merely on the basis of assumptions and presumptions and without expressing any deficiency in the nature/genuineness of the expenditure incurred. 8. That the Ld. CIT (A) erred in confirming adhoc disallowance made by Ld. AO Rs. 18,75,338/-being 10 percent of the other expenses incurred by the assessee company merely on the basis of assumptions and presumptions and without expressing any deficiency in the nature/genuineness of the expenditure incurred. 9. That the appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal

either before or at the time of hearing.”

3. Brief facts of the case are that the Ld. AO passed an exparte order u/s 144 of the Act wherein certain disallowances were made out of various heads of expenses on ad-hoc basis.

4. Aggrieved with the order of the Ld. AO, the assessee preferred an appeal before Ld. CIT(A). However, Ld. CIT(A) also passed an exparte order on 25.12.2019 confirming the additions made by Ld. AO in the absence of any submission/reply by the assessee despite several opportunities given by him.

5. Aggrieved with the order of the Ld. CIT(A), the assessee is in appeal before us. Before us, Ld. AR submitted that both Ld. AO as well as Ld. CIT(A) did not give the assessee an adequate opportunity of being heard, as such their orders deserve to be set aside.

Ld. DR has also agreed to the proposition that both orders are being exparte, the case may be remanded back for fresh adjudication as requested by Ld. AR.

We have considered the rival submissions and perused the material placed before us. In the interest of justice, we deem it appropriate to restore the case back to the file of Ld. AO for denovo assessment after giving adequate opportunity to the assessee. The assessee is also directed to make requisite compliance before Ld. AO to enable him to pass a fresh order on merits. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 24.12.2024.

Recent GST High Court judgments

Search GST case law →