UMESH MAHIPATRAI ADHIYA,MUMBAI vs. ITO 42(1)(4), MUMBAI

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ITA 643/MUM/2024Status: DisposedITAT Mumbai14 October 2024AY 2016-174 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee's appeal before the CIT(A) was not decided on merits. The primary issue was the dismissal of the appeal by the CIT(A) without considering the substantive grounds raised by the assessee. The Tribunal acknowledged the assessee's request to restore the matter to the CIT(A) for a fresh adjudication on merits. Therefore, the Tribunal decided to restore the appeal to the CIT(A) with a direction to provide the assessee with due opportunity to present their case. The Tribunal did not decide on the merits of the additions made by the AO, the disallowance of agricultural income, the deemed rent, the penalty under Section 271(1)(c), or the interest under Sections 234B and 234C. The operative direction was to set aside the order of the CIT(A) and restore the appeal to the CIT(A) for fresh adjudication.

What were the facts?

The assessee, Umesh Mahipatrai Adhiya, filed an appeal before the Income Tax Appellate Tribunal (ITAT) challenging the order of the Commissioner of Income-tax (Appeals) [CIT(A)] for Assessment Year 2016-17. The appeal was filed with a delay of 276 days, which the ITAT condoned due to genuine reasons related to the assessee's Chartered Accountant's personal circumstances. The Assessing Officer (AO) had completed the assessment under Section 143(3) of the Income Tax Act, 1961, determining the income at Rs. 8,27,850/-, an increase from the returned income of Rs. 5,77,950/-. This increase was due to additions on account of deemed rent, disallowance of agricultural income, and interest on refund. The assessee's appeal before the CIT(A) was dismissed for non-compliance with notices, leading to the present appeal before the ITAT.

What were the issues?

1. Whether the Hon'ble CIT(A) erred in dismissing the appeal in limine without considering the subject issues on merit and passing an ex parte order, thereby confirming the additions made by the Ld. AO, and whether the appeal should be restored back to the Ld. CIT(A) for fresh adjudication (Question of law and fact, relying on principles of natural justice and procedural fairness). 2. Whether the Hon'ble CIT(A) erred in upholding the addition of Rs. 1,87,000/- by disallowing the claim of exempt agricultural income made under Section 2(1A) of the IT Act, 1961, by holding it as non-agricultural income (Question of law and fact, concerning the definition and allowability of agricultural income). 3. Whether the Hon'ble CIT(A) erred in upholding the addition of Rs. 50,825/- being the deemed rent income from vacant house property by applying deeming provisions (Question of law and fact, concerning the computation of income from house property). 4. Whether the Hon'ble CIT(A) erred in upholding the penalty initiated by the Ld. AO under Section 271(1)(c) of the IT Act, 1961 (Question of law and fact, concerning the levy of penalty). 5. Whether the Ld. AO erred in charging interest under Sections 234B & 234C of the IT Act (Question of law and fact, concerning the levy of interest). Assessee's Contention: The assessee argued that the CIT(A) dismissed the appeal without deciding on merits and requested the matter be restored for fresh adjudication. The assessee also challenged the additions made by the AO regarding agricultural income, deemed rent, penalty, and interest. Revenue's Contention: The judgment records no specific arguments from the revenue's side regarding the merits of the case.

Which sections of the Income-tax Act were involved?

Section 2(1A),Section 143(3),Section 250,Section 271(1)(c),Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Before: SMT BEENA PILLAI & SMT RENU JAUHRI

For Appellant: Ms. Samrudhi Tawde
For Respondent: Shri Dharamveer D. Yadav- SR. D.R
Hearing: 10.10.2024Pronounced: 14.10.2024

आदेश / O R D E R PER RENU JAUHRI [A.M.] :-

1.

The present appeal has filed against the orders of the Learned Commissioner of Income-tax (Appeals), Mumbai-32/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 13.03.2023 for Assessment Years [A.Y.] 2016-17.

(A.Y. 2016-17) Umesh Mahipatrai Adhiya 2. The assessee has raised following grounds of appeal: 1. “On the facts & in the circumstances of the case and in law the Hon'ble CIT (A) erred in dismissing the appeal in limine without considering the subject issues on merit and passing an ex parte order and confirming the addition made by the Ld. AO to the returned income and the reasons assigned for doing so are wrong and contrary to the provisions of Income Tax and rules made thereunder. Therefore, the appeal may be restored back to Hon'ble CIT(A) for fresh adjudication.

2. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the addition made by the Ld AO of Rs.1,87,000/- to the returned income by disallowing genuine claim of exempt agricultural income made u/s 2(1A) of the IT Act, 1961 by holding the same as non-agricultural income and the reason assigned for doing so are wrong and contrary to the Provisions of Income Tax Act and rules made there under.

3. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the addition made by the Ld AO of Rs.50,825/- to the returned income being the deemed rent income from vacant house property by applying deeming provisions and the reason assigned for doing so are wrong and contrary to the Provisions of Income Tax Act and rules made there under.

4. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the penalty initiated by the Ld AO u/s. 271(1)(c) of the IT Act 1961 and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under.

5. On the facts and in the circumstances of the case and in law, the Ld AO erred in charging interest u/s 234B & 234C of the IT Act and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under.

6. Your Appellant crave, leave to add, alter, amend or modify any or all grounds of appeal on or before the date of hearing.”

3. The appeal has been filed after a delay of 276 days. The assessee has filed an application for condonation alongwith an affidavit explaining reasons for delay. It has been submitted that the appeal papers were prepared and signed by the assessee in the first week of May, 2023 and were sent to the C.A.. However, the C.A.’s father was diagnosed with cancer and hence appeal could not be filed by him in time. Subsequently, he left the firm and forgot to inform about the non-filing Page 2 of 4 (A.Y. 2016-17) Umesh Mahipatrai Adhiya of appeal. Thereafter, the appeal could be filed only in the month of February after the inadvertent omission by the C.A. came to notice. As the reasons given by the assessee appear to be genuine, we hereby condone the unintentional delay of 276 days.

4. The brief facts of the case are that the assessee filed return declaring income of Rs.5,77,950/- on 03.10.2016. The adjustment was completed u/s. 143(3) of the Act at an income of Rs.8,27,850/- after making additions on account of deemed rent, disallowance of claim of agricultural income and interest on refund. The assessee filed an appeal before the Ld. CIT(A) against this order. Several notices were issued by the Ld. CIT(A), however, no compliance was made. Accordingly, the assessee’s appeal was dismissed.

5.

We have heard the rival submissions and the Ld. A.R. has requested that the assessee’s appeal was not decided on merits by the Ld. CIT(A) and requested for restoring the same to Ld. CIT(A). We, accordingly, restore the matter to the Ld. CIT(A) for fresh adjudication on merits after giving due opportunity to the assessee.

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