RED LEAF ENTERTAINMENT PVT. LTD,MULUND vs. INCOME TAX OFFICER 15(3)(1) MUMBAI , CHURCHGATE

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ITA 1763/MUM/2024Status: DisposedITAT Mumbai16 July 2024AY 2010-11Bench: SHRI AMARJIT SINGH (Accountant Member), SHRI ANIKESH BANERJEE (Judicial Member)6 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the appeal was filed with a delay, and the assessee had filed a condonation petition explaining the delay due to a director's liver transplant surgery. The Tribunal found that the assessee had reasonable grounds for the delay. It also observed that the NFAC had called for a remand report, but the assessee was unable to appear for a reasonable cause, leading to a denial of a reasonable opportunity. Therefore, the Tribunal set aside the appellate order and restored the case to the file of the NFAC. The Tribunal directed the NFAC to condone the delay, accept the petition, and pass an appellate order on merits after providing a proper and adequate opportunity of being heard to the assessee. The evidence and explanations submitted by the assessee were to be admitted and adjudicated on merits. The issue regarding the assessment order being non-est and the addition of Rs. 15,03,557/- were not decided on merits by the Tribunal, as the matter was remanded.

What were the facts?

The assessee, Red Leaf Entertainment Pvt. Ltd., filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2010-11. The NFAC's order, dated February 6, 2024, was passed under Section 250 of the Income-tax Act, 1961. This order emanated from an assessment order dated October 16, 2017, passed by the Income Tax Officer (ITO), Ward 15(3)(1), Mumbai, under Sections 144 read with 147 of the Act. The ITO had made an addition of Rs. 15,03,557/-. The assessee's appeal before the NFAC was dismissed in limine due to delay in filing, and the condonation petition was rejected. The assessee is challenging this dismissal.

What were the issues?

1. Whether the assessment order dated 16.10.2017 passed by the learned ITO is non-est, as the Appellant was struck off by the Registrar of Companies and not in existence on that date, and consequently, whether the assessment order and the impugned NFAC order should be quashed. 2. Whether the NFAC erred in not condoning the delay in filing the appeal and dismissing it in limine, and whether the appeal should be restored for fresh adjudication after condoning the delay. 3. Whether the NFAC erred in concluding that the Appellant was not interested in providing documents and submissions, and whether the case should be restored to the NFAC for fresh adjudication. 4. Without prejudice to the above, whether the NFAC erred in confirming the assessment order by making an addition of Rs. 15,03,557/- on a gross basis without allowing expenses or determining net profits. Assessee's Contentions: - The delay in filing the appeal was due to a director's serious illness and undergoing a liver transplant, with medical documents duly filed. The NFAC erred in rejecting the condonation petition. - The NFAC wrongly concluded that the Appellant was not interested in providing submissions, as detailed submissions were made. - The addition of Rs. 15,03,557/- was made on a gross basis without allowing expenses, which is incorrect. Revenue's Contentions: - The revenue relied on the orders of the revenue authorities. The learned Departmental Representative submitted that the NFAC had called for a remand report, which was submitted, but none appeared, leading to an ex-parte order.

Which sections of the Income-tax Act were involved?

Section 250,Section 144,Section 147,Section 148,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “K(SMC

Before: SHRI AMARJIT SINGH, AM & SHRI ANIKESH BANERJEE, JM

For Appellant: Mr. Mihir Joshi, AR (Virtually present)
For Respondent: Mr. Dhiraj Kumar, DR
Hearing: 15.07.2024Pronounced: 16.07.2024

Instant appeal of the assessee was filed against the order of the 01. National Faceless Appeal Centre, Delhi [in short ‘the learned CIT (A)’], order passed under Section 250 of the Income-tax Act, 1961 (in brevity, ‘the Act’) for A.Y. 2010-11, date of order 6thFebruary 2024. The impugned order was emanated from the order of the learned Income Tax Officer, Ward 15(3)(1), Mumbai (in brevity, ‘the learned AO’), order passed under Section 144 read with section 147 of the Act, date of order 16thOctober, 2017.

“1. On the facts and in the circumstances of the case and as per the law the assessment order dated 16.10.2017 passed by the learned Income Tax Officer, 15(3)(1), Mumbai is non-est since the Appellant was struck off by the Registrar of the Company before and was not in existence on the aforesaid date of order. Thus, the assessment order dated 16.10.2017 and the Impugned Order dated 06.02.2024 may be quashed on this ground alone.

2.

On the facts and in the circumstances of the case and as per the law, the National Faceless Appeal Centre/Commissioner of Income Tax (Appeals) ["the learned Commissioner (Appeals)] erred in not condoning the delay and dismissing the appeal in limine. Thus, the learned Commissioner (Appeals) may be directed to condone the delay and thereafterdeciding the appeal afresh after hearing the Appellant.

3.

Without prejudice to the above, On the facts and in the circumstances of the case and as per the law, the learned Commissioner (Appeals) erred in reaching the conclusion that the Appellant was not interested in providing documents and filing submissions. The Appellant made detailed submissions before the learned Commissioner (Appeals). Thus, the order dated 06.02.2024 may be set aside and the case may be restored back to the file of the learned commissioner (Appeals) for fresh adjudication.

5.

The Appellant craves leave to add, alter, rescind, or amend any of the above grounds of appeal.”

The brief fact of the case is that the assessee was running business of 03. event management and working in different projects. During the impugned assessment year, the assessee received contractual amount, amounting to ₹15,03,557/-. The assessee’s case was reopened under Section 148 of the Act. During the assessment proceedings the notice was issued under Section 133(6) of the Actfor verification parties but none of the notice was served. The learned AOreceived this professional income amounting to ₹15,03,557/- which was treated by the ld. AO as bogus and added back in the total income of the assessee.

4.

Being aggrieved, the assessee filed an appeal before the learned CIT (A). But the learned CIT (A) has rejected the appeal on the ground of limitation for delay in filing of appeal and the condonation petition was rejected. Being aggrieved on the appellate order, the assessee filed an appeal before us.

“2. As per declaration in Form No.35, the order was served on 16.11.2017 and the appeal for A.Y. 2010- 11 was filed, belatedly, on 03.02.2018.

2.1. In the Form No. 35 the appellant has offered following comments seeking condonation of delay:

The Appellant Assessee has not been able to file the Appeal due to some Technical problem and ill health of the Director 2.2. Copies of medical bills and prescriptions were enclosed to justify the delay. I have carefully noted the dates of these bills and prescriptions, last one being dated 15/16.05.2016. Evidently, these have no connection with the delay in filing appeal, which took place in FY 2017- 18. Otherwise also, tax and related matters cannot get stalled in the case of a limited company due to director’s health. It is expected that for various compliances a company must be availing services of accountants and chartered accountants. In 2.3. It is also intriguing that the director, with his falling health, could manage to execute contracts during the concerned year and in the next year, i.e., in FY 010- 11, but failed to file returns of income in both the years. Under such circumstances, reasoning based on health grounds can never be accepted.

2.4. Thus, on both counts, viz., timing and reason for delay, justification given are unconvincing and uncompelling. Accordingly, delay is not condoned.”

The learned Departmental Representative argued and submitted that 06. the appellate authority had called remand report which was submitted on 26thJuly, 2023, but noneappeared. Accordingly, the learned CIT (A) passed an ex-parte order and rejected the appeal of the assessee. The learned Departmental Representative fully relied on the orders of the revenue authorities.

We have heard the rival submission and considered the documents 07. available on record. The appeal was filed with a delay but the condonation petition and the reason of the delay is duly filed by the assessee. One of the directors went through surgery for liver transplant during filing of the appeal and accordingly, the delay was happened. In our considered view, the assessee has reasonable ground for consideration of delay. The learned CIT (A) had called for remand report, but the assessee was unable to appear for reasonable cause. The reasonable opportunity is denied for the In the result, the appeal of the assessee bearing ITA 08. No.1763/Mum/2024, is allowed for statistical purposes.

Order pronounced in the open court on 16.07.2024.

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