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Facts
The assessee, a company registered u/s 25 of the Companies Act, engaged in export trade and diamond development, filed its return manually, but did not upload Form 10B. Consequently, the CPC denied expenses of Rs. 9,56,497/-. The assessee's appeal before the Ld. CIT(A) was decided ex-parte due to non-compliance with notices.
Held
The Tribunal held that the Ld. CIT(A) should have decided the appeal on merit, even without the assessee's representation. Since the appeal was not decided on merit and the assessee's submissions were not considered, the impugned order was set aside.
Key Issues
Whether the Ld. CIT(A) erred in deciding the appeal ex-parte without considering the merits of the case, and whether non-uploading of Form 10B is a fatal procedural error.
Sections Cited
12A, 139(1), 143(1), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
This appeal has been preferred by the assessee against order dated 14.06.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016-17, raising following grounds:
1. On facts and circumstances, Ld. CIT(A) has erred in confirming the addition made by CPC of 9,56,497/- by not allowing expenses incurred towards the object of the trust. Such addition is bad in law and erroneous in facts and liable to be deleted.
2. On facts and circumstances, Ld. CIT(A) has erred in confirming the addition made by CPC of 9,56,497/- by not allowing expenses incurred towards the object of the trust by merely denying the fact
M/s Diamond Exporters Association Ltd. M/s Diamond Exporters Association Ltd. 2 ITA No. 2589/M/2023 that Form 10B was not filed within the time without considering the that Form 10B was not filed within the time without considering the that Form 10B was not filed within the time without considering the fact that the filing of form is a procedural requirement. Such addition fact that the filing of form is a procedural requirement. Such addition fact that the filing of form is a procedural requirement. Such addition is bad in law and erroneous in fac is bad in law and erroneous in facts and liable to be deleted. ts and liable to be deleted.
3. On facts and circumstances, Ld. CIT(A) has erred in confirming the 3. On facts and circumstances, Ld. CIT(A) has erred in confirming the 3. On facts and circumstances, Ld. CIT(A) has erred in confirming the addition without providing proper opportunity of hearing which is addition without providing proper opportunity of hearing which is addition without providing proper opportunity of hearing which is against the principle of natural justice. Such addition is bad in law against the principle of natural justice. Such addition is bad in law against the principle of natural justice. Such addition is bad in law and erroneous in fact and erroneous in facts and liable to be deleted as the same is s and liable to be deleted as the same is confirmed without providing proper opportunity of hearing. confirmed without providing proper opportunity of hearing.
At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that the Ld. CIT(A) has passed the impugned order ex-parte qua the the Ld. CIT(A) has passed the impugned order ex the Ld. CIT(A) has passed the impugned order ex assessee and therefore, assessee and therefore, matter might be restored back restored back to him for deciding afresh.
We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. We find that the assessee is a company registered u/s 25 of the Companies Act, a company registered u/s 25 of the Companies Act, a company registered u/s 25 of the Companies Act, 1956 and is engaged in the promotion and development of export engaged in the promotion and development of export engaged in the promotion and development of export trade and diamond in India. For the year under consideration, the trade and diamond in India. For the year under consideration, the trade and diamond in India. For the year under consideration, the assessee filed return of income manually assessee filed return of income manually on 08.07.2016 however 08.07.2016 however Form No. 10B of Income Form No. 10B of Income-tax Rules was not uploaded while filing t tax Rules was not uploaded while filing the return of income and therefore, while processing the income-tax return of income and therefore, while processing the income return of income and therefore, while processing the income return, the Central Processing Centre (CPC) Bangalore denied the the Central Processing Centre (CPC) Bangalore denied the the Central Processing Centre (CPC) Bangalore denied the claim of expenses of Rs.9,56,497/ claim of expenses of Rs.9,56,497/-. Further, rectification sought by . Further, rectification sought by the assessee was also rejected by the CPC the assessee was also rejected by the CPC Bangalore. A Bangalore. Aggrieved, the assessee filed appeal before the Ld. CIT(A). However, due to non- assessee filed appeal before the Ld. CIT(A). However, due to non assessee filed appeal before the Ld. CIT(A). However, due to non compliance of various no compliance of various notices issued by the Ld. CIT(A), t tices issued by the Ld. CIT(A), the appeal was decided ex-parte observing as under: parte observing as under:
“4. Appellate decision: 4. Appellate decision:-
M/s Diamond Exporters Association Ltd. M/s Diamond Exporters Association Ltd. 3 ITA No. 2589/M/2023
In this case, the AO, CPC Bangalore passed In this case, the AO, CPC Bangalore passed the rectification order u/s the rectification order u/s 154 dated 07.08.2019 denying the expenses of Rs 9,56,497/ 154 dated 07.08.2019 denying the expenses of Rs 9,56,497/ 154 dated 07.08.2019 denying the expenses of Rs 9,56,497/- incurred towards various objects of the Trust. Form 10B being audit report u/s towards various objects of the Trust. Form 10B being audit report u/s towards various objects of the Trust. Form 10B being audit report u/s 12Ab of the Act was not uploaded while filing the return due to some 12Ab of the Act was not uploaded while filing the return due to some 12Ab of the Act was not uploaded while filing the return due to some technical glitches in technical glitches in the system which nowever was sought to be the system which nowever was sought to be rectified by uploading the same while filing the revised return. rectified by uploading the same while filing the revised return. rectified by uploading the same while filing the revised return. Aggrieved with above order the appellant preferred the present appeal. Aggrieved with above order the appellant preferred the present appeal. Aggrieved with above order the appellant preferred the present appeal. In this regard the appellant has taken the ground of appeal that order of In this regard the appellant has taken the ground of appeal that order of In this regard the appellant has taken the ground of appeal that order of AO is bad in law as AO erred in making the adjustments while is bad in law as AO erred in making the adjustments while is bad in law as AO erred in making the adjustments while processing the return u/s 143(1) of Rs 9,56,497/ processing the return u/s 143(1) of Rs 9,56,497/- without giving any without giving any opportunity of hearing to the appellant to explain its case, thus AO erred opportunity of hearing to the appellant to explain its case, thus AO erred opportunity of hearing to the appellant to explain its case, thus AO erred and violated the principles of natural justice. In thi and violated the principles of natural justice. In this connection, the s connection, the various opportunities u/s 250 of IT Act, 1961 was provided to the various opportunities u/s 250 of IT Act, 1961 was provided to the various opportunities u/s 250 of IT Act, 1961 was provided to the appellant during the course of appellate proceedings, however appellant appellant during the course of appellate proceedings, however appellant appellant during the course of appellate proceedings, however appellant failed to respond to any notice and no written submissions was failed to respond to any notice and no written submissions was failed to respond to any notice and no written submissions was furnished in support of grounds of ap furnished in support of grounds of appeal taken, documentary evidence peal taken, documentary evidence in detail. Further, appellant has also raised his grievance that AO, CPC in detail. Further, appellant has also raised his grievance that AO, CPC in detail. Further, appellant has also raised his grievance that AO, CPC has ignored the revised return of the appellant. In this regard it is to be has ignored the revised return of the appellant. In this regard it is to be has ignored the revised return of the appellant. In this regard it is to be noted that appellant has failed to furnish any written submissions in noted that appellant has failed to furnish any written submissions in noted that appellant has failed to furnish any written submissions in support of his grounds despite several opportunity given to elaborate ort of his grounds despite several opportunity given to elaborate ort of his grounds despite several opportunity given to elaborate and justify the grounds taken alongwith some documentary evidence and justify the grounds taken alongwith some documentary evidence and justify the grounds taken alongwith some documentary evidence and failed to furnish any reasonable cause for not filing the Form 10B and failed to furnish any reasonable cause for not filing the Form 10B and failed to furnish any reasonable cause for not filing the Form 10B alongwith return filed u/s 139 (1) within due time as alongwith return filed u/s 139 (1) within due time as per law. Therefore, per law. Therefore, in the absence of any detailed reason and documentary evidence the in the absence of any detailed reason and documentary evidence the in the absence of any detailed reason and documentary evidence the disallowance of Rs 9,56,497/ disallowance of Rs 9,56,497/- made by AO, CPC u/s 143 (1) is upheld made by AO, CPC u/s 143 (1) is upheld and in my considered opinion I do not see any infirmity in the action of and in my considered opinion I do not see any infirmity in the action of and in my considered opinion I do not see any infirmity in the action of the AO. Therefore, in view the AO. Therefore, in view of the above narrated facts and of the above narrated facts and circumstances of the ground of the appeal raised by the appellant is circumstances of the ground of the appeal raised by the appellant is circumstances of the ground of the appeal raised by the appellant is hereby dismissed. hereby dismissed.” 3.1 Before us, the Ld. counsel for the assessee submitted that in Before us, the Ld. counsel for the assessee submitted that in Before us, the Ld. counsel for the assessee submitted that in the Form No. 35 i.e. Form prescribed the Form No. 35 i.e. Form prescribed for filing appeal before the Ld. g appeal before the Ld. CIT(A), the he assessee assessee provided provided e-mail e mail address address as as devashish@anilmparikh.com devashish@anilmparikh.com for serving the notice of hearing of hearing on the assessee by the ld CIT(A) by the ld CIT(A). However, the Ld. CIT(A) has sent notices . However, the Ld. CIT(A) has sent notices at other e-mail address an mail address and therefore, the assessee could not d therefore, the assessee could not represent before the Ld. CIT(A). According to the represent before the Ld. CIT(A). According to the ld Counsel, ld Counsel, there was a sufficient cause for non a sufficient cause for non-complying before the Ld. CIT(A). complying before the Ld. CIT(A). In our opinion, the Ld. CIT(A) was required to decide the appeal on Ld. CIT(A) was required to decide the appeal on Ld. CIT(A) was required to decide the appeal on merit in terms of se merit in terms of section 250(6) of the Act ction 250(6) of the Act despite non
M/s Diamond Exporters Association Ltd. M/s Diamond Exporters Association Ltd. 4 ITA No. 2589/M/2023 representation by the assessee representation by the assessee. Since appeal has not been decided . Since appeal has not been decided on merit and submission of the assessee has on merit and submission of the assessee has also not been taken also not been taken into consideration , therefore, we feel it appropriate to set aside therefore, we feel it appropriate to set aside the therefore, we feel it appropriate to set aside impugned order and restore impugned order and restore the matter back to the file of the Ld. the matter back to the file of the Ld. CIT(A) for deciding afresh after giving due opportunity. CIT(A) for deciding afresh after giving due opportunity. CIT(A) for deciding afresh after giving due opportunity.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.