A S PHARMA,HYDERABAD V. ITO., WARD-7(1), HYDERABAD

ITA 503/HYD/2025

AI Insights

The case involves A S Pharma, a firm engaged in the sale and purchase of pharmaceuticals, which appealed against the order of the CIT(A), National Faceless Appeal Centre, Delhi. The appeal was directed against an assessment order under Section 144 of the Income-tax Act, 1961, which added Rs. 13,75,500 as unexplained income under Section 69A of the Act. The CIT(A) had dismissed the firm's appeal, leading to the current appeal before the Income Tax Appellate Tribunal, Hyderabad. The tribunal found that the CIT(A) had not properly served notices to the assessee as per the specified email, leading to an ex-parte decision without the firm's participation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786098 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 25-03-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard
• Section: 144; 143(3)

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SM’ Bench, Hyderabad Įी रवीश सूद, माननीय ÛयाǓयक सदèय एवं Įी मधुसूदन सावͫडया, माननीय लेखा सदèय SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A. No. 503/Hyd/2025 (Ǔनधा[रणवष[/ Assessment Year: 2017-18) A S Pharma, Hyderabad. PAN: AACFA9752F VS. Income Tax Officer, Ward-7(1), Hyderabad. (अपीलाथȸ/ Appellant) (Ĥ×यथȸ/ Respondent) करदाताकाĤǓतǓनͬध×व/ Assessee Represented by : Sri Mohd. Afzal, Advocate राजèवकाĤǓतǓनͬध×व/ Department Represented by : Sri V. Ravish Bhatt, Sr. AR सुनवाईसमाÜतहोनेकȧǓतͬथ/ Date of Conclusion of Hearing : 28/10/2025 घोषणा कȧ तारȣख/ Date of Pronouncement : 31/10/2025 ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee firm is directed against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 27/01/2025, which in turn arises from the Printed from counselvise.com 2 ITA No. 503/Hyd/2025 A S Pharma, Hyderabad vs. ITO assessment order passed under Section 144 of the Income-tax Act, 1961 (for short, “the Act”) dated 30.12.2019 for the Assessment Year 2017–18. The assessee firm has assailed the impugned order on the following grounds of appeal before us: “1. The order of the learned Commissioner of Income Tax (Appeals) is against the law, weight of evidence and probabilities of case. 2. The learned Commissioner erred in confirming the addition of Rs. 13,75,500/-made u/s 69A of the IT Act. 3. The learned Commissioner ought to have appreciated that the assessee is in the business of sale and purchase of pharmaceuticals, therefore, erred in confirming addition of Rs.13,75,500/-which was received on account of sale and medicines. 4. The appellant craves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary.” 2. Succinctly stated, the assessee firm had e-filed its return of income for assessment year 2017-18 on 05/11/2017 declaring an income of Rs. 79,390/-. Subsequently, the case of the assessee firm was selected for scrutiny assessment under section 143(2) of the Act. Thereafter, the AO vide his order passed under section 143(3) of the Act, dated 30/12/2019 determined the income of the assessee at Rs. 13,75,500/-. 3. Aggrieved, the assessee carried the matter in appeal before the CIT(A) who dismissed the same. For the sake of clarity, the observations of the CIT(A) are culled out as under: Printed from counselvise.com 3 ITA No. 503/Hyd/2025 A S Pharma, Hyderabad vs. ITO “5. Decision: 5.1 The facts relating to the present appeal, in brief, are that the appellant had filed his return of income on 05.11.2017 declaring total income of Rs. 79,390/-, The return was selected for regular assessment. During the course of assessment proceedings, the AO found that the appellant had deposited Rs. 24, 46,000/- in cash in his bank account during the period of demonetization. On being asked the appellant stated that Rs. 9,30,500/- was cash out of earlier income and savings. He further explain that Rs. 1,40,000/- was cash withdrawn by him on earlier dates. Both these explanations were accepted by the AO. However, explanation in respect of Rs. 13,75,500/- stated by the appellant to be sales to parties other than to the patients and also recovery from debtors was not accepted. The AO in his impugned order notes that the appellant was unable to explain this receipt. (para 3.2 of the impugned order). Therefore, the AO made an addition of Rs. 13,75,500/- as unexplained u/s 69A of Income Tax Act. Aggrieved by this decision of the AO, the assessee is in present appeal. 5.2 Ground No. 1 & 3: These grounds are general in nature, therefore, they are not be adjudicated separately: ME TAY DEPARTMEN 5.3 Ground no. 2: The appellant apart from making general statement that the order on merit is erroneous has failed to explain as to why and how the order of the AO was incorrect. In absence of any argument much less any documentary evidence, I do not see any basis to interfere with the decision of the AO. This ground is therefore dismissed. 6.In the result, all the grounds of the appeal are dismissed.” 4. The assessee firm being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. 5. We have heard the Learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record. Printed from counselvise.com 4 ITA No. 503/Hyd/2025 A S Pharma, Hyderabad vs. ITO 6. Sri Mohd. Afzal, Advocate, the Learned Authorized Representative (for short, “Ld. AR”) for the assessee firm, at the threshold of hearing of the appeal, submitted that the assessee firm had suffered dismissal of its appeal vide an ex-parte order for no fault on its part. Elaborating on his contention, the Ld. AR submitted that though the CIT(A) had stated in his order that the assessee firm had failed to respond to either of the six notices/letters intimating the fixation of the appeal, but the fact was that neither of the said notices/letters were ever served upon the assessee firm. The Ld. AR submitted that the assessee firm in its memorandum of appeal i.e., “Form-35” had at Sl.No.17 specifically mentioned that the notices intimating the fixation of the hearing of the appeal be sent on its email address i.e., “[e-mail]” as well as had provided its address, but none of the notices as pointed out by the CIT(A) were served/dropped in the said email account or “[e-mail]”. The Ld. AR submitted that all the notices were forwarded to the email account i.e., “[e-mail]” or “[e-mail]”. The Ld. AR to buttress his aforesaid claim had placed on record the screen shots of the notices/letters that were forwarded by the CIT(A) office. The Ld. AR submitted that as neither of the notices were ever dropped/delivered in the email account of the assessee firm that was specifically provided by him in Form-35 i.e., “[e-mail]”, therefore, in absence of any service of Printed from counselvise.com 5 ITA No. 503/Hyd/2025 A S Pharma, Hyderabad vs. ITO notice it had for no fault on its part failed to participate in the proceedings before the CIT(A) and put forth its case qua the additions/disallowances made by the AO. 7. Per contra, Sri V. Ravish Bhatt, Learned Departmental Representative (for short, “Ld. DR”) submitted that the email accounts where the notices/letters intimating the fixation of the appeal were dropped, i.e., “[e-mail]” as well as “[e-mail]” belong to the assessee firm and is reflected in the latter’s e-filing portal account for AY 2017-18 and 2019- 20 (copies placed on record). The Ld. DR submitted that as the notices intimating the fixation of hearing of the appeal had validly been delivered/dropped in the email accounts of the assessee firm, therefore, no infirmity emanates from the order of the CIT(A) who had validly disposed of the appeal. 8. We have given a thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both the parties in the backdrop of the material available on record. 9. Admittedly, it is a matter of fact borne from the record that the assessee firm had at Sl.No.17 of the memorandum of appeal in Form-35 had specifically provided its address along with the email address i.e., “[e-mail]” on which it had requested that the notices Printed from counselvise.com 6 ITA No. 503/Hyd/2025 A S Pharma, Hyderabad vs. ITO be sent. Further, we find on perusal of the screen shots of the notices/letters as had been brought to our notice by the Ld. AR that neither of the five notices intimating the fixation of the hearing of the appeal i.e., dated 26/12/2020, 12/03/2024, 30/05/2024, 03/07/2024, 27/11/2024 and 07/01/2025 were ever forwarded/delivered on the aforementioned email Id as was provided by the assessee firm i.e., “[e-mail]”. Although, the Ld. DR had tried to impress upon us that the notices/letters intimating the fixation of hearing of the appeal were forwarded/dropped in the email accounts that were provided by the assessee company either in its return of income or income tax portal or mentioned in Form-35, but we are unable to persuade ourselves to concur with him that the same could be brought within the meaning of valid service of notice. We say so, specifically for the reason that now when the assessee firm had provided the address/email Id for service of the notices from the office of the CIT(A), there was no justification for the latter to have forwarded/delivered the notices to any other email account/address other than that provided by the assessee firm. At this stage, we may herein refer to section 282 of the Act read with Rule 127 of the Income Tax Rules, 1962 which contemplates the manner of service of notices. Although the rule 127(2) refers to the addresses where the notices/communications can be delivered or transmitted to the assessee, viz., (i) address available in the PAN database of the assessee; (ii) the address available in the income tax return to which communication Printed from counselvise.com 7 ITA No. 503/Hyd/2025 A S Pharma, Hyderabad vs. ITO relates; or (iii) the address available in the last income tax return furnished by the assessee; or (iv) in the case of an assessee being a company, address of registered office as available on the website of Ministry of Corporate Affairs, the “proviso” appended to Rule 127(2) specifically envisages that no such communication shall be delivered or transmitted to either of the said addresses mentioned in items (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the income tax authority or any person authorized by such authority issuing the communication. 10. In fact, in the case before us as the assessee firm had specifically at Sl.No.17 of Form-35 provided its address along with email address at which it had requested that the notices/communications be forwarded/delivered, therefore, we are of a firm conviction that the CIT(A) office was obligated to have forwarded/delivered all the notices intimating the fixation of the hearing of the appeal at such specific address and there could be no justification on its part in forwarding/delivering the same at any other email address even though the same might have been provided by the assessee firm in its income tax portal or the return of income etc. 11. We, thus, in terms of our aforesaid observations find substance in the Ld. AR’s contention that as the CIT(A) had failed to validly put the assessee firm to notice about the fixation of the appeal on either of the six Printed from counselvise.com 8 ITA No. 503/Hyd/2025 A S Pharma, Hyderabad vs. ITO occasions, therefore, the ex-parte dismissal of its appeal cannot be sustained. Accordingly, we herein set aside the matter to the file of the CIT(A) with a direction to re-adjudicate the matter after affording a reasonable opportunity of being heard to the assessee firm. 12. Before parting, we may as a word of caution observe that the CIT(A) shall in the course of the set aside proceedings forward/deliver the notices/letters intimating the fixation of the appeal at the address provided by the assessee firm in its Form-35 i.e., “[e-mail]”. 13. Resultantly, the appeal filed by the assessee company is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the open court on 31ST October, 2025. S Sd/ Sd/-- (मधुसूदन सावͫडया) (MADHUSUDAN SAWDIA) लेखासदèय/ACCOUNTANT MEMBER Sd/ - Sd/- (रवीश सूद) (RAVISH SOOD) ÛयाǓयकसदèय/JUDICIAL MEMBER d/- Sd Hyderabad, dated 31.10.2025. OKK/sps Printed from counselvise.com 9 ITA No. 503/Hyd/2025 A S Pharma, Hyderabad vs. ITO आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:- 1. Ǔनधा[ǐरती/The Assessee : A S Pharma, 11-2-221 and 221/1, Nampally, Hyderabad-500001, Telangana. 2. राजèव/ The Revenue : Income Tax Officer, Ward-7(1), Signature Towers, Kondapur, Hyderabad, Telangana- 500084. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. ͪवभागीयĤǓतǓनͬध, आयकरअपीलȣयअͬधकरण /DR,ITAT, Hyderabad. 5. The Commissioner of Income Tax 6. गाड[फ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Hyderabad. Printed from counselvise.com "