ACIT -3(1)(1), MUMBAI V. ASIA POLYTEX (INDIA) LTD, MUMBAI

ITA 6922/MUM/2024

AI Insights

The case involves the Assistant Commissioner of Income Tax as the appellant and Asia Polytex(India) Ltd. as the respondent. The Revenue appealed against the order of the CIT(A) which had deleted an addition of INR 7,76,67,280 made by the AO under section 68 of the Income Tax Act, 1961. The addition was initially made following information about a one-time settlement with Allahabad Bank, which the AO interpreted as unexplained cash credit. The CIT(A) found that the addition was not in accordance with the law, as the transaction was a transfer of non-performing assets and not a one-time settlement. The tribunal noted the assessee's repeated non-compliance and remanded the case back to the CIT(A) for a fresh assessment, emphasizing the need for adherence to the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652847 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Assessee Lawyers: ADITYA RAI
• Keywords: Opportunity of being heard; Corroborative evidences; Unexplained cash credit; Principle of natural justice; Non compliance
• Section: 147; 148

Judgement Text

"IN THE INCOME-TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.6922/MUM/2024 (A.Y. 2011-12) Assistant Commissioner of Income Tax – 3(1)(1), Room No. 607, 6th Floor, Aayakar Bhavan, Mumbai – 400 020, Maharashtra v/s. बनाम Asia Polytex(India) Ltd. Mumbai, Shop 87, Maker Arcade, Cuffe Parade, Mumbai - 400 005, Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAACA3826B Appellant/अपीलार्थी .. Respondent/प्रतिवादी Appellant by : None Respondent by : Shri Aditya Rai, (Sr. DR) Date of Hearing 10.06.2025 Date of Pronouncement 16.06.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal is filed by the Revenue against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 147 r.w.s. 144 of the Income- tax Act, 1961 [hereinafter referred to as “Act”] dated 19.11.2018 for the Assessment Year [A.Y.] 2011-12. P a g e | 2 ITA No. 6922/Mum/2024 A.Y. 2011-12 Asia Polytex(India) Ltd., Mumbai 2. The grounds of appeal are as under: 1. “On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of Rs. 7, 76 ,67,280/-u/s 68 of the Act made by the AO without calling for Remand Report from the AO.” 2. “On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition without setting aside the assessment to the file of AO for fresh assessment.” 3. Brief facts of the case are that the assessee had not filed the ROI for the AY 2011-12. In this case, the ld.Assessing Officer received information from Investigation wing, Mumbai as per which the assessee had executed one time settlement (OTS) with Allahabad Bank and there was settlement in respect of loans to the extent of Rs. 7,76,67,280/-. Therefore, the AO proceeded to issue notice u/s. 148 of the Act on 28.03.2018. Finally, there being no compliance before the AO, he proceeded to make addition of above sum as unexplained cash credit u/s 68 of the Act. 4. In the subsequent appeal before the Ld.CIT(A) as many as eight notices were issued to the assessee from time to time on assessee’s registered email as appearing in ITBA calling for various details to substantiate its grounds of appeal with necessary supporting evidences/documents. However, as there was no response from the assessee, he took up the appeal for adjudication on the basis of the materials available on record. It is stated that Allahabad Bank entered P a g e | 3 ITA No. 6922/Mum/2024 A.Y. 2011-12 Asia Polytex(India) Ltd., Mumbai into an agreement on 31.03.2009 with Asset Reconstruction Company (India) Ltd. (ARCIL) and assigned the loan portfolios of four different companies including the assessee company for a total amount of Rs. 47 lakhs. These companies were M/s. Avance Technologies Ltd, M/s. Atcom Technologies Ltd., M/s. East West Travel & Trade Links Ltd and M/s. Asia Polytex (India) Ltd. However, the appellant company is not a signatory to this agreement. The loan portfolio was directly sold by Allahabad Bank to ARCIL. Thus, it was not a one time settlement, but only a transfer of non-performing assets by the Allahabad Bank to the Asset Reconstruction Company (India) Ltd. (ARCIL). Moreover, the agreement was made on 31.03.2009, therefore, if at all, there was any tax incidence that would fall in AY 2009-10 but not for the current AY. Further, it was a case of remission of assessee’s liability, therefore, it would fall under provisions of section 41(1) of the IT Act. Thus, he concluded that the AO grossly erred in invoking provisions of section 68 of the IT Act. Thus, the addition made was considered to be totally not in accordance with the law and therefore the same was deleted and the assessee’s grounds were allowed. 5. None attended for the assessee in when the case was called for hearing before the bench. It may be stated here that at the outset, ld. Departmental Representative submitted that the principle of natural P a g e | 4 ITA No. 6922/Mum/2024 A.Y. 2011-12 Asia Polytex(India) Ltd., Mumbai justice had not been followed in its case by the ld. CIT(A) who has passed the impugned order without providing sufficient opportunity of hearing to the Revenue. It is further contented that the appellate authority decided the issue in favour of the assessee even when the assessee did not bother to comply with any of the various notices issued by him. He did not even called for any reply or remand report. Accordingly, he submitted that the order by passed by the ld.CIT(A) may be remanded back to him to consider the whole issue afresh and after adequate opportunity of hearing to both the sides so as to decide the issue involved in a judicial manner. 6. We have considered all relevant facts of the case and have also perused the materials available on records. There was repeated non compliance by the assessee before both the lower authorities and even before us. Needless to state, it is the fundamental duty of the assessee to diligently pursue the appeal and comply with the notices and proceedings initiated by the Revenue authorities. The framework of the Act rely heavily on the co-operation and active participation of the taxpayer. Despite the notices by the AO as also notices under section 250 of the Act by the ld.CIT(A), no explanation was submitted. The failure of the assessee to make any response before both the authorities below reflects gross negligence and an indifference that is unacceptable. The P a g e | 5 ITA No. 6922/Mum/2024 A.Y. 2011-12 Asia Polytex(India) Ltd., Mumbai principles of natural justice operate both ways, while the Revenue authorities are required to provide a reasonable opportunity of being heard, the taxpayer is equally obligated to co-operate with the authorities and utilize the opportunities extended. In the present case, despite receiving adequate opportunities, the assessee displayed a casual approach and indifference, which not only delayed the appellate proceedings but also burdened the judicial system. Such conduct cannot be condoned. 6.1 In light of the non-compliant attitude of the assessee, levy of cost needs to be evaluated in this case Ld. CIT(A) cost serves Ld. CIT(A) a necessary deterrent to ensure that taxpayers act with due diligence in pursuing their appeals and respecting the timelines and processes laid down under the law. It also emphasizes the principle that while justice must be ensured, the system cannot cater to indolence or negligence on the part of the assessee. Accordingly, we impose a cost of Ld. CIT(A) 25,000/- on the assessee which shall be deposited to the credit of the Income Tax Department within 15 days of the receipt of this order and proof of payment shall be submitted before the Ld. CIT(A).CIT(A). 6.2 Taking into consideration all relevant facts of the case, we are of the opinion that the scales of justice demand that the matter should be verified and revisited at the level of Ld. CIT(A). CIT(A) and P a g e | 6 ITA No. 6922/Mum/2024 A.Y. 2011-12 Asia Polytex(India) Ltd., Mumbai accordingly, we are of the considered view that the matter should be remanded back to the file of Ld. CIT(A). CIT(A) for de novo adjudication by him while applying the principles of natural justice after affording sufficient opportunity of being heard to both the sides. 7. In the result, the appeal is allowed for statistical purposes. Order pronounced in the open court on 16.06.2025. Sd/- Sd/- SANDEEP GOSAIN PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai ददनाुंक /Date 16.06.2025 Lubhna Shaikh / Steno आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अयिकरण/ ITAT, Bench, Mumbai. "