CANDOR RENEWABLE ENERGY PRIVATE LIMITED,MUMBAI, MAHARASHTRA V. INCOME TAX OFFICER CIRCLE 3(3), MUMBAI, KAUTILYA BHAVAN, MUMBAI

ITA 6600/MUM/2024

AI Insights

The case involves Candor Renewable Energy Private Limited appealing against the order of the CIT(A), which had confirmed the AO's actions regarding the reopening of an assessment for A.Y. 2010-11. The primary issues included the ex-parte nature of the CIT(A)'s order, the legality of the notice issued under section 148, and the treatment of a significant payment for share purchases as unexplained. The Tribunal found that the CIT(A) had dismissed the appeal on grounds of non-prosecution without adjudicating on the merits, which was contrary to the principles of natural justice. The Tribunal also noted the assessee's failure to comply with procedural requirements and imposed a cost to deter such negligence in the future.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24123 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH PAMNANI
• Assessee Lawyers: MANI JAIN
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 147; 148; 144; 250

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “C” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JM AND SHRI PRABHASH SHANKAR, AM आयकर अपील सं./ITA No.6600/MUM/2024 (\u0001नधा\u0005रण वष\u0005 / Assessment Year :2010-2011) Candor Renewable Energy Private Limited, 406, 4th Floor, Hub Town Solaris N.S. Phadke Marg, Andheri(E), Mumbai Vs. ITO, Circle-3(3), Mumbai \u0001थायी लेखा सं./PAN No. : AADCR 1238 F (अपीलाथ\r /Appellant) .. (\u000e\u000fयथ\r / Respondent) िनधा\u000e\u000fरती की ओर से /Assessee by : Shri Mani Jain, AR. राज\u0011व क\u000b ओर से /Revenue by : Shri Mahesh Pamnani, Sr.DR सुनवाई क\u0016 तार\u0018ख / Date of Hearing : 11/02/2025 घोषणा क\u0016 तार\u0018ख/Date of Pronouncement : 18/02/2025 आदेश / O R D E R Per Prabhash Shankar, AM: This appeal preferred by the assessee emanates from the order of the ld. CIT(A), Mumbai, dated 15.10.2024 for A.Y.2010-11 as per the following grounds of appeal :- 1. On the facts and circumstances of the Appellant's case and in law the id CIT(A) erred in passing an ex-parte order, without providing adequate opportunity of being heard to the assessee 2. On the facts and circumstances of the case and in law the Id. CIT (A) erred in confirming the action of Id. AO in reopening the assessment by issue of notice u/s 148. which is illegal and bad-in- law or otherwise void for want of jurisdiction 3. On the facts and circumstances of the case and in law the Id. CIT (A) erred in confirming the action of Id. AO in reopening the assessment by issue of notice u/s, 148 of the Act, which barred by limitation in view of first proviso to section 147 of the Act. ITA No.6600/Mum/2024 2 4. On the facts and circumstances of the case and in law the Id. CIT (A) erred in confirming the action of Id. AO in passing the impugned assessment order in the name of non-existing entity 5. On the facts and circumstances of Appellant's case and in law the Id. CIT (A) erred in confirming the action of the Id. AO in treating the amount of Rs. 90,00,000/- paid to M/s Pellucid Securities Pvt Ltd towards purchase of shares as unexplained, for the reasons mentioned in the impugned order or otherwise. 6. The appellant craves leaves to alter, amend, withdraw or substitute any ground or grounds or to add any new ground or grounds of appeal on or before the hearing. 2. In this case, the assessment order was passed ex-parte invoking the provisions of section 144 of the Act since there was no compliance by the assessee during assessment proceedings. The assessee was not found at the address mentioned in the return and even physical service through Inspector could not be done as the assessee was not found traceable. As per the information by the Investigation wing of the department, the assessee was found to have purchased shares of certain Penny stock company for a sum of Rs 90 lakh. In absence of non- traceability of the assessee, the AO proceeded to complete the assessment ex parte. Even in the appellate proceedings, there was no compliance. The assessee did not come forward with any explanation to the impugned addition despite adequate opportunity of hearing. Accordingly, the ld.CIT(A) dismissed the appeal on account of non- prosecution. 3. Before us, at the outset, ld. AR submitted that the principle of natural justice had not been followed in its case. The ld. CIT(A) has passed the impugned order without providing sufficient opportunity of hearing to it. The ld AR submitted that another opportunity may be ITA No.6600/Mum/2024 3 provided to the assessee so that it could be able to represent its case before the ld. CIT(A). 4. On the other hand, ld. Sr. DR submitted that in the impugned order ld.CIT(A) makes a categorical remark that there were no documentary evidences furnished before him. Thus, the ld. Sr. DR submitted that the order of the ld. CIT(A) deserves to be upheld. 5. We have heard the rival parties and perused the material available on records. It is observed that the ld.CIT(A) dismissed the appeal solely on the ground of non-prosecution. He failed to adjudicate the issues raised in the grounds of appeal and did not examine the material available on record. Such dismissal without deciding the appeal on merits is contrary to the principles of natural justice. It is settled law that it is the duty of the appellate authority to dispose of an appeal on merits after considering the material on record, even if the appellant fails to appear. 5.1. However, it is equally true that 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 and the e-proceedings system rely heavily on the co-operation and active participation of the taxpayer. Despite the notices under section 250 of the Act by the CIT(A), no substantive explanation was submitted. The assessee’s contention of non-receipt of notices cannot absolve it of its duty to follow up on its appeal. The failure of the assessee to make any response before both the authorities below reflects gross negligence and an indifference that is unacceptable. The principles of natural justice ITA No.6600/Mum/2024 4 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. 5.2 In light of the non-compliant attitude of the assessee, levy of cost needs to be evaluated in this case as cost serves as 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. 5.3 As the ld. AR has requested before us that the assessee shall be given one more opportunity and this request which was not objected by the ld. DR, in such a scenario, we are of the opinion that the scales of justice demands that the matter should be verified and revisited at the level of ld. CIT(A) and accordingly, we are of the considered view that the matter should be remanded back to the file of ld. CIT(A) for de novo adjudication by him while applying the principles of natural justice after affording sufficient opportunity of being heard to the assessee. 5.4 Moreover, considering assessee’s non-compliant and non-co- operative attitude and lack of diligence in pursuing the appeal, we impose ITA No.6600/Mum/2024 5 a cost of Rs.11,000/- on it. The cost 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). Thus, the grounds of appeal of the assessee stand allowed for statistical purposes. 6. In the result, the appeal of the assessee stands allowed for statistical purposes. Order pronounced in the open court on 18/02/2025. Sd/- (NARENDER KUMAR CHOUDHRY) Sd/- (PRABHASH SHANKAR) \u0007ाियक सद\f / JUDICIAL MEMBER लेखा सद\f / ACCOUNTANT MEMBER मुंबई/Mumbai; \u001eदनांक Dated 18/02/2025 Prakash Kumar Mishra, Sr.P.S. आदेश क\u000b \u0012\u0001त\u0014ल\u0016प अ\u0019े\u0016षत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Assistant Registrar) आयकर अपील\u001eय अ\u001fधकरण, मुंबई/ ITAT, Mumbai 1. अपीलाथ\r / The Appellant- . Candor Renewable Energy Private Limited, 406, 4th Floor, Hub Town Solaris N.S. Phadke Marg, Andheri(E) Mumbai 2. \u000e\u000fयथ\r / The Respondent- ITO, Circle-3(3), Mumbai 3. आयकर आयु\u0016(अपील) / The CIT(A), 4. आयकर आयु त / CIT 5. िवभागीय \u001cितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 6. गाड# फाईल / Guard file. स\u000fया%पत \u000e&त //True Copy// "