CONDIS INDIA HEALTHCARE PRIVATE LIMITED,THIRUVANANTHAPURAM V. ACIT, CIRCLE-1(1), THIRUVANANTHAPURAM

ITA 296/COCH/2024

AI Insights

The case involves M/s. Condis India Healthcare Pvt. Ltd., the appellant, challenging an order from the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2018-19. The primary issue arose from the disallowance of expenses related to exempt income under Section 14A of the Income Tax Act, read with Rule 8D of the Income Tax Rules. The assessee argued that the issue was covered by a Supreme Court decision in South Indian Bank Ltd. vs. CIT. However, the CIT(A) dismissed the appeal ex-parte due to the non-appearance of the assessee, who failed to respond to notices sent to an outdated email address. The Tribunal found the reasons for the delay in filing the appeal reasonable and decided to remand the case back to the CIT(A) for a decision on the merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31161 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Other Referred Cases: South Indian Bank Ltd. vs. CIT
• Laws Referred To: Income Tax Act, Rule 8D of the Rules
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIT KUMAR DAS
• Assessee Lawyers: RAJAKANNAN
• Keywords: Set aside; Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH : COCHIN BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 296/Coch/2024 Assessment Year : 2018-19 M/s. Condis India Healthcare Pvt. Ltd., Avittom Residency, Anamugam, Anayara Post, Thiruvananthapuram – 695 029. PAN: AADCC2525Q Vs. The Assistant Commissioner of Income Tax, Circle – 1 (1), Trivandrum. APPELLANT RESPONDENT Assessee by : Shri Rajakannan, Advocate Revenue by : Shri Sanjit Kumar Das, CIT-DR Date of Hearing : 17-12-2024 Date of Pronouncement : 11-03-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 31/08/2023 in respect of the A.Y. 2018-19. Page 2 of 4 ITA No. 296/Coch/2024 2. The assessee filed an application to condone the delay in which the assessee submitted that the email ID given in form 35 belongs to the Finance Manager who has left the service of the company on the change of management and therefore the notices sent by the Ld.CIT(A) to the said email ID was not received by the assessee and therefore the order of the Ld.CIT(A) was also not known to the assessee and therefore the said delay of 156 days has been occurred. 3. We have heard the submissions and the reasoning given by the assessee for the above said delay of 156 days by comparing the email ID mentioned in form 35 and form 36 and satisfied ourselves that the reasoning given by the assessee seems to be a reasonable one and in order to render justice, we are condoning the said delay of 156 days in filing the appeal and taken up the main appeal for hearing. 4. The brief facts of the case are that the assessee filed their return of income on 06/10/2018 and thereafter their case was selected for complete scrutiny under CASS. The assessee also filed response to the various notices issued by the AO and the AO not satisfied with the explanations had come to the conclusion that the assessee was not eligible to claim the expenditure in respect of the exempt income earned by them and therefore estimated the said expenses u/s. 14A of the Act r.w.Rule 8D of the Rules. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and contended that the issue was covered by the latest decision of the Hon’ble Supreme Court reported in 130 taxmann.com 178 in the case of South Indian Bank Ltd. vs. CIT. The Ld.CIT(A) had dismissed the appeal on the ground that the assessee had not appeared to various hearing notices issued to their email ID. As against the order, the assessee is in appeal before this Tribunal. 5. At the time of hearing, the Ld.AR brought to our notice that the email ID mentioned in form 35 relates to the ex-Finance Manager who was in Page 3 of 4 ITA No. 296/Coch/2024 service till the management of the company was changed and therefore the various hearing notices sent to the said email ID was not forwarded to the assessee by the then Finance Manager for taking appropriate action and therefore the assessee was not able to respond to the said notices and prayed to set aside the ex-parte order of the Ld.CIT(A). 6. The Ld.DR submitted that the Ld.CIT(A) had passed the ex-parte order since the assessee had not responded to the four notices issued by the Ld.CIT(A) to the email ID mentioned in form 35 and therefore prayed to dismiss the appeal. 7. We have heard the arguments of both sides and perused the materials available on record. 8. The assessment order was made u/s. 14A of the Act for the reason that the assessee had earned exempt income and therefore proportionate expenditure has to be disallowed u/s. 14A of the Act r.w.rule 8D of the Rules. The Ld.AR demonstrated before us that the view of the AO is not correct in view of the judgment of the Hon’ble Supreme Court cited supra. We have perused the order of the Ld.CIT(A) in which the Ld.CIT(A) had not adjudicated the issue on merits but decided the appeal ex-parte for the non- appearance of the assessee. In such circumstances, we are not in a position to discuss the issue on merits. We cannot also completely disagree with the argument advanced by the Ld.AR which requires a detailed verification. In such circumstances, we are of the view that one more opportunity should be granted to the assessee for making out their case before the Ld.CIT(A) otherwise great prejudice would be caused to the assessee. We therefore set aside the ex-parte order of the Ld.CIT(A) and remit the same to the file of the Ld.CIT(A) to decide the issue on merits and in accordance with law after hearing the assessee in person. Page 4 of 4 ITA No. 296/Coch/2024 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 11th March, 2025. Sd/- Sd/- (INTURI RAMA RAO) (SOUNDARARAJAN K.) Accountant Member Judicial Member Cochin, Dated, the 11th March, 2025. /MS / Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Cochin 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Cochin "