DHARTI MADRID COUNTY LLP,AHMEDABAD V. THE DY.CIT, CIRCLE 3(1)(1) , AHMEDABAD

ITA 2127/AHD/2025

AI Insights

The case involves Dharti Madrid County LLP, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year 2018-19. The primary contention was the addition of Rs.2,89,94,161 as unexplained expenditure under section 69C of the Income Tax Act, 1961, which included various sales promotion expenses and interest on customer loans. The Assessing Officer (AO) had initially treated these expenses as unexplained, leading to a significant increase in the assessed income from Rs.34,32,120 to Rs.3,24,76,278. The CIT(A) upheld the AO's decision, prompting the LLP to appeal to the Tribunal. The Tribunal found procedural lapses in the handling of the appeal by the CIT(A) and granted a set-aside, allowing the assessee another chance to present its case.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827754 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 12-11-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KUMAR SUTHAR
• Assessee Lawyers: ASEEM THAKKAR
• Keywords: Set aside; Opportunity of being heard; Unexplained expenditure; Principle of natural justice
• Section: 143(3); 69C

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER ITA Nos.2127/Ahd/2025 Assessment Year: 2018-19 Dharti Madrid County LLP 33, Amrapalash Bunglow, B/h Fun Republic, Ramdevnagar, Ahmedabad – 380 015. (Gujarat). [PAN – AAHFD 5340 B] Vs. DCIT, Circle-3(1)(1), Ahmedabad (Gujarat). (Appellant) (Respondent) Assessee by Shri Aseem Thakkar, AR. Revenue by Shri Ashok Kumar Suthar, Sr. DR Date of Hearing 08.01.2026 Date of Pronouncement 09.01.2026 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi (in short “the CIT(A)”) dated 30.09.2025 for the Assessment Year (A.Y.) 2018-19, in the proceeding under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. The brief facts of the case are that the assessee had filed its return of income for the A.Y. 2018-19 on 31.10.2018 declaring income of Rs.34,32,120/-. The case was selected for scrutiny under CASS to examine large sales promotion expense vis-à-vis gross receipts. In the course of assessment, the AO found the assessee had incurred sales Printed from counselvise.com ITA Nos.2127/Ahd/2025 (Assessment Year: 2018-19) Dharti Madrid County LLP vs. DCIT Page 2 of 6 promotion expense of Rs.3,01,63,665/- which included brokerage on sales, interest on cancellation, interest on customer’s loan etc. the genuineness of which was examined. The AO found that the assessee did not incur any expenditure towards rent and interest on home loan. The AO treated the interest on customer’s home loan and sales promotion expense amounting to Rs.2,89,94,161/-as unexplained expenditure under section 69C of the Act and accordingly made the addition. 3. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 4. The assessee is now in second appeal before us. The following grounds have been taken in this appeal: - “1. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in passing an Ex Parte order without providing reasonable opportunity of being heard to the appellant. Hence the same being against the principles of natural justice and equity requires to be quashed. 2. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in dismissing the appeal without rejecting the adjournment applications filed by the appellant from time to time in compliance to various notices issued by him. 3. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming action of the Assessing Officer in computing the total income at Rs.3,24,76,278/- as against that of Rs.34,32,120/- declared by the appellant in return of income filed on 31/10/2018. 4. The learned Commissioner of Income Tax (Appeals), NFAC, Delhi has erred in confirming addition of Rs.2,89,94,161/- made by the Assessing Officer treating the amount of expenditure claimed by the assessee in Printed from counselvise.com ITA Nos.2127/Ahd/2025 (Assessment Year: 2018-19) Dharti Madrid County LLP vs. DCIT Page 3 of 6 Profit and Loss account comprising the interest on customers home loan Rs. 1,26,48,132/-, interest on home loan SL Rs.61,25,509/- and Sales Promotion exp. Of Rs. 1,02,20,520/- as alleged unexplained expenditure u/s 69C of the 1. T. Act, 1961 and taxing the same u/s 115BBE of the 1.T.Act 1961 5. The Appellant craves leave to add, alter, amend or modify any of the grounds on or before the date of hearing of appeal.” 5. Shri Aseem Thakkar, Ld. AR of the assessee, submitted at the outset that no compliance could be made before the Ld. CIT(A), who had dismissed the appeal of the assessee without adjudicating the grounds taken by the assessee on merit. He explained that adjournment applications were filed by the assessee on different occasions, still the appeal was decided ex-parte without allowing further opportunity. The Ld. AR requested that the assessee may be allowed another opportunity to explain the transactions by setting aside the matter to the file of the Ld. CIT(A). 6. Per contra, Shri Ashok Kumar Suthar, Ld. CIT-DR supported the order of the Ld. CIT(A). He, however, had no objection if the matter was set aside to the file of Ld. CIT(A) for allowing another opportunity to the assessee. 7. We have considered the submissions of the assessee. It is found that the Ld. CIT(A) had allowed as many as five opportunities to the assessee to submit evidence and substantiate it’s claim. However, apart from seeking adjournment, no compliance was made by the assessee on any of the dates. The assessee has attributed the default before the Ld. CIT(A) on the counsel. The assessee cannot escape by placing the blame for non-compliance on the counsel. It is a settled law that there is Printed from counselvise.com ITA Nos.2127/Ahd/2025 (Assessment Year: 2018-19) Dharti Madrid County LLP vs. DCIT Page 4 of 6 no general proposition that mistake of counsel by itself is always a sufficient ground. When the assessee had filed first appeal before the Ld. CIT(A), it should have been careful enough to ensure that proper compliance was made before the appellate authority other than seeking adjournment. It was the duty of the assessee to watch its affairs before the CIT(A) and ensure that proper compliance is made before him. The assessee was certainly negligent and we are not convinced with the explanation of the assessee regarding non-compliance before the Ld. CIT(A). Therefore, we deem it proper to impose a cost of Rs.10,000/- on the assessee which should be deposited to the Prime Minister’s National Relief Fund within a period of 15 days from the date of receipt of this order. Subject to the payment of cost, we deem it proper to set aside the matter to the file of Ld. CIT(A) with a direction to allow another opportunity to the assessee to explain the nature of transactions and to substantiate its claim. The assessee is also directed to make compliance before the Ld. CIT(A) in the course of set aside appeal proceeding. In case the assessee does not make compliance, the Ld. CIT(A) will have liberty to decide the matter on merits on the basis of the materials available on record. 8. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on this …09th January, 2026. Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member True copy Printed from counselvise.com ITA Nos.2127/Ahd/2025 (Assessment Year: 2018-19) Dharti Madrid County LLP vs. DCIT Page 5 of 6 Ahmedabad, the - 09th January, 2026 Copies to: (1) The appellant (2) The respondent (3) The PCIT (4) The CIT(A) (5) Departmental Representative (6) Guard File By order COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad Printed from counselvise.com "