FRAME IMPEX PRIVATE LIMITED,MUMBAI V. ITO-4(2)(1), MUMBAI, MUMBAI

ITA 4649/MUM/2025

AI Insights

The case involves Frame Impex Pvt. Ltd., which did not file its income tax return for the assessment year 2019-2020. Upon receiving information about alleged bogus bad debts linked to the 'Ruchi Group', the Assessing Officer (AO) believed income had escaped assessment and issued notices under sections 148 and 142(1) of the Income-tax Act. The AO disallowed the bad debts claimed by the assessee, adding Rs. 73,45,19,941 to the assessee's income. The CIT(A) upheld the AO's decision, citing lack of evidence from the assessee. The Tribunal found that the principles of natural justice were not followed as the assessee was not given adequate opportunity to present its case, leading to the decision to remand the case back to the CIT(A) for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775923 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2019-2020
• Appeal Filed On: 22-07-2025
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK PERAMPURNA VIRTUALLY
• Assessee Lawyers: JAIDEEP JAIN VIRTUALLY APPEARED
• Keywords: Set aside; Bad and doubtful debts; Corroborative evidences; Principle of natural justice; Bogus
• Section: 148; 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. SUCHITRA RAGHUNATH KAMBLE (JUDICIAL MEMBER) ITA No. 4649/MUM/2025 Assessment Year: 2019-2020 Frame Impex Pvt. Ltd., Shop No. 3 BLDG No. 4, ground floor, Angel Landmark, Sector-6, Yashwant Viva Township, Vasai, Mumbai-401209. Vs. ITO-4(2)(1), Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN NO. AAACF 4112 H Appellant Respondent Assessee by : Mr. Jaideep Jain (Virtually appeared) Revenue by : Mr. Vivek Perampurna (Virtually Present), CIT-DR Date of Hearing : 09/09/2025 Date of pronouncement : 09/09/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 26.06.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2019-2020, raising following grounds: 1. The Id AO was not justified in passing the order, which is badinlaw, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled. Printed from counselvise.com 2. The Id CIT(A) was not justified in confirming the order, which, is bad illegal, contrary to the fa liable to be annulled. 3. The Id CIT(A) was not justified in confirming the addition without giving proper opportunities of being heard. 4. The Id CIT(A) was not justified in confirming the addition of Rs. 73,45,19,941/ debts without considering the facts and circumstances 2. Briefly stated, the facts of the case are that the assessee, a Private Limited Company, did not file its return of income for the year under consideration provisions of the Income ‘the Act’). Upon receipt of specific information indicating that the assessee had derived benefit of bogus bad debts through entities allegedly controlled and managed by the ‘Ruchi Group’, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment. After duly following the amended procedure contemplated under section 148A of the Act, notice under section 148 such notice, the assessee failed to file its return of income. Thereafter, statutory notices under section 142(1) of the Act were also issued from time to time. 2.1 Upon consideration of the submissions advanced by assessee, the Assessing Officer, finding no merit in the claim of bad debt, rejected the same and added a sum of Rs.73,45,19,941/ ITA No. 4649/MUM/2025 The Id CIT(A) was not justified in confirming the order, which, is bad-in-law, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled. The Id CIT(A) was not justified in confirming the addition without giving proper opportunities of being heard. The Id CIT(A) was not justified in confirming the addition of Rs. 73,45,19,941/- on account of disallowance of bad debts without considering the facts and circumstances of the case. Briefly stated, the facts of the case are that the assessee, a Private Limited Company, did not file its return of income for the year under consideration within the due date prescribed under the provisions of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Upon receipt of specific information indicating that the assessee had derived benefit of bogus bad debts through entities rolled and managed by the ‘Ruchi Group’, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment. After duly following the amended procedure contemplated under section 148A of the Act, notice under section 148 of the Act was issued. However, despite such notice, the assessee failed to file its return of income. Thereafter, statutory notices under section 142(1) of the Act were also issued from time to time. Upon consideration of the submissions advanced by assessee, the Assessing Officer, finding no merit in the claim of bad debt, rejected the same and added a sum of Rs.73,45,19,941/ Frame Impex Pvt. Ltd 2 ITA No. 4649/MUM/2025 The Id CIT(A) was not justified in confirming the order, law, void ab initio, barred by limitation, cts and circumstances of the case, The Id CIT(A) was not justified in confirming the addition without giving proper opportunities of being heard. The Id CIT(A) was not justified in confirming the addition account of disallowance of bad debts without considering the facts and Briefly stated, the facts of the case are that the assessee, a Private Limited Company, did not file its return of income for the within the due date prescribed under the tax Act, 1961 (hereinafter referred to as ‘the Act’). Upon receipt of specific information indicating that the assessee had derived benefit of bogus bad debts through entities rolled and managed by the ‘Ruchi Group’, the Assessing Officer recorded reasons to believe that income chargeable to tax had escaped assessment. After duly following the amended procedure contemplated under section 148A of the Act, of the Act was issued. However, despite such notice, the assessee failed to file its return of income. Thereafter, statutory notices under section 142(1) of the Act were Upon consideration of the submissions advanced by the assessee, the Assessing Officer, finding no merit in the claim of bad debt, rejected the same and added a sum of Rs.73,45,19,941/– to Printed from counselvise.com the total income of the assessee under the head ‘Profits and Gains of Business or Profession’. 3. On appeal, the Learn [‘Ld. CIT(A)’] issued notices of hearing. The assessee partly complied but did not furnish complete details. In the absence of full compliance, the Ld. CIT(A) confirmed the findings of the Assessin Officer and recorded as under “5.4.3 The AO’s observation is that fictitious debts were created and written off. The burden of proving the genuineness of these debts lies on the assessee as per established judicial precedents. In absence of: • Evidence to prove the • Ledger accounts of debtors • Party-wise details of the provisions • Any proof of write …the AO was justified in disallowing the same. Since the entire business activity appears dubious, the add 4. Before us, Learned Counsel for the assessee has submitted that the Ld. CIT(A), vide letter dated 09.06.2025, adjourned the hearing of the appeal to 19.06.2025. In response thereto, the assessee filed part reply on 12.06.2025 and sought furnish the remaining details. However, without affording such further opportunity, the Ld. CIT(A) proceeded to dispose of the appeal and passed the impugned order on 26.06.2025. It is further contended that the assessee is now in a positi ITA No. 4649/MUM/2025 the total income of the assessee under the head ‘Profits and Gains of Business or Profession’. On appeal, the Learned Commissioner of Income Tax (Appeals) [‘Ld. CIT(A)’] issued notices of hearing. The assessee partly complied but did not furnish complete details. In the absence of full compliance, the Ld. CIT(A) confirmed the findings of the Assessin ded as under: 5.4.3 The AO’s observation is that fictitious debts were created and written off. The burden of proving the genuineness of these debts lies on the assessee as per established judicial precedents. In absence of: • Evidence to prove the genuineness of the trade transactions • Ledger accounts of debtors wise details of the provisions • Any proof of write-off in debtor accounts …the AO was justified in disallowing the same. Since the entire business activity appears dubious, the addition is upheld. Before us, Learned Counsel for the assessee has submitted that the Ld. CIT(A), vide letter dated 09.06.2025, adjourned the hearing of the appeal to 19.06.2025. In response thereto, the assessee filed part reply on 12.06.2025 and sought furnish the remaining details. However, without affording such further opportunity, the Ld. CIT(A) proceeded to dispose of the appeal and passed the impugned order on 26.06.2025. It is further contended that the assessee is now in a positi Frame Impex Pvt. Ltd 3 ITA No. 4649/MUM/2025 the total income of the assessee under the head ‘Profits and Gains ed Commissioner of Income Tax (Appeals) [‘Ld. CIT(A)’] issued notices of hearing. The assessee partly complied but did not furnish complete details. In the absence of full compliance, the Ld. CIT(A) confirmed the findings of the Assessing 5.4.3 The AO’s observation is that fictitious debts were created and written off. The burden of proving the genuineness of these debts lies on the assessee as per established judicial precedents. genuineness of the trade transactions …the AO was justified in disallowing the same. Since the entire ition is upheld.” Before us, Learned Counsel for the assessee has submitted that the Ld. CIT(A), vide letter dated 09.06.2025, adjourned the hearing of the appeal to 19.06.2025. In response thereto, the assessee filed part reply on 12.06.2025 and sought further time to furnish the remaining details. However, without affording such further opportunity, the Ld. CIT(A) proceeded to dispose of the appeal and passed the impugned order on 26.06.2025. It is further contended that the assessee is now in a position to furnish Printed from counselvise.com complete evidences to substantiate its claim, and therefore prays that the matter may be remanded back for fresh consideration. 4.1 Having considered the rival submissions and upon perusal of the material on record, we find that the disallowa sustained essentially for want of supporting evidences such as trade confirmations, debtor ledgers, party actual write-off. The principles of natural justice demand that the assessee be afforded adequate and reasonabl substantiate its claim, particularly when partial compliance was made and a request for extension of time was on record. 4.2 In view of the foregoing, and in the larger interest of justice, we deem it appropriate to set aside the impugned CIT(A) on the issue in dispute and restore the matter to his file with a direction to adjudicate the same afresh, after granting due opportunity to the assessee to file all relevant evidences in support of its claim. The assessee, on its cooperation and furnish all requisite documents without fail. 4.3 The ground No. 3 of the appeal of the assessee is allowed. we have already restored the matter back to the file of the Ld. CIT(A) for deciding afresh, t appeal are rendered academic. ITA No. 4649/MUM/2025 complete evidences to substantiate its claim, and therefore prays that the matter may be remanded back for fresh consideration. Having considered the rival submissions and upon perusal of the material on record, we find that the disallowa sustained essentially for want of supporting evidences such as trade confirmations, debtor ledgers, party-wise details and proof of off. The principles of natural justice demand that the assessee be afforded adequate and reasonable opportunity to substantiate its claim, particularly when partial compliance was made and a request for extension of time was on record. In view of the foregoing, and in the larger interest of justice, we deem it appropriate to set aside the impugned order of the Ld. CIT(A) on the issue in dispute and restore the matter to his file with a direction to adjudicate the same afresh, after granting due opportunity to the assessee to file all relevant evidences in support of its claim. The assessee, on its part, is directed to extend full cooperation and furnish all requisite documents without fail. The ground No. 3 of the appeal of the assessee is allowed. we have already restored the matter back to the file of the Ld. CIT(A) for deciding afresh, the other grounds raised on the merit of the appeal are rendered academic. Frame Impex Pvt. Ltd 4 ITA No. 4649/MUM/2025 complete evidences to substantiate its claim, and therefore prays that the matter may be remanded back for fresh consideration. Having considered the rival submissions and upon perusal of the material on record, we find that the disallowance has been sustained essentially for want of supporting evidences such as wise details and proof of off. The principles of natural justice demand that the e opportunity to substantiate its claim, particularly when partial compliance was made and a request for extension of time was on record. In view of the foregoing, and in the larger interest of justice, order of the Ld. CIT(A) on the issue in dispute and restore the matter to his file with a direction to adjudicate the same afresh, after granting due opportunity to the assessee to file all relevant evidences in support part, is directed to extend full cooperation and furnish all requisite documents without fail. The ground No. 3 of the appeal of the assessee is allowed. As we have already restored the matter back to the file of the Ld. CIT(A) raised on the merit of the Printed from counselvise.com 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court. Sd/- (SUCHITRA RAGHUNATH KAMBLE JUDICIAL MEMBER Mumbai; Dated: 09/09/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA No. 4649/MUM/2025 In the result, the appeal of the assessee is allowed for Order pronounced in the open Court. Sd/ (SUCHITRA RAGHUNATH KAMBLE) (OM PRAKASH KANT MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Frame Impex Pvt. Ltd 5 ITA No. 4649/MUM/2025 In the result, the appeal of the assessee is allowed for Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, Registrar) ITAT, Mumbai Printed from counselvise.com "