HIMESH HIRALAL MEHTA ,MUMBAI V. INCOME TAX OFFICER -25(2)(4), MUMBAI

ITA 1123/MUM/2025

AI Insights

The case involves Himesh Hiralal Mehta, the appellant, who contested the order of the National Faceless Assessment Centre (NFAC) and the Ld. CIT(A) regarding the disallowance of Rs.63.29,036 for alleged bogus purchases under section 69C of the Income Tax Act, 1961. The appellant argued that the NFAC erred in dismissing his appeal for non-compliance without considering his responses during the appellate proceedings. The Tribunal noted that the CIT(A) had not considered the appellant's submissions, leading to a violation of natural justice, and thus remanded the case for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 653208 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: NEHA PARANJPE
• Keywords: Set aside; Reassessment proceedings; Bogus purchase; Principle of natural justice; Accommodation entries; Bogus
• Section: 148; 133(6); 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER) ITA No. 1123/MUM/2025 Assessment Year: 2009-10 Himesh Hiralal Mehta 3 Vallabh Niwas No 1, Malavia Road, Vile Parle (East), Mumbai - 40005 Vs. National Faceless Assessment Centre, Delhi ITO 34(2)(1), Kautilya Bhavan, C-41, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051 PAN NO. AAEPM 4744 M Appellant Respondent Assessee by : Ms. Neha Paranjpe Revenue by : Mr. Hemanshu Joshi, CIT-DR Date of Hearing : 16/06/2025 Date of pronouncement : 19/06/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 28.12.2024 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals) – Kochi [in short „the Ld. CIT(A)‟] for assessment year 2009-10, raising following grounds: “1. The National Faceless Appeal Centre (NFAC) erred in passing the order dated 20.12.2024 and dismissing the appeal of the Appellant for non-compliance without considering the letters filed by the Appellant in Himesh Hiralal Mehta 2 ITA No. 1123/MUM/2025 response to the notices issued during the appellate proceedings. Thus, the order dated 20.12.2024 passed by the Ld.CIT(A) is not justified and the same may be set aside, 2. The NFAC erred dismissing the appeal of the Appellant and there by confirming the disallowance of Rs.63.29,036/- under section 69C of the Act on account of alleged bogus purchases without appreciating the facts and circumstances of the case. The disallowance made under section 69C of the Act is not justified and the same requires deletion. 3. The Appellant seeks leave to add, alter and amend the above grounds whenever required.” 2. Briefly stated facts of the case are that the assessee filed his return of income on 25.09.2009 declaring total income at Rs. 2,64,228/-. The return of income filed by the assessee was processed u/s 143(1) of the Income Tax Act, 1961 [in short „the act‟]. Subsequently, in view of the information received from the Sales-Tax Department through the office of Director General of Income-tax (investigation), Mumbai that assessee had obtained bogus accommodation entries of purchase without actual delivery of the goods; the Assessing Officer(AO) recorded reasons to believe that income escaped assessment and issued notice u/s 148 of the Act on 21.03.2014. After coupling the notice u/s 148 of the Act by the assessee, statutory notices under the Act were issued for commencing reassessment proceedings. During the re-assessment proceeding, the Assessing Officer issued notice u/s 133(6) of the Act to the alleged bogus purchase parties who had issued accommodation entries bills to the assessee, but said notices issued were returned un-served by the Postal Authorities with the remark parties “not known/left.” In the circumstances, the AO asked the assessee to produce those parties for verification. However the Himesh Hiralal Mehta 3 ITA No. 1123/MUM/2025 assessee failed to produce those parties before the AO. The assessee also failed to substantiate delivery of the goods from those parties. Accordingly, the AO disallowed entire amount of bogus/hawala purchase amounting to Rs.63,29,026/-. On further appeal, Ld. CIT(A) also upheld that disallowance in view of non-compliance on the part of assessee before him. 3. We have heard the rival submissions advanced by the parties and perused the material available on record. Insofar as the issue of non-compliance before the learned Ld. CIT(A) is concerned, the learned counsel for the assessee has submitted that out of the seven notices issued by the Ld. CIT(A) for hearing the appeal, two pertained to the period during the COVID-19 pandemic and hence could not be complied with. With respect to the remaining notices, it has been submitted that the notice dated 11.05.2023 was duly complied with on 19.10.2023, and further, in response to the subsequent notice dated 12.10.2023, a partial response was filed on 29.11.2023 along with certain relevant information. However, it is the grievance of the assessee that the Ld. CIT(A) passed the impugned order without considering the submissions so filed. 3.1 Upon careful examination of the record, we note that while the Ld. CIT(A) had indeed issued further notices dated 05.04.2024 and 12.12.2024, which remained uncomplied, but the fact remains that the submissions filed by the assessee on 19.11.2023 were not taken into consideration by the appellate authority. Under the statutory Himesh Hiralal Mehta 4 ITA No. 1123/MUM/2025 scheme of the Act, the Ld. CIT(A) is obligated to pass a reasoned order after affording due opportunity of hearing to the assessee. Failure to consider the submissions on record constitutes a clear violation of the principles of natural justice. 3.2 In the facts and circumstances of the case, we are of the considered opinion that the order passed by the Ld. CIT(A) cannot be sustained. We accordingly set aside the impugned order and restore the matter to the file of the Ld. CIT(A) for fresh adjudication, after affording one more opportunity of hearing to the assessee and upon due consideration of the material already on record as well as any additional submissions the assessee may file. Ground No. 1 of the assessee‟s appeal is, therefore, allowed. 4. As we have remanded the matter to the file of the Ld. CIT(A) for de novo consideration, Ground No. 2 raised on merit is rendered academic at this stage and does not require adjudication. Accordingly, Ground No. 2 is dismissed as infructuous. 5. In the result, the appeal of the assessee is allowed partly for statistical purposes. Order pronounced in the open Court on 19/06/2025. Sd/- Sd/- (ANIKESH BANERJEE) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Himesh Hiralal Mehta 5 ITA No. 1123/MUM/2025 Mumbai; Dated: 19/06/2025 Disha Raut, Stenographer Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai "