IP INFUSION SOFTWARE INDIA PRIVATE LIMITED,BANGALORE V. ACIT, KORAMANGA, BMT BUILDING

ITA 225/BANG/2025

AI Insights

The case involves IP Infusion Software India Pvt. Ltd., which appealed against the order of the Addl/JCIT(A)-1 Nashik, which had dismissed their earlier appeal due to non-compliance with statutory notices. The original dispute centered on the classification of servers and networking equipment, which the Assessing Officer (AO) treated as 'plant and machinery' instead of 'computers and software', leading to a lower depreciation rate and an additional tax liability. The Tribunal found that the Addl/JCIT(A) had erred in dismissing the appeal without adjudicating on the merits and without providing an opportunity for the assessee to be heard, thus violating the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34169 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEHA SAHAY
• Assessee Lawyers: PRABHAKAR
• Keywords: Opportunity of being heard; Revised return; Depreciation; Principle of natural justice
• Section: 143(3); 142(1); 143(2); 250

Judgement Text

"ITA No.225/Bang/2025 IP Infusion Software India Private Limited, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.225/Bang/2025 Assessment Year: 2017-18 IP Infusion Software India Pvt. Ltd. Unit 401, 4th Floor, Campus D Block B2, RMZ Centennial Doddanekundi Village K.R. Puram Hobli Bangalore 560 037 Karnataka PAN NO : AACCI5170N Vs. ACIT Circle-3(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Sri Prabhakar, A.R. Respondent by : Ms. Neha Sahay, D.R. Date of Hearing : 03.04.2025 Date of Pronouncement : 04.04.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against the order of Addl/JCIT(A)-1 Nashik dated 20.12.2024 vide DIN & Order No. ITBA/APL/S/250/2024-25/1071415161(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2017-18. 2. The assessee has raised the following grounds of appeal: ITA No.225/Bang/2025 IP Infusion Software India Private Limited, Bangalore Page 2 of 4 3. The brief facts of the case are that the assessee company is engaged in the business of software development providing IT/ITES services. The assessee company filed its revised return of income for the assessment year 2017-18 on 21.11.2017 declaring total income of Rs.8,85,71,060/-. Thereafter the case was selected for complete scrutiny under CASS and accordingly statutory notices u/s 143(2) of the Act as well as 142(1) of the Act were issued. In response to the same, the assessee e-filed the details as called for. After verifying the details furnished by the assessee company, the AO treated the servers and networking equipments as “plant and machinery” instead of “Computers and Software” as claimed and allowed depreciation @ 15% instead of 60% as claimed by the assessee and accordingly disallowed depreciation of Rs.9,31,633/- added to total income returned. 4. Aggrieved by the assessment completed u/s 143(3) of the Act vide order dated 25.12.2019 the assessee preferred an appeal before the ld. CIT(A)/NFAC. ITA No.225/Bang/2025 IP Infusion Software India Private Limited, Bangalore Page 3 of 4 5. The ld. Addl/JCIT (A)-1 Nashik dismissed the appeal of the assessee as the assessee had neither filed any written submission nor furnished any supporting documents during the course of Appellate proceedings. As the assessee failed to avail the opportunity by not complying with the statutory notices, the ld. Addl/JCIT(A) assumed that the assessee is not interested in pursuing his own appeal and dismissed the appeal for non- compliance. 6. Aggrieved by the order of ld. Addl/JCIT(A) -1 Nashik dated 20/12/2024, the assessee has filed the present appeal before this Tribunal. 7. Before us, the ld. A.R. of the assessee submitted that ld. Addl/JCIT(A) grossly erred in dismissing the appeal without giving an opportunity of being heard to the assessee, which is a clear violation of principles of natural justice. Further, ld. A.R. of the assessee submitted that even ld. Addl/JCIT (A) had not passed the order on merits and therefore the same is illegal and bad in law. 8. Ld. D.R. on the other hand supported the order of authorities below. 9. We have heard the rival submissions and perused the materials available on record. On going through the order ld. Addl/JCIT(A) Nashik, we find that the ld. Addl/JCIT(A) has dismissed the appeal solely on the ground that assessee has neither filed any written submission nor furnished any supporting documents during the course of appellate proceedings. Further, we also take a note of the fact that the ld. Addl/JCIT(A) had also not adjudicated the case on merits. As rightly contended by the ld. AR of the assessee, as per the provision contained in section 250(6) of ITA No.225/Bang/2025 IP Infusion Software India Private Limited, Bangalore Page 4 of 4 the Act, the order of the ld. ADDL/JCIT(A)/ CIT(A) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. This Being so, we are of the opinion that in the interest of justice and fair play and as requested by the AR of the assessee, we remit the entire issues in dispute to the file of the ld. Addl./JCIT(A) for fresh consideration in accordance with the law. Needless to say a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce/submit all the necessary documents/records/evidence in support of its contention. Further we make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly. 10. In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 4th Apr, 2025 Sd/- (Laxmi Prasad Sahu) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 4th Apr, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "