BHAVESH MAHENDRA MEHTA, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-NO-27(1), MUMBAI

ITA 152/MUM/2023

AI Insights

The case involves Shri Bhavesh Mahendra Mehta, the proprietor of M/s. Divyam Enterprise, who appealed against the order of the National Faceless Appeal Centre (NFAC) which confirmed the disallowance of proportionate interest of Rs. 49,71,623 on the grounds of interest-free advances. The appeal was initially delayed due to the negligence of the assessee's chartered accountant, which the Tribunal condoned based on the principles of substantial justice over technical considerations. The main legal contention was the violation of the right to a fair hearing, as the assessee's request for an adjournment to submit written submissions was not granted, leading to an ex-parte decision by the NFAC.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301104 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 16-01-2023
• Other Referred Cases: Land Acquisition Collector vs. MST Katiji & Others 167 ITR 471 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Condonation of delay; Set aside
• Section: 143(3); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “B”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No.152/M/2023 Assessment Year: 2016-17 Shri Bhavesh Mahendra Mehta, 1001 Alaknanda, 7 th Floor, Rajawadi, Nilkanth Valley, Ghatkopar, Mumbai – 400 077 PAN: AADPM8231C Vs. Assistant Commissioner of Income Tax, Cir. No.-27(1), Tower No.6, Vashi Station Commercial Complex, Navi Mumbai - 400703 (Appellant) (Respondent) Present for: Assessee by : Shri Rahul K. Hakani, A.R. Revenue by : Shri Prasoon Kabra, Sr. A.R. Date of Hearing : 06 . 04 . 2023 Date of Pronouncement : 20 . 04 . 2023 O R D E R Per : Kuldip Singh, Judicial Member: At the very outset it is brought to the notice of the Bench by the Ld. A.R. for the appellant, Shri Bhavesh Mahendra Mehta (hereinafter referred to as ‘the assessee’) that this appeal as filed with the delay of 148 days and sought to condone the same on the grounds inter-alia that the assessee received the impugned order ex- parte order passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] on e-mail on 23.06.2022 which was given to ITA No.152/M/2023 Shri Bhavesh Mahendra Mehta 2 the accountant Mr. Rajani D. Parekh (PAN No.AABPP9367N) who is a commerce graduate (B.Com and C.A. Finalist) who is regularly looking after the tax related matters of the assessee; that due to work pressure neither the assessee could follow up with Mr. Rajani D. Parekh nor he himself reverted back with his inputs as to the further course of action; that thereafter the assessee sent a reminder to his chartered accountant who has suggested in filing of the appeal before the Tribunal which was ultimately filed on 17.01.2023. 2. However, on the other hand, the Ld. D.R. for the Revenue opposed the application for condonation of delay on the ground that the late filing of appeals in this case is apparently malafide due to callous attitude of the assessee and prayed for dismissal of the application. 3. Keeping in view the fact that the entire delay in filing the present appeal is attributed to the concerned C.A. namely Mr. Rajani D. Parekh who has not reverted to the assessee by suggesting the next course of action and the fact that due to negligence or inadvertent mistake on the part of the tax advisor the assessee cannot be made to suffer and keeping in view the fact that impugned order passed by the Ld. CIT(A) is ex-parte and to decide the issue once for all order is required to be passed on merits and further keeping in view the law laid down by the Hon’ble Supreme Court in case of Land Acquisition Collector vs. MST Katiji & Others 167 ITR 471 (SC) wherein it is held that “it is on contention of delay that when substantial justice and technical considerations are pitted against each other, the case of substantial justice deserves ITA No.152/M/2023 Shri Bhavesh Mahendra Mehta 3 to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non deliberate delay,” we find sufficient cause to condone the delay, hence the delay of 148 days in filing the present appeal is hereby condoned and present appeal is ordered to be registered and heard today by the Bench. 4. The assessee by filing the present appeal, sought to set aside the impugned order dated 23.06.2022 passed by the Ld. CIT(A) qua the assessment year 2016-17 on the grounds inter-alia that :- “1. The Learned National Faceless Appellate Centre (NFAC) erred in confirming the order of Assessing Officer disallowing proportionate interest of Rs. 49,71,623/- on the ground of interest free advances without giving reasonable opportunity of hearing to the Assessee by rejecting adjournment request dated 15/6/2022 for 15 days and passing order on 23/6/2022 without intimation of rejection of adjournment and hence the addition of Rs. 49,71,623/- may be deleted. 2. The Learned National Faceless Appellate Centre (NFAC) erred in confirming the order of Assessing Officer disallowing proportionate interest of Rs. 49,71,623/- on the ground of interest free advances without considering quantum of interest free funds available with assessee and without appreciating that interest free advances are business advances and hence the addition of Rs. 49,71,628/- may be deleted. 3. Without prejudice to above, the learned Assessing officer erred in considering interest on secured loans, Bank Charges and Loan processing charges for computing disallowance of proportionate interest and hence the addition of Rs. 49,71,623/- may be deleted.” 5. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee is an individual/proprietor of M/s. Divyam Enterprise into the business of builder and developer filed the return of income declaring total income of Rs.48,14,750/- which was subjected to scrutiny. The Assessing Officer (AO) by invoking the provisions contained under section 36(1)(iii) of the Income Tax Act, 1961 (for short ‘the Act’) ITA No.152/M/2023 Shri Bhavesh Mahendra Mehta 4 made addition of Rs.49,71,623/- on account of interest disallowed and thereby framed the assessment under section 143(3) of the Act. 6. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing the present appeal. 7. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 8. Bare perusal of the impugned order passed by the Ld. CIT(A) goes to prove that the order has been passed ex-parte on the ground that the assessee despite issuance of the notice on email has failed to appear before the authority to file the written submissions and as such due to his non co-operative and delaying attitude he is found not entitled for any relief. 9. Perusal of the order in totality goes to prove that undisputedly on 15.06.2022 the assessee uploaded a request for adjournment on ITBA requesting for 15 days time to file the written submissions which was not granted on the ground that within a period of three years of filing the present appeal the assessee is still seeking time to file the written reply. Audi alteram partem is the cardinal principle of rule of natural justice and the issue must not be decided without providing adequate opportunity of being heard. ITA No.152/M/2023 Shri Bhavesh Mahendra Mehta 5 10. We are of the considered view that when the assessee has not been provided adequate opportunity of being heard despite a specific request made and the Ld. CIT(A) passed the order in mechanical manner without applying the rule of natural justice, the impugned order is not sustainable. To decide the issue once for all and to stop the multiplicity of the proceedings the impugned order passed by the Ld. CIT(A) is hereby set aside and remitted back to the Ld. CIT(A) to decide afresh after providing opportunity of being heard to the assessee. 11. Resultantly, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 20.04.2023. Sd/- Sd/- (GAGAN GOYAL) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 20.04.2023. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.