HRITIK CHEMICALS PRIVATE LIMITED COMPANY , MUMBAI V. COMMISSIONER OF INCOME TAX (APPEAL) WARD 10(10(1), MUMBAI

ITA 2994/MUM/2022

AI Insights

Hritik Chemicals Private Limited appealed against the order of the National Faceless Appeals Centre (NFAC), which was initially a response to a reassessment order that included additions for bogus purchases. The CIT(A) had dismissed the appeal ex-parte due to non-response from the appellant. The Tribunal found that the CIT(A) had not substantially examined the matter and thus restored the case for a fresh hearing, emphasizing the need for adherence to principles of natural justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123710 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 11-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 23-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 145; 263; 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H”, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 2994/Mum/2022 (A.Y. 2011-12) Hritik Chemicals Private Limited Company, 1301-1302, 13 th Floor, Dhanashree Heights, B Wing, Azad Nagar Off, Veera Desai Road, Andheri (East), Mumbai-400053. PAN: AACCH3398B ...... Appellant Vs. CIT(A), Ward-10(1)(1), Aayakar Bhavan, Mumbai-400020 ..... Respondent Appellant by : Sh. Anuj Kisnadwala, Adv. Respondent by : Smt. Madhumalti Ghosh, CIT- DR Date of hearing : 12/01/2023 Date of pronouncement : 21/03/2023 ORDER PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of National Faceless Appeals Centre, Delhi (for short ‘NFAC’) dated 23.08.2022 under section 250 of the Income Tax Act, 1961 (for short ‘the Act’) for A.Y. 2011-12. The assessee has raised the following grounds of appeal: “The following grounds of appeal are without prejudice to each other. 2 ITA No. 2994/Mum/2022 Hritik Chemicals Private Limited Company 1. No opportunity of being heard was provided The Hon'ble CIT (A) erred in law and in facts of the case in not providing the proper opportunity of being heard to the appellant and thus in violating the principles of natural justice, before passing the order u/s 250 of the Income Tax Act. We had responded on 17 August 2022 to a notice issued on 2 August 2022 seeking time till 31 August 2022 as the appellant had to appoint a new consultant due to sudden exist of their old consultant and it required collation of various documents including prior submissions made by the old consultant which were not available with the appellant. 2. Challenging order under section 263 of the Income Tax Act, 1961 While passing order under section 263 of the Income Tax Act, the learned commissioner has not considered the facts that were considered by AO while passing the original assessment order and has not considered the actual facts which had already been verified by the assessing officer. 3. Disallowance of purchases amounting to INR 64,67,077/- The Hon'ble CIT(A) erred in law and facts in disallowing the purchases from eleven parties aggregating to INR 64, 67,077/- without considering the genuineness of purchase. The Hon'ble CIT(A) erred in directing the Ld. AO to carry out verification of documents and details like bank statement showing payments made to supplier, purchase bills, sales bills, ledger a/c, delivery challans and quantitative party wise purchase summary etc. Therefore, merely on the information received, purchases cannot be treated as non-genuine. 4. The Hon'ble CIT(A) erred in disallowing the purchases from eleven parties aggregating to Rs.64,67,077/- by including Rs.5,97,450/- being purchase from M/s Supreme Enterprises without appreciating that the appellant has not made any purchase from this party, therefore the disallowance was held to be not sustainable. 5. Disallowing the purchases without appreciating that sales are accepted: The Hon'ble CIT(A) erred in disallowing the purchases without appreciating that sales are accepted; therefore, the disallowance was held to be not sustainable. 6. Disallowance of purchases should be restricted to the extent of profit. 3 ITA No. 2994/Mum/2022 Hritik Chemicals Private Limited Company The Hon'ble CIT(A) erred in law and facts in disallowing the purchases from eleven parties aggregating to INR 64.67,077/- without considering the extent of profit involved in such purchases. 7.CIT (A) erred in rejecting the books of accounts without pointing out any defects in the books: The Hon'ble CIT(A) erred in rejecting the books of accounts without pointing out any defects in the books, merely because the purchase parties are not responding to notice the books of accounts cannot be rejected u/s 145 of the Act 8. the appellant craves leave to add, amend, alter and/or delete any of the grounds of appeal before or during the course of appeal.” 2. Brief facts of the case are that assessee filed its return of income on 12.09.2011 declaring total income at Rs.6, 09,025/-. Case of the assessee was reopened and reassessment order was passed vide dated 21.12.2016. In this order AO made addition of Rs.7,33,703/- @ 12.5% on bogus purchases found in the case of assessee amounting to Rs.58,69,627/-. Thereafter, the Ld. PCIT-10, Mumbai found that the assessment completed above was erroneous so far as prejudicial to the interest of revenue for the purposes of sec. 263 of the Act. Accordingly, assessment was completed de novo u/s. 143(3) r.w.s. 263 of the Act and an addition of Rs.64, 67,077/- vide para 11 of the assessment order was made. 3. Assessee being aggrieved with this order of AO preferred an appeal before the Ld. CIT (A). In his order, Ld. CIT (A) passed an ex-parte order after observing that assessee is not responding to the notices issued by him dated 05.03.2022 and 02.08.2022. In his ex-parte order in absence of any reply filed by the assessee, dismissed the appeal filed by the assessee. 4 ITA No. 2994/Mum/2022 Hritik Chemicals Private Limited Company 4. Assessee being aggrieved with this order of Ld. CIT (A) approached this Tribunal. We have gone through the original order passed u/s. 143(3) r.w.s. 147 of the Act, order passed u/s. 143(3) r.w.s.263 of the Act and order of Ld. CIT (A) passed u/s. 250 of the Act. We observed that assessee had not challenge order passed by Ld. PCIT-10, Mumbai u/s. 263 of the Act and consequence of that AO passed order u/s. 143(3) r.w.s. 263 of the Act. Thereafter, appeal filed by the assessee before the Ld. CIT (A) is decided ex-parte in absence of any submissions by the assessee and no substantial examination of the matter on the facts and in terms of law was being made. 5. In view of these facts we are not in a position to comment upon the appeal as verification of the matter has not being done by the First Appellate Authority. In these terms, we restore the matter back to the file of Ld. CIT(A) for fresh adjudication by giving assessee a fair opportunity of being heard and assessee is directed to co-operate with the authorities and comply with all the notices and directions. In these terms, appeal of the assessee is allowed for statistical purpose. 6. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 21 st day of March, 2023. Sd/- Sd/- (VIKAS AWASTHY) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, दिन ांक/Dated: 21/03/2023 SK, Sr.PS 5 ITA No. 2994/Mum/2022 Hritik Chemicals Private Limited Company Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकर आयुक्त CIT 4. दवभ गीय प्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्ड फ इल/Guard file. BY ORDER, //True Copy// (Dy. /Asstt.Registrar) ITAT, Mumbai