M/S. BHARAT AGRI FERT AND REALTY LIMITED ,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX -2(1)(1), MUMBAI

ITA 3360/MUM/2025

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The case involves M/s. Bharat Agri Fert & Realty Limited, the Appellant, contesting an addition of INR 25,14,145 to their income, which was deemed as unverified rent expenses by the Assessing Officer under Section 143(3) read with Sections 143(3A) and 143(3B) of the Income Tax Act, 1961 for the Assessment Year 2018-2019. The Appellant's appeal against the Assessment Order was dismissed by the CIT(A) on 14/02/2025, leading to the current appeal before the Tribunal. The Tribunal found merit in the Appellant's argument that the expenses were mischaracterized as rental expenses and noted the procedural oversight in not submitting supporting documents at earlier stages due to staff changes and errors.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785856 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 13-05-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Business expenditure
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No.3360/MUM/2025 (Assessment Year:2018-2019) M/s. Bharat Agri Fert & Realty Limited 301, 3rd Floor, Hubtown Solaris, N. S. Phadke Marg, Andheri (East), Mumbai - 400069, Maharashtra [PAN: AAACB0681K] …………. Appellant Assistant Commissioner of Income Tax – 2(1)(1), Mumbai Room No.561, 5th Floor, Aayakar Bhavan, Maharishi Karve Road, Mumbai – 400020 Maharashtra. Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Ms. Varsha Nanwani Shri Sunny Kachhwaha Date Conclusion of hearing Pronouncement of order : : 16.10.2025 31.10.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 14/02/2025, passed by the Commissioner National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 18/03/2021, passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Income Tax Act, 1961 for the Assessment Year 2018-2019. The delay of 13 days in filing the appeal is condoned in view of the explanation furnished by the Assessee in the application seeking condonation of delay supported by sworn affidavit of sworn by the managing director of the Assessee company. In our view the Assessee had sufficient cause for Printed from counselvise.com ITA No.3360/Mum/2025 Assessment Year 2018-2019 2 not filing appeal within the prescribed period. Accordingly, we proceed to take up the grounds raised in the present appeal which are as under: “1. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of Rs.25,14,145/- on account of unverified rent expenses. 2. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of Rs.25,14,145/- on account of unverified rent expenses by ignoring the fact that the rent expenses shown in the financial statement amounting to Rs.25,14,145/- pertains to inspection fees, inspection fee IGST, Hub town office maintenance, Property tax for F Building, Property tax and Professional Tax and all these expenses are business expenses.” 2. The relevant facts in brief are that the Assessee filed return of income for the Assessment Year 2018-2019 on 26/09/2018 which was selected for scrutiny. Assessment under Section 143(3) read with Sections 143(3A) and 143(3B) of the Act was framed on the Assessee vide Assessment Order, dated 18/03/2021. The Assessing Officer computed the Assessee’s income at INR.47,54,565/- after making, inter alia, addition of INR.25,14,145/- in respect of expenses held to be unverified rent expenses debited to the Profit and Loss Account of the Assessee for the relevant previous year. Being aggrieved the Assessee preferred appeal before the Learned CIT(A) which was dismissed vide Order, dated 14/02/2025, impugned by way of present appeal before the Tribunal on the grounds reproduced in paragraph 2 above. 3. We have heard both the sides and have perused the material on record. 4. The Learned Authorized Representative for the Assessee has placed on record documents to show that the cost of INR.25,14,145/- was Printed from counselvise.com ITA No.3360/Mum/2025 Assessment Year 2018-2019 3 incurred during the relevant previous year and the same was not in the nature of rental charges. It was submitted that disallowance was made by the Assessing Officer without appreciating the true nature of expenses disallowed. She submitted that the aforesaid supporting documents could not be filed before the authorities below on account of mistake of the employees of the Assessee. The aforesaid submissions were supported by affidavit sworn by the Managing Director of the Assessee-Company. 5. Per contra Learned Departmental Representative advanced submissions in support of the order passed by the CIT(A) and placed reliance upon orders passed by the authorities below. It was submitted that in absence of any supporting documents/details furnished by the Assessee, the authorities below were justified in making the disallowance. 6. We have given thoughtful consideration to the rival submission and have perused the material on record. The case set up by the Assessee is that the Assessing Officer disallowance was made by the Assessing Officer on the understanding that the amount disallowed represented rental expenses paid by the Assessee which is not the correct factual position. The Assessee could not file the supporting document on account of mistake committed by the employee of the Assessee- Company. In the affidavit filed by the managing director of the Assessee-Company is has been deposed as under: “2. That during the course of appellate proceedings before the Hon'ble Commissioner of Income Tax (Appeals) [CIT(A)], certain original payment receipts relevant to the case could not be submitted 3. That the non-submission of these original receipts was inadvertent and occurred due to a genuine oversight on the part of our accounts staff handling the matter at that time. Printed from counselvise.com ITA No.3360/Mum/2025 Assessment Year 2018-2019 4 4. That subsequently, the concerned staff member responsible for maintaining and compiling the relevant accounts and documentation left our office, resulting in a temporary disruption in accessing and organizing the older records. 5. That the new accounts staff, being unfamiliar with the historical data and filing systems, faced significant difficulty in retrieving and compiling the necessary documents within the stipulated timeframe for submission before the CIT(A). 6. That the omission was entirely unintentional and not with any malafide intent, and we humbly request that this Hon'ble Authority take note of the circumstances that led to the lapse. 7. I further, declare that to the best of my knowledge and belief, the information given above is correct and complete and is truly stated.” 7. There is nothing on record to doubt the bonafides of the above stand taken by the Assessee. Taking into consideration the overall facts and circumstances of the present case, we deem it appropriate and in the interest of justice to grant an opportunity to the Assessee to make out a case for deduction for expenses of INR.25,14,145/- as claimed by the Assessee. Accordingly, we set aside the Order, dated 14/02/2025, passed by the CIT(A) to extent of this issue and restore the issue back to the file of the Assessing Officer with the directions to adjudicate the issue afresh. The Assessee is directed to file before the Assessing Officer all supporting document/details and the Assessing Officer is directed to consider the same before adjudicating the issue. It is clarified that the Assessing Officer shall grant reasonable opportunity of being heard to the Assessee. The Assessee is directed to be vigilant and track the assessment proceedings through Income Tax Business Application Portal. In case the Assessee fails to enter appearance and/or fails to file details/documents/submission in response to notice of hearing issued by the Assessing Officer, the Assessing Officer shall be at liberty to decide the issues on merits on the basis of material on record. In terms of the aforesaid, Ground No. Printed from counselvise.com ITA No.3360/Mum/2025 Assessment Year 2018-2019 5 1 to 2 raised by the Assessee are treated as allowed for statistical purposes. 8. In terms of above, the present appeal preferred by the Assessee is allowed for statistical purposes. Order pronounced on 31.10.2025. Sd/- Sd/- (Renu Jauhri) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 31.10.2025 Milan, LDC Printed from counselvise.com ITA No.3360/Mum/2025 Assessment Year 2018-2019 6 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध ,आयकर अपीलीय अदधकरण ,म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai Printed from counselvise.com "