NILESH TODI,AHMEDABAD V. INCOME TAX OFFICER, GUJ-C-(101)(1), AHMEDABAD

ITA 1425/AHD/2025

AI Insights

The case involves an appeal by Nilesh Todi against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2020-21. The primary contention was the ex-parte disposal of the assessment order, which the appellant argued was due to notices being directed to the spam folder of his email, leading to non-compliance. The appellant challenged the additions made under sections 68 and 57 of the Income-tax Act, 1961, regarding unsecured loans and disallowance of deductions, respectively. The tribunal noted the failure of the Ld. CIT(A) to adjudicate on merits and merely confirmed the additions due to non-compliance, which was deemed unsustainable in law.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790398 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 12-07-2025
• Laws Referred To: Income-tax Act, 1961, Companies Act, 2013, Companies (Acceptance of Deposits) Rules, 2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No. 1425/Ahd/2025 (Assessment Year: 2020-21) Nilesh Todi, Ground Floor, Block-A, Aura Villa, Sundderam Satellite Chsl, Nr. Omkar Bungalows, Thaltej, Ahmedabad-380059 [PAN :AAOPT 2933 K] Vs. The Income Tax Officer, GUJ-C-(101)(1), Ahmedabad (Appellant) .. (Respondent) Appellant by : None Respondent by: Shri Abhijit, Sr DR Date of Hearing 24.11.2025 Date of Pronouncement 25.11.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This appeal has been filed by the assessee against the order dated 11.06.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as “Ld. CIT(A)” in short], under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act” in short] for the Assessment Year 2020-21. 2. The assessee has raised following grounds of appeal:- “1. On facts and in the circumstances of the case CIT Appeal as well as Ld. AO has grossly erred in disposing the assessment order ex-parte without affording adequate opportunity to the assessee. Appellant prays that since the hearing notices sent to email were received directly in this SPAM folder and hence compliance becomes nonresponsive. 2. The CIT Appeal has erred in law and on facts in confirming the action of AO regarding making the addition on unsecured Loan of Rs. 1,48,93,715 u/s 68 and we had already made submission in response to SCN which was not rightly considered by the Ld. AO. Printed from counselvise.com ITA No. 1425/Ahd/2025 Nilesh Todi Vs. ITO Asst. Year : 2020-21 - 2– 3. The CIT Appeal has erred in law and on facts in making the addition on disallowance of deduction u/s 57 of Rs. 1,39,01,000. 4. The addition made is against the judicial pronouncements. 5. The addition made was only on presumption and not by fact which have been produced. 6. CIT Appeal completed ex-parte is based on incorrect assumptions and nonappreciation of material facts, and CIT Appeal was completed without giving opportunity of being heard and made additions, despite the fact that assesses has not received any physical notice for hearing on his address mentioned so above CIT appeal was not following the principal of natural justice, without given adequate time to submit our response. So the order needs to be quashed. 7. The order appears to have been passed by the CIT appeal as well as Lt. AO without due application of mind, which renders it arbitrary and unsustainable. 8. The appellant reserves the right to amend, modify or add any further grounds/ evidences/documents at the time of hearing. 9. The Ld. AO. And CIT (A) erred in not considering the details of the unsecured loans duly submitted during the assessment and appellate proceedings. The appellant had furnished all relevant documents and explanations in support of the said loans, which have not been duly appreciated or taken into account while framing the assessment order.” 3. Upon perusal of the record, it is observed that notices u/s 250 of the Act were issued on three occasions through the digital mode, requiring the assessee to furnish necessary documents and clarifications. However, the assessee contends that the said notices were delivered directly into the spam folder of the registered email account, due to which the assessee remained unaware of the proceedings and consequently failed to submit any response. This resulted in the Ld. CIT(A) dismissing the appeal ex-parte. 4. Before us, none appeared on behalf of the assessee. 5. The Ld. DR, on the merits of the addition, submitted as follows :- Printed from counselvise.com ITA No. 1425/Ahd/2025 Nilesh Todi Vs. ITO Asst. Year : 2020-21 - 3– • The assessee is one of the directors of Canpac Trends Private Limited. • The assessee has received unsecured loans from parties/companies, amounting to Rs.1,48,93,715/- • Reference was made to Section 73 of the Companies Act, 2013, and Rule 2(1)(c)(viii) of the Companies (Acceptance of Deposits) Rules, 2014, which govern acceptance of deposits from directors. The verbatim extracts of which are reproduced hereunder :- “Section 73 of the Companies Act, 2013 (Verbatim Extract) 73. Prohibition on acceptance of deposits from public- (1) On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter Provided that nothing in this sub-section shall apply to a banking company and a non-banking financial company as defined in the Reserve Bank of India Act, 1934 and such other company as the Central Government may, after consultation with the Reserve Bank of India, specify in this behalf. (2) A company may, subject to the passing of a resolution in general meeting and subject to such rules as may be prescribed in consultation with the Reserve Bank of India, accept deposits from its members on such terms and conditions, including provision of security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfilment of the following conditions, namely:- (a) issuance of a circular to its members including therein a statement showing the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed; (b) filing a copy of the circular along with such statement with the Registrar within thirty days before the date of issue of the circular, Printed from counselvise.com ITA No. 1425/Ahd/2025 Nilesh Todi Vs. ITO Asst. Year : 2020-21 - 4– (c) depositing such sun which shall not be less than fifteen per cent of the amount of its deposits maturing during a financial year and the financial year next following, and kept in a scheduled bank in a separate bank account to be called as deposit repayment reserve account, (d) providing deposit insurance in such manner and to such extent as may be prescribed; (e) certifying that the company has not committed any default in the repayment of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits, and (f) providing security, if any, for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the properties or assets of the company: Provided that in case where a company does not secure the deposits or secures such deposits partially, the deposits shall be termed as \"unsecured deposits and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits. Rule 2(1)(c)(vii) of the Companies (Acceptance of Deposits) Rules, 2014 (Verbatim Extract) Rule 2. In these rules, unless the context otherwise requires,- (1) \"deposit\" includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include- (c) any amount received from- (viii) any amount received from a person who, at the time of the receipt of the amount, was a director of the company: Provided that the director from whom the money is received furnishes a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others” • He further contended that statutory compliance regarding the deposits was not demonstrated by the assessee. Printed from counselvise.com ITA No. 1425/Ahd/2025 Nilesh Todi Vs. ITO Asst. Year : 2020-21 - 5– 4. We have heard the Ld. DR and perused the material available on record. A perusal of the impugned order reveals that the Ld. CIT(A) has not adjudicated the issues on merits and has merely confirmed the additions due to non- compliance. It is a well settled principle of natural justice that an assessee must be afforded a fair and reasonable opportunity to present its case. Dismissal of an appeal for non-prosecution without adjudicating issues on merits is not sustainable in the eyes of law. 5. Therefore, while we refrain from commenting on the submissions advanced by the Ld. DR, we deem it appropriate to direct the Ld. CIT(A) to examine the entire material and adjudicate the issues afresh. 6. In view of the above facts, and in the interest of justice, the matter is hereby remitted back to the Ld. CIT(A) for de novo adjudication, after granting the assessee a reasonable opportunity of being heard. The Ld. CIT(A) shall pass a speaking and reasoned order, addressing all grounds of appeal on their merits, after considering all documents, evidence and material to be furnished by the assessee. The assessee is directed to ensure due compliance with the notices issued by the Ld. CIT(A) from time to time. 7. In the result, the appeal of the assessee is allowed for statistical purposes. The order is pronounced in the open Court on 25.11.2025. Sd/- Sd/- (SIDDHARTHA NAUTITAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 25.11.2025 **btk Printed from counselvise.com ITA No. 1425/Ahd/2025 Nilesh Todi Vs. ITO Asst. Year : 2020-21 - 6– आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, , , , अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation words processed by Hon’ble VP on his PC on 24.11.2025 2. Date on which the typed draft is placed before the Dictating Member ….24.11.2025 3. Other Member… …..24.11.2025 4. Date on which the approved draft comes to the Sr.P.S./P.S .. …..24.11.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement .25.11.25 6. Date on which the fair order comes back to the Sr.P.S./P.S …...25.11.2025 7. Date on which the file goes to the Bench Clerk .. …..25.11.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "