PEACH TREE INVESTMENTS PVT LTD ,MUMBAI V. INCOME TAX OFFICER-3(2)(4), MUMBAI

ITA 2000/MUM/2024

AI Insights

The case involves Peach Tree Investments Pvt. Ltd., which appealed against the order of the NFAC, Delhi, pertaining to the assessment year 2012-13. The primary grievances included the validity of reassessment proceedings initiated under section 147 of the Income Tax Act, 1961, and the addition of Rs. 80,71,495 as cessation of trading liability under section 41(1). The reassessment was based on information regarding a bad debt written off by Realty Finance & Leasing Pvt. Ltd., which the assessee contended was a financial advance and not a trading liability. The CIT(A) had dismissed the appeal without merit consideration due to non-appearance of the assessee, which was later attributed to non-service of notices.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717253 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIRABHADRA S. MAHAJAN; DR
• Assessee Lawyers: RAJ KUMAR SINGH; AR
• Keywords: Opportunity of being heard; Bad and doubtful debts; Reason to believe
• Section: 147; 148; 143(3)

Judgement Text

" | आयकर अपीलीय अिधकरण ा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & SHRI SANDEEP SINGH KARHAIL, HON’BLE JUDICIAL MEMBER I.T.A. No. 2000/Mum/2024 Assessment Year: 2012-13 Peach Tree Investments Pvt. Ltd. Unit No. 23, Kalpataru Square Kondivita Lane Andheri (East) Mumbai - 400059 [PAN: AAACP2994B] Vs I.T.O. -3(2)(4), Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Rajkumar Singh, A/R Revenue by : Mr. Virabhadra S. Mahajan, Sr. D/R सुनवाई की तारीख/Date of Hearing : 11/08/2025 घोषणा की तारीख /Date of Pronouncement: 11/08/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 02/11/2023 by NFAC, Delhi [hereinafter the ‘ld. CIT(A)’] pertaining to AY 2012-13. 2. The grievance of the assessee reads as under:- “1. That on facts and circumstances of the case and in law the Id. CIT (Appeal), NFAC has erred in upholding the validity of reassessment proceeding initiated under section 147 of the Income Tax Act, 1961 by the Id. Assessing Officer to reopen the assessment only on basis of the information received from ACIT, Circle (1)(1), Mumbai in the case of Realty Finance and Leasing Pvt Ltd without bringing any adverse evidence or material on record and hence the impugned reassessment proceeding initiated by issue of notice u/s.148 and consequent assessment order passed u/s.143(3) r.w.s.147 being bad in law may be quashed. 2. That on facts of the case and in law the Id. CIT (Appeal), NFAC has erred in sustaining the addition made by Id. Assessing Officer u/s 41(1) at Rs.80,71,495/- treating it as cessation of trading liability without establishing or even verifying whether the amount was a trading liability ever claimed or allowed as allowance or Printed from counselvise.com I.T.A. No. 2000/Mum/2024 2 deduction in any assessment and rejecting the assessee appellant submission that the amount was refundable advance made by sister concern for financial help and not a trading liability and has never been claimed as deduction from income or receipt in any earlier years. The said addition does not come under the purview of section 41(1) as the amount is in fact a financial liability and was never claimed by or allowed to the Assessee Company as expenses or loss in any preceding previous years. In view of the same, alleged addition made at Rs.80,71,495/- being wrong on facts and bad in law therefore, same maybe deleted. 3. That without prejudice to the above that the impugned addition made is wrong on facts and bad in law, the information received from the ACIT, Circle (11)(1)(1) who is assessing Realty Finance and Leasing Pvt Ltd becomes redundant as though Realty Finance and Leasing Pvt Ltd has written off the amount as Bad debts in the P/L A/c ,the Id ACIT has disallowed the claim in his order passed u/s 143(3) r.w.s 147 on 11/12/2019 for A.Y.2012-13 in its case and thus now confirming the same addition in the hands of the Assessee Company would amount to double addition. 4. That all the above appeal grounds raised hereinabove are independent grounds and without prejudice to each other. 5. That appellant craves the leave to amend, alter, substitute any of the above appeal grounds and or to raise new or additional grounds of appeal at the time of hearing.” 3. Briefly stated the facts of the case are that the assessee filed its return of income on 28/09/2012 declaring Nil income with current year loss of Rs. 1,53,949/-. As per the information received from the office of Asst. Commissioner of Income Tax-(11)(1)(1), Mumbai, in respect of bad debt of Rs. 80,71,495/- due, from the assessee written off by M/s. Realty Finance & Leasing Pvt. Ltd.. Basis this information, the AO had a reason to believe that taxable income in this case has escaped assessment u/s 41(1) of the Act and accordingly notice u/s 148 of the Act was issued on 30/03/2019 in response to which the assessee filed return of income declaring Nil income. 4. The re-assessment proceedings were initiated. The assessee is engaged in finance and investment but during the year it did not carry out any business activity. Printed from counselvise.com I.T.A. No. 2000/Mum/2024 3 5. On the query of write-off, the assessee explained that the transaction in question was in the nature of financial advances received from Reality Finance & Leasing Pvt. Ltd. Since this loan could not be repaid by the assessee, the same was written off by Reality Finance & Leasing Pvt. Ltd. 6. However, the AO noticed that the assessee has shown the same under the head “current liabilities”. The AO was of the opinion that the said amount should have been offered to tax by the assessee u/s 41(1) of the Act and went on to make addition of Rs. 80,71,495/-. 6.1. The assessee agitated the matter before the ld. CIT(A) but in spite of several notices, assessee could not attend the appellate proceedings and the ld. CIT(A) dismissed the appeal without going into the merits of the case. 7. Before us, the appeal is barred by limitation. The assessee has requested for condonation of delay. The assessee has also filed an affidavit stating the reasons for delay. Considering the reasonableness in the delay, the delay is condoned. 8. We have carefully perused the order of the ld. First Appellate Authority. The undisputed fact is that the ld. CIT(A) did issued notice as mentioned by him at page 4 & 5 of his order. It appears that though the notices were issued but were not served upon the assessee. This fact has also been mentioned in the affidavit. Considering the facts in totality, we deem it proper to restore the appeal to the files of the ld. CIT(A) with a direction to decide the appeal on merits of the case, after affording reasonable and adequate opportunity of being heard to the assessee and after properly serving a notice. Printed from counselvise.com I.T.A. No. 2000/Mum/2024 4 9. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 11th August, 2025 at Mumbai. Sd/- Sd/- (SANDEEP SINGH KARHAIL) (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 11/08/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs आदेश की \u0015ितिलिप अ\u001aेिषत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. \u0015 थ / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai Printed from counselvise.com "