PROTEAN E GOV TECHNOLOGIES LIMITED ,MUMBAI V. DCIT 8(2)(1), MUMBAI

ITA 976/MUM/2025

AI Insights

The case involves Protean E Gov Technologies Limited appealing against the ex-parte dismissal of their appeal by the Commissioner of Income Tax (Appeals). The dismissal was based on the non-receipt of notices, which were sent to a non-functional email address. The assessee argued that this led to an unfair opportunity to present their case. The ITAT found merit in the assessee's argument and restored the appeal to the CIT(A) for a fresh hearing, emphasizing the need for a fair opportunity to be heard.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706192 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2020-2021
• Laws Referred To: Income-tax Act, 1961, Income-tax Rules, 1962
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIRABHADRA S. MAHAJAN
• Assessee Lawyers: ANEESH JOGLEKAR; PALLAVI
• Keywords: Set aside; Business income; Opportunity of being heard; TDS; Earning of tax free income; Rule 8D
• Section: 14A; 40(a)(ia)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI (JUDICIAL MEMBER) AND SMT. RENU JAUHRI (ACCOUNTANT MEMBER) I.T.A. No.976/Mum/2025 Assessment Year: 2020-21 Protean E Gov Technologies Limited 1st Floor, Times Tower, S.B. Marg, Lower Parel, Mumbai – 400013, Maharashtra, India PAN:AAACN2082N Vs. DCIT 8(2)(1), Aayakar Bhavan, Mumbai (Appellant) (Respondent) Appellant by Shri Aneesh Joglekar & Ms. Pallavi Talavlikar Respondent by Mr. Virabhadra S. Mahajan, SR. D.R. Date of Hearing 26.06.2025 Date of Pronouncement 30.06.2025 ORDER Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 19/12/2023 passed by NFAC, Delhi for assessment year 2020-21 on following grounds of appeal : “1:0 Dismissing the appeal filed by the Appellant ex-parte 2 ITA No. 976/Mum/2025; A.Y. 2020-21 Protean E Gov Technologies Limited 1:1 The Learned Commissioner of Income Tax (Appeals) ['CIT(A)'] has erred in dismissing the appeal of the Appellant ex-parte, without considering the fact that the notices were issued to an email ID which had become non-functional and was no longer accessible to the Appellant, thereby denying the Appellant a fair opportunity to present their case. 1:2 The Appellant submits that the failure to receive these notices was beyond the control of the Appellant, and as such, the decision to dismiss the appeal ex-parte is unjust and improper. The Appellant was never given an adequate opportunity to respond to the notices and therefore, the action of dismissing the appeal should be set aside 1:3 The Appellant prays that the appeal be treated on its merits and considered by the Hon'ble ITAT, as the Appellant has valid and justifiable grounds for contesting the impugned order. The below grounds are without prejudice to each other: 2:0 Additional Disallowance u/s 14A of the Act r.w. Rule 8D of the Income-tax Rules, 1962 2:1 The Learned CIT(A) has erred in disallowing an additional sum of INR 30,90,906/- under section 14A of the Act, further to the suo- motu disallowance made by the Appellant, by incorrectly applying the provisions of Rule 8D of the Income-tax Rules, 1962, and considering the entire investment amount as reflected in the financial statements. 2:2 The Learned CIT(A) has failed to differentiate between the investments that earn exempt income and those that do not, thereby including the entire investment amount in the disallowance calculation. 2:3 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject matter, the stand taken by the Learned AO in this regard is incorrect, erroneous, illegal and misconceived and the CIT(A) ought to have held as such. 2:4 The Appellant prays that the additional sum of INR 30,90,906/- disallowed by the learned CIT(A) be deleted. 3:0 Disallowance u/s 40(a)(ia) of the Act 3 ITA No. 976/Mum/2025; A.Y. 2020-21 Protean E Gov Technologies Limited 3:1 The Learned CIT(A) has erred in upholding the disallowance of INR 6,25,184 under section 40(a)(ia) of the Income-tax Act, 1961, as computed by the Learned AO in the absence of material available on record and on the grounds that the Learned AO could not ascertain the reasons for deduction of TDS at a lower rate without adequate responses by the Appellant 3:2 The Appellant states that as has been submitted in Ground 1 above, since the notices were issued to an email ID which was non-functional and no longer accessible to the Appellant, there was no avenue to respond to the issue raised. As such, the Learned AO / CIT(A) has enediol not considering the said fact, thus denying the Appellant a fair opportunity to present their case 3:3 The Appellant further submits that the Learned AO/ CIT(A) has failed to appreciate that appropriate taxes were deducted by the Appellant during the year under consideration on transactions undertaken with the identified payees as per the provisions of the Act and in consonance with the lower withholding tax certificate, thereby warranting no addition under section 40(a)(ia) of the Income-tax Act, 1961. 3:3 The Appellant prays that considering the facts and circumstances of the case, the appeal be treated on its merits and the disallowance of INR 6,25,184 under section 40(a)(ia) be reconsidered by the Hon'ble ITAT. 4:0 Disallowance of employee incentive scheme 4:1 The Learned CIT(A) has erred in sustaining the disallowance of INR 1,70,16,453 as computed by the Learned AO, being employee incentive claimed by the Appellant by holding that the Appellant failed to furnish submissions with respect to the claim during the course of assessment proceedings and in the absence of material available on record. 4:2 The Appellant submits that the Learned CIT(A)/Learned AO failed to appreciate the submissions of the Appellant that the amount in question represents a provision made for the employee incentive plan in earlier years, which was duly added back to the business income in those years and was claimed as a reduction from business income upon payment during the year under consideration. 4 ITA No. 976/Mum/2025; A.Y. 2020-21 Protean E Gov Technologies Limited 4:3 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the disallowance made by the learned AO to its total income is incorrect, illegal, misconceived and unwarranted and the CIT(A) ought to have held as such. 5:0 General grounds The appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of objections at or before the hearing of the appeal.” 2. At the very outset, it is noticed that the Ld. CIT(A) passed ex parte order. It is submitted that the e-mail to which notices were sent was non functional and hence not received by the assessee. The Ld.AR submitted that, after coming to know about the dismissal of the appeal, the assessee promptly filed present appeal and is seeking an opportunity of hearing. 2.1 On the other hand Ld. DR contested the said appeal and requested for dismissal of the same. We have perused the submissions advance by both sides in the light of record placed before us. 3. Without going into the merits of the issues we are of the view that the to met ends of justice it would be necessary to provide fair opportunity of being heard to the assessee. 3.1 Therefore, the present appeal is restored back to the file of Ld. CIT(A) for fresh adjudication by providing opportunity of hearing to the parties. The assessee shall not seek any adjournment on frivolous grounds and remain cooperative during the course of proceedings. It is submitted that, all notices shall be put to the following mail id [e-mail] account [e-mail]. The assessee is directed to update the I.T. 5 ITA No. 976/Mum/2025; A.Y. 2020-21 Protean E Gov Technologies Limited portal accordingly to receive all communication from the authorities. Accordingly the grounds raised by the assessee stands partly allowed for statistical purposes. In the result the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 30/06/2025 Sd/- Sd/- (RENU JAUHRI) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 30/06/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order (Asstt. Registrar) ITAT, Mumbai "