ROMAAN MOHD HUSSAIN PATHAN,MUMBAI V. ACIT-21(3), PIRAMAL CHAMBERS MUMBAI

ITA 45/MUM/2025

AI Insights

The case involves Romaan Mohd Hussain Pathan, the Appellant, who appealed against the order of the National Faceless Appeal Centre (NFAC), which had dismissed his appeal against an Assessment Order disallowing a sum of Rs.6,47,050. This amount represented 20% of the purchases made from M/s. Raksha Construction, deemed excessive and unreasonable by the Assessing Officer under Section 40A(2)(b) of the Income Tax Act, 1961. The Assessee argued that the disallowance was arbitrary and based on mere estimates. The Tribunal found that the CIT(A) had not adequately addressed the issue of the fair market value of the purchases and noted the Assessee's inability to present necessary bills due to a communication gap with their tax professional.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668993 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Fair market value
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “J (SMC)” BENCH, MUMBAI SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SHRI OMKARESHWAR CHIDARA, ACCOUNTANT MEMBER ITA No.45/MUM/2025 (Assessment Year: 2015-2016) Romaan Mohd Hussain Pathan A-9/10, The Pheonix Mill Ltd. S. G. Marg, Lower Parel, Mumbai - 400013.Maharashtra. [PAN:AMNPP3826C] …………. Appellant Assistant Commissioner of Income Tax 21(3) Mumbai Piramal Chambers, Mumbai – 400012, Maharashtra. Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Ms. Radha Halbe Shri Asif Karmali Date Conclusion of hearing Pronouncement of order : : 19.06.2025 25.06.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 10/11/2024, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 04/12/2017, passed under Section 143(3) of the Act for the Assessment Year 2015-2016. 2. The Assessee has raised following grounds of appeal : “1. On the facts and circumstances of the case, the Ld. CIT(A),NFAC erred in confirming the action of the AO in disallowing an adhoc and arbitrary sum of Rs.6,47,050 being 20% of purchase of materials from M/s. Raksha Construction, a ITA No.45/Mum/2025 Assessment Year 2015-2016 2 related concern. The said disallowance is based on mere estimate, arbitrary and excessive.” 3. The relevant facts in brief are that the assessment under Section 143(3) of the Act was framed on the Assessee for the Assessment Year 2015-2016 vide Assessment Order, dated 04/12/2017. The Assessing Officer noted that Assessee who is engaged in construction of buildings had failed to produce bills of purchase of mud and water made from related entities. The Assessing Officer finally concluded that the purchases made by the Assessee were excessive and unreasonable and therefore, INR.6,47,050/- (i.e., 20% of purchases of INR.32,35,250/-) was disallowed by the Assessing Officer under Section 40A(2)(b) of the Act. 4. In appeal preferred by the Assessee against the above Assessment Order, dated 04/12/2017, the Assessee was proceeded ex-parte and the appeal preferred by the Assessee was dismissed vide order dated, 10/11/2024, by the CIT(A). 5. Being aggrieved, the Assessee has preferred the present appeal before the Tribunal on the ground reproduced at Paragraph 2 above. 6. The Learned Authorized Representative for the Assessee appearing before us submitted that the Assessee was not able to gather the relevant bills for supply of mud and water at the relevant time and therefore, could not furnish the same during the assessment proceedings. It was further, submitted that the Assessee was proceeded ex-parte in appellate proceedings before the CIT(A) on account of communication gap between the Assessee and the tax professional handling the appeal. She sought an opportunity to make out a good case on merits before the CIT(A). 7. Per contra, the Learned Departmental Representative pointed out that during the assessment proceedings no bills were furnished by the Assessee and that the Assessee had failed to make ITA No.45/Mum/2025 Assessment Year 2015-2016 3 representation before CIT(A) despite sufficient opportunities having been granted. 8. We have considered the rival submissions and have perused the material on record. On perusal of the order impugned, we find that the CIT(A) has dismissed the appeal by reiterating that findings of the Assessing Officer that bills were not produced by the Assessee. On perusal of Form No. 35 we find that the Assessee had stated the Assessee wanted to place on record additional evidence. However, the Assessee did not filed purchase bills as additional evidence before the CIT(A) and was proceeded ex-parte as no representation could be made on account of communication gap between the Assessee and the concerned tax professional. The Assessee has now stated that the Assessee has been able to procure the bills/supporting document. We further note that the disallowance was finally made by the Assessing Officer on the ground that the payments were excessive by invoking provisions contained in Section 40A(2)(b) of the Act. On perusal of the Assessment Order we find that the details of ‘fair market value’ on the basis of which the Assessing Officer had concluded that the purchase consideration paid by the Assessee was excessive/unreasonable have not been stated therein. There are no findings on this issue by the CIT(A). Therefore, taking into consideration the totality of facts and circumstances of the present case, we deem it appropriate to grant another opportunity to the Assessee to make out a case on merits before the Learned CIT(A). Accordingly, the impugned order, dated 10/11/2024, passed by the Learned CIT(A) is set aside with the direction to adjudicate the appeal preferred by the Assessee afresh after granting the Assessee an opportunity of being heard. All the rights and contentions of the Assessee are left open. The Assessee shall be at liberty to move application for admission of additional evidence before the CIT(A). In terms of aforesaid Ground No.1 raised by the Assessee is allowed for statistical purposes. ITA No.45/Mum/2025 Assessment Year 2015-2016 4 9. In result, the present appeal preferred by the Assessee is allowed for statistical purpose. Order pronounced on 25.06.2025. Sd/- Sd/- (Omkareshwar Chidara) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; िदनांक Dated : 25.06.2025 Milan,LDC ITA No.45/Mum/2025 Assessment Year 2015-2016 5 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. आयकर आयुƅ/ The CIT 4. Ůधान आयकर आयुƅ / Pr.CIT 5. िवभागीय Ůितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, सȑािपत Ůित //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai "