SONALE FABRICS P LTD,MUMBAI V. DCIT CIR-4(3)(1), MUMBAI

ITA 9423/MUM/2025

AI Insights

The case involves Sonale Fabrics Private Limited, which appealed against the order of the CIT(A) dismissing their appeal ex parte for the assessment year 2022-23. The primary contention was that the CIT(A) erred in law and on facts by dismissing the appeal without a decision on merits and in violation of the principles of natural justice. The Tribunal noted that the assessee was not effectively represented before the CIT(A) and thus decided to set aside the CIT(A)'s order and remand the case for a fresh hearing, emphasizing the need for adherence to procedural fairness and adequate representation.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847755 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2022-2023
• Appeal Filed On: 31-12-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL CHOUDHARI
• Assessee Lawyers: SATISH KUMAR
• Keywords: Set aside; Rejection of books of accounts; Principle of natural justice; Competent authority

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE HON’BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & HON’BLE SHRI JAGADISH, ACCOUNTANT MEMBER ITA No. 9423/Mum/2025 (Assessment Year: 2022-23) Sonale Fabrics Private Limited 13-15, Anant Wadi, 1st Floor, Room No. 8 Dr. Atmaram Merchan Road, Mumbai -400002 Vs. DCIT, Circle 4(3) (1), Ayakar Bhavan, 6th Floor, M.K. Road New Marine Lines Mumbai - 400020 PAN/GIR No. AAICS1520L (Applicant) (Respondent) Assessee by Shri Satish Kumar Revenue by Shri Swapnil Choudhari Date of Hearing 17.03.2026 Date of Pronouncement 23.03.2026 आदेश / ORDER PER SANDEEP GOSAIN, JM: The present appeal has been filed by the assessee challenging the impugned order 27.10.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2022-23. The following grounds are reproduced below: “1.The Ld. C.I.T(A) has grossly erred in law and on facts in passing the order in utter disregard of the statutory provisions contained under section 250(6) of the Act by Printed from counselvise.com 2 ITA No. 9423/Mum/2025 dismissing the appeal of the appellant ex parte, violating the principles of natural justice. 2. The Ld. C.I.T. (A) erred on facts and in law in not deciding the appeal on Merits by passing speaking order without appreciating that L.d. CIT(A) is not empowered to dismiss the appeal for non prosecution. 3. (i) The Ld. C.I.T.(A) erred on facts and in law in upholding the incorrect finding of Ld. A. O. regarding assessee's conduct of operations as AO is not a Competent Authority to assess the efficiency and expediency of Business which assessee has to decide for the purpose of its business. (ii) The Ld. C.I.T. (A) erred on facts and in law in upholding action of AO without appreciating that Ld. AO arbitrarily disallowed Rs. 63,19,418/ being 50% of the interest paid to suppliers on delayed payments on a premise that assessee did not charge interest for overdue receivables disregarding genuine exigencies of business. (iii) The Ld. CIT(A) erred on facts and in law in sustaining arbitrary disallowance of Rs.3,28,92,518/- made by Id. A. O. towards excess weaving, processing and job charges disregarding genuine operational needs of business. of (iv)The Ld. CIT(A) erred on facts and in law in sustaining arbitrary disallowance Rs.22,58,261/- made by Id. A. O. towards excess packing material expenses disregarding genuine operational needs of business. (v) that disallowance of expenses purely on ad hoc basis without rejection of books of accounts or without pointing out any specific deficiencies in duly audited Books of Account is not justifiable and thus liable to be set aside and presumptive arbitrary additions be deleted. 4. The appellant craves leave to add, substitute modify, delete or amend all or any ground of appeal on before or at the time of hearing. ” Printed from counselvise.com 3 ITA No. 9423/Mum/2025 2. At the very outset we noticed that assessee was ex-parte before Ld. CIT(A) and consequently, considering the documents placed on record, Ld. CIT(A) dismissed the appeal. 3. Be that as it may, without going into the merits of the issues raised by the assessee and considering the fact that the assessee could not put effective representation before Ld. CIT(A). Therefore, considering the interest of justice, the Bench is of the view that one more opportunity be given to the assessee to represent his case before Ld. CIT(A). Therefore, considering the overall circumstances of the present case, we deem it proper to set aside the order passed by Ld. CIT(A) and restore the matter back to the file of Ld. CIT(A) for deciding the same afresh by providing adequate opportunity of hearing, subject to cost of Rs. 5,000/- imposed upon the assessee which shall be deposited in the Prime Minister Relief Fund and a copy of the receipt shall be placed on the file before Ld. CIT(A) within 30 days from the date of receipt of this order. The assessee shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of proceedings. 4. Before parting, we want to make it clear that our decision to restore the matter back to the file of CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute which shall be adjudicated by CIT(A) independently in accordance with law. Printed from counselvise.com 4 ITA No. 9423/Mum/2025 5. Needless to mention that Ld. CIT(A) shall provide adequate opportunity of hearing to the assessee. The assessee shall not seek any adjournment on frivolous grounds and shall remain cooperative during the course of proceedings. 6. In the result, the appeal filed by the assesse stands allowed for statistical purposes. Order pronounced in the open court on 23.03.2026 Sd/- Sd/- (JAGADISH) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 23/03/2026 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. संबंधित आयकर आयुक्त / The CIT(A) 4. आयकर आयुक्त(अपील) / Concerned CIT 5. धिभागीय प्रधतधिधि, आयकर अपीलीय अधिकरण,मुम्बई/ DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशानुसार/BY ORDER, सत्याधपत प्रधत //True Copy// उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai Printed from counselvise.com "