STARPOINT VINIMAY PRIVATE LIMITED,KOLKATA V. ASST COMMISSIONER OF INCOME TAX (OSD) WARD-1(1), , KOLKATA

ITA 340/KOL/2025

AI Insights

The case involves Starpoint Vinimay Private Limited appealing against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, which confirmed additions made in the assessment order under sections 68 and 14A of the Income Tax Act, 1961. The Tribunal noted that the appeal was initially dismissed due to non-prosecution and non-compliance by the assessee. However, it was found that the assessee was not properly represented due to the illness and subsequent death of their Chartered Accountant, leading to an ex-parte order. The Tribunal emphasized the need for a reasoned decision on merits rather than dismissal for non-compliance, citing various judicial precedents and statutory provisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772397 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2015-2016
• Other Referred Cases: N. Balakrishnan v. M. Krishnamurthy, Collector. Land Acquisition V. Katiji, Ajji Basha Vs. CIT, Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Unexplained investment; Commercial expediency; Earning of tax free income; Notional interest; Rule 8D
• Section: 143(3); 68; 14A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘D’ BENCH, KOLKATA Before SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 340/KOL/2025 Assessment Year: 2015-16 Starpoint Vinimay Private Limited Vs. Asst. Commissioner of Income Tax (OSD) Ward-1(1), Kolkata (Appellant) (Respondent) PAN: AAICS4169B Appearances: Assessee represented by : Rahul Hakani, AR. Department represented by : S.B. Chakraborty, Addl. CIT, Sr.DR. Date of concluding the hearing : 19-June-2025 Date of pronouncing the order : 26-August-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2015-16 dated 31.05.2023, which has been passed against the assessment order u/s 143(3) of the Act, dated 29.11.2017. 1.1. The Registry has informed that the appeal filed by the assessee is barred by limitation by 565 days. An application along with an affidavit seeking condonation of delay has been filed by the assessee stating as under: Printed from counselvise.com Page | 2 I.T.A. No.: 340/KOL/2025 Assessment Year: 2015-16 Starpoint Vinimay Private Limited. “A. Applicant has filed the above appeal on 15/2/2025 against the order of NFAC dt. 31/5/2023 resulting in a delay of 565 days. B. The order of NFAC dated 31/5/2023 was not received by the Assessee on the email-id mentioned in the return of income A.Y. 2022-2023 i.e. [e-mail]. It was not received on the email-ids mentioned on the income tax portal i.e. [e-mail] and [e-mail]. C. The order of NFAC dated 31/5/2023 was not received on the email id bhagwati industrieswhotinuil.com which was mentioned in Form No 35. D. The Applicant through his new Chartered Accountant visited the income tax portal between 15/2/2024 to 20/2/2024 for the purposes of Vivaad Se Vishwaas and discovered that the order of NFAC dated 31/5/2023 was uploaded on the portal. E. There was no intimation of passing of order of NFAC by sms. F. The Applicant further found out that the notices of hearing by NFAC dated 1/2/2021, 9/8/2021. 4/5/2023 and 15/5/2023 were issued on email id ia.uhavkedia885wgmail.com. Mr Raghav Kedia who looks after the financial affairs of the group had forwarded the same to the then Chartered Accountant Mr Aditya Chirimar who had also appeared before the Assessing officer and was representing the Applicant before the NFAC. However, Mr Aditya Chirimar had not filed any reply perhaps as he was very ill and had ultimately expired on 5/1/2024. Hence, the order of NFAC was an ex-parte order. F. The Applicant submits that if date of downloading of order from the portal is taken as date of receipt of the order then there is no delay. G. In view of the above facts the appellants submits that the delay was unintentional, for bonafide reasons. H. In N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123, the Court made the following observations: “It is axiomatic that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter; acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior Printed from counselvise.com Page | 3 I.T.A. No.: 340/KOL/2025 Assessment Year: 2015-16 Starpoint Vinimay Private Limited. court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first court refuses to condone the delay. In such cases, the superior court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammelled by the conclusion of the lower court.” I. The appellant further rely on the observation of the Apex Court the case of Collector. Land Acquisition V. Katiji 167 ITR 471 (SC). “When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay.” 1.2. Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1) The Learned NFAC/CIT(A) erred in confirming additions made in the assessment order by passing ex-parte order and without deciding the appeal of merits and hence the order of NFAC may be set-aside. 2) The Learned NFAC/CIT(A) erred in confirming additions made in the assessment order by passing ex-parte order without providing sufficient opportunity of hearing and hence the order of NFAC may be set-aside. 3) The Ld NFAC/CIT(A) erred confirming the addition of Rs. 38,40,000/- u/s 68 of the Income Tax Act, 1961 being investment in unlisted securities without appreciating that section 68 does not apply to unexplained investments and hence the addition of Rs 38,40,000/- may be deleted. 4) The Ld NFAC/CIT(A) erred confirming the addition of Rs. 38,40,000/- u/s 68 of the Income Tax Act, 1961 being investment in unlisted securities without appreciating that said investments are coming from earlier assessment year and said investments are genuine and hence no addition Printed from counselvise.com Page | 4 I.T.A. No.: 340/KOL/2025 Assessment Year: 2015-16 Starpoint Vinimay Private Limited. of the same can be made in this year and hence the addition of Rs 38,40.000/- may be deleted. 5) The Learned NFAC/CIT(A) erred in confirming an addition of notional interest income of Rs. 14,74,200/- being interest on loan of Rs 1,22,85,000/- given to Shri Birendra Kedia as undisclosed income without appreciating that loan was given on grounds of commercial expediency and out of own funds and hence the addition of Rs 14,74,200/- may be deleted. 6) The Learned NFAC/C1T(A) erred in confirming addition of Rs. 25251/- u/s 14A read with Rule 8D of the Income Tax Act, 1961 though there is no exempt income earned and hence the addition of Rs 25,251/- may be deleted. 7) The Appellant craves leave to add, amend, delete and alter the grounds of appeal.” 3. Brief facts of the case are that during the year under consideration the assessee is dealing in investment in shares and securities and the return declaring total income at ₹549/- was filed on 30.03.2016. The case was selected for limited scrutiny under Computer Assisted Scrutiny Selection (in short 'CASS') and the assessment was made by making an addition of ₹38,40,000/- u/s 68 of the Act, ₹14,74,200/- as undisclosed income and ₹25,251/- as the disallowance u/s 14A of the Act read with Rule 8D of the Income Tax Rules, 1962. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who considered the facts and circumstances of the case, assessment order and noted that despite issuing 4 notices, the assessee did not file any reply during the appellate proceeding despite providing several opportunities by this office. Even in response to the final opportunity given on 15.05.2023 no compliance was made. The Ld. CIT(A) has discussed section 114(g) of Indian Evidence Act, 1872 and also the decision of the Hon'ble Bombay High Court in the case of M/s. Chemppol v/s Union of India Central Excise Appeal No.62 of 2009 and several other judicial pronouncements and on perusal of the Printed from counselvise.com Page | 5 I.T.A. No.: 340/KOL/2025 Assessment Year: 2015-16 Starpoint Vinimay Private Limited. grounds of appeal, statement of facts and assessment order and since the assessee did not produce any material to controvert the finding of the Assessing Officer (hereinafter referred to as Ld. 'AO') on merits, the Ld. AO’s order was found to be reasonable. It was further inferred that the assessee was not interested in pursuing the appeal and thus there was no reason to interfere with the findings of the Ld. AO whose order was confirmed and the appeal of the assessee was dismissed. 4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal. 5. Rival contentions were heard and the submissions made and the details filed have been examined. The Ld. AR submitted that the order of the Ld. CIT(A) may kindly be remitted back as he has not decided the appeal on merits. 6. We have considered the submissions made and find that the appeal was dismissed only on account of non-prosecution. Further, even before the Ld. AO the assessee had furnished submission which was not considered but the Ld. CIT(A) has simply confirmed the order of the Ld. AO without adjudicating various grounds of appeal taken by the assessee before him. A perusal of the appellate order shows that while the Ld. CIT(A) has discussed non-compliance on the part of the assessee as the notices sent were not complied with but he has not adjudicated the appeal on merit. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.” Printed from counselvise.com Page | 6 I.T.A. No.: 340/KOL/2025 Assessment Year: 2015-16 Starpoint Vinimay Private Limited. 7. Thus, section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. The Ld. CIT(A) has neither adjudicated various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose the assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. The relevant extract from the order is as under: 6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion. 7. In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard. 8. It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 Printed from counselvise.com Page | 7 I.T.A. No.: 340/KOL/2025 Assessment Year: 2015-16 Starpoint Vinimay Private Limited. taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. The relevant extract is as under: 8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non- prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. 9. The assessee has filed a paper book before us and has also enclosed the death certificate of Mr. Aditya Chirimar in the paper book, who could not file the reply and ultimately expired on 05.01.2024; therefore, the ex parte order was passed by the NFAC. Therefore, we deem it appropriate in the interest of justice and fair play that another Printed from counselvise.com Page | 8 I.T.A. No.: 340/KOL/2025 Assessment Year: 2015-16 Starpoint Vinimay Private Limited. opportunity needs to be provided to the assessee to represent his case properly before the Ld. CIT(A). We, therefore, set aside the order of the Ld. CIT(A) and remit the appeal to him to be decided afresh, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereby pass an order in accordance with law. For statistical purposes, the grounds of appeal of the assessee are partly allowed. 10. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 26th August, 2025. Sd/- Sd/- [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 26.08.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 9 I.T.A. No.: 340/KOL/2025 Assessment Year: 2015-16 Starpoint Vinimay Private Limited. Copy of the order forwarded to: 1. Starpoint Vinimay Private Limited, 53/2 Kankulia Road, Kolkata, West Bengal, 700029. 2. Asst. Commissioner of Income Tax (OSD) Ward-1(1), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "