TIN TIME CONSULTANCY PRIVATE LIMITED (SUCCESSOR OF AVDHARNA TRADING PRIVATE LIMITED),BHIWANDI V. DCIT CIRCLE 1, KALYAN, KALYAN

ITA 2493/MUM/2025

AI Insights

The case involves Tim Time Consultancy Private Limited, which is the successor of Avdharna Trading Private Limited, appealing against the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961. The penalty was initially levied by the Assessing Officer following an ex parte assessment and was upheld by the CIT(A). However, the ITAT found that the quantum appeal, which could affect the penalty, was still pending and had been remanded back to the CIT(A) for fresh adjudication. Consequently, the ITAT set aside the penalty and remanded the matter for re-evaluation post the quantum appeal's decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668702 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Other Referred Cases: ITA No. 3291/Mum/2017, ITA No. 2810/Mum/2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: MUDIT
• Keywords: Set aside; Unexplained cash credit; Unexplained investment; Principle of natural justice
• Section: 144; 271(1)(c); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI ANIKESH BANERJEE (JUDICIAL MEMBER) ITA No. 2493/MUM/2025 Assessment Year: 2011-12 Tim Time Consultancy Private Limited (Successor of Avdharna Trading Private Limited) 302, CFC Bldg No. 1, 3rd Floor, Asmeeta Textile Park, Addl Kalyan Bhiwandi Ind Estate Area, Village Kone, Bhiwandi, 421311 Vs. DCIT Circle 1, Kalyan Mohan Plaza Wayle Nagar, Swanand Colony, Gandhar Nagar, Khadakpada, Kalyan, Kalyan Dombivli, Mumbai- 421301 PAN NO. AAICA 4811 G Appellant Respondent Assessee by : Mr. Mudit Revenue by : Mr. Hemanshu Joshi, CIT-DR Date of Hearing : 18/06/2025 Date of pronouncement : 27/06/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 12.02.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2011-12, raising following grounds: Tin Time Consultanc Private Limted (Successor of Avdharna Trading Pvt. Ltd.) 2 ITA No. 2493/MUM/2025 “Being aggrieved by the order under Section 271(1)(c) of the Income- tax Act, 1961, passed by the Learned Additional Commissioner of Income Tax, NFAC and upheld by the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi, this appeal petition is being submitted on the following grounds, which it is prayed may be considered independently without prejudice to one another. 1. On the facts and circumstances of the case as well as in Law the Learned Commissioner of Income Tax (Appeals), NFAC, has erred in confirming the order of the Learned Additional Commissioner of Income Tax and has upheld the order passed u/s 271(1)(c) of the Act. 2. On the facts and circumstances of the case as well as in Law the Learned Commissioner of Income Tax (Appeals), NFAC, has erred in dismissing the appeal and confirming the penalty of Rs. 1,78,90,426/- imposed under section 271(1)(c) of the Act without adjudicating on the merits of the case. 3. On the facts and circumstances of the case as well as in Law the Learned Commissioner of Income Tax (Appeals), NFAC, has erred in in law in disposing of the penalty appeal merely on the basis that \"the addition made by the AO has been confirmed by the CIT(A)\" in quantum proceedings, without appreciating that penalty proceedings are independent and require separate adjudication. 4. On the facts and circumstances of the case as well as in Law the Learned Commissioner of Income Tax (Appeals), NFAC, has erred in considering that the ITAT in its order dated 18.04.2019 had earlier set aside the first assessment order with directions to conduct de- novo assessment in accordance with principles of natural justice. 5. On the facts and circumstances of the case and in law, the Appellant submits that since the quantum appeal has been remanded back to the Learned Commissioner of Income Tax (Appeals) for fresh adjudication by the Hon'ble ITAT, Mumbai, in its order dated 06.12.2023, ITA No. 2810/Mum/2023, the penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961 should also be kept in abeyance till the final disposal of the quantum appeal. 6. Under the circumstances the Appellant has been denied a reasonable opportunity to present its case. 7. The order under appeal is not only bad in law and invalid, but also against the principles of natural law of equity and justice. 8. The appellant craves leave to add, to amend, alter/delete and/or modify the above grounds of appeal on or before the final hearing.” 2. Briefly stated, the facts of the case are that the assessee filed its return of income for the assessment year under consideration on Tin Time Consultanc Private Limted (Successor of Avdharna Trading Pvt. Ltd.) 3 ITA No. 2493/MUM/2025 27.09.2012, declaring a total income of Rs. Nil. The return so filed was subsequently selected for scrutiny assessment, which culminated in an ex parte assessment under Section 144 of the Income-tax Act, 1961 ( in short the Act), dated 19.03.2014. Aggrieved by the said assessment, the assessee preferred an appeal before the ld.CIT(A), who, vide order dated 24.02.2017, deleted the additions made by the Assessing Officer. However, on further appeal by the Revenue, the Income Tax Appellate Tribunal (in short the Tribunal), Mumbai, vide order dated -------------- in ITA No. 3291/Mum/2017, set aside the order of the CIT(A) and restored the matter to the file of the Assessing Officer for fresh adjudication. 2.1 Pursuant to the directions of the Tribunal, the Assessing Officer issued statutory notices to the assessee. However, there was no compliance on the part of the assessee to the said notices. Consequently, in the absence of any satisfactory explanation or supporting documentary evidence, the Assessing Officer proceeded to frame the assessment and made the following additions: (i) Addition of Rs. 1,15,06,840/- on account of unsecured loans treated as unexplained cash credits under Section 68 of the Act; (ii) Addition of Rs. 1,55,27,426/- on account of sundry creditors also treated as unexplained cash credits under Section 68 of the Act; and Tin Time Consultanc Private Limted (Successor of Avdharna Trading Pvt. Ltd.) 4 ITA No. 2493/MUM/2025 (iii) Addition of Rs. 2,68,46,100/- on account of unexplained investment in shares. 2.2 The Assessing officer also initiated penalty proceedings u/s. 271(1)(C) of the Act vide the assessment order dated 27.09.2021 passed in term of sec. 144 of the Act. Consequently the Assessing Officer levied penalty u/s 271(1)(C) on 15.02.2022 amounting to Rs. 1,78,90,426/-. On further appeal, the Ld. CIT(A) upheld the penalty observing as under: “5.2 The appellant vide his appeal has assailed the AO for imposing penalty u/s 271(1)(c) of the Income Tax Act. 5.2.1 The CIT(A) in his order dated 18.05.2023, vide ITBA/NFAC/S/250/2023-24/1052952897(1), the quantum appeal has been decided in the favour of the Department. 5.2.2 In view of the fact that the addition made by the AO has been confirmed by the CIT (A), the penalty order u/s 271(1) (c) in consequence to the assessment order becomes in effective. Hence the penalty order passed by the AO is confirmed.” 3. We have heard the rival submissions of the parties and perused the material available on record. At the very outset, the learned counsel for the assessee brought to our attention that, in the second round of proceedings, the Income Tax Appellate Tribunal, while adjudicating the quantum appeal in ITA No. 2810/Mum/2023, has once again restored the matter to the file of the learned CIT(A) for adjudication afresh. The relevant findings of the Tribunal are reproduced hereinbelow for reference: Tin Time Consultanc Private Limted (Successor of Avdharna Trading Pvt. Ltd.) 5 ITA No. 2493/MUM/2025 “5. We heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no appearance in spite of providing adequate opportunity of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. The Ld. CIT(A) has issued the notices of hearing on11-04-2023,21.04.2023 and 04- 05-2023 referred at Para 4.3 of the order, but there was no response and thus the Ld.CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. Whereas the assessee has raised grounds of appeal challenging the additions of the A.O and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the principles of natural justice shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of appeal. And, we allow the grounds of appeal of the assessee for statistical purposes.” 4. In view of the fact that the appellate proceedings in respect of the quantum additions have themselves been restored to the file of the learned CIT(A) for fresh adjudication, the sustenance of the penalty by the CIT(A) cannot be allowed to stand. Consequently, the order passed by the learned CIT(A) affirming the levy of penalty is set aside. The matter is remanded to the file of the CIT(A) to be decided afresh upon disposal of the quantum appeal, in accordance with law. The grounds raised by the assessee in the present appeal are accordingly treated as allowed for statistical purposes. Tin Time Consultanc Private Limted (Successor of Avdharna Trading Pvt. Ltd.) 6 ITA No. 2493/MUM/2025 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 27/06/2025. Sd/- Sd/- (ANIKESH BANERJEE) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 27/06/2025 Disha Raut, Stenographer Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai "