In a recent case, the Ahmedabad bench of Income Tax Appellate Tribunal ( ITAT ) set aside an ex parte order observing that the assessee did not receive hearing notices sent by the Revenue, as they were being sent to an ex-employee.
The assessee/appellant, Takshashila Realties Pvt. Ltd, is the successor of the erstwhile Takshashila Properties Pvt. Ltd.
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The assessee company involved in real estate development had claimed various deductions under the Income Tax Act 1961 (ITA), particularly under Section 80-IB, related to profits and gains from certain industrial undertakings other than infrastructure undertakings.
The Assessing Officer (AO) scrutinized the returns filed by the assessee for the assessment year 2010-11, and disallowed the company’s claim of deduction under Section 80-IB of ITA amounting to ₹2.93 crores.
Additionally, the AO made adjustments to the book profits under Section 115JB of ITA by ₹2.86 crores and disallowed labour expenses claimed by the company amounting to ₹63 lakhs.
Dissatisfied with the AO’s assessment, the company appealed to the Commissioner of Income Tax (Appeals) [CIT(A)].
However, during this stage, the company failed to appear for the hearing, which led to the CIT(A) deciding the case ex-parte, upholding the AO’s findings and confirming all the additions and disallowances made.
Aggrieved again, the assessee appealed before ITAT.
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The assessee company, represented by its counsel Sanjay R. Shah, argued before the ITAT that the non-appearance was due to genuine reasons and not a deliberate attempt to avoid proceedings.
The non-appearance was attributed to the notices of hearing being sent to an outdated email address, which belonged to a former employee who had left the organization.
The assessee did not receive the notices and thus missed the opportunity to present its case.
The counsel submitted an affidavit to this effect and requested a de-novo consideration of the case by CIT(A).
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The counsel also argued that the company had a strong case on merits, highlighting previous favorable decisions by the ITAT for the same issues in prior assessment years (A.Y. 2009-10 and A.Y. 2010-11).
The bench of Mr Siddhartha Nautiyal and Mr Makarand V Mahadeokar, after considering the circumstances, including the company’s failure to receive notices and the strong merits of the case as evidenced by past ITAT rulings, decided in favor of the assessee.
The tribunal set aside the CIT(A)’s order, restoring the matter back to CIT(A) for de-novo consideration, ensuring that the company is given a proper opportunity to present its case.
The tribunal also directed the company to diligently comply with all future notices from CIT(A).
This decision was pronounced on August 7, 2024, and the appeal was allowed for statistical purposes.
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