ITAT Mumbai Remands Case to CIT(A) Over Denial of Adequate Opportunity and Unconsidered Submissions

The ITAT Mumbai set aside the appellate order in the case of Saboo Silk Emporium for AY 2017–18, noting that proper opportunity was not given and submissions were not duly considered due to procedural lapses in e-filing and adjournment handling.

The assessee filed its return of income on 04.11.2017 declaring total income of Rs 37,55,360. The case was selected for scrutiny and notices under Sections 143(2) and 142(1) were issued and assessment order was passed u/s 143(3) dated 12.12.2019 determining the total income at Rs 57,83,260. Aggrieved, the assessee filed an appeal before the CIT(A) who granted partial relief. Dissatisfied with the additions sustained by the CIT(A), the assessee further appealed before the ITAT.

The assessee argued that the due date for filing the submission was 04.12.2019. Since the compliance window for the e-filing facility was opened, the assessee duly filed the submissions on 13.12.2019, however, by that time, the order had already been passed by the AO on 12.12.2019. Firstly, the submissions filed by the assessee have not been considered by the AO, and secondly, there is also a violation of instruction No. 01/2018 dated 12.02.2018. The assessee also submitted that during appellate proceedings, it had sought additional time to file the necessary application, but the CIT(A) proceeded to pass the order without granting further opportunity.

The assessee submitted that the Provident Fund disallowance of Rs 5,27,303 was not justified, as it is in a position to produce challans and payment proof. Regarding deduction under section 80G, it was submitted that the payment has been made from the bank account of the assessee’s firm, and therefore the assessee has rightly claimed the deduction u/s. 80G of the Act. About the credit card joining and renewal fees, it was submitted that even though the credit cards were issued in the name of the partners of the firm, the amount has been spent on behalf of the firm, and the same has been claimed by the assessee firm while filing its return of income.

About the disallowance of Rs 3,01,081, it was submitted that the books were audited, no defects were pointed out, and sample bills were already produced, making the addition unsustainable.

For interest and penalty of Rs 5,89,988, the assessee argued that these were wrongly disallowed, as they were not payments for any offence. It was further submitted that even though disallowed suo-moto, if legally allowable, the claim should not be denied merely on that basis, and the CIT(A) should have adjudicated it on merits.

The Ld. Departmental Representative (DR) contended that the assessee was given adequate opportunity by both the Assessing Officer and the CIT(A). It was further argued that the disallowances were rightly sustained by the CIT(A) due to lack of supporting evidence from the assessee. Accordingly, the DR supported the orders passed by the lower authorities.

The ITAT observed that the assessee had filed submissions before the AO when the e-filing window was still open, but the AO passed the assessment order before considering them. It was also noted that the CIT(A) issued notices but failed to grant further opportunity despite an adjournment request from the assessee and proceeded to pass the order without a proper hearing.

In view of these procedural lapses, the Tribunal held that the assessee was not given a fair opportunity to present its case. Therefore, in the interest of justice and fair play, the ITAT set aside the matter to the CIT(A) for fresh adjudication after granting a reasonable opportunity of hearing. All issues on merits were left open for reconsideration.

In the result, the appeal of the assessee is allowed for statistical purposes.