ITAT Mumbai Restores Appeal to CIT(A) in Rs. 64.12 Lakh Section 69C Disallowance Case

Paras Multiplex LLP filed its return of income for AY 2011-12, declaring a total income of Rs. 4,520, which was originally accepted under Section 143(3). Subsequently, the assessment was reopened, and notice under Section 148 was issued. The Assessing Officer disallowed contractual expenses amounting to Rs. 64,12,859 under Section 69C and completed reassessment under Section 143(3) read with Section 147, determining total income at Rs. 64,17,379.

The assessee challenged the reassessment and disallowance before the CIT(A), NFAC. Despite the issuance of multiple notices, the assessee sought adjournments and failed to file submissions, leading the CIT(A) to pass an ex parte order confirming the reopening as well as the addition. Aggrieved, the assessee approached the Tribunal.

Issue Raised: Whether the ex parte appellate order confirming reassessment and Section 69C disallowance could be sustained without granting an adequate opportunity of hearing to the assessee.

Tribunal’s Ruling: The ITAT observed that although the assessee was negligent and failed to effectively pursue the appeal before the CIT(A), principles of natural justice warranted one more opportunity. The Tribunal set aside the order of the CIT(A) and restored the matter for fresh adjudication, subject to the assessee paying costs of Rs. 22,000 to the Prime Minister’s National Relief Fund within 30 days.

The CIT(A) was directed to decide the appeal afresh after granting adequate opportunity, and the assessee was directed to cooperate and file necessary explanations. The appeal was allowed for statistical purposes.

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