Case Law Details
MJVS Fashions Private Limited Vs ITO (ITAT Mumbai)
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) allowed the assessee’s appeal for statistical purposes and restored the matter to the Commissioner of Income Tax (Appeals) [CIT(A)] for fresh adjudication on merits in relation to the assessment year 2021-22.
The assessee had challenged the order passed by the CIT(A) under section 250 of the Income Tax Act, 1961. The dispute related to payments made to Facebook Netherlands Ltd. without deduction of tax at source (TDS). The assessee contended that Facebook did not have a Permanent Establishment (PE) in India and that the Double Taxation Avoidance Agreement (DTAA) with the Netherlands applied. According to the assessee, the income had arisen in the Netherlands and deducting TDS would amount to double taxation. The assessee further argued that the payments were digitally debited without human intervention and that TDS could not be recovered in such circumstances.
The Tribunal observed that the CIT(A) had passed the impugned order ex parte because there was no appearance on behalf of the assessee during the appellate proceedings. Before the Tribunal, however, the assessee was represented by authorised counsel and expressed its intention to pursue the appeal against the addition made by the Assessing Officer (AO).
The ITAT noted that the CIT(A) had dismissed the appeal merely on account of non-compliance with notices without adjudicating the grounds raised by the assessee on merits, as required under section 250(6) of the Act. The Tribunal referred to the judgment of the Bombay High Court in CIT v. Premkumar Arjundas Luthra (HUF), which held that the Commissioner (Appeals) cannot dismiss an appeal solely for non-prosecution by the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The assessee has filed the present appeal against the impugned order dated 29/08/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2021-22.
2. In this appeal, the assessee has raised the following grounds: –
“1. The learned commissioner of appeal erred in passing the order without going through the fact of the case. The payment made to facebook netherland ltd. Without deducting the tds. the assessee has strong reason to believe that the facebook is not having PE that is permanent establishment in India for their advertisement platform and secondly there is double taxation treaty (DTAA) with netherland government. In these circumstances the income is not arised in India and secondly it will amount to double taxation.
2. Since the facebook do not have PE in India and income is arised in Netherland with DAA so we cannot deduct TDS.
3. There is no person available of office is there so it is direct debit of our account in digital form without any human intervention and we cannot recover the TDS as it will amount to double taxation as per DTAA.
4. In view of the above discussions and directions as set out above, we see no need to address the broader issue of whether OR not tax is deductible from the payments made by the assessee to Facebook Ireland Limited for the advertisements placed on Facebook, and whether OR not income embedded in such payments in taxable in India.”
3. We have considered the submissions of both sides and perused the material available on record. In the present case, at the outset, it is evident that the learned CIT(A) has passed the order ex parte due to the nonappearance of/on behalf of the assessee. Now, in the appeal before us, the assessee is duly represented by the learned AR and wishes to pursue the litigation against the addition made by the AO. We further find that the learned CIT(A) merely on the basis of non-compliance with notices, dismissed the appeal filed by the assessee without adjudicating the grounds raised by the assessee on merits, as required under section 250(6) of the Act. In CIT v/s Premkumar Arjundas Luthra (HUF), reported in [2016] 69 taxmann.com 407 (Bombay), the Hon’ble Jurisdictional High Court held that the Commissioner (Appeals) cannot dismiss the appeal on account of non-prosecution of the appeal by the assessee. Consequently, we deem it fit and proper to set aside the impugned order and restore the matter to the file of the learned CIT(A) for de novo adjudication of the appeal on merits. We further direct that no order shall be passed without affording reasonable opportunity of hearing to the parties. The assessee is directed to appear before the learned CIT(A) on all the hearing dates as may be fixed without any default, and also submit the operational email address of the assessee to the learned CIT(A). As the matter is being restored to the file of the learned CIT(A) for adjudication on merits, the other grievances raised by the assessee in the present appeal do not call for adjudication at this stage. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
4. In the result, the appeal by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 08/04/2026
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