M/S SEVEN EAGLE PRODUCTION,SURAT vs. THE ASSISTANT COMMISSIONER INCOME TAX, CIRCLE-3(2), SURAT

Apellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”

Brief facts of the case are that during the relevant period under consideration, the assessee was engaged in the production of commercial films. The assessee filed return of income for assessment year 2009-10 on 29.09.2010 declaring total loss of Rs.5.36 Crore. The case was selected for scrutiny and the assessment was completed under section 143(3) of the on 12.12.2011 and the total income was assessed at loss of Rs.5.30 Crore. Subsequently, the assessment was reopened under section 147. Notice under section 148 was served on the assessee by affixation on 31.03.2016. In response to the notice under section 148, the assessee filed its reply on 28.10.2016 stating therein that the return filed originally on 29.09.2010 be treated return in response to the said notice. The assessing officer after serving statutory notices under section 143(2) and 142(1) and supplying reasons recorded, proceeded for re- assessment. During the assessment the assessee was asked to submits the details of tax deducted at sources on the payments of various expenses of Rs. 4.37 Crore, as mentioned in para 6.1 of the assessment order. The assessee filed its reply as recorded in para 6.2 of the assessment order. In the reply the assessee stated that the firm is engaged in the production of commercial films and incurred various expenses & accumulated under “ project under progress” from the period from 01.04.2006 to 31.03.2009 was transferred to profit and loss account on release of film in FY 2008-09 relevant to AY 2009- 10. The assessee also furnished income tax return, computation of income and 2 (AY 2009-10) Sevan Eagle Production, Surat. audited balance sheet with all details. The assessee also stated that during the period from 31.03.2006 to 31.03.2009 the assessee made various payments and deducted tax as sources (TDS) under various section wherever applicable. The assessee further stated that the partner of the assessee also received notice on 17.10.2016 regarding the details of deductions under chapter XVII-B for the expenses of Rs. 4.37 Crore under various sections and after verification of details only additions of Rs.748,038/- was made to the income of the said partner. The assessee also explained that during the regular assessment the assessee furnished all the required details and the AO after verification passed the assessment order by disallwaning the expenses of Rs. 6,17,309/-.

The reply of the assessee was not accepted by AO by taking view that the auditor has clearly mentioned in the audit report that there is shortfall on account of lessor deduction then required. On the contention of the assessee that the AO has disallowed some expenses, the AO held that said disallowances were made on account of other reasons, and have no relevance with default of TDS. And accordingly made disallowances under section 40(a)(ia) of Rs. 4.37 Crore.

On appeal before ld. CIT(A) the action of the assessing officer was affirmed. The ld.CIT(A) confirmed the order of AO in ex-parte order by taking view that appellant is not interested in filing any details during the appellate proceedings and availed the opportunities under the principles of natural (AY 2009-10) Sevan Eagle Production, Surat. justice. Further aggrieved, the assessee has filed present appeal before this Tribunal.

On the other hand, the ld.CIT-DR for the Revenue submits that the assessee was given ample opportunity as recorded in page 2 of para 4 of the order passed by the ld.CIT(A). The assessee failed to comply with the notice issued 4 (AY 2009-10) Sevan Eagle Production, Surat. by the ld.CIT(A). The ld.CIT(A) left with no option, except to proceed to decide the issue and in absence of any evidence or explanation affirm the action of AO. In alternative submission, the ld.CIT-DR for the Revenue submits that in case the Hon’ble Tribunal is deem appropriate, the assessee be directed to be vigilant and not to default in attending the proceedings and to waste the time of public authorities/ld.CIT(A).

We have considered the rival submission of both the parties and have gone through the orders of lower Authorities. We find that the assessing officer while passing the assessment order made disallowances for the want of TDS. The ld.CIT(A) confirmed the action of AO by taking view that there is non- compliance on the part of the assessee. We further find that before the AO, the assessee raised factual and legal submission. The ld CIT(A) has not seen and examined such facts and affirmed the action of AO. Before, us the ld. AR for the assessee submits that the assessee also filed adjournment application before the ld.CIT(A) as assessee needs more time to file details before the Ld.CIT(A) as expenses were incurred almost 6 to 7 years back and compilation of details were taking time. We find merit in the submissions of the ld AR for the assessee that sufficient and reasonable time was not granted to the assessee.

However, before us the ld AR for the assessee still undertook to be vigilant in timely making compliance before the ld. CIT(A). We, instead of going into controversy, whether the assessee defaulted in attending the proceedings 5