REDROCK IT SOLUTIONS INDIA PRIVATE LIMITED,HYDERABAD vs. INCOME TAX OFFICER, WARD-3(2), HYDERABAD

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ITA 1521/HYD/2019Status: DisposedITAT Hyderabad07 April 2021AY 2009-105 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found merit in the assessee's submission that it did not receive notice for remand proceedings before the CIT(A). Therefore, the matter was remitted back to the CIT(A) for de-novo consideration to provide the assessee with another opportunity to be heard.

What were the facts?

The assessee claimed a deduction under Section 10B for AY 2009-10. The Assessing Officer disallowed the claim for lack of substantiation. The CIT(A) upheld the disallowance after considering a remand report.

What were the issues?

Whether the assessee was denied a proper opportunity of being heard by the CIT(A) due to non-receipt of notice for remand proceedings. Whether the disallowance of deduction under Section 10B was justified.

Which sections of the Income-tax Act were involved?

Section 10B,Section 10A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCH “SMC”, HYDERABAD

For Appellant: Shri P. Vinod
For Respondent: Shri Sanjeev Bhagat, DR
Hearing: 09/03/2021Pronounced: 07/04/2021

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “SMC”, HYDERABAD (Through Virtual Hearing) BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER Redrock IT Solutions India Vs. Income Tax Officer, Private Limited, Ward-3(2), Hyderabad. Hyderabad. PAN: AADCR 3796 E (Appellant) (Respondent) Assessee by: Shri P. Vinod Revenue by: Shri Sanjeev Bhagat, DR Date of hearing: 09/03/2021 Date of pronouncement: 07/04/2021 ORDER PER A. MOHAN ALANKAMONY, AM.:

This appeal is filed by the assessee against the order of the ld. CIT (A)-3, Hyderabad in appeal No.1049/CIT(A)-3/2014-15, dated 09/08/2019 passed U/s. 143(3) r.w.s 250(6) of the Act for the AY: 2009- 10.

2.

The assessee has raised three grounds in its appeal and they are extracted herein below for reference:-

“1. The order of the Ld. CIT(A) dismissing the appeal is erroneous both on facts and in law. 2. The Ld. CIT(A) erred in dismissing the appeal without proper opportunity. The Ld. CIT(A) failed to appreciate that the appellant has not received the notice of the A.O. in the remand proceedings and therefore ought to have directed the A.O. to provide one more opportunity for verification.

3. The Ld. CIT(A) erred in upholding the disallowance made by the A.O. U/s. 10B. The Ld. CIT(A) failed to appreciate the clarification by the STPI that there is no practice of ratification now and ought to have allowed the deduction U/s. 10B.

4.

The Ld. CIT(A) erred in not appreciating the alternate claim of deduction U/s. 10A which was duly supported by report of chartered accountant in Form No. 56F.”

3.

Brief facts of the case are that the assessee company is engaged in the business of software services, filed its return of income for the A.Y. 2009-10 on 11/09/2009 declaring total income of Rs. 1,760/- after claiming exemption of Rs. 28,58,812/- U/s. 10B of the Act. During the assessment proceedings, the assessee was asked to substantiate its claim of deduction U/s. 10B with necessary documentary evidence. In reply, the assessee company had submitted the documents before the Ld. A.O. but the Ld. A.O was not satisfied with the explanations given by the assessee and therefore denied the claim of deduction U/s. 10B of the Act. Accordingly, the total income of the assessee was determined at Rs. 28,60,572/-. On appeal, the Ld. CIT(A) called for remand report from the Ld. A.O. After examining the Ld. A.O.’s remand report and considering the material on record, the Ld. CIT(A) dismissed the assessee’s appeal by holding that the assessee could not substantiate its claim of deduction with necessary documentary evidence. Aggrieved, the assessee is in appeal before the Tribunal.

4. Before me, at the outset, Ld. AR submitted that during the assessment proceedings, though all the necessary documentary evidence was produced by the assessee before the Ld. A.O as required by him, without examining the same he disallowed the claim of deduction. On appeal, the Ld. CIT(A) called for a remand report from the Ld. A.O. However, in the remand proceedings the assessee could not appear as the notice was not received by the assessee. Ld. AR further submitted that Ld. CIT(A) ignored the assessee’s submissions in this regard and passed order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the assessee may be provided with one more opportunity to pursue his case before the Ld. CIT(A). Ld. DR on the other hand objected to the submissions of the Ld. AR and argued that sufficient opportunities had been provided to the assessee, however, the assessee could not substantiate its claim of deduction U/s. 10B of the Act before the Ld. Revenue Authorities. Ld. DR further submitted that even before the Ld. A.O though the assessee was provided with sufficient opportunity to substantiate its case, however the assessee failed to adduce proper evidence to substantiate its claim. Under these circumstances, the Ld. Revenue Authorities had no other option but to pass orders based on the materials available on record. Hence, it was pleaded that the orders passed by the Ld. Revenue Authorities do not call for any interference and appeal of the assessee may be dismissed.

5.

I have heard the rival submissions and carefully perused the materials on record. On examining the facts of the case, I find merit in the submissions of the Ld. DR. The Ld. Revenue Authorities had provided sufficient opportunities to the assessee to substantiate its claim of deduction U/s.10B of the Act with proper documentary evidence. However, the assessee failed to produce cogent evidence before the Ld. Revenue Authorities. Hence, the Ld. Revenue Authorities were left with no other option except to pass orders based on the material available on record. Further on examining the Ld. CIT(A)’s order, I find that though the Ld. CIT(A) had called for remand report from the Ld.AO it appears that the assessee could not appear before the Ld.AO during the remand proceedings as it did not receive the notice. Under these circumstances, considering the prayer and the submissions of the Ld. AR and the nature of issues involved in the appeal, in the interest of justice, I hereby remit the matter back to the file of Ld. CIT(A) for de-novo consideration thereby providing one more opportunity to the assessee of being heard. At the same breath, I also hereby caution the assessee to promptly co-operate before the Ld. CIT(A) in the proceedings failing which the Ld. CIT(A) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials on the record. It is ordered accordingly.

6.

In the result, the appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.

Pronounced in the open Court on the 07th April, 2021.

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