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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against order of NFAC dated 11.1.2023 for the assessment year 2015-16. The assessee has raised following grounds of appeal:-
The order of the learned Commissioner of Income Tax (Appeals) is bad in law and against the facts of the case.
2. The order of the learned Commissioner of Income Tax (Appeals) is liable to be set aside as the Commissioner of Income Tax (Appeals) violated the principles of natural justice by not affording opportunity of hearing to the appellant before passing the order.
Page 2 of 4 3. The learned Commissioner of Income Tax (Appeals) erred in confirming the order of the learned Assessing Officer who had disallowed Rs. 4,91,23,856/- u/s 37 holding the same to be capital expenditure.
3.1. The learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that the loss suffered is revenue loss.
3.2. The learned Commissioner of Income Tax (Appeals) failed to appreciate fact that amount advanced was to further the sales of the appellant and boost its business.
3.3. The learned Commissioner of Income Tax (Appeals) failed to appreciate that the amount advanced was in the appellant's own business interest.
For all these and other grounds, which may be urged at the time of hearing, the appellant prays that its appeal be allowed.
Facts of the case are that the notice u/s 143(2)of the Income-tax Act,1961 ['the Act' for short] was issued on 16.03.2016 and duly served. The case was selected for scrutiny through CASS and assessment was completed on 24.11.2017 at an assessed loss income of Rs.45,81,534/-. On perusal of assessment order, it was observed that the return of Income filed by assessee at loss income of Rs. 5,37,05,390/-. Further, addition was made by AO on account of disallowance of loss on write off of investments u/s 37 of the Act amounting to Rs.4,91,23,856/-. Accordingly, a sum of Rs. 4,91,23,856/- was added back to the income of the assessee.
The NFAC observed that in the instance of the case the assessee failed to make any submissions in support of grounds of appeal, this gives rise to an undisputable conclusion that the assessee has got nothing more to say in this regard. NFAC has gone through the record before him and based on the record he decided to adjudicate the issue on the merits of the case and Page 3 of 4 observed that in the instant case the AO has rightly assessed loss income of Rs. 45,81,534/- under the head disallowance of loss on write off of investments u/s 37 of the Act, amounting to Rs.4,91,23,856/-. Since the assessee failed to substantiate assessee’s claim and addition made by the AO of Rs.4,91,23,856/- was confirmed by the NFAC. Against this assessee is in appeal before us by way of aforesaid grounds of appeal.
We have heard the rival submissions and perused the materials available on record. Admittedly, in this case, order of the NFAC has been passed without any submissions filed by the assessee. In other words, this is an ex-parte order passed which is in violation of natural justice. Accordingly, the entire issue in dispute is remitted back to the file of NFAC to decide the issue afresh after giving an opportunity of hearing to the assessee to file submissions and to decide accordingly.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 26th Apr, 2023