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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MANJUNATHA G & SHRI MANOMOHAN DAS
आयकर अपीलीय अिधकरण, ‘सी’ "ायपीठ, चे"ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI "ी मंजुनाथ. जी, लेखा सद# एवं "ी मनोमोहन दास, "ाियक सद# के सम( BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI MANOMOHAN DAS, JUDICIAL MEMBER आयकर अपील सं./ Year: 2010-11 Kanakarathna Media Pvt. Ltd., The Income Tax Officer, “No. 7 Palat Madhavan Road, Vs. Non Corporate Ward-10(6), Mahalingapuram, Chennai. Chennai – 600 034. [PAN: AADCK-3117-E] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/ Appellant by : Shri J. Vignesh, C.A. ""यथ" क" ओर से /Respondent by : Shri D. Hema Bhupal, JCIT सुनवाई क" तारीख/Date of Hearing : 31.08.2023 : 06.09.2023 घोषणा क" तारीख /Date of Pronouncement आदेश / O R D E R PER MANOMOHAN DAS, J.M:
This appeal filed by the assessee is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-7, Chennai dated 12-02-2020 and pertains to assessment year 2010-11. 2. The grounds of appeal s of the assessee are as under:
1. The order of the Learned Commissioner of Income Tax Appeals, in so far as it is prejudicial to the interest of the appellant, is against law, principles of justice, weight of evidence, probabilities of the case of the appellant. :- 2 -:
2. The reassessment proceedings initiated and completed are invalid on the following grounds. a. The notice issued was served beyond the time limit for initiating the reassessment proceedings, were not properly authorized and served as required by law, reasons recorded are not proper and were not provided to the appellant in spite of request made for the same, the notice was not accompanied with the reasons recorded as was required thus the entire proceedings are against the law and various judicial pronouncements. b. No speaking order was passed, against the preliminary objections filed against the reopening even though reasons recorded were not provided to the appellant and served on the assessee, and served on the appellant as is required by law and procedural law laid down by the Apex Court. c. No proper notice under 143(2) was served on the assessee after passing of proper speaking order and proper procedures required to be followed in 148 proceedings as per judicial pronouncements and provisions of law were not followed by the assessing officer. d) No proper draft assessment order is passed as is required under the provisions of Section 144 and served on the appellant calling for objections against the proposal and no proper opportunity was given to the appellant to put forward its case and thus principles of natural justice were violated and the provisions of various Sections of the Act were also violated making the order passed void abinitio. e) Without considering all the objections raised and ignoring the case law provided the Learned Commissioner of Income Tax erred in upholding the validity of the reopening proceedings and the case law given by the Learned Commissioner of Income Tax (Appeals) in arriving at the conclusion to uphold the validity of reopening are distinguishable based on the facts of the case.
3. The assessing officer had erred in adding the cash deposits made in to the bank as unexplained income ignoring the explanations that the cash deposits made in the bank account were out of balances drawn for production expenses of the film. The Learned commissioner of Income Tax (Appeals) erred in confirming the addition without going in to the probabilities and explanations given.
4. The Assessing officer should have seen that the interest from bank during the implementation period earned is capital in nature and is not taxable and also that in the alternative it should be reduced from the expenses incurred. The Learned Commissioner of Income Tax (A) erred in confirming the order of the assessment officer without taking in to account the well settled legal position of treating interest earned during construction period as capital receipt not liable for tax or alternatively to be reduced from the cost incurred in bringing the asset in to position.
5. The appellant craves leave to file and furnish in case of a need additional grounds if any before the hearing or at the time of hearing. :- 3 -: 6. The appellant prays the Honorable ITAT, suitable order be passed to allow the claim and justice be rendered to the assessee appellant.”
The Registry has noted a delay of 99 days in filing of the appeal.
Assessee filed a petition seeking condonation of delay citing the reason of Covid-19 Pendemic followed by lockdown in the country. We observe that the ground for condonation of delay is reasonable.
Hence, the delay is condoned and we proceed to adjudicate the appeal.
The facts of the case are that the assessee is a domestic company and engaged in the business of production of feature films.
The assessee did not file return of income during the impugned assessment year. The Revenue noticed that the assessee made cash deposits of Rs. 10,00,000/- and earned interest income for which TDS had been made u/s. 194A of the Act. The assessee also earned income for rendering professional / technical services, but these facts were not disclosed by way of filing any return of income. Hence, assesse’s case was re-opened vide issuance of notice u/s. 148 of Act after recording reasons and with the approval of the Range Head of Office of the Income Tax Officer, Corporate Ward-4(3). Notice was sent at the then available address of the assessee being No.2, Rajan Street, T. Nagar, Chennai-600017 which was returned un-served with postal remarks “No such addressee”. Thereafter, the notice was :- 4 -: served by affixation at the aforesaid address of the assessee on 11- 10-2017. Notice u/s 129 of the Act was also sent on 13-10-2017 and the same was returned with postal remarks “No such addressee”.
Finally, the Revenue could locate the address of the Managing Director of the assessee company as No. 39/6, Thanikachalam Road, T.Nagar, Chennai. A hearing notice along with a copy of notice u/s. 148 of the Act was served upon the assessee on 20-11-2017 in person. Hearing was posted on 23-11-2017, but the assessee failed to attend. The Managing Director of the assessee company, Shri Ramesh Babu vide petition dated 10-12-2017 raised objection for re- opening of the assessment. The Ld. AO after consideration of the objection of the assessee vide order dated 14-12-2017 rejected the objection of the assessee. The assessee thereafter did not participate in the re-assessment proceeding. The Ld. AO, therefore, vide order dated 26-12-2017 completed the assessment to the best of his judgment. The Ld. AO added the amount of Rs. 10,00,000/- on account of cash deposits, Rs. 13,419/- on account of interest income and Rs.1,50,00,000/- on account of professional / technical services to the total income of the assessee.
Aggrieved, the assessee filed 1st appeal before the Ld. CIT(A). 5. The Ld. CIT(A) vide order dated 12-02-2020 partly allowed the appeal :- 5 -: of the assessee. The Ld. CIT(A), however, confirmed the addition of Rs. 10,00,000/- to the total income of the assessee.
Dissatisfied, the assessee filed the present appeal before the Tribunal.
The Ld. A.R submitted that the order passed by the Ld. AO was an ex-parte order. The Ld. AR produced a paper book in support of his case.
On the other hand, the Ld. DR is in support of the order of the lower authority.
Heard representatives of both the parties and perused the materials on record. We carefully considered the submissions made by the parties and perused the materials available on record including the orders of the lower authorities. We observe that, the assessment
order passed by the Ld. AO was an ex-parte order. As the assessment
order was an ex-parte order, we consider it proper to send back the matter to the Ld. AO for reframing the assessment order so far as the addition of Rs. 10,00,000/- is concerned. The Ld. DR also raised no objection for sending back of the matter to the Ld. AO. Accordingly, we direct the Ld. AO to pass a fresh assessment order in respect of the addition of Rs. 10,00,000/- to the total income of the assessee. Also, :- 6 -: we direct the assessee to substantiate his claim before the Ld. AO. It is needless to add here that the Ld. AO shall give a hearing to the assessee before reframing of the assessment order as aforesaid. Accordingly, we set aside the impugned order of the Ld. CIT(A) dated 12-02-2020 as well as assessment order dated 26-12-2017 to the extent it relates to the addition of Rs. 10,00,000/-. Send back the matter to the file of the Ld. AO. Order accordingly.