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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI V. DURGA RAO & SHRI G. MANJUNATHA
This appeal filed by the assessee is directed against order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 24.06.2022 and pertains to assessment year 2016-17.
The assessee has raised following grounds of appeal:-
1. The appellant had obtained a work order for dismantling and acquisition of scrap materials torn M/s Kudrernukh Iron Ore company. As the dismantling could not be completed on time and the appellant was faced with many litigations, the entire value of stocks has been written off from the books at the company on the ground that the appellant has made only a part performance of the contract and the contract was terminated without any compensation to the appellant.
The Learned Assessing Officer has not comprehended the circumstances leading to the write off of stocks and has erroneously made the addition of Rs. 201,03,61,968/-.
2. The appellant had written off expenses. The ld. Assessing Officer had erred in comprehending nature of expenses and the reason of the write off, thus resulting in an addition of Rs.6,16,00,000/-.”
Brief facts of the case are that the assessee company had filed its return of income for the assessment year 2016-17 on 17.10.2016 declaring total income of Rs.’Nil’ with current year loss of Rs.1,74,39,86,256/-. The case was selected for scrutiny and assessment has been completed u/s.143(3) of the Income Tax Act, 1961, on 28.12.2018 and determined total income at Rs.32,79,75,712/- by making additions towards disallowance of closing stock written off amounting to Rs.201,03,61,968/- and disallowance of interest u/s.36(1)(iii) for Rs.6,16,00,000/-. The assessee carried the matter in appeal before the First Appellate Authority and before the CIT(A), the assessee neither appeared nor filed any details, despite the Ld.CIT(A) has given various dates of hearing on 17.02.2020, 29.01.2021, 06.12.2021, 30.03.2022, 12.04.2022 and 20.06.2022.
Therefore, the Ld.CIT(A) left with no option to dispose off appeal filed by the assessee passed ex-parte order and dismissed appeal filed by the assessee for non-prosecution by following certain judicial precedence, including decision of the Hon'ble Supreme Court in the case of CIT Vs. B.N.
Bhattacharjee and Others (1979) 10 CTR 354 (SC). The relevant findings of the ld. CIT(A) are as under:-
“7.2 I have considered the facts and circumstances of the case, the observations of the AO and material available on record on the above matter. As mentioned in paragraph 7 of this appeal order, this office has issued several letters to file written submission. However, neither any adjournment was sought for nor any written submission was filed. The letters were issued through ITBA System at the mail ID provided by the appellant. From the above conduct of the appellant, it is evident that the appellant is no more interested in pursuing the appeal. Hon'ble Supreme Court in the case of CIT Vs B.N. Bhattacharjee and others [1979] 10 CTR 354 (SC) observed that preferring an appeal, means effectively pursuing it. Hon'ble M.P. High Court in the case of Estate of Late Tukojirao Holkar Vs CWT [1979] 223 ITR 480 (M.P.) dismissed the reference filed at the instance of the assessee for default and for not taking necessary steps. Considering the conduct of the assessee In the present circumstance, I am of the view that the assessee is not interested in pursuing the appeal. This new has been affirmed by Hon'ble ITAT Ahmedabad in case of Amit kumar Shah Vs. ACIT in \TA No. 2985/Ahd/2010 vide their order dated 31.12.2013, wherein following the order of ITAT Delhi Bench in the case of CIT Vs Multiplan India Pvt. Ltd., [1991] 38 ITD 320 (Del), ITAT has dismissed the appeal filed by the assessee for want of persuasion. Under these circumstances, the current appeal of the appellant is liable to be dismissed.”
We have heard both the parties, perused material available on record and gone through orders of the authorities below. At the time of hearing, learned counsel for the assessee and learned CIT DR present for the Revenue fairly agreed that the Ld.CIT(A) has passed ex-parte order without discussing issues on merits and thus, appeal may be set aside to the file of the CIT(A) to give one more opportunity of hearing to the assessee. We find that although, the Ld. CIT(A) disposed off appeal filed by the assessee, but such appeal has been disposed off for technical reasons of non-prosecution by the assessee without discussing issues on merits. It is well settled principles of law by decisions of various courts that the CIT(A) is having power to dispose off appeal filed by the assessee ex-parte, in case of non-appearance by the assessee, however, such appeal should be disposed off on merits on the basis of available records. In this case, the Ld.CIT(A) simply disposed off appeal filed by the assessee for non-prosecution by following decision of the ITAT., Delhi benches in the case of CIT Vs. Multiplan India Pvt. Ltd. (1991)
38 ITD 320(Del). Therefore, we are of the considered view that appeal needs to be set aside to the file of the Ld.CIT(A) and thus, we set aside the order passed by the learned CIT(A) and restore the issues back to the file of the CIT(A) for fresh adjudication on merits.