M/S H R. LOGISTICS,SURAT vs. ITO, WARD3(1)(4), SURAT

H.R.Logistics Vs. ITO, Ward-3(1)(4), Surat /ITA No.703/SRT/2018/A.Y. 2015-16 Page 1 of 4

आयकर अपीलीय अिधकरण,सुरत �यायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A. No.703/SRT/2018 िनधा�रण वष�/Assessment Year : 2015-16 H.R.Logistics, Vs. The Income Tax Officer, 126, Municipal Shopping Centre, Ward-3(1)(4), Surat. Sahara Darvaja, Ring Road, Surat. [PAN: AAFFH 4624 L] अपीलाथ� Appellant ��यथ�/Respondent िनधा�रती क� ओर से /Assessee by Shri Mehul R.Shah – CA राज�व क� ओर से /Revenue by Shri Prasoon Kabra – Sr.DR

सुनवाई की तारीख/ Date of hearing: 26.02.2019 27.02.2019 उ�ोषणा क� तारीख/Pronouncement on: आदेश /O R D E R PER O.P.MEENA, AM: This appeal filed by the Assessee are directed against the 1. order of learned Commissioner of Income Tax (Appeals)-3, Surat(in short “the CIT (A)”) dated 28.09.2018 pertaining to Assessment Year 2015-16.

The grounds raised by the assessee read as under : 2. 1. On facts and circumstances of the case, the learned CIT(A) has grossly erred in passing the impugned appellate order on an Ex-parte basis, without providing the appellant a proper opportunity of being heard and also without properly appreciating the facts and merits of the case. Therefore, the appellate order of the learned CIT(A), needs to be quashed as being erroneous, illegal and bad-in-law. 2. On facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in confirming the action of the learned ITO in treating the closing balance of the entire sundry creditors as at the year-end amounting to Rs. 1,72,52,450/- as unexplained cash credits u/s. 68 of the Act without appreciating that first of all, section 68 is not at all applicable in respect of

H.R.Logistics Vs. ITO, Ward-3(1)(4), Surat /ITA No.703/SRT/2018/A.Y. 2015-16 Page 2 of 4

sundry creditors and secondly that the appellant has duly discharged the onus of proving the outstanding sundry creditors and hence, the impugned addition as erroneously confirmed by the learned CIT(A) needs to be quashed as being absolutely erroneous, illegal and bad-in-law. 3. On facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in confirming the disallowance of Rs. 1,72,121/- as made by the ITO in respect of depreciation on motorcars and disallowance of Rs. 20,612/- in respect of interest on motorcar loan on the ground that the said motorcars are not owned by the firm, which is absolutely incorrect and hence, the impugned disallowance of depreciation on motorcars and interest on motor car loan as confirmed by the learned CIT(A), needs to be deleted, as being illegal, erroneous and bad-in-law. 4. On facts and circumstances of the case and in law, the learned CIT(A) has grossly erred in confirming the disallowance of Rs. 1,80,442/-, in respect of motorcar loan instalments paid by the firm through ECS from its bank account by holding the said payment is not deductible u/s. 40A of the Act without appreciating that the appellant has not claimed any expenditure in respect of the said loan repayments. Hence, the impugned disallowance u/s. 40A of the Act as made by the ITO and erroneously confirmed by the learned CIT(A), needs to be quashed as being absolutely illegal, erroneous and bad in law.”

At the outset, the Ld. Counsel for the assessee contended 3. that no proper opportunity of hearing was afforded to the assessee. The ld. CIT (A) was not justified in rejecting the appeal of the assessee ex-parte. The documents relied by the AO were not made available to assessee. The Ld. Counsel prayed that the appeal be restored to the file of ld. CIT (A) with a direction that proper opportunity of being heard may be allowed to the assessee.

The Ld. Senior D.R. relied on the orders of the authorities 4. below, however, has no objection if the entire issue is set-aside to ld.Assessing Officer.

We have heard the rival contentions of both the parties. We 5. find that the ld. CIT (A) has not allowed proper opportunity of being heard. The principle of audi alteram partem is the basic

H.R.Logistics Vs. ITO, Ward-3(1)(4), Surat /ITA No.703/SRT/2018/A.Y. 2015-16 Page 3 of 4

concept of natural justice. The expression “audi alteram partem” implies that a person must be given an opportunity to defend himself. This principle is sine qua non of every civilized society. The right to notice, right to present case and evidence, right to rebut adverse evidence, right to cross examination, right to legal representation, disclosure of evidence to party, report of enquiry to be shown to the other party and reasoned decisions or speaking orders. We took this guidance for right of hearing, from the ratio as is laid down by the Hon'ble Supreme Court in the case of Maneka Gandhi v. Union of India, wherein Hon'ble Supreme Court has laid down that rule of fair hearing is necessary before passing any order. We find that it is pre-decision hearing standard of norm of rule of audi alteram partem. We find that in this instant case, the assessee was not given proper hearing and simply dismissed appeal by relying on the decision in the case of B. N. Bhattacharjee 118 ITR 461 (SC). Therefore, we are of the view that the assessee must be given one more opportunity of hearing to represent his case. Therefore, in exercise of power conferred under Rule 28 of Tribunal Rules, we restore this appeal to the file of ld.CIT(A) for reconsideration all grounds of appeal after allowing proper opportunity of being heard in accordance with law. Nevertheless, to mention that the assessee will cooperate in the appeal

H.R.Logistics Vs. ITO, Ward-3(1)(4), Surat /ITA No.703/SRT/2018/A.Y. 2015-16 Page 4 of 4

proceedings and his failure will entail confirmation of the impugned addition made by the AO. The assessee will file necessary evidences on which he wants to rely upon.

In the result, the appeal of the assessee is allowed for 6. statistical purposes.

The order pronounced in the open court on 27.02.2019. 7.

Sd/- Sd/- (KUL BHARAT) (O.P.MEENA) (�याियकसद�यतथा/JUDICIAL MEMBER) (लेखासद�यकेसम� /ACCOUNTANT MEMBER) सुरत/ Surat, �दनांक Dated: 27th February, 2019/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat