GLOBAL BUSINESS CONEXXTIONS PVT.LTD.,MADHYA PRADESH vs. DY COMMISSIONER OF INCOME TAX-1(1), BHOPAL

The appellant, M/s. Global Business Conexxtions Pvt. Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 26.03.2021 passed by Commissioner of Income Tax (Appeals), Mumbai [hereinafter referred to as the CIT(A)] qua the assessment year 2014-15 on the grounds inter-alia that :- “1. The Id. CIT(A) erred in facts and law in confirming the ad-hoc disallowance made by the Id. Assessing Officer of Rs.5,33,203/-, being 10% of Rs.53,32,025/- towards travelling expenses on his own 2 M/s. Global Business Conexxtions Pvt. Ltd.

The Id. CIT(A) erred in facts and law in confirming the ad-hoc disallowance made by the Id. Assessing Officer of Rs. 1,78,397/-, being 10% of Rs. 17,83,979/-towards telephone expenses on his own surmises without appreciating the explanations / documents placed on record.

Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved, assessee has come up before the Tribunal by way of filing present appeal.

This appeal was instituted on 23.05.2022 thereafter none appeared on behalf of the assessee despite notices were sent to the assessee for 12.07.2022, 22.08.2022 and 04.10.2022 through registered post with acknowledgement due (RPAD) not received back served/unserved. Since period of more than one month has already elapsed the notices sent to the assessee are presumed to have been served, but the assessee has not preferred to put in appearance to prosecute this appeal. Consequently, the Bench has decided to dispose of the appeal on the basis of documents available on record with the assistance of the Ld. D.R. for the Revenue.

We have heard the Ld. Departmental Representative for the Revenue, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon.

When we examine para 4.2 of Ld. CIT(A), the assessee has come up with specific written submissions which are extracted as under: “4.2 During the appellate proceedings, the appellant has filed a written submission, which is reproduced as under: ".... Addition 2: The AO's contention stating that bills and vouchers were not maintained properly is not true. Further, the AO also states that some of the vouchers were self-made, which would be the case for expenses of such nature such as travelling expenses. The Appellant would like to provide sample bills and vouchers and financial statements as Annexure for your ready reference (Annexure 6). AO has not given enough opportunity of being heard before finalizing the case and concluding the proceedings, which is against nature principles of natural justice...." "... Addition 3: The AO's contention stating that bills and vouchers were not maintained properly is not true. Further, the AO a/so states that some of the vouchers were self-made which would be the case for expenses of such nature such as telephone expenses. The Appellant would like to provide sample bills and vouchers and financial statements as Annexure for your ready reference (Annexure 7). AO has not given enough opportunity of being heard before finalizing the case and concluding the proceedings, which against nature principles of natural justice ..."

However, aforesaid written submissions have not been examined neither by the AO nor by Ld. CIT(A) rather mechanically made disallowance @ 10% of the total expenses claimed, particularly when books of account of the assessee have never been disputed by the AO. The assessee has specifically pleaded that the AO has not given enough opportunity of being heard during the assessment proceedings which fact is also evident from the findings 5 M/s. Global Business Conexxtions Pvt. Ltd.

Aforesaid submissions have also not been considered by the Ld. CIT(A) because assessee has come up with specific pleading that “TDS and corresponding interest income in question have not been claimed in the return of income since the same has been booked in the future years”. This question has not been considered by the AO by duly verifying the same nor it is examined by the Ld. CIT(A) by calling a remand report. In the written submissions the assessee has also pleaded that the AO has also not given enough opportunity of being heard to the assessee, which fact is proved from the findings returned by the AO which are based upon surmises. So this issue is also required to be remitted back to the AO to decide afresh after providing opportunity of being heard to the assessee.

Resultantly, appeal filed by the assessee is allowed.