BHARAT SANCHAR NIGAM LTD.,NEW DELHI vs. ADDL.CIT, NEW DELHI

That on the facts and circumstances of the case and in law, the impugned order passed by the Learned Commissioner of Income Tax (Appeals) - 35, New Delhi [‘Learned CIT(A)’] under Section 250 of the Income-tax Act, 1961 (‘Act’), is a vitiated order having been passed in violation of principles of natural justice and is otherwise arbitrary and is thus bad in law and void ab-initio.

That on the facts and circumstances of the case and in law, the impugned order passed by the Learned CIT(A) is void ab-initio and against the principles of natural justice as no opportunity of being heard / making detailed submissions on grounds raised by the Appellant before Leaned CIT(A) has been granted to the Appellant.

That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs. 662,79,52,500 made by the Learned AO under the provisions of Section 40(a)(ia) on account of alleged non-deduction of TDS on the discounts offered to distributors/ franchisees. 4. That on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid disallowance by merely relying upon the facts and details provided by the Appellant in the appellate proceedings of previous AYs and not granting the Appellant with an opportunity of being heard/ making detailed submissions on the said issue for the subject AY. 5. That on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid disallowance without appreciating that taxes have been duly deducted and deposited by the Appellant on the discounts offered to distributors/ franchisees during the previous year relevant to the subject AY.

That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs. 53,39,84,585 made by the Learned AO under the provisions of Section 40(a)(ia) of the Act on account of alleged non-deduction of TDS on IUC /international roaming charges payable to the Non- resident Telecom Operators (‘NTOs’) by alleging the same to be in the nature of ‘royalty’ under the provisions of Section 9(i)(vi) of the

That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs. 529,15,80,000 made by the Learned AO, being 15% of the license fees and spectrum fees payable/ paid to DoT both under the normal provisions of the Act as well as the provisions of Section 115JB of the Act. 10. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid disallowance without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue. 11. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid disallowance in complete disregard of the fact that the said issue stands settled in favour of the Appellant by the Hon’ble Delhi Tribunal in Appellant’s own case for earlier AYs and no appeal against this issue has been filed by the Income tax department before the Hon’ble High Court.

That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the disallowance of Rs. 925,01,00,000 made by the Learned AO being 1 /20th of the sum paid for acquisition of right to use 3G and BWA spectrum, claimed during the year under Section 35ABB of the Act by merely following the appellate order passed in the case of the Appellant for AY 2011-12. 13. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid disallowance without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue.

Without prejudice to Ground 12 to 13 above, the Learned CIT (A) has erred in not allowing depreciation under Section 32 of the Act on the amount paid by the Appellant for acquisition of right to use 3G and BWA spectrum, despite a specific noting made by the Learned AO in the assessment order for the AY 2011-12 that the said amount is paid by the Appellant for acquisition of an intangible asset, eligible for depreciation under Section 32 of the Act.

That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in not adjudicating and referring back to the Learned AO, the issue of disallowance of Rs. 354,57,16,829 made by the Learned AO on account of write off assets debited to the profit and loss account. 16. That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in referring back the said issue to the Learned AO without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue. 17. That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in referring back the said issue to the Learned AO with a direction to verify challan of payment for taxes and thereafter giving credit to the Appellant, without appreciating the fact that the limited issue involved is whether the said amount has been disallowed twice.

That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in not adjudicating and referring back to the Learned AO, the issue of addition of Rs. 90,59,89,625 made by the Learned AO on account of interest under Section 244A of the Act on income tax refund received by the Appellant. 19. That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in referring back the said issue to the Learned AO, without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue.

That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in not adjudicating and referring back, the addition of Rs. 80,02,53,768 made by the Learned AO being extrapolation of the difference between amount of TDS claimed in the return of income and amount of TDS appearing in form 26AS

That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs. 6,17,41,000 made by the Learned AO under section 40(a)(ia) of the Act on account of alleged non-deduction of taxes from interest payable to banks. 25. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid d i s a 11 o wa n ce wj t hout providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue. 26. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid disallowance in complete disregard of provisions of Section 194A of the Act, which do not cover interest payment to bank within its ambit.

That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the disallowance of Rs. 2,02,57,683 made by the Learned AO under section 43B of the Act. 28. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid disallowance without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue. 29. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid

That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in not adjudicating and referring back, the addition of Rs. 25,27,500 made by the Learned AO being cash deposits above Rs. 10 lakhs appearing in the AIR on account of wrong PAN entered by the banks/ payees. 31. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in referring back the said issue to the Learned AO without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue. 32. That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in referring back the said issue to the Learned AO with a direction to verify challan of payment for taxes and thereafter giving credit to the Appellant, without appreciating the fact that there is no question of verification with tax challans or credit of taxes as the such amounts are not deposits made by the Appellant but are reflecting in Appellant’s AIR on on account of wrong PAN entered by the banks/ payees.

That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs. 1139,66,00,000 made by the Learned AO by alleging the difference between the closing and opening recoverable balance of the current account maintained by the Appellant with DoT to be in the nature of unexplained amount recovered from DoT, by merely relying upon the order passed by her predecessor for the AY 2011-12 34. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the aforesaid disallowance without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue. 35. That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in confirming the said disallowance in complete ignorance of the fact that the transaction between DoT and the Appellant is transaction between a Government of India owned company and a department of Government, hence, the parameters for transaction/source of funds to be qualified as unexplained can never be satisfied.

That, on the facts and circumstances of the case and in law, the Learned CIT (A) has erred in dismissing the ground raised by the Appellant against the reservation made by the Learned AO on the right for rectification of the assessment order pursuant to decision of the Learned CIT(A) on similar issue for AY 2010-11, without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue.

That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in dismissing the ground raised by the Appellant against the reservation made by the Learned AO on the right for rectification of the assessment order pursuant to decision of the Learned CIT(A) on similar issue for AY 2010-11, without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue.

That, on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs. 151,20,00,000 made by the Learned AO both under the normal provisions of the Act and under Section 115JB of the Act by treating the loan of Rs. 720 crores received by the Appellant during FY 2002-03 towards the Government’s 'Village Telephony’ (VPT) project to be capital subsidy and thus disallowing depreciation on the said amount. 39. That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the aforesaid disallowance without providing the Appellant with an opportunity of being heard/ making detailed submissions on the said issue. 40. That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the aforesaid addition without appreciating that her predecessor in the order passed in the case of the Appellant for AY 2011-12 had deleted the aforesaid addition made in case of the Appellant. 41. That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the aforesaid addition in complete disregard of the fact that the said addition has resulted in double addition, since such loan has already been considered

That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs. 2,08,00,000 made by the Learned AO both under the normal provisions and under Section 115JB of the Act by alleging that under-capitalization of expenditure results excessive claim of loss. 44. That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the aforesaid disallowance without granting the Appellant an opportunity of being heard/ making detailed submissions on the said issue.

That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs. 990,200 made by the Learned AO both under the normal provisions and under Section 115JB of the Act by alleging the said amount to be excess depreciation claimed on the decommissioned assets, 46. That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs. 336,000 both under the normal provisions of the Act and under Section 115JB of the Act by alleging the said amount to be excess depreciation claimed by the Appellant. 47. That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the aforesaid disallowances without granting the Appellant an opportunity of being heard/ making detailed submissions on the said issues.

That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in confirming the disallowance of Rs 59,73,12,500 made by the Learned AO by alleging the annual

That on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in not directing the Learned AO to drop the penalty proceedings under Section 271 (1)(c) of the Act. The above grounds and sub grounds of appeal are mutually exclusive and without prejudice to each other.

In the grounds of appeal, almost in each and every issue, the assessee has raised the grounds that no opportunity of being heard/making detailed submissions, has been granted to the assessee. The grounds raised in this regard are at Serial Nos. 2, 4, 10, 13, 16, 19, 21, 25, 28, 31, 34, 36, 39, 44, 47, 49 and 51. The learned counsel for the assessee submitted that since no sufficient opportunity of being heard was granted to the assessee by the learned CIT(A), the appeal may be restored back to the file of the learned CIT(A) for deciding afresh. 3. The learned CIT(DR) did not object to this request of the learned counsel of the assessee.

We have heard the rival submissions of the parties and perused the relevant material on record. We find that that the issues in dispute have been decided by the learned CIT(A) in absence of evidence furnished by the assessee. For ready reference few such paragraphs of the order of learned CIT(A) are reproduced as under: “4.5 Ground no. 4 is with respect to disallowance of 15% of the licence and spectrum fees of Rs.52,91,580,000/- paid/payable to DOT. From the perusal of assessment order dated 31.03.2015 as well as appellant orders in the present case for earlier years, it is observed that the present issue has come up for consideration in every year. It would be relevant to note that the appellant/AR did not furnish any details/evidence/calculations etc. during appellate proceedings which could substantiate the claim of Rs.3,52,772/- lakhs as expenditure on licence and spectrum fees. Perusal of assessment record for the relevant year (ref: pages 16, 17, 18, 19 of the assessment order) shows that as in earlier years, the expenditure towards such fees as licence/spectrum, have not been made at any reasonable level of arithmetical accuracy, In view of the position above Ground no. 4 is dismissed. ……………………………………………………………………………………

From the above, it is evident that the appeal has been decided by the learned CIT(A) without taking into consideration detailed arguments of the learned representative of the assessee. In view of the facts and circumstances of the case and in the interest of substantial justice, we feel it appropriate to restore this appeal to the file of the learned CIT(A) who shall decide the same afresh after affording adequate opportunity of being heard to the assessee. The assessee is also directed to file all the necessary documents/evidences which it would like to rely in support of its claim. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court.