What did the Tribunal hold?

The Tribunal restored the matter to the CIT(A) for a decision on merits, noting that the CIT(A) had passed an ex-parte order without deciding the issue. The assessee was granted one more opportunity to present their case.

The assessee's appeal for AY 2008-09 was dismissed ex-parte by the CIT(A). The Assessing Officer had made an ad-hoc disallowance of Rs. 2,25,000 on travelling expenses, suspecting personal use and lack of verification.

What were the issues?

Whether the CIT(A) erred in passing an ex-parte order without deciding the appeal on merits and whether the assessee was denied a reasonable opportunity of hearing.

Mayank K. Barjatya vs DCIT | ITAT Pune 2019

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI ANIL CHATURVEDI

For Appellant: Shri Harish Chopada

For Respondent: Shri Vishwas Mundhe

Hearing: 06.08.2019Pronounced: 09.10.2019

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by assessee is emanating out of the order of Commissioner of Income Tax (Appeals) – 9, Pune dated 15.11.2018 for A.Y. 2008-09.

The relevant facts as culled out from the material on record are as under :-

Assessee is an individual and Proprietor of “M/s. Vastu Environmental Services”. Assessee filed his return of income for A.Y.

2008-09 on 30.09.2008 declaring total income at Rs.46,43,580/-.

The case was selected for scrutiny and thereafter assessment was

framed u/s 143(3) of the Act vide order dated 30.12.2010 and the

total income was determined at Rs.48,99,480/-. Aggrieved by the

order of AO, assessee carried the matter before Ld.CIT(A), who vide ex-

parte order dated 15.11.2018 dismissed the appeal of assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal and has

raised the following grounds :

“1. On the facts and in the circumstances of the case and in law the lower authorities have erred in adding 31.56% of travelling expenses to income merely on presumption that it appears that appellant incurred personal travel, is not supported by any cogent evidence and therefore such presumption which is based on mere surmises and guesswork is illegal, and therefore entire proceedings needs to be quashed.

The total travelling expense (Rs. 7.12 lacs) which constitutes 4.86% of total receipts of profession and sales including exports of Rs. 146.32 LACS which are received from services rendered in Indonesia, France and UAE. The revenue from export of Service was Rs.23.22 lacs. From above expenses of Rs.7.12 lacs only Rs.O.17 lacs(2.38%) was in cash for purchase of Fuel for vehicle and rest all were from account payee cheque and credit card (97.62%). Thus contention of AO that the travelling expenses are mostly paid in cash is not valid.

On the facts and in the circumstances of the case and in law the lower authorities have erred in not giving reasonable opportunity to assessee as well as all the notices by CIT (A) were returned and not delivered to assessee. The notices were not send by email. Thus assessee was deprived for representing before lower authorizes.

On the facts and in the circumstances of the case and in law, the lower authorities have erred in confirming the addition of Rs.2,25,000/- as personal expenses element in travelling, by disregarding the: nature of work conducted by the assessee and sources of receipt of business income which necessitates extensive travelling for assessee as well as his employees, appellant prays for complete relief as the entire addition is based on surmises and guesswork and presumption which is not supported by any corroborative evidence, and therefore addition needs to be deleted in its entirety.”

Before me, at the outset, Ld.A.R. submitted that he would like

to press ground No.1 only and the other grounds i.e., 2 to 4 may be

treated as not pressed. I therefore proceed to decide ground No.1 and

dismiss ground Nos.2 to 4 as not pressed.

AO on perusing the Profit and Loss Account, noticed that

assessee had debited Rs.7,12,857/- towards travelling expenses. AO

noted that the expenses have been incurred in cash as well as by

cheque. He was of the view that genuineness of all the payments

towards travelling could not be verified and the personal travelling of

the assessee could not be denied. He accordingly made adhoc

disallowance of Rs.2,25,000/-. Aggrieved by the order of AO, assessee

carried the matter before Ld.CIT(A), who dismissed the appeal of the

assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now in appeal.

Before me, Ld.A.R. submitted that AO has made an adhoc

disallowance and that Ld.CIT(A) has passed an ex-parte order and has

not decided the issue on merits. Ld.A.R. further submitted that

assessee was not given an opportunity of hearing before the Ld.CIT(A)

and that if given a chance, assessee undertakes to appear before lower

authorities and furnish all the required details to substantiate his

case. He therefore submitted that assessee be granted one more

opportunity to explain his case. Ld.D.R. on the other hand supported

the order of AO and Ld.CIT(A) and objected to Ld.A.R.’s prayer for 2nd

innings.

I have heard the rival submissions and perused the material on

record. The issue in the present case is with respect to addition of

Rs.2,25,000/- on account of travelling expenses. The perusal of order

of Ld.CIT(A) reveals that Ld.CIT(A) has passed an ex-parte order

without deciding the issue on merits. In view of the well settled

principle of natural justice that sufficient opportunity of hearing

should be afforded to the parties and no party should be condemned

unheard, I am of the view that one more opportunity be granted to the

assessee to present his case before the lower authorities. I therefore

restore the matter back to the file of Ld.CIT(A) to decide the issue on

merits in accordance with law. Needless to state that Ld.CIT(A) shall

grant adequate opportunity of hearing to both the parties. Assessee is

also directed to promptly furnish all the details called for by the

authorities. In view of my decision to restore the issue to Ld.CIT(A), I

am not adjudicating on merits the grounds of the appeal raised by the

assessee. Thus, the ground of assessee is allowed for statistical

purposes.

In the result, the appeal of the assessee is partly allowed for

statistical purposes.

Order pronounced on 9th day of October, 2019.

Sd/- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 9th October, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-9, Pune. 4. Pr. CIT-7, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक सद�य” / DR, ITAT, “SMC” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.

MAYANK K. BARJATYA,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 5, PUNE

What did the Tribunal hold?

What were the facts?

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