THE MANJRI STUD FARM PVT. LTD.,MUMBAI vs. THE DEPUTY COMMISSIONER OF INCOME-TAX - CIRCLE 2(2)(1) - MUMBAI, MUMBAI

Though, the assessee has raised multiple grounds, however, the basic grievance of the assessee is against perfunctory disposal of its appeal by learned First Appellate Authority, without objectively considering the submissions made and additional evidences furnished.

Briefly stated the facts are, the assessee is a resident corporate entity stated to be engaged in the business of development of information technology, infrastructure services, development of residential township and development of Special Economic Zone (SEZ). For the assessment year under dispute, assessee filed its return of income on 15.10.2010 declaring income of Rs.1,26,57,980/-

In course of assessment proceeding, the Assessing Officer issued a questionnaire along with notice u/s. 142(1) of the Income Tax Act, 1961 (in short the ‘Act’) seeking clarification/information on various issues. In response to the queries raised, the assessee furnished its reply and certain evidences. However, alleging that the submissions made and evidences furnished are not satisfactory, the Assessing Officer made various additions/disallowances as under:

Further, the Assessing Officer did not consider claim of amortization of part of brokerage fees. Against the assessment order so passed, assessee preferred an appeal before learned First Appellate Authority. However, by the impugned order, learned First Appellate Authority dismissed assessee’s appeal.

Before us, it is the say of the assessee that in course of hearing before learned First Appellate Authority, the assessee furnished certain additional evidences to contest the disallowances made by the Assessing Officer. He submitted, while deciding the appeal learned First Appellate Authority has not at all taken cognizance of the additional evidences. He further submitted that without properly applying his mind to the facts and material on record, learned First Appellate Authority has dismissed the appeal. He further submitted that this is evident from the fact that though the Assessing Officer had subsequently passed an order u/s. 154 of the Act reducing the quantum of disallowance in respect of other sales and marketing expenses, however, ignoring such fact, learned First Appellate Authority has upheld the disallowance of the full amount. Thus, he submitted, the issues may be restored back to the Assessing Officer for fresh adjudication after considering the evidences furnished by the assessee.

Though, learned Departmental Representative (DR) justified the order of learned First Appellate Authority, however, he submitted, the issue may be restored back for considering assessee’s claim afresh.

We have considered rival submissions and perused materials on record. The limited grievance of the assessee is that various facts and material brought on record including the additional evidences have not at all been considered by learned First Appellate Authority. In our view, if the assessee wants to contest the additions/disallowances made in the assessment proceedings by furnishing additional evidences, which for whatever may be the reason could not be furnished before the Assessing Officer, opportunity must be granted to the assessee to furnish them at the appellate stage, of course, after being satisfied that such evidences could not be furnished before the Assessing Officer due to sufficient cause.

In the facts of the present appeal, undoubtedly, the assessee had furnished additional evidences before First Appellate Authority. However, without commenting upon the admissibility of such evidence and whether they are germane for deciding the issues, learned First Appellate Authority has decided the appeal completely ignoring the evidences furnished by the assessee. This, in our view, is in violation of principles of natural justice. Considering that, in ordinary course, the First Appellate Authority would have forwarded the additional evidences filed by the assessee for the verification of the Assessing Officer, we deem it appropriate to set aside the impugned order of learned First Appellate Authority and restore the issues to the file of the jurisdictional Assessing Officer for fresh adjudication after considering all material facts and evidences including the additional evidences furnished before learned First Appellate Authority. The Assessing Officer must decide the issues through a speaking order after providing due and reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.

In the result, appeal is allowed for statistical purposes.