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Facts
The assessee declared a total income of Rs.18,59,03,120/- and faced additions on account of disallowance under section 14A, amortization of premium, and depreciation on investment. The CIT(A) dismissed the appeal ex-parte after the assessee repeatedly sought adjournments without filing submissions.
Held
The Tribunal held that the CIT(A) violated principles of natural justice by deciding ex-parte without giving adequate opportunity. Therefore, the appeal was remitted back to the CIT(A) for fresh consideration.
Key Issues
Whether the CIT(A) violated principles of natural justice by dismissing the appeal ex-parte without providing adequate opportunity to the assessee.
Sections Cited
14A, 143(2)
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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This is an appeal filed by the assessee against the ex-parte Order passed by the CIT(A) vide DIN &Order No: ITBA/NFAC/S/250/2024- 25/1074928598(1) dated 24.03.2025.
Briefly stated, the facts of the case are that assessee filed return of income on 25.10.2018 declaring total income of Rs.18,59,03,120/-. The case was selected for scrutiny and notice under section 143(2) of the Act was issued and served to the assessee on 22.09.2019. Subsequently, other statutory notices were issued to the assessee. During the course of assessment proceedings, it was noticed that the assessee company has received dividend of Rs.89,99,004/- on investment of Rs.1020,83 Crores which has been claimed as exempt but no disallowance has been made under section 14A of the Act. Therefore, the AO, after considering the submission of the assessee, calculated disallowance under section 14A of the Act of Rs.10,00,14,000/-. Further, the AO noted that the assessee has claimed amortization of premium of investment of Rs.3,73,16,410/- which was also disallowed as per para No. 4.2 to 4.6 of the Assessment Order. Further, it was noticed that the assessee has claimed depreciation on investment of Rs.5,35,00,000/- which has been disallowed by the AO in para No. 5 to 5.2 of the Assessment Order. Accordingly, income was assessed at Rs.37,67,33,530/- and completed the assessment on 06.04.2021.
Aggrieved from the above Order, assessee filed appeal before the learned CIT(A) on 04.05.2021. During the course of appellate proceedings, the learned CIT(A) issued various notices but assessee filed only adjournment letter and did not file any written submissions in support of its grounds of appeal. Therefore, the learned CIT(A), after giving various opportunities to the assessee, decided the issue raised on the basis of materials available on record and dismissed the appeal of the assessee.
Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel submitted that learned CIT(A) has violated the principles of natural justice and decided the issue ex-parte without giving property opportunity to the assessee. The learned CIT(A) should have decided the appeal as per the grounds of appeal taken but did not decide the issue on merits, he has dismissed the appeal of the assessee ex-parte by relying on some judgments and confirmed the addition made by the AO. Further, he requested and undertook that if a chance is given to the assessee, assessee will comply with the notices issued by the learned CIT(A).
On the other hand, learned DR relied on the Order of the lower authorities and submitted that during the course of assessment proceedings as well appellate proceedings, assessee was given several fair opportunities to the assessee but assessee could not substantiate its case with cogent materials and objected for giving further chance to the assessee.
Considering the rival submissions and perusing the entire material available on record and Orders of authorities below, we noted that the AO has made 3 additions as narrated above. However, during the appellate proceedings, the learned CIT(A) gave several chances to the assessee as noted in para 7 of his Order but the assessee has only requested for adjournment of the case and did not respond to any of the notices. Therefore, the learned CIT(A) has dismissed the appeal of the assessee by relying on various judgments.
Considering the prayer of the assessee and in the interest of justice, we are remitting this issue back to the file of CIT(A) for fresh consideration with a cost of Rs.20,000/- to the assessee. Before taking up the case by the learned CIT(A), assessee has to show the cost of payment of Rs.20,000/- to the CIT(A) and learned CIT(A) is directed to decide the issue as per law after giving reasonable opportunity to the assessee. Assessee is directed to produce necessary documents to substantiate its case and not to seek unnecessary adjournments, for early disposal of the case. In case of failure, no second leniency shall be granted to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.