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Facts
The assessee, engaged in software development, filed its return for AY 2017-18. The AO disallowed depreciation on servers and networking equipment, treating them as plant and machinery instead of computers, leading to an addition to income. The CIT(A) dismissed the assessee's appeal without a hearing or deciding on merits.
Held
The Tribunal held that the CIT(A) erred by dismissing the appeal without providing an opportunity to be heard and without adjudicating on merits. The order of the CIT(A) was found to be in violation of natural justice principles.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without providing an opportunity of being heard to the assessee and without adjudicating the case on merits.
Sections Cited
143(2), 142(1), 143(3), 250, 274, 270A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of Addl/JCIT(A)-1 Nashik dated 20.12.2024 vide DIN & Order No. ITBA/APL/S/250/2024-25/1071415161(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2017-18.
The assessee has raised the following grounds of appeal:
3. The brief facts of the case are that the assessee company is engaged in the business of software development providing IT/ITES services. The assessee company filed its revised return of income for the assessment year 2017-18 on 21.11.2017 declaring total income of Rs.8,85,71,060/-. Thereafter the case was selected for complete scrutiny under CASS and accordingly statutory notices u/s 143(2) of the Act as well as 142(1) of the Act were issued. In response to the same, the assessee e-filed the details as called for. After verifying the details furnished by the assessee company, the AO treated the servers and networking equipments as “plant and machinery” instead of “Computers and Software” as claimed and allowed depreciation @ 15% instead of 60% as claimed by the assessee and accordingly disallowed depreciation of Rs.9,31,633/- added to total income returned.
4. Aggrieved by the assessment completed u/s 143(3) of the Act vide order dated 25.12.2019 the assessee preferred an appeal before the ld. CIT(A)/NFAC.
IP Infusion Software India Private Limited, Bangalore Page 3 of 4 5. The ld. Addl/JCIT (A)-1 Nashik dismissed the appeal of the assessee as the assessee had neither filed any written submission nor furnished any supporting documents during the course of Appellate proceedings. As the assessee failed to avail the opportunity by not complying with the statutory notices, the ld. Addl/JCIT(A) assumed that the assessee is not interested in pursuing his own appeal and dismissed the appeal for non- compliance.
Aggrieved by the order of ld. Addl/JCIT(A) -1 Nashik dated 20/12/2024, the assessee has filed the present appeal before this Tribunal.
Before us, the ld. A.R. of the assessee submitted that ld. Addl/JCIT(A) grossly erred in dismissing the appeal without giving an opportunity of being heard to the assessee, which is a clear violation of principles of natural justice. Further, ld. A.R. of the assessee submitted that even ld. Addl/JCIT (A) had not passed the order on merits and therefore the same is illegal and bad in law.
Ld. D.R. on the other hand supported the order of authorities below.
We have heard the rival submissions and perused the materials available on record. On going through the order ld. Addl/JCIT(A) Nashik, we find that the ld. Addl/JCIT(A) has dismissed the appeal solely on the ground that assessee has neither filed any written submission nor furnished any supporting documents during the course of appellate proceedings. Further, we also take a note of the fact that the ld. Addl/JCIT(A) had also not adjudicated the case on merits. As rightly contended by the ld. AR of the assessee, as per the provision contained in section 250(6) of IP Infusion Software India Private Limited, Bangalore Page 4 of 4 the Act, the order of the ld. ADDL/JCIT(A)/ CIT(A) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. This Being so, we are of the opinion that in the interest of justice and fair play and as requested by the AR of the assessee, we remit the entire issues in dispute to the file of the ld. Addl./JCIT(A) for fresh consideration in accordance with the law. Needless to say a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce/submit all the necessary documents/records/evidence in support of its contention. Further we make it clear that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.