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Income Tax Appellate Tribunal, “SMC” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of Ld. CIT(Appeals)-8, Pune dated 21.09.2018 for the assessment year 2013-14 as per following grounds of appeal on record:
“1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in dismissing the appeal of the assessee confirming the additions made by the A.O. The Ld. CIT(A) failed to apply her mind to the facts of the case before dismissing the appeal of the assessee.
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On the facts and in the circumstances of the case and in law the detailed submissions on the issues involved were explained in the statement of facts appended to Appeal Memo. The Ld. CIT(A) decided the appeal without application of mind. 3. On the facts and in the circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the disallowance made by the A.O. invoking S.14A of the Act in spite of the fact that no exempt income was earned by the assessee. The disallowance of Rs.51,812/-be deleted. 4. On the facts and in the circumstances of the case and in law the Ld.CIT(A) was not justified in confirming the addition made by the A.O. under u/s.41(1) of the Act. The A.O. has no jurisdiction to add back such liability even though the assessee carries forward such liability in her books of account. The disallowance is also permissible by not rejecting the audited books of account u/s.145(3) of the Act. The addition made and confirmed of Rs.15,66,027/- be deleted. 5. On the facts and in the circumstances of the case and in law the Ld.CIT(A) was not justified in confirming the addition made by the A.O. who in turn has accepted the information submitted by the creditors by way of information received from them u/s.133(6) of the Act. This was done on the back of the assessee without any opportunity to the assessee to explain. The addition be deleted. 6. The appellant craves to leave, add/amend or alter any of the above grounds of appeal.”
At the time of hearing, the Ld. AR of the assessee appraised the Bench
that order passed by the Ld. CIT(Appeals) is an ex-parte order and rights and
liabilities were not adjudicated upon. There was non-compliance before the
First Appellate Authority for reasons beyond the control of the assessee and it
was never a deliberate attempt.
The Ld. AR of the assessee submitted that he is not pressing the
grounds No.1, 2 and 3 and therefore, grounds No. 1, 2 and 3 are dismissed as
‘not pressed’.
With regard to ground No. 4, the Ld. AR of the assessee prayed that
they want to represent the case on merits before the Ld. CIT(Appeals) and the
matter may be restored back to the file of the First Appellate Authority.
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The Ld. DR conceded to the prayer of the Ld. AR of the assessee.
We have perused the case records and heard the rival contentions. We
find that the order passed by the Ld. CIT(Appeals) is an ex-parte order. There
was notice u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as
‘the Act’) issued on 19.12.2017 for compliance on 04.01.2018 which was duly
received by the assessee as per acknowledgement of receipt placed on record.
However, none complied in response to the same. Two more notices were
issued on 19.04.2018 & 12.09.2018 which too remained un-complied with.
Thereafter, the Ld. CIT(Appeals) decided the issue on the basis of materials
available on record. It is absolutely clear that the rights and liabilities of the
assessee were not adjudicated upon in the presence of the assessee before the
Ld. CIT(Appeals) and it was only with materials/ documents on record that
the appeal was decided.
That the only ground No. 4 in grounds of appeal which was prayed for
adjudication by the Ld. AR pertains to the addition of Rs.15,66,027/-
u/s.41(1) of the Act. The facts relating to this ground are as under:
“6. In Ground Nos. 2 and 3, the appellant has challenged the addition of Rs.15,66,027/- made u/s. 41(1) of the Act. From the assessment order, it is seen that the AO has discussed the issue in detail in para 5.2 of the assessment order. The facts are that the AO observed from the schedule of sundry creditors that there were creditors whose outstanding balances as on 31/03/2012 & 31/03/2013 had remained the same. Accordingly, the AO required the appellant why the same should not be treated as cessation of liability and taxed as income u/s. 41(1) of the Act. In response, the appellant submitted that these credit balances had been paid in the subsequent financial years, and in support of the same, she furnished ledger extracts of those parties for the relevant financial years. The appellant also furnished details of these creditors regarding their address, ledger account extract, and confirmations. From the ledger accounts furnished by the appellant for the relevant financial years, the AO observed that all the repayments made in subsequent years were in cash, and kept below the limit of Rs.20,000/-. As a sample, he has produced copy of ledger account of the party M/s.Arkay Industries at page 4 of the assessment order. This squaring off appeared to be unusual to the AO, and therefore in order to verify the same, he issued
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letters u/s.133(6) of the Act to 7 such parties seeking details regarding their transactions, as well as confirmation from them. However, except two parties, who accepted the credit balances, notices u/s.133(6) of the Act, sent to 5 parties, carne back un-served. When the AR of the appellant was confronted with the same, he stated that the appellant would contact them and furnish the information required by the AO. Subsequently, the AO received e-mails from two such parties but found various discrepancies in the same. The detailed observations of the AO regarding the discrepancies are contained in para 5.2.3 to 5.2.7 of the assessment order……”
That on this fact, the Ld. CIT(Appeals) observed that the assessee has
not filed single submission to controvert the findings of the Assessing Officer.
In the statement of facts, the assessee has filed only the order of Assessing
Officer without any new supporting documents to represent her case. This
fact shows that the matter needs to be remanded to the file of Ld.
CIT(Appeals) for adjudication on merits. Accordingly, in the interest of justice,
we set aside the order of Ld. CIT(Appeals) and restore this issue i.e. with
regard to the addition made u/s.40(1) of the Act back to the file of the Ld.
CIT(Appeals) to adjudicate on merits after providing reasonable opportunity of
hearing to the assessee. At the same time, we direct the assessee to appear
before the Ld. CIT(Appeals) with relevant documents and evidences in support
of her case and to represent the case on merits, immediately on receipt of this
order. Any service of notice is dispensable.
In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced on 07th day of February, 2019.
Sd/- Sd/- D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 07th February, 2019. SB
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आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-8, Pune. 4. The Pr. CIT-5, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, 5. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.
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Date 1 Draft dictated on 06.02.2019 Sr.PS/PS 2 Draft placed before author 06.02.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order