SAFAL CONSTRUCTION PVT. LTD.,AHMEDABAD vs. THE INCOME TAX OFFICER (INT. TAXN.)-2, AHMEDABAD

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ITA 2766/AHD/2016Status: DisposedITAT Ahmedabad08 October 2018AY 2015-164 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The ITAT held that the ex-parte order passed by the CIT(A) violated the principles of natural justice (audi alteram partem) as the assessee was not given a proper hearing. Therefore, the appeal was restored to the CIT(A) for fresh adjudication.

What were the facts?

The assessee's appeal before the CIT(A) was decided ex-parte as no one appeared on behalf of the assessee on the hearing date. The assessee appealed this ex-parte order to the ITAT, arguing it was bad in law.

What were the issues?

Whether an ex-parte order passed by the CIT(A) without providing a proper opportunity of hearing is valid. Whether the payment to Wimberly Allison Tong & Goo., USA was in the nature of fees for included technical services.

Which sections of the Income-tax Act were involved?

Section 201(1),Section 201(1A),Section 195,Section 9(1)(vii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD lnL; ds le{kA

Before: SHRI WASEEM AHMED

For Respondent: Shri Mudit Nagpal, Sr. D.R
Pronounced: 08/10/2018

आदेश / O R D E R

PER WASEEM AHMED, ACCOUNTANT MEMBER:

The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)–13, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-13/Ahd/87/2015- 16 dated 07-09-2016 relevant to Assessment Year (AY) 2015-16.

2.

The grounds of appeal raised by the assessee are as under:- 1. In law and in the facts and circumstances of the appellant's case, the ex-parte order passed by the learned CIT(A) is bad in law and deserves to be quashed.

- 2 - 2. In law and in the facts and circumstances of the appellant's case, the order u/s 201(1) and 201(1A) r.w.s. 195 of the Income Tax Act 1961is bad in law and deserves to be cancelled. 3. In law and in the facts and circumstances of the appellant's case, Learned CIT(A) has erred in confirming order passed by Assessing Officer in treating the Appellant as an Assessee in default u/s 201(1) and 201(1A) of the Income Tax Act 1961. 4. a) In law and in the facts and circumstances of the appellant's case, CIT(A) erred in confirming order passed by Assessing Officer in characterizing the payment made to Wimberly Allison Tong & Goo., USA (WATG) to be in the nature of fees for included technical services under section 9(1)(vii) of the Act. b) In law and in the facts and circumstances of the appellant's case, CIT(A) erred in confirming order passed by Assessing Officer in characterizing the payment made to Wimberly Allison Tong & Goo., USA (WATG) to be in the nature of fees for included technical services under Article 12(4) of the India-USA DTAA. 5. The Appellant craves leaves to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal.”

3.

At the outset, it was observed from the order of Ld. CIT(A) that the last date of hearing of the appeal was fixed on 22.08.2016 but none- appeared on behalf of the assessee. Therefore, the Ld. CIT(A) passed ex parte order due to no compliance or no submissions were made on the date of hearing. Against the impugned ex parte order of Ld. CIT(A) assessee filed an appeal before us and prayed for restoring the appeal to the ld. CIT-A for fresh adjudication according to the law.

- 3 - On the other hand the ld. DR did not object if the matter is restored back to the ld. CIT-A for fresh adjudication according to the law.

4.

On perusal of appellate order, we find that Ld. CIT(A) affirmed the action of Assessing Officer by passing an ex-parte order. The provisions of Section 250(6) of the Act require the Commissioner (Appeal) to dispose of the appeal in writing with reasoning. But we find from the impugned order of Ld. CIT(A) who confirmed the order of AO without deciding the same on merit. The principle of audi alteram partem is the basic concept of natural justice. The expression “audi alteram partem” implies that a person must be given an opportunity to defend himself. This principle is sine qua non of every civilized society. The right to notice, right to present case and evidence, right to rebut adverse evidence, right to cross-examination, right to legal representation, the disclosure of evidence to the party, report of inquiry to be shown to the other party and reasoned decisions or speaking orders. We took this guidance for the right of hearing, from the ratio as laid down by the Hon'ble Supreme Court in the case of Maneka Gandhi v. Union of India in 1978 SCR (2) 621, wherein Hon'ble Supreme Court has laid down that rule of fair hearing is necessary before passing any order. We find that it is the pre-decision hearing standard of the norm of the rule of audi alteram partem. We find that in this instant case, the assessee was not given a proper hearing. Therefore, we are of the view that the assessee must be given one more opportunity of hearing and to represent his case. Therefore, in exercise of the power conferred under Rule 28 of Tribunal Rules, we restore this appeal to the file of Ld. CIT (A) for

- 4 - reconsideration all grounds of appeal after allowing the proper opportunity of being heard by law. Nevertheless, to mention that the assessee will cooperate in the appeal proceedings and his failure will entail confirmation of the impugned addition made by the AO. The assessee will file necessary evidence on which he wants to rely upon. Hence, this ground of assessee’s appeal stands allowed for statistical purpose.

5.

In the result, for statistical purpose, the appeal of the assessee is treated as allowed.

This Order pronounced in Open Court on 08/10/2018

Sd/- Sd/- ¼e/kqferk jkW; e/kqferk jkW; e/kqferk jkW;½ e/kqferk jkW; ¼olhe vgen olhe vgen½ olhe vgen olhe vgen U;kf;d lnL; U;kf;d lnL; U;kf;d lnL; U;kf;d lnL; Yks[kk ln Yks[kk ln Yks[kk lnL; Yks[kk ln L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 08/10/2018 Priti Yadav, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-13, Ahmedabad. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad. 6. गाड� फाईल / Guard file. आदेशानुसार/BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad

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