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Facts
The assessee filed its return of income for AY 2020-21, which was revised. The case was selected for scrutiny, and the Assessing Officer (AO) rejected an additional claim for interest on taxes paid in the USA and certain expenses. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that the CIT(A) failed to pass a speaking order, as required by Section 250(6) of the Income Tax Act, and did not properly adjudicate the grounds of appeal. The AO also failed to provide reasons for disallowing the additional claim.
Key Issues
Whether the CIT(A) passed a speaking order as required by law, and whether the AO provided sufficient reasons for disallowing the additional claims made by the assessee.
Sections Cited
250, 143(3), 144B, 244A
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Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2020-21 dated 14.02.2025, which has been passed against the assessment order u/s 143(3) r.w.s. 144B of the Act, dated 23.09.2022. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. That on the facts and in the circumstances of the case and in law, Ld. CIT(Appeals) grossly erred in dismissing the appeal arising from the assessment order dated 23 September 2022 passed under section 143(3), without granting the Appellant a fair opportunity to furnish the submissions I.T.A. No.: 664/KOL/2025 Assessment Year: 2020-21 Pricewaterhouse Coopers Pvt. Ltd. on the grounds raised in the appeal, thereby violating the principles of natural justice.
That on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in upholding the Ld. AO's rejection of additional claim of interest of Rs. 10,95,16,946 on account of taxes paid in United States of America made during the assessment proceedings, without providing any cogent reasons.
That on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals), erred in not considering the claim (made during the course of assessment proceedings) of business expenses of Rs. 2,68,57,702 pertaining to AY 2020-21, but debited and already disallowed in subsequent AY 2021-22, by merely stating that it does not arise out of the assessment order.
That on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals), erred in not considering the claim (made during the course of assessment proceedings) of expenses of Rs. 2,54,09,949, by merely stating that it does not arise out of the assessment order.
That on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals), erred in dismissing the ground with respect to short grant of interest under section 244A.
That on the facts and circumstances of the case and in law, the amount of Rs. 48,82,46,165 received under the Service Exports from India Scheme (SEIS) as per the Government's Foreign Trade Policy 2015-20 and credited to the profit and loss account for the AY 2020-21, be regarded as a capital receipt not subjected to tax.
That the appellant craves leave to add, amend, modify, rescind, supplement, or alter any or all of the above grounds of appeal stated hereinabove either before or at the time of hearing of this appeal.”
Brief facts of the case are that the assessee is a private limited company incorporated in India under the Companies Act 1956 having its registered office at Kolkata. It is primarily engaged in the business of providing, inter alia, management consultancy services and also business advisory services. The assessee filed its original return of income for AY 2020-21 on 11.02.2021 showing total income of ₹76,86,02,300/- and claimed a refund of ₹131,01,35,650/-. I.T.A. No.: 664/KOL/2025 Assessment Year: 2020-21 Pricewaterhouse Coopers Pvt. Ltd. Subsequently, the return was revised on 31.03.2021 showing total income of ₹75,85,53,330/- and claiming a refund of ₹131,83,79,750/-. The case was selected for complete scrutiny by the Assessing Officer (hereinafter referred to as Ld. 'AO') on 9 issues and in compliance to the notices issued, the assessee furnished the requisite details and also made certain additional claims. Although in paragraphs 5.1, 5.2 and 6.1 of the assessment order, the response of the assessee to the queries raised is reported to be reproduced; however, no such reproduction is made in the assessment order in the corresponding paragraphs. Further, in para-6.2, the submission of the assessee along with the details furnished are mentioned to be perused and the reply of the assessee is found to be acceptable on the issues relating to interest expenses in the ITR filed. However, as regards the issue relating to interest on taxes paid in USA, it is stated in para-6.2 of the assessment order that the assessee had not claimed the interest on taxes paid in USA but it was an additional claim made during the course of the assessment proceedings. The claim was based on some court orders/litigation etc. The Ld. AO has mentioned that as per the law, the same is not allowable and accordingly the ‘additional claim’ made during the course of the assessment proceedings was rejected. The Ld. 'AO', thereafter has passed the assessment order under section 143(3) r.w.s. 144B of the Act accepting the income returned by the assessee of ₹75,85,53,330/-. Aggrieved with the assessment order as the claim of interest and taxes paid in USA was not allowed, the assessee filed an appeal before the Ld. CIT(A). The assessee had raised the issues relating to additional claim of interest on taxes paid in the USA, additional claim of expenses pertaining to A.Y. 2020-21 but debited in A.Y. 2021-22 and prior period expenses. However, vide order dated 14.02.2025, the Ld. I.T.A. No.: 664/KOL/2025 Assessment Year: 2020-21 Pricewaterhouse Coopers Pvt. Ltd. CIT(A) dismissed the appeal of the assessee. The relevant extract from the order of the Ld. CIT(A) is as under: “1.Ground no.1 object to rejecting the additional claim made during the course of assessment proceedings of interest on taxes paid in USA amounting to Rs.109516946/-.During the course of assessment proceedings, a show cause notice dated 01.09.2022 was issued to the assessee to Explain why the interest Expense of Rs.109516946/- claimed should not be disallowed. The submission of the assessee alongwith the details furnished are perused & the reply of the assessee is found to be acceptable on the above issues relating to Interest Expenses in the ITR filed. The assessee has not claimed the interest on taxes paid in USA. It was additional claim made during the course of assessment proceedings. The claim was based on some court orders/litigation etc. Thus it is clear that as per income tax law the same is not allowable. Accordingly, the "additional claim" made during the assessment proceedings is rejected and the same is confirmed. 2.Ground no.2 & 3 do not arise out of the assessment order and hence dismissed.
Ground no.4 & 5 are without any documentary evidence and hence dismissed.
The appeal filed by the assessee is dismissed.”
Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
Rival contentions were heard and the submissions made have been examined. It is submission and paper book as well as request for additional evidence to be admitted has been made, which does not appear to have been filed before either the Ld. CIT(A) or the Ld. AO. It was submitted by the Ld. AR that the order of the Ld. CIT(A) is not a speaking order and the Ld. DR stated that in the grounds of appeal filed before the Ld. CIT(A), there were two issues which were not taken up for adjudication before the Ld. AO and requested to send back the case to the Ld. AO. I.T.A. No.: 664/KOL/2025 Assessment Year: 2020-21 Pricewaterhouse Coopers Pvt. Ltd.
We have considered the submissions made. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.”
Thus, section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. In the present case before us, the Ld. CIT(A) has not mentioned the reasons after examining the records while disposing of the appeal. The Ld. CIT(A) has neither adjudicated upon various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose the assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. The relevant extract from the order is as under: 6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion.
In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot I.T.A. No.: 664/KOL/2025 Assessment Year: 2020-21 Pricewaterhouse Coopers Pvt. Ltd. be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.
Since on the issues raised relating to additional claim of interest on account of taxes paid in USA and other issue, the Ld. CIT(A) has not adjudicated the appeal by passing a speaking order nor the Ld. AO has given reasons as to why the additional claim was not allowable as per law and the submission of the assessee does not appear to have been considered, therefore, both the orders of the Ld. AO as well as the Ld. CIT(A) are hereby set aside and issue is remitted back to the file of the Ld. AO for making the reassessment de novo who will consider the evidence filed before the Tribunal decide as per law on the basis of the evidence filed before us, which the assessee is directed to file before the Ld. AO. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in his appeal are partly allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 14th August, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 14.08.2025 Bidhan (Sr. P.S.) I.T.A. No.: 664/KOL/2025 Assessment Year: 2020-21 Pricewaterhouse Coopers Pvt. Ltd. Copy of the order forwarded to:
Pricewaterhouse Coopers Pvt. Ltd., Block - EP, Plot - Y -14, Salt Lake City, Sector - V, Kolkata, West Bengal, 700091. 2. D.C.I.T., Circle - 1(1), Kolkata.
CIT(A)-NFAC, Delhi.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order