Loading judgment…
Facts
The assessee's appeal is against an order of the CIT(A) that dismissed the appeal ex-parte. The CIT(A) confirmed the disallowance of expenses amounting to Rs. 38,35,086/-. The assessee claims that notices were not properly served, as they were sent to incorrect email addresses.
Held
The Tribunal held that the ex-parte order by the CIT(A) was due to improper service of notices, as they were not sent to the email address provided by the assessee. Consequently, the CIT(A)'s order was set aside.
Key Issues
Whether the ex-parte order passed by the CIT(A) is valid when proper notices were not served to the assessee? Whether the 100% disallowance of expenses is justified without proper opportunity to the assessee?
Sections Cited
147, 144, 37(1), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ SM-A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Manjunatha, G.
(िनधा�रण वष�/Assessment Year: 2018-19) COWA Communication Vs. Income Tax Officer Network, Warangal Ward-1 PAN:AAIFC9267D Warangal (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri, K.A. Sai Prasad, CA राज� व �ारा/Revenue by:: Shri Y Srikanth Reddy, DR सुनवाई की तारीख/Date of hearing: 21/04/2025 घोषणा की तारीख/Pronouncement: 24/04/2025 आदेश/ORDER
Per Vijay Pal Rao, Vice President
This appeal by the assessee is directed against the order dated, 13/01/2025 of the learned CIT (A)-NFAC Delhi, for the A.Y. 2018-19.
The assessee has raised the following grounds of appeal:
1. The order of the ld. First Appellate Authority confirming the order u/s 147 R W S 144 of the l. T. Act is arbitrary and contrary to the provisions of law and facts sf the case.
2. The ld. First Appellate Authority is not justified in confirming the addition towards unverifiable expenses of Rs.38,35,086/- disallowed u/s 37(1) of the Income Tax Act.
The ld. First Appellate Authority failed to give proper opportunity to present the facts.
4. The appellant prays+ leave to add or amend or alter any of the grounds at the time of hearing of appeal'”.
3. At the time of hearing, the learned AR of the assessee has submitted that during the course of hearing, the assessee has filed its reply to the show-cause notice issued by the Assessing Officer and furnished the P&L Account, Balance Sheet, Tax Audit Report, cash book, bank book, bank account statement, ledger account for expenses, purchase ledger of vendors etc., whereas the Assessing Officer has disallowed the entire claim of expenditure total amounting to Rs.38,35,086/- while passing the order u/s 147 r.w.s. 144 of the I.T. Act, 1961. He has further submitted that the learned CIT (A) has also dismissed the appeal of the assessee ex-parte and confirmed the disallowances which are 100% of the claim of expenses while passing the impugned order. He has pointed out that the notices issued by the learned CIT (A) were sent to the email ID (a) camadhinwnirayanna@gmail.com (b) ramesh7362@gmail.com whereas the assessee has given the email id in Form 35 as manohar.gorantala@gmail.com / Manohar.gorantala@gmail.com and therefore, the assessee could not receive the notices issued by the learned CIT (A). He has further submitted that the Assessing Officer also issued the last show-cause notice and sent to the email ID which does not belong to the assessee but to the Tax Consultant of the assessee and therefore, the assessee could not respond to the said show cause notice. Even otherwise, the Assessing Officer has made a disallowance of 100% of the expenses comprising of salary, office expenses etc. which is highly arbitrary and unjustified. Thus, the learned AR has pleaded that Page 2 of 5 the matter may be remanded to the record of the jurisdictional Assessing Officer for fresh adjudication after giving an opportunity to the assessee to explain all the details and furnish the supporting evidences.
On the other hand, the learned DR has relied upon the orders of the authorities below and submitted that despite various notices, the assessee failed to participate in the proceedings before the learned CIT (A).
Having considered the rival submission as well as relevant material available on record, we note that the Assessing Officer has stated in para 3.1 of the assessment order that, in response to the show-cause notice, the assessee has filed replies dated 15/06/2023 and 09/08/2023 explaining the nature of the business and also stopped the business w.e.f. 1/7/2017. The assessee was carrying on the business of distribution of cable network of different broadcasting channels through multiple operators in the name and style of Incable Networking. The Assessing Officer has further noted at page 3 of the assessment order as under:
Thus, it is clear that the assessee has duly responded to the notices issued by the Assessing Officer and also filed the relevant details and evidences. Only the subsequent show-cause notice issued u/s 142(1) of the Act was not responded by the assessee whereby the Assessing Officer asked the assessee to Page 3 of 5 furnish the copies of bills & vouchers and consequently, the Assessing Officer has disallowed 100% claim of expenditure under various heads as under:
The assessee challenged the action of the Assessing Officer before the learned CIT (A). However, the appeal of the assessee was dismissed while passing the impugned ex-parte order. It is manifest from the record that in Form-35, the assessee has given email ID as Manohar.gorantala@gmail.com for notices and other communication. Whereas the learned CIT (A) sent the notices to the other email ID as camadhinenirayanna@gmail.com / ramesh7325@gmail.com. Therefore, the notices were not sent to the email ID given in Form- 35. Thus, in the facts and circumstances of the case, we find that due to improper service of the notices issued by the learned CIT (A), the assessee could not participate in the proceedings before the learned CIT (A). Further, the Assessing Officer has made 100% disallowance of various expenses which is also not justified when the assessee has already produced the books of account and other supporting details and evidences. Hence, in the interest of justice, the impugned order of the learned CIT (A) is set aside and Page 4 of 5 the matter is remanded to the record of the jurisdictional Assessing Officer for fresh adjudication after giving an opportunity of hearing to the assessee.