Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R
PER MAHAVIR SINGH, VP:
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-15, Chennai in dated 29.11.2018. The assessment was framed by the ACIT (OSD), Corporate Circle -6, Chennai for 2 the assessment year 2009-10 u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 25.03.2015.
At the outset, it is noticed that this appeal is barred by limitation by 1004 days. As per Form No. 36, the order of CIT(A) dated 29.11.2018 was received by assessee on 28.12.2018 and the appeal before the Tribunal was filed on 26.11.2021, thereby there is a delay of 1004 days. The ld.AR for the assessee stated that the Hon’ble High Court of Madras in Writ Petition Nos.8761 & 10211 of 2015 and M.P.Nos. 1&1 of 2015, order dated 16.06.2021 has already condoned the delay vide para 8 as under:- “8. The 2nd Writ Petition is filed challenging the original assessment order. Thus, the petition is at liberty to prefer an appeal contemplated under the statute for redressal of his grievances by following the procedures. The petitioner is at liberty to prefer such an appeal within a period of four weeks from the date of receipt of a copy of this order. The appellate authority in the event of receiving any appeal from the petitioner, shall entertain the same, condone the delay if any, and adjudicate the appeal on merits, in accordance with law and by affording opportunity to the parties concerned as expeditiously as possible.”
2.1 When this was pointed out to ld. Senior DR, he could not contend anything.
2.2 After hearing both the sides and in view of the order of Hon’ble Madras High Court, we condone the delay and admit the appeal.
3 3. The ld.AR for the assessee stated that the assessee has challenged the issue of reopening of assessment u/s.147 r.w.s. 148 of the Act on the issue that there is lack of jurisdiction as there is no fresh intangible material available with the AO and there is change of opinion. Secondly on merits, the disallowance of business expenditure as the AO and CIT(A) have erred in applying the concept of matching principle. However, the ld.AR took us through the adjudication of reopening by CIT(A), which is ex-parte and even there is no adjudication on merits. The ld.AR drew our attention to para 4.3 & 4.3.1, which reads as under:- 4.3. CIT(A)’s remarks and decision : I have carefully gone through the observation of the AO in the assessment order as mentioned above under para 4.1, and the appellant's submission before the CIT(A) under para 4,2. The appeal hearing was posted eight times. The AR appeared once on 27-8-2017 and filed a written submission. None appeared for the final hearing on 01-11-2018, Therefore, this appeal is decided based on the material available on record. 4.3.1. Ground - Reopening bad in law: The grounds raised challenging the reopening are routine in nature. As the law stood then, the proceedings for reopening was initiated within a period of four years and the reasons to believe that income chargeable to tax had escaped assessment are good enough to sustain the reopening of assessment within the period of four years from the end of the relevant assessment year. Therefore, the appellant's grounds are dismissed as devoid of merit. The AO's re-opening is upheld.”
4. The ld.AR further took us through the merits of the case and stated that the CIT(A) has simply confirmed the action of the AO without elaborating how the business expenses are pre-operative and not eligible for being treated as business loss. For this, the 4 CIT(A) simply dismissed the issue by observing in 4.3.2 to 4.3.4 as under:- 4.3.2. On Merit: 1 have gone through the contentions of the appellant and the reasoning of the AO in considering the expenditure claimed under the head as 'business' as pre-operative in nature and therefore not eligible for being treated as business loss eligible for setoff against the income computed by the appellant under the head - Other Sources. 4.3.3. The AO in his order u/s 147 in paras 7,8 and 9 has exhaustively dealt with the basis for his stand and relied upon the apex court's decision in the case of Tuticorin Alkali Chemicals Ltd.' The Appellant's reliance on the order of the AO in respect of Fringe Benefit Tax as the basis for treating the expenditure as allowable business expenditure for the current assessment year is misplaced. No doubt, it is a business expenditure, but it was incurred prior to commencement of business and therefore, the AO rightly held as preoperative in nature not eligible for set off against income under the head - Other Sources. 4.3.4. In view of the above remarks, the AO's disallowance of appellant's claim of set off of pre-operative expenditure is upheld. The appellant's grounds are dismissed.
We noted from the above that there is no adjudication by CIT(A) and even the order passed by CIT(A) is ex-parte, without affording opportunity of being heard to the assessee. When these facts were confronted to ld. Senior DR, he could not controvert the above facts.
After hearing rival contentions and going through the order of CIT(A) particularly the findings in regard to reopening and on merits also, we noted that there is no adjudication by CIT(A) on 5 merits. Further, the CIT(A) passed the order ex-parte without hearing the assessee in violation of principles of natural justice. Hence, we quash the order of CIT(A) and restore the matter back to the file of the CIT(A) for fresh adjudication.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 18th May, 2022 at Chennai.