RAJESH CHAUHAN ,DELHI vs. ITO, WARD- 62(2), NEW DELHI

At the outset it is submitted by both the sides that the facts to be considered for the disposal of the stay application are the similar to dispose of the appeal itself and therefore, both the stay application and appeal may be heard together. Considering the same, we shall now proceed to dispose of by way of this common order.

Brief facts of the case are that the assessee is an individual engaged in the business of contract as a proprietor of M/s Chauhan constructions and deriving income from business, capital gain and other sources. For the assessment year 2013-14, he filed his return of income on 31/10/2013 declaring an income of Rs. 16,68,311/-. Assessment was, however, complete under section 143(3) of the Income Tax Act, 1961 (for short “the Act”) at Rs. 1,47,63,590/-by making several additions, namely, disallowance on account of wages and other expenses at 10%, addition on account of unsecured loan, addition on account of short-term capital gain, disallowance of depreciation on car, and disallowance of 1/5 of telephone expenses and vehicle running and maintenance expenses.

Aggrieved by such additions, assessee preferred appeal before the Ld. CIT(A). It could be seen from the order of the Ld. CIT(A) that several opportunities were granted to the assessee for entering appearance and to proceed with the matter, but in spite of the same the assessee failed to cooperate with the Ld. CIT(A) to dispose of the matter on merits. Noting so, Ld. CIT(A) observed that in spite of the fact of non-co- operation by the assessee, he considered the case on merits and because despite the numerous opportunities, assessee failed to substantiate the grounds of appeal and therefore, there was no reason for the Ld. CIT(A) to interfere with the order of the Assessing Officer. Ld. CIT(A), therefore, confirmed the additions and dismissed the appeal.

Aggrieved by such an order of the Ld. CIT(A), assessee filed this appeal challenging the additions separately but the main plank of his contention is that despite the fact of non-appearance of the assessee and that the Ld. CIT(A) had to dispose of the appeal ex parte, it is incumbent on the Ld. CIT(A) to pass a speaking order on merits disposing all the grounds of appeal with reference to the material available on record. Ld. AR submitted that because the Ld. CIT(A) passed a very cryptic order, no reasons are available before this Tribunal to appreciate the impugned order on merits. He further submitted that given an opportunity the assessee is ready and willing to cooperate with the Ld. CIT(A) for disposal of the matter on merits.

Per contra it is the submission of the Ld. DR that as could be seen from the impugned order, several opportunities were given to the assessee to put forth their contentions before the Ld. CIT(A), but without assigning any valid reasons the assessee failed to cooperate with the Ld. CIT(A) and, therefore, is not a fit case to give an opportunity to the assessee to contest the matter before the Ld. CIT(A). He further submitted that despite the fact of the assessee failing to cooperate with the Ld. CIT(A) and numerous opportunities, Ld. CIT(A) proceeded to dispose of the matter on merits and considering the fact that the assessee failed to substantiate the grounds of appeal, there was no reason for the Ld. CIT(A) to interfere with the Assessment Order. She, therefore, prayed to dismiss the appeal as well as the Stay Application.

We have gone through the record in the light of the submissions made on either side. There is no dispute that before the Assessing Officer, the assessee submitted the data regarding the GP/NP rates, books of accounts, complete muster rolls, confirmation of the parties from whom unsecured loans were taken etc. Learned Assessing Officer by comparing the GP and NP rates of the current assessment year with those of the previous assessment year thought it fit to disallow 10% of expenses under the heads purchases, wages and other expenses. The observations of the Assessing Officer on the aspect of purchases and the muster rolls and other expenses requires consideration of the Ld. CIT(A) with reference to the material that was available on record. So also, on the other additions, the Ld. CIT(A) should have given reasons as to how and why the observations of the Assessing Officer deserve sustainability. Impugned order on these aspects is very cryptic inasmuch as the appeal is disposed of by the Ld. CIT(A) stating that in spite of numerous opportunities, the assessee failed to substantiate the grounds of appeal and therefore there was no reason for her to interfere with the order of assessment.

8. It is the submission of the Ld. AR that whenever the adjournment application was filed, Ld. CIT(A) considered the same and having satisfied with the reasons, she granted the time and therefore it cannot be said that the assessee is a totally non-cooperative with the Ld. CIT(A) for disposal of the matter on merits and there are sufficient reason for the absence of the assessee on the given dates.

Though the Revenue opposed granting another opportunity to the assessee, there is no reason as to how the assessee stood to gain by allowing the appeal disposed of ex parte and inviting adverse order. Unless and until the rights of the parties are crystallised by afflux of time, all the endeavour of the tax functionaries would be to determine the just tax liability basing on material on record. When the technicalities are pitted against the delivery of substantial Justice, the former must give way to the latter and the highest that would happen by affording an opportunity to the assessee would be that a cause could be decided on merits. It is always in the interest of Justice.

With this view of the matter, we are of the considered opinion that to serve the ends of Justice, an opportunity could be granted to the assessee to substantiate his case before the Ld. CIT(A). However, in our endeavour to strike a balance between the realisation of the rights of the assessee and the necessity to evince due diligence, it is just and necessary to keep the assessee to certain terms like paying costs to the Revenue, to secure his due diligence.

We accordingly set aside the impugned order and remand the matter to the file of Ld. CIT(A) to dispose of the matter afresh after affording an opportunity to the assessee of being heard, and also direct the assessee to pay costs of Rs. 5000/-to the Revenue. Consequent on the disposal of the appeal in the above way, the stay application becomes infructuous and accordingly is liable to be dismissed.

In the result, appeal of the assessee is allowed for statistical purpose and stay application is dismissed as infructuous.