ERAM TECHNOLOGIES PRIVATE LIMITED,TRIVANDRUM vs. ACIT, CIRCLE 1(1), TRIVANDRUM

Brief facts of the case are that the appellant is a company incorporated under the provisions of Companies Act, 1956. It is engaged in the business of imparting training to students. The return of income for AY 2016-17 was filed on 02.01.2017 declaring a loss of Rs. 1,01,56,111/-. Against the said return of income assessment Eram Technologies Pvt. Ltd. was completed by the ACIT, Circle-1(1), Thiruvananthapuram (hereinafter called "the AO") vide order dated 25.12.2018 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 4,34,07,507/-. While doing so, the AO made addition of unsecured loan of Rs. 4,34,07,507/- stating to have been received from one Mr. Ahmed Haji Siddeek rejecting the explanation offered by the appellant that said loan was received as a result of merger of the company called Eram Scientific Solutions Pvt. Ltd. with the appellant company and this transferor company received loan from Pantharayil Ahmad Haji Siddeek for business purposes. As a result of merger of the company the loan was credited in the books of the appellant company.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order held that no additional evidence was filed in substantiation of the explanation in support of the source of unexplained loans.

Being aggrieved, the appellant is in appeal before us in the present appeal.

When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR.

We have carefully perused the order passed by the CIT(A) and found that the CIT(A), without dealing with the grounds of appeal Eram Technologies Pvt. Ltd. raised by the appellant company, merely dismissed the appeal by alleging that the appellant had not filed evidence to substantiate the explanation. As contemplated u/s. 250(6) of the Act the CIT(A) is required to frame points of determination followed by a detailed discussion thereupon before passing the order. It is the settled position of law that the CIT(A), even while disposing of the appeal exparte, is duty bound to dispose of the appeal on merits. Reliance in this regard can be placed on the decision of the Hon'ble Bombay High Court in the case of PCIT vs. Premkumar Arjundas Luthra 279 CTR 614. Therefore, in the light of the above legal position we are of the considered view that the matter requires to be remanded to the file of the CIT(A) with the direction to dispose of the appeal de novo on merits after affording reasonable opportunity of hearing to the assessee.

In the result, the appeal filed by the assessee stands partly allowed.