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Facts
The appellant, CSB Bank Ltd., filed its return for AY 2009-10. The AO completed the assessment under Section 143(3) making additions under Section 37 (pension) and Section 14A. The CIT(A) partly allowed the appeal, deleting the pension addition but confirming the Section 14A addition. Subsequently, the AO issued a notice under Section 154 proposing further disallowances under Section 14A and Section 37 (capital expenditure), which the CIT(A) confirmed despite the assessee claiming lack of opportunity due to non-service of the consequential order.
Held
The Tribunal found that the appellant was not provided a reasonable opportunity to file objections against the proposed action under Section 154 as the consequential order was not served. Therefore, the matter is remanded to the AO for fresh disposal in accordance with law, after affording the appellant a reasonable opportunity of hearing, keeping all contentions open.
Key Issues
Whether the order passed by the AO under Section 154 was illegal due to a lack of a mistake apparent from record and the denial of reasonable opportunity of hearing to the assessee.
Sections Cited
143(3), 37, 14A, 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SOUNDARARAJAN K., JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)], dated 12.10.2023 for Assessment Year (AY) 2009-10.
Brief facts of the case are that the appellant is a banking company. The return of income for AY 2009-10 was filed on 24.09.2009 disclosing total income of Rs. 73,18,82,460/-. Against the said return of income, the assessment was completed by the DCIT, Circle – 1(1), Thrissur (hereinafter called "the AO") vide order dated 23.12. 20111 u/s. 143(3) of the Act at a total income of CSB Bank Ltd. Rs. 73,29,78,611/-. While doing so, the AO made addition of Rs. 4,92,212/- by disallowing the payment of pension u/s. 37 of the Income Tax Act, 1961 (the Act) and also made a disallowance u/s. 14A of Rs. 6,03,939/-
Being aggrieved, an appeal was filed before the CIT(A), who vide order dated 19.02.2014 in appeal No. 16/RI/TCR/CIT(A)- V/2011-12 had partly allowed the appeal. The CIT(A) deleted the addition made on account of pension of Rs. 4,92,212/-. However, the CIT(A) confirmed the addition u/s. 14A of the Act. The AO passed consequential order giving effect to the order of the CIT(A) on 11.06.2014 and the AO had issued a notice u/s. 154 of the Act proposing to make the following disallowances:-
i) Disallowance u/s. 14A of Rs. 20,87,731/- ii) Capital expenditure disallowance u/s. 37 of Rs. 2,70,787/- 4. In response to the show cause notice it is submitted that since the consequential order dated 11.06.2014 was not served on the appellant, it was unable to offer any explanation to the show cause notice. However, the AO has proceeded with passing of the order u/s. 154 after making disallowances proposed in the show cause notice vide order dated 24.03.2016.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before us in the present appeal.
CSB Bank Ltd. 7. The learned counsel for the assessee contends that the order passed by the AO u/s. 154 of the Act is illegal, inasmuch as, there are no mistake apparent from record in the order passed by the AO giving effect to the order of the CIT(A). There is no mistake apparent from record which are capable of being rectified u/s. 154 of the Act.
We have heard the rival contentions and perused the material available on record. We find that, when the appellant was issued a show cause notice u/s. 154 of the Act, the appellant had no reasonable opportunity to file objections against the proposed action u/s. 154, as the consequential order was not served on the appellant. Therefore, we are of the considered opinion that the matter requires remand to the file of the AO for fresh disposal of the matter in accordance with law decide the appeal in accordance with law after affording reasonable opportunity of hearing to the appellant. We make it clear that all the contentions raised by the appellant before us are kept opened before the AO.
In the result, the appeal filed by the assessee stands partly allowed.
Order pronounced in the open court on 14th May, 2025.