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Facts
The assessee, a public sector undertaking, filed an appeal against the CIT(A)'s order for AY 2011-12, which upheld several disallowances by the AO related to exempt income, TDS non-deduction, revaluation loss, rental income, notional interest, and additional depreciation. The CIT(A)/NFAC had dismissed the assessee's appeal ex parte for non-compliance and failure to submit evidence despite multiple opportunities, without deciding the appeal on merits or passing a speaking order.
Held
The Income Tax Appellate Tribunal (ITAT) found that the CIT(A)/NFAC's order was passed without adjudicating the issues on merit and in violation of Section 250(6) of the Income Tax Act, which requires a speaking order with reasons. Considering the principles of natural justice and the assessee's request, the ITAT remitted all issues back to the CIT(A)/NFAC for fresh adjudication, directing the assessee to provide all necessary documents and avoid adjournments.
Key Issues
Whether the CIT(A) erred in dismissing the appeal ex parte without deciding on merits and passing a speaking order, violating statutory provisions and principles of natural justice, thus requiring a fresh adjudication.
Sections Cited
250, 250(6), 14A, 8D, 40a(ia), 24(a), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH:COCHIN
Before: SHRI INTURI RAMA RAO & SHRI KESHAV DUBEY
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH:COCHIN BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER
Assessment Year: 2011-12 Kerala Agro Machinery Corporation Limited Athani Aluva ADIT, Range-1 Vs. Ernakulam Kochi Kerala 683 585 PAN NO : AAACK9968Q APPELLANT RESPONDENT Appellant by : Mrs. Remya S. Menon, A.R. Respondent by : Shri Sanjit Kumar Das, D.R. Date of Hearing : 28.01.2025 Date of Pronouncement : 02.04.2025 O R D E R
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 24.4.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1064318699(1) for the AY 2011-12 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”).
The assessee has raised the following grounds of appeal:
Kerala Agro Machinery Corporation Limited, Ernakulam Page 3 of 6 3. Brief facts of the case are that the assessee company is a public sector undertaking owned by the Kerala Government and is engaged in business of manufacturing and selling of power tillers, power reapers and accessories. The company filed its revised return on 26.4.2012 declaring a total income of Rs. 11,26,46,129/-. While completing the assessment, the AO made the following adjustments: i. Expenditure incurred for earning exempt income has been estimated under the provisions of section 14A r.w. Rule 8D of the Act and Rs.1,02,500/- has been disallowed. ii. Expenditure on which TDS was not deducted and remitted before the date of filing of return has been disallowed u/s 40a(ia) of the Act. iii. Loss on revaluation of tools amounting to Rs.4,48,719/- has been added back to the returned income. iv. Income from rental income has been treated as business income and deduction of Rs. 64,233/- claimed u/s 24(a) has been disallowed. v. Notional interest of Rs. 4,50,000/- on loan granted to Kerala State Coconut Development Corporation Limited has been treated as income of the assessee. vi. Additional depreciation of Rs.35,622/- claimed on certain items of plant and machinery have been disallowed. The AO accordingly assessed on a total income of Rs. 11,76,31,612/- u/s. 143(3) of the Act for the Assessment year 2011-12 vide order dated 06.03.2014.
Aggrieved by the assessment completed u/s. 143(3) of the Act dated 06.03.2014, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
Kerala Agro Machinery Corporation Limited, Ernakulam Page 4 of 6 5. During the appellate proceedings, the assessee was provided adequate number of opportunity for hearing and sufficient time to file submissions along with supporting documentary evidences. However, the assessee has not availed the benefit of opportunities of hearing provided. The details of opportunities of being heard provided to the assessee are tabulated below for ready reference: Sl.No. Date of Date of Remarks Notice/letter hearing u/s 250 of the Act 1. 24.12.2020 10.02.2021 No response 2. 10.07.2023 25.07.2023 No response 3. 10.08.2023 17.08.2023 No response 4. 27.09.2023 03.10.2023 No response 5. 05.10.2023 10.10.2023 Responded only for request of adjournment but has not furnished any submissions and evidences in support of grounds of appeal 6. 12.12.2023 18.12.2023 No response 7. 05.02.2024 09.02.2024 Responded only for request of adjournment but has not furnished any submissions and evidences in support of grounds of appeal 8. 11.03.2024 18.03.2024 Final opportunity was given. Responded only for request of adjournment but has not furnished any submissions and evidences in support of grounds of appeal 9. 03.04.2024 09.04.2024 Last and final opportunity was given. Responded only for request of adjournment but has not furnished any submissions and evidences in support of grounds of appeal 5.1 The ld. CIT(A)/NFAC held that the assessee has been provided sufficient opportunities but assessee failed to submit any submission or evidence during the appellate proceedings in support Kerala Agro Machinery Corporation Limited, Ernakulam Page 5 of 6 of grounds of appeal as well as statement of facts and remained non-compliant. Therefore, in view of the above facts, the ld. CIT(A)/NFAC upheld the order of the AO, in absence of any supporting evidence, documents submitted by the assessee and treated the appeal of the assessee as disposed off for statistical purposes.
6. Aggrieved by the order of ld. CIT(A)/NFAC dated 24.04.2024, the assessee has filed the present appeal before this Tribunal.
7. Before us, the ld. AR of the assessee submitted that the action of the ld. CIT(A)/NFAC without deciding the appeal on merits by passing a speaking order and without affording adequate opportunity of being heard to the assessee is illegal and bad in law. Further, the ld. AR of the assessee also submitted that it is obligatory for the ld. CIT(A)/NFAC to pass a speaking order deciding the points raised in appeal, stating his reasons for the decision and prayed to provide one more opportunity of being heard before the ld. CIT(A)/NFAC.
The ld. DR on the other hand supported the order of the authority below.
We have heard the rival submissions and perused the material available on record. A perusal of the fact of the case shows that in spite of granting several opportunities, the assessee could not represent his case before the ld. CIT(A)/NFAC as a result of which the ld. CIT(A)/NFAC has disposed off the appeal of the assessee by upholding the order of AO. Further on perusal of the order of the ld. CIT(A)/NFAC, it is found that the ld. CIT(A)/NFAC has also not adjudicated the issues on merit. As rightly contended by the ld. AR of the assessee, as per the provision contained in section 250(6) of the Act, the order of the ld. CIT(A)/NFAC disposing Kerala Agro Machinery Corporation Limited, Ernakulam Page 6 of 6 of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.
9.1 During the course of hearing, the ld. AR of the assessee requested that the assessee may be provided with one more opportunity to represent his case before the ld. CIT(A)/NFAC. In view of the above, considering the prayer of the ld. A.R. of the assessee, as well as in the interest of justice and fair play, we deem it fit to remit the entire issues involved in the present appeal to the file of ld. CIT(A)/NFAC for fresh adjudication in accordance with the law. Needles to say, reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce all the necessary documents/evidences/information in support of his claim and shall not seek unnecessary adjournments. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 2nd April, 2025 Sd/- Sd/- (Inturi Rama Rao) (Keshav Dubey) Accountant Member Judicial Member Bangalore, Dated: 2nd April, 2025. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order
Asst. Registrar, ITAT, Cochin.