ASTORIA AGRO & ALLIED INDUSTRIES PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER-12(1)(2), MUMBAI

The grounds raised by the assessee pertains to the disallowance under section 14A of the Income Tax Act, 1961 (for short "the Act") r/w rule 8D of the Income Tax Rules, 1962.

Brief facts are, for the assessment year under dispute the assessee filed its return of income on 28th September 2018, declaring nil income. The assessment in case of the assessee was completed under section 143(3) of the Act determining the total income nil after set–off of loss. However, while doing so, the Assessing Officer made a disallowance of ` 1,55,10,808, under section under section 14A r/w rule 8D, thereby effectively reducing the losses claimed by the assessee. The assessee challenged the aforesaid disallowance before the first appellate authority.

As stated by learned Commissioner (Appeals), the assessee sought adjournment on two occasions and did not appear the third time when the appeal was fixed for hearing. Therefore, he proceeded to decide the appeal ex–parte. While doing so, he sustained the disallowance made by the Assessing Officer u/s 14A r/w rule 8D.

The learned Authorised Representative submitted before us, without affording sufficient opportunity of being heard, learned Commissioner (Appeals) has disposed off the appeal ex–parte in complete violation of rules of natural justice. Therefore, he submitted, the issue raised in the appeal should be restored back to the learned Commissioner (Appeals) for de novo adjudication.

The learned Departmental Representative, though, justified ex– parte disposal of the appeal by the learned Commissioner (Appeals), however, he submitted that one more opportunity can be given to the assessee to represent its case before the first appellate authority.

We have considered rival submissions and perused the material on record. The issue in dispute in the present appeal is with regard to disallowance made under section 14A r/w rule 8D. Before us, learned Authorised Representative has submitted that the disallowance made under section 14A r/w rule 8D is legally unsustainable for various reasons. He has submitted, had learned Commissioner (Appeals) not decided the issue ex–parte, assessee could have convinced him that no disallowance under section 14A r/w rule 8D could be made. Considering the aforesaid submissions of the learned Authorised Representative and without entering into the controversy whether the ex–parte disposal of the appeal by the learned Commissioner (Appeals) is justified or not, we are of the view that the assessee deserves an opportunity to explain its case relating to disallowance mad under section 14A r/w rule 8D before learned Commissioner (Appeals). Accordingly, we set aside the impugned order of learned Commissioner (Appeals) and restore the issue relating to the disallowance made under section 14A r/w rule 8D for de novo adjudication by the learned Commissioner (Appeals) after providing

In the result, appeal is allowed for statistical purposes. Order pronounced in the open Court on 29.05.2019