M/S ICICI VENTURE FUNDS MANAGEMENT CO.LTD ,BANGALORE vs. THE DEPUTY COMMISSIONER OF INCOME TAX LARGE TAX PAYERS UNIT , BANGALORE

Per Shri Jason P Boaz, A.M. : This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-14, Bangalore dt.13.10.2017 for the Assessment Year 2013-14. 2. Briefly stated, the facts of the case are as under :- 2.1 The assessee, a company engaged in asset management / advisory services, filed its return of income for Assessment Year 2013-14

4.1 At the outset, in respect of Ground No.2 (supra), the learned Authorised Representative for the assessee challenged the action of the learned CIT (Appeals) in dismissing the assessee's appeal in limine on the ground that the assessee is not interested in pursuing the appeal.

According to the learned Authorised Representative, the first hearing fixed for the appeal was admittedly attended by the assessee's counsel and the case was adjourned. It is submitted that the notices fixing the next two hearings listed were not received and the last hearing was not attended due to unavoidable reasons and immediately thereafter the order of dismissal was passed by the learned CIT (Appeals). It was contended that the failure on the part of the assessee to attend these hearings before learned CIT (Appeals) was neither intentional nor deliberate but due to unavoidable circumstances as listed in the Affidavit dt.9.4.2018 filed before the Bench. It is submitted by the learned Authorised Representative that the reasons cited for non-appearance in the hearings before CIT (Appeals) amounted to reasonable and sufficient cause. It was prayed that, in the circumstances of the case as laid out above, the impugned order be set aside and the matter restored to the file of the learned CIT (Appeals) for consideration and disposal on merits of the issues raised in that appeal.

4.2 In respect of Ground No.3 (supra), the assessee contends that the learned CIT (Appeals); while disposing off the appeal on merits, erred in holding that the grounds of appeal raised by the assessee are not relevant to the additions made in the order of assessment and related to disallowance under Section 14A of the Act. According to the learned Authorised Representative, a perusal of the grounds of appeal raised before the learned CIT (Appeals) would go to show that the grounds at S.Nos.1 to 7 raised by the assessee did not pertain to disallowance under Section 14A of the Act as mentioned by the learned CIT (Appeals), but to three of the four additions / disallowances made in the order of assessment in excess of Rs.3 Crores, which are - i) Disallowance of year-end provision : Rs.2,54,74,924. ii) Disallowance of deduction u/s.80G : Rs.15,84,250. iii) Disallowance u/s.40(a)(ia) : Rs.72,21,641.

It is contended that the finding of the learned CIT (Appeals) at para 6 of the impugned order that the grounds of appeal raised relate to provision of Sec.14A of the Act is factually incorrect and evidences absolute lack of application of mind by the learned CIT (Appeals) in disposing off the assessee's appeal erroneously on merits. It was pleaded by the learned Authorised Representative that in view of the above erroneous order of the learned CIT (Appeals) and in the interest of substantial justice, the impugned order of the learned CIT (Appeals) be set aside and remanded to his file for consideration and disposal on the merits of the issues raised in the grounds before him.

4.3 Per contra, the learned Departmental Representative for revenue supported the impugned order of the learned CIT (Appeals).

4.4.1 We have heard the rival contentions on the aforesaid grounds Nos.2 & 3 (supra) and have perused and carefully considered the material on record. In our considered view the reasons cited by the assessee in the Affidavit dt.9.4.2018 for non-appearance in the hearings before the learned CIT (Appeals) on account of non-receipt of notices and due to unavoidable circumstances were neither intentional or deliberate and constitute reasonable and sufficient cause; especially considering that huge additions amounting to over Rs.3 Crores had been made in the order of assessment for Assessment Year 2012-13 which were the subject matter of appeal before the learned CIT (Appeals). It is trite law that the ultimate object of assessment is to bring to tax an assessee's correct income.

4.4.2 In the case on hand, we also find an absolute lack of application of mind by the learned CIT (Appeals) while purportedly disposing off the appeal on merits by rendering erroneous finding in respect of grounds raised. This will be evident when we extract hereunder the grounds of appeal raised by the assessee before the CIT (Appeals) and the learned CIT (Appeals) ‘s order in the matter at para 6 of the impugned order.

4.4.3 The grounds of appeal raised by the assessee before the learned CIT (Appeals) are as under :-

4.4.4 Para 6 of the impugned order where the learned CIT (Appeals) purportedly disposed of the grounds of appeal raised by the assessee on merits reads as under :-

“6. Even though there is no representation, the ground of appeal are examined and it is found that the grounds of appeal raised relate to provisions of Sec. 14A in the assessment order. There has been no discussion with reference to Sec. 14A and, hence, the grounds of appeal are not relevant to the additions made in the assessment order. Hence, these ground of appeal are dismissed.” 4.4.5 In the light of the factual matrix and circumstances of the case, as discussed above, in our view, it is imperative in the interest of substantial justice that the impugned order of the learned CIT (Appeals) being passed / disposed off on merits for factually erroneous reasons is liable to be set aside and the matter remanded to the file of the learned CIT (Appeals) for consideration and adjudication of the grounds raised by the assessee in the appeal before him. Needless to add, the learned CIT (Appeals) will dispose off the appeal on merits only after affording the assessee adequate opportunities of being heard and to file details / submissions required, which shall be duly considered. We hold and direct accordingly. Consequently, Grounds 2 & 3 of assessee's appeal disposed off.

5. In view of the findings rendered above on grounds 2 and 3 of this appeal (supra), there is no requirement for us to adjudicate the other grounds raised on merit at Nos.1, 4 to 7.4 of this appeal (supra).

Order pronounced in the open court on the 18th day of April,2018.