ADVAIT ENTERTAINMENT PRIVATE LIMITED ,MUMBAI vs. INCOME TAX OFFICER WARD 16(1)(1), MUMBAI

Learned AR submitted that the assessee has incurred heavy losses in the immediately preceding years. He submitted that the director of the company is residing in UK. Due to heavy losses, operations of the company were stopped and the office was closed. The Assessing Officer reopened the assessment on noticing that the assessee has made deposits with HDFC Bank. The notice issued by the Assessing Officer could not be responded and hence the Assessing Officer assessed the entire deposits of Rs. 359.12 lakhs as income of the assessee. The Assessing Officer also assessed interest arising from deposits amounting to Rs. 2.02 lakhs as income of the assessee. The Assessing Officer was constrained to pass order to the best of his judgement u/s. 144 of the Act.

The Learned AR submitted that the Assessing Officer has also passed order u/s. 230 of the Act restraining the assessee from leaving India. The assessee has was constrained to pay a sum of Rs. 20 lakhs as part payment of tax in order to get permission from the Assessing Officer for leaving India. He submitted that the assessee has paid a sum of Rs.29.00 lakhs till date. He submitted that non-appearance before tax authorities was on account reasons beyond the control of the assessee. The Learned AR submitted that all deposits have been made out of proper sources and the same can be explained to the satisfaction of the Assessing Officer, if an opportunity is given to it. Accordingly, he prayed for complete stay of outstanding demand.

On the contrary, learned DR submitted that assessee has not appeared before the tax authorities and hence the Assessing Officer was constrained to pass the order ex party, to best of his Judgement. The Learned DR submitted that the initial onus is placed upon the assessee to prove the sources for deposits to the satisfaction of the Assessing Officer. Since the assessee has failed to discharge the onus placed on it, Assessing Officer was justified in making the impugned additions. Accordingly he opposed the stay.

On the contrary, learned AR submitted that the assessee did not get an opportunity to discharge the initial onus placed upon it. Accordingly, he prayed that the appeal may also be taken up and the assessee may be given a chance to explain the sources before the Assessing Officer.

We noticed from the orders passed by the tax authorities that the assessee did not appear before both the tax authorities and hence they were constrained to pass the orders ex-parte, without hearing the assessee. The 3 Advait Entertainment Private Limited assessee now claims that it would be in a position to explain the sources, if an opportunity is given to it. Learned AR also submitted that the assessee was constrained to close down its business as it has incurred heavy losses in earlier years. To substantiate this submission, the assessee has also filed copies of ITRs in the paper book. Considering these peculiar facts, with the consent of both the parties, we took the appeal for hearing.

After hearing the case, we are of the view that, in the interest of natural justice, the assessee may be provided with an opportunity to present its case before the Assessing Officer. However, since the assessee has failed to appear before the tax authorities in the original proceedings, we are of the view that the assessee should be imposed a cost for being negligent. Accordingly, we impose a cost of Rs. 25,000/- on the assessee, which shall be paid on or before 31.3.2018. Subject to above said payment, we set aside the order passed by the learned CIT(A) and restore all the issues to the file of the Assessing Officer for doing assessment de-novo. We also direct the assessee to cooperate with the Assessing Officer for expeditious completion of the assessment.

The Learned AR submitted that the Assessing Officer may be directed to revoke the order passed u/s. 230 of the Act. However, we are of the view that this request may be beyond the scope of the present appeal. The assessee may move appropriate petition before appropriate authorities in this regard. In view of the order passed by us, the said petition may be considered liberally by the concerned authority.

Since we have disposed of the appeal itself, the Stay Application filed by the assessee shall become infructuous.

In the result, appeal filed by the assessee is treated as allowed and Stay Application is dismissed. Order has been pronounced in the Court on 9.03.2018.