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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SH. SUDHANSHU SRIVASTAVA & SH.ANADEE NATH MISSHRA
PER ANADEE NATH MISSHRA, ACCOUNTANT MEMBER (A). This appeal has been filed by the assessee against the order dated 15.03.2016 of CIT(A)-4, New Delhi pertaining to A.Y. 2012-13. Grounds of appeal are as under:-
1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad, both in the eyes of law and on facts.
2. On the facts and circumstances of the case, the learned CIT(A) has grossly erred, both on facts and in law in disposing off the appeal ex-parte, despite the fact that the assessee has been appearing before him and has even filed the written submissions and paper book. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in holding that the assessee failed to appear on the date given as per the notice issued by him. 4. On the facts and circumstances of the case, the order passed by the learned CIT(A) without giving proper and adequate opportunity of being heard is bad and liable to be quashed. 5. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the disallowance of Rs.1,61,310/- made by the AO by invoking the provisions of section 14A of the Act. (ii) The learned CIT(A) has erred in confirming the above disallowance by ignoring the fact that the own funds of the assessee being
I.T.A .No.-2425/Del/2016 Ganpati FInsec Pvt. Ltd. vs DCIT Page 2 of 6 more than the borrowed funds, no disallowance on account of interest could have been made under section 14A of the Act. 6. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law in confirming the disallowance of Rs.45,37,865/- made by the AO on account of allocation of expenses before and after the date of survey. (ii) The learned CIT(A) has erred in sustaining the above addition by misinterpreting the facts of the case and by concluding that the assessee has understand its income to this extent.
The appellant carves leave to add, alter, amend or withdraw any of the grounds of appeal at any time before or at the time of hearing of the appeal.”
(B). The assessee filed return of income declaring income of Rs.90,61,570/-. The assessment order dated 18.02.2015 was passed by Assessing Officer (in short “AO”) u/s 143(3) of the Income Tax Act, 1961 (In short “Act”) wherein the following additions were made:-
(a) Disallowance amounting to Rs.1,61,310/- u/s 14A of the Act; (b) Additions of Rs.45,37,865/- on account of survey. (B.1). The assessee filed appeal against the assessment order before the Ld. CIT(A). The Ld. CIT(A), vide order dated 15.03.2016, dismissed the assessee’s appeal without giving finding on merits of additions made by the AO. The relevant portion of the appellate order of Ld. CIT(A) is reproduced below:-
“The case was fixed for hearing on 24/11/2015 but nobody attended and finally a letter dated 15/12/2015 was sent seeking for some more time and the next date of hearing was fixed for 22/12/2015. Another application comes seeking for adjournment which was given to 28/12/2015. On 28/12/2015 another application was sent seeking more time, which was rejected. After that nobody attended and now I find that the appellant had quietly submitted the written submissions and paper book on 1/01/2016 and nobody came forward to discuss the same with me or sought any date to come and discuss with me. Now, I find this situation very tricky when the appellant keeps on seeking the time on one pretext or the other and finally quietly submits the details in my office and never comes forward to discuss the case and the submissions. In this way the basic idea of hearing and I.T.A .No.-2425/Del/2016 Ganpati FInsec Pvt. Ltd. vs DCIT
Page 3 of 6 explaining the matter stands defected. This kind of situation is not acceptable and I hereby dismiss the appeal.”
(B.2). A perusal of the foregoing portion of the order of Ld. CIT(A) shows that the assessee had already filed written submissions and Paper Book on 01.01.2016, which however were not considered in the aforesaid order dated 15.03.2016 of the Ld. CIT(A). Aggrieved by the order of Ld. CIT(A), the assessee is now in appeal in ITAT. At the time of hearing before us, the Ld. Counsel appearing for the assessee contended that the action of Ld. CIT(A) was against the law and the Ld. CIT(A) was required to decide the appeal on merits even when he passed an ex-parte order. The counsel for the assessee pleaded that in the absence of appeal being decided by Ld.CIT(A) on merit, the order of Ld.CIT(A) was bad in law and was liable to be set aside. He drew our attention to the decisions of the Co-ordinate Benches of ITAT, Delhi in the cases of Gaurav Goel vs ITO, Ward-1(2) [ITA No.605/Del/2012 dated 09.04.2012] and M/s Haryana Liquor Company vs ACIT (ITA No.1852/Del/2012 dated 25.06.2012) and pleaded that the matter should be set aside to the file of Ld. CIT(A) for fresh order on merit.
Ld. Departmental Representative (in short “DR”) relied upon the order of the Ld. CIT(A).
(C). We have heard both sides. We have also perused all materials on record carefully. In the case of Gaurav Goel vs ITO (supra), it was held by the Co-ordinate Bench of ITAT, Delhi as under:-
"7. The Ld.DR. relied upon the order of CIT(A) and pleaded for its confirmation and mainly contended that assessee is habitual defaulter. He I.T.A .No.-2425/Del/2016 Ganpati FInsec Pvt. Ltd. vs DCIT Page 4 of 6 has not appeared before the Assessing Officer nor before the CIT(A) and his attitude has not changed even before the tribunal. Therefore, the appeal should be dismissed.
After hearing Ld.DR. and considering the material on record, we find that the assessee has defaulted in appearing before CIT(A) despite repeated opportunities and every time he was seeking adjournment and after having been given final opportunity, CIT(A) refused further adjournment and proceeded ex-pane and passed the order on merits in paras.4.1 and 5 as reproduced in earlier part of the order. From the conclusion as drawn by the CIT(A), while passing the order on merit, we find that he has just confirmed the action of the Assessing Officer without properly discussing the case on merits. He has just confirmed the order of the Assessing Officer. The law provides that even for passing ex-parte order, first appellate authority is required to decide the appeal on merits by passing a speaking order which is absent in this case. As such while considering the entirety of facts, circumstances and material on record, we find it just and appropriate to set aside the order of the CIT(A) and restore the matter back on his file with the direction to re-decide the appeal afresh after giving due opportunity to the assessee well as to the Assessing Officer and to pass a speaking order in accordance with law. We hold and direct accordingly."
(C.1). In the case of M/s Haryana Liquor Company vs ACIT (supra) held by Co-ordinate Bench of ITAT, Delhi as under:-
"A mere glance at the impugned order reveals that the order passed by the Id. CIT(A) is cryptic and grossly violative of one of the facets of the rules of natural justice, namely, that every judicial /quasi-judicial body/authority must pass reasoned order, which should reflect application of mind by the concerned authority to the issues/points raised before it. The application of mind to the material facts and the arguments should manifest itself in the order.
Section 250(6) of the Act mandates that the order of the CIT(A) while disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision. The requirement of recording of reasons and communication thereof by the quasi- judicial authorities has been read as an Integral part of the concept of fair procedure and is an important safeguard to ensure observance of the rule of law. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and minimizes arbitrariness in the decision- making process. We may reiterate that a 'decision' does not merely mean the 'conclusion'. It embraces within its fold the reasons forming basis for the conclusion. [Mukhtiar Singh Vs. State of Punjab,(1995)1 SCC 760(SC)J. It is well settled that reasons are the links between the material on record and the conclusion arrived at by the court and the appellate authority being a quasi judicial authority, the order passed by him should show that he has applied his mind and taken into consideration the basic requirements
I.T.A .No.-2425/Del/2016 Ganpati FInsec Pvt. Ltd. vs DCIT
Page 5 of 6 germane to the issue [V.N. Purushothaman vs. Ag.ITO (1984) 149 ITR 120 (Ker.)].
(C.2.). In the case of Gujarat Themis Biosyn Ltd. vs. Jt. CIT 74 ITD 339 (Ahd), in similar circumstances, it was held as under:
"3. We have carefully considered the facts and circumstances of the case as well as submissions made before us. The impugned order passed by the CIT(A) is clearly violative of the express provisions of s. 250(6), which provides that the appellate orders of the CIT(A) are to state the points arising in the appeal, the decision of the authority thereon and the reasons for such decision. The underlying rationale of the provision is that such orders are subject to further appeal to the Tribunal. Speaking order would obviously enable a party to know precise points decided in his favour or against him. Absence of the formulation of the point for decision for want of clarity in a decision undoubtedly puts a party in quandary. Sec. 250(6) expressly embodies the principles of natural justice and such a provision is clearly mandatory in nature. The impugned order passed by the CIT(A) in violation of the provisions of s. 250(6) cannot, therefore, be sustained. Regarding the decisions of the Delhi Bench of the Tribunal in Multiplan India Ltd. (supra) cited by the learned CIT(A), we find That the said decision is clearly distinguishable. Sec 254 referring to the orders of the Tribunal confers plenary jurisdiction on the Tribunal in the matter of passing orders under s. 254(1). There is no such express stipulation in s. 254 as contained under the provisions of s. 250(6) relating to the orders of first appellate authority. Therefore, reliance placed by the CIT(A) on Multiplan India Ltd. (supra) is entirely misplaced. Similarly, the case of Late Tukojirao Holkar (supra) cited by the learned CIT(A) is distinguishable and does not support the view taken by the CIT(A). For the reasons indicated above, we hereby set aside the impugned order of the CIT(A) and direct the CIT(A) to dispose of the appeal of the assessee afresh after allowing proper opportunity in accordance with law."
In view of the foregoing, especially when the Id. CIT(A) has not passed a speaking order on various issues raised before him ,we consider it fair and appropriate to set aside the order of the Id. CIT(A) and restore the matter to his file for deciding the issues raised in the grounds raised before him by the assessee, afresh in accordance with law, after allowing sufficient opportunity to both the parties. Needless to say that while re-deciding the appeal, the Id. CIT(A) shall pass a speaking order, keeping in mind, inter alia, the mandate of provisions of sec. 250(6) of the Act."
(C.3). Respectfully following the aforesaid precedents, including orders of Co-ordinate Benches of ITAT, Delhi in the cases of Gaurav Goel vs ITO (supra) and M/s Haryana Liquor Company vs ACIT (supra), we set aside
I.T.A .No.-2425/Del/2016 Ganpati FInsec Pvt. Ltd. vs DCIT
Page 6 of 6 the order of Ld.CIT(A) and restore the matter to the file of Ld. CIT(A) with the direction to the Ld.CIT(A) to pass a denovo order on merits.