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Facts
The assessee, Karnataka Trade Promotion Organisation, filed appeals against the orders of the NFAC for assessment years 2013-14 and 2014-15. The grounds of appeal were common for both years. The assessee contended that the NFAC passed the orders without providing adequate opportunity of hearing, violating principles of natural justice.
Held
The Tribunal found merit in the assessee's argument that the NFAC passed orders without providing a proper hearing opportunity. Consequently, the Tribunal vacated the orders of the NFAC.
Key Issues
Whether the NFAC orders were passed in violation of the principles of natural justice due to lack of adequate hearing opportunity, and whether the grounds of appeal regarding income determination, exemption denial, and interest liability are valid.
Sections Cited
250, 2(15), 11, 10(23C)(iv), 234B
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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
These two appeals by assessee are directed against order of NFAC for the assessment years 2013-14 & 2014-15. The grounds of appeal in both the appeals are common in nature except for figures and hence, these appeals are clubbed together, heard together and disposed of by this common order for the sake of convenience. 2. The grounds of appeal in ITA No.998/Bang/2024 are reproduced as under: 1. The order of the learned Commissioner of Income tax (Appeals) passed under Section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case. 2. The authorities below are not justified in determining the total income of the appellant at Rs. 5,73,91,152/- as against NIL income declared by the appellant on the facts and circumstances of the case.
ITA Nos.998 & 999/Bang/2024 Karnataka Trade Promotion Organisation, Bangalore Page 2 of 4 3. The order passed by the learned Commissioner of Income-tax (Appeal), NFAC Delhi without providing opportunity of hearing to the appellant is in violation of principles of natural justice and consequently the order passed is required to be set aside on the facts and circumstances of the case. 4. The order of the learned Commissioner of Income tax (Appeals) is passed without providing adequate opportunity to file written submissions and consequently the order is passed in violation of the principles of natural justice on the facts and circumstances of the case. 5. The learned Commissioner of Income tax (Appeals) erred in passing the order under section 250 of the Act after providing opportunity of hearing on 17.03.2020 vide hearing notice under section 250 of the Act dated 09.03.2020 and the appellant sought adjournment on the facts and circumstances of the case. 6. The learned Commissioner of Income tax (Appeals) failed to appreciate the detailed statement of facts filed by the appellant and consequently the order passed under section 250 of the Act is passed in violation of the principles of natural justice on the facts and circumstances of the case. 7. The learned Commissioner of Income-tax (Appeals) is not justified in law in passing the impugned order, without granting another opportunity of hearing for filing the written submissions on each of the grounds of appeal and relevant documents in support of t e case of the appellant on the facts and circumstances of the case. 8. The learned Commissioner of Income tax (Appeals) is not justified in law in holding that the appellant activity is covered by part (b) of the proviso to section 2(15) of the Act and consequently denying the exemption claimed by the appellant under section 11 is not in accordance with law on the facts and circumstances of the case. 9. The learned Commissioner of Income tax (Appeals) is not justified in law in holding that the income is subject to service tax and consequently the appellant is hit by part (b) of the first proviso to section 2(15) of the Act on the facts and circumstances of the case. 10. The learned Commissioner of Income tax (Appeals) is not justified in law in confirming the treatment of the bank interest income of Rs. 1,99,25,941 /- as business income by the learned Assessing officer by invoking the proviso to section 2(15) of the Act on the facts and circumstances of the case.
ITA Nos.998 & 999/Bang/2024 Karnataka Trade Promotion Organisation, Bangalore Page 3 of 4 11. The learned Commissioner of Income tax (Appeals) is not justified in law in confirming the treatment of rental income of the appellant as business income by the learned Assessing officer invoking the proviso to section 2(15) of the Act, when the same ought to be treated as income from house property on the facts and circumstances of the case. 12. The learned Commissioner of Income tax (Appeals) is not justified in law in confirming the denial of exemption claimed by the appellant under section 10(23C)(iv) of the Act during the assessment proceedings on the facts and circumstances of the case. 13. The learned Commissioner of Income tax (Appeals) is not justified in law in confirming the disallowance of the appellant's claim of prior period expenses crystallised during the year a sum of Rs. 28,550/- on the facts and circumstances of the case. 14. The learned Commissioner of Income tax (Appeals) is not justified in law in confirming the order of the learned Assessing officer that the appellant did not fulfill the conditions to continue as an AOP(Trust) and assessed the appellant in the status of a section 8 company on the facts and circumstances of the case. 15. The learned Commissioner of Income tax (Appeals) is not justified in law in not adjudicating the grounds related to claim of not considering credit of TDS a sum of Rs. 71,03,524/- while computing the tax liability by the learned Assessing officer and the appellant is not liable to pay interest under section 234B of the Act on the facts and circumstances of the case. 16. The Appellant craves leave to add, alter, amend, substitute or delete any or all of the grounds of appeal urged above. 17. For the above and other grounds to be urged during the course of hearing of the appeal the Appellant prays that the appeal be allowed in the interest of equity and justice.
The contention of the ld. A.R. is that the learned Commissioner of Income tax (Appeals) erred in passing the order under section 250 of the Income Tax Act, 1961 (in short “The Act”) after providing opportunity of hearing on 17.03.2020 vide hearing notice under section 250 of the Act dated 09.03.2020 and the assessee sought adjournment on the facts and circumstances of the case.
ITA Nos.998 & 999/Bang/2024 Karnataka Trade Promotion Organisation, Bangalore Page 4 of 4 3.1 In this case, notice was originally given by jurisdictional ld. CIT(A) on 9.3.2020 and posted the case on 17.3.2020. However, in this case, NFAC passed the impugned first appellate orders dated 28.3.2024, though there was no notice from NFAC. Accordingly, he submitted that these impugned orders were passed in violation of principles of natural justice. 4. The ld. D.R. relied on the orders of lower authorities. 5. We have heard the rival submissions and perused the materials available on record. We find force in the argument of ld. A.R. since the ld. D.R. is not able to show that whether the NFAC has given any notice for hearing in these assessment years to file necessary submissions before it. Hence, we vacate the order of NFAC in both assessment years and remit the entire issue in dispute to the file of NFAC for fresh consideration to decide the same after giving an opportunity of hearing to the assessee. 6. In the result, both the appeals are partly allowed for statistical purposes. Order pronounced in the open court on 1st July, 2024
Sd/- Sd/- (Beena Pillai) (Chandra Poojari) Judicial Member Accountant Member
Bangalore, Dated 1st July, 2024. VG/SPS
Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order
Asst. Registrar, ITAT, Bangalore.