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Income Tax Appellate Tribunal, “A” BENCH : KOLKATA
Before: Hon’ble Sri A.T.Varkey, JM & Shri M.Balaganesh, AM ]
This appeal of the assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals) -IV , Kolkata [ in short the ld CITA] in Appeal No. 268/CIT(A)- IV/Cir.4/2008-09 dated 04.07.2014 against the order passed by the Assistant Commissioner of Income Tax, Circle-4, Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act ‘) dated 26.12.2008 for the Asst Year 2006-07.
2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in dismissing the appeal exparte without giving any findings on the merits of the case , in the facts and circumstances of the case.
The brief facts of this issue is that the assessee is public limited company engaged in the business of share trading according to ld AO. The assessee filed its return of income for the Asst Year 2006-07 on 18.10.2006 showing loss of Rs 1,19,22,562/-. The ld AO observed that the assessee had derived interest income of Rs 30,12,038/- from five
2 M/s. Aristro Projects Ltd. A.Yr.2006-07 parties. The ld AO on analysis of accounts came to the conclusion that the assessee had shown trading loss of Rs 1,47,42,130/- and had set off the interest income with the said loss which is not permissible in law as the share trading loss should be construed as speculation loss in accordance with Explanation to Section 73 of the Act. The assessee replied that its principal business is granting of loans and advances and the quantum of loan and advance was Rs 415 lakhs whereas the quantum of stock of shares was only Rs 85 lakhs. Hence based on funds deployed by the assessee, its principal business should have to be construed only as one of granting loans and advances and accordingly it falls under the exception provided in Explanation to Section 73 of the Act. Hence it prayed that the share trading loss should have to be construed as business loss. The ld AO observed that the share trading loss is primary activity of the assessee and stock of shares is not comparable to balance of loan and advance as both are different in nature. He further observed that just because, for a particular year, loan is higher due to induction of capital, but in earlier year, the loan was much lower than the stock of shares. Accordingly he concluded that the principal business of the assessee is not granting of loans and advances . Based on this observation, he held that the share trading loss would have to be construed as speculation loss and hence setting off the interest income with the same is not permissible in law. The ld CITA dismissed the appeal of the assessee exparte as none appeared before him on the dates of hearing. Aggrieved , the assessee is in appeal before us on the following grounds:- “01) That the order of the learned CIT (A) confirming the additions made by learned assessing officer is contrary to the law and facts of the case. 02) That the learned CIT (A) ought to have passed order after giving reasonable opportunity of hearing to the appellant before passing ex-parte order. 03) That on facts and circumstances of the case the learned CIT (A) ought have treated the loss of Rs.1,49,34,599/- from share trading business as non-speculative loss instead of speculative loss as treated by the Ld. Assessing Officer by applying provisions of Section 73 of Income Tax Act, 1961. 04) That the appellant craves leave to add/or amend any grounds of this appeal.”
3 M/s. Aristro Projects Ltd. A.Yr.2006-07 4. The ld AR argued that the office of the assessee is situated in the second floor at 28, Strand Road, Kolkata and since second floor was not mentioned by the ld CITA in the hearing notice and in the appellate order, the assessee had not received any notice from the office of the ld CITA. He prayed for one last opportunity to be provided to the assessee to pursue its case before the ld CITA. None appeared on behalf of the revenue when the cases were called for hearing. The revenue had not even sought an adjournment before us on the date of hearing. Hence we proceed to dispose off these appeals after hearing the ld AR.
We have heard the ld AR. We find that the ld CITA had passed an order exparte by dismissing the appeal of the assessee for non-compliance. The reason given by the ld AR for non-compliance was that the notice was not served on the assessee due to wrong mention of the address thereon. Hence we deem it fit and appropriate , in the interest of justice and fairplay, to set aside this appeal to the file of the ld CITA, for fresh adjudication, in accordance with law. Needless to mention that the assessee be given reasonable opportunity of being heard. The assessee is also directed to co-operate with the ld CITA by not seeking adjournment unless prevented by bonafide reason and in exceptional circumstances. The ld CITA is directed to dispose off this appeal on or before 30.11.2017 as the appeal relates to Asst Year 2006-07. Accordingly the grounds raised
by the assessee are allowed for statistical purposes.
6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 07.07.2017
Sd/- Sd/- [A.T.Varkey] [ M.Balaganesh ] Judicial Member Accountant Member Dated : 07.07.2017 [RG PS] 3 Copy of the order forwarded to: 1. M/s. Aristro Projects Ltd., 28, Strand Road, 2nd Floor, Kolkata-700001.
A.C.I.T., Cirlce-4, Kolkata.
3..C.I.T.(A)-IV, Kolkata 4. C.I.T.-II, Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.