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Income Tax Appellate Tribunal, BANGALORE BENCH ‘C’, BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO
PER SHRI GEORGE GEORGE K, JUDICIAL MEMBER :
This appeal, at the instance of assessee, is directed against the ld. CIT(A)’s order dated 28-03-2013. The relevant assessment year : 2009-10.
Briefly stated the facts are as follows;
The assessee is a company engaged in the business of software development and solutions. The return of income for the relevant assessment year was filed on 29-09-2009 declaring total income of Rs.28,56,056/-. The assessment was taken up for scrutiny by issuance of notice u/s 143(2) of the IT Act, and the scrutiny assessment was completed on 27-10-2009 u/s 143(3) of the scrutiny assessment, the AO had made the following additions/disallowances;
Disallowance u/s 40(a)(ia) Rs. 3,96,461 2. Disallowance of interest Rs. 9,12,509 3. Disallowance u/s 40A(3) Rs.10,50,723 4. Disallowance of bad debts Rs.13,09,088
3. Aggrieved by the assessment completed, the assessee preferred appeal before the first appellate authority. The ld. CIT(A) dismissed the appeal and confirmed the assessment. The ld,.CIT(A)’s order was an ex-parte order, since the assessee on three hearing dates neither appeared nor filed any details in support of its claim.
Aggrieved by the order of the ld.CIT(A) the assessee is in appeal before us raising various grounds, including the illegality of passing ex-parte order by the ld.CIT(A). The grounds raised by the assessee reads as under;
“1. The ld. CIT(A) (Appeals), Hubli, has erred in passing an ex-parte order which is illegal and bad in law.
2. The learned Commissioner of Income Tax The learned Commissioner of Income Tax (Appeals), Hubli, has erred in passing an ex-parte order without giving a reasonable opportunity of hearing to the appellant hence the same is illegal and bad in law.
The learned CIT (Appeal) action is being challenged on facts and law for dismissing the appeal ex-parte which is not according to the provisions of section 251 of the Income Tax Act, 1961, whereby the assessee has not received any notices for appearing before the CIT (Appeals), Hubli and the natural justice demands that proper opportunity should be given before appeal is decided.
a. Disallowing certain interest paid without deduction of tax u/s. 40(a)(ia). Such disallowance is contrary to the facts of case and against the provisions of law. b. Disallowing the interest paid on the loan taken for site. Such disallowance is contrary to the facts of case and applicable law. c. Treating the certain amount adjusted by way of journal entries as payment made in violation of Section 40A(3) of Income TaxAct,1961. Such treatment is contrary to the facts and applicable law. d. Disallowing bad debts written off for lack of evidence. Such disallowance is against the provisions of law.
The Commissioner of Income Tax (Appeals), Hubli, has failed to appreciate the facts of the case.
In view of the above and on other grounds to be adduced at time of hearing, it is requested that the: i. impugned order be quashed. ii .the interest charged under section 234B & 234D be deleted. iii. penalty proceedings initiated be dropped.
5. The ld. Counsel submitted that the assessee company had shifted its office and the same was duly intimated to the office of the ld.CIT(A). It was submitted that no notice of hearing was received by the assessee, hence there was no representation before the ld.CIT(A). Therefore, it was prayed that in the interest of justice and equity a reasonable opportunity of hearing ought be afforded to the assessee.
6. The ld. DR on the other hand, submitted that the ld.CIT(A)’s records are available with him and it is seen that the hearing notices were despatched by notices to the assessee.
We have heard the rival submissions and perused the material on record.
The CIT(A) had posted the appeal for hearing on 07-12-2012, 13-02-2013 and 27- 03-2013. None of the above the dates, the assessee had appeared nor filed an adjournment application. Hence, the ld.CIT(A) had disposed of the appeal ex- parte. The assessee had claimed the hearing notices issued by the ld,CIT(A) was not received by it. The ld.CIT(A)’ s records are available with us. There is nothing on the record to suggest that the hearing notices have been served on the assessee concerned. Therefore, in the interest of justice and equity, we are of the view, that the matter needs fresh consideration by the ld. CIT(A). Accordingly, the appeal is restored to the file of the ld.CIT(A), with the direction that reasonable opportunity of hearing shall be afforded to the assessee for presenting its case and the assesssee shall co-operate with the ld.CIT(A) for expeditious disposal of the matter. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on the 7th April, 2016.