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Income Tax Appellate Tribunal, “D”, BENCH KOLKATA
Before: SHRI S.S.VISWANETHRA RAVI, JM, & DR. A.L.SAINI, AM
O R D E R
Per Dr. Arjun Lal Saini, AM:
The captioned appeal filed by the Revenue, pertaining to the assessment year 2010-2011, is directed against the order passed by the ld. Commissioner of Income Tax (Appeals)-13, Kolkata, in Appeal No.757/CIT(A)-13/Wd-45(3)/2014-15/Kol, dated 29.02.2016, which in turn arises out of order passed by the AO u/s.143(3) of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 14.03.2013.
Brief facts of the case qua the assessee are that the return of income for assessment year 2010-2011 was filed by the assessee on 20- 09-2010 showing total income of Rs.4,86,810/-. The return of income of the assessee was processed u/s 143(1) of the Act and later on assessee’s case was selected for scrutiny u/s.143(3) of the Act and the AO completed the assessment by making various additions.
Not being satisfied with the order passed by the AO, the assessee filed an appeal before the CIT(A), who has dismissed the appeal of the assessee by observing the followings :-
Decision:- 4. I have gone through the contention of the assessee, the order passed by the AO and the submissions made by the Appellant. The decision of this appeal is given as under:- In this case the appeal was filed on 10.04.2013. Since even various notices dated 25.01.2016, 05.02.2016, 22.02.2016 were issued but the same could not be served as the appellant left it address. The entire proceedings got non complied. The where about of the appellant could not be located hence an ex-party decision is taken in this case. '. Commission disallowance The AO has made addition/disallowances of such as expenses, commission, sale promotion and salary. The AO while adding the commission found that commission is paid for the business claimed to be brought in by the broker related to the same parties. Against single client transaction brokerage have been claimed by different brokers, Shri Arvind Harlalka received commission as director of M/s. Dynamic traders and on behalf of dynamic solution too, The AO also observed that commission is paid @ 40% whereas normal rates are approximately 10%. The AO found that the payment were excessive, services rendered were not proved, the expenses were debited in order reduce taxable profit. As at appellate stage the observation of the AO were not controverted by material evidence. The appellant merely relied on his cheque payment which is not sancrocent in itself, therefore the addition made on this account by the AO is hereby upheld. The ground of appeal is dismissed. (ii) As regard salary addition is concern in case of Mr. Bajaj, Mrs. Sweta Singh and salary to others, the AO has given very categorical finding in each case. In case of disallowance of Mr. Bajaj the AO has relied upon the statement of Shri Manoj Kumar and on the basis of his statement only it was concluded by him that the working period was less than the payment and it was full with contradiction. Similarly Smt. Sweta Singh could not explained her services rendered. The P.F details and salary registers were not produced. Payments were made through self made cash voucher. Based on observation the AO has made addition under aforesaid heads. These facts are not controverted by the appellant. Very vague and general comments/explanation without substance have Smt. Alka Majoj Bajaj been given. Considering the facts, the addition made by the AO is hereby upheld and the ground of appeal is dismissed. Sale Promotion Disallowance (iii)The AO disallowed the sale promotion expenses on the ground that the appellant is earning income from commission and other sources which does not require sale promotion. On the contrary the appellant submitted that being new business it required promoting its business. The appellant has submitted that the purpose has not been verified and ex-party decision has been taken, I agree with the submission of the appellant that the same should have been examined at the same time the appellant also failed to prove that (i) the expenses and its nature (ii) as how the same was incidental to her business. In absence of detail and merely on vague claim the appellants claim is not allowable. The addition made by the AO on this account is upheld. The ground of appeal is dismissed.
Not being satisfied with the order of ld. CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal :-
1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in passing an exparte order without affording a reasonable opportunity of hearing.
2. That the Ld. Commissioner of Income Tax (Appeals)-13 was unjustified in disallowing the expenses amounting to Rs.1, 10,000/- incurred under the head business promotion expenses for her business. 3. That the Ld. Commissioner of Income Tax (Appeals)-13 has erred in treating an amount of Rs. 11,96,199/- as excessive commission paid for introduction of new client viz Md. Aslam. 4. That the Ld. Commissioner of Income Tax (Appeals)-13 has wrongly disallowed an amount of Rs.40,000/- on account of salary paid to one Mr. Manoj Kr. Bajaj. 5. That the Ld. Commissioner of Income Tax (Appeals)-13 has wrongly disallowed an amount of Rs.1,26,000/- on account of salary and incentive paid to one Mrs. Sweta Singh. 6. That the Ld. Commissioner of Income Tax (Appeals)-13 has erred in making ad hoc disallowance of 25% of the salary and incentive paid to employees amounting to Rs. 2,81,000/- treating it as excessive salary paid. 7. That the appellant craves leave to add, alter or delete all or any of the grounds of appeal.
Smt. Alka Majoj Bajaj 5. Although in this appeal the assessee has raised multiple grounds of appeal, but at the time of hearing the solitary grievance of the assessee has been confined to ground No.1 only. Ground No.1 relates to ex-parte order passed by ld. CIT(A) without giving a reasonable opportunity of being heard to the assessee.
6. Ld. AR for the assessee has submitted before us that the assessee did not get the notice of hearing from the ld. CIT(A) because of chance of address. Since the assessee has changed the address of communication, therefore, he could not get notice of hearing from the ld. CIT(A). The Ld. AR for the assessee has further argued that in this case, the rights and liabilities of the assessee has not been determined by the ld. CIT(A), therefore, it is appropriate to send the case back to the file of ld. CIT(A) to re-adjudicate the issue afresh.
7. On the other hand, ld. DR for the revenue has fairly agreed that in the case under consideration the rights and liabilities of the assessee has not been determined by the ld. CIT(A), therefore, it is appropriate to send the case back to the file of ld. CIT(A) to re-adjudicate the issue afresh.
8. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the assessee, as the proposition canvassed by ld. AR for the assessee are supported by the facts narrated by him above. As Ld. AR for the assessee has stated before us that because of change of address, the assessee could not get notice of hearing from the ld. CIT(A) and since in this case the rights and liabilities of the assessee has not been Smt. Alka Majoj Bajaj determined by the ld. CIT(A), therefore, we are of the view to remit the case back to the file of ld. CIT(A) to readjudicate the issue afresh after giving proper opportunity of being heard to the assessee. Since we are sending back the entire case to the file of ld. CIT(A), therefore, we do not adjudicate other grounds raised
by the assessee on merits.
9. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on this 03/03/2017.