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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 Assessee pertaining to Assessment Year 2009-2010, is directed against the order passed by ld. CIT(A)-2, Kolkata in Appeal No.1263/CIT(A)-2/14-15, dated 10.05.2016, which in turn arises out of an order passed by the Assessing Officer (AO) Under Section 154 of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 05.02.2014.
Brief facts of the case qua the assessee are that the assessee filed its return of income for the relevant A.Y.2009-2010 on 25.09.2009 declaring total loss of Rs.5433320/-. The case of the assessee was selected for scrutiny and the AO framed the assessment u/s.143(3) making various additions. Later on, the AO rectified the order U/s 154 of the Act in respect of mistake in computing 100% loss from export business instead of 40%. before the ld. CIT(A), who has dismissed the appeal filed by the assessee observing the followings :-
“I have considered the submissions of the AR of the appellant. While going through the submission filed by the AR of the assessee has not pointed out any mistake in the order of the AO and also not filed any evidences during the appellate proceeding in support of the claim. In view of the above, the order of the AO is upheld. This ground of appeal is dismissed. In the result, the appeal of the appellant is treated as dismissed.”
Not being satisfied with the order of ld. CIT(A), the Revenue is in appeal before us and has taken the following grounds of appeal :-
1) That under the facts and in the circumstances of the case, the impugned order dated 10.05.2016 as passed by the Ld. Commissioner of I.T. (Appeal)-2, Kolkata is rather bad, illegal and arbitrary. 2) That under the facts and circumstances of the case, the concerned assessment can't be covered u/s. 154 as the referred mistake, pointed out by the Ld. ITO Ward-4(4), Kolkata is first of all not a mistake. Further without prejudice to the above, if it's a mistake, the same is not apparent from record. Therefore, the said assessment order of the AO u/s 143(3) cannot be rectified by way of invoking provisions u/s. 154 in Income Tax Act, 1961. 3) That under the facts and circumstances of the case, the company had exported major part of teas out of teas purchased from outside and also out of leaves purchased from outside and processed in the factory of tea estate. The income from teas purchased from outside and exported as well as teas manufactured out of bought leaves and exported cannot be considered as agricultural income of the tea estate. Hence, whatever loss there has been on account of export of teas, 100% of such loss must be allowable. Written submissions were duly placed and everything was duly explained as desired from time to time during the course of appellate proceedings. No evidences were desired during the course of appellate proceedings before the Commissioner of Income Tax (Appeals)- 2, Kolkata. However, the necessary documentary evidences would be produced at the time of final hearing of this Appeal Petition and that may be considered and allowed in the Appeal.
3 Kamala Tea Company Ltd. 4) That the Appellant prays for all reliefs, benefits and advantages and craves leave to add, alter, amend, and put forward any other grounds at the time of the hearing of the instant appeal petition or at any time before disposal of the appeal. 5. Although, in this appeal the assessee has raised a multiple grounds of appeal but at the time of hearing the solitary grievance of the assessee has been confined to the main issue that Assessing Officer passed the rectification order U/s 154 of the Act without giving an opportunity of being heard to the assessee.
5.1 Ld. AR for the assessee submitted before us that the Assessing Officer has rectified the order u/s.154 suo moto without giving opportunity to the assessee. It is essential condition for rectification U/s 154 of the Act that if the rectification of mistake results into reducing the refund or increasing the liability of the assessee, the said rectification order should be passed after giving an opportunity of being heard to the assessee.
Here no opportunity was given by the AO to the assessee, hence order passed U/s 154 is against the principle of natural justice.
5.2. On the other hand, ld. DR for the revenue relied on the orders of the authorities below.
5.3. Having heard the rival submissions, perused the material on record, we are of the view that there is merit in the submissions of ld. AR for the assessee, as the proposition canvassed by ld. AR for the assessee are supported by the facts narrated by him above. As, the Ld. AR for the assessee has pointed out that the Assessing Officer has rectified the 4 Kamala Tea Company Ltd. order u/s.154 suo moto without giving opportunity to the assessee. The Assessing Officer has violated the provisions of section 154 of the Act, as he passed the order without giving an opportunity of being heard to the assessee. Therefore, we remit the case back to the file of AO to re- adjudicate the issue afresh after giving proper opportunity to the assessee. 5.4. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on this 22/02/2017.