M/S. VICTOR COMMERCIAL CO. LTD.,KOLKATA vs. ACIT, CC - 1(2), KOLKATA, KOLKATA

Present for: Appellant by : S. Jhajaria, AR Respondent by : Pradip Biswas, Addl. CIT Date of Hearing : 23.07.2024 Date of Pronouncement : 27.08.2024 O R D E R PER RAKESH MISHRA, ACCOUNTANT MEMBER: Both these appeals filed by the assessee are against the two separate orders of the Ld. Commissioner of Income Tax (Appeals), Kolkata-20 (hereinafter referred to as “the Ld. CIT(A)”) passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AYs 2009-10 and 2010-11, dated 30.04.2024 respectively. As both the appeals involve identical issues, the same were heard together and are being disposed of by a common order for the sake of brevity and convenience.

(Assessment Year: 2009-10)

& 1127/Kol/2024 M/s Victor Commercial Co. Ltd. : AYs: 2009-10 and 2010-11 We would first take up appeal for the Assessment Year 2009-10 which has been preferred by the assessee challenging the order dated 30.04.2024, passed by the Ld. CIT(A) whereby the Ld. CIT(A) dismissed the appeal of the Assessee against the Assessment Order, dated 30.11.2016, passed under Section 147/143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

1. For that in view of the facts and in the circumstances the Ld. CIT(A) was wholly unjustified in passing the ex-parte order without adjudicating the matter on jurisdictional aspects as well as on the merits and in view of the facts and in the circumstances the Ld. CIT(A)'s action in such respect is bad in law and the order may kindly be set aside/quashed/cancelled.

2. Without prejudice to Ground No. 1 above, the Ld. CIT(A) erred in not adjudicating on the validity of the notice u/s 148 and the consequential order u/s 147/143(3) and in view of the facts and in the circumstances the Ld. CIT(A)'s action in such respect is bad in law and the order may kindly be set aside/quashed/cancelled.

3. Without prejudice to Grounds No. 1 & 2 above, the Ld. CIT(A) erred in not appreciating the fact that the impugned notice u/s 148 for initiation of the impugned proceedings was merely on the basis of the report of Investigation Wing without there being any independent verification by AO and as such the order so passed is bad in law and it may be held accordingly.

4. Without prejudice to Grounds No. 1, 2 & 3 above, the Ld. CIT(A) failed to dispose the objection so filed by the appellant for reopening the impugned proceedings and the consequential order so passed u/s 147/143(3) is bad in law and it may be held accordingly.

5. For that in view of the facts and in the circumstances the Ld. CIT(A) erred in confirming the order of AO in disallowing the loss incurred by the appellant in F & O Segment of Rs. 6,04,477/- treating the same as bogus loss and such action of Ld. CIT(A) is bad in law and it may be held accordingly.

6. For that your petitioner craves the right to put additional grounds and/or to alter/ amend/ modify the present grounds at the time of hearing.”

(Assessment Year: 2010-11) 3. The grounds of appeal raised by the assessee in AY 2010-11 are reproduced as under:

& 1127/Kol/2024 M/s Victor Commercial Co. Ltd. : AYs: 2009-10 and 2010-11 1. For that in view of the facts and in the circumstances the Ld. CIT(A) was wholly unjustified in passing the ex-parte order without adjudicating the matter on jurisdictional aspects as well as on the merits and in view of the facts and in the circumstances the Ld. CIT()'s action in such respect is bad in law and the order may kindly be set aside/ quashed/cancelled.

2. Without prejudice to Ground No. 1 above, the Ld. CIT(A) erred in not adjudicating on the validity of the notice u/s 148 and the consequential order u/s 147/143(3) and in view of the facts and in the circumstances the Ld. CIT(A)'s action in such respect is bad in law and the order may kindly be set aside/quashed/cancelled.

5. For that in view of the facts and in the circumstances the Ld. CIT(A) erred in confirming the order of AO in disallowing the loss incurred by the appellant in F & O Segment of Rs. 3,36,836/- treating the same as bogus loss and such action of Ld. CIT(A) is bad in law and it may be held accordingly.

4. Brief facts of the case are that the appellant is an NBFC company. The appellant had filed its return of income on 30.9.2009 for the AY 2009- 10 declaring an income of Rs. 14,30,900/-. Subsequently, the return was processed u/s 143(1) dt. 11.10.2010 and notice u/s 148 was issued to the appellant on 30.3.2016 as information was received from the office of the DDIT (Inv.), Unit 1(3), Ahmedabad that the assessee had indulged in manipulation of its taxable income by use of Client Code Modification (CCM). The appellant had filed the return under protest in response to such notice u/s 148. Subsequently, scrutiny proceedings were taken up and the reassessment proceedings were completed vide order u/s 147/143(3) wherein certain adjustment/additions/disallowances were made and the income was assessed at Rs.20,35,380/- as against the returned income of Rs. 14,30,900/-. The assessee had claimed credit for TDS of Rs. 16,20,135/- & 1127/Kol/2024 M/s Victor Commercial Co. Ltd. : AYs: 2009-10 and 2010-11 in its return of income whereas the AO in the Order gave credit for Rs. 4,71,696/- only. Aggrieved with the assessment order, the assessee filed in appeal before the Ld. CIT(A), Kolkata-20 on 11 grounds. The Ld. CIT(A) mentioned the five notices served upon the assessee for hearing of the case and the lack of response and dismissed the appeal. Aggrieved with the order of the Ld. CIT(A) the assessee has filed this appeal before the Tribunal.

6. In this respect, it is relevant to reproduce the relevant paras of the order of the CIT(A) as under: “4. The present appeal is against the order u/s 147/143(3) passed by the A.O. I have carefully perused the grounds of appeal

and the order of the A.O. The appellant has failed to offer any explanation or submission in support of the grounds raised in this appeal nor any supporting evidences were produced by it despite adequate opportunity having been provided. In the appeal stage also the appellant failed to explain the following disallowance/addition:

1. Disallowance of loss ………Rs. 6,04,477/-

5. In the instant case, the appellant is not able to show that the decision of the A.O. was arbitrary, biased, irrational, vindicative or capricious without any basis. I find no reason to inference with the decision of the A.O.

6. In the result, the appeal filed by the appellant is dismissed by not allowing any grounds of appeal.”

7. The order of the Ld. CIT(A) is a non-speaking one and while the assessee had sought adjournment, the appeal was dismissed. Neither the order of the Ld. CIT(A) has adjudicated upon the grounds of appeal, one of & 1127/Kol/2024 M/s Victor Commercial Co. Ltd. : AYs: 2009-10 and 2010-11 which related to credit of TDS, nor the order is a speaking one. In this respect, it is relevant to examine the provisions of section 250(6) of the Act, which are reproduced as under: “250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.”

7.1 Thus, section 250(6) casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and a decision as well as the reason for arriving at such decision. In the present case before us, even though the assessee had made its submissions along with supporting documents before the Ld. AO which are on record, compliance has not been made by the Ld. CIT(A) by not mentioning the reasons after examining the assessment records while disposing of the appeal nor the request for adjournment was considered and therefore, adequate opportunity was not allowed to the assessee. We also note that while the Ld. CIT(A) has discussed non-compliance on the part of the assessee as the five notices sent by e-mail were not complied with, however, no mention is made of the adjournment application of the assessee but the Ld. CIT(A) upheld the view of the AO and has not passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras), it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. The relevant extract from the order is as under: 6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the & 1127/Kol/2024 M/s Victor Commercial Co. Ltd. : AYs: 2009-10 and 2010-11 grounds of appeal

, also by expressing his reasons and findings in support of his conclusion.

7. In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non- application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.

7.2 It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act. The relevant extract is as under:

& 1127/Kol/2024 M/s Victor Commercial Co. Ltd. : AYs: 2009-10 and 2010-11 (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty." (c) . . . . . . . . . . . . . . . . . . (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation. - In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.' 8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.

9. As the facts of the case in for AY 2010-11 are also similar to the facts of the case for AY 2009-10, therefore, the appeal for AY 2010-11 is also allowed for statistical purposes and the order of the Ld. CIT(A) is set aside and he is required to pass a speaking order after affording a reasonable opportunity of being heard to the assessee and after examination of the facts of the case.