HBP ESTATES PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

Both the parties have been heard. 2.1. The relevant facts of the case are that the assessee who is engaged in the business of Builders/Property Developers declared a loss of Rs.6,79,435/-. In view of the fact that the assessee had earned income of Rs.1,68,961/- from bank interest and interest from others and had claimed business expenses to the tune of Rs. 8,48,396/-. The Assessing Officer disallowed the business expenses and assessed the total income at 1,68,961/- holding as under:- “ Since income earned is income from other sources, only expenses incidental to earning income from other sources is allowed to set off against income from other sources in accordance with Section 57. In view of the provisions of Section 56 & 57 business expenses are disallowed.”

The said finding led to the passing of the penalty order u/s 271(1) (c). Aggrieved by which the assessee came in appeal before the First Appellate Authority. In view of non representation the appeal was dismissed holding as under:- “2. In response to the notices, the last time appellant had appeared was on 9/1/2014, when they made the submissions. On that date my predecessor had asked to furnish the details of travelling expenses and other expenses disallowed by the Assessing Officer. After that the details were never filed and the appellant went on to seek many adjournments as visible from the order sheet. Finally after I joined in this charge, again a notice was issued and the case was fixed on 16/7/2015. The appellant was given further adjournments to 4/8/2015 and 31/8/2015 but after that nobody appeared on 31/8/2015 even. In view of non- compliance, I hereby dismiss the appeal”. (emphasis provided)

Aggrieved the assessee is in appeal. On consideration of the above we are of the view that the aforesaid decision of the learned First Appellate Authority does not meet the statutory requirements as set out sub Section (6) of Section 250 of the Income-tax Act 1961. The same is reproduced hereunder for ready reference:- 250. “(1) …………………………………………. (2) ………………………………………………… (3) ………………………………………………… (4) …………………………………………………. (5) …………………………………………………. (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. (6A)...................................................................”