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Income Tax Appellate Tribunal, “C” BENCH KOLKATA
Before: SHRI SONJOY SARMA & SHRI GIRISH AGRAWAL
Present for: Appellant by : Shri Sunil Surana, AR Respondent by : Shri Raja Sengupta, Addl. CIT, Sr. DR Date of Hearing : 04.01.2024 Date of Pronouncement : 15.01.2024 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide order No. ITBA/NFAC/S/250/2022-23/1050018060(1) dated 22.02.2023 passed against the assessment order by ITO, Ward-9(2), Kolkata u/s.143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 04.12.2019 for AY 2017-18.
Grounds taken by the assessee are as under: “1. For that the order of the Ld. CIT(A) is arbitrary, ilIegal and bad in law. 2. For that the Ld. CIT(A) erred in deciding the appeal ex parte without allowing the appellant any proper and reasonable opportunity of being heard.
3. For that the order passed by the Ld. CIT(A) is bad in law since the ld. CIT (A) has not decided the issues ground wise in respect of the grounds raised by the appellant in the Memo of Appeal.
Wrinkle Marketing Pvt. Ltd., AY 2017-18 4. For that the Ld. CIT (A) is bad in law since the order passed is not any speaking order nor the C.I.T(A) has looked into the assessment records and relevant materials to conclude that the order of the Ld. AO cannot be interfered with.
5. For that the Ld. CIT (A) erred in Confirming the action of Ld. AO in disallowing 20 % of the travelling and conveyance expenses as non business expenses merely on estimates and ignoring the fact that the assessee is a company which cannot have any personal expenses.
For that the Ld. CIT(A) erred in disallowing Rs. 11,84,919/- being loss, from F&O without assigning any reason in spite of the fact that the assessee adduced sufficient evidences in support of the same and no defects were found therein.
7. For that the Ld. CIT)A) erred in confirming the action of Ld. AO in disallowing the Security transaction tax of Rs. 1,09,586/- whereas STT is paid on Turnover and credited to the account of Government of India.
For that the Ld. CIT(A) erred in confirming the action of Ld. AO in disallowing Rs. 2,00,28,541/- being loss from derivatives merely relying in the report of DIT, Kolkata in respect of bogus LTCG/STCL/Trading Loss/Valuation loss on shares without providing the copy of the same to the assessee.
For that under the facts and circumstances of the case the Ld. CIT(A) erred in considering the Loss on Derivative transaction of Rs.20,028,541/- as unexplained cash credit whereas all the information were duly on records.
For that on the facts and in the circumstances of the case the order passed by the Ld. CIT(A) is not maintainable.
For that the order of the AO be modified and the assessee be given relief prayed for.
For that the-appellant craves leave to arid, alter or withdraw any ground/s of appeal on or before hearing of the appeal.”
There is a brief delay of nine days in filing the present appeal for which an affidavit is placed on record by one of the directors of the assessee explaining the reason for the delay caused in filing the appeal. From the perusal of the same, we find it appropriate to condone the delay and admit the appeal for its adjudication.
Brief facts of the case are that assessee filed its return of income on 02.02.2018 reporting total income of Rs.3,35,690/-. Case of the assessee was taken for complete scrutiny under CASS for which statutory notices were issued and served on the assessee. In the assessment order, Ld. AO noted that assessee has furnished documentary evidence through on-line which have been checked and Wrinkle Marketing Pvt. Ltd., AY 2017-18 verified. In the course of assessment proceeding, Ld. AO raised queries in respect of transaction of purchase and sale of shares, claim of loss on F&O transactions and claim relating to travel and conveyance expenses. Ld. AO noted that owing to non-compliance by the assessee on the queries so raised, made the addition in respect of claim of derivative loss, loss of F&O, securities transaction and travelling and conveyance expenses to complete the assessment. Aggrieved, assessee went in appeal before the Ld. CIT(A) who dismissed the same by observing that assessee has not filed any submissions or information or documents on various opportunities given in the course of hearing. According to him, since no written submission/information/documents were filed by the assessee, the appeal was decided on the basis of material available on record and was thus, dismissed. Aggrieved, assessee is in appeal before the Tribunal.
In the course of hearing before us, Ld. Counsel for the assessee emphasized that Ld. CIT(A) has passed the order ex parte without giving the assessee proper and reasonable opportunity of being heard. According to him, Ld. CIT(A) did not look into the assessment records and the relevant materials which were furnished in the course of assessment before dismissing the appeal. Ld. Counsel thus, pleaded before us to remit the matter back to the file of Ld. CIT(A) to decide the grounds raised
before him meritoriously after considering the submissions of the assessee for which he gave an assurance that all the relevant and necessary documents along with explanations shall be furnished in support of the claim of the assessee. On confrontation of all these submissions by the Ld. Counsel to the Ld. Sr. DR, nothing objectionable was placed before us.
6. Before we accept the plea made by the Ld. Counsel to remit the matter back to the file of Ld. CIT(A), we would like to note that Ld.
Wrinkle Marketing Pvt. Ltd., AY 2017-18 CIT(A) is required to dispose the appeal in accordance with the provisions contained in section 250 of the Act. We also find that no effective cognizance of the submissions made by the assessee in the course of the appellate proceedings have been taken by the Ld. CIT(A) while disposing of the appeal. The Act provides for the powers of Commissioner (Appeal) u/s. 251 which adequately deals with the powers in disposing of the appeal by the Ld. CIT(A). The section is reproduced as under: “Powers of the Commissioner (Appeals) 251. (1) In disposing off an appeal, the Commissioner (Appeals), shall have the following powers: (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment; or (aa) in an appeal against the order of assessment in respect of which the proceeding before the Settlement Commission abates under section 245HA, he may, after taking into consideration all the material and other information produced by the assessee before, or the results of the inquiry held or evidence recorded by, the Settlement Commission, in the course of the proceeding before it and such other material as may be brought on his record, confirm, reduce, enhance or annul the assessment; (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) in any other case — he may pass such orders in the appeal as he thinks fit. 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, not- withstanding that such matter was not raised before the Commissioner (Appeals) by the appel- lant.”
Section 250 of the Act provides for procedure to be adopted and disposing of the appeal by the Ld. CIT(A). Sub-section (4) of section 250 of the Act provides that the Ld. CIT(A) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing officer to make further inquiry and report the result of the same to the Commissioner (Appeals). Further, sub-section (6) provides that the CIT(A) shall pass an order in writing and shall set
Wrinkle Marketing Pvt. Ltd., AY 2017-18 the points for determination, the decision thereon and the reasons for the decision. The section is reproduced as under:
“250. Procedure in appeal (1) The 7 Deputy Commissioner (Appeals)] 8 or, as the case may be, the Commissioner (Appeals)] shall fix a day and place for the hearing of the appeal, and shall give notice of the same to the appellant and to the 9 Assessing] Officer against whose order the appeal is preferred. (2) The following shall have the right to be heard at the hearing of the appeal- (a) the appellant, either in person or by an authorised representative; (b) the 10 Assessing] Officer, either- in person or by a representative. (3) The 1 Deputy Commissioner (Appeals)] 2 or, as the case may be, the Commissioner (Appeals)] shall have the power to adjourn the hearing of the appeal from time to time. (4) The 3 Deputy Commissioner (Appeals)] 4 or, as the case may be, the Commissioner (Appeals)] may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the 5 Assessing] Officer to make further inquiry and report the result of the same to the 6 Deputy Commissioner (Appeals)] 7 or, as the case may be, the Commissioner (Appeals)]. (5) The 8 Deputy Commissioner (Appeals)] 9 or, as the case may be, the Commissioner (Appeals)] may, at the hearing of an appeal, allow the appellant to go into any ground of appeal not specified in the grounds of appeal, if the 10 Deputy Commissioner (Appeals)] 11 or, as the case may be, the Commissioner (Appeals)] is satisfied that the omission of that ground from the form of appeal was not wilful or unreasonable. (6) The order of the 12 Deputy Commissioner (Appeals)] 13 or, as the case may be, 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) On the disposal of the appeal, the 14 Deputy Commissioner (Appeals)] 15 or, as the case may be, the Commissioner (Appeals)] shall communicate the order passed by him to the assessee and to the 16 Chief Commissioner or Commissioner].
8. Principles governing the exercise of powers by the First Appellate Authority are contemplated under sections 250 and 251 of the Act, breach of which has far reaching consequences on the administration of justice culminating in the litigant approaching the higher appellate authority. It is required that the first appellate authority viz. CIT(A) will appreciate the evidence, consider the arguments and apply the law on the given set of facts and circumstances and arrive at findings.
9. Keeping in mind the provision of sections 250 and 251 of the Act referred as above, it is incumbent upon the Ld. CIT(A) to pass a Wrinkle Marketing Pvt. Ltd., AY 2017-18 speaking order on the merits of the case by examining, verifying and analyzing the material on record. Since there are no meritorious finding given by the Ld. CIT(A) on the submissions made by the assessee and also considering the grounds raised by the assessee where the Ld. CIT(A) has passed an ex parte order without giving opportunity of being heard, we find it fit to remit the matter back to the file of the Ld. CIT(A) for his objective and meritorious observations and findings on the submissions made by the assessee. Needless to say the assessee be given reasonable opportunity of being heard and the assessee shall also be cooperating for the effective disposal of the appeal and will be at liberty to make further submissions as deem fit. Since the matter is restored to the file of Ld. CIT(A) for meritorious adjudication by passing a speaking order in terms of our observations made hereinabove, we are not expressing any views on the merits of the case so as to limit the appellate procedure before the Ld. CIT(A). The observations herein made by us in remanding the matter back to the file of Ld. CIT(A) will not impair or injure the case of the Revenue nor will it cause any prejudice to the defense/explanation of the assessee. Accordingly, we set aside the impugned order of the Ld. CIT(A) and restore the matter back to the file of the Ld. CIT(A) to decide afresh after affording reasonable opportunity of being heard to the assessee and the assessee is directed to be diligent in the appellate proceedings.