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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri Vijay Mehta Department by: Shri A. N. Sontakke सुनवाई क" तार"ख / Date of Hearing: 02.05.2016 घोषणा क" तार"ख /Date of Pronouncement: 01.08.2015 आदेश / O R D E R PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 22.01.2015 passed by the Commissioner of Income Tax (Appeals) 45, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2010-11. 2. The assessee has raised the following issue:
“1. Non – attendance in appeal proceeding: A.Y. 2010-11 The learned Commissioner of Income Tax (Appeals)- 45 has erred in dismissing the appeal without giving the assessee an opportunity of being heard and not serving any proper notice to the assessee.
Hawala purchases amounting to Rs.39,46,280/- disallowed u/s.69C of the Income Tax Act, 1961: The learned Commissioner of Income Tax (Appeals) – 45 has erred in disallowing the entire purchase expenditure amounting to Rs.39,46,280/- without considering the fact that the assessee is a pure reseller and shall not be able to effect any sales without making adequate purchases. The learned CIT(A) has erred in confirming the above disallowance without giving the assessee an opportunity of being heard.
3. Disallowance amounting to Rs.47,084/- u/s.14A of the Income Tax Act, 1961: The learned Commissioner of Income Tax (Appeals) – 45 has erred in disallowing an amount of Rs.47,084/- u/s.14A of the Income Tax Act, 1961 as the investments bearing dividend income were made using own interest free funds of the assessee and the borrowed funds were used only for business purposes and not for making any investments. The learned CIT(A) has erred in confirming the above disallowance without giving the assessee an opportunity of being heard.
Disallowance of interest expenses amounting to Rs.14,113/- The learned AO has erred by disallowing the interest expenses amounting to Rs.14,113/- as the borrowed funds were used wholly and exclusively for the purpose of the business of the assessee and accordingly, eligible for deduction u/s.37(1) of the Act. The learned CIT(A) has erred in confirming the above disallowance without giving the assessee an opportunity of being heard.
5. Interest levied u/s.234B and 234C of the Income Tax Act, 1961 A.Y. 2010-11 On deletion of the aforesaid disallowances made in the assessment order, the consequential interest levied u/s.234B and 234C of the Act shall stand deleted. The learned CIT(A) has erred in confirming the above disallowance without giving the assessee an opportunity of being heard.
Penalty under the Income Tax Act, 1961 The learned AO has erred in initiating penalty proceedings u/s.271(1)(c) of the Act. The learned CIT(A) has erred in confirming the initiation of the penalty proceedings without giving the assessee an opportunity of being heard.
The brief facts of the of the case are that the assessee filed its return of on 15.10.2010 declaring total income to the tune of Rs.6,47,101/-. The assessee is a dealer in chemicals and solvents and is the proprietor of M/s. Sachin Chemicals. He also declared his business income as capital income and claimed deduction on account of interest of housing loan under the head income from house property. The case was selected for scrutiny, therefore the notice u/s.143(2) of the income on Income Tax Act, 1961 ( in short “the Act”) dated 29.09.2011 was issued and served upon the assessee. Subsequently, notice u/s.142(1) dated 10.01.2013 was issued and served upon the assessee. Subsequently, notice u/s.143(1) dated of the Act 18.10.2012 along with a questionnaire was issued and served upon the assessee. Second notice u/s.142(1) of the Act dated 10.01.2013 was issued and served upon the assessee. Thereafter the income of the assessee was assessed to the tune of Rs.47,89,580/-. The assessee was not satisfied with the certain additions, therefore, the assessee filed an appeal before the CIT(A) who dismissed the appeal in absence without gone into merits therefore the assessee has filed the present appeal before us. A.Y. 2010-11 ISSUE NO.1:-
4. We have heard the arguments advanced by the learned representative of the parties and perused the record. The representative of the assessee has argued that the CIT(A) has dismissed the appeal without giving an opportunity of being heard to the assessee and without deciding the matter of controversy on record, therefore, the order passed by the CIT(A) is wrong against law and facts and is not liable to be sustainable in the eyes of law. In support of these contentions the learned representative of the assessee has placed reliance upon the law settled in Gujarat Themis Biosyn Ltd. Vs. Joint Commissioner of Income Tax on 20th August 1999, 74 ITD 339, Ahmadabad. On the other hand the learned representative of the department has refuted the said contentions. Keeping in view of the argument advanced by the parties and perused the record carefully it came into notice that het CIT(A) has decided the appeal in question without the presence of the parties. None appeared on behalf of the assessee and none appeared on behalf of the revenue. On appraisal of the order on record we found that the CIT(A) did not disposed the case on merits, he simply mentioned in his order about this fact that the assessee was asked to adduced the written submissions but the assessee failed to submit the written submission. Therefore the revenue’s appeal in question is hereby ordered to be dismissed. Apparently, the CIT(A) did not comply the provision in section 250(6) of the Act which provide that the appellate order of the CIT(A) are to state the points arising in the appeal, the decision of the authority thereon and the reasons for such decision. Speaking order would obviously enable the party to know precious points decided in his favour or against him. A.Y. 2010-11 Absence of the formulation of the points for decision for want of clarity in a decision undoubtedly put the party in quandary. Section 250(6) of the Act expressly embodies the principles of natural justice and such a provision is clearly mandatory in nature. Therefore, the said circumstances the order in question has been passed in violation of the provisions u/s.250(6) of the Act is not liable to be sustainable in the eyes of law specifically in the reason mentioned above i.e. in the decisions of the Delhi Bench of the Tribunal in Multiplan India Ltd. (1991) 38 ITD 320 (Delhi) and Gujarat Themis Biosyn Ltd. Vs. Joint Commissioner of Income Tax on 20th August 1999, 74 ITD 339, Ahmadabad. Hence we set aside the order in question on this point and direct the CIT(A) to decide the matter afresh by giving an opportunity of being heard to the assessee.
ISSUE NO.2 TO 6:-
Since the order of the CIT(A) has been ordered to be set aside while deciding the issue no.1 therefore in the said circumstances the decision upon the issue no.2 to 6 would only be in the nature of academic hence is not required to be adjudicated.