PARK HEALTH SYSTEMS PRIVATE LIMITED,HYDERABAD vs. ACIT , CIRCLE 16(2), HYDERABAD, HYDERABAD

Facts of the case, in brief, are that the appellant company is engaged in Community, personal and social service business and operates hospitals in the name of ‘The Deccan Hospital’, filed its return of income for A.Y. 2017-18 on 30.10.2017 declaring current year loss of Rs.27,97,65,139/-. The assessment has been completed u/s 143(3) of the Income Tax Act, 1961 on 21.12.2019 determining total loss of Rs.24,59,83,410/- by making various additions, including the addition towards excess consideration received for allotment of equity shares under section 56(2)(viib) of the Income Tax Act, 1961 (hereinafter referred as “the Act”) and disallowance of prior period expenses.

The assessee carried the matter in appeal before the first appellate authority. Before the ld.CIT(A), the assessee neither appeared nor filed any details. Therefore, the ld.CIT(A) partly allowed the appeal filed by the appellant and sustained additions made towards excess consideration received for allotment of equity shares under section 56(2)(viib) of the Act and disallowance of prior period expenses. Aggrieved with the order of ld.CIT(A), the assessee is in appeal before the Tribunal.

The learned counsel for the assessee, Shri V. Siva Kumar, Advocate, submitted that the ld.CIT(A) erred in sustaining the additions made by the Assessing Officer without providing

The ld. DR Ms. Sheetal Sarin, on the other hand, supporting the order of ld.CIT(A) submitted that the assessee could not explain as to why it had not appeared before the ld.CIT(A) when the appeal was called for hearing. Therefore, the ld. DR submitted that there is no need to give another opportunity of hearing to the assessee before the first appellate authority.

We have heard both the parties, perused the material available on record and gone through the orders of the authorities below. Admittedly, the ld.CIT(A)’s order is silent on opportunities given to the assessee. Although, the ld.CIT(A) in Para 9.2 of the order stated that sufficient opportunity was given to the appellant to explain its case, but the appellant has not furnished any documentary evidence, it seems that ld.CIT(A) did not provide a reasonable opportunity of hearing to the assessee to explain its case. We further noted that as claimed by the assessee in its affidavit, the ld.CIT(A) seems to have given only two dates of hearing. The first notice of hearing was issued on 28.01.2021 for which, the appellant has responded. The second notice of hearing was issued on 16.12.2023 i.e., almost after a gap of 3 years which was not noticed by the assessee. The appellant has explained the reasons for not appearing on 16.12.2023. As per the affidavit filed by the appellant, the notice issued by the office of ld.CIT(A) went into spam folder and because of this, he could not file any response to the notice issued by the ld.CIT(A). In our considered opinion, the reason given by the appellant for not appearing before the first appellate authority when the appeal was taken up for hearing is bonafide and acceptable. Therefore, we are of the considered view that the appellant deserves one more opportunity of hearing before the first appellate authority to explain its case. Thus, we set aside the order of ld.CIT(A) appeal and restore the issue to the file of ld.CIT(A) for fresh adjudication. The ld.CIT(A) is directed to provide reasonable opportunity of hearing of the 5 ITA 197/Hyd/2024 assessee to explain its case. Needless to say, the assessee shall appear before the ld.CIT(A) as and when the appeal is taken up for hearing without seeking any adjournment.

In the result, the appeal filed by the assessee is allowed for statistical purposes.