MONO HERBICIDES PVT. LTD.,KOLKATA vs. ITO, WD-4(2), KOLKATA, KOLKATA

The facts of the case are as stated in brief. The Assessee company filed its return of income for A.Y.2010-11 on dated 21.09.2010 for a total income of Rs.29,670/-. The return was processed u/s 143(1) of the Act, but subsequently the case was selected for scrutiny u/s 143(3) of the Act. The AO has completed the assessment u/s 143(3) by making the addition u/s 40(a)(ia) of the Act, and the other disallowances. The AO noticed that an amount of Rs.2,92,116/- had been debited to the profit and loss account under the head “Interest paid on unsecured loan”. It was also found that no TDS had been made on such payments. It was thus a clear violation of the provisions of section 194A of the Act and consequently attracted the penal provisions of section 40(a)(ia) of the Act. Since the assessee could not file the reply on time Aggrieved from the order of the ld. AO the assessee has filed an appeal before the ld. CIT(A), who had also confirmed the addition made by AO by observing the followings :- “In the grounds of appeal, the assessee has contested addition of Rs.2,92,116/- made U/s. 40(a)(ia) of the Act for non-deduction of tax at source on payment of interest for unsecured loans. This apart, grounds are taken stating that AO erred in computation of tax. The appeal was fixed for hearing first on 11/12/2015. The director of the assessee- company filed a letter on 10/12/2015, seeking adjournment of the hearing for three weeks. The hearing was re-fixed on 22/12/2015 and duly acknowledged. Nobody attended or filed any written submission till date. It is thus presumed that the assessee is not interested to pursue the appeal and has nothing to say in defence of the grounds taken. The AO made the addition of Rs.2,92,116/- for non-deduction of tax at source on payments of interest after due deliberation. There is nothing on record to controvert the decision of the AO. Therefore, the addition of Rs.2,92,116/- is confirmed. So far as tax calculation is concerned, no corroborative evidence is found on record and therefore, assessee’s claim cannot be entertained.”

Not being satisfied with the order of the ld. CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal.

Although the assessee has raised in this appeal multiple grounds of appeal, but at the time of hearing the grievance of the assesse has been confined to the issue that the order has been passed by the ld. CIT(A) without giving an opportunity of being heard to the assessee. The solitary grievance of the assessee is that the order passed by the ld. CIT(A) is without giving an opportunity of being heard and therefore against the principles of natural justice.

On the other hand, the ld. Departmental Representative for the revenue has primarily reiterated the stand taken by the AO, which we have already noted in our earlier para, and is not being repeated for the sake of brevity.

Having heard the rival submissions, and perused the materials available on record, we are of the view that there is merit in the submissions of the assessee, as the propositions canvassed by the ld. AR for the assessee are supported by the facts 3 Mono Herbicides Pvt.Ltd. A..Y.2010-11 narrated by him above. As ld AR has rightly explained before us that no proper opportunity of being heard, has been given to him by the ld. CIT(A).While going through the order of the ld. CIT(A), we noticed that he had not given sufficient opportunity to the assessee of being heard and he passed the order in a hurry, which is against the principles of natural justice. The director of the assessee company filed a letter on 10.12.2015, seeking adjournment for the hearing for three weeks before the ld. CIT(A). The hearing was re-fixed on 22.12.2015 and duly acknowledged. Nobody attended or filed any written submission till that date. Therefore the ld. CIT(A) presumed that the assessee is not interested to pursue the appeal and has nothing to say in defence of the grounds taken by him. This way, he has passed the order by confirming the action of the ld. AO. As we have seen from the order of the ld. CIT(A) that he should have provided more opportunity to the assessee and he is supposed to send one more reminding letter/serving the final date of hearing to the assessee. But he has failed to do so. The assessee had taken the adjournment and he was supposed to file the written submissions but he could not come on that date fixed for hearing because of some reasons. At this juncture, it was the duty of the ld. CIT(A) to send another notice stating that final opportunity to the assessee for hearing, but the same has not been done by the ld. CIT(A). Therefore we are of the view that the order passed by the ld. CIT(A) is an exparte order without giving an opportunity to the assessee for hearing, i.e. no sufficient opportunity has been given to the assessee of being heard. Considering the factual position, we are of the view that this issue requires fresh examination of the facts by the ld.CIT(A). Therefore we deem it fit and appropriate to send back /remit the issue back to the ld. CIT(A) to decide the appeal after giving adequate opportunity of being heard to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the court on 19.10.2016