MR. ANSHUL JAIN,KOLKATA vs. D.C.I.T.CENTRAL CIRCLE-III, KOLKATA, KOLKATA

Brief facts of the case, as could be culled out from the record, are that the assessee is an individual, filed his return of income on 29.09.2009 in respect of ./2013 Assessment year: 2009-2010 Page 2 of 5 which the assessment under section 143(3) was complete and the Assessing Officer by way of an order dated 23.09.2010 raised a demand of Rs.16,74,430/-. However, subsequently the assessee revised the return of income on 24.03.2011 showing taxable total income of Rs.1,14,88,710/- under section 154. The Assessing Officer by way of an order dated 09.11.2010 reduced the demand to Rs.7,52,920/-. While assessing the income of the assessee, the Assessing Officer enhanced the income from the house property, disallowed the claim of bad debt, travelling expenses, business promotion expenses and also the disallowance of loss under section 94(7) of the Act. The Assessing Officer also added back a sum of Rs.4,28,864/-, which was claimed in respect of expenses by invoking the provisions of section 14A read with Rule 8D. Aggrieved by this order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A).

The ld. CIT(Appeals) in his impugned order observed that inspite of issuance of sufficient notices, the assessee did not put in appearance either in person or through representative, the assessee is not interested in pursuing this appeal and under that circumstances, he proceeded to dispose of the appeal on the basis of material available on record. By way of the impugned order, the ld. CIT(Appeals) confirmed the additions made by the Assessing Officer stating that the assessee has not brought any material on record to dispute the findings of the Assessing Officer. In these circumstances, the ld. CIT(Appeals) dismissed the appeal.

Aggrieved by the impugned order of the ld. CIT(Appeals), the assessee approached before the Tribunal on the following grounds:-

“1) That on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) is wrong in drawing adverse inference and passing ex parte order without allowing effective opportunity of hearing.

At the time of hearing before us, the ld. counsel for the assessee has argued that though the ld. CIT(Appeals) in his order observed that the notices were issued for several times, he did not take care to verify whether and when such notices were served on the asseessee. According to the assessee, the notice was served on one occasion that too allowing only three or four days including the intervening Saturday and Sunday, as such the assessee could not make any appearance before the ld. CIT(Appeals). It is now submitted by the ld. A.R. that for want of reasons, the order of the ld. CIT(Appeals) cannot be sustained and the appeal is liable to be allowed.

In his counter argument, the ld. D.R. stated that in any of the occasions before the ld. CIT(Appeals), there was no proper representation for the assessee and thereby the ld. CIT(Appeals) felt compelled to proceed in the absence of assessee and since the assessee did not produce any material evidence whatsoever, the ld. CIT(Appeals) is justified in confirming the additions made by the Assessing Officer. Arguing so, he prayed to dismiss the appeal of the assessee.

In this background, the point that arises for our consideration is whether the authorities below were justified in sustaining the additions? ./2013 Assessment year: 2009-2010 Page 4 of 5

As could be seen from the record that the Assessing Officer while assessing the income of the assesese observed that the income from house property at Rs.7,000/- per month was held to be ad hoc and without any basis and opined that it is very low in comparing with the market rate, as such he reached the deemed rental income at Rs.4,26,312/- per annum being 8% of the capitalized value of the property. The Assessing Officer recorded the reasons for disallowing the bad debts, travelling expenses and business promotion expenses apart from the disallowance under section 94(7) and 14A of the Act. The ld. CIT(Appeals) observed that the notices were issued several times fixing the dates of hearing but on none of the occasions, there was any appearance as in person or through representative for the assessee, as such the matter had to be proceeded ex parte. Though the order of the ld. CIT(Appeals) reads that the notices were issued for several times, it does not give any clue as to whether these notices were served or not. According to the assessee, it was only on one occasion, the notice was served and the ld. CIT(Appeals) disposed of the matter without allowing sufficient time to the assessee because the time left was only 3-5 days including the intervening Saturday and Sunday.

Whatever may be the sufficiency of time because material does not contain any date as to the service of notice, the fact remains that even while disposing of the matter ex parte, the ld. CIT(Appeals) did not record any reason to reach to the conclusion that the additions made by the Assessing Officer be sustainable. The ld. CIT(Appeals) should have recorded the reasons for his support of the findings of the Assessing Officer. Without giving any reason, the order cannot be a speaking order and cannot be sustained. The reasons should have been recorded by the ld. CIT(Appeals) in order to give an opportunity for the Tribunal to verify the veracity of the reason of the ld. CIT(Appeals) in the context of the additions made by the Assessing Officer, without which we feel handicapped to appraise the sustainability of the additions made by the Assessing Officer. We, ./2013 Assessment year: 2009-2010 Page 5 of 5 therefore, find it just and proper to set aside the matter to the file of the ld. CIT(Appeals) for disposal according to law after giving opportunity of being heard to the assessee and recording reasons for supporting and referring to the conclusion drawn by the Assessing Officer. We may it amply clear that it is the last opportunity to the assessee to participate in the assessment proceedings with his cooperation.