ADIDARSHAN TRADEWING PRIVATE LIMITED,KOLKATA V. I.T.O., WARD - 12(2), KOLKATA, KOLKATA

ITA 1716/KOL/2024

AI Insights

The case involves Adidarshan Tradewing Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi, concerning the assessment year 2012-13. The primary contention was the ex-parte order confirming additions made under sections 68, 234A, and 234B of the Income Tax Act, 1961, related to share capital and share premium. The ITAT found that the CIT(A) had not adequately addressed the grounds of appeal nor provided a reasoned decision as required by law. Consequently, the ITAT set aside the CIT(A)'s order and remitted the case for a fresh decision, ensuring the assessee is given a reasonable opportunity to be heard.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469569 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Other Referred Cases: Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras), Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Onus to prove; Assessment record; Revision of order
• Section: 144; 143(3); 250; 251; 246A

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA श्री प्रदीप क ुमार चौबे, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 1716/KOL/2024 Assessment Year: 2012-13 Adidarshan Tradewing Private Limited Vs. I.T.O., Ward -12(2), Kolkata (Appellant) (Respondent) PAN: AAJCA6493K Appearances: Assessee represented by : Rakesh Jain, AR. Department represented by : S. Datta, CIT DR. Date of concluding the hearing : January 13th, 2025 Date of pronouncing the order : January 21st, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2012-13 dated 10.07.2024, which has been passed against the assessment order u/s 144/263 of the Act, dated 30.12.2019. Page | 2 I.T.A. No.: 1716/KOL/2024 Assessment Year: 2012-13 Adidarshan Tradewing Private Limited. Page 2 of 8 2. The assessee has taken the following grounds of appeal: “1. That in the facts and circumstances of the case, the C.I.T.(A) erred in confirming the ex-parte order passed by the Ld. Assessing Officer u/s 144/263 of the I. T. Act, 1961 is bad in law and on facts. 2. That in the facts and circumstances of the case, the ex-parte order passed by the C.I.T.(A) without verifying the transactions from complete details filed before Ld. AO during the course of Assessment Proceeding u/s 143(3) and u/s 263/143(3) which were available in the assessment records, is bad in law and on facts. 3. That in the facts and circumstances of the case, the C.I.T.(A) erred in confirming the actions of the Ld. Assessing Officer in making addition u/s 68 of the I. T. Act, 1961 towards additions made for share capital of Rs. 48,470/- and share premium of Rs. 4,84,21,530/- which is without proper basis, reason or justification. 4. That in the facts and circumstances of the case, the CIT(A) erred in confirming the actions of the Ld. Assessing Officer in charging interest u/s 234A and u/s 234B. which is without proper basis, reason or justification. 5. That in the facts and circumstances of the case, the appellant craves leave to modify, alter, submit further more grounds of appeal.” 2.1. The assessee has taken additional grounds of appeal which are as under: “1. That in the facts and circumstances of the case the learned CIT appeal erred in confirming the ex- parte order of the learned AO, when the learned AO had no jurisdiction to pass order under section 144 in response to second 263 order of the Ld. PCIT, when the Ld. CIT himself did not have jurisdiction to pass 2nd 263 order stating the AO's order u/s 143(3)/263 in respect of 1st 263 order, to be erroneous and hence prejudicial to the interest of revenue. 2. That in the facts and circumstances of the case, the appellant craves leave to modify, alter, submit further more grounds of appeal.” 3. The brief facts of the case are that assessment proceedings initiated against the assessee company u/s 143(3) and 263 of the Act, following a notice issued on July 5, 2019, which was served via email and speed post. Despite multiple opportunities provided for compliance, Page | 3 I.T.A. No.: 1716/KOL/2024 Assessment Year: 2012-13 Adidarshan Tradewing Private Limited. Page 3 of 8 the assessee failed to respond or substantiate the high share premium of Rs. 999/- per share, which was deemed unjustified given the company's lack of a track record or substantial financial standing. In the assessment order it is observed that the share subscribers were likely paper companies, and the burden of proof lay with the assessee to demonstrate the legitimacy of the share capital introduced. Judicial precedents emphasized the importance of examining the surrounding circumstances and the credibility of the documents submitted, ultimately leading to a best judgment assessment due to the assessee's non-compliance and failure to provide satisfactory explanations regarding the source of the funds. Aggrieved with the assessment order, the assessee filed appeal before the Ld. CIT(A) wherein notices for hearing were issued on various dates for furnishing written submission but the assessee did not respond to any of the notices. However, perusing the order of the Ld. AO, the Ld. CIT(A) dismissed the order ex- parte. Aggrieved with the order of the Ld. CIT(A) the assessee is in appeal before this Tribunal. 4. We note that while the Ld. CIT(A) has discussed non-compliance on the part of the assessee as the notices sent by e-mail were not complied with. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(6) – The order of 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.” 5. We also note that Section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and a decision as well as the reason for arriving at such decision. In the present case before us, the Ld. CIT(A) has not Page | 4 I.T.A. No.: 1716/KOL/2024 Assessment Year: 2012-13 Adidarshan Tradewing Private Limited. Page 4 of 8 mentioned the reasons after examining the records while disposing of the appeal. The Ld. CIT(A) has neither adjudicated upon various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. The relevant extract from the order is as under: “6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion. 7. In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.” 5.1. It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. The relevant extract is as under: Page | 5 I.T.A. No.: 1716/KOL/2024 Assessment Year: 2012-13 Adidarshan Tradewing Private Limited. Page 5 of 8 “7. An appeal is filed with the CIT(A) from appealable orders listed in Section 246A of the Act. We find that the procedure in appeal before the CIT(A) and the powers of the CIT(A) are governed by Sections 250 and 251 of the Act respectively. The relevant provisions for consideration are as under:— 'Procedure in appeal 250 (1) . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . (4) The Commissioner (Appeals) 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). (5) . . . . . . . . . . . . . . . . . . (6) The order of 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. (6A) . . . . . . . . . . . . . . . . . . (7) . . . . . . . . . . . . . . . . . . Powers of the Commissioner (Appeals) \"Section 251(1) In disposing of 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. (aa) . . . . . . . . . . . . . . . . . . (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) . . . . . . . . . . . . . . . . . . (2) 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. Page | 6 I.T.A. No.: 1716/KOL/2024 Assessment Year: 2012-13 Adidarshan Tradewing Private Limited. Page 6 of 8 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, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.' 8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” 6. In the course of hearing before us, the Ld. AR submitted that the second order u/s 263 of the Act was not justified. However, it is observed that the appeal has been filed against the order giving effect to the order passed by the Ld. CIT(A) u/s 263 of the Act and the order of Page | 7 I.T.A. No.: 1716/KOL/2024 Assessment Year: 2012-13 Adidarshan Tradewing Private Limited. Page 7 of 8 the Ld. CIT(A) was not contested and has therefore, become final. This fact was brought to the notice of the Ld. AR. Since the assessee could not make proper submission before the Ld. AO as well as the Ld. CIT(A), it is deemed proper in the interest of justice and fair play to set aside the order of the Ld. CIT(A) and remit the matter back for deciding the appeal afresh. 6.1. Accordingly, after examining the facts of the case, we deem it appropriate to remit the matter back to the file of the Ld. CIT(A) for disposal of the grounds taken by the assessee on merits, by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, 1962 shall be followed, wherever required. Accordingly, the grounds taken by the assessee in his appeal are allowed for statistical purposes. The additional ground of appeal is dismissed. 7. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 21st January, 2025. Sd/- Sd/- [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 21.01.2025 Bidhan (P.S.) Page | 8 I.T.A. No.: 1716/KOL/2024 Assessment Year: 2012-13 Adidarshan Tradewing Private Limited. Page 8 of 8 Copy of the order forwarded to: 1. Adidarshan Tradewing Private Limited, Mukti Chamber, Room No.402, 4, Clive Row, Kolkata G.P.O. Kolkata, West Bengal, 700001. 2. I.T.O., Ward -12(2), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "