DCIT, Circle - 4, Kolkata V. M/s. Duncanes Industries Ltd., Kolkata

ITA 1261/KOL/2008

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99891 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-08-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 30-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: D S DAMLE
• Keywords: Opportunity of being heard; Notional interest
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1261 / KOL / 2008 ASSESSMENT YEAR :2004-05 DCIT, CIRCLE-4 P-7, CHOWRINGHEE SQUARE, 8 TH FLOOR, KOLKATA-69 V/S . DUNCANS INDUSTRIES LTD. 31, N.S. ROAD, KOLKATA 700 001 [ PAN NO.AAACD 9302 P ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI NIRAJ KUMAR, CIT-DR /BY RESPONDENT SHRI D.S.DAMLE, FCA /DATE OF HEARING 07-10-2015 /DATE OF PRONOUNCEMENT 16-10-2015 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IV, KOLKATA IN APPEAL NO.185/CIT(A)-IV/06-07 DATED 09.04.2008. ASSESSMEN T WAS FRAMED BY ACIT, CIRCLE-4, KOLKATA U/S 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 29.12.2006 FOR ASSESSMENT YEAR 2004-05. REVENUE HAS FOLLOWING GROU NDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN DELETING THE A DDITION MADE BY THE A.O TO THE TUNE OF RS.33,309/-. THE ADDITION WA S MADE ON ACCOUNT OF CLUB EXPENSES. ITA NO.1261/KOL/2008 A.Y. 2004-05 DCIT, CIR-4, KOL. V. M/S DUNCANSINDS. LTD. PAGE 2 2. THAT THE LD. CIT(A) HAD ERRED IN DELETING THE DI SALLOWANCE OF RS.6,15,00/- PAID TO BCL. SIMILAR DISALLOWANCE IN T HE ASSESSEES CASE WERE CONFIRMED BY THE CIT(A) IN THE ASSESSMENT YEARS 1998- 99 TO 2001-02. 3. THAT THE LD. CIT(A) HAD ERRED IN DELETING THE DI SALLOWANCE OF LOSS TO THE TUNE OF RS.64,58,365/-. THE LOSS WAS IN CURRED BY INFOTECH DIVISION. THE A.O DISALLOWED THE LOSS CLAI MED BY THE ASSESSEE OBSERVING THAT THE INFOTECH DIVISION HAS C EASED ITS OPERATION. 4. THAT THE LD. CIT(A) HAD ERRED IN DELETING THE DI SALLOWANCE OF CLAIM OF INTEREST ON BORROWING RS.2,02,54,000/-. SI NCE NO PROVISION IN THE PROFIT & LOSS A/C. WAS MADE A.O DISALLOWED B Y STATING THAT WHEN THE INTEREST AMOUNT IS NOT ASCERTAINABLE THERE CAN BE NO QUANTIFICATION OF INTEREST. 5. THAT THE LD. CIT(A) HAD ERRED IN DELETING THE AD DITION OF RS.9,58,86,086/- ON ACCOUNT OF NOTIONAL INTEREST. A SSESSEE HAD GIVEN LOANS TO CERTAIN COMPANIES/PERSONS AND DID N OT CHARGE ANY INTEREST. A.O CALCULATED THE INTEREST AT THE RATE O F 18% AND MADE THE ADDITION. 6. THAT THE LD. CIT(A) HAD ERRED IN DELETING THE DI SALLOWANCE OF RS.90,98,379/- BEING PROVISION FOR CONTINGENCY. SIN CE THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE OF DISALLOWAN CE OF THE SAME IN THE EARLIER YEAR A.O BROUGHT THAT AMOUNT TO TAX. 7. THAT THE LD. CIT(A) HAD ERRED IN DELETING THE DI SALLOWANCE OF RS.68,17,621/- BEING EMPLOYEES CONTRIBUTION TO P.F . AND PENSION FUND. A.O DISALLOWED THE SAME IN VIEW OF THE SPECIF IC PROVISION OF SEC. 2(24)(X) READ WITH SEC. 36(1)(VA) 8. LD. CIT(A), KOLKATA HAD ERRED IN FACTS BY STATIN G THAT NONE APPEARED FOR DEPARTMENT WHEN NO NOTICE U/S. 250(1) WAS SERVED ON THE A.O. SHRI D.S.DAMLE, LD. AUTHORIZED REPRESENTATIVE APPEA RING ON BEHALF OF ASSESSEE AND SHRI NIRAJ KUMAR, LD. DEPARTMENTAL REP RESENTATIVE APPEARING ON BEHALF OF REVENUE. ITA NO.1261/KOL/2008 A.Y. 2004-05 DCIT, CIR-4, KOL. V. M/S DUNCANSINDS. LTD. PAGE 3 2. AT THE OUTSET, LD. DR SUBMITTED THAT LD. CIT(A) HAS PASSED ORDER IN CONTRAVENTION OF SEC.250(2) OF THE ACT AND STATE D THAT THE AO HAS NOT BEEN GIVEN THE OPPORTUNITY OF BEING HEARD AT THE TI ME OF HEARING BEFORE THE CIT(A). AS PER THE SECTION 250(2) OF THE ACT TH E AO HAS RIGHT TO ATTEND THE HEARING BUT THE CIT(A) HAS NOT ISSUED T HE NOTICE TO THE AO TO ATTEND HEARING THE SAID MATTER IN APPEAL. THEREFORE THE ORDER PASSED BY THE CIT(A) IS ERRONEOUS AND BAD IN LAW. THE LD. DR PRAYED TO RESTORE THE FILE TO CIT(A) FOR FRESH ADJUDICATION. ON THE C ONTRARY, LD AR OF ASSESSEE HAS RAISED OBJECTION ON THE ARGUMENTS MADE BY LD. DR AND HE CONTENDED IN THE ORIGINAL GROUNDS NO SUCH OBJECT ION WAS TAKEN BY THE AO BUT HAS BEEN TAKEN ONLY IN REVISED GROUNDS OF AP PEAL. ACCORDING TO HIM, THE OBJECTION IS PURELY TECHNICAL AND THEREFOR E THE APPEAL SHOULD BE HEARD ON MERITS. 3. FROM THE AFORESAID DISCUSSION, WE FIND THAT SECT ION 250(2) OF THE ACT PROVIDES LEGAL RIGHT TO THE AO FOR OPPORTUNITY OF BEING HEARD AT THE TIME OF HEARING APPEAL EITHER IN PERSON OR BY A REP RESENTATIVE. A PLAIN READING OF THE SECTION 250 OF THE ACT IS AS UNDER:- 250(1) THE [COMMISSIONER (APPEALS)] SHALL FIX A DA Y AND PLACE FOR THE HEARING OF THE APPEAL, AND SHALL GIVE NOTICE OF THE SAME TO THE APPELLANT AND TO THE [ASSESSING] OFFICER AGAINST WH OSE ORDER THE APPEAL IS PREFERRED. (2) THE FOLLOWING SHALL HAVE THE RIGHT TO BE HEARD AT THE HEARING OF THE APPEAL (A) THE APPELLANT, EITHER IN PERSON OR BY AN AUTHOR ISED REPRESENTATIVE; (B) THE [ASSESSING] OFFICER, EITHER IN PERSON OR BY A REPRESENTATIVE. 4. WE HAVE PERUSED THE RECORDS OF THE LD. CIT(A) AN D FIND THAT THE AO HAS NOT BEEN GIVEN NOTICE OF HEARING BY LD. CIT( A) AS IS REQUIRED BY THE PROVISION OF SEC. 250(1) OF THE ACT. SO IN VIEW OF THE ABOVE FACTUAL ITA NO.1261/KOL/2008 A.Y. 2004-05 DCIT, CIR-4, KOL. V. M/S DUNCANSINDS. LTD. PAGE 4 POSITION, WE RESTORE THE MATTER TO THE LD. CIT(A) W ITH A DIRECTION TO COMPLETE THE APPELLANT PROCEEDINGS WITHIN A PERIOD NOT EXCEEDING THREE MONTHS FROM THE DATE OF SERVICE OF THE ORDER. IT IS ALSO NOT OUT OF PLACE TO MENTION THAT THE NOTICE SHOULD BE SERVED TO AO AS R EQUIRED UNDER THE LAW AND AO SHOULD CO-OPERATE IN THE APPELLATE PROCE EDINGS SO THAT MATTER CAN BE DISPOSED OFF WITHIN THE PRESCRIBED PE RIOD. HENCE, THIS APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOS ES. 5. SINCE THE APPEAL OF REVENUE IS RESTORED TO THE F ILE OF LD. CIT(A) U/S. 250(1) OF THE ACT, HENCE, THE GROUNDS RAISED B Y REVENUE ON MERITS ARE ADJUDICATED. 6. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 16/1 0/2015 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *DKP !- 16 /10/2015 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-DCIT, CIR-4, P-7, CHOWRINGHEE SQ. 8 TH FL, KOLKATA-69 2. / RESPONDENT-M/S DUNCANS INDS. LTD., 31, N.S. ROAD , KOLKATA-01 3. * +, - - . / CONCERNED CIT KOLKATA 4.- - .- / CIT (A) KOLKATA 5. 012 33+,,- +, , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ - , /TRUE COPY/ / - +, ,