M/s Bellary Computer IT Solutions (P) Ltd., V. DCIT,

ITA 141/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0342 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 06-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-01-2014
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Bad and doubtful debts
• Section: 40A(3); 143(3); 234B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C, BANGALORE BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.141(BANG/2014 (ASSESSMENT YEAR 2009-10) M/S BELLARY COMPUTER IT SOLUTIONS (P)LTD., NO.13/20B, 1 ST CROSS, GANDHINAGAR, BELLARY APPELLANT PAN NO.AACCB4891M VS THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-11(1), BANGALORE. R ESPONDENT ASSESSEE BY : SHRI MUKESH KUMAR JAIN, CA REVENUE BY : SHRI SUNIL KUMAR AGAR WALA, JCIT DATE OF HEARING : 06-04-2016 DATE OF PRONOUNCEMENT : 07-04-2016 O R D E R PER SHRI GEORGE GEORGE K, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF ASSESSEE, IS DIRECT ED AGAINST THE LD. CIT(A)S ORDER DATED 28-03-2013. THE RELEVANT ASSESSMENT YE AR : 2009-10. 2. BRIEFLY STATED THE FACTS ARE AS FOLLOWS; THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND SOLUTIONS. THE RETURN OF INCOME FO R THE RELEVANT ASSESSMENT YEAR WAS FILED ON 29-09-2009 DECLARING TOTAL INCOME OF RS.28,56,056/-. THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY BY ISSUANCE OF NOTICE U/S 143(2) OF THE IT ACT, AND THE SCRUTINY ASSESSMENT WAS COMPLETED ON 2 7-10-2009 U/S 143(3) OF THE 2 ITA NO.141(B)14 ACT, BY QUANTIFYING THE TOTAL INCOME AT RS.65,24,83 7/-. WHILE COMPLETING THE SCRUTINY ASSESSMENT, THE AO HAD MADE THE FOLLOWING ADDITIONS/DISALLOWANCES; 1. DISALLOWANCE U/S 40(A)(IA) RS. 3,96,461 2. DISALLOWANCE OF INTEREST RS. 9,12,509 3. DISALLOWANCE U/S 40A(3) RS.10,50,723 4. DISALLOWANCE OF BAD DEBTS RS.13,09,088 3. AGGRIEVED BY THE ASSESSMENT COMPLETED, THE ASSES SEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE LD. CIT( A) DISMISSED THE APPEAL AND CONFIRMED THE ASSESSMENT. THE LD,.CIT(A)S ORDER W AS AN EX-PARTE ORDER, SINCE THE ASSESSEE ON THREE HEARING DATES NEITHER APPEARED NO R FILED ANY DETAILS IN SUPPORT OF ITS CLAIM. 4. AGGRIEVED BY THE ORDER OF THE LD.CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US RAISING VARIOUS GROUNDS, INCLUDING THE ILLEGALITY O F PASSING EX-PARTE ORDER BY THE LD.CIT(A). THE GROUNDS RAISED BY THE ASSESSEE READ S AS UNDER; 1. THE LD. CIT(A) (APPEALS) , HUBLI , HAS ERRED IN PASSING AN EX-PARTE ORDER WHICH I S ILLEGAL AND BAD IN LAW . 2. THE LEARNED COMMISSIONER OF INCOME TAX THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , HUBLI , HAS ERRED IN PASSING AN EX-PARTE ORDER WITHOUT GIVING A REASONAB LE OPPORTUNITY OF HEARING TO THE APPELLANT HENCE THE S AME IS ILLEGAL AND BAD IN LAW . 3. THE LEARNED CIT (APPEAL) ACTION IS BEING CHALLENGED ON FACTS AND LAW FOR DISMISSING THE APPEAL EX-PARTE WH ICH IS NOT ACCORDING TO THE PROVISIONS OF SECT I ON 251 OF THE INCOME TAX ACT, 1961 , WHEREBY THE ASSESSEE HAS NOT RECEIVED ANY NOTICES FOR APPEARING BEFORE THE CIT (APPEALS) , HUBLI AND THE NATURAL JUSTICE DEMANDS THAT PROPER OPPORTUNITY SHOULD BE GIVEN BEFORE APPEAL IS DECIDED . 3 ITA NO.141(B)14 4 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) , HUBL I, HAS ERRED IN : A. DISALLOWING CERTAIN I NTEREST PAID WITHOUT DEDUCTION OF TAX U/S . 40(A)( I A) . SUCH DISALLOWANCE IS CONTRARY TO THE FACTS OF CASE AND AGAINST THE PROV I SIONS OF LAW. B. D I SALLOWING THE INTEREST PAID ON THE LOAN TAKEN FOR SITE. SUCH D I SALLOWANCE IS CONTRARY TO THE FACTS OF CASE AND APPLICABLE LAW. C. TREATING THE CERTAIN AMOUNT ADJUSTED B Y WAY OF JOURNAL ENTRIES AS PAYMENT MADE IN VIOLATION OF SEC TION 40A(3) OF INCOME TAXACT , 1961 . SUCH TREATMENT IS CONTRARY TO THE FACTS AND APPLICABLE LAW. D. DISALLOWING BAD DEBTS WRITTEN OFF FOR L ACK OF EVIDENCE. SUCH DISALLOWANCE IS AGAINST THE PROVISIONS OF LAW . 5. THE COMMISSIONER OF INCOME TAX (APPEALS) , HUBLI , HAS FAILED TO APPREC I ATE THE FACTS OF THE CASE. 6. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT TIME OF HEARING , IT IS REQUESTED THAT THE : I . I MPUGNED ORDER BE QUASHED . II .THE INTEREST CHARGED UNDER SECTION 234B & 234D BE DELETED. III. PENALTY PROCEEDINGS INITIATED BE DROPPED. 5. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE COMP ANY HAD SHIFTED ITS OFFICE AND THE SAME WAS DULY INTIMATED TO THE OFFICE OF TH E LD.CIT(A). IT WAS SUBMITTED THAT NO NOTICE OF HEARING WAS RECEIVED BY THE ASSES SEE, HENCE THERE WAS NO REPRESENTATION BEFORE THE LD.CIT(A). THEREFORE, IT WAS PRAYED THAT IN THE INTEREST OF JUSTICE AND EQUITY A REASONABLE OPPORTUNITY OF H EARING OUGHT BE AFFORDED TO THE ASSESSEE. 6. THE LD. DR ON THE OTHER HAND, SUBMITTED THAT THE LD.CIT(A)S RECORDS ARE AVAILABLE WITH HIM AND IT IS SEEN THAT THE HEARING NOTICES WERE DESPATCHED BY 4 ITA NO.141(B)14 SPEED POST. HOWEVER, HE ADMITTED THAT THERE IS NO RECORD FOR SERVICE OF THESE NOTICES TO THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD. THE CIT(A) HAD POSTED THE APPEAL FOR HEARING ON 07- 12-2012, 13-02-2013 AND 27- 03-2013. NONE OF THE ABOVE THE DATES, THE ASSESSEE HAD APPEARED NOR FILED AN ADJOURNMENT APPLICATION. HENCE, THE LD.CIT(A) HAD DISPOSED OF THE APPEAL EX- PARTE. THE ASSESSEE HAD CLAIMED THE HEARING NOTICE S ISSUED BY THE LD,CIT(A) WAS NOT RECEIVED BY IT. THE LD.CIT(A) S RECORDS ARE A VAILABLE WITH US. THERE IS NOTHING ON THE RECORD TO SUGGEST THAT THE HEARING NOTICES H AVE BEEN SERVED ON THE ASSESSEE CONCERNED. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, WE ARE OF THE VIEW, THAT THE MATTER NEEDS FRESH CONSIDERATION BY THE LD. CIT(A). ACCORDINGLY, THE APPEAL IS RESTORED TO THE FILE OF THE LD.CIT(A) , WITH THE DIRECTION THAT REASONABLE OPPORTUNITY OF HEARING SHALL BE AFFORDED TO THE ASSESSEE FOR PRESENTING ITS CASE AND THE ASSESSSEE SHALL CO-OPERATE WITH TH E LD.CIT(A) FOR EXPEDITIOUS DISPOSAL OF THE MATTER. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 7 TH APRIL, 2016. SD/- SD/- (INTURI RAMA RAO) (GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER AM* PLACE: BANGALORE DATED : 07-04-2016 5 ITA NO.141(B)14 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.