ACIT, New Delhi V. M/s Arcotech Ltd., New Delhi

ITA 2460/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4309 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-04-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 24-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GEETMALA MOHNAMY
• Section: 143(2); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A NO. 2460/DEL/10 ASSTT. YEAR : 2003-04 ACIT, CIRCLE 8 (1), ROOM NO. 163, C.R.BUILDING NEW DELHI. VS. ARCOTECH LTD. (FORMERLY SKS LTD.) B- II/99, MOHAN COOP. INDL. ESTATE, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: GEETMALA MOHNAMY, CIT, DR RESPONDENT BY: NONE ORDER PER RAJPAL YADAV : JM THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 26 TH FEBRUARY, 2010 PASSED FOR ASSTT. YEAR 2003-04. IN THE SOLITARY GROUND OF APPEAL, REVENUE HAS PLEADED THAT LD. CIT( A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 14,59,16,812/-. TH E NOTICE TO THE ASSESSEE WAS SERVED THROUGH REGISTERED POST BUT INS PITE OF SERVICE OF NOTICE, NO ONE HAS COME PRESENT ON BEHALF OF THE AS SESSEE. WITH THE ITA NO. 2460/DEL/10 ASSTT. YEAR 2003-04 2 HELP OF LD. DR, WE HAVE GONE THROUGH THE RECORD CAR EFULLY AND PROCEED TO DECIDE THE APPEAL EX PARTE QUA THE ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 2.12.2003 DECLARING A LOSS OF RS. 2,29,9 3,710/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT A ND A NOTICE U/S 143 (2) OF THE INCOME TAX ACT WAS ISSUED ON 27.11.2004 WHICH WAS SERVED UPON THE ASSESSEE. THE NOTICE REMAINED UN-COMPLIED WITH. THE AO SERVED NOTICE U/S 143(2) OF THE ACT TO ITS DIRECTO R SHRI NARESH KUMAR AGGARWAL AT CALCUTTA. HE ISSUED A NUMBER OF OTHER N OTICES BUT ALL NOTICES REMAINED UN-COMPLIED WITH. UNDER THE COMPEL LING CIRCUMSTANCES, AO PROCEED TO COMPLETE THE ASSESSMEN T ACCORDING TO HIS BEST JUDGMENT U/S 144 OF THE INCOME TAX ACT. D URING THE SCRUTINY OF THE ACCOUNTS, HE FOUND THAT ASSESSEE HAS CLAIMED EX PENSES OF RS. 14,59,16,812/-. THE AO HAS OBSERVED THAT ASSESSEE D ID NOT CARRY OUT ANY BUSINESS ACTIVITY. THEREFORE, FOR MAINTAINING T HE STATUS OF THE ASSESSEE AS A COMPANY, A SUM OF RS. 17,175/- ARE SU FFICIENT. HE FURTHER NOTICED THAT A MISCELLANEOUS INCOME OF RS. 77,175/- IS DISCERNABLE FROM THE P & L ACCOUNT. THE AO DID NOT GRANT THE EXPENSE S CLAIMED BY THE ASSESSEE. HE ASSESSED THE INCOME OF ASSESSEE AT RS. 60,000/- AGAINST THE LOSS DECLARED BY IT. A SUM OF RS. 60,000/- HAS BEEN WORKED OUT AFTER DEBITING ESTIMATED EXPENSES OF RS. 17,175/- FOR MAI NTAINING THE STATUS OF ITA NO. 2460/DEL/10 ASSTT. YEAR 2003-04 3 THE ASSESSEE COMPANY FROM THE MISCELLANEOUS INCOME OF RS. 77,175/- NOTICED FROM THE ACCOUNTS. 3. DISSATISFIED WITH THE ACTION OF AO, ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE LD. CIT(A). IT CONTENDED THAT COMPANY HAS BEEN CLOSED FROM 2000 AND REHABILITATED THROUGH BIFR. IT HAS ST ARTED ITS OPERATION ON THE SAME LINE OF BUSINESS SINCE 2007. FROM THE ORDE R OF LD. CIT(A), WE FIND THAT IN PARAGRAPH NO. 1.1, 1.2 2 AND 2.1, HE HAS JUST NARRATED THE FACTS ABOUT THE CORRESPONDENCE MADE WITH THE AO FOR SUBMITTING THE REPORT. HE HAS DELETED THE DISALLOWANCE BY MAKING F OLLOWING OBSERVATIONS IN PARA NO. 2.2 WHICH READ AS UNDER :- 2.2 AT THIS STAGE I AM OF THE CONSIDERED VIEW THAT THE AO HAS NOTHING TO SAY IN RESPECT OF THE EXPENSES DISALLOWED BY THE AO WHILE FRAMING THE ORDER DATED 27.1.2006. THE LD AR ALSO TOLD ME THAT HE HAS TRIED HIS LEVEL BEST TO CONTACT THE AO IN CONNECTION WITH THE REMAND REPORT BUT TO NO AVAIL. IRRESPECTIVE OF THE FACT THAT THE APPELLA NT HAS CONTACTED THE AO OR NOT, IT IS THE DUTY OF THE AO TO SEND THE REM AND REPORT SPECIALLY WHEN IT WAS PENDING SINCE JAN. 2007. THE AO HAS FAI LED TO FILE THE REPORT INSPITE OF REPEATED OPPORTUNITIES. I TREAT S UCH DISALLOWANCE MADE BY THE AO IN HIS ORDER OF RS. 14,59,16,812/- IS LIA BLE TO BE DELETED AND THE AO IS ACCORDINGLY DIRECTED TO DELETE THE SAME. 4. FROM THE PERUSAL OF THE ORDER OF LD. CIT(A), WE DO NOT FIND THE BASIS FOR DELEING THE ADDITION, LD. FIRST APPELLATE AUTHORITY HAS NOWHERE NOTICED WHAT IS THE EXPLANATION OF THE ASSESSEE FOR GRANTING THE EXPENSES CLAIMED BY IT, HOW THAT EXPLANATION IS ACC EPTABLE ONE. IT IS ALSO NOT DISCERNABLE ON WHAT POINTS HE HAS CALLED FOR TH E REMAND REPORT. LD. CIT(A) FAILED TO DISCUSS THE ISSUE ON MERIT. HE SI MPLY OBSERVED THAT A ITA NO. 2460/DEL/10 ASSTT. YEAR 2003-04 4 REMAND REPORT HAS BEEN CALLED FOR FROM THE AO WHO F AILED TO SUBMIT THE REMAND REPORT. THEREFORE, DISALLOWANCE IS BEING DEL ETED. THE FAILURE OF AO TO SUBMIT REMAND REPORT IS ONE ASPECT OF THE MAT TER. LD. CIT(A) IS SUPPOSED TO GIVE HIS FINDING INDEPENDENTLY APART FR OM THE FAILURE OF THE AO, TO SUBMIT THE REPORT. THE DISALLOWANCE IS TO BE DELETED ON THE BASIS OF THE ASSESEES EXPLANATION AND NOT ON THE BASIS O F FAILURE OF THE AO TO SUBMIT THE REMAND REPORT. THEREFORE, IN OUR OPINION , THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY IS NOT SUSTAINABLE. WE SE T ASIDE THIS ORDER AND RESTORE THE MATTER TO THE LD. CIT(A) FOR READJUDICA TION. 5. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH APRIL, 2011. SD/- SD/- [G.E.VEERABHADRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 19.4.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BEN CHES