Mr. Anshul Jain, Kolkata V. D.C.I.T.Central Circle-III, Kolkata, Kolkata

ITA 2879/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4560 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2013
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Opportunity of being heard; Bad and doubtful debts
• Section: 143(3); 14A; 37

Judgement Text

I.T.A. NO. 2879/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 2879 /KOL/ 2013 ASSESSMENT YEAR: 2009-2010 MR. ANSHUL JAIN,................................... ..................................APPELLANT 2/10, SARAT BOSE ROAD, LANSDOWN, KOLKATA-700 020 [PAN: ACUPJ 6856 D] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. ...............RESPONDENT CENTRAL CIRCLE-III, KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, KOLKATA-700 107 APPEARANCES BY: SHRI MANISH TIWARI, FCA, FOR THE ASSESSEE SHRI DEBASHIS BANERJEE, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 22, 2016 DATE OF PRONOUNCING THE ORDER : AUGUST 26, 2016 O R D E R PER SHRI K. NARASIMHA CHARY, J.M .: THIS APPEAL BY THE ASSESSEE IS CHALLENGING THE ORDE R DATED 27.11.2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS), CENTRAL-1, KOLKATA (HEREINAFTER CALLED AS THE CIT(A) IN SHORT) IN AP PEAL NO.109/CC-III/CIT(A)/C- 1/11-12 IN RESPECT OF THE ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE, AS COULD BE CULLED OUT FROM THE RECORD, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, FILED HIS RETURN OF INCO ME ON 29.09.2009 IN RESPECT OF I.T.A. NO. 2879/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 2 OF 5 WHICH THE ASSESSMENT UNDER SECTION 143(3) WAS COMPL ETE 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 RETU RN OF INCOME ON 24.03.2011 SHOWING TAXABLE TOTAL INCOME OF RS.1,14,88,710/- UN DER SECTION 154. THE ASSESSING OFFICER BY WAY OF AN ORDER DATED 09.11.20 10 REDUCED THE DEMAND TO RS.7,52,920/-. WHILE ASSESSING THE INCOME OF THE AS SESSEE, THE ASSESSING OFFICER ENHANCED THE INCOME FROM THE HOUSE PROPERTY, DISALL OWED THE CLAIM OF BAD DEBT, TRAVELLING EXPENSES, BUSINESS PROMOTION EXPENSES AN D 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 E XPENSES BY INVOKING THE PROVISIONS OF SECTION 14A READ WITH RULE 8D. AGGRIE VED BY THIS ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). 3. THE LD. CIT(APPEALS) IN HIS IMPUGNED ORDER OBSER VED THAT INSPITE OF ISSUANCE OF SUFFICIENT NOTICES, THE ASSESSEE DID NO T PUT IN APPEARANCE EITHER IN PERSON OR THROUGH REPRESENTATIVE, THE ASSESSEE IS N OT INTERESTED IN PURSUING THIS APPEAL AND UNDER THAT CIRCUMSTANCES, HE PROCEEDED T O DISPOSE OF THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. BY WAY O F THE IMPUGNED ORDER, THE LD. CIT(APPEALS) CONFIRMED THE ADDITIONS MADE BY THE AS SESSING 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. 4. AGGRIEVED BY THE IMPUGNED ORDER OF THE LD. CIT(A PPEALS), THE ASSESSEE APPROACHED BEFORE THE TRIBUNAL ON THE FOLLOWING GRO UNDS:- 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS WRONG IN DR AWING ADVERSE INFERENCE AND PASSING EX PARTE ORDER WITHOUT ALLOW ING EFFECTIVE OPPORTUNITY OF HEARING. I.T.A. NO. 2879/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 3 OF 5 2) THAT WITHOUT PREJUDICE TO GROUND NO. 1 AND ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN CONF IRMING DISALLOWANCE U/S. 14A READ WITH RULE 8D OF THE INCOME TAX RULES AMOUN TING TO RS.4,28,864/-. 3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) ERRED IN CONFIRMING ADDITION OF RS.4,26,312//- AS DEEMED REN TAL INCOME FROM FLAT NO. 2C AT 3, ROWDON STREET. 4) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.1,00 ,000/- TOWARDS BAD DEBT. 5) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN CONFIRMING THE DISALLOWANCE OF T RAVEL AND ACCOMMODATION OF RS.10,98,014/- U/S 37 OF THE INCOM E TAX ACT, 1961. 6) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(A) IS WRONG IN DISALLOWING RS.17,86,758/- TOWARDS BUSINESS PROM OTION EXPENSES U/S 37 OF INCOME TAX ACT, 1961. 5. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE HAS ARGUED THAT THOUGH THE LD. CIT(APPEALS) IN HIS ORDER OBSER VED THAT THE NOTICES WERE ISSUED FOR SEVERAL TIMES, HE DID NOT TAKE CARE TO V ERIFY 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 ASSESS EE COULD NOT MAKE ANY APPEARANCE BEFORE THE LD. CIT(APPEALS). IT IS NOW S UBMITTED BY THE LD. A.R. THAT FOR WANT OF REASONS, THE ORDER OF THE LD. CIT(APPEA LS) CANNOT BE SUSTAINED AND THE APPEAL IS LIABLE TO BE ALLOWED. 6. IN HIS COUNTER ARGUMENT, THE LD. D.R. STATED THA T IN ANY OF THE OCCASIONS BEFORE THE LD. CIT(APPEALS), THERE WAS NO PROPER RE PRESENTATION 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 CO NFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER. ARGUING SO, HE PRAYED TO DIS MISS THE APPEAL OF THE ASSESSEE. 7. IN THIS BACKGROUND, THE POINT THAT ARISES FOR OU R CONSIDERATION IS WHETHER THE AUTHORITIES BELOW WERE JUSTIFIED IN SUSTAINING THE ADDITIONS? I.T.A. NO. 2879/KOL./2013 ASSESSMENT YEAR: 2009-2010 PAGE 4 OF 5 8. AS COULD BE SEEN FROM THE RECORD THAT THE ASSESS ING 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 RA TE, AS SUCH HE REACHED THE DEEMED RENTAL INCOME AT RS.4,26,312/- PER ANNUM BEI NG 8% OF THE CAPITALIZED VALUE OF THE PROPERTY. THE ASSESSING OFFICER RECORD ED THE REASONS FOR DISALLOWING THE BAD DEBTS, TRAVELLING EXPENSES AND BUSINESS PRO MOTION 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 APPEARA NCE 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 WHET HER THESE NOTICES WERE SERVED OR NOT. ACCORDING TO THE ASSESSEE, IT WAS ONLY ON O NE OCCASION, THE NOTICE WAS SERVED AND THE LD. CIT(APPEALS) DISPOSED OF THE MAT TER WITHOUT ALLOWING SUFFICIENT TIME TO THE ASSESSEE BECAUSE THE TIME LE FT WAS ONLY 3-5 DAYS INCLUDING THE INTERVENING SATURDAY AND SUNDAY. 9. WHATEVER MAY BE THE SUFFICIENCY OF TIME BECAUSE MATERIAL DOES NOT CONTAIN ANY DATE AS TO THE SERVICE OF NOTICE, THE FACT REMA INS THAT EVEN WHILE DISPOSING OF THE MATTER EX PARTE, THE LD. CIT(APPEALS) DID NOT R ECORD ANY REASON TO REACH TO THE CONCLUSION THAT THE ADDITIONS MADE BY THE ASSES SING OFFICER BE SUSTAINABLE. THE LD. CIT(APPEALS) SHOULD HAVE RECORDED THE REASO NS FOR HIS SUPPORT OF THE FINDINGS OF THE ASSESSING OFFICER. WITHOUT GIVING A NY REASON, THE ORDER CANNOT BE A SPEAKING ORDER AND CANNOT BE SUSTAINED. THE REASO NS SHOULD HAVE BEEN RECORDED BY THE LD. CIT(APPEALS) IN ORDER TO GIVE A N 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 WH ICH WE FEEL HANDICAPPED TO APPRAISE THE SUSTAINABILITY OF THE ADDITIONS MADE B Y THE ASSESSING OFFICER. WE, I.T.A. NO. 2879/KOL./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 GI VING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND RECORDING REASONS FOR SUP PORTING AND REFERRING TO THE CONCLUSION DRAWN BY THE ASSESSING OFFICER. WE MAY I T AMPLY CLEAR THAT IT IS THE LAST OPPORTUNITY TO THE ASSESSEE TO PARTICIPATE IN THE ASSESSMENT PROCEEDINGS WITH HIS COOPERATION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 26, 20 16. SD/- SD/- (WASEEM AHMED) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER KOLKATA, THE 26 TH DAY OF AUGUST, 2016 COPIES TO : (1) MR. ANSHUL JAIN, 2/10, SARAT BOSE ROAD, LANSDOWN, KOLKATA-700 020 (2) DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-III, KOLKATA, AAYAKAR BHAWAN POORVA, 110, SHANTI PALLY, KOLKATA-700 107 (3) CIT(APPEALS), CENTRAL-1, KOLKATA (4) COMMISSIONER OF INCOME TAX, KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.