M/s. Net 4 India Ltd., New Delhi V. DCIT, New Delhi

ITA 3088/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9988 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; TDS; Rule 8D
• Section: 142(1); 14A; 195

Judgement Text

1 ITA NOS. 3088/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE PRESID ENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 3088/DEL/2 016 (A.Y 2011-12) NET 4 INDIA LTD. AB-11, COMMUNITY CENTRE, 139/1 SF MOHAMMUDPUR NEW DELHI AAACT0291M (APPELLANT) VS DCIT CIRCLE-13(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. R. S. SINGHVI, CA RESPONDENT BY SH. N. K. BANSAL, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 23/03/2016 PASSED BY CIT(A)-20, NEW DELHI FOR ASSESSMENT YEAR 2011-12. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1(I) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT (A) WAS NOT JUSTIFIED IN PASSING EX-PARTE ORDER WITHOUT GRANTIN G REASONABLE OPPORTUNITY TO THE APPELLANT. (II) THAT IN ABSENCE OF SERVICE OF NOTICE OF HEARI NG, THE IMPUGNED ORDER IS ILLEGAL AND AGAINST PRINCIPLES OF NATURAL JUSTICE. (III) THAT EVEN OTHERWISE, THE APPEAL WAS DISMISSED ON MECHANICAL BASIS WITHOUT FOLLOWING PROCEDURE LAID DOWN IN SECTION 25 0(4) OF THE I T ACT, 1961. 2(I). THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING DISALLOWANCE U/S 14A RE AD WITH RULE 8D TO THE DATE OF HEARING 01.04.2019 DATE OF PRONOUNCEMENT 02.04.2019 2 ITA NOS. 3088/DEL/2016 EXTENT RS. 50,51,081/-. (II) THAT THE DISALLOWANCE IS ILLEGAL, ARBITRARY A ND WITHOUT PROPER APPRECIATION OF FACTS AND LEGAL PROVISIONS AS SAME WAS WITHOUT RECORDING OF PROPER SATISFACTION. 3(I). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ASSESSING OFFICER HAS ERRED IN MAKING DISALLOWANCE OF RS. 5,7 7,46,000/- U/S. 40(A)(I) ON THE ALLEGED GROUND THAT THE TDS HAS NOT BEEN DEDUCT ED. (II) THAT THE ASSESSING OFFICER HAS' NOT PROPERLY APPRE CIATED THE FACTS AND WRONGLY APPLIED PROVISIONS OF SEC. 9(L)(VI) EXP LANATION 2(1) AND EXPLANATION 3. (III) THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS IN T ERMS OF PROVISIONS OF SEC. 195 AND AS SUCH THERE IS NO CASE OF ANY DISALL OWANCE U/S. 40(A)(I) OF THE INCOME TAX ACT, 1961. 4(I). THAT THE ASSESSING OFFICER HAS ALSO ERRED IN MAKING DISALLOWANCE OF RS. 29,93,740/- ALLEGED TO BE CLAIM OF INFLATED EXP ENSES IN RESPECT OF TRANSACTIONS WITH GLOBAL ENERGY PVT. LTD. (II) THAT GENUINENESS OF THE CLAIM BEING NOT IN DIS PUTE, THERE IS NO JUSTIFICATION FOR DISALLOWANCE OF THE SAME. 3. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF PROVIDING INTERNET INFRASTRUCTURE SOLUTIONS. RETURN OF INCOME WAS FIL ED ELECTRONICALLY ON 29/09/2011 DECLARING INCOME OF RS. 19,31,38,170/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) OF THE IN COME TAX ACT, 1961 DATED 20/09/2012 WAS ISSUED AND DULY SERVED UPON THE ASSE SSEE WITHIN THE PRESCRIBED STATUTORY TIME LIMIT. THEREAFTER, FURTH ER NOTICE U/S 142(1) OF THE ACT DATED 10/06/2013 ALONG WITH QUESTIONNAIRE WAS ISSUE D AND DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THESE STATUTORY NOTIC ES CA/AR OF THE ASSESSEE COMPANY ATTENDED THE ASSESSMENT PROCEEDING AND FILE D NECESSARY DETAILS/DOCUMENTS AS CALLED FOR THEREIN FROM TIME T O TIME. THE ASSESSING OFFICER AFTER EXAMINING THE DETAILS MADE ADDITION OF RS.50,51,81/- IN RESPECT OF DISALLOWANCE U/S 14A READ WITH RULE 8D. THE ASSESS ING OFFICER FURTHER MADE 3 ITA NOS. 3088/DEL/2016 ADDITION OF RS.5,77,46,000/- IN RESPECT OF NON DEDU CTION OF TDS U/S 195 ON THE INCOME CHARITABLE TAX IN INDIA AND THUS AS PER THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT. THE DOMAIN RENT REGISTRATION DOMAIN/ROYALTY WAS DISALLOWED. THE ASSESSING OFFICER ALSO MADE DISA LLOWANCES OF INTEREST ON LATE DEPOSIT OF TDS AND MADE ADDITION OF RS.4,70,000/- A LONG WITH ADDITION OF RS. 29,93,740/- IN RESPECT OF TRANSACTIONS WITH GLOBAL ENERGY PVT. LTD. THUS, THE ASSESSING OFFICER ASSESSED IN INCOME OF RS. 25,93,9 8,990/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER THE ASSE SSEE FILED APPEAL BEFORE THE CIT (A). THE CIT (A) DISMISSED THE APPEAL OF T HE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE CIT (A) HAS NOT GR ANTED REASONABLE OPPORTUNITY TO THE ASSESSEE AND IN FACT HAS NOT TAK EN INTO ACCOUNT THE EVIDENCES FILED BEFORE THE ASSESSING OFFICER. THE LD. AR SUBMITTED THAT THE MATTER MAY BE REMANDED BACK TO THE CIT(A) AS THE OR DER OF THE CIT(A) IS EX- PARTE AND PRINCIPLE OF NATURAL JUSTICE HAS NOT BEEN FOLLOWED BY THE CIT(A). 6. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AND THE ORDER OF THE CIT (A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ORDER OF THE CIT(A) IS EX-PARTE AND HAS NOT TAKEN COGNIZANCE OF THE RELEVANT EVIDENCES PROD UCED BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AS WELL. THE ORDER IS NON-SPEAKING. THEREFORE, WE ARE SETTING ASIDE THE ORDER OF THE CI T(A) AND REMANDING BACK ALL THE ISSUE TO THE FILE OF THE CIT(A) FOR DECIDING TH E ISSUES ON MERIT. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING B Y FOLLOWING PRINCIPLES OF NATURAL JUSTICE. 4 ITA NOS. 3088/DEL/2016 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND APRIL, 2019 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 02/04/2019 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NOS. 3088/DEL/2016 DATE OF DICTATION 01.04.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.04.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 2 .04.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 .04.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 .04.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK