VELOGIC INDIA P LTD, NEW DELHI V. ACIT, CORP COR-3(2), CHENNAI

ITA 3194/CHNY/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3642 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 26-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Principle of natural justice; Set aside
• Section: 69C; 37(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI , . , & BEFORE SHRI MAHAVIR SINGH, VICE-PRESIDENT AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.3194/CHNY/2018 ( / ASSESSMENT YEAR: 2011-12) M/S. VELOGIC INDIA P.LTD., 1 ST FLOOR, PLOT NO.7, KHASRA NO.28/3/2, SAMALKHA EXTENSION, KAPASHERA BIJWASAN ROAD, NEW DELHI-110 037. VS ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), CHENNAI. PAN:AADCR 3846B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. AR.V.SREENIVASAN , ADDL.CIT /DATE OF HEARING : 29.10.2020 /DATE OF PRONOUNCEMENT : 29.10.2020 / O R D E R PER G.MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -7, CHENNAI DATED 27.09.2018 AND IT PERTAINS TO ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) - 7, CHENNAI DATED 27.09.2018 IN I.T.A.NO.110/CIT(A)-7/2014-15 FOR THE ABOVE MENTIONED ASSESSMENT YEAR IS CONTRARY TO LAW, FACTS, AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT (APPEALS) ERRED IN DISMISSING THE APPEAL BY PASSING EXPARTE APPELLATE ORDER WITHOUT ASSIGNING PROPER RE ASONS AND JUSTIFICATION AND OUGHT TO HAVE APPRECIATED THAT AN Y ORDER PASSED IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE SHOUL D BE RECKONED AS NULLITY IN LAW. 3. THE CIT (APPEALS) FAILED TO APPRECIATE THAT HAVI NG NOT SERVED THE NOTICE(S) OF HEARING AT THE CORRECT ADDRESS AND HAVING NOT 2 ITA NO.3194/CHNY/2018 CROSS VERIFIED WITH JURISDICTIONAL ASSESSING OFFICE R ON THE CHANGE OF ADDRESS, THE DECISION TO PASS EXPARTE ORDER WAS WHO LLY UNJUSTIFIED AND BAD IN LAW. 4. THE CIT (APPEALS) ERRED IN SUSTAINING THE ADDITI ON OF RS.19,22,434/- BEING THE ESTIMATED DISALLOWANCE AT 15% OF EMPLOYEE COST IN THE COMPUTATION OF TAXABLE TOTAL I NCOME WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 5 . THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE MISREADING OF FACTS RESULTING IN WRONG ANALYSIS OF THE EMPLOYEE C OST WITH REFERENCE TO SUCH COSTS REPORTED FOR THE THREE ASSE SSMENT YEARS INCLUDING THE ASSESSMENT YEAR UNDER CONSIDERATION W OULD VITIATE THE DECISION IN RELATION THERETO. 6. THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE D ETAILED NOTES FILED BEFORE THE ASSESSING OFFICER ON 17.01.2014 IN CORPORATING THE CORRECT FACTS WAS COMPLETELY OVERLOOKED AND BRUSHED ASIDE IN RENDERING DECISION IN PARA 7 OF THE IMPUGNED ORDER. 7. THE CIT(APPEALS) ERRED IN SUSTAINING THE ADDITIO N OF ` 90,300/- REPRESENTING PAYMENTS MADE TO AIRLINES FOR WANT OF FURTHER EVIDENCE ON THE APPLICATION OF SECTION 69C OF THE A CT WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION. 8. THE CIT(APPEALS) FAILED TO APPRECIATE THAT THE E XPENSES INCURRED WERE DULY ACCOUNTED AS WELL AS SPENT WHOLL Y AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, DEDUCTIBLE U/S 37(1) OF THE ACT, THEREBY VITIATING THE RELATED FINDINGS IN PARA 7 OF THE IMPUGNED ORDER. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF FREIGHT FORWARDING AND CLEARING SERVICES FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEA R 2011-12 ON 30 TH SEPTEMBER, 2011 DECLARING LOSS OF ` 86,76,971/-. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS DISALLOWED SALARY EXPENDITURE OF ` 19,22,434/- ON AD-HOC BASIS ON THE GROUND THAT TH E ASSESSEE HAS FAILED TO FILE SUFFICIENT MATERIAL T O JUSTIFY THE CLAIM OF 3 ITA NO.3194/CHNY/2018 SALARY EXPENDITURE. THE ASSESSING OFFICER HAS AL SO DISALLOWED CASH PAYMENT OF ` 90,300/- ON THE GROUND THAT THE ASSESSEE DID NOT PRODUCE NECESSARY SUPPORTING BILLS AND VOUC HERS. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LE ARNED CIT(A). BEFORE THE LEARNED CIT(A), THE ASSESSEE HAS NEIT HER APPEARED NOR FILED ANY EVIDENCES TO JUSTIFY ITS CASE, WHICH IS EVIDENT FROM THE FACT THAT DESPITE THREE DATES OF HEARING WAS G IVEN TO THE ASSESSEE, BUT NOTICES GOT RETURNED UNSERVED. THE REFORE, THE LEARNED CIT(A) LEFT WITH NO OPTION HAS DISPOSE D OF THE APPEAL FILED BY THE ASSESSEE AND CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE OF SALAR Y EXPENDITURE AND CASH PAYMENT MADE TO AIRLINES UNDER SECTION 69C OF THE ACT. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE A SSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE COUNSELS FOR BOTH SIDES AND PE RUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LE ARNED CIT(A) HAS DISPOSED OFF THE APPEAL FILED BY THE ASSESSEE E X-PARTE FOR NON- PROSECUTION AS THE ASSESSEE NEITHER APPEARED NO R FILED ANY DETAILS TO JUSTIFY ITS CASE. NO DOUBT, IT IS THE OBLIGATION OF THE PERSON WHO FILES APPEAL, GO BEFORE THE AUTHORITIES , WHEN THE APPEAL IS CALLED FOR HEARING TO JUSTIFY ITS CASE. IN CA SE, THE ASSESSEE DID 4 ITA NO.3194/CHNY/2018 NOT CHOOSE TO APPEAR BEFORE THE AUTHORITIES, THE N THE APPELLATE AUTHORITY LEFT WITH NO OPTION BUT TO DISPOSE OFF, THE APPEAL, BUT SAID APPEAL NEEDS TO BE DISPOSED OFF ON MERITS ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. IN THIS CASE, ON PERUSAL OF THE ORDER OF THE LEARNED CIT(A), WE FIND THAT THE LEARNED CI T(A) HAS DISPOSED OFF THE APPEAL FOR NON-APPEARANCE WITHOUT DISCUS SING THE ISSUES INVOLVED IN THE APPEAL ON MERITS. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE NEEDS TO GO BACK TO THE FILE OF THE LEARNED CIT(A) TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO FILE NECESSARY EVIDENCE IN SUPPORT OF ITS CASE. HENCE, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER BACK TO THE F ILE OF LEARNED CIT(A) AND DIRECT HIM TO RECONSIDER THE ISSUES AF TER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. NEEDLESS TO SAY, THE ASSESSEE SHALL APPEAR BEFORE THE CIT(A) WITHOUT SEEKING ANY ADJOURNMENT UNLESS OR OTHERWISE WARRANTS. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER, 2020 SD/- SD/- ( ) ( . ) (MAHAVIR SINGH) (G. M ANJUNATHA ) / VICE-PRESIDENT $ / ACCOUNTANT MEMBER 5 ITA NO.3194/CHNY/2018 & /CHENNAI, ' /DATED 29 TH OCTOBER, 2020 DS )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , () /CIT(A) 4. , /CIT 5. * 1 /DR 6. /GF .