QUARK ENTERPRISES PRIVATE LIMITED,HYDERABAD V. INCOME TAX OFFICER, WARD 16(4), HYDERABAD

ITA 1212/HYD/2024

AI Insights

Quark Enterprises Private Limited appealed against the order of the Learned Commissioner of Income Tax (Appeals), which had dismissed their appeal ex-parte, confirming the disallowance of a business loss claim of Rs. 25,17,338 for the Assessment Year 2017-18. The primary contention was that the CIT(A) had not provided adequate opportunity for the assessee to present their case. The Assessing Officer had initially disallowed the business loss on grounds that the assessee had not commenced business operations during the relevant assessment year. The Tribunal found merit in the assessee's argument regarding the lack of a proper hearing and remitted the case back to the CIT(A) for a decision on merits after a fair hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472198 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHIN KUMAR
• Assessee Lawyers: P. VINOD
• Keywords: Principle of natural justice
• Section: 143(3); 142(1); 143(2)

Judgement Text

" आयकर अपीलीय अिधकरण, हैदराबाद पीठ मŐ IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”, HYDERABAD BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA No.1212/Hyd/2024 Assessment Year: 2017-18 Quark Enterprises Private Limited, Hyderabad. PAN : AAACQ3370N Vs. Income Tax Officer, Ward-16(4), Hyderabad. (Appellant) (Respondent) Assessee by: Shri P. Vinod, AR Revenue by: Dr. Sachin Kumar, Sr. AR Date of hearing: 20/01/2025 Date of pronouncement: 21/01/2025 O R D E R PER LALIET KUMAR, J.M: This appeal filed by Quark Enterprises Private Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (“Ld. CIT(A)”), dated 25/09/2024 for the AY 2017-18. 2. The assessee has raised the following grounds of appeal: ITA 1212/Hyd/2024 Quark Enterprises Private Limited Page 2 of 5 “1. The order of the Ld. CIT(A)/Addl/JCIT(A)-1, Coimbatore, is erroneous both on facts and in law so far as it is prejudicial to the appellant. 2. The Ld. CIT(A)/Addl/JCIT(A)-1, Coimbatore erred in dismissing the appeal without providing further opportunity. 3. The Ld. CIT(A)/Addl/JCIT(A)-1, Coimbatore should have considered the statement of facts submitted by the appellant wherein the appellant has made the submissions. By not considering the statement of facts, the Ld. CIT(A) erred in confirming the disallowance of business loss of Rs. 25,17,338/-. 4. The Ld. CIT(A)/Addl/JCIT(A)-1, Coimbatore ought to have allowed the business loss of Rs. 25,17,338/- as the expenditure is incurred wholly and exclusively for the purpose of business. 5. The appellant craves leave to add/alter/modify grounds which would be necessary for adjudication of the case.” 3. Brief facts of the case are that the assessee, a Private Limited Company engaged in the business of investment activities, filed its return of income for the AY 2017-18 on 23/10/2017 claiming loss of Rs. 25,17,338/-. Subsequently, the case was selected for scrutiny through CASS and notice U/s. 143(2) of the Act, dated 22/09/2018 was issued and duly served on the assessee. In response to the statutory notices U/s. 143(2) and 142(1) of the Act, the assessee- company furnished the information as called for by the Ld. Assessing Officer. After examining the information furnished by the assessee, the Ld Assessing Officer completed the assessment U/s. 143(3) of the Act by observing that since the assessee has not started its business operations, the assessee’s claim of loss of Rs. 25,17,338/- by way of ITA 1212/Hyd/2024 Quark Enterprises Private Limited Page 3 of 5 certain expenses cannot be allowed. Thus, the Ld. Assessing Officer passed the assessment order dated 14/06/2019 and made a disallowance of Rs. 25,17,338/-. Aggrieved by the order of the Ld. Assessing Officer, the assessee preferred an appeal before the Ld. CIT(A). 4. The Ld. CIT(A) passed ex-parte order and dismissed the assessee’s appeal by holding that the assessee has not responded to any of the hearing notices. The Ld. CIT(A) further observed that the assessee has not filed any evidence to disprove the findings of the Assessing Officer that since the assessee has not commenced its business during the assessment year, the claim of the assessee that the expenses incurred by the assessee cannot be allowed as revenue expenses. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the above mentioned grounds of appeal. 5. At the outset, the Ld. AR submitted before us stating that the Ld. CIT (A) has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A) in order to provide one more opportunity to the assessee of being heard. 6. Ld. DR, on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that sufficient opportunities ITA 1212/Hyd/2024 Quark Enterprises Private Limited Page 4 of 5 had been provided to the assessee. However, on the given dates of hearing, neither the assessee filed any submissions in support of its claim before the Ld. CIT (A) nor responded to the hearing notices issued. Therefore, the Ld. CIT (A) had no other option but to pass ex- parte order based on the materials available on record. Hence, it was pleaded that the order passed by the Ld. CIT(A) does not call for any interference. 7. We have heard the rival submissions and carefully perused the materials on record. On examining the facts of the case, we find that Ld. CIT (A) had posted the case on several occasions. However, none appeared on behalf of the assessee before the Ld. CIT(A) on the dates of hearing nor filed any submissions to disprove the findings of the Ld. AO. Therefore, the Ld. CIT (A) was left with no other option except to adjudicate the appeal ex-parte. In this situation, considering the prayer of the Ld. AR, in the interest of justice and strictly following the principles of natural justice, we hereby remit the matter back to the file of Ld. CIT (A) in order to consider the appeal afresh on merits by providing one more opportunity to the assessee of being heard. At the same breath, we also hereby caution the assessee to promptly co- operate before the Ld. CIT (A) in the proceedings failing which the Ld. CIT (A) shall be at liberty to pass appropriate order in accordance with law and merits based on the material available on the record. It is ordered accordingly. ITA 1212/Hyd/2024 Quark Enterprises Private Limited Page 5 of 5 8. In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove. Order pronounced in the Open Court on 21st January, 2025. Sd/- Sd/- (MANJUNATHA. G) ACCOUNTANT MEMBER Sd/- (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 21/01/2025 OKK/spc Copy to: S.No Addresses 1 Quark Enterprises Private Limited, 1-66/1/RI, 5th Floor, Ramky Grandiose, Ramky Towers Complex, Hyderabad- 500032. 2 Income Tax Officer, Ward-16(4), Income Tax Towers, Masab Tank, Hyderabad, Telangana-500004. 3 Pr. CIT, Hyderabad. 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "