2012 (7) TMI 425 - AT - Income Tax

ITAT grants revenue appeal, dismisses assessee's appeal as infructuous. Cooperation in legal proceedings emphasized.

The ITAT allowed the revenue's appeal for statistical purposes and dismissed the assessee's appeal as infructuous due to the remittance of the case back ... Power of CIT – Remand - addition on account of disallowance of unpaid service tax, disallowance of service tax, disallowance of rent expenses, disallowance out of consultancy and sales incentive expenditure - AO had specifically stated in the assessment order that in spite of repeated opportunities provided to the assessee, the assessee failed to be present before the revenue in the assessment proceedings - assessment order ex-parte u/s 144 of the Act - CIT(A) had remitted back the matter to the file of the learned AO for verification of all the additions raised – Held that:- Provisions of section 251 of the IT Act wherein the powers of the Commissioner of Income Tax (Appeals) to set aside the order of the learned AO has been omitted by the Finance Act, 2001 with effect from 1st June, 2001 - Order of the learned CIT(A) to be erroneous and hereby, set aside the same and remit back the case to the file of the learned CIT(A) to pass appropriate order as per the provisions of the Act Issues involved:1. Disallowance of unpaid service tax2. Disallowance of service tax3. Disallowance of rent expenses4. Disallowance out of consultancy and sales incentive expenditure5. Justification of passing order under section 144 without considering facts6. Disallowance of salary income7. Disallowance of telephone expensesAnalysis:Issue 1: Disallowance of unpaid service tax, service tax, rent expenses, and consultancy expenditureThe revenue raised concerns regarding the additions made by the Assessing Officer in an ex-parte order under section 144 of the IT Act. The CIT(A) directed the AO to verify the contentions of the assessee and delete the additions if found correct. The ITAT found the order of the CIT(A) erroneous due to the omission of powers under section 251 of the IT Act post the Finance Act, 2001. The case was remitted back to the CIT(A) for appropriate orders after obtaining a remand report from the AO.Issue 2: Justification of passing order under section 144 without considering factsThe assessee contended that the AO passed the order under section 144 without considering the facts of the case and without providing adequate opportunity for the assessee to present its case. The ITAT found the approach of the assessee in the proceedings before the CIT(A) to be lethargic and emphasized the importance of cooperation in appellate proceedings. The case was remitted back to the CIT(A) for proper adjudication.Issue 3: Disallowance of salary income and telephone expensesThe assessee challenged the disallowance of salary income and telephone expenses by the CIT(A). The ITAT found that the CIT(A) brushed aside the submissions and documentary evidence produced by the assessee. The case was remitted back to the CIT(A) for reconsideration and appropriate orders.Conclusion:The ITAT allowed the revenue's appeal for statistical purposes and dismissed the assessee's appeal as infructuous due to the remittance of the case back to the CIT(A) for further proceedings. The importance of cooperation in legal proceedings was highlighted, and the need for proper verification and consideration of facts by the authorities was emphasized.