2012 (7) TMI 487 - AT - Income Tax

Appeal Dismissed Due to Lack of Cooperation - Importance of Active Prosecution

The appellant challenged the ex parte order passed by the CIT(A) but failed to cooperate during the proceedings, leading to the dismissal of the appeal ... Challenging the order passing ex parte - conforming additions and dis allowances by CIT(A) - Held that:- All the notices were sent by registered post and receipts have been duly acknowledged. Despite this there was no compliance to the notices. Under the circumstances CIT constrained to decide the appeal on the basis of material available on record ex parte - considering the lethargic and irresponsible attitude of the assessee we hereby reject the adjournment letter filed by the assessee - assessee present at the time of hearing assured the Bench that the relevant necessary records shall be filed within a day and also assured the Bench to cooperate with the proceedings for speedy disposal of the case but until this date no record as suggested by the assessee was furnished - instance of the assessee for default and for not taking necessary steps showing no interest in prosecuting the appeal - against assessee. Issues:1. Ex parte order passed by CIT(A)2. Addition of Rs.57,50,000 from unexplained sources3. Disallowance under section 40a(ia) of I. T. Act4. Disallowance of service tax debited to profit & loss account5. Disallowance of Rs.1 lac from salary expensesIssue 1: Ex parte order passed by CIT(A)The appellant challenged the ex parte order passed by the CIT(A), stating that it was erroneous both in law and facts. The appellant alleged that they were not given a fair opportunity to present their case. The AR for the appellant sought an adjournment during the hearing due to the unavailability of certain records from the Chartered Accountant. However, it was revealed that the appellant, a Limited Company, did not cooperate during the proceedings at various stages. The appellant or its AR did not appear before the CIT(A) during the hearing. The assessment order detailed the series of adjournments requested by the appellant and the subsequent non-compliance. The CIT(A) issued multiple notices for hearings, but the appellant failed to comply with them. Ultimately, the CIT(A) decided to pass an ex parte order due to the lack of cooperation from the appellant.Issue 2: Addition of Rs.57,50,000 from unexplained sourcesThe appellant contested the addition of Rs.57,50,000 on account of investment from unexplained sources. The CIT(A) confirmed this addition, leading to a dispute. However, due to the appellant's non-cooperation and failure to provide necessary details and evidence during the assessment proceedings, the Tribunal found it challenging to verify the source of the investment. The Tribunal highlighted the appellant's lack of interest in prosecuting the appeal and ultimately dismissed it for want of prosecution.Issue 3: Disallowance under section 40a(ia) of I. T. ActThe appellant raised a concern regarding the disallowance of Rs.11,73,759 under section 40a(ia) of the Income Tax Act. The Tribunal observed that the appellant's irresponsible conduct during the assessment proceedings, including the failure to furnish essential details and evidence, hindered the proper examination of the disallowance. This lack of cooperation led to the dismissal of the appeal for want of prosecution.Issue 4: Disallowance of service tax debited to profit & loss accountRegarding the disallowance of service tax amounting to Rs.3,55,915 debited to the profit & loss account, the appellant contested the CIT(A)'s decision. However, the Tribunal noted the appellant's consistent non-compliance and lack of interest in pursuing the appeal. The Tribunal referred to relevant legal precedents emphasizing the importance of actively prosecuting an appeal. Consequently, the appeal was dismissed for want of prosecution due to the appellant's conduct.Issue 5: Disallowance of Rs.1 lac from salary expensesThe appellant disputed the disallowance of Rs.1 lac from salary expenses without any basis. Despite this challenge, the Tribunal highlighted the appellant's continuous failure to cooperate and provide necessary documentation throughout the proceedings. The Tribunal, considering the appellant's lack of interest in pursuing the appeal, dismissed it for want of prosecution based on precedents emphasizing the obligation to actively prosecute an appeal.This detailed analysis of the judgment provides insights into the issues raised by the appellant and the Tribunal's rationale for dismissing the appeal due to the appellant's non-cooperation and lack of interest in prosecuting the case.