2019 (6) TMI 90 - AT - Income Tax

Tribunal Grants Fresh Adjudication, Emphasizes Assessee's Right to Fair Hearing

Astoria Agro & Allied Industries P. Ltd. Versus Income Tax Officer Ward–12 (1) (2), Mumbai

The Tribunal set aside the Commissioner (Appeals)'s order sustaining the disallowance under section 14A r/w rule 8D, directing a fresh adjudication. The ... Disallowance u/s 14A r/w rule 8D - assessee sought adjournment on two occasions and did not appear the third time when the appeal was fixed for hearing - ex–parte disposal of the appeal by the CIT(A) - HELD THAT:- The assessee deserves an opportunity to explain its case relating to disallowance mad under section 14A r/w rule 8D before CIT(A). Accordingly, we set aside the impugned order of CIT(A) and restore the issue relating to the disallowance made under section 14A r/w rule 8D for de novo adjudication by the learned CIT(A) after providing due opportunity of being heard to the assessee. We direct the assessee to appear before CIT(A) and represent its case in an effective manner with supporting evidences and co–operate in finalization of appeal proceedings. With the aforesaid observations, grounds are allowed for statistical purposes. Issues:Challenge to disallowance under section 14A of the Income Tax Act, 1961 r/w rule 8D.Analysis:The appeal was filed challenging the order passed by the Commissioner (Appeals) regarding the disallowance under section 14A r/w rule 8D for the assessment year 2013-14. The Assessing Officer had made a disallowance of Rs. 1,55,10,808 under section 14A r/w rule 8D, reducing the losses claimed by the assessee. The Commissioner (Appeals) proceeded ex-parte as the assessee sought adjournments and did not appear for the hearing. The Commissioner (Appeals) sustained the disallowance made by the Assessing Officer.The Authorized Representative argued that the ex-parte disposal of the appeal violated the rules of natural justice and requested the issue to be sent back for fresh adjudication. The Departmental Representative supported the ex-parte disposal but suggested giving another opportunity to the assessee to present its case.Upon considering the submissions, the Tribunal decided to set aside the order of the Commissioner (Appeals) and restore the issue for fresh adjudication. The Tribunal emphasized that the assessee should be given a chance to explain its case regarding the disallowance under section 14A r/w rule 8D before the Commissioner (Appeals). The assessee was directed to appear before the Commissioner (Appeals), present its case effectively with supporting evidence, and cooperate in the appeal proceedings. The Tribunal allowed the grounds for statistical purposes, and the appeal was allowed accordingly.In conclusion, the Tribunal granted the assessee an opportunity to address the disallowance issue under section 14A r/w rule 8D before the Commissioner (Appeals) in compliance with the principles of natural justice, emphasizing the importance of providing a fair hearing and due process in tax matters.