2021 (1) TMI 459 - AT - Income Tax

Tribunal remands appeal to CIT(A) for fresh decisions. Assessee to be given fair opportunity.

The Tribunal partially allowed the appeal for statistical purposes and remanded all issues back to the CIT(A) for fresh decisions on merit. The CIT(A) was ... CIT-A dismissed the appeal on the ground of non-prosecution of appeal - Disallowance of various expenses As argued CIT-A not appreciating the correct facts of the case and without giving proper opportunity of being hear confirmed addition - HELD THAT:- From the perusal of the order of the CIT(A), it can be seen that the CIT(A) has not given any categorical finding on merit of the case. Therefore, it will be appropriate to give the opportunity of hearing to the assessee before the CIT(A). Hence, we are remanding back the entire issue to the file of the CIT(A) to be decided on merit. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Appeal filed by the assessee is partly allowed for statistical purpose. Issues:1. Disallowance of advance to staff2. Addition of business promotion expenses3. Disallowance of Deepawali expenses4. Disallowance of staff training and welfare expenses5. Disallowance of freight and cartage expenses6. Disallowance of vehicle running and maintenance expenses7. Disallowance of interest paid on borrowed funds1. Disallowance of advance to staff:The appeal was filed against the disallowance of a significant amount on account of written off advance to staff for business purposes. The CIT(A) confirmed the disallowance without giving proper opportunity for the assessee to be heard. The Tribunal noted the lack of a categorical finding on the merit of the case by the CIT(A) and remanded the issue back to the CIT(A) for a decision on merit. The assessee was directed to be given a hearing following principles of natural justice.2. Addition of business promotion expenses:The CIT(A) confirmed the addition of a specific amount as business promotion expenses under section 40A(3) of the Income Tax Act, 1961. The Tribunal observed that the CIT(A) did not provide a clear finding on the merit of the case and remanded the issue back for a decision on merit. The assessee was instructed to cooperate with revenue authorities for a fair disposal of the matter.3. Disallowance of Deepawali expenses:A disallowance was confirmed on account of Deepawali expenses on an estimation basis. The Tribunal remanded this issue back to the CIT(A) for a decision on merit, emphasizing the need for the assessee to be given a proper opportunity for a hearing.4. Disallowance of staff training and welfare expenses:Similar to other expenses, a disallowance was confirmed on staff training and welfare expenses on an estimation basis. The Tribunal directed a reevaluation of this issue by the CIT(A) on merit, stressing the importance of providing the assessee with a fair hearing.5. Disallowance of freight and cartage expenses:The disallowance of a portion of freight and cartage expenses was confirmed based on estimation. The Tribunal decided to remand this issue back to the CIT(A) for a fresh decision on merit, highlighting the necessity of allowing the assessee a proper hearing.6. Disallowance of vehicle running and maintenance expenses:A disallowance of a specific amount on account of vehicle running and maintenance expenses was confirmed. The Tribunal remanded this issue back to the CIT(A) for a decision on merit, emphasizing the requirement for the assessee to participate in the proceedings and submit relevant documents.7. Disallowance of interest paid on borrowed funds:The CIT(A) confirmed the disallowance of interest paid on borrowed funds for the advance paid to staff. The Tribunal partly allowed the appeal for statistical purposes and directed the CIT(A) to reexamine the issue on merit, ensuring the assessee's right to a fair hearing.In conclusion, the Tribunal partially allowed the appeal for statistical purposes and remanded all the issues back to the CIT(A) for fresh decisions on merit, emphasizing the importance of providing the assessee with a fair opportunity to be heard and cooperate with the revenue authorities for a just disposal of the matters.