2014 (3) TMI 296 - AT - Income Tax

Ex-parte order - Opportunity of being heard - Order u/s 143(3) of the Act Addition on account of ad-hoc disallowance @ 2% - Held that - There was no infirmity in the order of learned CIT(A) - The Assessing Officer has recorded the finding that some vouchers/bills are only self-generated vouchers - he disallowed only 2% of the expenses incurred - The CIT(A) wanted to verify the expenses - He asked the assessee to produce the vouchers before him - He allowed the assessee 13 opportunities but the assessee did not produce the vouchers Decided against Assessee. Interest u/s234B of the Act Held that - It has not been shown as to how the charging of interest was not correct thus, there was no justification to interfere with the interest charged under Section 234B of the Act Decided against Assessee.

Summary

Issues Involved:
1. Ex parte decision due to non-appearance of the assessee during the appeal hearing.
2. Disallowance of expenses on repairs and maintenance, spare parts, and interest charged under Section 234B of the IT Act.

Issue 1: Ex Parte Decision
The appeal was filed by the assessee against the order of the learned CIT(A)-XI, New Delhi for the AY 2007-08. The case was initially fixed for hearing on 18th July, 2012, but no one appeared on behalf of the assessee, leading to an ex parte decision on that date. However, this decision was later recalled by the ITAT. Despite multiple adjournments and opportunities given to the assessee, including a final hearing on 27th February, 2014, where neither the assessee nor their representative appeared, the ITAT was left with no choice but to decide the appeal ex parte, ultimately upholding the decision of the learned CIT(A).

Issue 2: Disallowance of Expenses and Interest Charged
The Assessing Officer disallowed 2% of the expenses incurred by the assessee on repairs, maintenance, spare parts, and tires due to the presence of self-made vouchers and lack of proper verification. The learned CIT(A) provided ample opportunities to the assessee to produce supporting vouchers but the assessee failed to do so, leading to the sustained disallowance of the expenses. The ITAT, after considering the arguments of the learned DR and the facts of the case, found no fault in the decision of the learned CIT(A) and upheld the disallowance of expenses. Additionally, the ITAT found no justification to interfere with the interest charged under Section 234B of the IT Act, thereby rejecting the appeal on this ground as well.

In conclusion, the ITAT dismissed the appeal of the assessee, upholding the decisions of the learned CIT(A) regarding the disallowance of expenses and the charging of interest under Section 234B of the IT Act. The ex parte decision was made due to the repeated non-appearance of the assessee or their representative during the appeal hearings, despite multiple opportunities provided.