2015 (12) TMI 26 - AT - Income Tax

Legal right to the AO for opportunity of being heard at the time of hearing appeal - Held that - AO has not been given notice of hearing by Ld. CIT(A) as is required by the provision of Sec. 250(1) of the Act. So in view of the above factual position, we restore the matter to the Ld. CIT(A) with a direction to complete the appellant proceedings within a period not exceeding three months from the date of service of the order. It is also not out of place to mention that the notice should be served to AO as required under the law and AO should co-operate in the appellate proceedings so that matter can be disposed off within the prescribed period. - Decided in favour of revenue for statistical purposes.

Summary

Issues:
1. Appeal against order of Commissioner of Income Tax (Appeals)-IV, Kolkata.
2. Disallowance of various expenses and claims by the Assessing Officer.
3. Violation of Sec. 250(2) of the Income Tax Act by the CIT(A).

Analysis:
1. The appeal by the Revenue challenges the deletion of additions made by the Assessing Officer, including club expenses, payments to BCL, loss in infotech division, interest on borrowing, notional interest, provision for contingency, and employees' contributions to P.F. and Pension Fund. The CIT(A) had erred in deleting these disallowances, leading to the appeal.

2. The Revenue contended that the CIT(A) violated Sec. 250(2) of the Act by not providing the Assessing Officer with an opportunity to be heard during the appeal proceedings. The CIT(A) passed the order without issuing a notice to the AO for the hearing, contrary to the legal right granted under the Act. The AO's absence in the appeal hearing was a procedural error, prompting the Tribunal to restore the matter to the CIT(A) for proper adjudication.

3. The Tribunal found that the CIT(A) indeed failed to comply with the statutory requirement of giving notice to the AO for the appeal hearing, as mandated by Sec. 250(1) of the Act. Consequently, the Tribunal directed the CIT(A) to conduct the appellate proceedings within three months from the date of the order, emphasizing the importance of following due process. The appeal of the Revenue was allowed for statistical purposes due to the procedural irregularity.

In conclusion, the judgment addressed the substantive grounds of appeal related to the disallowance of expenses and claims, while also highlighting the procedural lapse regarding the violation of Sec. 250(2) of the Income Tax Act by the CIT(A). The decision underscored the significance of procedural fairness in appellate proceedings, ensuring that all parties are given a proper opportunity to present their case.