2019 (4) TMI 286 - AT - Income Tax

Order of the CIT(A) exparte - denial of principle of natural justice - Disallowance u/s 14A r.w.r.8D - addition in respect of non deduction of TDS u/s 195 on the income charitable tax in India u/s 40(a)(i) - Disallowances of interest on late deposit of TDS - HELD THAT - It is pertinent to note that the order of the CIT(A) is ex-parte and has not taken cognizance of the relevant evidences produced before the AO during the assessment proceedings as well. The order is non-speaking. Therefore, we are setting aside the order of the CIT(A) and remanding back all the issue to the file of the CIT(A) for deciding the issues on merit. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice

Summary

Issues:
1. Ex-parte order by CIT (A) without granting reasonable opportunity to appellant
2. Disallowance u/s 14A read with Rule 8D
3. Disallowance u/s 40(a)(i) for non-deduction of TDS
4. Disallowance of claim of inflated expenses
5. Assessment order challenged before CIT (A)

Analysis:

1. The appellant challenged the ex-parte order by CIT (A) for not granting a reasonable opportunity and violating principles of natural justice. The appellant contended that the CIT (A) did not consider the evidences submitted before the Assessing Officer. The matter was remanded back to the CIT (A) by the ITAT, emphasizing the importance of following natural justice principles and giving the appellant a fair hearing.

2. The Assessing Officer made a disallowance u/s 14A read with Rule 8D, adding an amount to the income of the appellant. The appellant argued that the disallowance was unjustified, illegal, and lacked proper factual and legal appreciation. The ITAT remanded this issue back to the CIT (A) for a fresh decision on merit, ensuring the appellant's right to be heard and considered.

3. Another issue involved the disallowance u/s 40(a)(i) for non-deduction of TDS. The Assessing Officer made a substantial disallowance on this ground. The appellant contended that the TDS was not required to be deducted, and the provisions of the Income Tax Act were wrongly applied. The ITAT set aside this disallowance as well, directing the CIT (A) to re-examine the issue considering all relevant facts and legal provisions.

4. The Assessing Officer also disallowed a claim of inflated expenses related to transactions with a specific entity. The appellant argued that the claim was genuine and should not have been disallowed. The ITAT found no justification for the disallowance and directed the CIT (A) to review this issue comprehensively.

5. Finally, the appeal was filed before the CIT (A) challenging the assessment order. The CIT (A) dismissed the appeal, leading to the appellant approaching the ITAT. The ITAT partially allowed the appeal for statistical purposes, emphasizing the importance of a fair hearing and proper consideration of evidence in tax matters.

This judgment highlights the significance of procedural fairness, proper assessment of facts and legal provisions, and the right of the appellant to be heard in tax disputes.