2015 (6) TMI 800 - AT - Income Tax

CIT-I power u/s 264 - ex-parte order - revival of the company - HC while accepted the prayer of the company has stated that, The prayer is accepted to secure the ends of justice, exmanagement of the (Company-in-liquidation) would now appear in the office of the Commissioner of Income Tax - Held that - In the present case, it appears that the department passed the ex-parte order during the period of liquidation and the ld. CIT-I, Delhi while deciding the petitions of the assessee u/s 264 of the Act for the assessment years 1996-97 to 2001-02 vide separate orders each dated 11.03.2015 set aside the issues to the file of the AO for making assessment de-novo after giving reasonable opportunity of being heard to the assessee. We, therefore, considering the totality of the facts deem it appropriate to remand all the cases under consideration to the file of the AO to be decided expeditiously afresh, in accordance with law after providing due and reasonable opportunity of being heard to the assessee. We also direct the assessee to Co-operate and not seek undue or unwarranted adjournments. - Decided in favour of asssesse for statistical purposes.

Issues Involved:
1. Quantum additions.
2. Penalty imposition.
3. Amalgamation and its effects on tax assessments.
4. Condonation of delay in filing appeals.
5. Denial of natural justice and lack of opportunity to the assessee.
6. Disallowance of various expenses.
7. Applicability of Section 72A of the Income Tax Act.
8. Deductions under Sections 80HH and 80-I of the Income Tax Act.
9. Ex-parte orders during the liquidation period.

Issue-wise Detailed Analysis:

1. Quantum Additions:
The appeals ITA Nos. 4010 to 4013/Del/2013, 4015 to 4019/Del/2013, and 4022-4023/Del/2013 pertain to quantum additions made by the Assessing Officer (AO). The assessee argued that the AO ignored the merger of the companies and did not consider the set-off of losses and unabsorbed depreciation of the amalgamating companies against the amalgamated company. The AO's decision was challenged as being based on suspicion and surmises, without proper application of mind.

2. Penalty Imposition:
The appeals ITA Nos. 4008-4009/Del/2013, 4014/Del/2013, and 4020-4021/Del/2013 concern penalties imposed by the AO. The assessee contended that the penalties were imposed without providing an opportunity to explain and justify the claims, and the orders were passed ex-parte during the liquidation period.

3. Amalgamation and Its Effects on Tax Assessments:
The amalgamation of M/s Asian Closures Ltd. and M/s Trans Asia Packaging Ltd. with M/s Asian Consolidated Industries Ltd. was not considered by the department in the assessments for the relevant years. The assessee maintained separate books of accounts and filed returns separately for these companies. The AO did not take cognizance of the mergers and failed to set off the losses and unabsorbed depreciation of the amalgamating companies against the amalgamated company. The High Court's orders regarding the amalgamation were ignored by the AO.

4. Condonation of Delay in Filing Appeals:
The appeals were filed after a delay, and the assessee sought condonation of the delay, arguing that the liquidation process and the ex-parte orders prevented timely filing. The affidavits submitted by the ex-director detailed the reasons for the delay, including the lack of notice and the company's inability to contest the appeal due to liquidation.

5. Denial of Natural Justice and Lack of Opportunity to the Assessee:
The assessee argued that the AO passed ex-parte orders without providing an opportunity to present the case or access records held by the official liquidator. The material collected at the back of the assessee was not confronted, and the submissions made before the CIT(A) were ignored. The assessee was denied natural justice as no opportunity was afforded to explain and prove the genuineness of the claims.

6. Disallowance of Various Expenses:
The AO disallowed interest paid, administrative, selling, and distribution expenses, and claims under Sections 80HH and 80-I. The assessee argued that these expenses were incurred wholly and exclusively for business purposes and should be allowed. The disallowances were made without proper verification and consideration of the facts.

7. Applicability of Section 72A of the Income Tax Act:
The assessee contended that the amalgamation and the set-off of depreciation and losses should be considered under Section 72A of the Income Tax Act. The AO failed to apply this provision, which was crucial for the correct determination of income post-amalgamation.

8. Deductions Under Sections 80HH and 80-I of the Income Tax Act:
The assessee claimed deductions under Sections 80HH and 80-I, which were not allowed by the AO. The complete details and justification for these deductions were available in the books of accounts, but the AO did not consider them.

9. Ex-parte Orders During the Liquidation Period:
The department passed ex-parte orders during the liquidation period without due verification and appraisal of facts. The CIT-I, Delhi, set aside the issues to the AO for de-novo assessment, providing an opportunity for the assessee to present the case.

Conclusion:
The Tribunal found merit in the assessee's submissions and admitted the appeals, considering the directions given by the High Court. The appeals were set aside to the AO for fresh adjudication, ensuring due and reasonable opportunity for the assessee to be heard. The AO was directed to decide the cases expeditiously, and the assessee was advised to cooperate and avoid unnecessary adjournments. The appeals were allowed for statistical purposes.

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