2018 (11) TMI 42 - AT - Income Tax

Disallowance of claim of deduction u/s 80IC - assessee is engaged in hotel business - as during the assessment proceedings, the assessee withdrew the claim of deduction - Held that - It is true that during the assessment proceedings, the assessee withdrew the claim of deduction u/s 80IC of the Act. It is equally true that subsequently, by the judgment of Aanchal Hotels Pvt. Ltd 2016 (6) TMI 1033 - UTTARAKHAND HIGH COURT as held a hotel set up in the State of Himachal Pradesh or the State of Uttaranchal and having a valid NOC from the Pollution Control could be said to be eligible for deduction u/s 80IC of the Act. When this claim was made before the CIT(A), CIT(A) did make some enquiry behind the back of the assessee and decided the issue against the assessee. CIT(A) ought to have confronted the result of the enquiries made by him and should have given reasonable opportunity to the assessee to explain his case. The matter deserves to be set aside to the file of the CIT(A) to decide the issue afresh - decided in favour of assessee for statistical purposes

Summary

Issues:
Appeals against disallowance of deduction u/s 80IC of the Income-tax Act, 1961 for assessment years 2012-13 & 2013-14.

Analysis:
The appeals were filed against the disallowance of the claim of deduction u/s 80IC of the Income-tax Act, 1961 for the assessment years 2012-13 & 2013-14. The assessee, engaged in the hotel business, initially withdrew the claim during scrutiny assessment. However, based on a judgment of the Hon'ble Uttarakhand High Court, the assessee reinstated the claim before the CIT(A). The CIT(A) considered the claim, gathered information about the hotel, and decided against the assessee. The assessee argued that the CIT(A) did not confront them with the gathered information, alleging a violation of natural justice. The CIT(A) decision was supported by the Department's representative.

Upon reviewing the orders, the Accountant Member noted that the assessee withdrew the claim during assessment but later became eligible based on the High Court judgment. The CIT(A) made inquiries without informing the assessee and decided against them. The Accountant Member held that the CIT(A) should have provided an opportunity for the assessee to respond to the gathered information. Consequently, the Accountant Member set aside the matter to the CIT(A) for a fresh decision after allowing the assessee a reasonable opportunity to be heard. Both appeals were allowed for statistical purposes.

In conclusion, the Accountant Member found that the CIT(A) had not followed the principles of natural justice by not confronting the assessee with the gathered information. Therefore, the matter was remanded back to the CIT(A) for a fresh decision after providing the assessee with a fair opportunity to present their case.