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TMI Blog2022 (5) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... d 30.01.2015. 2. Ground no. 1 and 2 of the appeal of the assessee is against the action of the Ld. CIT(A) in passing ex parte order without giving the proper opportunity of being heard to the assessee. 3. Ground no. 3 of the appeal of the assessee is against the action of Ld. CIT(A) in confirming the ad-hoc disallowance of a sum of Rs.55,05,750/- being 75% of the Security Expenses of Rs.73,41,000/- claimed for the year. 4. Briefly stated, facts of the case are that the original assessment order passed in this case by the AO on 19.12.2011 against the return of income filed by the assessee on 24.09.2009 declaring total income of Rs.1,15,94,328/-. The AO in the original assessment noted that the assessee claimed provision for leave encashment and provision for gratuity which has been considered by him as disallowable u/s. 43B following the decision of Hon ble Calcutta High Court in the case of Exide Industries Ltd. Vs. Union of India (2007) 292 ITR 470 (Cal). Thereafter, the AO also noted from the accounts that various expenses in the nature of brokerage commission, travelling, electricity charges, property development expenses, printing stationery, gifts, communication e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e additions made in respect of Security Expenses. This order of the Tribunal was available to the Ld. CIT(A) while disposing of the appeal before him against the assessment order passed u/s. 143(3)/263 of the Act. However, no follow up and no cognizance was taken by the Ld. CIT(A) in respect of the orders of the coordinate bench of ITAT, Kolkata in assessee s own case (supra). He also submitted before the AO that the decision of the Hon ble ITAT is awaited. This explanation of the assessee was found untenable by the AO who proceeded to make disallowance as made in the earlier year @ 75% of Rs.73,41,000/- amounting to Rs.55,05,750/-. He also submitted that the Ld. CIT(A) dismissed the appeal of the assessee merely on non-prosecution, even though the order of the coordinate bench of ITAT, Kolkata was available. Ld. Counsel also referred to the provisions of section 250 of the Act which contains Procedure in Appeal to be followed by the ld. CIT(A) while disposing of the appeal. 9. Per contra, the Ld. DR heavily relied on the order of the Ld. CIT(A) and urged before the bench not to interfere with the order of the Ld. CIT(A) and the same may be confirmed as assessee failed to atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. (7) On the disposal of the appeal, the 14 Deputy Commissioner (Appeals)] 15 or, as the case may be, the Commissioner (Appeals)] shall communicate the order passed by him to the assessee and to the 16 Chief Commissioner or Commissioner]. 12. From the sub-section (4) of section 250, we note that before disposing the appeal, Ld. CIT(A) may make such inquiry as he thinks fit or direct the AO to make further inquiry and report the result of the same to Ld. CIT(A). Further, sub-section (6) requires that disposal of appeal shall be in writing and shall state the points for determination to arrive at a decision thereon and most importantly the reasons for the decision. The fact of appeal by department in assessee s own case on the same issue pending before the ITAT is on record as noted by the AO in his order which ought to have been inquired upon by the Ld. CIT(A). Principles governing the exercise of powers by the First Appellate Authority are contemplated under sections 250 and 251 of the Act, breach of which has far reaching consequenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. (c) . . . . . . . . . . . . . . . . . . (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation. - In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.' 8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a matter of right, by withdrawing the appeal, or by not pressing the appeal, or by non-prosecution of the appeal; nor the first appellate authority, CIT(A) in this case, can halt this machinery by ignoring either the procedure in appeal prescribed U/s 250 of I.T. Act or powers of Commissioner (Appeals) prescribed U/s 251 of I.T Act. CIT(A). The first appellate authority cannot dismiss assessee's appeal on merits, in a summary manner, without deciding the appeal on merits through an order in writing, stating the points of determination in the appeal, the decision thereon and the reason for the decision. It is well-settled that powers of Ld. CIT(A) are co-terminus with powers of the Assessing Officer. Useful reference may be made to order of Apex Court decision in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225 in which it was held that AAC has plenary powers in disposing off an appeal; that the scope of his power is co-terminus with that of the ITO, that he can do what the ITO can do and also direct him to do what he failed to do. In this context, useful reference may also be made to Apex Court's decisions in the cases of CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute before us. We find that the expenditure incurred towards advertisement, marketing, publicity expenses, printing and stationery, brokerage, commission, car hire charges, legal and professional charges etc. fall under the head General Administrative Costs which should not be included in the project cost as per the guidance noted supra. However, we find that the assessee had erroneously claimed insurance as a revenue expenditure instead of allocating the same to project costs as per the guidance note. To that extent, the argument of the Ld. DR is well appreciated. We find that the other expenditures incurred by the assessee supra are squarely to the allowed as revenue in nature as they are not related to project cost. Hence, we find that the Ld. CIT(A) had rightly granted relief by deleting the disallowance made on that count. The decision rendered herein for the AY 2007-08 would apply with equal force for the AY 2009-10 also except with variance in figures. Accordingly, the ground no. 1 raised by the revenue for the AYs 2007-08 and 2009-10 is partly allowed. 17. Thus, following the decision of the coordinate bench of ITAT, Kolkata in assessee s own case cited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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