Crown Essential Oil Company, Hyderabad vs Assessee

Crown Essential Oil Co., Addl. CIT, Range-8 Tondapalli (V), R.R.dist. vs. Hyderabad. PAN AAAFC6080G (Appellant) (Respondent)

For Assessee : Mr. L.K. Pissay For Revenue : Mr. Suman Malik

Date of Hearing : 20.01.2015 Date of Pronouncement : 20.01.2015

ORDER

PER P.M. JAGTAP, A.M.

This appeal filed by the assessee is directed against the Order of the Ld. CIT(A)-III, Hyderabad dated 15th April, 2014 passed ex-parte whereby he confirmed the trading addition of Rs.19,97,367 made by the assessing officer.

2. The assessee in the present case is a partnership firm which is engaged in the business of purchase and sale of sandal oil. The return of income for the year under consideration was filed by it on 24.10.2007 declaring total income of Rs.43,46,250. During the course of assessment proceedings, it was noticed by the A.O. that there is a sharp decline in the rate of gross profit from 7.11% and 6.31% in A.Ys. 2005-06 and 2006-07 to 4.68% in the year under consideration i.e, A.Y. 2007-08. In this regard, the explanation offered by the assessee for fall in gross profit rate was not 2 ITA.No.1355/Hyd/2014 Crown Essential Oil Co., Tondapalli (V), Ranga Reddy Dist.,

found acceptable by the A.O. and rejecting the book results declared by the assessee, he proceeded to estimate the business income of the assessee by applying average gross profit rate of 6.03% for A.Ys. 2005-06 to 2007-08 as against the gross profit rate of 4.68% declared by the assessee which resulted in the trading addition of Rs.19,97,367.

2.1. The trading addition made by the A.O. in the assessment completed under section 143(3) vide order dated 29.12.2009 was challenged by the assessee in an appeal filed before the Ld. CIT(A). During the appellate proceedings before the Ld. CIT(A), there was no compliance on the part of the assessee to the notices issued by the Ld. CIT(A) fixing the hearing from time to time. The ld. CIT(A), therefore, proceeded to dispose of the appeal of the assessee ex-parte on merit and confirmed the trading addition made by the assessing officer. Aggrieved by the Order of the Ld. CIT(A), assessee has preferred this appeal before the Tribunal.

3. We have heard the arguments of both the parties and also perused the material on record. The preliminary issue raised by the assessee in this appeal is that no opportunity was given by the Ld. CIT(A) of being heard on merit while disposing of its appeal filed before him. In this regard, it is observed that the appeal of the assessee filed before him has been dismissed by the Ld. CIT(A) by his impugned order passed ex-parte after taking note of the non-compliance on the part of the assessee in paragraph No.4 which reads as under :

"4. In this case, the first notice of hearing was given in the year 2012 fixing the case were hearing on 13.07.2012. Thereafter, various notices have been given and adjournments have been allowed to the appellant on 3 ITA.No.1355/Hyd/2014 Crown Essential Oil Co., Tondapalli (V), Ranga Reddy Dist.,

at least three occasions. After that a final opportunity of hearing was provided on 7.07.2013. Thereafter, yet another notice was given fixing the case were hearing on 8.04.2014. In spite of a lapse of two years, the appellant has not appeared even once. It's request for adjournment was finely rejected on 7.4.2014. Given the above facts, there is only one conclusion to be drawn that the appellant is not interested in pursing its own appeal. Therefore, I have no option but to adjudicate on this appeal given the facts on record."

4. A perusal of the relevant portion of the Ld. CIT(A)'s, impugned order extracted above shows that the assessee sought adjournments on all the five occasions when its case was fixed for hearing by the Ld. CIT(A) and although the Ld. CIT(A) granted adjournments to the assessee on the first four occasions, he rejected the request of the assessee for adjournment on the fifth occasion and proceeded to dispose of the appeal of the assessee ex-parte on merit. The assessee thus, has not got an opportunity of being heard on merit effectively before the Ld. CIT(A) and in our opinion, it would be fair and proper and in the interest of justice that the assessee should get atleast one more opportunity of being heard on merit from the Ld. CIT(A). At the same time, we also feel that the action of the assessee in seeking adjournments of the hearings fixed before the Ld. CIT(A) from time to time continuously on five occasions over a period of about two years shows its casual approach which needs to be deplored. We, therefore, consider it proper to impose a token cost of Rs.2000/- (Rs. Two Thousand only) on the assessee for such casual approach. The assessee is accordingly directed to pay a contribution of Rs.2000/- (Rs. Two Thousand only) to the Prime Minister's Relief Fund and produce the proof of such payment before the Ld. CIT(A). The impugned order of the Ld. 4 ITA.No.1355/Hyd/2014 Crown Essential Oil Co., Tondapalli (V), Ranga Reddy Dist.,

CIT(A) passed ex-parte is therefore set aside and the matter is remitted back to him with a direction to dispose of the appeal of the assessee afresh on merit after giving one more opportunity of being heard to the assessee subject to the payment of cost of Rs.2000 by the assessee. The assessee is also directed to extend all the possible cooperation to the Ld. CIT(A) in order to enable him to dispose of the appeal expeditiously.

5. In the result, appeal of the assessee is treated as allowed for statistical purposes.

Order pronounced in the open Court on 20.01.2015.

Sd/- Sd/- (SAKTIJIT DEY) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 20th January, 2015

VBP/-

Copy to

1. Crown Essential Oil Co., Tondapalli (v), Ranga Reddy Dist., C/o. Pissay & Company, 5-8-548, Abid Road, Hyderabad.

2. The Addl. Commissioner of Income Tax, Range-8, Hyderabad.

3. CIT(A)-III, Hyderabad

4. CIT-II, Hyderabad.

5. D.R. I.T.A.T. "A" Bench, Hyderabad.