Deepak Casting Ltd. , New Delhi vs Department Of Income Tax

This appeal, preferred by the department, is directed against the order dated 04-06-2010, passed by the CIT(Appeals)-XIII, New Delhi in appeal no. 102/08-09, relating to A.Y. 2006-07.

2. None put in appearance on behalf of the assessee at the hearing, despite issue of notice for hearing through RPAD. We proceed to dispose of the appeal, ex parte, qua the assessee, on merits and in that process we have heard ld. DR and perused the entire material available on record.

Sole effective ground raised by the department is as under:

"On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in holding that the assessee is entitled for 2

claim of expenditure of Rs. 11,85,019/- which was disallowed by the then AO as the assessee closed down its business."

3. Brief facts of the case are that assessee had filed its return of income, declaring loss of Rs. 29,63,425/-. In course of assessment proceedings the assessee vide its letter dated 19-11-2008 informed that during the year under consideration the assessee company did not conduct any manufacturing activity due to disconnection of electricity in October 2000. The AO required the assessee to show cause as to why all expenses might not be disallowed as was done in AY 2004-05, since no business activity was actually carried out during the year. The assessee pointed out that in AY 2004-05 assessee had filed its appeal before ld. CIT(A), who decided in its favour and the addition made by AO was deleted. However, the departmental appeal before the Tribunal was pending. The AO, after considering the assessee's submissions, determined the total income at Nil by disallowing the expenditure claimed by the assessee.

4. Ld. CIT(A) allowed the assessee's appeal. Being aggrieved, the department is in appeal before us.

5. Having heard ld. DR and perusing the material available on record we find that in A.Y. 2004-05 the ITAT, Delhi Bench 'B', rendered in ITA no. 1269/Del/2008, vide order dated 26-6-2009 has restored the matter to the file of AO by observing as under:

6. We have carefully considered the rival submissions in the light of the material placed on record . There is a contradiction in the claim of the revenue and as stated by the assessee before the Ld. CI'T (A). The Ld. CIT (A) has held that there was a theft of stock in trade. As against that the department is claiming that the theft was on account of plant and machinery and miscellaneous fixed asset which was not stock-in-trade. The 3

assessment order in this regard is silent. It has been the case of the assessee that the Assessing Officer did not give proper opportunity to the assessee to explain its case. It appears from the order of the Ld. CIT' (A) that the submission of the assessee have not been referred to the Assessing Officer to make him apprised of the submission of the assessee as the assessee did not furnish any such explanation at the time of assessment. Keeping in view the entirety of these facts, we are of the opinion that it will meet the interest of justice if the matter is restored back to the file of Assessing Officer for framing de novo assessment as per provisions of law after giving the assessee a reasonable opportunity of hearing. We direct accordingly.

6. Respectively following the decision of the ITAT for A.Y. 2004-05, the issue is restored to the file of AO for de novo assessment as per law, after affording reasonable opportunity of being heard to the assessee .

7. In the result, department's appeal is allowed for statistical purposes only.

Order pronounced in open court on 09-02-2015.

Sd/- Sd/- (ABY. T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 09-02-2015. MP Copy to : 1. Assessee 2. AO 3. CIT 4. CIT(A) 5. DR 4