Pooja Paper Craft, Ahmedabad vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL " B " BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA Kr. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.)

I.T. A. No.3124/AHD/2011 (Assessment Year: 2008-09)

M/s.Pooja Paper Craft 15, V/S A.C.I.T., Circle-10, Narayan Swastik Avenue 55, Swstik Chembers, Ahmedabad Society, Navrangpura, Ahmedabad-380009

(Appellant) (Respondent)

PAN: AADFP5875B

Appellant by : Smt. Urvashi Shodhan, A.R. Respondent by : Shri Roop Chand, Sr. D.R.

(आदे श)/ORDER

Date of hearing : 10-04-2015 Date of Pronouncement : 17 -04-2015

PER SHRI ANIL CHATURVEDI,A.M.

1. This appeal filed by the Assessee is against the order of CIT(A)-XVI, Ahmedabad dated 27.09.2011 for A.Y. 2008-09.

2. The relevant facts as culled out from the material on record are as under.

3. Assessee is a partnership firm stated to be engaged in the business of

manufacturing of paper tubes. Assessee filed its return of income for A.Y. 2 ITA No 3124/AHD/2011 . A.Y. 2008-09 2008-09 on 29.09.2008 declaring total income of Rs. 28,47,910/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 02.11.2010 and the total income was determined at Rs. 36,34,470/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 27.09.2011 dismissed the appeal of the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following grounds;-

1.1 That the Learned Hon'ble CIT(A) has erred in confirming disallowance of Rs. 5,64,805 U/s. 14A and Rs. 2,21,7587- being interest expenses. 1.2 The appellant respectfully submits that the hearing of the appeal was fixed on 27.09.2011. The appellant had sent representative for asking adjournment at about 3.00 pm when CIT (A) was not there in office. Due to last days of September, the representative could not wait for more time for adjournment. On subsequent day, when inquiry was made it was informed that the appellant order is already passed. The appellant submits that such an action of Id. CIT (A) is contrary to the principle of natural justice and equity and that too on the last days of September when representatives are busy in Tax Audit.

1.3 That the findings given by the Ld. CIT(A) in not allowing above expenses incurred by the appellant contrary to the facts of the case and evidence on record. 1.4 In relation to disallowance U/s. 14A, we have to state that the investment in mutual fund is made out of surplus funds when the appellant has earned cash profit of Rs. 97,78, 883/-. Therefore, the provisions of Sec. 14A are not applicable at all. 1.5 In connection with disallowance of interest of Rs. 2,21,758/- we have to state that all the funds procured by appellant, on which interest is paid has been used for the purpose of business. The appellant has to state that it has paid interest free funds as advances for purchase and expenses and also to one of its ex-employee Shri Arvindbhai K. Patel. The same being for business consideration, no interest was charged on the same. 1.6 Without prejudice to the above, we also have to state that loans and advances given interest free amount to only Rs. 14,78,391/- which is quite less as compared to profit of the year of Rs. 86,49,207 and cash profit of Rs. 97,78,883/-.

4. Before us, at the outset ld. A.R. submitted that ld. CIT(A) has passed an ex parte order in the absence of any representation by the Assessee. She therefore submitted that Assessee be granted one more opportunity to present its case before ld. CIT(A) and therefore the matter may be remitted to the file of ld. CIT(A). The ld. D.R. on the other hand submitted that 3 ITA No 3124/AHD/2011 . A.Y. 2008-09 Assessee has not brought on record any justification for non appearance before ld. CIT(A) and the tendency of the Assessee of not appearing before ld. CIT(A) and subsequently pleading before Hon'ble ITAT for a second inning to present its case before ld. CIT(A) should not be considered favorably. He thus supported the order of A.O and ld. CIT(A).

5. We have heard the rival submissions and perused the material on record. We find that before ld. CIT(A) neither Assessee appeared nor was the Assessee represented be any Authorized Representative and thus an ex parte order was passed by ld. CIT(A). We also find that ld. CIT(A) in the absence of any representation from the side of Assessee, by a cryptic order had substantially upheld the additions made by A.O Before us, during the course of hearing, a specific query was raised by the Bench to the A.R to explain the reasons as to why there was no representation before ld. CIT(A) to which ld. A.R. could not give any satisfactorily explanation or justification. Considering the aforesaid facts, we are of the view that in the interest of justice, the Assessee be granted one more opportunity to present its case before ld. CIT(A) but at the same time apathy of the Assessee towards the proceedings before lower Authorities without any reasonable cause also cannot be encouraged. So in the interest of justice, we set aside the order of ld. CIT(A) to his file with direction to decide the issues in accordance with law and after providing adequate opportunity of hearing to the Assessee and subject to the Assessee making a payment of cost of Rs. 5,000/- in the Legal Aid. Further we also direct the Assessee to suo motu appear before ld. CIT(A) within 1 month from the date of the order of the Tribunal for receiving the date of hearing from him. In view of our decision to restore to the issues to the file of ld. CIT(A), we are not adjudicating on merits the other grounds of 4 ITA No 3124/AHD/2011 . A.Y. 2008-09 appeal raised by the Assessee. In the result, the grounds of Assessee are allowed for statistical purposes.

6. In the result, the appeal of Assessee is allowed for statistical purposes.

Order pronounced in Open Court on 17 - 04 - 2015.

Sd/- Sd/- (SHAILENDRA Kr. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad. TRUE COPY Rajesh

Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) - 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad

1.Date of dictation 10 - 04 -2015

2.Date on which the typed draft is placed before the Other Member 13-04-2015

3.Date on which the approved draft comes to the Sr.P.S./P.S 13 - 04 -2015.

4.Date on which the fair order is placed before the Dictating Member for pronouncement 17 - 04 -2015

5.Date on which the fair order comes back to the Sr.P.S./P.S - -2015

6.Date on which the file goes to the Bench Clerk - -2015.

7.Date on which the file goes to the Head Clerk.............

8.The date on which the file goes to the Asstt. Registrar for signature on the order........................

9.Date of Despatch of the Order............