Case Number: ITA 1510/DEL/2020
Appellant: Salman Steels Private Limited, Muzaffarnagar
Respondent: DCIT Circle-2, Muzaffarnagar
Assessment Year: 2015-16
Result: Penalty and Disallowance Challenged
Case Filed On: 2020-08-28
Order Type: Final Tribunal Order
Date of Order: 2023-07-10
Pronounced On: 2023-07-10
The case of Salman Steels Pvt. Ltd. vs. DCIT revolves around the challenge to the penalty imposed and disallowance of expenses for the assessment year 2015-16. This appeal was brought before the Income Tax Appellate Tribunal (ITAT) Delhi Benches ‘G’, where the appeal by Salman Steels Pvt. Ltd. was heard and the Tribunal provided specific directions for further proceedings.
Salman Steels Pvt. Ltd., the appellant, filed its return of income declaring a total loss of Rs. 28,55,576/-. The assessment was completed with an addition of Rs. 3,31,10,200/- on account of various expenses deemed unproved by the Assessing Officer (A.O.).
The primary contention in this case stems from the ex-parte order passed by the Commissioner of Income Tax (Appeals) [CIT(A)], Muzaffarnagar, dated March 28, 2018. The CIT(A) confirmed the disallowance of expenses and the resultant penalty imposed by the A.O., which led to the filing of the present appeal by Salman Steels Pvt. Ltd.
The appellant raised several grounds of appeal, which included the following key points:
The proceedings before the CIT(A) involved multiple notices and hearings. However, the appellant failed to appear on all five occasions, leading to an ex-parte order being passed by the CIT(A). The lack of representation was a significant point of contention in the appeal, highlighting issues with adherence to the principles of “audi alteram partem” (the right to be heard).
The Tribunal, comprising Dr. B. R. R. Kumar (Accountant Member) and Sh. C. M. Garg (Judicial Member), heard the appeal on July 4, 2023. The Tribunal noted the appellant’s repeated failure to appear before the CIT(A) and emphasized the importance of compliance with procedural requirements.
Despite the appellant’s non-compliance, the Tribunal recognized the importance of providing an opportunity for a fair hearing. The Tribunal directed the appellant to pay a nominal amount to the “Prime Minister’s National Relief Fund” as a gesture of accountability for not attending the hearings. Subsequently, the Tribunal directed the CIT(A) to afford a fresh hearing to the appellant, ensuring that the principles of natural justice were upheld.
The primary legal issues in this case included the validity of the ex-parte order, the jurisdiction of the CIT(A) under section 145(3), and the appropriateness of the disallowances made on an ad-hoc basis.
The Tribunal’s decision to grant a fresh hearing underscores the judicial commitment to ensuring that all parties have a fair opportunity to present their case. The direction to pay a nominal amount to the Prime Minister’s National Relief Fund reflects the Tribunal’s balanced approach in addressing procedural lapses while maintaining the integrity of the judicial process.
The ITAT’s decision highlights the importance of procedural compliance and the need for fair hearings in tax litigation. By granting Salman Steels Pvt. Ltd. a fresh opportunity to present its case, the Tribunal reinforced the principles of natural justice and ensured that the appellant could contest the disallowances and penalties imposed by the A.O.
Order:
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on July 10, 2023.
Sd/- C. M. Garg, Judicial Member
Sd/- Dr. B. R. R. Kumar, Accountant Member
Copy to:
// By Order //
Assistant Registrar, ITAT Delhi Benches, Delhi
Salman Steels Pvt. Ltd. vs. DCIT: Challenge on Penalty and Disallowance for Assessment Year 2015-16
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