Punch Ratna Fasteners Pvt Ltd vs. ACIT Circle-20(1): Dispute Over Rs. 2,92,612 Disallowed Depreciation

Punch Ratna Fasteners Pvt Ltd vs. ACIT Circle-20(1): A Tribunal Dispute on Disallowed Depreciation

In the matter of Punch Ratna Fasteners Pvt Ltd, New Delhi versus ACIT Circle-20(1), New Delhi, the Income Tax Appellate Tribunal (ITAT) was called upon to adjudicate on a significant issue concerning the disallowance of depreciation amounting to Rs. 2,92,612 for the assessment year 2016-17. The appeal, numbered ITA 6441/DEL/2019, was filed by the appellant on 2019-08-01, with the final tribunal order being pronounced on 2022-04-26.

Background of the Case

The appellant, Punch Ratna Fasteners Pvt Ltd, challenged the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] on the grounds that the CIT(A) had confirmed the addition of Rs. 2,92,612 made by the Assessing Officer (AO) by disallowing the depreciation claimed by the appellant. The CIT(A) had passed an ex-parte order without considering the detailed submissions and relevant documents provided by the appellant. The appellant argued that the CIT(A) failed to adhere to the principles of natural justice by not granting a fair opportunity to present their case.

Proceedings Before the ITAT

The case was heard by a bench consisting of Sh. Anil Chaturvedi, Accountant Member, and Shri Kul Bharat, Judicial Member. During the proceedings, the appellant’s representative, Shri Alok Sharma, Advocate, submitted that the CIT(A) had not properly served the notices to the appellant, which led to the appellant’s non-appearance. Consequently, the CIT(A) dismissed the appeal without deciding on the merits of the case.

The respondent, represented by Shri Umesh Takyar, Senior Departmental Representative (DR), argued that the CIT(A) was justified in dismissing the appeal due to the appellant’s non-compliance with the proceedings. However, the DR conceded that the CIT(A) did not dispose of the appeal on merits.

Tribunal’s Findings and Judgment

The ITAT examined the case records and noted that the CIT(A) had indeed passed an ex-parte order without addressing the issues raised by the appellant. The Tribunal emphasized the importance of following the mandate of Sub-Section (6) of Section 250 of the Income Tax Act, 1961, which requires the CIT(A) to state the points in dispute and provide reasons for their conclusions. The ITAT observed that by not deciding the appeal on merits, the CIT(A) had failed to comply with the statutory requirements and principles of natural justice.

The Tribunal further noted that sufficient opportunity of hearing must be provided to the parties involved, and no party should be condemned unheard. In light of these observations, the ITAT set aside the impugned order of the CIT(A) and restored the matter to the CIT(A) for re-adjudication, directing the CIT(A) to provide a fair hearing to the appellant and to consider the merits of the case.

Conclusion

The ITAT allowed the appeal for statistical purposes, remanding the case to the CIT(A) with clear instructions to re-examine the issues after granting sufficient opportunity to the appellant to present their case. The Tribunal’s decision highlights the critical importance of due process and fair hearing in tax adjudications, ensuring that all parties have an opportunity to be heard before a final decision is made.

In summary, the case of Punch Ratna Fasteners Pvt Ltd vs. ACIT Circle-20(1) serves as a reminder of the fundamental principles of natural justice that underpin the Indian legal system, particularly in tax-related matters.

Order Pronounced in the Open Court on 26.04.2022

Signed by:
Judicial Member: Shri Kul Bharat
Accountant Member: Sh. Anil Chaturvedi

Date of Pronouncement: 26.04.2022

Punch Ratna Fasteners Pvt Ltd vs. ACIT Circle-20(1): Dispute Over Rs. 2,92,612 Disallowed Depreciation