The Income Tax Appellate Tribunal ‘B’ Bench, Chennai, has, while allowing the appeals of an assessee, held that reasonable opportunity of being heard shall be compulsorily observed in the adjudication process and that a want of compliance of the natural justice principles by the adjudicating authority is a serious defect.
The aforesaid observation was made by the Tribunal when three appeals were filed by the assessee, a company named M/s. Toshiba JSW Power Systems Pvt Ltd filed three appeals against separate, but identical orders of the Commissioner of Income Tax (Appeals)-16, Chennai, all dated 16.05.2018 , pertaining to the assessment years 2011-12, 2012-13 & 2013-14.
The ground of the appeal being the order passed by the Assessing Officer (A.O) imposing tax at 10% of the gross amount on fee for technical services ,on the basis that as per the provisions of section 195 of the Act , the said payments made by the assessee to a non-resident being reimbursement of salary costs of the seconded employees of the aforesaid Toshiba Corporation ,Japan , the same would constitute income chargeable to tax in India as fees for technical services as per section 9(1)(vii) of the Act and Article 12(4) of India and Japan DTAA , the following was the observation of the Tribunal while allowing the assessee’s appeal :
“We have heard both the parties, perused the material available on record and have gone through the orders of the authorities below. We find that the sole issue which needs to be resolved in the given facts and circumstances of the case is as to whether the payment made by the assessee to a non-resident will come under provisions of section 195 of the Act and also as to whether the assessee is required to deduct TDS or not.
Although the assessee has filed appeals in terms of provisions of section 248 of the Act, the CIT(A) has dismissed the appeals filed by the assessee on technical grounds, without discussing the issue on merit whether the assessee is liable to deduct TDS or not on the payments made to a non-resident , only on the ground that the assessee could not file necessary evidence to prove that there is no such arrangements whereby the tax deductible on said income is payable by the appellate assessee.
It was contention of the assessee that in Form No. 35 Column 10, the assessee has specified the details of TDS deducted and reimbursed to Government account. The assessee further contended that it has necessary arrangements with the non- resident as per which the cost of salary of seconded employees should be reimbursed without any mark up or profit. For this, evidences were furnished before the CIT(A). However, the CIT(A) has ignored all the evidences filed by the assessee and dismissed appeals on technical grounds.
From the above, it is abundantly clear that the CIT(A) has disposed off appeals filed by the assessee on technical grounds without observing principle of natural justice by providing reasonable opportunity of hearing to the assessee to justify its case. Therefore, we are of the considered view that the appeals filed by the assessee need to go back to the file of the Ld. CIT(A) to decide the issues involved in these appeals on merits.
Hence, we set aside the appeals filed by the assessee for assessment year 2011-12 to 2013-14 to the file of CIT(A), with a direction to decide the issues involved in these appeals on merits after providing reasonable opportunity of being heard to the assessee.
In the result, the appeals filed by the assessee for assessment years 2011-12, 2012-13 & 2013-14 are treated as allowed for statistical purposes.”
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