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2021 (2) TMI 1140 - AT - Income Tax‘Limited Finality’ - Proper and reasonable opportunity at the first stage (at the stage of Assessing Officer) - Disallowance being reimbursement of expenses by the appellant to its wholly owned subsidiary in United states for development of its business in United States of America - addition made by assessing officer for claiming double deduction of expenses as well as non deduction of tax at source on payment made to non residents - assessee was unable to produce evidences to show that the expenditure has been incurred by the assessee wholly and exclusively for the purpose of business; and further that no evidence was adduced to show that the EII made concerted effects to locate any business arrangements in USA - grounds for making the disallowance was not adjudicated by the Ld. CIT(A); and instead the Ld. CIT(A) followed a entirely different reasoning, as aforesaid, for confirming the disallowance - HELD THAT:- Assessee has the right to explain his case first to the Assessing Officer; before he is forced to explain his case to appellate authorities. If an assessee explains his case at the first stage, i.e. at the stage of the Assessing Officer to the satisfaction of the Assessing Officer; the matter, in a way, attains ‘Limited Finality’ because Revenue has no right of appeal against the order of the Assessing Officer. Though the matter can be revisited by Revenue under exceptional circumstances, such as, for example, in the circumstances prescribed under sections 147, 263, 264, 154, 153A 153C, etc. of I.T.Act; the fact that Revenue has no right of appeal against the order of Assessing Officer implies that the matter attains ‘Limited Finality’, barring the exceptional circumstances as aforementioned, if the assessee is able to satisfactorily explain the matter to the Assessing Officer. That is why it is of utmost importance that the assessee gets proper and reasonable opportunity at the first stage (i.e. at the stage of Assessing Officer), so that the assessee has a chance to avail of ‘Limited Finality’ which is an assessee’s statutory right. In the present case reasoning adopted by the Ld. CIT(A) for dismissing the assessee’s appeal was not considered at the stage of assessment proceedings before the Assessing Officer; which has resulted in violation of the assessee’s right of ‘Limited Finality’. In view of the foregoing, and as both sides have agreed to this, we set aside the issue of disallowance of the aforesaid ₹ 86,41,053/- to the file of the Assessing Officer for fresh order as per law after providing reasonable opportunity to the assessee to produce relevant materials and to make necessary submissions. All the grounds in the present appeal are disposed of in accordance with aforesaid directions and are treated as partly allowed for statistical purposes
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