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Income Tax - Case Laws
Showing 121 to 140 of 9151 Records
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2015 (12) TMI 1746
TDS u/s 195 - non deduction of tds on agency commission paid to non resident agent - income deemed to accrue or arise in India - Held that:- Argument of the Revenue that for non deduction of TDS, obtaining of certificate from the concerned Assessing Officer is mandatory is not acceptable. On a plain reading of the provisions contained in Chapter-XVIIB of the Act, more particularly section 195, there is no absolute liability on the part of the assessee to deduct tax at source notwithstanding that the payment is not chargeable to tax under sections 4, 5 or 9 of the Act. It is reasonable to conclude that TDS provisions are attracted only when the payment is chargeable to tax in India.
The provisions of section 195 are not applicable to the case of the assessee as no income chargeable to tax in India has arisen. The disallowance of payment of commission u/s. 40(a)(ia) of the Act is incorrect. - Decided in favour of assessee.
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2015 (12) TMI 1745
Exemption to the trust u/s 11 denied - proof of charitable activities - Held that:- Since as stated above the facts in the present case are identcial to that in the case of Hoshiarpur Improvement Trust (2015 (9) TMI 902 - ITAT AMRITSAR), respectfully following the same we hold that the assessee trust is carrying out charitable activity of advancement of public utility and the business activity carried out by it are incidental to the attainment of its main object and thus the proviso to section 2(15) is not attracted in the assessee case. We therefore hold that the assessee is entitled to claim exemption u/s 11. - Decided in favour of assessee.
Framing of assessment in the status of artificial juridical person - A.O. changed the status of the assessee from AOP to Artificial Judicial Person - Held that:- In view of the fact that we have held the assessee trust to be indulging in activities which constitute advancement of general public utility and hence charitable activities as defined u/s 2(15) of the Act, the status of the assessee shall be AOP as specified in section 164(2) of the Act. Section 164(2) states that where income is derived from property held under trust wholly for charitable or religious purposes, tax shall be charged on the taxable income if any in the status of AOP. In case of discretionary trust which are not covered u/s 164(2), the income is to be assessed in the status of individual. Thus we hold that the assessee trust be assessed in the status of “AOP” and not “Artificial Judicial Person”.
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2015 (12) TMI 1743
Revision u/s 263 - CIT-A non exercising his own discretion and judgment - Held that:- The order of the Assessing Officer may be brief and cryptic but that by itself is not sufficient reason to hold that the assessment order is erroneous and prejudicial to the interest of revenue. It is for the Commissioner to point out as to what error was committed by the Assessing Officer in taking a particular view. In the case in hand, the Commissioner of Income Tax has failed to point out error in the assessment order. For invoking revisionary powers the Commissioner of Income Tax has to exercise his own discretion and judgment. Here the Commissioner of Income Tax has invoked the provisions of section 263 at the mere suggestion of the Dy. Commissioner of Income Tax, without exercising his own discretion and judgment.
The Mumbai Bench of the Tribunal in the case of Vinay Pratap Thacker Vs. Commissioner of Income Tax (2013 (2) TMI 838 - ITAT MUMBAI) has set aside the order of Commissioner of Income Tax passed u/s. 263 on the ground that the Commissioner of Income Tax had not used his own discretion and judgment in assuming the revisional jurisdiction. - Decided in favour of assessee
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2015 (12) TMI 1742
Disallowing reimbursement of expenses to ABSC - Held that:- The assessee drew our attention to the break-up of expenditure. However, he pointed out that it could not furnish the details before the authorities below as the same had been lost in floods. Even before us, the assessee failed to furnish any document or information though pressed that whether the payment was to the foreign affiliate or it was reimbursement was a factual issue. We find no merit in the stand of the assessee in this regard in the absence of basic details to substantiate its claim, the amount in question is to be added in the hands of the assessee. Upholding the order of CIT(A), we uphold the addition - Decided against assessee.
Disallowance of Excise duty on closing stock of obsolete inventory - Held that:- We find similar issue of advance payment of Excise duty in an accounting year, which is to be adjusted as and when goods were lifted by the assessee from its factory, was held as allowable as deduction under section 43B of the Act, since the said section recognized the deduction for payment of tax, duty, etc. as allowable on payment basis. See DCIT Vs. Glaxo Smithkline Consumer Healthcare Ltd. (2007 (7) TMI 334 - ITAT CHANDIGARH). Following the same parity of reasoning, we hold that the assessee is entitled to the claim of deduction of ₹ 10,06,000/- under section 43B of the Act as the aforesaid amount admittedly, was paid before the due date of filing the return of income for the instant assessment year, as certified by the Auditor in the audit report in Annexure 7 attached to the Form No.3CD, wherein it has been certified that the amount of Excise duty paid up to date of filing the return of income, exceeded sum of ₹ 1.86 crores.
Disallowance of sales commission paid to sales agents - onus to prove - Held that:- the onus is upon the assessee to establish that the said expenditure has been incurred for the purpose of carrying on its business activities. Merely because the expenditure has been incurred by the assessee, does not entitle the assessee to the said claim without discharging his onus. In the facts of the case, the Assessing Officer made enquiries from the respective parties through Revenue Department at Mumbai and Kolkata respectively. However, no evidence whatso ever was furnished by either of the two parties in support of services provided by them to the assessee and the expenditure incurred by them vis-à-vis the said income earned by them. The assessee also did not furnish complete details in this regard and in the absence of any evidence and the onus not having been discharged by the assessee, we find no merit in the claim of the assessee.
Addition made on account of software expenses - Held that:- The assessee for the year under consideration had also claimed to have incurred the expenditure on application software. However, the claim of the assessee was rejected being of enduring nature. We find no merit in the aforesaid disallowance made by the Assessing Officer in the case of assessee in view of the nature of expenditure incurred and also in view of ratio laid down in assessee’s own case in earlier years. We uphold the order of CIT(A) in allowing expenditure incurred by the assessee on application software - Decided against revenue
Addition made to the closing stock being provision for obsolete inventory - Held that:- The assessee was consistently following the method of accounting of its obsolete inventory which has been consistently followed from year to year. Where there is recognition of the value of obsolete stock on a scientific basis, then provision made on that basis cannot be objected to by the Assessing Officer as the Department has been accepting the consistent method followed by the assessee both in the earlier and subsequent years. In view of the principle of consistency and in the absence of any evidence brought on record to dis-believe the method followed by the assessee, we find no merit in the order of Assessing Officer in this regard. Further, even the Hon’ble Supreme Court in Rotork Controls India (P) Ltd. Vs. CIT (2009 (5) TMI 16 - SUPREME COURT OF INDIA) had upheld the provision for warranty made by the said assessee in its books of account and its admissibility being on scientific basis - Decided against revenue.
Allowing the losses suffered by newly set up EOU against its other business income - entitled to claim deduction under section 10B - Held that:- In the present case, the assessee has claimed the said deduction from assessment year 2005-06. Where the option is available with the assessee to claim the deduction under section 10B of the Act from assessment year in which it commences the business and not when the plant and machinery is first put in use, we find no merit in the ground of appeal No.3b raised by the Revenue in this regard.
The assessee is entitled to set off of losses of EOU unit against the other business income, if any, assessed in the hands of assessee for the captioned assessment year. Balance loss, if any, would be carried forwar d to the succeeding years to be adjusted as per the provisions of the Act. Accordingly, the ground of appeal No.3 raised by the Revenue is also dismissed.
Computation of deduction under section 80HHC - write back of the creditors to be included as business income eligible for deduction under section 80HHCHeld that:- The issue is squarely covered in favour of the assessee, where the credit balance written back, in turn relating to purchases made by the assessee. The Hon’ble Madras High Court in CIT Vs. Abdul Rahman Inustries (2006 (12) TMI 114 - MADRAS High Court) had held that the said write back of the creditors is to be included as business income eligible for deduction under section 80HHC of the Act. The learned Departmental Representative for the Revenue before us had made an alternate plea that once the same is included in the business profits, it should also be included in the total turnover of the unit. The assessee on the other hand, submits that the Assessing Officer had restricted himself in including the same in the business profit only. We find merit in the plea of the assessee in this regard and the said item relates to purchases and is not to be included in the total turnover of the eligible unit, while computing deduction under section 80HHC of the Act
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2015 (12) TMI 1741
Disallowance u/s 14A - Held that:- As noted from the facts brought before us that loans were taken by the assessee in earlier years. It is informed that no disallowance was made in earlier years on account of interest. Thus, impliedly, it can be said that no borrowed funds have been used in acquiring tax-free investment during the year. It is further noted that onus is upon the AO to prove that interest bearing funds were used for earning tax free income. Reliance is placed in this regard on the judgment of Hon’ble Punjab & Haryana High Court in the cases of CIT vs. Hero Cycles Ltd.[2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT], CIT vs. Winsome Textiles [2009 (8) TMI 220 - PUNJAB AND HARYANA HIGH COURT] and CIT vs. Deepak Mittal [2013 (9) TMI 764 - PUNJAB & HARYANA HIGH Court]. Thus, viewed from any angle, the disallowance made by the AO was contrary to law and facts and therefore, the same has been rightly deleted by the Ld. CIT(A).
Treating the income earned by the assessee from hoarding, mobile tower, display of advertising hoarding from subletting hotel premises - ‘income from house property’ or ‘income from other sources’ - Held that:- It is noted that the assessee has credited income from hotel business in its profit and loss account and debited expenses with respect to running of hotel and maintenance of the hotel premises in the P & L account. In these facts, the income received from exploitation from the hotel premises in any manner should also be credited in the profit and loss account. The assessee has already debited the expenses with respect to maintenance of the hotel premises. It is clarified that the assessee is also eligible to claim of expenses incurred for earning the aforesaid income.Thus, keeping in view the peculiar facts of this case for the year under consideration, the aforesaid income is directed to be treated as ‘income from business’.
Disallowance u/s 40(a)(ia) - Held that:- As in the case of Rajiv Kumar Agrawal vs. ACIT [2014 (6) TMI 79 - ITAT AGRA] wherein it has been held that the second proviso to section 40(a)(ia) is declaratory and curative in nature, and should be given retrospective effect from the 1st April 2005. Thus, the position of law on this issue is now very clear. The other grievance of the Revenue is that evidences with regard to payment of taxes by the payees were not referred by the Ld. CIT(A) to the AO and thus, additional evidences were admitted by him in violation of Rule 46A. Thus, accepting the grievance of the Revenue in this regard, we send this issue back to the file of the AO for the limited purpose of verification of the facts with regard inclusion of income by the payees in their respective returns, and if the claim of the assessee in this regard is found to be factually correct, in that case no disallowance shall be made with regard to impugned payment of interest. Thus, this ground is allowed for statistical purposes.
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2015 (12) TMI 1738
Reopening of assessment - AO failed to provide it with a copy of the reasons recorded before completion of the order of assessment - Held that:- Formation of belief by the AO was a condition precedent as regards the escapement of tax pertaining to the relevant assessment year. Before proceeding to issue the notice under section 147 of the Act, the AO was required to form an opinion, the validity of which are supposed to sustain the formation of an opinion, which can be challenged. Though conclusive evidence is not requisite at the stage of formation of belief, it must be based on application of mind which a reasonable person would apply. In our view, the reasons recorded, as communicated to the assessee by letter dated 04.10.2012, does not remotely evidence independent application of mind as there is clearly no nexus, whatsoever, between the reasons recorded and the factual findings in the order of assessment. In these circumstances we hold that initiation of proceedings under section 147 of the Act is bad in law
Variance in the reasons recorded by the AO as provided to the assessee vide letter dated 04.10.2012 and that recorded in the order of assessment, in our view, prevented the assessee from putting up any defence in respect of the reopening of assessment under section 147 of the Act. This has clearly violated the principles of natural justice as the AO proceeded on a different premise while finalizing the order of assessment dated 25.03.2013. - Decided in favour of assessee.
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2015 (12) TMI 1737
Disallowance of excessive depreciation in respect of assets purchased from Deltron Ltd. - Held that:- As decided in assessee's own case for the assessment years 2005-06 to 2007-08 and 2009-10 [2016 (1) TMI 163 - ITAT DELHI] Assessing Officer was not justified in invoking Explanation 3 to section 43(1) of the Act on the facts and circumstances of the case of the appellant company and therefore, appellant is entitled to claim of depreciation on the actual cost as incurred by the appellant on transfer of the electronic business on going concern basis from M/s. Deltron Ltd. to the appellant company
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2015 (12) TMI 1735
Addition made u/s 153A/143(3) - Held that:- There is no incriminating evidence found during the course of search. Hence, as per the binding decision in Commissioner of Income Tax v. Kabul Chawla [2015 (9) TMI 80 - DELHI HIGH COURT] addition to income cannot be made in respect of items which are originally disclosed in the original assessment proceedings. Therefore we do not find any merits in this ground of appeal of the Revenue, so it is dismissed.
Unexplained income of the assessee - receipt of gifts - Held that:- Both the amounts added to the income of the assessee cannot be held to be unexplained income of the assessee, since it was a gift from the father who was the Donor and an NRI from his bank account at Singapore. So the ld. CIT (A) has rightly deleted the addition for both the years and so we uphold the order of the ld. CIT (A) and dismiss these ground of the revenue in both the assessment years.
Unexplained jewellery found with the assessee - Held that:- The value of jewellery declared is far in excess of the value of jewellery found during the course of search, which finding also could not be controverted before us by the department. The ld CIT(A) has considered individually i.e. assessee wise, the value of jewellery declared taking the rate of gold at ₹ 900/- per gram is in excess of jewellery found during the course of search. The CIT(A) rightly observes that it is not unusual for families to spend money on modification of their jewellery and very often, the bills evidencing the modification are not retained for a long period of time. However, since there was sufficient cash available with the assessee and her family, there is no reason to disbelieve her contention that the jewellery was remodeled, altered from time to time and hence the difference in description. The Assessing Officer in his assessment order and in the remand report has nowhere refuted the claim of the assessee that both in terms of value and quantity, the jewellery declared in the wealth tax return far exceed the jewellery found during the course of search. There is also no evidence that has been brought on record to prove that the jewellery seized was purchased out of undisclosed income. The reconciliation of jewellery is quite detailed and in the absence of any discrepancies found during the assessment proceedings and remand proceedings, it cannot be faulted with - Decided against revenue.
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2015 (12) TMI 1732
Maintainability of appeal - monetary limit - Held that:- Since the tax effect in this appeal is ₹ 15,32,504/- and since the monetary limit of ₹ 20 lakhs is fixed for filing appeals before the High Court by the Department as per Circular which has been issued with retrospective effect and as Mr. Dudhoria submits that he has no written instruction from the Department for withdrawing this appeal, as the said Circular, in view of Section 119(1) is binding on the departmental authority, the appeal is treated to be dismissed as withdrawn.
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2015 (12) TMI 1729
Appeal admitted on the following reframed substantial question of law:
“Whether on the facts and circumstances of the case and in law, the Tribunal has erred in law in holding that the assessee qualifies for deduction of profits u/s. 80IB(10) on prorata basis even though it has not fulfilled the provision of clause 'c' of section 80IB(10)?”
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2015 (12) TMI 1726
Maintainability of appeal - monetary limit - tax effect - Held that:- In the present case, tax effect on account of the relief granted by the CIT(A) which led to the filing of the present appeal by the Revenue, is admittedly, less than ₹ 10 lakhs.
In the light of the circular dated 10.12.2015, issued by the CBDT in exercise of the powers conferred in it by subsection (1) of S.268A, we are of the view that the appeal filed herein should not have been pressed by the Revenue. The Learned Departmental Representative fairly admitted that the Revenue effect in this appeal is less than the limit prescribed in para-3 of the above circular issued by the CBDT. Having regard to the circumstances of the case, we dismiss the appeal of the Revenue as withdrawn/not pressed
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2015 (12) TMI 1714
TDS u/s 194C OR 194I - TDS liability on crane hire charges - Held that:- The issue arising in the present appeal is squarely covered by the order of Tribunal in Bharat Forge Ltd. Vs. Addl.CIT [2013 (11) TMI 1263 - ITAT PUNE]. The amended provisions of section 194I came into effect from 13.07.2006, under which the definition of rent was amended to include the rent on plant as defined in section 43(3) of the Act. The year under appeal is financial year 2006-07 i.e. up to 31.03.2006, hence, the amended provisions of section 194I are not attracted. The assessee was duty bound to deduct tax at source under the provisions of section 194C of the Act @ 2% out of crane hire charges. The assessee had deducted the said tax at source @ 2%, hence, there is no default attributable to the assessee in this regard. - Decided against revenue
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2015 (12) TMI 1711
Bogus long term capital gains - unexplained cash credit u/s 68 - Held that:- The action u/s 68 of the Act has been taken merely on the basis of the statement of the third party. We find that the assessee's have duly proved the identity, creditworthiness and genuineness of the broker from whom the sale proceeds of shares were received by the assesses and hence the resultant long term capital gains thereon cannot be doubted with. Hence there is no scope for making any addition u/s 68 of the Act in the facts and circumstances of the case. - Decided in favour of assessee.
Disallowance u/s 14A of the Act read with Rule 8D - addition on the basis of the statement of the third party - Held that:- Rule 8D of the Rules came into effect from 24.3.2008. We find that the Hon’ble Bombay High Court in the case of Godrej & Boyce Manufacturing case (2010 (8) TMI 77 - BOMBAY HIGH COURT) had held that provisions of Rule 8D could be made applicable only from Asst Year 2008-09. The assessment year under appeal for all the assesses before us is Asst Year 2005-06 and hence the Learned AO erred in invoking Rule 8D of the Rules for making disallowance u/s 14A of the Act. In the absence of these factual findings, AO cannot straight away resort to make disallowance u/s 14A of the Act and hence the addition made on this account for all the assesses are deleted. Accordingly, the grounds raised by all the assesses in this regard are allowed.
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2015 (12) TMI 1708
Addition u/s 68 on bogus share capital - any incriminating material whatsoever found during the search to justify initiation of proceedings under Section 153A? - HC order [2015 (9) TMI 115 - DELHI HIGH COURT] saying there is a factual finding that “no incriminating evidence related to share capital issued was found during the course of search as is manifest from the order of the AO.” No justification in invoking Section 68 for the purposes of making additions on account of share capital - Held that:- The special leave petition is dismissed. Decided against revenue.
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2015 (12) TMI 1706
Revision u/s 263 - The following questions are framed for determination:
(i) Did the notice dated 18th March 2013 issued by the Commissioner of Income Tax, Kolkata to the Assessee at the address shown therein satisfy the requirements of Section 263 (1) of the Act as regards providing the Assessee an opportunity of being heard?
(ii) If the answer to Question (i) is in the affirmative, whether on merits the order dated 30th March 2013 passed by the Commissioner of Income Tax, Kolkata under Section 263 of the Act is sustainable in law?
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2015 (12) TMI 1704
Entitlement to deduction u/s 80-IB - scope of manufacture - denial of claim as conversion of 24 Kt Gold into 22 Kt Gold does not amount to manufacture - Held that:- The activity for converting gold bricks, biscuits or bars, into jewellery amounts to “production or manufacture of a new article. The gold, silver or platinum in bar, biscuits or brick form, is converted by manual labour and by the use of implements/tools or by machinery, culminating into an entirely new article/thing called jewellery or ornaments. Jewellery is a wearable item and is used by both men and women. Jewellery/ornaments in common parlance or in commercial terms has a distinct identity, treated as a new article and not the same as raw or standard gold in the form of bricks, biscuits or bars. As a result of the said processing a commercially different saleable product comes into existence. Jewellery has a distinctive name, character and use. It can no longer be regarded as the original commodity, has separate consumers and is a new commercial commodity. The activity of the respondent assessee amounts to ‘manufacture or production - Decided in favour of assessee.
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2015 (12) TMI 1702
Validity of the reassessment - Held that:- We found the issue regarding the validity of the reassessment is duly covered in Shree Radheshyam & Company (2015 (11) TMI 1537 - ITAT DELHI) in which this Tribunal respectively, has quashed the reassessment proceedings. We also note that in these cases the ld. Assessing Officer had recorded similar reasons, and the party from which the assessee therein had made purchases were also same, as in the case of the present assessee. Therefore, respectfully following the decisions above, we quashed the reassessment proceedings.
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2015 (12) TMI 1693
Addition u/s 40A(3) - cash payment to his permanent employees for more than ₹20,000/- in a day - Held that:- It is a relevant consideration for the assessing authority under the Income Tax Act that before invoking the provisions of section 40A(3) in the light of Rule 6DD as clarified by the Circular of the CBDT that whether the failure on the part of the assessee in adhering to requirement of provisions of section 40A(3) has any such nexus which defeats the object of provision so as to invite such a consequence.
We hold that the purpose of section 40A(3) is only preventive and to check evasion of tax and flow of unaccounted money or to check transactions which are not genuine and may be put as camouflage to evade tax by showing fictitious or false transactions. Admittedly, this is not the case in the facts of the assessee herein. The assessee had issued bearer cheques in the name of respective labours which is evident from the additional details submitted by the assessee and placed on page 2 to 6 of the additional details. It is also pertinent to note that the Hon’ble Rajasthan High Court in the case of Smt.Harshila Chordia vs ITO reported in (2006 (11) TMI 117 - RAJASTHAN HIGH COURT) had held that the exceptions contained in Rule 6DD of Income Tax Rules are not exhaustive and that the said rule must be interpreted liberally.
Thus no hesitation in deleting the addition u/s 40A(3) - Decided in favour of assessee.
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2015 (12) TMI 1692
Maintainability of appeal - fee payable as per the statutory provisions of section 253(6) not paid - Held that:- If the memorandum of appeal is deficient in its enclosures, as prescribed, then only the Tribunal can exercise its discretion to accept the memorandum of appeal. In the present appeals, the enclosures are not defective but the fee payable as per the statutory provisions of section 253(6) was not paid. Since the Memo of Appeal is not accompanied by the fee, as prescribed, we are of the opinion that there is no discretion to the ITAT to accept Memorandum of Appeal filed, in violation of the statutory provisions.
ITAT being a quasi-judicial body under the I.T. Act, it has to follow the statutory provisions as prescribed. Under analogous circumstances, while dealing with an appeal filed by an assessee against the order passed under section 271FA, the ITAT, Cochin Bench in the case of Sub-Registrar Office, Meppayur vs. DIT (Intelligence) (2014 (1) TMI 102 - ITAT COCHIN) observed that the Tribunal cannot travel beyond the provisions of the Act and cannot admit an appeal even if the opponent party gives consent permitting the appellant to file an appeal. In otherwords, the consent of a litigant party would not confer jurisdiction on a quasi judicial authority unless and until it is otherwise conferred under the statute. Memorandum of appeals filed by the Revenue are hereby rejected as not maintainable.
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2015 (12) TMI 1691
Sufficient cause from appearing on the date of hearing - assessee contended that though the appeal was adjourned for 05.05.2015 but erroneously, he noted the date of hearing as 06.05.2015 - Held that:- Considering the explanation of the assessee, we are satisfied that assessee was prevented by sufficient cause from appearing on the date of hearing. Further, the appeal of assessee has not been decided on merits, therefore, one more chance could be given to the assessee to argue the appeal on merits.
The order dated 05.05.2015 is recalled and appeal of the assessee be fixed for final hearing on 18.02.2016 for which date, no separate notice will be issued to the assessee. Miscellaneous Application of the assessee is allowed.
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