HIMANSHU GANDHI, MUMBAI V. ASST CIT 13(1), MUMBAI

CO 201/MUM/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7502 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 04-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 21-12-2011
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI D.MANMOHAN, VICE-PRESIDENT AND SHRI RAJENDRA SINGH (AM) ITA NO.6240/MUM/2010 (ASSESSMENT YEAR: 2007-08) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-13(1), ROOM NO.418, 4 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI 400 020. SHRI HIMANSHU GANDHI, PROP.MERIDIAN EXPORTS 145/37, BHANU BHAVAN NARAYAN DHURU STREET, MUMBAI-400003 PAN:AADPG5045J APPELLANT V/S RESPONDENT CROSS-OBJECTION NO.201/MUM/2011 IN ITA NO.6240/MUM/2010 (ASSESSMENT YEAR: 2007-08) SHRI HIMANSHU GANDHI, PROP.MERIDIAN EXPORTS 145/37, BHANU BHAVAN NARAYAN DHURU STREET, MUMBAI-400003 PAN:AADPG5045J ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-13(1), ROOM NO.418, 4 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI 400 020. CROSS-OBJECTOR V/S RESPONDENT DATE OF HEARING : 4.6.2012 DATE OF PRONOUNCEMENT : 15.6.2012 REVENUE BY : SHRI V.V. SHASTRI ASSESSEE BY : SHRI M. SUBRAMANIAN O R D E R PER BENCH: THIS APPEAL BY THE REVENUE AND CROSS-OBJECTION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 30.6.2010 OF C IT(A) FOR THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE IN THIS APPEAL HAS DISPUTED THE ORDE R OF THE CIT(A) ALLOWING THE RELIEF IN RELATION TO DEPRECIATION ON OFFICE BUILDING AND IN RELATION TO ADDITION MADE BY THE AO ON ACCOUNT OF CLOSING STOCK. IN ITA NO.6240/MUM/2010 CO NO.201/MUM/2011 (ASSESSMENT YEAR:2007-08) 2 ADDITION, THE REVENUE HAS ALSO RAISED A GROUND REGA RDING NOT ALLOWING OPPORTUNITY OF HEARING TO THE AO BEFORE PASSING THE ORDER. THE ASSESSEE IN THE CROSS-OBJECTION HAS ONLY SUPPORTED THE ORDER OF THE CIT(A) GRANTING THE RELIEF TO THE ASSESSEE. 3. CASE OF THE REVENUE, AT THE OUTSET, IS THAT LEAR NED CIT(A), BEING A QUASI JUDICIAL AUTHORITY, OUGHT TO HAVE GIVEN HIM A PROPER OPPORTUNITY OF BEING HEARD AND AN ORDER PASSED WITHOUT GIVING S UFFICIENT OPPORTUNITY TO THE ASSESSING OFFICER WOULD BE CONSI DERED TO BE IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND THER EFORE LIABLE TO BE SET ASIDE. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT THE FIRST APPELLATE AUTHORITY FOLLOWS ITS STANDARD PROCEDURE OF SERVING A FORM TO THE ASSESSING OFFICER CONCERNED, SOON AFTER AN ASSE SSEE FILES AN APPEAL, AND IF THAT ITNS 51 IS RETURNED WITHOUT A REQUEST B Y THE ASSESSING OFFICER WITH REGARD TO OPPORTUNITY OF BEING HEARD I N PERSON, IT WILL BE DEEMED THAT THE ASSESSING OFFICER IS NOT INTERESTED AND ACCORDINGLY THE MATTER IS DECIDED BY THE FIRST APPELLATE AUTHORITY. 4. IN THE INSTANT CASE, THE FORM WAS NOT RETURNED B Y THE ASSESSING OFFICER BUT THE LEARNED CIT(A) PROCEEDED TO DISPOSE OF THE APPEAL WITHOUT GIVING THE ASSESSING OFFICER AN OPPORTUNITY OF BEING HEARD. THIS FORM, WHICH WAS NOT SENT BACK TO COMMISSIONER (APPE ALS) WAS PLACED BEFORE US, SHOWS THAT THE ASSESSING OFFICER HAS TO GIVE DETAILS AS TO THE DATE OF SERVICE OF THE ASSESSMENT ORDER AND DEMAND NOTICE, AND WHETHER THE APPEAL IS WITHIN THE TIME OR NOT AND PA RA 7 THEREIN SHOWS THAT THE CONCERNED ASSESSING OFFICER HAS TO INTIMAT E THE LEARNED CIT(A) AS TO WHETHER HE DESIRES TO BE PRESENT AT THE HEARI NG OR NOT. IN THE LIGHT OF THE PROCEDURE PRESCRIBED THEREIN, THE ASSESSING OFFICER HAS TO RETURN THE FORM AND ONLY UPON OBTAINING INFORMATION FROM T HE ASSESSING OFFICER, LEARNED CIT(A) CAN DISPOSE OF THE APPEAL. IN THE INSTANT CASE, ITNS 51 WAS DATED 21.4.2010 WHEREAS APPEAL WAS POST ED FOR HEARING ON 7.6.2010 WITHOUT OBTAINING INFORMATION FROM THE ASSESSING OFFICER AS TO WHETHER HE IS INTERESTED IN APPEARING OR NOT. IT MAY ALSO BE ITA NO.6240/MUM/2010 CO NO.201/MUM/2011 (ASSESSMENT YEAR:2007-08) 3 NOTICED THAT THE DATE OF HEARING OF APPEAL WAS NOT MENTIONED IN ITNS 51 OR BY WAY OF NOTICE OF HEARING. 5. SECTION 250 OF THE INCOME TAX ACT DEALS WITH THE PROCEDURE TO BE FOLLOWED BY THE COMMISSIONER (APPEALS) IN DISPOSING OF THE APPEAL. INTENTION OF THE LEGISLATURE IS CLEAR FROM A PLAIN READING OF THE SECTION; SUB-SECTION (1) OF SECTION 250 MANDATES THAT THE CO MMISSIONER (APPEALS) SHALL FIX A DAY AND PLACE FOR THE HEARING OF APPEAL, AND SHALL GIVE NOTICE OF THE SAME TO THE APPELLANT AND TO THE ASSESSING OFFICER AGAINST WHOSE ORDER THE APPEAL IS PREFERRED . SUB-CLAUSE (2) THEREIN STATES THAT THE ASSESSING OFFICER HAS A RIG HT TO BE HEARD, EITHER IN PERSON OR BY AN AUTHORIZED REPRESENTATIVE, ON TH E DATE FIXED FOR HEARING. IT IS WELL SETTLED THAT THE PROCEEDINGS BE FORE THE APPELLATE COMMISSIONER ARE QUASI-JUDICIAL PROCEEDINGS AND THE REFORE HE IS UNDER AN OBLIGATION TO PASS AN ORDER IN CONFORMITY WITH T HE RULES OF NATURAL JUSTICE. THE CARDINAL PRINCIPLE EMBEDDED THEREIN IS THAT NO PERSON SHOULD BE CONDEMNED UNHEARD. THEREFORE, THE ASSESSI NG OFFICER OR HIS REPRESENTATIVE HAS TO BE GIVEN PROPER OPPORTUNITY O F BEING HEARD. MANDATE OF THE PROVISION CAN BE ACHIEVED ONLY WHEN THE DATE OF HEARING OF APPEAL IS INFORMED TO THE ASSESSING OFFICER. IN THE INSTANT CASE, IT IS CLEAR THAT LEARNED CIT(A) HAS NOT SENT ANY NOTICE M ENTIONING THE DATE OF HEARING OF THE APPEAL. 6. WE ARE OF THE OPINION THAT IN THE INSTANT CASE T HE ORDER PASSED BY LEARNED CIT(A) IS IN VIOLATION OF THE PRINCIPLES OF NATURE JUSTICE SINCE THE ASSESSING OFFICER WAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD. THOUGH WE ARE OF THE OPINION THAT THE STANDARD FORM AT I.E. ITNS 51 MAY NOT, IN STRICT SENSE, BE TREATED AS COMPLIANCE WITH THE STATUTORY MANDATE PROVIDED UNDER 250 OF THE ACT, BUT EVEN GOI NG BY THE PROCEDURE FOLLOWED THEREIN, LEARNED CIT(A) SHOULD A SCERTAIN IN WRITING AS TO WHETHER THE ASSESSING OFFICER DESIRES TO BE P RESENT AT THE HEARING. PARA 7 IN ITNS 51 READS AS UNDER WHETHER INCOME TA X OFFICER/INSPECTING COMMISSIONER OF INCOME TAX DESIR ES TO BE PRESENT AT THE HEARING. SECTION 250 ON THE OTHER HAND PRE SCRIBES THAT THE ITA NO.6240/MUM/2010 CO NO.201/MUM/2011 (ASSESSMENT YEAR:2007-08) 4 ASSESSING OFFICER CAN EITHER BE PRESENT PERSONALLY OR CAN MAKE A REQUEST TO PERMIT THE AUTHORIZED REPRESENTATIVE TO BE PRESENT ON HIS BEHALF; THERE IS NO COLUMN, IN ITNS 51, TO PERMIT T HE AUTHORIZED REPRESENTATIVE TO BE PRESENT BEFORE LEARNED CIT(A). AT ANY RATE, THERE IS NO TIME LIMIT FIXED IN THE STANDARD FORMAT WHEREBY THE ASSESSING OFFICER IS REQUIRED TO RETURN THE FORM. ASSUMING FOR A MOME NT THAT ITNS 51 DATED 21.4.2010 WAS SERVED ON THE ASSESSING OFFICER ON THE SAME DATE, LEARNED CIT(A) OUGHT TO HAVE WAITED FOR ONE MONTH A ND IF THE ITNS 51 IS NOT RETURNED BY DULY FILLING UP THE FORM, A DUTY IS CAST UPON LEARNED CIT(A) TO INFORM THE ASSESSING OFFICER THE DATE OF HEARING. IN THE INSTANT CASE, NO SUCH NOTICE INFORMING THE DATE OF HEARING WAS SENT TO THE ASSESSING OFFICER. IT IS NOT IN DISPUTE THAT ITNS 5 1, SENT TO THE ASSESSING OFFICER, WAS NOT RETURNED TO LEARNED CIT( A). 7. THOUGH THE POWERS OF LEARNED CIT(A) ARE CO-TERMI NUS WITH THAT OF THE ASSESSING OFFICER, UNDER LAW HE PERFORMS A DUAL ROLE I.E. HE CAN TAKE INTO CONSIDERATION ANY ISSUE WHICH WAS IGNORED OR OMITTED BY THE ASSESSING OFFICER BUT AT THE SAME TIME HE SHOULD AC T AS QUASI JUDICIAL AUTHORITY WHO IS NOT BOUND BY THE CIRCULARS ISSUED BY THE CBDT. AS A QUASI JUDICIAL AUTHORITY, HE SHOULD GIVE BOTH THE P ARTIES A REASONABLE OPPORTUNITY OF BEING HEARD AND HE SHOULD PASS A SPE AKING ORDER SO THAT EITHER PARTY, WHO IS AGGRIEVED BY THE ORDER, CAN AP PROACH THE SECOND APPELLATE AUTHORITY BY CHALLENGING THE ORDER PASSED BY LEARNED CIT(A). DUAL ROLE CAN BE PERFORMED EFFECTIVELY ONLY WHEN A PROPER OPPORTUNITY OF BEING HEARD IS GIVEN TO THE ASSESSING OFFICER. 8. UNFORTUNATELY THE TREND IN THE RECENT DAYS, IN T HE MOST OF THE CASES IS, FOR REASONS NOT KNOWN, THAT THE ASSESSING OFFICERS ARE NOT APPEARING BEFORE THE FIRST APPELLATE AUTHORITIES. T HERE MAY BE SITUATIONS, WHERE AN ASSESSING OFFICER, WHO PASSED THE ORDER, MAY BE INTERESTED IN APPEARING BEFORE LEARNED CIT(A) TO PU T FORTH THE POINTS EFFECTIVELY IN SUPPORT OF THE CONCLUSIONS REACHED B Y HIM BUT BY THE TIME AN APPEAL IS FILED BY ASSESSEE AND ITNS 51 IS SENT TO THE ASSESSING OFFICER, NEXT INCUMBENT MAY NOT BE INTERESTED IN T AKING ANY ACTION AND ITA NO.6240/MUM/2010 CO NO.201/MUM/2011 (ASSESSMENT YEAR:2007-08) 5 MIGHT SIMPLY RETURN THE FORM TO LEARNED CIT(A). IN CERTAIN CASES EVEN AFTER RETURNING ITNS 51 THE APPEAL MIGHT TAKE A LON GER TIME FOR DISPOSAL AND BY THE TIME THE CASE IS FIXED FOR HEARING ANOTH ER OFFICER MAY BE DEALING WITH THE CONCERNED ASSESSEE FOR A SUBSEQUEN T YEAR AND MIGHT HAVE GATHERED SUFFICIENT INFORMATION, INCLUDING THE FACTS FOUND IN THE ASSESSMENT RECORD OF PRECEDING YEAR, AND HE MAY BE INTERESTED IN APPEARING BEFORE LEARNED CIT(A), PROVIDED THE DATE OF HEARING IS KNOWN TO HIM, BUT THE PRESENT PROCEDURE FOLLOWED BY COMMI SSIONERS WOULD VIRTUALLY BE DENYING AN EFFECTIVE OPPORTUNITY TO TH E ASSESSING OFFICER IN SUCH CASES. WE HOPE THAT ALL LEARNED COMMISSIONER ( APPEALS) WOULD HAVE A RE-LOOK ON THIS ASPECT AND THE MANDATE OF SE CTION 250 OF THE ACT AND GIVE PROPER OPPORTUNITY OF HEARING TO THE ASSES SING OFFICERS CONCERNED, BY SENDING NOTICES TO THE ASSESSING OFFI CERS WHENEVER A CASE IS ADJOURNED AND RE-FIXED FOR HEARING. 9. REVERTING TO THE CASE ON HAND, IT IS NOT IN DISP UTE THAT ITNS 51 WAS NOT RETURNED BY THE ASSESSING OFFICER, HENCE LE ARNED CIT(A) IS NOT JUSTIFIED IN PRESUMING THAT THE ASSESSING OFFICER O R HIS REPRESENTATIVE IS NOT INTERESTED IN APPEARING BEFORE LEARNED CIT(A). IT IS ALSO NOT IN DISPUTE THAT THE DATE OF HEARING OF THE APPEAL IS N EITHER MENTIONED IN ITNS 51 NOR INFORMED TO THE ASSESSING OFFICER BY A SEPARATE NOTICE. UNDER THESE CIRCUMSTANCES, WITHOUT GOING INTO THE M ERITS OF THE CASE, WE HOLD THAT THE ORDER PASSED BY LEARNED CIT(A) IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND HENCE WE SET ASID E THE MATTER WITH A DIRECTION TO HIM TO GIVE THE ASSESSING OFFICER A PR OPER OPPORTUNITY OF BEING HEARD AND TO DECIDE THE ISSUES BEFORE HIM AFR ESH. 10. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE A ND CROSS- OBJECTION OF THE ASSESSEE STAND ALLOWED FOR STATIST ICAL PURPOSES. THE ORDER WAS PRONOUNCED IN OPEN COURT ON 15 TH JUNE, 2012. SD/- SD/- (D.MANMOHAN) ( RAJENDRA SINGH ) VICE-PRESIDENT ACCOUNTANT MEMBER DATE : 15 TH JUNE, 2012. ITA NO.6240/MUM/2010 CO NO.201/MUM/2011 (ASSESSMENT YEAR:2007-08) 6 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR H BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI SRL/PS