IRS Industries Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1001/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3004 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 21-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJIV SAXENA S
• Keywords: Income from undisclosed sources; Opportunity of being heard; Principle of natural justice; Bonafide belief; Additional evidence

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH C, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1001/DEL./2017 ASSESSMENT YEAR: 2006-07 IRS INDUSTRIES PVT. LTD., 10, ESSEL HOUSE, ASAF ALI ROAD, NEW DELHI. (APPELLANT) VS. D.C.I.T., CIRCLE 11(1), NEW DELHI. (RESPONDENT) ASSESSEE BY SH. RAVI PRATAP MALL & SH. RAJIV SAXENA, ADVOCATES REVENUE BY SH. ARUN KUMAR YADAV, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-4, NEW DELHI DATED 19.12.2016 FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS : (1) THAT THE ORDER OF THE LEARNED CIT(APPEALS)-4, NEW DELHI IS ARBITRARY, BIASED, BAD IN LAW AND IN FACTS AND CIRCUMSTANCES O F THE CASE. (2) THAT THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN NOT PROVIDING A PROPER AND MEANINGFUL OPPORTUNITY TO THE APPELLANT TO REPRESENT ITS CASE. (3) THAT THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN PASSING AN EX- PARTE ORDER AND IN CONFIRMING THE ACTION OF THE ASS ESSING OFFICER FOR MAKING ADDITION OF RS. 86,14,903/- AND RS. 87,966/- U/S 68 AND FOR DISALLOWANCE OF THE PENALTY RESPECTIVELY. DATE OF HEARING 05.02.2018 DATE OF PRONOUNCEMENT 19 .03.2018 ITA NO. 1001/DEL./2017 2 (4) THAT THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN DISMISSING THE APPEAL OF THE ASSESSEE AND CONSEQUENTLY CONFIRMING THE ADDITION OF RS. 86,14,903/- MADE BY THE ASSESSING OFFICER BY TREATI NG THE EXEMPT RECEIPT OF LONG TERM CAPITAL GAIN UNDER SECTION 10(38) OF T HE ACT AS INCOME FROM UNDISCLOSED SOURCES. (5) THAT THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED I N NOT ADJUDICATING THE APPEAL AFTER APPRAISING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS AND IN S UMMARILY BRUSHING ASIDE THE SAME. (6) THAT THE LEARNED CIT(APPEALS) HAS GROSSLY ERRED I N DISMISSING THE GROUND OF THE ASSESSEE FOR DISALLOWANCE OF PENALTY OF RS. 87,966/- MADE BY THE ASSESSING OFFICER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME DECLARING INCOME OF RS.11,30,859/-. THE CASE WAS SE LECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED. IN THE ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SHOWN LONG-T ERM CAPITAL GAIN OF RS.86,14,903/- ON ACCOUNT OF SALE OF SHARES. THE AS SESSING OFFICER FURTHER OBSERVED THAT IN EARLIER YEARS ALSO, THE ASSESSEE H AD SHOWN LONG-TERM CAPITAL GAINS WHICH WAS FOUND TO BE NON-GENUINE AND THE SAM E WAS TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. IN REPLY TO NOTICE, THE ASSESSEE SUBMITTED COPY OF ACCOUNT WITH P.K. AGARWAL & CO. T O WHOM THE PURCHASE AND SALES OF SHARES ARE RECORDED. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT FURNISH ANY BROKERS NOTE OR EVIDENCE REGAR DING PURCHASE AND SALES OF SHARES. THE ASSESSEE SHOWED SUCH LONG-TERM CAPITAL GAIN IN ASSESSMENT YEARS 2003-04 TO 2005-06 AND IT WAS BROUGHT TO TAX AS ITS INCOME FROM UNDISCLOSED SOURCES. THE ASSESSING OFFICER, THEREFORE, FOLLOWIN G THE EARLIER YEARS ORDERS, TREATED IT AS INCOME OF THE ASSESSEE FROM UNDISCLOS ED SOURCES. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS PAID PENALTY OF RS.87,966/- FOR ITA NO. 1001/DEL./2017 3 NON-REGISTRATION AS SERVICE PROVIDER UNDER THE SERV ICE TAX ACT. THEREFORE, THE AO DISALLOWED THIS CLAIM OF THE ASSESSEE BY HOLDING IT AS INFRINGEMENT OF LAW. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASS ESSEE HAS DEBITED A SUM OF RS.3500/- TOWARDS PRIOR PERIOD EXPENDITURE AND HE W AS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THEREFORE, HE DISALLOWED THES E EXPENSES. BEFORE THE LD. CIT(A), IN APPEAL OF THE ASSESSEE, THE ASSESSEE FIL ED APPLICATION U/R. 46A AND THE LD. CIT(A) CALLED FOR REMAND REPORT FROM THE AS SESSING OFFICER. THE ASSESSING OFFICER DID NOT SUBMIT THE REMAND REPORT TILL THE DATE OF ORDER. THE ASSESSEE ALSO DID NOT APPEAR BEFORE THE LD. CIT(A). THEREFORE, THE LD. CIT(A) PASSED THE IMPUGNED ORDER EXPARTE AND UPHELD THE AC TION OF THE ASSESSING OFFICER. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSES SEE IS IN APPEAL BEFORE US. 3. AT THE OUTSET OF HEARING, THE LD. AR OF THE ASSE SSEE URGED BEFORE US TO SEND THE MATTER BACK TO THE FILE OF LD. CIT(A) FOR FRESH HEARING. HE ASSURED THAT THE ASSESSEE WILL COOPERATE WITH THE LD. CIT(A) IN HEARING OF APPEAL ON MERITS. HE WAS UNDER THE BONAFIDE BELIEF THAT THE LONG TERM CAPITAL GAIN ARISING OUT OF THE SALE OF SHARES WAS EXEMPT U/S. 10(38) OF THE AC T. THE ASSESSEE COULD NOT AVAIL THE OPPORTUNITY OF HEARING DUE TO THIS REASON . 4. THE LD. DR, THOUGH RELIED ON THE ORDER OF THE LD . CIT(A), BUT HE HAS NO OBJECTION ON THE PRAYER OF THE ASSESSEE FOR REMANDI NG THE CASE BACK TO THE LD. CIT(A). 5. AFTER HEARING THE SUBMISSIONS OF BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL ON RECORD, WE FIND THAT THE IMPUGNED ORDER HAS BEEN PASSED EXPARTE. IT IS ALSO A FACT ON RECORD THAT ON THE APPLICATION FOR ADMISSION OF ADDITIONAL ITA NO. 1001/DEL./2017 4 EVIDENCES FILED BY THE ASSESSEE, NO REMAND REPORT W AS FILED BY THE ASSESSING OFFICER BEFORE THE LD. CIT(A). IN THESE CIRCUMSTANC ES, WE THINK IT APPROPRIATE IN THE INTEREST OF NATURAL JUSTICE TO RESTORE THE MATT ER BACK TO THE FILE OF LD. CIT(A) FOR DECIDING THE APPEAL AFRESH AFTER GIVING REASONA BLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE FIRST APPELLATE AUTHORITY IN HEARING THE APPEAL, AS UNDER TOOK BEFORE US AND SHALL NOT SEEK ANY UNNECESSARY ADJOURNMENT. WE ORDER ACCORDIN GLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2018. SD/- SD/- (H.S. SIDHU) (L.P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 TH MARCH, 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI