Ramesh Kumar Gupta, New Delhi V. ITO, New Delhi

ITA 1041/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7050 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 05-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Keywords: Opportunity of being heard; Principle of natural justice; Bad and doubtful debts; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F, NEW DELHI BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO.1041/DEL/2011 (ASSESSMENT YEAR 2006-07) RAMESH KUMAR GUPTA, VS. ITO, WARD 29(1), 3968 B, NAYA BAZAR, NEW DELHI NEW DELHI. GIR / PAN :AAEPG8444J (APPELLANT) (RESPONDENT) APPELLANT BY : MS. MANJU GOEL, CA RESPONDENT BY : SHRI R S NEGI, SR. DR DATE OF HEARING: 05.01.2016 DATE OF PRONOUNCEMENT: 29.01.2016 ORDER PER KULDIP SINGH, JM: THE APPELLANT, SHRI RAMESH KUMAR GUPTA (HEREINAFTE R REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL, SOUGH T TO SET ASIDE THE IMPUGNED ORDER DATED 15.12.2010 PASSED BY LD. CIT(A ) XXV, NEW DELHI QUA THE ASSESSMENT YEAR 2006-07 ON THE GROUNDS INTE R ALIA THAT: 1. THAT THE LEARNED CIT(A)-XXV, NEW DELHI HAS ERRE D, BOTH OF FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE ASS ESSING OFFICER WARD 29(1) NEW DELHI. 2. THAT THE LEARNED CIT (A) HAS RECORD, THE CASES C ITED AND PRINCIPLES OF NATURAL JUSTICE. 3. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CA SE & IN LAW THE LEARNED CIT (A) FAILED TO CONSIDER THE GROUND O F PROPER SERVICE OF NOTICE WHICH IS THE FOUNDATION FOR VALID JURISDI CTION & THE CASE 2 I.T.A.NO.10412/DEL/2011 CITED OF DELHI HIGH COURT CIT VS HOTLINE INTERNATIO NAL (P) LTD. (2008) 296 ITR 333 DELHI. 4. THAT ON FACTS AND IN CIRCUMSTANCES OF THE CASE & IN LAW THE LEARNED CIT (A) ERRED BY NOT ALLOWED OF RS.5,91,000 /-(OUT OF 91,000/-SUBJECT TO VERIFICATION)THE CLAIM OF BAD DE BTS. 5. THAT THE FOLLOWING OBSERVATIONS OF THE LEARNED C IT (A) IN THE ORDER ARE PERVERSE, ARBITRARY, BASELESS AND MISLEAD ING. (A)IN REGARD TO DISALLOWANCE OF RS. 58,442/- UNDER THE HEAD TELEPHONE, BUSINESS PROMOTION AND CAR MAINTENANCE T HAT THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL OR SATISFACTO RY EXPLANATION. (B)IN REGARD TO SERVICE TO NOTICE STATING AND ASSUM ING THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER WAS NEVE R RETURNED BACK UNSERVED TO THE ASSESSING OFFICER. (C)IN REGARD TO SERVICE TO NOTICE STATING THAT CHAN GE OF ADDRESS IN PAN CARD HAS NOT BEEN DONE BY THE ASSESS EE WHEREAS THE SAME WERE ALSO FILED BEFORE CIT (A). (D) IN REGARD TO BAD DEBTS STATING THAT THE AMOUNT OF RS.5 LACKS IS NOT A TRADING RECEIPT ACCOUNTED FOR IN THE P&L WHEREAS IT IS NOT RECEIPT BUT PAYMENT. (E)IN REGARD TO REJECTING OF OUR GROUND OF CHARGING OF INTEREST U/S 2348 & 2340 AND PENALTY INITIATION U/S 271 (1) (C) OF I. TAX ACT. 6. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF A PPEAL THE ORDER PASSED BY THE' CIT (A) IS BAD IN LAW AND PASS ED IN CONTRAVENTION OF EQUITY AND JUSTICE, HENCE ADDITION S ARE LIABLE TO BE DELETED. 2. BRIEFLY STATED, THE FACTS OF THIS CASE ARE: DURI NG THE PROCESSING OF RETURN OF INCOME FILED BY THE ASSESSEE QUA THE ASSE SSMENT YEAR 2006-07, THE CASE WAS SUBJECTED TO SCRUTINY AND CONSEQUENT U PON NOTICE ISSUED U/S 143(2) OF THE ACT, SHRI ATUL GUPTA CA/AR ATTENDED T HE PROCEEDINGS AND 3 I.T.A.NO.10412/DEL/2011 FILED DOCUMENTS AND DISCUSSED THE CASE. THE ASSESS EE IS INTO THE BUSINESS OF TRADING AND COMMISSION AGENT IN FOOD GRAINS, UND ER THE NAME AND STYLE OF M/S. MAKHAN LAL RAMESH KUMAR. THE ASSESSING OFF ICER DISALLOWED RS.21,447/- OUT OF TELEPHONE EXPENSES, RS.3,290/- O UT OF BUSINESS PROMOTION EXPENSES AND RS.33,705/- OUT OF USER OF V EHICLE ON ACCOUNT OF PERSONAL USAGE, OUT OF THE LUMPSUM AMOUNTS CLAIMED BY THE ASSESSEE IN P & L ACCOUNTS. 3. THE ASSESSEE ALSO CLAIMED BAD DEBT OF RS.5,91,00 0/- IN COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATION BUT IN T HE ASSESSMENT YEAR 2005-06, NO SUCH BAD DEBT HAD BEEN CLAIMED. IN RES PONSE TO THE QUERIES, ASSESSEE STATED THAT FINANCIAL POSITION OF THE PART Y M/S. AMAR SALES CORPORATION WAS WEEK BUT FAILED TO FURNISH ANY SUPP ORTING EVIDENCE. ASSESSEE, VIDE LETTER DATED 17.12.2008 ALSO CLAIMED THAT THE NOTICE U/S 143(2) OF THE ACT WAS NOT SERVED UPON THE ASSESSEE IN TIME AND AT THE CORRECT ADDRESS, WHICH HAS NOT BEEN ACCEPTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE CASE WAS SELECTED FOR SCRUTINY THROUGH COMPUTER AND NOTICE WAS GENERATED AS PER THE COMPUTERIZED ADDRES S FURNISHED BY THE ASSESSEE IN FORM 49A, SO, TREATED THE NOTICE SENT T HROUGH REGISTERED POST ON 24.07.2007 AS A VALID SERVICE AND THEREBY ASSESS ED THE TOTAL INCOME OF THE ASSESSEE AT RS.9,77,392/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ) WHO HAS PARTLY ALLOWED THE APPEAL. FEELING AGGRIEVED, THE ASSESSE E HAS COME UP BEFORE THE TRIBUNAL BY FILING THE PRESENT APPEAL. 4 I.T.A.NO.10412/DEL/2011 5. WE HAVE HEARD BOTH THE AUTHORIZED REPRESENTATIVE S AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD IN THE LIGHT OF ORDERS OF AUTHORITIES BELOW AND FACTS & CIRCUMSTANCES OF THE CASE. 6. LD. A.R. FOR THE ASSESSEE, CHALLENGING THE IMPUG NED ORDER, VEHEMENTLY CONTENDED THAT SINCE NOTICE U/S 143(2) H AS NEVER BEEN SERVED UPON THE ASSESSEE, THE SAID ASSESSMENT ORDER STANDS VITIATED. SINCE LD. A.R. FOR THE ASSESSEE CONTENDED THAT HIS MAIN GROUN D AGAINST THE REVENUE IS NON SERVICE OF NOTICE UPON THE ASSESSEE U/S 143( 2) OF THE ACT, THE ONLY QUESTION ARISES FOR DETERMINATION FIRST IN THIS CAS E IS, AS TO WHETHER THE ASSESSING OFFICER HAS NOT PROVIDED THE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BY AFFECTING PROPER SERVICE OF NOTICE UPON THE ASSESSEE U/S 143(2) OF THE ACT , IF ANSWER TO THE AFORESAID QUESTION IS IN AFFIRM ATIVE, THERE IS NO NEED TO GO INTO THE MERITS OF THE PRESENT CASE. 7. ON THE OTHER HAND, LD. D.R. FOR THE REVENUE TO REPEL THE ARGUMENTS ADDRESSED BY THE LD. A.R., RELIED UPON THE ORDER OF LD. CIT(A). 8. BARE PERUSAL OF THE PROVISIONS CONTAINED U/S 143 (2) SHOWS THAT IT INCORPORATES THE RULE OF AUDI ALTERAM PARTEM I.E. NO MAN SHOULD BE CONDEMNED UNHEARD. NOTICE U/S 143(2) IMPLIES MANDA TORY DUTY OF THE ASSESSING OFFICER TO GET THE NOTICE SERVED UPON THE ASSESSEE BEFORE PROCEEDING FOR ASSESSMENT. NOW, ADVERTING TO THE C ASE AT HAND, ASSESSMENT RECORD WAS SUMMONED AND PERUSED IN THE O PEN COURT AND THE ASSESSEE HAS SUBMITTED A LETTER DATED 25.04.2008 TO THE ASSESSING OFFICER CATEGORICALLY RAISING THE QUESTION THAT THE NOTICE DATED 16.04.2008 HAS NEVER BEEN SERVED UPON HIM AND AS SUCH IT IS NOT PO SSIBLE TO PREPARE THE CASE. PERUSAL OF THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE RELEVANT 5 I.T.A.NO.10412/DEL/2011 ASSESSMENT YEAR 2006-07 SHOWS THAT HE HAS CATEGORIC ALLY MENTIONED HIS NAME AS RAMESH KUMAR GUPTA S/O M L GUPTA, 3968-B, N AYA BAZAR, DELHI AND HAS ALSO MENTIONED HIS PAN AS AAEPG8444J. A PERUSAL OF NOTICE DATED 24.07.2007 ISSUED BY THE ASSESSING OFF ICER U/S 143(2) ACCOMPANIED WITH POSTAL RECEIPT GOES TO PROVE THAT THE SAME WAS ISSUED ON THE ADDRESS RAMESH GUPTA, C-628, NEW FRIENDS COLONY , NEW DELHI. ASSESSEE VEHEMENTLY DENIED TO HAVE RECEIVED THE NOT ICE. EVEN OTHERWISE IT IS NOT THE CASE OF REVENUE THAT THE NOTICE IN QU ESTION WAS SERVED UPON THE ASSESSEE. 9. LD. CIT(A) HAS DECLINED THE CONTENTION OF THE AS SESSEE ON THE GROUND THAT SINCE THE NOTICE WAS ISSUED ON THE COMP UTER GENERATED ADDRESS GIVEN BY THE ASSESSEE IN FORM 49A, THE ISSUANCE OF NOTICE THROUGH REGISTERED POSTS ON 24.07.2007 IS A VALID SERVICE. 10. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT WHE N APPARENTLY, THE NOTICE WAS SENT ON THE WRONG ADDRESS AS THE ASSESSE E HAS CATEGORICALLY GIVEN HIS ADDRESS AS RAMESH KUMAR GUPTA, 3968-B, NA YA BZAR, DELHI IN THE RELEVANT RETURN OF INCOME FOR THE ASSESSMENT YE AR 2006-07, WHICH WAS SUBJECTED TO SCRUTINY, THE ISSUANCE OF NOTICE I N A MECHANICAL MANNER DOES NOT MEAN THAT SERVICE OF NOTICE ON THE ASSESSE E HAS BEEN EFFECTED. PRESUMPTION CAN ONLY BE RAISED AGAINST THE ASSESSEE FOR SERVICE OF NOTICE U/S 143(2) WHEN THE NOTICE WAS SENT ON THE CORRECT ADDRESS. THE REVENUE IS ALSO SILENT IF THE ALLEGED NOTICE SENT THROUGH R EGISTERED COVER WAS RECEIVED BACK UNDELIVERED OR HAS NEVER BEEN RECEIVE D BACK WITHIN THE STIPULATED PERIOD TO RAISE THE PRESUMPTION AGAINST THE ASSESSEE. THE ENTIRE RECORD OF THE ASSESSING OFFICER IS SILENT AND AS SU CH, THE ASSESSING OFFICER 6 I.T.A.NO.10412/DEL/2011 CANNOT BE ALLOWED TO RAISE THE PRESUMPTION FOR SERV ICE OF NOTICE ON ASSESSEE. SO, WE ARE OF THE CONSIDERED VIEW THAT S ERVICE OF NOTICE U/S 143(2) IS ESSENTIAL AND ASSESSMENT MADE WITHOUT SER VICE OF SUCH A NOTICE IS INVALID. SO, WHEN THE ASSESSEE HAS CATEGORICALL Y PROVED THAT THE CHANGE OF ADDRESS HAS ALREADY BEEN INTIMATED TO THE REVENU E BY INCORPORATING THE SAME IN THE RELEVANT RETURN OF INCOME FOR THE ASSES SMENT YEAR 2006-07, THE ASSESSMENT ORDER DUE TO NON SERVICE OF NOTICE U /S 143(2), IS NOT SUSTAINABLE. 11. SO WITHOUT ENTERING INTO THE MERITS OF THE CASE , WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSMENT ORDER PASSED IN THIS CASE BY THE ASSESSING OFFICER WITHOUT GETTING SERVICE OF NOTICE ON THE ASSESSEE ON HIS NEW ADDRESS DULY INTIMATED TO THE REVENUE IS NOT SU STAINABLE IN THE EYES OF LAW. HENCE, WE HEREBY SET ASIDE THE IMPUGNED ORDER PASSED BY LD. CIT(A). 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, APPE AL OF THE ASSESSEE STANDS ALLOWED. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JAN., 2016. SD./- SD./- (J. S. REDDY) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 29.01. 2016 SP. 7 I.T.A.NO.10412/DEL/2011 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY BY ORDER (ITAT, NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 11/1 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21,30/1 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 29/1/16 SR . PS/PS 6 KEPT FOR PRONOUNCEMENT 29/1 SR. PS/PS 7 FILE SENT TO BENCH CLERK 29/1 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER