Satpal Singla, Patiala V. ITO, Patiala

ITA 1079/CHANDI/2014

• Counselvise Citation: 107921514 RSA 2014
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 31-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Opportunity of being heard; Principle of natural justice; Right to appeal

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 1079/CHD/2014 ASSESSMENT YEAR 2009-10 SH. SATPAL SINGLA, VS. THE ITO, WARD-2, PATIALA PATIALA PAN NO. BARPS8953E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI S.K. MITTAL DATE OF HEARING : 01.09.2015 DATE OF PRONOUNCEMENT : 04.09.2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), PATIALA DATED 09.09.2014 RELATING TO ASSESSMENT YE AR 2009-10. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE CIT(A) HAS ERRED IN PASSING THE ORDER U/S 250(6) AND DISMISSING THE APPEAL OF THE ASSESSEE WITHOUT PROV IDING REASONABLE OPPORTUNITY OF BEING HEARD. 2. THAT NOTWITHSTANDING THE ABOVE FACTS, THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 5,25,000/- AS MADE B Y THE LD. ASSESSING OFFICER. 3. THAT THE CIT(A) HAS FAILED TO APPRECIATE THAT TH E SOURCE OF CASH AS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESS EE IS FORM THE WITHDRAWALS FROM THE CAPITAL ACCOUNT OF THE ASS ESSEE IN 2 THE EARLIER YEARS AND WHICH IS VERY CLEAR FROM THE ASSESSMENT PROCEEDINGS ITSELF AND, THUS, THE ADDITION AS CONFI RMED THE CIT(A) IS NOT JUSTIFIED. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT AS SESSEE DERIVES INCOME FROM GOVERNMENT CONTRACTS AND ALSO SHARE INCOME BEING PA RTNER IN M/S JAI SHRI RAM RICE MILLS AND M/S MANCHANDA FILLING STATION. AS PE R AIR INFORMATION, CASH DEPOSITS OF RS. 15,35,000/- WAS MADE BY THE ASSESSE E IN HIS BANK ACCOUNT WITH STATE BANK OF PATIALA, INDUSTRIAL ESTATE, PATIALA. THE ASSESSING OFFICER REQUIRED THE ASSESSING OFFICER TO EXPLAIN THE SOURCE OF CASH DEPOSITS MADE IN THIS ACCOUNT. THE ASSESSING OFFICER OBSERVED THAT THE AS SESSEE HAD NO CASH IN HAND TO PROVE THE CASH DEPOSITS OF RS. 2 LAKHS AND RS. 3 ,25,000/- MADE ON 3.4.2008 AND 25.4.2008 RESPECTIVELY. ACCORDINGLY, VIDE LETTE R DATED 25.11.2011, THE ASSESSING OFFICER ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY CASH DEPOSITS OF RS. 5,25,000/- SHOULD NOT BE TREATED AS UNEXPLAINE D CASH DEPOSITS AND ADDED TO HIS INCOME. IN RESPONSE TO THE ABOVE QUERY, THE ASS ESSEE SUBMITTED THAT HE HAD MADE HUGE WITHDRAWALS IN THE PRECEDING ASSESSMENT Y EAR I.E. ASSESSMENT YEAR 2007-08 FROM HIS BANK ACCOUNT AND THE ABOVE CASH DE POSITS WERE MADE OUT OF THOSE WITHDRAWALS. ACCORDING TO ASSESSING OFFICER, THE ASSESSEE FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE TO PROVE THAT THER E WAS SUFFICIENT CASH IN HAND WITH THE ASSESSEE. A COPY OF THE CAPITAL ACCOU NT FOR THE YEAR ENDING 31.3.2008 FURNISHED BY THE ASSESSEE WAS ALSO CONSID ERED BY THE ASSESSING OFFICER. AFTER PERUSING THE CAPITAL ACCOUNT FURNIS HED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THERE WAS NO CASH A VAILABLE WITH THE ASSESSEE ON 31.3.2008. SINCE ASSESSEE HAS FAILED TO PROVE THE SOURCE OF CASH DEPOSITS OF RS. 5,2,5,000- EITHER FROM CURRENT YEARS WITHDRAWA LS IN THE SAME BANK ACCOUNT OR FROM THE WITHDRAWALS MADE IN EARLIER YEARS, THE ASSESSING OFFICER TREATED THE AFORESAID DEPOSITS AS UNEXPLAINED CASH DEPOSIT AND ADDED TO THE ASSESSEES INCOME IN VIEW OF THE PROVISIONS OF SECTION 69A OF THE INCOME-TAX ACT, 1961. 3 4. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) VIDE HIS ORDER DATED 9.9.2014 DISMISSED THE APPEAL OF THE ASSESSEE FOR W ANT OF PROSECUTION. THE RELEVANT OBSERVATIONS OF CIT(A) ARE REPRODUCED HER EIN BELOW:- IN THIS STATE OF POSITION, I HAVE NO OPTION BUT TO OPT FOR EX- PARTY DECISION RELYING UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. B.N. BHATTACHARGEE AND ANOTHER 118 ITR 461 WHEREIN, IT IS HELD THAT THE APPEALS DOES NOT MERELY MEAN FILING OF THE MEMO OF APPEAL BUT EFFECT IVELY PURSING THE SAME. WE ARE, ACCORDINGLY CONSTRAINED T O DISMISS THE APPEAL FOR WANT OF PROSECUTION. THE CIT(A) FURTHER HELD THAT ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF RS. 5,25,000/-. 5. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES AT LENGTH AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. SHR I SUDHIR SEHGAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. CIT(A) HAS DISM ISSED THE APPEAL OF THE ASSESSEE WITHOUT PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HE FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 250(6) OF THE ACT ARE IN THE NATURE OF INSTRUCTIONS TO THE APPELLATE AUTHORITY A ND EMPHASIZING THAT THE ORDER DISPOSING OF THE APPEAL SHALL BE A SPEAKING ORDER. THE ORDER SHALL NOT BE CRYPTIC. HE FURTHER SUBMITTED THAT THE ORDER SHALL BE SELF-E XPLANATORY. HE THEREFORE, SUBMITTED THAT THE ORDER OF THE CIT(A) MAY BE SET A SIDE. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF CIT(A). 6. IN MY OPINION THE LD. CIT(A) HAS NOT AFFORDED AN ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE AP PEAL. IT IS WELL SETTLED LAW THAT A RIGHT TO APPEAL WHEREVER CONFERRED INCLUDES A RIGHT OF BEING AFFORDING AN OPPORTUNITY OF BEING HEARD, IRRESPECTIVE OF THE LANGUAGE CONFERRING SUCH 4 RIGHT. THIS IS A PART AND PARCEL OF THE PRINCIPLE OF NATURAL JUSTICE. IN MY OPINION IT WAS INCUMBENT UPON THE CIT(A) TO GIVE TH E ASSESSEE AN ADEQUATE OPPORTUNITY OF BEING HEARD BEFORE DECIDING THIS APP EAL. ON THIS SCORE ALONE, THE ORDER PASSED BY CIT(A) IS BAD IN LAW. FURTHERMORE, PROVISIONS OF SECTION 250(6) OF THE ACT ARE MANDATORY AND IT IS OBLIGATOR Y FOR CIT(A) TO PASS A SPEAKING ORDER STATING POINTS RAISED IN APPEAL, HIS DECISION THEREON AND REASONS FOR SUCH DECISION. IN MY OPINION THE CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESSEE FOR WANT OF PROSECUTION. THE REFORE, THE ORDER PASSED BY CIT(A) IS CONTRARY TO THE PROVISIONS OF SECTION 25 0(6) OF THE ACT. WHILE TAKING SUCH A VIEW I AM FORTIFIED BY THE DECISION OF ITAT AHMADABAD BENCH IN THE CASE OF GUJARAT THEMIS BIOSYN LTD V JCIT [2000] 74 ITD 339 (AHD), WHEREIN IN SIMILAR CIRCUMSTANCES THE TRIBUNAL HELD AS UNDER:- '3. WE HAVE CAREFULLY CONSIDERED THE FACTS AND CIRC UMSTANCES OF THE CASE AS WELL AS SUBMISSIONS MADE BEFORE US. THE IMPUGNED ORDER PASSED BY THE CIT(A) IS CLEARLY VIOL ATIVE OF THE EXPRESS PROVISIONS OF SECTION 250(6), WHICH PRO VIDES THAT THE APPELLATE ORDERS OF THE CIT(A) ARE TO STATE THE POINTS ARISING IN THE APPEAL, THE DECISION OF THE AUTHORIT Y THEREON AND THE REASONS FOR SUCH DECISION. THE UNDERLYING R ATIONALE OF THE PROVISION IS THAT SUCH ORDERS ARE SUBJECT TO FURTHER APPEAL TO THE APPELLATE TRIBUNAL. SPEAKING ORDER WO ULD OBVIOUSLY ENABLE A PARTY TO KNOW PRECISE POINTS DEC IDED IN HIS FAVOUR OR AGAINST HIM. ABSENCE OF THE FORMULATI ON OF THE POINT FOR DECISION FOR WANT OF CLARITY IN A DECISIO N UNDOUBTEDLY PUTS A PARTY IN QUANDARY. SECTION 250(6 ) EXPRESSLY EMBODIES THE PRINCIPLES OF NATURAL JUSTIC E AND SUCH A PROVISION IS CLEARLY MANDATORY IN NATURE. THE IMP UGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) IN VIOLA TION OF THE PROVISIONS OF SECTION 250(6) CANNOT, THEREFORE, BE SUSTAINED. REGARDING THE DECISIONS OF THE DELHI BEN CH OF THE TRIBUNAL IN MULTIPLAN INDIA (P.) LTD.'S CASE (SUPRA ) CITED BY THE LD. CIT(A), WE FIND THAT THE SAID DECISION IS C LEARLY DISTINGUISHABLE. SECTION 254 REFERRING TO THE ORDER S OF THE TRIBUNAL CONFERS PLENARY JURISDICTION ON THE TRIBUN AL IN THE 5 MATTER OF PASSING ORDERS UNDER SECTION 254(1). THER E IS NO SUCH EXPRESS STIPULATION IN SECTION 254 AS CONTAINE D UNDER THE PROVISIONS OF SECTION 250(6) RELATING TO THE OR DERS OF FIRST APPELLATE AUTHORITY. THEREFORE, RELIANCE PLACED BY THE CIT(A) ON MULTIPLAN INDIA (P.) LTD.';S CASE (SUPRA) IS ENT IRELY MISPLACED. SIMILARLY, THE CASE OF ESTATE OF LATE TU KOJIRAO HOLKAR (SUPRA) CITED BY THE LD. CIT(A) IS DISTINGUI SHABLE AND DOES NOT SUPPORT THE VIEW TAKEN BY THE CIT(A). 4. FOR THE REASONS INDICATED ABOVE, WE HEREBY SET A SIDE THE IMPUGNED ORDER OF THE CIT(A) AND DIRECT THE CIT(A) TO DISPOSE OF THE APPEAL OF THE ASSESSEE AFRESH AFTER ALLOWING PROPER OPPORTUNITY IN ACCORDANCE WITH LAW. 7. IN VIEW OF THE ABOVE DISCUSSION, I SET ASIDE TH E IMPUGNED ORDER PASSED BY LD. CIT(A) AND REMAND THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE FRESH IN ACCORDANCE WITH LAW AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE M ATTER. IT IS MADE CLEAR THAT THE ASSESSEE IS FREE TO PRODUCE THE RELEVANT EVIDEN CE IN SUPPORT OF HIS CASE. SINCE I HAVE SET ASIDE THE ORDER OF LD. CIT(A) IN T OTO, THEREFORE, NO COMMENTS ARE BEING GIVEN ON THE MERITS OF THE CASE. 8. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 04.09.2015 SD/- (H.L.KARWA) VICE PRESIDENT DATED : 4 TH SEPTEMBER, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6