Ambika Ghorpade , Sandur V. Assistant Commissioner of Income TAx Circle-1 , Bellary

ITA 1110/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8136 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 05-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SREENANDINI DAS
• Assessee Lawyers: K R PRADEEP
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause; Set aside
• Section: 143(3); 234B; 14A; 37(1); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER ITA NO. 1110 /BANG/201 8 ASSESSMENT YEAR : 20 1 4 - 1 5 MS. AMBIKA GHORPADE, KARTHIKEYA NIVAS, KRUTIKA FARM, WARD NO.1, DAWALANTHPUR ROAD, SANDUR 583 119. PAN : AAVPG 1908 N VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, BELLARY. APPELLANT RESPONDENT ASSESSEE BY : SHRI. K. R. PRADEEP, ADVOCATE REVENUE BY : MS. SREENANDINI DAS, JCIT DATE OF HEARING : 2 8 . 03 .201 9 DATE OF PRONOUNCEMENT : 16 . 0 4 .201 9 O R D E R PER SHRI JASON P BOAZ, A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE EX-PARTE ORDER OF THE CIT(A), GULBARGA, DATED 28.02.2018 FOR ASSESSMENT YEAR 2014-15. 2. BRIEFLY STATED, THE FACTS RELEVANT FOR DISPOSAL OF THIS APPEAL ARE AS UNDER: 2.1 THE ASSESSEE FILED HER RETURN OF INCOME FOR ASSESSMENT YEAR 2014-15 ON 30.01.2015 DECLARING TOTAL INCOME OF RS.2,64,66,920/- . THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND THE CASE WAS SUBSEQUENTLY ITA NO. 1110/BANG/2018 PAGE 2 OF 6 TAKEN UP FOR SCRUTINY FOR THIS ASSESSMENT YEAR. THE ASSESSMENT WAS CONCLUDED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 08.12.2016, WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT RS.4,29,37,671/-, IN VIEW OF THE FOLLOWING ADDITIONS / DISALLOWANCES:- (I) DISALLOWANCE UNDER SECTION 14A R.W.R. 8D - RS. 4,05,636/- (II) DISALLOWANCE UNDER SECTION 37(1) - RS. 10,21,923/- (III) ADDITION UNDER SECTION 41(1) - RS.1,50,43,192/- 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 08.12.2016 FOR ASSESSMENT YEAR 2014-15, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), GULBARGA. THE CIT(A) DISMISSED THE ASSESSEES APPEAL VIDE THE IMPUGNED EX-PARTE ORDER DATED 28.02.2018 FOR NON-PROSECUTION, INTER ALIA, FOLLOWING THE DECISION OF THE ITAT DELHI BENCH IN THE CASE OF MULTIPLAN (INDIA) LTD., 38 ITD 320 (DEL.). 3. THE ASSESSEE, BEING AGGRIEVED BY THE EX-PARTE ORDER OF CIT(A), GULBARGA DATED 28.02.2018 FOR ASSESSMENT YEAR 2014-15 HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL WHEREIN SHE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF THE AUTHORITIES BELOW IN SO FAR AS IT IS AGAINST THE ASSESSEE IS OPPOSED TO LAW, FACTS, CIRCUMSTANCES, NATURAL JUSTICE, EQUITY ALL OTHER KNOWN PRINCIPLES OF LAW. 2. THAT THE TOTAL INCOME COMPUTED AND THE TOTAL TAX COMPUTED IS HEREBY DISPUTED. 3. THE AUTHORITIES BELOW ERRED IN NOT PROVIDING SUFFICIENT AND ADEQUATE OPPORTUNITY TO THE APPELLANT AS REQUIRED UNDER LAW, THEREBY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE, HENCE THE ORDER REQUIRES TO BE CANCELLED. 4. THAT THE LEARNED CIT-APPEALS ERRED IN REFUSING TO GRANT ADJOURNMENT AND PASSING THE ORDER WITHOUT HEARING THE ASSESSEE. 5. THE AUTHORITIES BELOW ERRED IN DISALLOWING RS.4,05,636/- U/S 14A RWR 8D(2)(III) OF THE ACT. ITA NO. 1110/BANG/2018 PAGE 3 OF 6 6. THE AUTHORITIES BELOW ERRED IN DISALLOWING ENTERTAINMENT EXPENSES OF RS.29,306/- U/S 37(1) OF THE ACT. 7. THE AUTHORITIES BELOW ERRED IN DISALLOWING REPAIRS AND MAINTENANCE EXPENSES OF RS.4,65,822/- U/S 37(1) OF THE ACT. 8. THE AUTHORITIES BELOW ERRED IN DISALLOWING TRAVELLING EXPENSES OF RS.5,26,795/- U/S 37(1) OF THE ACT. 9. THE AUTHORITIES BELOW ERRED IN DISALLOWING SUNDRY CREDITORS AMOUNTING TO RS. 1,50,43,192/- U/S 41(1) OF THE ACT. 10. THE AUTHORITIES BELOW ERRED IN HOLDING THAT THE SUNDRY CREDITORS AMOUNTING TO RS. 1,50,43,192/- CEASED TO EXIST OR ARE BOGUS AND FICTITIOUS IN NATURE. 11. THE REASONS GIVEN BY THE AUTHORITIES BELOW FOR DISALLOWING THE ABOVE ARE UNSUSTAINABLE AND UNTENABLE IN LAW, HENCE REQUIRES TO BE REJECTED. 12. THAT THE AUTHORITIES BELOW ERRED IN RELYING ON IRRELEVANT MATERIAL WHILE IGNORING THE RELEVANT MATERIAL. 13. THE APPELLANT DENIES THE LIABILITIES FOR INTEREST U/S 234A, 234B AND 234C OF THE ACT. FURTHER PRAYS THAT THE INTEREST IF ANY SHOULD BE LEVIED ONLY ON RETURNED INCOME. 14. NO OPPORTUNITY HAS BEEN GIVEN BEFORE LEVY OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 15. WITHOUT PREJUDICE TO THE APPELLANT'S RIGHT OF SEEKING WAIVER BEFORE APPROPRIATE AUTHORITY, THE APPELLANT BEGS FOR CONSEQUENTIAL RELIEF IN THE LEVY OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 16. FOR THE ABOVE AND OTHER GROUNDS AND REASONS WHICH MAY BE SUBMITTED DURING THE COURSE OF HEARING OF THE APPEAL, THE ASSESSEE REQUESTS THAT THE APPEAL BE ALLOWED AS PRAYED AND JUSTICE BE RENDERED. 4. GROUND NOS. 3 AND 4 4.1 IN THESE GROUNDS (SUPRA), THE ASSESSEE CONTENDS THAT THE IMPUGNED EX-PARTE ORDER OF THE CIT(A) DISMISSING THE ASSESSEES APPEAL, IN LIMINE, FOR NON-PROSECUTION; WITHOUT PROVIDING THE ASSESSEE ADEQUATE OPPORTUNITY AND REFERRING TO GRANT ADJOURNMENTS SOUGHT; WAS PASSED IN HASTE AND WITHOUT CONSIDERING THE ASSESSEES APPEAL ON MERITS. ACCORDING TO THE LEARNED AR, THE CIT(A) AFFORDED THE ASSESSEE ITA NO. 1110/BANG/2018 PAGE 4 OF 6 ONLY SIX HEARINGS, WITHIN A SHORT SPAN OF 3 MONTHS AND ADMITTEDLY THE ASSESSEE SOUGHT ADJUSTMENTS SINCE SHE HAD DIFFICULTY IN CO-ORDINATING MATTERS IN SUCH A SHORT PERIOD; AS SHE WAS BASED IN SANDUR, HER ASSESSMENT WAS DONE IN BELLARY, HER COUNSEL WAS BASED IN BANGALORE AND THE APPEAL BEFORE THE CIT(A) WAS CONDUCTED IN GULBARGA. FURTHER, EVEN FOR HEARING ON 28.02.2018, THE CIT(A) DID NOT GRANT ADJOURNMENT SOUGHT AND PASSED THE IMPUGNED ORDER EX-PARTE ON THE VERY SAME DAY. IT IS SUBMITTED THAT THERE WAS NO MALAFIDE OR WILLFUL INTENTION ON THE PART OF THE ASSESSEE TO NOT ATTEND THE HEARINGS BEFORE THE CIT(A), BUT WERE DUE TO REASONS BEYOND HER CONTROL; WHICH CONSTITUTED REASONABLE CAUSE FOR NON-APPEARANCE. MORE SO, WHEN THE AO HAD DETERMINED THE ASSESSEES INCOME OF THE YEAR AT RS.4,29,37,671/-, AS AGAINST RETURNED INCOME OF RS.2,64,66,920/-. IT IS SUBMITTED THAT THIS RESULTED IN THE ASSESSEE BEING FASTENED WITH A HUGE DEMAND OF RS.81,63,540/-. IT IS FURTHER SUBMITTED THAT THE ULTIMATE OBJECT OF ASSESSMENT IS THAT THE CORRECT INCOME OF AN ASSESSEE IS BROUGHT TO TAX AND IN THIS CONTEXT, IT IS PRAYED BY THE LEARNED AR FOR THE ASSESSEE THAT THE IMPUGNED EX-PARTE ORDER OF THE CIT(A) BE SET ASIDE AND THE MATTERS RESTORED TO THE FILE OF CIT(A) FOR HEARING AND ADJUDICATION ON MERITS. 4.2 PER CONTRA, THE LEARNED DR FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4.3.1 WE HAVE HEARD AND CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS PUT FORTH BY BOTH LEARNED DR FOR REVENUE AND THE LEARNED AR OF THE ASSESSEE. A PERUSAL OF THE IMPUGNED ORDER CONFIRMS THE FACT THAT THE CIT(A) DISMISSED THE ASSESSEES APPEAL EX-PARTE FOR NON-PROSECUTION FOLLOWING, INTER ALIA, THE DECISION OF THE DELHI BENCH OF ITAT IN THE CASE OF MULTIPLAN (INDIA) LTD., (38 ITD 320) (DEL.). IT IS SEEN THAT THE CIT(A) FIXED HEARING ON 6 DATES; ALL WITHIN A PERIOD OF 3 MONTHS BETWEEN NOVEMBER, 2017 AND MARCH, 2018. ACCORDING TO THE ASSESSEE SHE COULD NOT ATTEND THE HEARINGS AS SHE WAS HAVING DIFFICULTY IN CO-ORDINATING MATTERS IN RESPECT OF HER APPEAL AS SHE WAS BASED IN SANDUR, HER ASSESSING OFFICER (AO) IN BELLARY, THE CIT(A) IN GULBARGA ITA NO. 1110/BANG/2018 PAGE 5 OF 6 AND HER COUNSEL IN BANGALORE. IT WAS PLEADED THAT THIS DEFAULT WAS NEITHER DELIBERATE NOR INTENTIONAL, BUT WAS FOR CAUSES BEYOND HER CONTROL AND CONSTITUTED REASONABLE CAUSE. IN THE INTEREST OF SUBSTANTIAL JUSTICE, WE ARE INCLINED TO CONCUR WITH THIS PLEA OF ASSESSEE, AS IT IS HIGHLY UNLIKELY THAT THE ASSESSEE WOULD INTENTIONALLY OR DELIBERATELY NOT ATTEND HEARINGS BEFORE THE CIT(A); AS THIS WOULD CAUSE IMMENSE HARM TO HER OWN INTERESTS; ESPECIALLY WHEN SHE HAS BEEN FASTENED WITH TAX DEMAND OF RS.81,63,540/- BY THE AO DUE TO ADDITIONS OF RS.1,64,70,751/- TO HER RETURNED INCOME OF RS.2,64,66,920/-. ADMITTEDLY, THE ASSESSEES APPEAL HAS NOT BEEN DISPOSED OFF BY ADJUDICATION ON MERITS OF THE ISSUES RAISED BEFORE THE CIT(A). SINCE THE ULTIMATE AIM OF THE ASSESSMENT IS THAT ONLY THE CORRECT TAXES DUE BY THE ASSESSEE BE COLLECTED BY REVENUE, IN OUR VIEW, IT IS IMPERATIVE THAT THE ASSESSEES APPEAL BEFORE THE CIT(A) BE HEARD AND DISPOSED OFF ON MERITS. 4.3.2 IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPINION THAT THE INTEREST OF SUBSTANTIAL JUSTICE WILL BE WELL SERVED IF THE IMPUGNED EX-PARTE ORDER OF THE CIT(A) DATED 28.02.2018 FOR ASSESSMENT YEAR 2014-15 BE SET ASIDE. WE, THEREFORE, SET ASIDE THE AFORESAID IMPUGNED ORDER OF THE CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR FRESH HEARINGS, EXAMINATION AND ADJUDICATION OF THE ISSUES RAISED BY THE ASSESSEE IN THE APPEAL BEFORE HIM. NEEDLESS TO ADD, THE CIT(A) SHALL AFFORD THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS/SUBMISSIONS REQUIRED, WHICH SHALL BE DULY CONSIDERED BEFORE DECIDING THE ISSUES. WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN VIEW OF THE ABOVE, WE REFRAIN FROM COMMENTING ON OR ADJUDICATING THE ISSUES RAISED ON TECHNICAL ISSUES/MERITS IN GROUNDS AT NOS. 1, 2 AND 5 TO 16 OF THIS APPEAL. ITA NO. 1110/BANG/2018 PAGE 6 OF 6 6. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF APRIL, 2019. SD/- SD/ - SD/ - (N. V. VASUDEVAN) VICE PRESIDENT (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE. DATED: 16TH APRIL, 2019. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.