ANEES UR. REHMAN, MUMBAI V. ITO 19(2)(1), MUMBAI

ITA 1239/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3008 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 13-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Depreciation; Salary income; Opportunity of being heard; Principle of natural justice
• Section: 143(3)

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.1239 /MUM/2013 ( / ASSESSMENT YEAR : 2005-06) ANEES UR. REHMAN NEHRU ROAD, VAKOLA BRIDGE SANTACRUZ(E), MUMBAI-400 055 / V. ITO 19(2) PIRAMAL CHAMBERS LALBAUG MUMBAI ./ PAN : AAAAPR5571R ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY NONE REVENUE BY : SHRI A. RAMACHANDRAN / DATE OF HEARING : 27-6-2016 / DATE OF PRONOUNCEMENT : 16-09-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 1239/MUM/2013 IS DIRECTED AGAINST APPELLATE ORDER DATED 26 TH DECEMBER, 2012 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 11, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2005-06, THE APPE LLATE PROCEEDING BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DA TED 27 TH DECEMBER, 2007 PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTE R CALLED THE AO) U/S 143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER CALL ED THE ACT). ITA 1239 /MUM/2013 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) ERRED IN UPHOLDING THE ACTION OF LD A O BY TREATING THE GENUINE AGRICULTURE INCOME AS INCOME FROM OTHER SOURC ES AND THE REASON ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO PROVISION OF THE INCOME TAX ACT AND RULES MADE THERE UNDER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE HONBLE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS MADE BY LD AO BY DISALLOWING THE LEGITIMATE MUNICIPAL TAX EXPENS ES CLAIMED OUT OF HOUSE PROPERTY INCOME AND THE REASON ASSIGNED FOR DO ING SO ARE WRONG AND CONTRARY TO THE PROVISION OF THE INCOME TAX ACT AND RULES MADE THERE UNDER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 50137/- MADE BY LD AO BY DISALLOWING 20% OF THE LEGITIMATE EXPENSES ON TELEPHONE, DEPRECIATION ON CAR AND INTEREST ON CAR LOAN AND THE REASON ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO PROVISION OF TH E INCOME TAX ACT AND RULES MADE THERE UNDER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS DEALER IN MARBLE, GRANITE AND OTHER STONES . THE ASSESSEE IS SHOWING INCOME FROM SALARY, HOUSE PROPERTY AND INCOME FROM PROPRIETARY CONCERN NAMELY M/S KOHINOOR MARBLE. THE ASSESSEE IS ALSO PARTNER IN PARTNERSHIP CONCERNS NAMELY M/S KOHINOOR GRANITE AND MARBLE, M/S KOHINOOR GRANITE E XCLUSIVE , M/S KOHINOOR GRANITE AND STONES(TUMKUR), M/S KOHINOOR M ARBLE(ITALIA) AND M/S KOHINOOR CERAMICS. THE CASE OF THE ASSESSEE WAS SEL ECTED FOR SCRUTINY ASSESSMENT U/S 143(3) READ WITH SECTION 143(2) OF T HE ACT AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS DECLARED AGRICULTURAL INCOME OF RS.1,3 5,000/- (NET) FOR WHICH NO DETAILS WERE FILED DESPITE BEING ASKED BY THE AO. THE AO IN THE ABSENCE OF THE DETAILS FILED BY THE ASSESSEE TREATED THE SAID AGRICULTURAL INCOME OF ITA 1239 /MUM/2013 3 RS.1,35,000/- AS INCOME FROM OTHER SOURCES , VIDE A SSESSMENT ORDER DATED 27.12.2007 PASSED BY THE AO U/S. 143(3) OF THE ACT. THE AO ALSO OBSERVED DURING THE COURSE OF ASSESSMEN T PROCEEDINGS U/S. 143(3) READ WITH SECTION 143(2) OF THE ACT THAT THE ASSESSEE HAS SHOWN RENTAL INCOME FROM HOUSE PROPERTY AT BANGALORE AFTER DEDUC TING MUNICIPAL TAXES AND DEPRECIATION . THE ASSESSEE DID NOT FILE PROOF OF MUNICIPAL TAXES WHICH CLAIM WAS DENIED BY THE AO , AND ALSO CLAIM OF DEP RECIATION WAS DISALLOWED BY THE AO , VIDE ASSESSMENT ORDER DATED 27.12.2007 PASSED BY THE AO U/S. 143(3) OF THE ACT. FURTHER THE AO OBSERVED THAT THE ASSESSEE HAS DEBIT ED TELEPHONE CHARGES OF RS. 79,489/- , DEPRECIATION ON CAR RS. 1,39,381/- AND INTEREST ON CAR LOAN RS. 31,515/- TO THE PROFIT AND LOSS ACCOUNT OF KOHI NOOR MARBLES, A PROPRIETARY CONCERN OF THE ASSESSEE. THE AO DISALLO WED 20% OF THE ABOVE EXPENSES AS POSSIBILITY OF PERSONAL ELEMENT INVOLVE D IN THESE EXPENSES FOR NON-BUSINESS PURPOSES COULD NOT BE RULED OUT AS PER THE AO AND HENCE ADDITION OF RS.50,137/- WAS MADE BY THE AO TO THE I NCOME OF THE ASSESSEE, VIDE ASSESSMENT ORDER DATED 27.12.2007 PASSED BY TH E AO U/S. 143(3) OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 27.12.20 07 PASSED BY THE AO U/S. 143(3) OF THE ACT, THE ASSESSEE FILED FIRST AP PEAL BEFORE THE LEARNED CIT(A) WHICH WAS DISMISSED EX-PARTE BY THE LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 26.12.2012 SINCE THERE WAS NO APPEARANCE BY T HE ASSESSEE BEFORE THE LEARNED CIT(A) AND NO SUBMISSIONS WERE MADE ON MERI TS W.R.T. ADDITIONS MADE BY THE AO, DESPITE SEVERAL OPPORTUNITIES GIVEN TO THE ASSESSEE BY THE LEARNED CIT(A) VIDE SEVEN NOTICES DATED FROM 02-12- 2008 TO 19-12-2012 WHICH NOTICES WERE ALL STATED TO BE RECEIVED BY THE ASSESSEE VIDE ITA 1239 /MUM/2013 4 ACKNOWLEDGMENTS PLACED ON RECORD IN THE FILE OF LEA RNED CIT(A) AS MENTIONED IN THE AFORE-STATED APPELLATE ORDER OF LEARNED CIT( A). 5. AGGRIEVED BY THE EX-PARTE APPELLATE ORDER OF THE LEARNED CIT(A) DATED 26.12.2012 DISMISSING THE APPEAL OF THE ASSESSEE , THE ASSESSEE FILED SECOND APPEAL WITH THE TRIBUNAL. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE APPEAL WAS CALLED FOR HEARING. THE LEARNED DR RELIED ON THE ORDER OF THE LEARNED CIT(A). 7. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL ON RECORD. WE HAVE OBSERVED THAT THE LEARNED CIT(A) HAS PASSED AN EX-PARTE APPELLATE ORDER WHEREIN THE ASSESSEE DID NOT ENTER APPEARANCE NOR A NY SUBMISSIONS WERE SUBMITTED BY THE ASSESSEE ON MERITS BEFORE THE LEAR NED CIT(A). THE ASSESSEE PARTICIPATED IN PROCEEDINGS BEFORE THE AO BUT DID N OT APPEAR BEFORE THE LEARNED CIT(A) AND ALSO THERE IS NO APPEARANCE BEFO RE US. IN OUR CONSIDERED VIEW KEEPING IN VIEW FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE ONE MORE OPPORTUNITY NEEDED TO BE GIVEN TO THE ASSESSEE TO PRESENT HIS CASE ON MERITS BEFORE THE FIRST APPELLATE AUTHORITY I.E. LEARNED CIT(A) , THUS, ALL THE ISSUES IN THIS APPEAL NEEDED TO BE SET ASIDE AN D RESTORED TO THE FILE OF LEARNED CIT(A) FOR DE-NOVO ADJUDICATION OF THE ISSU ES ON MERITS IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD SHALL BE PROVIDED BY THE LEARNED CIT(A) TO TH E ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WI TH LAW BEFORE ADJUDICATING THE ISSUES ON MERITS IN ACCORDANCE WITH LAW. THE AS SESSEE WILL BE ENTITLED TO FILE ALL NECESSARY AND RELEVANT EVIDENCES AND EXPLA NATIONS IN SUPPORT OF HIS CONTENTIONS WHICH SHALL BE ADMITTED BY LEARNED CIT( A) BEFORE ADJUDICATING THE APPEAL ON MERITS IN ACCORDANCE WITH LAW. WE ORDER A CCORDINGLY. ITA 1239 /MUM/2013 5 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 1239/MUM/2013 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2016. # $% &' 16 -09-2016 ( ) SD/- SD/- (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 16-09-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI