M/s Vijai Auto Sales & Services (P) Ltd., Bangalore V. DCIT, Bangalore

ITA 1262/BANG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95250 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 14-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 19-08-2013
• Court: TRIBUNAL
• Assessee Lawyers: V CHANDRASHEKAR
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 143(3); 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.126 2/BANG/2013 (ASST. YEAR 2008-2009) M/S VIJAI AUTO SALES & SERVICES PVT. LTD., NO.12-A, 4 TH FLOOR, NARANG CHAMBERS, NR ROAD, BANGALORE-560 002. . APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-12(5), BANGALORE. . RESPONDENT APPELLANT BY : SHRI V CHANDRA SHEKAR, ADVOCAT E RESPONDENT BY : SHRI SUNIL KUMAR AGARWALA, JCIT DATE OF HEARING : 14-9-2015 DATE OF PRONOUNCEMENT : -9-2015 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEA L) III, BANGALORE DATED 31/5/2013 FOR ASST. YEAR 2008-09. ITA NO.1262/B/13 2 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: 2.1 THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASST. YEAR 2008-09 ON 30/9/2008 DECLARING TOTAL INCOME OF RS.18,16,074/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSME NT WAS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE ORDER DATED 30/12/2010; WHEREIN THE INCO ME OF THE ASSESSEE WAS DETERMINED AT RS.76,87,238/- AS AGAINST THE RET URNED INCOME OF RS.18,16,070/- IN VIEW OF THE FOLLOWING ADDITIONS/D ISALLOWANCES THERETO:- I) UNEXPLAINED CASH CREDITS - RS.17,90,000/- II) DISALLOWANCE U/S 40(A)(I) - RS.32,49,846/- III) DISALLOWANCE U/S 40(A)(I) - RS.6,74,763/- IV) OTHER ADDITIONS/DISALLOWANCES - RS.1,56,565/- 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASST. YEAR 2008-09 DATED 30/12/2010, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)- III, BLORE. THE LEARNED CIT(A) FIXED THE APPEAL F OR HEARING ON VARIOUS DATES I.E 16/11/2011, 7/12/2011, 3/1/,2012, 19/1/2012, 30/11/2012, 26/2/2013, 25/3/2013 AND 27/5/2013 TO W HICH THE ITA NO.1262/B/13 3 ASSESSEE FAILED TO RESPOND/ATTEND THE SCHEDULED HEA RINGS. IN THIS, FACTUAL VIEW OF THE MATTER, THE LEARNED CIT(A) REC ORDED THAT THE NON- COMPLIANCE BY THE ASSESSEE TO THE NOTICES FIXING HE ARING OF THE APPEAL ON THE AFORESAID DATES ESTABLISHES THAT THE ASSESSE E IS NOT INTEREST IN PURSUING THE APPEAL AND PROCEEDED TO DISMISS THE AP PEAL EX-PARTE BY ORDER DATED 31/5/2013. 3. AGGRIEVED BY THE ORDER OF THE CIT(A)-III, BANGAL ORE FOR ASST. YEAR 2008-09 DATED 31/5/2013, THE ASSESSEE HAS PREF ERRED THIS APPEAL RISING THE FOLLOWING GROUNDS:- I) THE ORDER OF THE AUTHORITIES BELOW SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES AND THE FACTS AND CIRCUMSTANCES IN THE APPELLANTS CASE. II) THE ORDER PASSED BY THE LEARNED CIT(A) IS NOT JUSTIFIED IN LAW IN PASSING AN ORDER WITHOUT AFFORD ING THE APPELLANT A REASONABLE OPPORTUNITY OF HEARING WHICH IS IN GRAVE VIOLATION OF PRINCIPLES OF NATURA L JUSTICE AND NOT ADJUDICATING THE ISSUE ON MERITS OF THE MATTER AND CONSEQUENTLY THE ORDER PASSED BY THE LEARNED CIT(A) REQUIRES TO BE SET ASIDE ON THE FACT S AND CIRCUMSTANCES OF THE CASE. ITA NO.1262/B/13 4 III) THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESSED O VER AND THE INCOME RETURNED BY IT OF RS.18,16,070/- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. IV) WITHOUT PREJUDICE THE LEARNED AUTHORITIES BELOW ARE NOT JUSTIFIED IN LAW IN MAKING AN ADDITION OF RS.17,90,000/- AS UNEXPLAINED CASH CREDITS UNDER THE PROVISIONS OF SEC. 68 OF THE ACT UNDER THE FACT S AND CIRCUMSTANCES OF THE CASE. V) WITHOUT PREJUDICE THE LEARNED AUTHORITIES ARE NOT JUSTIFIED IN LAW IN MAKING A DISALLOWANCE UNDER THE PROVISIONS OF SEC. 40[A][IA] OF THE ACT AMOUNTING T O RS.6,74,763/- BEING EXPENDITURE INCURRED TOWARDS LABOUR CHARGES BY THE APPELLANT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. VI) WITHOUT PREJUDICE THE LEARNED AUTHORITIES ARE NOT JUSTIFIED IN LAW IN MAKING A DISALLOWANCE UNDER THE PROVISIONS OF SEC. 40[A][IA] OF THE ACT AMOUNTING T O RS.32,49,840/- BEING THE INTEREST EXPENDITURE INCURRED AND DEBITED BY THE APPELLANT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. VII) WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER OF INTEREST AS PER THE PARITY OF REASONING OF THE DECI SION OF THE HONBLE APEX COURT IN THE CASE OF KARANVIR SINGH, REPORTED IN 349 ITR 692, THE APPELLANT DENIE S ITSELF LIABLE TO BE CHARGED INTEREST U/S 234B AND 234C OF THE ACT UNDER THE FACTS AND CIRCUMSTANCES O F THE CASE. FURTHER THE LEVY OF INTEREST U/S 234B & 234C OF THE ACT IS BAD IN LAW AS THE PERIOD, RATE, ITA NO.1262/B/13 5 QUANTUM AND METHOD OF CALCULATION ADOPTED ON WHICH INTEREST IS LEVIED ARE NOT DISCERNIBLE FROM T HE ORDER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE . VIII) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, SUBSTITUT E AND DELETE ANY OR ALL OF THE GROUNDS OF APPEAL URGE D ABOVE. IX) FOR THE ABOVE AND OTHER GROUNDS TO BE URGED DURING THE HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED IN THE INTEREST OF EQUITY AND JUSTICE. 4.1 IN GROUND NO.2 THE ASSESSEE CONTENDS THAT THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) WAS IN GRAVE VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AS THE SAME WAS PASSED EX-PARE W ITHOUT AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF HEARING AND IN NOT ADJUDICATING THE GROUNDS RAISED ON MERITS. 4.2 IN THE COURSE OF APPEAL PROCEEDINGS, THE LEARNE D AR OF THE ASSESSEE IN ADDITION TO THE GROUNDS RAISED, HAS FIL ED ON AFFIDAVIT DATED 9/9/2015 SWORN TO BY THE MANAGING D IRECTOR OF THE ASSESSEE COMPANY SHRI V SRIDHAR LISTING OUT THE FAC TS AND CIRCUMSTANCES OF THE CASE AND THE REASONS FOR NON C OMPLIANCE WITH THE NOTICES ISSUED BY THE LEARNED CIT(A) FIXING THE HEA RING IN THE CASE ON ITA NO.1262/B/13 6 THE DATES LISTED OUT PARA 5 OF THE IMPUGNED ORDER. IN SHORT, THE ASSESSEES AFFIDAVIT SUBMITS THAT THE ADDRESS GIVE N IN FORM NO.35 FILED BEFORE THE CIT(A) I.E NO.677, BILEKAHALLI, BA NERGHATTA ROAD, BANGALORE-560 076 WAS THE PREMISES FROM WHERE THE A SSESSEE COMPANY WAS OPERATING ITS BUSINESS ACTIVITY. IT W AS SUBMITTED THAT THE AFORESAID OFFICE WAS CLOSED SINCE THE COMPANY U NDERWENT GRAVE FINANCIAL CRISIS AS IT WAS UNABLE TO PAY BACK MONIE S TO ITS CREDITORS. IT IS SUBMITTED THAT IT WAS IN THESE CIRCUMSTANCES, TH E ASSESSEE COULD NOT RECEIVE THE NOTICES FOR HEARING SENT BY THE LEARNED CIT(A) AND APPEAR BEFORE HIM AND IT CAME TO KNOW OF THE IMPUGNED ORDE R ONLY WHEN THE SAME WAS PASSED ONTO IT BY THEIR AUDITORS. IT IS SUBMITTED THAT IT WAS DUE TO THE FACT OF CHANGE OF ADDRESS FROM NO.677, B ILEKAHALLI, BANERGHATTA ROAD, BANGALORE-560 076 TO THE ONE GIVE N IN FORM NO. 36 I.E NO.12-A, 4 TH FLOOR, NARANG CHAMBERS, N.R ROAD, BANGALROE- 560 002, IN THE MIDST OF ITS GRAVE FINANCIAL CRISIS , THAT THE ASSESSEE DID NOT RECEIVE THE NOTICES SENT AND, THEREFORE, COULD NOT ATTEND THE HEARINGS BEFORE THE LEARNED CIT(A) IN APPEAL PROCEE DINGS. IT WAS PLEADED THAT SINCE THE ABOVE FACTUAL MATRIX CLEARLY ESTABLISHED THAT THE ASSESSEES FAILURE TO APPEAR BEFORE THE LEARNED CIT (A) ON THE DATES OF HEARING (SUPRA) WAS NEITHER INTENTIONAL, NOR WILLFU L OR DELIBERATE, THE IMPUGNED ORDER OF THE LEARNED CIT(A) BE SET ASIDE A ND THE LEARNED ITA NO.1262/B/13 7 CIT(A) BE DIRECTED TO DECIDE THE APPEAL AFRESH ON T HE MERITS OF THE GROUNDS RAISED BEFORE HIM. 4.2. WE HAVE HEARD BOTH THE LEARNED AR FOR THE ASSE SSEE AND THE LEARNED DR FOR REVENUE IN THE MATTER. WE FIND FROM THE RECORD PLACED BEFORE US THAT THE LEARNED CIT(A) HAD FIXED THE HEA RINGS IN THE CASE ON AT LEAST 8 OCCASIONS AS LISTED OUT AT PARA 5 OF THE IMPUGNED ORDER AND TO WHICH THERE WAS ADMITTEDLY NO RESPONSE OR COMPLI ANCE THERETO FROM THE ASSESSEE. IT IS APPARENTLY IN THESE CIRCU MSTANCES THAT THE LEARNED CIT(A) WAS CONSTRAINED TO DISMISS THE ASSES SEES CASE EX- PARTE. ON A PERUSAL OF THE AFFIDAVIT DATED 9/9/201 5 SWORN TO BY THE ASSESSEE AND FILED BEFORE US BY THE LEARNED AR, IT APPEARS THAT THE ASSESSEES LACK OF RESPONSE AND NON APPEARANCE TO T HE SCHEDULED APPELLATE HEARINGS BEFORE THE LEARNED CITL(A) WAS DUE TO THE FACT THAT THE ASSESSEE HAD SHIFTED FROM ITS EARLIER PLAC E OF BUSINESS OPERATIONS AT NO.677, BILEKAHALLI, BANNERGHATTA ROA D, BANGALORE-560 076 WHICH WAS THE GIVEN ADDRESS IN THE FORM NO.35/A PPEAL FILED BEFORE THE LEARNED CIT(A). IN THESE FACTUAL CIRCUM STANCES, WE ARE OF THE CONSIDERED VIEW THAT THE FAILURE ON THE PART OF THE ASSESSEE TO COMPLY WITH THE NOTICES OF HEARING ISSUED BY THE LE ARNED CIT(A) WAS NEITHER INTENTIONAL OR DELIBERATE. FURTHER, THE LE ARNED CIT(A) IN THE ITA NO.1262/B/13 8 IMPUGNED ORDER HAS ALSO DETERMINED THE ASSESSEES A PPEAL EX-PARTE WITHOUT ADJUDICATING ON THE MERITS OF THE GROUNDS R AISED BY THE ASSESSEE. THE INTENTION OF THE ACT BEING THAT THE TRUE AND CORRECT INCOME OF THE ASSESSEE BE BROUGHT TO TAX, REQUIRE T HAT THE VARIOUS ISSUES RAISED BY THE ASSESSEE BEFORE THE LEARNED CI T(A) OUGHT TO BE DISPOSED OFF ON MERITS; WHICH WE FIND HAS NOT BEEN DONE IN THE CASE ON HAND. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY SET ASIDE THE IMPUGNED EX-PARTE ORDER OF THE LEARNED CIT(A) A ND RESTORE THE MATTER BACK TO HIS FILE WITH THE DIRECTION TO HEAR THE APPEAL AFRESH AND DECIDE THE ISSUES RAISED IN THE GROUNDS OF APPEAL O N MERITS AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEIN G HEARD AND TO FILE DETAILS/SUBMISSIONS IN THIS REGARD. IT IS ORDERED ACCORDINGLY. CONSEQUENTLY, GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. SINCE THE IMPUGNED ORDER OF THE LEARNED CIT(A) H AS BEEN SET ASIDE TO THE FILE OF THE LEARNED CIT(A) FOR DE-NOVO ADJUDICATION OF THE GROUNDS OF APPEAL RAISED ON MERITS AS HELD AT PARA 4.2.1 OF THIS ORDER, THERE IS NO REQUIREMENT FOR US TO ADJUDICATE ON THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE AT THIS JUNCTURE. ITA NO.1262/B/13 9 6. IN THE RESULT, THE ASSESSEES APPEAL FOR THE ASS T. YEAR 2008-09 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH SEPT , 2015. SD/- SD/- (VIJAYPAL RAO) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER VMS. BANGALORE DATED : 18/9/2015 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.