EKTA SURPEME HOUSING, MUMBAI V. ADDL CIT 15(3), MUMBAI

ITA 1277/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2127 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 04-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Opportunity of being heard; Principle of natural justice; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO 1277/MUM/2015 ASSESSMENT YEAR: 2011-12 M/S. EKTA SUPREME HOUSING, LAKE HOMES, GROUND FLOOR, OFF. ADI SHANKARACHARYA MARG, NEAR GOPAL SHARMA SCHOOL, POWAI, MUMBAI 400 076. PAN:- AABFE7069G VS. THE ADDL. CIT - 15(3), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : DR. K. SHIVRAM & MS. NEELAM JADHAV RESPONDENT BY : SHRI. A.K.KARDAM DATE OF HEARING: 20 /10 /2016 DATE OF PRONOUNCEMENT: 28/10/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 07/11/2014 PASSED BY THE LD. CIT(APPEALS)-26 MUMBAI FOR THE ASST. YEAR 2011-12, WHEREBY THE LD. CIT(A) DISMISSED THE APPEA L FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER DATED 06/02/2014 PASSED BY THE A.O U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUND OF APPEAL:- I. NATURAL JUSTICE - EX- PARTE ORDER 2 ITA NO 1277/MUM/2015 ASSESSMENT YEAR: 2011-12 1.1. THE LEARNED CIT(A) ERRED IN PASSING AN EX PART E ORDER WITHOUT CONSIDERING AN APPLICATION FOR ADJOURNMENT VIDE LET TER DTD. 03/11/2014, WHICH WAS FILED ON 03/11/2014 EXPLAININ G THE REASONS OF ILL HEALTH OF THE CHARTERED ACCOUNTANT, THEREFORE THE EX PARTE ORDER PASSED BY THE CIT(A) MAY BE SET-A-SIDE. 1.2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT W HEN AN APPLICATION FOR ADJOURNMENT WAS FILED AND IT WAS INFORMED THAT 'NEW NOTICE WILL BE ISSUED' FOR THIS MATTER. HOWEVER WITHOUT ISSUING ANY FURTHER NOTICE FOR HEARING, AN EX-PARTE ORDER WAS PASSED, H ENCE THE ORDER OF CIT(A) MAY BE SET-ASIDE. II. DISALLOWANCE OF COMPENSATION PAID OF RS. 43,37, 500/ - 2.1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DIS ALLOWANCE OF RS. 43,37,500/- BEING COMPENSATION PAID BY THE ASSESSEE FIRM FOR CANCELLATION OF BOOKING OF FLATS, WITHOUT APPRECIAT ING THAT IT IS A PREVAILING PRACTICE TO PAY THE COMPENSATION TO THE INVESTOR BUYERS IN THE SAME LINE OF BUSINESS OF DEVELOPERS AND CONSTRU CTION TO MAINTAIN BUSINESS EXPEDIENCY, HENCE DISALLOWANCE OF COMPENSA TION MAY BE DELETED. 2.2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT, THE ASSESSEE HAS FILED THE DETAILS OF PAYMENT OF COMPENSATION TO VAR IOUS INVESTORS WITH SUPPORTING EVIDENCE AND CORRESPONDENCE, HENCE THE DISALLOWANCE OF COMPENSATION OF RS. 43,37,500/- MAY BE DIRECTED TO BE DELETED. 3 ITA NO 1277/MUM/2015 ASSESSMENT YEAR: 2011-12 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE IMPUGNED ORDER IS BAD IN LAW, AS THE SAME HAS BEEN PASSED IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE ASSESSEE WAS NOT AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD DESPITE THE WRITTEN REQU EST MADE FOR ADJOURNMENT WELL IN TIME BEFORE THE DATE OF HEARING ON THE GROU ND OF THE CHARTERED ACCOUNTANT CONCERNED. HENCE THE ORDER IS LIABLE TO BE SET ASIDE. 4. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESE NTATIVE (DR) SUBMITTED THAT SINCE THE ASSESSEE DID NOT APPEAR, DESPITE SUF FICIENT OPPORTUNITY TIME TO PRESENT ITS CASE, NOW THE ASSESSEE IS ESTOPPED FROM RAISING THE PLEA THAT THE LD. CIT (A) HAS WRONGLY PASSED THE EX PARTE ORDER WITHOUT ALLOWING THE APPLICATION FOR ADJOURNMENT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO G ONE THROUGH THE MATERIAL PLACED BEFORE US. THE ONLY ISSUE INVOLVED IN THIS A PPEAL IS WHETHER THE CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 43, 37,500/-WHICH WAS PAID BY THE ASSESSEE AS COMPENSATION FOR CANCELLATION OF BO OKING OF FLATS? WE NOTICE THAT THE LD. CIT(A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE BY ENDORSING THE FINDINGS OF THE A.O. THE LD. CIT(A) HAS NOT MEN TIONED THAT THE ASSESSEE WAS GIVEN SUFFICIENT TIME TO PRESENT HIS CASE AND D ESPITE THIS, THE ASSESSEE DID NOT APPEAR BEFORE HIM. THE LD. CIT(A) HAS ALSO NOT RECORDED THE REASONS FOR REJECTION OF APPLICATION DATED 03.11.2014 SUBMITTED BY THE ASSESSEE FOR ADJOURNMENT. THE AFORESAID FACTS SUGGEST THAT THE A SSESSEE WAS NOT GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD AND THE ORDER WAS PASSED IN VIOLATION OF ONE OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR P LAY. WE ARE THEREFORE, OF THE CONSIDERED VIEW THAT THE ASSESSEE SHOULD GET AN OPP ORTUNITY TO ARGUE HIS CASE BEFORE THE FIRST APPELLATE AUTHORITY. HENCE, WE ALL OW THE FIRST GROUND OF APPEAL OF THE ASSESSEE IN THE INTEREST OF JUSTICE AND WITH OUT DECIDING THE APPEAL ON MERIT, SEND THE APPEAL BACK TO THE LD. CIT(A) FOR A DJUDICATING THE SAME AFRESH 4 ITA NO 1277/MUM/2015 ASSESSMENT YEAR: 2011-12 AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEAR D TO THE APPELLANT/ASSESSEE. THE APPEAL IS DISPOSED OF ACCORDINGLY. 6. IN THE RESULT APPEAL FILED BY THE ASSESSEE FOR A.Y. 2011-12 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:28/10/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA