M/S KARTAR AGRO MILLS.PVT LTD, MOGA V. INCOME TAX OFFICER WARD-1, MOGA

ITA 141/ASR/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4992 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 18-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M SURENDRANATH
• Assessee Lawyers: P N ARORA
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 143(3); 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBU NAL AMRITSAR BENCH: AMRITSAR BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER I.T.A NO. 141/ASR/2019 (ASSESSMENT YEAR: 2013-14) KARTARAGRO MILLS PVT. LTD. VILLAGE GHALOTI, POST OFFICE-KOT-ISE-KHAN, MOGA-PUNJAB [PAN: AABCK3132H] (ASSESSEE) VS. INCOME TAX OFFICER WARD-1,MOGA- PUNJAB (REVENUE) ASSESSEE BY SH. P. N. ARORA, ADVOCATE REVENUE BY SH. S. M. SURENDRANATH, D.R. DATE OF HEARING 16.09.2021 DATE OF PRONOUNCEMENT 20.09.2021 ORDER PER LALIET KUMAR, JM: THE PRESENT APPEAL FILED BY THE ASSESSEE FEELING AG GRIEVED BY THE ORDER OF LD. CIT(A)-3, LUDHIANA,DATED 11.10.2018 FO R A.Y. 2013-14 2. THE ASSESSEE HAS RAISED THE FOLLOWINGS GROUNDS O F APPEAL: 1. THAT THE ASSESSMENT ORDER AS WELL AS THE ORDER OF L EARNED CIT(A), LUDHIANA, BOTH ARE AGAINST THE FACTS OF THE CASE AND ARE UNTENABLE UNDER THE LAW. I.T.A NO. 141/ASR/2019 2 2. THAT NO REASONABLE OPPORTUNITY OF BEING HEARD WA S ALLOWED BY THE A.O. BEFORE PASSING THE ORDER. AS SUCH, THE ASS ESSMENT ORDER IS BAD IN LAW AND IS LIABLE TO BE CANCELLED. AGAIN, THE WORTHY CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE O RDER OF THE AO. 3. THAT THE ORDER OF THE LD CIT(A) IS ILLEGAL, INVA LID AND VOID ABINITIO AND THE CIT(A) HAS CONFIRMED THE ADDITION WITHOUT APPLYING HER MIND AND WITHOUT APPRECIATING THE FACT S OF THE CASE. 4. THAT THE LD CIT(A) DID NOT APPRECIATE THAT NO NO TICE WAS SERVED ON THE ASSESSEE AND NO PROPER AND REASONABLE OPPORT UNITY OF BEING HEARD WAS ALLOWED AND AS SUCH THE ORDER OF TH E CIT(A) IS BAD IN THE EYES OF LAW AND IS LIABLE TO BE CANCELLE D. 5. THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE NEVER REJECTED AND THE BOOKS OF ACCOUNTS ARE DULY AUDITED AND THEY ARE MAINTAINED IN DUE COURSE OF BUSINESS. THE PROVI SIONS OF SECTION 145(3) WERE NEVER INVOKED AND AS SUCH NO AD DITION CAN BE MADE. 6. THAT THE AO HAS GROSSLY ERRED IN MAKING ADHOC AD DITION OF RS. 500000/- WITHOUT POINTING OUT ANY SPECIFIC ITEMS OF INADMISSIBLE NATURE. THIS IS A TAX AUDIT CASE AND THE BOOKS OF A CCOUNTS ARE SUBJECT TO AUDIT. NO OMISSION OR COMMISSION HAS BEE N POINTED OUT BY THE AO DURING THE COURSE OF ASSESSMENT PROCE EDING. ALL THE SALES AND PURCHASES ARE VOUCHED. AS SUCH NO ADD ITION IS CALLED FOR AND THE ADDITION MADE BY THE AO AND CONF IRMED BY THE CIT(A) MAY BE DELETED AS NO DEFECT WHATSOEVER H AS BEEN POINTED OUT BY THE AUTHORITIES BELOW. THE PROVISION S OF SECTION 143(3) ARE NOT AT ALL APPLICABLE. ALTERNATIVELY TH E ADDITION SUSTAINED BY THE WORTHY CIT(A) IS VERY HIGH & EXCES SIVE. I.T.A NO. 141/ASR/2019 3 7. THAT AGAIN THE CIT(A) HAS ERRED IN CONFIRMING TH E DISALLOWANCE OF RS. 51044/- ON ACCOUNT OF DISALLOWANCE OF PROPOR TIONATE INTEREST ON DEBIT BALANCE UNDER THE PROVISIONS OF S ECTION 36(1)(III) OF THE IT ACT, 1961. THE AUTHORITIES BE LOW DID NOT APPRECIATE THAT THE BORROWED FUND WAS EXCLUSIVELY U SED FOR BUSINESS PURPOSE ONLY AND THE DEBIT BALANCES WHICH WERE APPEARING WERE EITHER OLD ONE OR THEY ARE RELATED T O BUSINESS.THE AO AS WELL AS CIT(A) HAVE NOT BEEN ABL E TO PIN POINT EVEN ONE OF THE ITEM ON WHICH THE INTEREST IS DISALLOWABLE. AS SUCH THE INTEREST PAID SHOULD HAVE BEEN ALLOWED IN TOTO. THE AO HAS NOT BEEN ABLE TO PLACE ANY MATERIAL OR EVIDE NCE OR REASON ON RECORD FOR JUSTIFYING THE DISALLOWANCE. I T IS PRAYED THAT INTEREST PAID IS IN ACCORDANCE WITH THE LAW AND AS SUCH THE ADDITION MADE IS LIABLE TO BE DELETED. 8. THAT AGAIN THE CIT(A) HAS ERRED IN CONFIRMING TH E ADDITION OF RS. 47,99,802/- ON ACCOUNT OF CESSATION OF LIABILIT Y CREATED UNDER THE HEAD SUNDRY CREDITORS U/S. 41(1)OF THE IT ACT, 1961. THE AO DID NOT APPRECIATE THAT THIS CASE DOES NOT F ALL WITHIN THE MISCHIEF OF SECTION 41(1) OF THE IT ACT, 1961. THAT THE CIT(A) HAS AGAIN GROSSLY ERRED IN CONFIRMING THE SAME AND NO DISALLOWANCE CAN BE MADE BY UNILATERAL ACT OF THE D EPARTMENT. THE AO DID NOT APPRECIATE THAT THESE LIABILITIES WE RE STILL OUTSTANDING AND IT WAS STILL PAYABLE BY THE COMPANY .THERE WAS NO REASON FOR TREATING THE SAME U/S. 41(1).THE CIT( A) HAS GROSSLY ERRED IN CONFIRMING THE SAME WITHOUT APPREC IATING THE FACTS OF THE CASES.THE AUTHORITIES BELOW HAVE NOT B EEN ABLE TO PLACE ANY MATERIAL ON RECORD TO PROVE THAT THERE WA S CESSATION OF LIABILITY AND AS SUCH THIS CASE IS CLEARLY NOT C OVERED WITHIN THE MEANING OF SECTION 41(1). AS SUCH THE ADDITION MADE IS PURELY BASED ON CONJECTURES, SURMISES AND SUPPOSITIONS AND THE ADDITION MADE MAY BE DELETED. 9. THAT ANY OTHER GROUND OF APPEAL WHICH MAY BE URG ED AT THE TIME OF HEARING OF THE APPEAL. I.T.A NO. 141/ASR/2019 4 3. THE LD. AR FOR THE ASSESSEE HAD DRAWN OUR ATTENT ION TO PARAGRAPH 4 OF THE CIT(A) ORDER, ON THE BASIS ON WHICH THAT IT WAS SUBMITTED THAT THE APPEAL WAS DECIDED EX-PARTE AS NONE ATTEND THE HEAR ING ON BEHALF OF THE ASSESSEE AS EX-PARTE. HOWEVER, IT WAS SUBMITTED THA T THE LD. CIT(A) HAD MERELY REPRODUCED THE ORDER OF THE ASSESSING OFFICE R AND UPHELD THE SAME. IT WAS SUBMITTED THAT THE ASSESSEE BE KINLY ONE MOR E OPPORTUNITY TO APPEAR BEFORE THE CIT(A) AND DIRECTION BE ISSUED FOR DECID ING THE APPEAL IN ACCORDANCE WITH LAW. 4. PER CONTRA DR FOR THE REVENUE HAD VEHEMENTLY REL IED UPON THE ORDER PASSED BY THE ASSESSING OFFICER AS WELL AS BY THE C IT (A). 5. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD, INCLUDING THE JUD GMENTS CITED AT BAR DURING THE COURSE OF HEARING BY BOTH THE PARTIES. IN THE L IGHT OF THE ABOVE WE SET ASIDE THE ORDER PASSED BY THE COMMISSIONER AND REMA ND THE MATTER TO CIT (A). THE CIT(A) IS DIRECTED TO PASS FRESH SPEAKING ORDER, IN TERMS OF DIRECTION GIVEN HEREIN ABOVE, AFTER FOLLOWING THE P RINCIPLE OF NATURAL JUSTICE AND AFFORDING THE OPPORTUNITY OF HEARING TO THE ASS ESSEE.FURTHER WE DIRECT THE ASSESSEE TO APPEAR ON DATE AND TIME AND PANEL I N WHICH THE LD. CIT(A) ISSUED THE NOTICE AND GRANT THE HEARING. THIS MAKES CLEAR THAT THE ASSESSEE SHALL NOT TAKE ANYUNDUE ADJOURNMENT IN THE MATTER AND IN THE REMAND PROCEEDINGS AND SHALL COOPERATE ANY EARLY DI SPOSAL OF THE APPEAL. I.T.A NO. 141/ASR/2019 5 6. IN THE LIGHT OF THE ABOVE, THE APPEAL OF THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20/09/2021. SD/ SD/- (DR. M.L. MEENA) (LALIET KUMAR) ACCOUNTANT MEMBER JU DICIALMEMBER DATED 20/09/2021 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY BY ORDER