ACIT, New Delhi V. M/s. K.S. Hotels Pvt. Ltd., New Delhi

ITA 1432/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7595 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Principle of natural justice
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 1432 /DEL/20 1 4 AY: 20 10 - 11 ACIT, CIRCLE 5(1) VS. KS HOTELS PVT.LTD. NEW DELHI B 25, CONNAUGHT PLACE NEW DELHI PAN: AAACK 4557 B (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P.DAM KANUNJNA, SR.D.R. RESPONDENT BY : NONE ORDER PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF I NCOME T AX ( A PPEALS) - VIII , NEW DELHI DATED 13.12.2013 PERTAINING TO THE ASSESSMENT YEAR (HEREINAFTER REFERRED TO AS THE A.Y.) 20 10 - 11 . 2. NONE APPEARED ON BEHALF OF THE ASSESSE DESPITE ISSUE OF NOTICE. THERE IS NO APPLICATION FOR ADJOURNMENT EITHER. UNDER THESE CIRCUMSTANCES WE DISPOSE OF THE CASE EX PARTE QUA THE ASSESSEE ON MERITS AFTER HEARING THE LD.SR.D.R. 3. HEARD SHRI P.DAM KANUNJNA, THE LD.SR.DE PARTMENTAL R EPRESENTATIVE . ITA 1432/DEL/2014 A.Y. 2010 - 11 M/S K.S.HOTELS PVT.LTD. 2 4. THE ISSUE BEFORE US IS WHETHER THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 2,19,97,449 / MADE BY THE AO U/S 40 (A) (IA) R.W.S 194C OF T HE INCOME TAX ACT , 1961 ( HEREINAFTER CALLED THE ACT ), ON THE GROUND THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON PAYMENTS MADE TO M/S Z EN CHINESE F OOD AS PER THE TERM S OF AGREEMENT DATED 13 . 07 . 2005 IN THE NAME AND STYLE OF F OOD S UPPLY A RRANGEMENT . 5. WE FIND THAT A SIMILAR ISSUE HAS COME UP BEFORE THE D B ENCH OF THE ITAT , DELHI IN THE CASE OF K. S. HOTELS (P) LTD. IN ITA NO. 755/DEL/2010 ORDER DATED 11/05/2012. THE T RIBUNAL ON THE VERY SAME FACTS OF PAYMENTS MADE TO M /S ZEN CHINESE FOOD FOR FOOD SUPPLY ARRANGEMENT AS PER AGREEMENT, HELD AS FOLLOWS. 4. ACCORDINGLY IN THE AFOREMENTIONED PECULIAR FACTS AND CIRCUMSTANCES AND CONSIDERING THE SUBMISSIONS ADVANCED BY THE PARTIES BEFORE THE BENCH. WE ARE OF THE VIEW THE IMPUGNED ORDER CANNOT BE UPHELD. SECTION 250(6) OF THE ACT MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REASONS FOR THE DECISION. THE REQUIREMENT OF RECORDING OF REASONS FOR THE DECISION. THE REQUIREMENT OF RECORDING OF REASONS AND COMMUNICATION THEREOF BY THE QUASI - JUDICIAL AUTHORITIES HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PROCEDURE AND IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE DECISION MAKING PROC ESS. HON BLE JURISDICTIONAL HIGH COURT IN THEIR DECISION IN VODAFONE ESSAR LTD. VS. DRP, 196 TAXMAN 423 (DELHI) HELD THAT WHEN A QUASI JUDICIAL AUTHORITY DEALS WITH A LIST, IT IS OBLIGATORY ON ITS PART TO ASCRIBE COGENT AND GERMANE REASONS AS THE SAME IS T HE HEARD AND SOUL OF THE MATTER AND FURTHER, THE SAME ALSO FACILITATES APPRECIATION WHEN THE ORDER IS CALLED IN QUESTION BEFORE THE SUPERIOR FORUM. A DECISION DOES NOT MERELY MEAN THE CONCLUSION . IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FO R THE CONCLUSION. (MUKHTIAR SINGH VS. STATE OF PUNJAB (1995) 1 SCC 760 (SC). 5. THE LD.COMMISSIONER OF INCOME TAX (APPEALS) ON A PERUSAL OF THE IMPUGNED ORDER IT IS SEEN CANNOT BE SAID TO HAVE ANALYSED THE ISSUES IN PROPER PERSPECTIVE IN THE LIGHT OF RELEVANT PROVISIONS AND THE ORDER PASSED IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF T HE FACTS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI JUDICIAL BODY/AUTHORITY MUST PASS REASONED ITA 1432/DEL/2014 A.Y. 2010 - 11 M/S K.S.HOTELS PVT.LTD. 3 ORDER, WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEFORE IT. THE APPLICATION OF MIND TO THE MATERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. IN VIEW OF THE FOREGOING DISCUSSION AS THE LD.COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT PASSED A SPEAKING ORDER ON THE ISSUES RAISED IN THE APPEAL, WE CONSIDER IT FAIR AND APP ROPRIATE TO SET ASIDE THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS) AND RESTORE THE MATTER TO HIS FILE FOR DECIDING THE AFORESAID ISSUE. NEEDLESS TO SAY THAT WHILE KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF S.250(6) OF THE ACT. WI TH THESE OBSERVATIONS, GROUND NOS.1 AND 2 IN THE APPEAL OF THE REVENUE ARE DISPOSED OF.' 2.2. AS IN THESE YEARS THE LD.COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWED THE ORDER OF HIS PREDECESSOR FOR THE A.Y. 2006 - 07, WE APPLY THE DECISION OF THE COORDINATE BENCH IN THE ASSESSEE'S OWN CASE AND SET ASIDE THE ISSUE TO THE FILE OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS) FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW WHILE KEEPING IN MIND THE OBSERVATIONS OF THE TRIBUNAL IN ITS ORDER DT.11.5.2012. 5.1 . CONS ISTENT WITH THE VIEW TAKEN THEREIN WE SET ASIDE THE ISSUE TO THE FILE OF THE A SSESSING O FFICER FOR FRESH ADJUDICATION . 6. IN THE RESULT THIS APPEAL OF THE REVENUE IS ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON 2 6 T H MAY, 2016. S D / - S D / - (H.S. SIDHU) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 2 6 T H M AY, 2016 *MANGA ITA 1432/DEL/2014 A.Y. 2010 - 11 M/S K.S.HOTELS PVT.LTD. 4 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR