Indian Drugs & Pharmaceuticals Ltd., Gurgaon V. ACIT, New Delhi

ITA 1466/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61726 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 29-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S GILL
• Assessee Lawyers: VENKETESH MOHAN
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 1466/DEL/2012 ASSESSMENT YEAR: 2003-04 INDIAN DRUGS & PHARMACEUTICALS LTD., IDPL COMPLEX, DUNDAHERA, DELHI GURGAON ROAD, GURGAON. AAAC12471C VS. ACIT, CIRCLE 11(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : RANO JAIN, ADV. & VENKETESH MOHAN, FCA RESPONDENT BY : SH. R.I.S. GILL, CIT(DR) O R D E R PER CHANDRA MOHAN GARG, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER VIDE DATED 16.12.2010 BY WHICH THE CIT(A)-XVIII, NEW DELHI DIS ALLOWED THE APPEAL OF THE ASSESSEE DECLINING TO INTERFERE WITH THE ASSESSMENT ORDER DATED 10.03.2006. 2. THE GROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE OR DER PASSED BY LD. CIT(APPEALS) IS BAD BOTH IN THE EYE OF LAW A ND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE AC TION OF THE AO IN DISALLOWING LOSS AMOUNTING TO RS. 258,23,43,9 10/- CLAIMED BY THE ASSESSEE. ITA NO. 1466/D/2012 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN NOT ADMITTING THE EVIDEN CES BROUGHT ON RECORD BY THE ASSESSEE UNDER RULE 46A OF THE ACT . II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN REJECTING THE APPLICATION U/S 46A OF THE ACT DESPITE THE FACT THA T THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE BOOKS OF ACCOUNTS BEFORE THE AO. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN PASSING THE ORDER EXPARTE WITHOUT GIVING ASSESSEE A PROPER AND ADEQUATE OPPOR TUNITY OF BEING HEARD. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY OF THE GROUNDS OF APPEAL. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE COMPANY IS A PUBLIC SECTOR UNDERTAKING ENTERPRISE LIMITED COMPANY ENGAG ED IN THE BUSINESS OF PRODUCTION AND MARKETING OF DRUGS AND ANTIBIOTICS. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREIN TO BE REFERRED TO AS THE ACT) REPLYING TO THE QUESTIONNAIRE, THE ASSES SEE FILED DETAILS REGARDING NATURE OF BUSINESS, ADDRESS OF BUSINESS PREMISES AND LIST OF DIRECTORS BUT THE REPRESENTATIVE OF THE ASSESSEE REQUESTED TO TAKE RELEVANT PHOTOCOP IES OF THE DOCUMENTS BY STATING THAT DUE TO LARGE NUMBER OF RETIREMENTS, THE RELATE D YEAR INCOME TAX FILE AND BALANCE SHEET FILE WERE NOT TRACEABLE. IN THE LETT ER AND REPLY DATED 23.02.2006 THE ASSESSEE ALSO STATED THAT THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING WHICH HAS BEEN DECLARED AS SICK UNIT AND MAJORITY OF THE STAFF HAS GIVEN VRS. LATER, THE COMPANY REFERRED TO BIFR AND THE AR SUBMITTED BEFORE AO THA T THE COMPANY WAS UNABLE TO PRODUCE COMPLETE BOOKS OF ACCOUNTS AND ACCORDINGLY, THE AO PASSED ASSESSMENT ITA NO. 1466/D/2012 3 ORDER WITH A FINAL FINDING THAT AS THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH SUFFICIENT INFORMATION AND RELEVANT EVIDENCE IN SUPPORT OF ITS P&L A/C, TRADING RESULTS AND BALANCE SHEET, THE CLAIM OF ASSESSEE COMPANY REMAIN S UNVERIFIABLE AND THE SAME (CLAIMED LOSS) WAS IGNORED ASSESSING THE INCOME AT NIL. 4. BEING AGGRIEVED BY THE ABOVE ORDER THE ASSESSEE INVOKED THE LD. CIT(A) WHEREIN HE DISALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT OPERATIVE PART OF IMPUGNED ORDER IS BEING REPRODUCED FOR CLARITY IN T HE ADJUDICATION OF THIS APPEAL, WHICH READS AS UNDER: - 5.1 THE COPY OF THE REMAND REPORT WAS SERVED ON T HE APPELLANT ALONG WITH NOTICE U/S 250 DATED 26.08.201 0 FIXING THE CASE FOR HEARING ON 07.09.2010. THE SAM E WAS SENT THROUGH SPEED-POST WHICH HAS NOT BEEN RECEIVED BACK. HOWEVER, NO ONE ATTENDED NOR ANY ADJOURNMENT APPLICATION WAS FILED. FURTHER, THE CASE WAS FIXED ON 19.10.2010 BY ISSUE OF NOTICE DATED 04.10.2010. HOWEVER, THE NOTICE HAS BEEN RECEIVED BACK WITH THE REMARKS LEFT. FROM THE ABOVE, IT IS CLEAR THAT T HE APPELLANT IS NOT INTERESTED IN PURSUING THE APPEAL. FURTHER, AS MENTIONED ABOVE, THE AO HAS ALSO OBJECT ED TO THE FILING OF ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME-TAX RULES, 1962. IT ALSO APPEARS EXTREMELY IMPROBABLE THAT THE APPELLANT WAS UNABLE TO TRACE T HE BASIC INCOME-TAX AND BALANCE SHEET FILES AND PRODUC E THE SAME AT THE ASSESSMENT STAGE DESPITE SUFFICIENT OPPORTUNITIES PROVIDED BY THE AO. MOREOVER, EVEN A T THE APPELLATE STAGE APART FROM FILING A COPY OF THE FIN AL ACCOUNTS, THE APPELLANT HAS NOT MADE ANY OTHER SUBMISSION ON THE MERIT OF ITS CONTENTIONS AND NOT FILED ANY OTHER DOCUMENTARY OR ORAL EVIDENCE WHATSOEVER I N SUPPORT OF ITS CLAIM OF HUGE LOSS DURING THE YEAR. UNDER THE CIRCUMSTANCES, I HAVE NO REASON TO INTERFERE WI TH THE ASSESSMENT ORDER. THE SAME IS, THEREFORE, UPHELD A ND THE GROUNDS OF APPEAL ARE REJECTED. ITA NO. 1466/D/2012 4 5. THE ASSESSEES REPRESENTATIVE (FOR SHORT THE AR) SUBMITTED THAT THE LD. CIT(A) GROSSLY ERRED IN CONFIRMING THE ACTION OF TH E AO IS DISALLOWING LOSS OF RS. 258,23,43,910/- AS CLAIMED BY THE ASSESSEE. HE FUR THER SUBMITTED THAT THE LD. CIT(A) WAS ALSO NOT JUSTIFIED IN NOT ADMITTING THE EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE UNDER RULE 46A OF THE INCOME TAX RULES 1962 (HEREINAFTER TO BE REFERRED TO AS THE RULES) DESPITE THE FACT THAT T HE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE BOOKS OF ACCOUN TS BEFORE THE AO AND THE FIRST APPELLATE AUTHORITY ALSO VIOLATED PRINCIPLES OF NAT URAL JUSTICE PASSING AN EX-PARTE ORDER WITHOUT GIVING ASSESSEE A PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD. THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW BUT HE DID NOT DISPUTE THE FACT THAT THE DEPARTMENT HAS NO EVIDENCE REGARDING SERVICE OF THE NOTICE UPON THE ASSESSEE ISSUED BY THE LD. CIT(A) U/S 250 OF THE AC T FOR THE HEARING ON 07.09.2010. 6. ON BARE READING OF THE OPERATIVE PART I.E. PARA 5.1 OF THE IMPUGNED ORDER, AS REPRODUCED HEREINABOVE, WE OBSERVE THAT THE LD. CIT (A) NOTED THAT A NOTICE DATED 26.08.2010 HAS BEEN ISSUED, U/S 250 OF THE ACT, TO THE ASSESSEE FOR THE DATE OF HEARING ON 07.09.2010 BUT WE ARE UNABLE TO OBSERVE THIS FINDING IN THE IMPUGNED ORDER THAT DESPITE DUE AND PROPER SERVICE OF THE NO TICE (UPON THE ASSESSEE) NEITHER THE ASSESSEE NOR HIS REPRESENTATIVE ATTENDED THE HE ARING. ACCORDINGLY, WE DECLINE TO UPHOLD THE FINDING OF THE LD. CIT(A) THAT THE AP PELLANT WAS NOT INTERESTED IN PURSUING THE APPEAL BEFORE HIM. ON THE CONTRARY, W E ARE OF THE VIEW THAT THE LD. CIT(A) VIOLATED THE PRINCIPLES OF NATURAL JUSTICE I N PASSING AN EX-PARTE ORDER WHICH ITA NO. 1466/D/2012 5 DISALLOWED THE APPEAL OF THE ASSESSEE AS THE NOTICE OF HEARING CANNOT BE SAID TO BE SERVED FOR THE DATE OF HEARING AND ACCORDINGLY WE A LSO OBSERVE THAT THE ASSESSEE WAS PREVENTED TO PURSUE HIS APPEAL BEFORE THE LD. C IT(A) DUE TO SUFFICIENT CAUSE. 7. THEREFORE, IN VIEW OF THE ABOVE, WE FIND IT JUST AND PROPER TO SET ASIDE THE IMPUGNED ORDER AND TO RESTORE THE MATTER TO THE FIL E OF CIT(A) WITH A DIRECTION THAT HE WOULD ADJUDICATE THE MATTER AFRESH AFTER PROVIDI NG REASONABLE OPPORTUNITY TO BE HEARD AND THE ASSESSEE WOULD ALSO COOPERATE IN THE PROCEEDINGS. HENCE, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR THE STATI STICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSIO N OF HEARING ON 31.05.2012 SD/- SD/- (J.S. REDDY) ACCOUNTANT MEMBER (CHANDRA MOHAN GARG) JUDICIAL MEMBER DATED: 31ST MAY, 2012 GS COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DY. REGISTRAR