Abhishek Verma, New Delhi V. ACIT, New Delhi

ITA 1540/DEL/2013

• Counselvise Citation: 154020114 RSA 2013
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: S B GARG
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NO. - 1540 /DEL/201 3 (ASSESSMENT YEAR - 2 007 - 08 ) ABHISHEK VERMA, C/O - MR. GAURAV CHANDHOK, CHAMBER NO.636, DWARKA COURTS, SECTOR 10, DWARKA, NEW DELHI - 110075. P AN - ABMPV5153C (APPELLANT) VS ACIT , CENTRAL CIRCLE - 12, ARA CENTRE, JAHNDEWALAN EXTN. NEW DELHI - 110002 (RESPONDENT) APPELLANT BY SH. S.B.GARG, CA RESPONDENT BY MS. Y.KAKKAR, SR. DR ORDER PER DIVA SINGH, JM TH E PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED22.01.2013 OF THE CIT(A) - XXXI, NEW DELHI PERTAINING TO 2007 - 08 ASSESSMENT YEAR WHEREIN THE PENALTY IMPOSED BY THE AO U/S 271(1)(B) HAS BEEN UPHELD BY THE CIT(A). THE CORRECTNESS OF THE IMPUGNED ORDER HAS BEEN ASSAILED ON THE FOLLOWING GROUNDS: - 1. THE PENALTY PROCEEDINGS WERE INITIATED VIDE NOTICE DATED 06.10.2009 AND ASSESSMENT WAS MADE VIDE ORDER DATED 11.12.2009, AND THEREFORE THE P ENALTY ORDER DATED 29.06.2010 IS TIME BARRED. 2. THE ASSISTANCE COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 12, NEW DELHI (HEREAFTER THE ACIT), WHO PURPORTEDLY ISSUED THE NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961 (HEREAFTER THE ACT), CONDUCTED THE PROCEEDI NGS AND IMPOSED THE PENALTY WAS NOT AUTHORIZED TO EXERCISE THE POWER AND PERFORM THE FUNCTIONS OF THE ASSESSING OFFICER AND THEREFORE THE SAID NOTICE AS WELL AS THE PENALTY ORDER ARE INVALID, NULL AND VOID AB - INITIO. 3. THE ASSISTANT COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 12, NEW DELHI (HEREAFTER THE ACIT), ERRED IN IMPOSING THE PENALTY, PARTICULARLY WITHOUT PROVIDING PROPER AND ADEQUATE OPPORTUNITY OF HEARING; AND FURTHER ERRED IN IMPOSING THE PENALTY VIDE ORDER DATED 29.06.2010, WHEN THE PROCEED INGS WERE NOT FIXED FOR HEARING. 4. THE LD. ACIT AS WELL AS LD. CIT(A) FAILED TO APPRECIATE THAT S H . JITEND RA GARG, ADVOCATE WAS HOLDING VALID POWER OF ATTORNEY BUT ANY OPPORTUNITY WAS NOT PROVIDED TO FILE THE SAME. THE LD. ACIT AS 2 I.T.A .NO. - 1540 /DEL/2013 WELL AS LD. CIT(A) FURTHER FAILED TO APPRECIATE THAT THE ADDRESS OF THE ASSESSEE IS THAT OF SH. JITEND RA GARG, ADVOCATE. 5. THE LD. CIT(A) ERRED IN UPHOLDING IMPOSITION OF PENALTY OF RS.10,000 U/S 271(1)(B) OF THE ACT. 6. THE LD. CIT(A) ERRED IN HOLDING THAT SECTION 292BB OF THE ACT IS A PPLICABLE. 7. THE LD. ACIT AS WELL AS LD. CIT(A) HAD MADE OBSERVATIONS WHICH ARE WITHOUT ANY MATERIAL OR EVIDENCE ON RECORD AND AGAINST THE FACTS OF THE CASE. 8. THE PENALTY ORDER IS AGAINST FACTS AS WELL AS LAW. 2. THE LD. SR. DR HAS FILED A PAPER BOOK. THE RECORD SHOWS THAT PURSUANT TO THE ASSESSMENT ORDER PASSED U/S 144 OF THE ACT WHEREIN IN RESPONSE TO THE NOTICE ISSUED TO THE ASSESSEE S COUNSEL, SH. JITENDR A GARG , A D V . APPEARED AND HIS PRESENCE WAS NOT TAKEN INTO COGNIZANCE AS THE AO HELD THAT HE DID NOT HOLD A VALID POWER OF ATTORNEY. AS A RESULT OF NOTICE ISSUED U/S 142(1) ON 11.09.2009 WHEREIN THE ASSESSEE WAS REQUIRED TO REPLY BY 22.09.2009 TO THE QUESTIONNAIRE ISSUED , SHOW CAUSE NOTICE U/S 271(1)(B) WAS SENT ON 06.10.2009 FIXING THE DATE OF HEARING ON 30.10 .2009 . T HEREAFTER ANOTHER NOTICE WAS SENT . S INCE THIS ALSO REMAIN UNREPLIED AND THE ASSES SMENT S TOOD CONCLUDED U/S 144 PENALTY OF RS.10,000/ - WAS IMPOSED. ON BEHALF OF THE ASSESSEE IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY IT WAS CONTENDED THAT SH . JITENDR A GARG WAS HOLDING A VALID POWER OF ATTORNEY BUT OPPORTUNITY TO FILE THE SAME WAS NOT PROVIDED BY THE AO WHO EVEN FAILED TO APPRECIATE THAT THE ADDRESS OF THE ASSESSEE WAS THE ADDRESS OF SH. JITENDR A GARG, ADVOCATE AND EVEN THE PENALTY ORDER WAS SENT TO THE VERY SAME ADDRESS . HOWEVER THE EXPLANATION WAS NOT ACCEPTED BY THE CIT(A) WHO WAS OF THE VIEW THAT MERELY UTILIZING THE ADDRESS OF THE ADVOCATE DOES NOT MEAN THAT HE ALSO HAD THE AUTHORITY TO REPRESENT THE ASSESSEE AND THE PENALTY ORDER WAS CONFIRMED. 3. THE LD. AR FILING HIS POWER OF ATTORNEY SUBMITTED THAT THE ASSESSEE CONTINUES TO BE IN JAIL AND HAS BEEN DEPRIVED OF THE OPPORTUNITY OF BEING HEARD. IT WAS A LSO HIS SUBMISSION REFERRING TO THE DEPARTMENTAL PAPER BOOK THAT THE PENALTY I MPOSED IS TIME BARRED. 3 I.T.A .NO. - 1540 /DEL/2013 4. WE HAVE HEARD THE LD. SR. DR AND THE LD. AR, SH.S.B.GARG, CA . C ONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES AND THE SUBMISSIONS OF THE PARTIES BEFORE THE BENCH WE DEEM IT APPROPRIATE IN THE INTEREST S OF JUSTICE TO RESTORE THE ISSUE BACK TO THE FILE TO THE AO AS EVIDENTLY THE PENALTY HAS BEEN IMPOSED WITHOUT HEARING THE ASSESSEE. RIGHT TO BE HEARD IS AN IMPORTANT RIGHT TO WHICH A PARTY WHO IS FACED WITH AN ADVERSE VIEW IS ENTITLED TO AUDI ALTERAM PARTEM IS ONE OF THE MOST FAMOUS AND CELEBRATED RULE OF NATURAL JUSTICE. THE PRINCIPLES OF NATURAL JUSTICE ARE THOSE WHICH HAVE BEEN LAID OUT BY THE COURTS AS BEING THE MINIMUM PROTECTION OF THE RIGHTS OF AN INDIVIDUAL AGAINST THE ARBITRARY PROCEDURE THAT MAY BE ADOPTED BY A JUDICIAL, QUASI - JUDICIAL AND ADMINISTRATIVE AUTHORITY WHILE MAKING AN ORDER AFFECTING THOSE RIGHTS. A CAREFUL PERUSAL OF THE CONSISTENT JUDGEMENTS OF THE APEX COURT WOULD SHOW THAT IT HAS CONSISTENTLY BEEN HELD THAT THE RULES OF NATURAL JUSTICE ARE NOT EMBODIED RULES AND THE SAID PHRASE IS NOT AND CANNOT BE CAPABLE OF A PRECISE DEFINITION. THE UNDERLYING PRINCIPLE OF NATURAL JUSTICE EVOLVED UNDER THE COMMON LAW IS TO CHECK ARBITRARY EXERC ISE OF POWER BY THE STATE OR ITS FUNCTIONARIES. ACCORDINGLY, THE PRINCIPLE BY ITS VERY NATURE IMPLIES THE DUTY TO ACT FAIRLY I.E. FAIR PLAY IN ACTION MUST BE EVIDENT AT EVERY STAGE. FAIR PLAY DEMANDS THAT NOBODY SHALL BE CONDEMNED UNHEARD. IN THE CELEBR ATED JUDGEMENT OF THE APEX COURT IN THE CASE OF A.K.KRAIPAK VS - UNION OF INDIA (1969) 2 SCC 262, IT IS OBSERVED THAT THE AIM OF RULES OF NATURAL JUSTICE IS TO SECURE JUSTICE OR TO PUT IT NEGATIVELY TO PREVENT MISCARRIAGE OF JUSTICE. THE SAID RULES ARE ME ANS TO AN END AND NOT AN END IN THEMSELVES AND THOUGH IT IS NOT POSSIBLE TO MAKE AN EXHAUSTIVE CATALOGUE OF SUCH RULES HOWEVER IT CAN BE READILY SAID THAT THERE ARE TWO BASIC MAXIMS OF NATURAL JUSTICE NAMELY AUDI ALTERAM PARTEM AND NEMO JUDEX IN RE SUA . IN THE PRESENT FACTS OF THE CASE WE ARE CONCERNED WITH THE MAXIM AUDI ALTERM PARTEM WHICH AGAIN MAY HAVE MANY FACETS TWO OF THEM (A) NOTICE OF THE CASE TO BE MET; AND (B) OPPORTUNITY TO EXPLAIN. THEIR LORDSHIPS HAVE CAUTIONED THAT THESE RULES CANNOT BE SACRIFICED AT THE ALTAR OF THE ADMINISTRATIVE CONVENIENCE OR CELEBRITY. THE 4 I.T.A .NO. - 1540 /DEL/2013 ASSESSEE HAS RAISED GROUND NO. - 3 IN REGARD TO THE OPPORTUNITY OF BEING HEARD AGITATED BEFORE US AND CONSIDERING THE SUBMISSIONS OF EITHER SIDE WHERE IN THE SOLE ISSUE AGITATED BEFORE US IS PERTAINING TO GRANTING OF OPPORTUNITY OF BEING HEARD WHICH ADMITTEDLY HAS NOT BEEN MADE AVAILABLE TO THE ASSESSEE WE ARE INCLINED TO ACCEPT THE PRAYER OF THE ASSESSEE ON A CAREFUL CONSIDERATION OF THE LEGAL POSITION THEREON. 4.1. WHILE SO HOL DING WE ARE OF THE VIEW THAT NO PURPOSE WOULD BE SERVED TO ADDRESS WHETHER SH. JITENDRA GARG AT THE RELEVANT POINT OF TIME HAD A VALID POWER OF ATTORNEY OR NOT AS IT WOULD SERVE NO PURPOSE AT THIS STAGE. WHILE REMITTING THE ISSUE BACK TO THE AO IN ORDER T O AFFORD AN OPPORTUNITY OF BEING HEARD WE FURTHER DIRECT THE AO TO FIRST DECIDE THE LEGALITY OF THE PENALTY IMPOSED WHICH HAS BEEN ASSAILED BY THE ASSESSEE ON THE GROUNDS THAT I T W A S TIME BARRED IN TERMS OF SECTION 275(1)(C) AND PASS A SPEAKING ORDER IN ACCORDAN CE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 4.2. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING IN THE PRESENCE OF THE P ARTIES. 5 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 8 T H O F NOVEMBER 2014. S D / - S D / - ( T.S.KAPOOR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 8 / 11 /2014 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI