ITO WD 22(3)(1), NAVI MUMBAI V. BHNDU HATWAR, NAVI MUMBAI

ITA 1558/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8989 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Unexplained expenditure; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H MUMBAI BEFORE SHRI JASON P BOAZ, AM & SHRI RAM LAL NEGI, JM ITA NO.1558/MUM/2013 ( ASSESSMENT YEAR :2009-10 ) ITO WD 22(3)(1), MUMBAI VS. SHRI BHANDU HATWAR, H-705, APMC FRUIT MARKET, TURBHE, NAVI MUMBAI - 400705 PAN/GIR NO. AAWPH0506L APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI SUMAN KUMAR ASSESSEE BY NONE DATE OF HEARING 02/01/2017 DATE OF PRONOUNCEMENT 11/01/2017 / O R D E R PER JASON P BOAZ (A.M) : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)- 33, MUMBAI DATED 17/12/2012 FOR A.Y.2009-10. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER:- 2.1. THE ASSESSEE, ENGAGED IN BUSINESS AS FRUIT DEA LER / WHOLESALER, FILED HIS RETURN OF INCOME FOR A.Y.2009-10 ON 30/09/2009 DECLARING TOTAL INCOME OF RS.6,91,443/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT) VIDE ORDER DATED 26/12/2011, WHERE IN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.3,47,13,380/- IN VIEW OF THE FOLLOWING ADDITIONS / DISALLOWANCES:- ITA NO.1558/MUM/2013 SHRI BHANDA HATWAR 2 (I) UNEXPLAINED EXPENDITURE U/S.69C RS.2,98,99,39 0/- (II) DISALLOWANCE U/S.40(A)(IA) RS. 41,22,540/ - 2.2. AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 26/ 12/2011 FOR A.Y.2009-10, THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A) 33, MUMBAI. THE LEARNED CIT(A) DISPOSED OFF THE APPEAL VIDE THE IMPUGNED ORDER DATED 17/12/2012 ALLOWING THE ASSESSEE PARTIA L RELIEF. 3.1. REVENUE BEING AGGRIEVED BY THE ORDER OF CIT(A) 33, MUMBAI DATED 17/12/2012 FOR A.Y.2009-10 HAS PREFERRED THIS APPEA L, RAISING THE FOLLOWING GROUNDS:- 1) ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE , THE LD CIT(A) ERRED IN DELETING THE ADDITIONS MADE U/S. 40 (A)(I) FOR AN ACCOUNT OF RS.41,22,540/- BEING TRANSPORT CHARGES W HICH ARE BELLOW RS.20,OOO/ - AND HOLDING THAT THE PROVISIONS OF SEC.194C ARE NOT APPLICABLE. THE ASSESSEE HAS NOT P RODUCED ANY PROOF FOR TRANSPORT CHARGES PAID EXCEPT SOME RA NDOM NAMES. 2) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3.) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3.2. THIS CASE WAS FIXED FOR HEARING ON NUMBER OF O CCASIONS, BUT NONE WAS PRESENT FOR THE ASSESSEE NOR WAS ANY ADJOURNMEN T SOUGHT BY THE ASSESSEE. ON A COUPLE OF OCCASIONS, WHEN THE BENCH DID NOT FUNCTION, THE ADJOURNMENT DATES WERE INTIMATED BY DISPLAY ON THE NOTICE BOARDS. EVEN ISSUE OF NOTICE FOR HEARING BY REGISTERED AD DID NO T EVOKE ANY RESPONSE FROM THE ASSESSEE. THE LEARNED DR FOR REVENUE, HOWE VER, WAS PRESENT AND READY TO ARGUE THE CASE OF REVENUE. IN VIEW OF THESE CIRCUMSTANCES, ITA NO.1558/MUM/2013 SHRI BHANDA HATWAR 3 AS NARRATED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS NOT SERIOUS ABOUT PURSUING THIS APPEAL AND THEREFOR E, PROCEED TO DISPOSE OFF THIS APPEAL EX-PARTE WITH THE ASSISTANCE OF THE LEARNED DR FOR REVENUE AND THE MATERIAL ON RECORD. 3.3. THE LEARNED DR WAS HEARD IN RESPECT OF THE GRO UNDS RAISED AT SR.NO.1 TO 3 WHICH CHALLENGE THE ORDER OF THE LEARN ED CIT(A) DELETING THE DISALLOWANCE OF RS.41,22,540/- MADE U/S. 40(A)(IA) OF THE ACT IN RESPECT OF TRANSPORT CHARGES BELOW RS.20,000/- BY HOLDING THAT THE PROVISIONS OF SECTION 194C OF THE ACT ARE NOT APPLICABLE. ACCORDI NG TO THE LEARNED DR, THE SAID DISALLOWANCE WAS MADE BY THE AO AS THE ASS ESSEE HAS NOT PRODUCED ANY PROOF OF TRANSPORT CHARGES PAID TO TRU CK OWNERS EXCEPT SOME RANDOM NAMES OF DRIVERS. THE LEARNED DR DREW O UR ATTENTION TO PARA 3.1 OF THE IMPUGNED ORDER OF THE LEARNED CIT(A ) WHEREIN THE ASSESSEE IN SUBMISSION HAS, INTER ALIA, STATED THAT THE ASSESSING OFFICER (AO) HAD DISALLOWED THE ENTIRE TRANSPORTATION CHA RGES OF RS.41,22,540/- DEBITED DUE TO WANT OF EVIDENCE, THIS REQUIREMENT CAME TO OUR NOTICE ONLY ON RECEIVING THE ASSESSMENT ORDER DATED 26/12/ 2011. WE HAVE ACCORDINGLY COMPILED THE DETAILS AND ARE SUBMITTING THE SAME HEREWITH. ACCORDING TO THE LEARNED DR, IT IS CLEAR FROM THE A VERMENTS OF THE ASSESSEE ITSELF THAT NO EVIDENCE WAS FILED BEFORE T HE AO AND THAT FRESH EVIDENCE / MATERIAL ON THIS ISSUE WAS ADMITTEDLY BR OUGHT ON RECORD BEFORE THE LEARNED CIT(A) AND SHE ACTED THEREON TO ALLOW T HE ASSESSEE RELIEF, WITHOUT ALLOWING THE AO OPPORTUNITY TO REBUT THE SA ID FRESH EVIDENCE. THIS, THE LEARNED DR CONTENDS, IS IN GROSS VIOLATION OF T HE PRINCIPLES OF NATURAL ITA NO.1558/MUM/2013 SHRI BHANDA HATWAR 4 JUSTICE AND AS PER THE REQUIREMENTS LAID DOWN IN RU LE 46A (3) OF THE I.T. RULES 1962 (I.E. THE RULES) AND ON THIS SHORT POINT ITSELF THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUE SHOULD BE VACATED AND THE MATTER SET ASIDE TO HIS FILE FOR FRESH ADJUDICATION AFTER AFFORDING THE AO ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER F OR REBUTTAL OF THE ADDITIONAL EVIDENCE ADMITTEDLY FILED BY THE ASSESSE E BEFORE THE LEARNED CIT(A). 3.4.1. WE HAVE HEARD THE LEARNED DR FOR REVENUE AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. WE HAV E PERUSED PARA 3.1 OF THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND FIND T HAT IT IS RECORDED THEREIN THAT THE DISALLOWANCE OF RS.41,22,540/- U/S .40(A)(IA) OF THE ACT WAS MADE BY THE AO IN VIEW OF THE INABILITY OF THE ASSESSEE TO PRODUCE ANY EVIDENCE / PROOF OF TRANSPORT CHARGES. WE ALSO FIND THAT THE ASSESSEE HAS SUBMITTED THAT TO FULFIL SUCH REQUIREMENT WHICH IT CAME TO KNOW AFTER THE ORDER OF ASSESSMENT WAS PASSED ON 26/12/2011, D ETAILS IN THIS REGARD HAVE BEEN COMPILED AND ARE BEING FILED BEFORE THE C IT(A). THE RELEVANT PORTION AT PARA 3.1 OF THE IMPUGNED ORDER IS EXTRAC TED HEREUNDER:- 3.1. DURING THE APPELLATE PROCEEDINGS APPELLANT HA S SUBMITTED AS UNDER:- THE ASSESSEE WAS QUESTIONED AT THE TIME OF SUMMON O N 23/12/2011 TO SUBMIT THE DETAILS OF TRANSPORT CHARGES PAID OWNER WISE. IT IS QUITE LIKELY THAT THE ASSESSEE FAILED TO UNDERSTAND THE QUESTION . IT IS THE PRACTICE IN HIS BUSINESS TO MAINTAIN A PHOTOCOPY OF PAN AND R.C . BOOK OF TRANSPORTER FOR HIS RECORDS. ITA NO.1558/MUM/2013 SHRI BHANDA HATWAR 5 5. THE LEARNED ASSESSING OFFICER DISALLOWED THE ENT IRE TRANSPORTATION CHARGES OF RS.41,22,540/- DEBITED TO PROFIT & LOSS ACCOUNT DUE TO WANT OF EVIDENCE. THIS REQUIREMENT C AME TO OUR KNOWLEDGE ONLY ON RECEIVING THE ASSESSMENT ORDER DA TED 26/12/2011. WE HAVE ACCORDINGLY COMPILED THE DETAIL S AND ARE SUBMITTING THE SAME HEREWITH. 3.4.2. IN OUR VIEW RULE 46A OF THE RULES HAS A DIRE CT HEARING ON THE CONTROVERSY AND THEREFORE, IT WOULD BE RELEVANT TO EXTRACT THE SAME. RULE 46A READS AS UNDER:- 46A.(1) THE APPELLANT SHALL NOT BE ENTITLED TO PRO DUCE BEFORE THE (DEPUTY COMMISSIONER (APPEALS) [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)], ANY EVIDENCE WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HI M DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER ), EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY :- (A) WHERE THE [ASSESSING OFFICER) HAS REFUSED TO AD MIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER) ; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER) ANY EVIDEN CE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE [ASSESSING OFFICER) HAS MADE THE ORDE R APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)) [OR, AS THE CASE MA Y BE, THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REAS ONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)} [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [AS SESSING OFFICER) HAS BEEN ALLOWED A REASONABLE OPPORTUNITY- (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS -EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR ITA NO.1558/MUM/2013 SHRI BHANDA HATWAR 6 (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITN ESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)} [OR, AS THE CASE MA Y BE, THE COMMISSIONER (APPEALS)) TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENA BLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETH ER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFI CER)) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271] 3.4.3. IN THE LIGHT FACTS OF THE CASE AS NARRATED A BOVE AND THE PROVISIONS OF RULE 46A OF THE IT RULES (SUPRA) WE CONCUR WITH THE AVERMENTS OF THE LEARNED DR FOR REVENUE THAT IT IS ONLY AN APPEAL TH AT THE ASSESSEE HAD IN FACT COMPILED AND FILED FRESH / ADDITIONAL EVIDENCE IN RESPECT OF PAYMENT OF TRANSPORT CHARGES, NOT FILED BEFORE THE AO, WHICH T HE LEARNED CIT(A) TOOK ON RECORD AND WITHOUT EITHER ADMITTING THEM AS REQU IRED UNDER RULE 46(2) OF THE RULES OR ALLOWING THE AO ADEQUATE OPPORTUNIT Y TO EXAMINE AND REBUT THE SAME AS REQUIRED UNDER RULE 46(3) OF THE RULES, ALLOWED THE ASSESSEES APPEAL. IN OUR CONSIDERED VIEW, THESE AC TIONS OF THE LEARNED CIT(A) ARE IN GROSS VIOLATIONS OF THE PRINCIPLES OF NATURAL JUSTICE AS REQUIRED TO BE COMPLIED WITH BY RULE 46(3) OF THE R ULES. WE THEREFORE SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THE ISSUE OF DELETION OF THE DISALLOWANCE MADE BY THE AO U/S. 40(A)(IA) OF THE A CT AND RESTORE THE MATTER TO THE FILE OF THE LEARNED CIT(A) TO CONSIDE R AND ADJUDICATE ON THE ISSUE AFRESH, IN ACCORDANCE WITH LAW, AFTER AFFORDI NG THE AO ADEQUATE OPPORTUNITY OF EXAMINING AND REBUTTING THE FRESH EV IDENCE, PUT FORTH BY THE ASSESSEE IN APPELLATE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY. THE ASSESSEE MAY ALSO BE HEARD IN THE MATTER IF SO REQU IRED. WE HOLD AND ITA NO.1558/MUM/2013 SHRI BHANDA HATWAR 7 DIRECT ACCORDINGLY. CONSEQUENTLY, THE GROUNDS 1 TO 3 RAISED BY REVENUE ARE NOT BEING ADJUDICATED ON MERITS AND REVENUES A PPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE . 4. IN THE RESULT, REVENUES APPEAL FOR A.Y.2009-10 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11/01/2017. SD/ - (RAM LAL NEGI) SD/ - (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 11/01/2017 KARUNA SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//