M/s Payal Nivesh & Viniyog Pvt. Ltd, Kolkata V. DCIT, Circle-1(2), Kolkata, Kolkata

ITA 1576/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1945 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 03-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINIDAM BHATTACHERJEE
• Assessee Lawyers: S K TULSIYAN
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1576/KOL/2016 ASSESSMENT YEAR:2005-06 M/S PAYAL NIVESH & VINIYOG PVT. LTD., 7A, HOSPITAL STREET, 1 ST FLOOR, KOKATA-72 [ PAN NO.AABCP 5162 G ] / V/S . DCIT, CIRCLE-1(2), AAYAKAR BHAWAN, P/7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI S.K. TULSIYAN, ADVOCATE /BY RESPONDENT SHRI ARINIDAM BHATTACHERJEE, ADDL. CIT-DR /DATE OF HEARING 01-01-2018 /DATE OF PRONOUNCEMENT 05-01-2018 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKATA DATED 31.05.2016. A SSESSMENT WAS FRAMED BY DCIT, CIRCLE-1, KOLKATA U/S 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 22.05.2007 FO R ASSESSMENT YEAR 2005-06. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEAL ARE A S UNDER:- 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED AND ACTED AGAINST THE PRINCIPAL OF NATURAL JUSTICE IN H AVING PASSED THE EX PARTE APPELLATE ORDER WITHOUT AFFORDING ADEQUATE OPPORTUNITY OF BEI NG HEARD TO THE APPELLANT. 2. THAT, THEREFORE, AS THE ORDER OF THE LD. CIT(A) IS A NULLITY FOR THE FAILURE TO CONFORM TO THE PRINCIPLE OF NATURAL JUSTICE LEADING TO UNFA IR PLAY IN ACTION, THE SAME WAS ARBITRARY, UNWARRANTED. INVALID AND NOT SUSTAINABLE IN LAW AND THE SAME IS LIABLE TO BE QUASHED. 3. THAT, WITHOUT ANY PREJUDICE TO THE ABOVE, THE LD . CIT(A) ERRED IN HAVING PRESUMED FOR ALLEGED NON- COMPLIANCE ON TWO DATES THAT THE A PPELLANT DID NOT WANT TO PURSUE ITA NO.1576/KOL/2016 A.Y. 2005-06 M/S PAYAL NIVESH & VINIYOG PVT. LTD. VS. DCIT CIR-1(2) KOL. PAGE 2 THE APPEAL, LEADING TO DISMISSAL OF ALL THE GROUNDS WITHOUT ADJUDICATING THE SAME ON MERITS AND FACTS OF THE CASE ALREADY ON RECORD AND THIS ACTION OF LD. CIT(A) IS NOT ONLY ARBITRARY, UNCALLED FOR BUT ALSO BAD IN LAW. 4. THAT, RELIANCE MADE BY THE LD. CIT(A) ON THE DEC ISION IN THE CASE OF H.M.ESUFALI H.M. ABDULALI (1973) 90 ITR 271 (SC) IS TOTALLY MIS PLACED ON THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE'S CASE. INASMUCH THE IMPUGNED ORDER HAS BEEN PASSED EX PARTE QUA THE ASSESSEE WITHOUT ANY SUPPORTING EV IDENCE IN SUPPORT OF THE CASE AND HENCE A TRUE AND IMPARTIAL DECISION ABOUT BIASNESS OR OTHERWISE OF THE ACTION OF THE A.O. WAS NOT POSSIBLE TO BE TAKEN. 5. THAT, EVEN ON MERITS OF THE CASE, THE LD. A.O. O N HIS PURPORTED UNDERSTANDING OF UTILIZATION OF LOAN AMOUNT CONVERTED FROM SHARE APP LICATION MONEY FOR THE PURPOSE OF INVESTMENT IN SHARES DISALLOWED INTEREST OF RS.13,0 8,1601- ON SOME CUMBERSOME FORMULA AND THE LD. C.L.T.(A) ERRED IN UPHOLDING SU CH ARBITRARY AND ERRONEOUS ACTION OF THE LD. A.O. WITHOUT RECORDING ANY JUSTIFICATION THEREOF. 6. THAT, THE LD. CIT(A) GROSSLY ERRED IN HAVING UPH ELD THE ESTIMATED DISALLOWANCE OF EXPENDITURE OF RS.88,599/- U/S. 14A OF THE ACT MADE BY THE LD. A.O., BEING 5% OF THE DIVIDEND INCOME, IN SPITE OF THE SETTLED POSITION I N LAW THAT TO ENFORCE PROVISION OF SEC. 14A(1) OF THE ACT, THE A.O. WAS DUTY BOUND TO DETER MINE THE EXPENDITURE WHICH HAD BEEN INCURRED IN RELATION TO THE EXEMPT INCOME, WHI CH EXERCISE IS TOTALLY MISSING IN THE INSTANT CASE. 7. THAT, EVEN OTHERWISE ALSO THE LD. CIT(A) HAS VIO LATED HIS OWN ORDER DATED 29.02.2016 ON 14A ISSUE IN THE CASE OF THE ASSESSEE ITSELF FOR A. Y. 2006-07, WHEREIN DISALLOWANCE WAS RESTRICTED TO 1 % OF THE DIVIDEND INCOME AND THAT BEING SO, THE ACTION OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR UN DER APPEAL IN UPHOLDING ESTIMATED DISALLOWANCE AT 5% ON THE SAME SET OF FACTS AND CIR CUMSTANCES OF THE CASE WAS MISLEADING AND LIABLE TO BE QUASHED. 8. THAT AS THE IMPUGNED EX PARTE ORDER OF LD. CIT(A ) SUFFERS FROM ILLEGALITY AND IS DEVOID OF ANY MERIT, THE SAME SHOULD BE QUASHED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. 9. THAT THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, MODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND / OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS. SGHRI S.K. TULSIYAN, LD. ADVOCATE APPEARED ON BEHAL F OF ASSESSEE AND SHRI ARINDAM BHATTACHERJEE, LD. DEPARTMENTAL REPRESENTATIVE APPE ARED ON BEHALF OF REVENUE. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 1 IS THAT LD. CIT(A) ERRED IN PASSING THE EX-PARTE ORDER WITHOUT HEARING ITS POIN TS OF CONTENTIONS ON MERITS. 3. AT THE OUTSET, IT WAS OBSERVED FROM THE ORDER OF LD. CIT(A) THAT THE CASE WAS FIXED FOR HEARING ON 24.02.2014 AND 26.05.2016 BUT NONE APPEARED ON BEHALF OF ASSESSEE. THEREFORE, THE APPEAL WAS DECIDED BY LD. CIT(A) AS EX PARTE ON 31.05.2016. ITA NO.1576/KOL/2016 A.Y. 2005-06 M/S PAYAL NIVESH & VINIYOG PVT. LTD. VS. DCIT CIR-1(2) KOL. PAGE 3 4. ON PERUSAL OF APPELLATE ORDER, WE FIND THAT LD. CIT(A) AFFIRMED THE ACTION OF ASSESSING OFFICER EX PARTE WITHOUT MENTIONING ANY R EASON FOR CONFIRMING THE SAME ON MERITS. THE PROVISIONS OF SECTION 250(6) OF THE ACT REQUIRE THE COMMISSIONER (APPEAL) TO DISPOSE OF THE APPEAL IN WRITING WITH R EASONING. BUT, WE FIND FROM THE IMPUGNED APPELLATE ORDER OF LD. CIT(A) WHO CONFIRME D THE ORDER OF AO WITHOUT DECIDING THE SAME ON MERIT. WE ALSO FIND IN THE INT EREST OF JUSTICE AND FAIR PLAY LD. CIT(A) SHOULD HAVE GIVEN ANOTHER OPPORTUNITY TO THE ASSESSEE TO APPEAR BEFORE HIM TO EXPLAIN ITS POINTS OF CONTENTIONS. THEREFORE, IN TH IS VIEW OF THE MATTER, WE ARE INCLINED TO REMIT THE MATTER BACK TO THE FILE OF LD. CIT(A) WITH THE DIRECTION TO DECIDE THE ISSUE RAISED BY ASSESSEE ON MERIT AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE AND IN ACCORDANCE WITH LAW. IT IS NEEDLESS TO SAY THAT THE ASSESSEE SHOULD CO- OPERATE IN THE APPELLATE PROCEEDING AND ATTEND THE HEARING AS AND WHEN CALLED BY LD. CIT(A). HENCE, THIS GROUND OF ASSESSEES APPEAL STA NDS ALLOWED FOR STATISTICAL PURPOSE. 5. REMAINING GROUNDS DO NOT CALL FOR ANY ADJUDICATI ON AT THIS STAGE BECAUSE THE APPEAL IS ALREADY RESTORED BACK TO THE FILE OF LD. CIT(A) FOR DECIDING THE ISSUES AFRESH AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO ASSESSEE. 6. IN THE RESULT, FOR STATISTICAL PURPOSE, THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 05/01/2018 SD/- SD/- ( % ') ( ') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ) - 05/01/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S PAYALA NIVESH & VINIYOG PVT. LTD., 7 A, HOSPITAL STREET, 1 ST FLOOR, KOLKATA-72 2. /RESPONDENT-DCIT,CIRCLE-1(2),AAYAKA BHAWAN, P/7,CHO WRINGHEE SQ. KOL-69 3. , - / CONCERNED CIT 4. - - / CIT (A) 5. . %%, , , / DR, ITAT, KOLKATA 6. 2 / GUARD FILE. BY ORDER/ /TRUE COPY/ SR. PRIVA TE SECRETARY HEAD OF OFFICE/DDO , ,