HEMAL V.MEHTA, MUMBAI V. CIT(A) -45 / ITO 33(1)(5), MUMBAI

ITA 1678/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3945 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 23-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.1678/MUM/2015 ( / ASSESSMENT YEAR: 2010-11) HEMAL MEHTA 304, CHARKOP SURAKSHA CO.OP SPC., PLOT NO.14, RDP I/II, SECTION 1, KANDIVALI (W), MUMBAI - 400067 / VS. INCOME TAX OFFICER25(3)(2 ) MUMBAI ./ ./ PAN/GIR NO. : ADRPM4657P ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 02.05.2016 !' /DATE OF PRONOUNCEMENT: 01.08.2015 #$ / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 22.01.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 45, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y. 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUE: 1. NON ATTENDANCE IN APPEAL PROCEEDING: ASSESSEE BY: SHRI VIJAY MEHTA DEPARTMENT BY: SHRI A. N. SONTAKKE ITA NO.1678/M/15 A.Y. 2010-11 2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 45 HAS ERRED IN DISMISSING THE APPEAL WITHOUT GIVIN G THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND NOT SERVING ANY PROPER NOTICE TO THE ASSESSEE. 2. HAWALA PURCHASES AMOUNTING TO RS.39,46,280/- DISALLOWED U/S.69C OF THE INCOME TAX ACT, 1961: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 45 HAS ERRED IN DISALLOWING THE ENTIRE PURCHASE EXPENDITURE AMOUNTING TO RS.39,46,280/- WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE IS A PURE RESELLER AND SHALL NOT BE ABLE TO EFFECT ANY SALES WITHOUT MAKING ADEQUATE PURCHASES. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ABOVE DISALLOWANCE WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 3. DISALLOWANCE AMOUNTING TO RS.47,084/- U/S.14A OF THE INCOME TAX ACT, 1961: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 45 HAS ERRED IN DISALLOWING AN AMOUNT OF RS.47,084/ - U/S.14A OF THE INCOME TAX ACT, 1961 AS THE INVESTMENTS BEARING DIVIDEND INCOME WERE MADE USING OWN INTEREST FREE FUNDS OF THE ASSESSEE AND T HE BORROWED FUNDS WERE USED ONLY FOR BUSINESS PURPOSES AND NOT FOR MAKING ANY INVESTMENTS. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ABOVE DISALLOWANCE WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 4. DISALLOWANCE OF INTEREST EXPENSES AMOUNTING TO RS.14,113/- THE LEARNED AO HAS ERRED BY DISALLOWING THE INTERES T EXPENSES AMOUNTING TO RS.14,113/- AS THE BORROWED FUNDS WERE USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE AND ACCORDINGLY, ELIGIBLE FOR DEDUCTION U/S.37(1) OF TH E ACT. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING TH E ABOVE DISALLOWANCE WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 5. INTEREST LEVIED U/S.234B AND 234C OF THE INCOME TAX ACT, 1961 ITA NO.1678/M/15 A.Y. 2010-11 3 ON DELETION OF THE AFORESAID DISALLOWANCES MADE IN THE ASSESSMENT ORDER, THE CONSEQUENTIAL INTEREST LEVIED U/S.234B AND 234C OF THE ACT SHALL STAND DELETED. THE LEARNED CIT(A) HAS ERRED IN CONFIRMI NG THE ABOVE DISALLOWANCE WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 6. PENALTY UNDER THE INCOME TAX ACT, 1961 THE LEARNED AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE INITIATION OF TH E PENALTY PROCEEDINGS WITHOUT GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 3. THE BRIEF FACTS OF THE OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF ON 15.10.2010 DECLARING TOTAL INCOME TO THE TUNE OF RS.6,47,101/-. THE ASSESSEE IS A DEALER IN CHEMICALS AND SOLVENTS AND IS THE PROPRIETOR OF M/S. SACHIN CHEMICALS. HE ALSO DECLARED HIS BUSINESS IN COME AS CAPITAL INCOME AND CLAIMED DEDUCTION ON ACCOUNT OF INTEREST OF HOU SING LOAN UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE CASE WAS SELECTED FOR SCRUTINY, THEREFORE THE NOTICE U/S.143(2) OF THE INCOME ON INCOME TAX A CT, 1961 ( IN SHORT THE ACT) DATED 29.09.2011 WAS ISSUED AND SERVED UPON T HE ASSESSEE. SUBSEQUENTLY, NOTICE U/S.142(1) DATED 10.01.2013 WA S ISSUED AND SERVED UPON THE ASSESSEE. SUBSEQUENTLY, NOTICE U/S.143(1) DATED OF THE ACT 18.10.2012 ALONG WITH A QUESTIONNAIRE WAS ISSUED AN D SERVED UPON THE ASSESSEE. SECOND NOTICE U/S.142(1) OF THE ACT DATE D 10.01.2013 WAS ISSUED AND SERVED UPON THE ASSESSEE. THEREAFTER THE INCOM E OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.47,89,580/-. THE ASSESS EE WAS NOT SATISFIED WITH THE CERTAIN ADDITIONS, THEREFORE, THE ASSESSEE FILE D AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL IN ABSENCE WITHOUT GONE INTO MERITS THEREFORE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ITA NO.1678/M/15 A.Y. 2010-11 4 ISSUE NO.1:- 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE REPRESE NTATIVE OF THE ASSESSEE HAS ARGUED THAT THE CIT(A) HAS DISMISSED THE APPEAL WIT HOUT GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND WITH OUT DECIDING THE MATTER OF CONTROVERSY ON RECORD, THEREFORE, THE ORDER PASSED BY THE CIT(A) IS WRONG AGAINST LAW AND FACTS AND IS NOT LIABLE TO BE SUSTA INABLE IN THE EYES OF LAW. IN SUPPORT OF THESE CONTENTIONS THE LEARNED REPRESENTA TIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN GUJARAT THE MIS BIOSYN LTD. VS. JOINT COMMISSIONER OF INCOME TAX ON 20 TH AUGUST 1999, 74 ITD 339, AHMADABAD. ON THE OTHER HAND THE LEARNED REPRESENT ATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. KEEPING IN VIEW OF THE ARGUMENT ADVANCED BY THE PARTIES AND PERUSED THE RECORD CAREFULLY IT CAME INTO NOTICE THAT HET CIT(A) HAS DECIDED THE APPEAL IN QUESTION WITHOUT T HE PRESENCE OF THE PARTIES. NONE APPEARED ON BEHALF OF THE ASSESSEE A ND NONE APPEARED ON BEHALF OF THE REVENUE. ON APPRAISAL OF THE ORDER O N RECORD WE FOUND THAT THE CIT(A) DID NOT DISPOSED THE CASE ON MERITS, HE SIMP LY MENTIONED IN HIS ORDER ABOUT THIS FACT THAT THE ASSESSEE WAS ASKED T O ADDUCED THE WRITTEN SUBMISSIONS BUT THE ASSESSEE FAILED TO SUBMIT THE WRITTEN SUBMISSION. THEREFORE THE REVENUES APPEAL IN QUESTION IS HEREB Y ORDERED TO BE DISMISSED. APPARENTLY, THE CIT(A) DID NOT COMPLY T HE PROVISION IN SECTION 250(6) OF THE ACT WHICH PROVIDE THAT THE APPELLATE ORDER OF THE CIT(A) ARE TO STATE THE POINTS ARISING IN THE APPEAL, THE DECISIO N OF THE AUTHORITY THEREON AND THE REASONS FOR SUCH DECISION. SPEAKING ORDER WOULD OBVIOUSLY ENABLE THE PARTY TO KNOW PRECIOUS POINTS DECIDED IN HIS FA VOUR OR AGAINST HIM. ITA NO.1678/M/15 A.Y. 2010-11 5 ABSENCE OF THE FORMULATION OF THE POINTS FOR DECISI ON FOR WANT OF CLARITY IN A DECISION UNDOUBTEDLY PUT THE PARTY IN QUANDARY. SE CTION 250(6) OF THE ACT EXPRESSLY EMBODIES THE PRINCIPLES OF NATURAL JUSTIC E AND SUCH A PROVISION IS CLEARLY MANDATORY IN NATURE. THEREFORE, THE SAID C IRCUMSTANCES THE ORDER IN QUESTION HAS BEEN PASSED IN VIOLATION OF THE PROVIS IONS U/S.250(6) OF THE ACT IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW SPECIFICALLY IN THE REASON MENTIONED ABOVE I.E. IN THE DECISIONS OF THE DELHI BENCH OF THE TRIBUNAL IN MULTIPLAN INDIA LTD. (1991) 38 ITD 320 (DELHI) AND GUJARAT THEMIS BIOSYN LTD. VS. JOINT COMMISSIONER OF INCOME TAX O N 20 TH AUGUST 1999, 74 ITD 339, AHMADABAD. HENCE WE SET ASIDE THE ORDER IN QUESTION ON THIS POINT AND DIRECT THE CIT(A) TO DECIDE THE MATTER AF RESH BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ISSUE NO.2 TO 6:- 5. SINCE THE ORDER OF THE CIT(A) HAS BEEN ORDERED T O BE SET ASIDE WHILE DECIDING THE ISSUE NO.1 THEREFORE IN THE SAID CIRCU MSTANCES THE DECISION UPON THE ISSUE NO.2 TO 6 WOULD ONLY BE IN THE NATURE OF ACADEMIC HENCE IS NOT REQUIRED TO BE ADJUDICATED. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST AUGUST , 2016. SD/- SD/- (D.KARUNAKARA RAO) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 1 ST AUGUST, 2016 MP MP MP MP ITA NO.1678/M/15 A.Y. 2010-11 6 !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. !' ) / BY ORDER, - & //TRUE COPY// */)+ , (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI