Smt. Pramila Jayaram Sharma, Pune V. Assistant Commissioner of Income-tax, Circle - 9, Pune

ITA 1691/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4095 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 25-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Keywords: Earning of tax free income
• Section: 133(6)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, P UNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.1691/PUN/2018 / ASSESSMENT YEAR : 2013-14 SMT. PRAMILA JAYARAM SHARMA, PROP. M/S. ARKAY INDUSTRIES, GAT NO.84, PLOT NO.24, JYOTIBA NAGAR, TALAWADE, PUNE-412 109 PAN : ACNPS7015G .... / APPELLANT ! / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-9, PUNE. / RESPONDENT ASSESSEE BY : SHRI M.K. KULKARNI REVENUE BY : SHRI N. ASHOK BABU / DATE OF HEARING : 06.02.2019 / DATE OF PRONOUNCEMENT : 07.02.2019 ' / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF LD. CIT(APPEALS)-8, PUNE DATED 21.09.2018 FOR THE ASSESSMENT YEAR 2013-14 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE APPE AL OF THE ASSESSEE CONFIRMING THE ADDITIONS MADE BY THE A.O. THE LD. C IT(A) FAILED TO APPLY HER MIND TO THE FACTS OF THE CASE BEFORE DISM ISSING THE APPEAL OF THE ASSESSEE. 2 ITA NO. 1691/PUN/2018 A.Y.2013-14 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE DETAILED SUBMISSIONS ON THE ISSUES INVOLVED WERE EX PLAINED IN THE STATEMENT OF FACTS APPENDED TO APPEAL MEMO. THE LD. CIT(A) DECIDED THE APPEAL WITHOUT APPLICATION OF MIND. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISA LLOWANCE MADE BY THE A.O. INVOKING S.14A OF THE ACT IN SPITE OF THE FACT THAT NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE. THE DISALLOWANCE OF RS.51,812/-BE DELETED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDIT ION MADE BY THE A.O. UNDER U/S.41(1) OF THE ACT. THE A.O. HAS N O JURISDICTION TO ADD BACK SUCH LIABILITY EVEN THOUGH THE ASSESSEE CARRIES FORWARD SUCH LIABILITY IN HER BOOKS OF ACCOUNT. THE DISALLOWANCE IS ALSO PERMISSIBLE BY NOT REJECTING THE AUDITED BOOKS OF ACCOUNT U/S.145(3) OF THE ACT. THE ADDITION MADE AND CONFIR MED OF RS.15,66,027/- BE DELETED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDIT ION MADE BY THE A.O. WHO IN TURN HAS ACCEPTED THE INFORMATION S UBMITTED BY THE CREDITORS BY WAY OF INFORMATION RECEIVED FROM T HEM U/S.133(6) OF THE ACT. THIS WAS DONE ON THE BACK OF THE ASSESSEE WITHOUT ANY OPPORTUNITY TO THE ASSESSEE TO EXPLAIN. THE ADDITIO N BE DELETED. 6. THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL. 2. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE AP PRAISED THE BENCH THAT ORDER PASSED BY THE LD. CIT(APPEALS) IS AN EX-PARTE ORDER AND RIGHTS AND LIABILITIES WERE NOT ADJUDICATED UPON. THERE WAS NON-COMPLIA NCE BEFORE THE FIRST APPELLATE AUTHORITY FOR REASONS BEYOND THE CONTROL OF THE ASSESSEE AND IT WAS NEVER A DELIBERATE ATTEMPT. 3. THE LD. AR OF THE ASSESSEE SUBMITTED THAT HE IS NO T PRESSING THE GROUNDS NO.1, 2 AND 3 AND THEREFORE, GROUNDS NO. 1, 2 AND 3 ARE DISMISSE D AS NOT PRESSED . 4. WITH REGARD TO GROUND NO. 4, THE LD. AR OF THE ASSES SEE PRAYED THAT THEY WANT TO REPRESENT THE CASE ON MERITS BEFORE THE LD. CIT(APPEALS) AND THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE FIRST APPELLATE AUTHORIT Y. 3 ITA NO. 1691/PUN/2018 A.Y.2013-14 5. THE LD. DR CONCEDED TO THE PRAYER OF THE LD. AR OF THE ASSESSEE. 6. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE R IVAL CONTENTIONS. WE FIND THAT THE ORDER PASSED BY THE LD. CIT(APPEALS) IS AN E X-PARTE ORDER. THERE WAS NOTICE U/S.250 OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS THE ACT) ISSUED ON 19.12.2017 FOR COMPLIANCE ON 04.01.201 8 WHICH WAS DULY RECEIVED BY THE ASSESSEE AS PER ACKNOWLEDGEMENT OF REC EIPT PLACED ON RECORD. HOWEVER, NONE COMPLIED IN RESPONSE TO THE SAME. TWO MORE NOTICES WERE ISSUED ON 19.04.2018 & 12.09.2018 WHICH TOO REMAINED UN-CO MPLIED WITH. THEREAFTER, THE LD. CIT(APPEALS) DECIDED THE ISSUE ON THE B ASIS OF MATERIALS AVAILABLE ON RECORD. IT IS ABSOLUTELY CLEAR THAT THE RIGHTS AND LIABILITIES OF THE ASSESSEE WERE NOT ADJUDICATED UPON IN THE PRESENCE OF THE ASSES SEE BEFORE THE LD. CIT(APPEALS) AND IT WAS ONLY WITH MATERIALS/ DOCUMENT S ON RECORD THAT THE APPEAL WAS DECIDED. 7. THAT THE ONLY GROUND NO. 4 IN GROUNDS OF APPEAL WHICH WAS PRAYED FOR ADJUDICATION BY THE LD. AR PERTAINS TO THE ADDITION OF R S.15,66,027/- U/S.41(1) OF THE ACT. THE FACTS RELATING TO THIS GROUND ARE AS UNDER: 6. IN GROUND NOS. 2 AND 3, THE APPELLANT HAS CHALLE NGED THE ADDITION OF RS.15,66,027/- MADE U/S. 41(1) OF THE ACT. FROM THE ASSESSMENT ORDER, IT IS SEEN THAT THE AO HAS DISCUSSED THE ISSUE IN DETA IL IN PARA 5.2 OF THE ASSESSMENT ORDER. THE FACTS ARE THAT THE AO OBSERVE D FROM THE SCHEDULE OF SUNDRY CREDITORS THAT THERE WERE CREDITORS WHOSE OUTSTANDING BALANCES AS ON 31/03/2012 & 31/03/2013 HAD REMAINED THE SAME. ACCORDINGLY, THE AO REQUIRED THE APPELLANT WHY THE SAME SHOULD NOT BE TREATED AS CESSATION OF LIABILITY AND TAXED AS INCO ME U/S. 41(1) OF THE ACT. IN RESPONSE, THE APPELLANT SUBMITTED THAT THES E CREDIT BALANCES HAD BEEN PAID IN THE SUBSEQUENT FINANCIAL YEARS, AND IN SUPPORT OF THE SAME, SHE FURNISHED LEDGER EXTRACTS OF THOSE PARTIES FOR THE RELEVANT FINANCIAL YEARS. THE APPELLANT ALSO FURNISHED DETAILS OF THES E CREDITORS REGARDING THEIR ADDRESS, LEDGER ACCOUNT EXTRACT, AND CONFIRMA TIONS. FROM THE LEDGER ACCOUNTS FURNISHED BY THE APPELLANT FOR THE RELEVAN T FINANCIAL YEARS, THE AO OBSERVED THAT ALL THE REPAYMENTS MADE IN SUBSEQU ENT YEARS WERE IN CASH, AND KEPT BELOW THE LIMIT OF RS. 20,000/-. AS A SAMPLE, HE HAS PRODUCED COPY OF LEDGER ACCOUNT OF THE PARTY M/S.AR KAY INDUSTRIES AT PAGE 4 OF THE ASSESSMENT ORDER. THIS SQUARING OFF A PPEARED TO BE UNUSUAL TO THE AO, AND THEREFORE IN ORDER TO VERIFY THE SAME, HE ISSUED 4 ITA NO. 1691/PUN/2018 A.Y.2013-14 LETTERS U/S. 133(6) OF THE ACT TO 7 SUCH PARTIES SEEKING DETAILS REGARDING THEIR TRANSACTIONS, AS WELL AS CONFIRMATION FROM TH EM. HOWEVER, EXCEPT TWO PARTIES, WHO ACCEPTED THE CREDIT BALANCES, NOTI CES U/S. 133(6) OF THE ACT, SENT TO 5 PARTIES, CARNE BACK UN-SERVED. WHEN THE AR OF THE APPELLANT WAS CONFRONTED WITH THE SAME, HE STATED T HAT THE APPELLANT WOULD CONTACT THEM AND FURNISH THE INFORMATION REQU IRED BY THE AO. SUBSEQUENTLY, THE AO RECEIVED E-MAILS FROM TWO SUCH PARTIES BUT FOUND VARIOUS DISCREPANCIES IN THE SAME. THE DETAILED OBS ERVATIONS OF THE AO REGARDING THE DISCREPANCIES ARE CONTAINED IN PARA 5.2.3 TO 5.2.7 OF THE ASSESSMENT ORDER THAT ON THIS FACT, THE LD. CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAS NOT FILED SINGLE SUBMISSION TO CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER. IN THE STATEMENT OF FACTS, THE ASSESSEE HAS FILED ONLY T HE ORDER OF ASSESSING OFFICER WITHOUT ANY NEW SUPPORTING DOCUMENTS TO REPRESEN T HER CASE. THIS FACT SHOWS THAT THE MATTER NEEDS TO BE REMANDED TO T HE FILE OF LD. CIT(APPEALS) FOR ADJUDICATION ON MERITS. ACCORDINGLY, IN THE IN TEREST OF JUSTICE, WE SET ASIDE THE ORDER OF LD. CIT(APPEALS) AND RESTORE TH IS ISSUE I.E. WITH REGARD TO THE ADDITION MADE U/S.40(1) OF THE ACT BACK TO THE FILE OF THE LD. CIT(APPEALS) TO ADJUDICATE ON MERITS AFTER PROVIDING REASON ABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. AT THE SAME TIME, WE DIRECT THE ASSESSEE TO APPEAR BEFORE THE LD. CIT(APPEALS) WITH RELEVANT DOCUMENTS AND EV IDENCES IN SUPPORT OF HER CASE AND TO REPRESENT THE CASE ON MERITS, IMMEDIA TELY ON RECEIPT OF THIS ORDER. ANY SERVICE OF NOTICE IS DISPENSABLE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 07 TH DAY OF FEBRUARY, 2019. SD/- SD/- D. KARUNAKARA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 07 TH FEBRUARY, 2019. SB 5 ITA NO. 1691/PUN/2018 A.Y.2013-14 '#$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-8, PUNE. 4. THE PR. CIT-5, PUNE. 5. '#$ %%&' , ( &' , - )*+ , / DR, ITAT, SMC BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 6 ITA NO. 1691/PUN/2018 A.Y.2013-14 DATE 1 DRAFT DICTATED ON 0 6 .0 2 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 0 6 .0 2 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER