Mitra Auxiliary Chemicals Private Limited, Ratnagiri V. Assistant Commissioner of Income-tax, Ratnagiri Circle, Ratnagiri

ITA 1788/PUN/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5946 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 18-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK KUMAR
• Keywords: Principle of natural justice; Audi alteram partem
• Section: 143(3)

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.1788/PUN/2019 / ASSESSMENT YEAR : 2011-12 MITRA AUXILIARY CHEMICALS PRIVATE LIMITED, D-13/3, MIDC, LOTE PARSHURAM, TAL. KHED, DIST. RATNAGIRI-415722. PAN : AACCM3693A ....... / APPELLANT / V/S. ACIT, RATNAGIRI CIRCLE, RATNAGIRI. / RESPONDENT ASSESSEE BY : SHRI PRANJAL PHADNIS REVENUE BY : SHRI DEEPAK KUMAR / DATE OF HEARING : 28.01.2020 / DATE OF PRONOUNCEMENT : 31.01.2020 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-2, KOLHAPUR DATED 09.10.2019 FOR THE ASSESSMENT YEAR 2011-12. 2. THE SOLITARY ISSUE RAISED IN THE APPEAL RELATES TO THE CONFIRMING OF DISALLOWANCE OF RS.19,20,000/- ONLY ON THE BASIS OF DOUBTS IGNORING THE SUBMISSIONS AND LOG BOOK. 3. BEFORE ME, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE WHERE THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF CHEMICALS PRODUCTIONS. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.10,52,070/-. THE CASE WAS SELECTED FOR SCRUTINY. AT THE END OF THE ASSESSMENT U/S 143(3) OF THE ACT, THE ASSESSING ITA NO.1788/PUN/2019 - 2 - OFFICER ASSESSED THE TOTAL INCOME AT RS.29,72,070/- AGAINST THE RETURNED INCOME OF RS.10,52,070/- AFTER MAKING CERTAIN ADDITION OF RS.19,20,000/-. THE CONTENTS OF PARA 5 AND 6 OF THE ASSESSMENT ORDER ARE RELEVANT AND THE SAME ARE EXTRACTED HEREUNDER :- 5. ONE OF THE DIRECTORS SHRI. MILIND S, BAPAT ATTENDED ON 25/03/2014 AND HE WAS AGAIN ASKED TO PRODUCE DOCUMENTARY EVIDENCES REGARDING AVAILING OF SERVICES FROM SISTER CONCERN AND THE CASE WAS ADJOURNED TO 26/03/2014. ON THIS DATE THE DIRECTOR SHRI. MILIND S. BAPAT ATTENDED AND FILED A COPY OF MINUTES OF THE MEETING HELD BETWEEN THE DIRECTORS OF THE ASSESSEE COMPANY AND IT'S SISTER CONCERN M/S SNEHALATE CHEMICALS PVT. LTD. HE ALSO FILED A COPY OF REGISTER A STATED TO BE BELONGING TO VISIT OF CONSULTANTS TO THE ASSESSEE COMPANY. 6. ASSESSEE CANNOT CLAIM PAYMENTS TO SISTER CONCERN MERELY ON THE BASIS OF FILING A COPY OF AGREEMENT, COPY OF MINUTES OF THE MEETING AND COPY OF CONSULTANT'S VISIT REGISTER. NO DETAILS REGARDING THE PERSONS DEPLOYED FROM THE SISTER CONCERN FOR CARRYING OUT THE DESIRED WORK HAVE BEEN FILED. THEREFORE, ASSESSEE WAS NOT ABLE TO CLEARLY SUBSTANTIATE AS TO WHICH PERSONAL FROM THE SISTER CONCERN HAS BEEN ASSIGNED TO CARRY OUT A PARTICULAR ACTIVITY IN THE ASSESSEE COMPANY AND ON WHAT REMUNERATION CHARGES. SINCE THE ASSESSEE FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCES WORK WISE AND PERSONAL WISE REGARDING THE SO CALLED AGREEMENT WITH THE SISTER CONCERN, THE TOTAL PAYMENTS MADE OF RS.19,20,000/- TO M/S SNEHALATE CHEMICALS PVT. LTD. IS BEING DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDING U/S.271(1)(C) ARE BEING INITIATED ON THIS ISSUE. 4. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE FILED A WRITTEN SUBMISSION AND CHOSE NOT TO APPEAR PERSONALLY OR REPRESENT THE CASE THROUGH THE AUTHORISED REPRESENTATIVE. THE WRITTEN SUBMISSIONS WERE NOT ADEQUATE TOO. THE CIT(A) ISSUED NUMBER OF LETTERS AND NOTICES AND THE ASSESSEE DID NOT CONSIDER RELEVANT FOR PERSONAL APPEARANCE. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE AS PER THE DISCUSSION GIVEN IN PARA 6 OF HIS ORDER. 5. BEFORE ME, EXPLAINING THE BACKGROUND FACTS OF THE CASE, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) ADJUDICATED THE ISSUE IN THE ABSENCE OF THE ASSESSEE MERELY RELYING ON THE WRITTEN SUBMISSION. ITA NO.1788/PUN/2019 - 3 - REFERRING TO THE CONSEQUENT ERRORS, LD. COUNSEL SUBMITTED THAT IN ABSENCE OF INTERACTION BETWEEN THE ASSESSEE AND THE CIT(A) RESULTED IN MISUNDERSTANDING OF THE FACTS, WHICH REQUIRES REMANDING THE ISSUE TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. 6. ON THE OTHER HAND, LD. DR FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). 7. AFTER HEARING BOTH THE SIDES ON THIS ISSUE AND PERUSING THE EX-PARTE ORDER OF THE CIT(A), I AM OF THE OPINION THAT THE ADJUDICATION BY THE CIT(A) IS NOT UPTO THE MARK IN VIEW OF THE NON-APPEARANCE OF THE ASSESSEE OR HIS AUTHORIZED REPRESENTATIVE BEFORE THE CIT(A). GENERALLY, THE QUALITY OF ADJUDICATION SUFFERS WHEN THERE IS NO PERSONAL APPEARANCE OF THE ASSESSEE OR HIS AUTHORIZED REPRESENTATIVE. UNLIKE IN THE DEPARTMENT, IT IS NOT A CASE OF FACE-LESS ADJUDICATION BY THE CIT(A). WITHOUT GOING INTO THE MERITS OF THE CLAIM OF THE ASSESSEE AS WELL AS CORRECTNESS OF THE DECISIONS OF THE ASSESSING OFFICER AND CIT(A), I AM OF THE OPINION, AS PROPOSED BY THE AR OF THE ASSESSEE, THE MATTER SHOULD BE REMANDED BACK TO THE FILE OF THE CIT(A) FOR DECIDING THE ISSUE AFRESH AFTER HEARING THE ASSESSEE OR HIS AUTHORIZED REPRESENTATIVE OR BOTH AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. THE ADJUDICATION OF THE APPEAL SHOULD BE DONE AFTER HEARING THE ASSESSEE AND CERTAINLY NOT AFTER CONSIDERING THE MERE WRITTEN SUBMISSION OF THE ASSESSEE. THE PRINCIPLES OF AUDI ALTERAM PARTEM HAVE TO BE STRICTLY FOLLOWED BY THE CIT(A). WITH THESE DIRECTIONS, THE ISSUES RAISED BY THE ASSESSEE ARE REMANDED TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. THE ASSESSEE IS ITA NO.1788/PUN/2019 - 4 - DIRECTED TO MAKE APPEARANCE AS PROMISED IN THE COURT AND THE CIT(A) IS DIRECTED TO ADJUDICATE THE ISSUE AFRESH AFTER HEARING THE ASSESSEE AND SHALL PASS A SPEAKING ORDER. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 31 ST DAY OF JANUARY, 2020. SD/- (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 31 ST JANUARY, 2020. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-2, KOLHAPUR; 4. THE PR. CIT-2, KOLHAPUR; 5. , , - / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE