ITO, Ward - 4(1), Kolkata, Kolkata V. M/s. Rashmi Logistics Pvt. Ltd., Kolkata

ITA 1833/KOL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87670 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 16-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-09-2010
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Business income; Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 260A; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [BEFORE & HON BLE SRI N.K.SAINI , A M & HON BLE SRI MAHAVIR SINGH, JM ] ITA NO .1833 /KOL/2010 ASSESSMENT YEAR : 2006 - 07 ( A PPELLANT ) (RESPONDENT) I.T.O., W ARD - 4(1) - VS - M/S.RASHMI LOGISTICS PVT.LTD., KOLKATA KOLKATA (PAN: AACCR 7862 G) FOR THE APPELLAN T SHRI RANU BISWAS, JCIT FOR THE RESPONDENT NONE (EXPARTE) DATE OF HEARING : 22 .01.2015 DATE OF PRONOUNCEMENT : 22 .0 1.2015. ORDER PER SHRI N.K.SAINI , AM THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 24.03.2010 OF L D. C.I.T - (A) - IV, KOLKATA AND PERTAINS TO A.YR. 2006 - 07. 2. DURING THE COURSE OF HEARING NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE. NEITHER ANY ADJOURNMENT PETITION WAS MOVED. NOTICE OF HEARING WAS SENT TO THE ASSESSEE THROUGH RPAD ON 29.10.2014. IT APPEARS THAT THE ASSESSEE IS NOT INTERESTED TO PROSECUTE THE MATTER. WE, THEREFORE, PROCEEDED TO DECIDE THE APPEAL EXPARTE QUA THE ASSESSE E ON MERITS AFTER HEARING THE LD. DR. 3. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL : 1. THAT LD. CIT(A) - IV, KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.24.32 LAKHS BEING THE ONETIME LEASE RENT PAID TO KOLKATA PORT TRUST AS LAND REVENUE EVEN WHEN SUCH PAYMENT WAS PURELY A LEASE RENT MADE FOR ACQUISITION OF LEASE RIGHT OF CAPITAL IN NATURE. 2. THAT LD. CIT(A) - IV, KOLKATA HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN TREATING THE RENTAL INCOME OF R S.9.17 LAKHS AS INCOME FROM BUSINESS, EVEN WHEN THE ASSESSEE HAD RECEIVED RENTAL INCOME FROM LEASE PROPERTY AND ACQUISITION OF SUCH LEASE RIGHT CONSTITUTES THE DEEMED OWNER AS PER SECTION 27 (IIIB) OF THE I.T.ACT. 3. THAT THE APPELLANT CRAVES FOR LEAVE T O ADD, DELETE OR MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. ITA NO.1833 /KOL/2010 M/S. RASHMI LOGISTICS PVT.LTD., A.YR . 2006 - 07 2 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED ITS E - RETURN OF INCOME ON 29.07.2006 DECLARING A LOSS OF RS.18,97,443/ - . LATER ON THE CASE WAS SELECTED FOR SCRUTINY AND THE AO FRAMED THE ASSESSMENT AT AN INCOME OF RS.6,42,413/ - BY DISALLOWING THE CLAIM FOR DEDUCTION ON ACCOUNT OF RENT PAID TO KOLKATA PORT TRUST AMOUNTING TO RS.24,32,998/ - . HE ALSO CONSIDERED THE RENT FROM KPT UNDER THE HEAD INCOME FROM H OUSE PROPERTY AND NOT AS BUSINESS INCOME SHOWN BY THE ASSESSEE. HE ALSO DISALLOWED THE DEPRECIATION. 4.1. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO REPRODUCED THE GROUNDS RAISED BY THE ASSESSEE IN PARA 2 AND THE STATEMEN TS OF FACTS FURNISHED BY THE ASSESSEE IN PARA - 3 OF THE IMPUGNED ORDER. THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER : - 1. IN THE GROUND THE APPELLANT IS DISPUTING THE ASSESSING OFFICER SECTION AND TREATING HIS INCOME U/S 27 OF INCOME TAX ACT, 1961. KEEPING IN VIEW THE DISCUSSIONS AND SUBMISSIONS AND SATISFIED THAT THE CONDITION FOR INVOKING OF U/S 27 IS NOT SATISFIED. ASSESSEE IS NOT THE OWNER OF THE PROPERTY M/S. SHOW WALLACE & COMPANY HAS TAKEN THE PROPERTY ON LEASE FROM THE K OLKATA PORT TRUST. COMPANY WAS NOT ABLE TO COLLECT THE RENT PROPERTY, SO HE MADE THE MEMORANDUM OF UNDERSTANDING WITH THE ASSESSEE COMPANY. THE LEASE OF M/S. SHOW WALLSE COMPANY HAD ALREADY EXPIRED WITH THE KOLKATA PORT TRUST. THE LEASE IS ONLY RUNNING DUE TO OUTSTANDING RENT PAYABLE TO KOLKATA PORT TRUST. AS THE ASSESSEE COMPANY IS THE SUB LESSEE. THEREFORE THIS GROUND OF APPEAL IS ALLOWED. 2. AS THE PROVISIONS OF U/S OF THE INCOME TAX ACT, 1961 TREATED AS BUSINESS INCOME U/S 28(2) OF THE INCOME TAX ACT, 1961 AND THEREFORE THE BENEFITS OF EXPENSES IS CLAIMED IN PROFIT AND LOSS ACCOUNT. FURTHER MORE THIS IS AN ILLOGICAL DISALLOWANCE AND NO BASIS IT HAS BEEN ADVANCED BY THE ASSESSING OFFICER, IN MY OPINION DISALLOWANCE IS NOT SUSTAINABLE IN LAW. 5. NOW TH E DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR SUBMITTED THAT THE LD. CIT(A) HAS PASSED NON - SPEAKING ORDER AND HAS NOT GIVEN ANY REASON IN SUPPORT OF HIS CONCLUSION. THE LD. DR ALSO REITERATED THE OBSERVATIONS MADE BY THE AO AND SUPPORTED THE A SSESSMENT ORDER DATED 21.11.2008. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE IT IS NOTICED THAT THE LD. CIT(A) HAS PASSED THE IMPUGNED ORDER IN SLIP - SHOD MANNER . HE H AS NOT GIVEN ANY REASONS FOR HIS CONCLUSION. ITA NO.1833 /KOL/2010 M/S. RASHMI LOGISTICS PVT.LTD., A.YR . 2006 - 07 3 6.1 . IN OUR OPINION THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS NOT A SPEAKING ORDER. IT IS WELL SETTLED THAT THE ORDER/JUDGMENT UNSUPPORTED BY REASON IS NOT A JUDGMENT IN THE EYES OF LAW. IT IS ALSO TRUE TH AT THE REASONS ARE THE LINK BETWEEN THE MATERIAL ON RECORD AND THE CONCLUSION THEREAFTER BY THE COURT/APPELLATE AUTHORITY. IN OUR VIEW THE LD. CIT(A) SHOULD HAVE PROPERLY CONSIDERED THE ARGUMENTS OF THE ASSESSEE AS WELL AS FINDINGS GIVEN BY THE ASSESSING OFFICER AND THEREAFTER HE SHOULD HAVE MADE INDEPENDENT FINDINGS EITHER IN FAVOUR OR AGAINST THE ASSESSEE. CONSIDERING THE ENTIRE FACTS, WE ARE OF THE OPINION THAT THE LD. CIT(A) HAD NOT PASSED A PROPER ORDER IN THE EYES OF LAW. AT THIS STAGE, WE MAY REFER TO THE DECISION OF ITAT AHMADABAD BENCH IN THE CASE OF GUJARAT THEMIS BIOSYN LTD. VS. J.C.I.T., (2000) 74 ITD 339 (AHD) . THE ITAT AHMADABAD BENCH, WHILE INTERPRETING THE PROVISIONS OF SECTION 250(6) OF THE I.T. ACT, 1961 HELD AS UNDER: 'THE PROVISIONS OF S ECTION 250(6) PROVIDES THAT THE APPELLATE ORDERS OF THE COMMISSIONER (APPEALS) ARE TO STATE THE POINTS ARISING IN THE APPEAL, THE DECISION OF THE AUTHORITY THEREON AND THE REASONS FOR SUCH DECISION. THE UNDERLYING RATIONALE OF THE PROVISIONS IS THAT SUCH O RDERS ARE SUBJECT TO FURTHER APPEAL TO THE TRIBUNAL. SPEAKING ORDER WOULD OBVIOUSLY ENABLE A PARTY TO KNOW PRECISE POINTS DECIDED IN HIS FAVOUR OR AGAINST HIM. ABSENCE OF THE FORMULATION OF THE POINT FOR DECISION FOR WANT OF CLARITY IN A DECISION UNDOUBTE DLY PUTS A PARTY IN QUANDARY. SECTION 250(6) EXPRESSLY EMBODIES THE PRINCIPLE OF NATURAL JUSTICE AND SUCH A PROVISION IS CLEARLY MANDATORY IN NATURE. THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) IN VIOLATION OF THE PROVISIONS OF SECTION 250(6) C OULD NOT, THEREFORE, BE SUSTAINED.' 6.2 . THE RATIO LAID DOWN BY THE ITAT AHMADABAD BENCH IN THE AFORESAID REFERRED TO CASE IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE. 6.3 . THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V PALWAL CO - OPERATIVE SUGAR MILLS LTD. (2006) 284 ITR 153 HAS HELD AS UNDER: 'EVERY JUDICIAL/QUASI JUDICIAL BODY / AUTHORITY MUST PASS A REASONED ORDER WHICH SHOULD REFLECT THE APPLICATION OF MIND OF THE CONCERNED AUTHORITY TO THE ISSUES / POINTS RAISED BEFORE IT. THE REQUIREMENT OF RECORDING REASONS IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARIFY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE DECISION MAKING PROCESS. ANOTH ER REASON WHICH MAKES IT IMPERATIVE FOR QUASI JUDICIAL AUTHORITIES TO GIVE REASONS IS THAT THEIR ORDERS ARE NOT ONLY SUBJECT TO THE FIGHT OF THE ITA NO.1833 /KOL/2010 M/S. RASHMI LOGISTICS PVT.LTD., A.YR . 2006 - 07 4 AGGRIEVED PERSONS TO CHALLENGE THEM BY FILING STATUTORY APPEAL AND REVISION BUT ALSO BY FILING WRIT PETITION UN DER ARTICLE 226 OF THE CONSTITUTION. SUCH DECISIONS CAN ALSO BE CHALLENGED BY WAY OF APPEAL UNDER ARTICLE 136 OF THE CONSTITUTION OF INDIA. THE HIGH COURTS HAVE THE POWER TO ISSUE WRITS OF CERTIORARI TO QUASH THE ORDERS PASSED BY QUASI JUDICIAL AUTHORITIES / TRIBUNALS. LIKEWISE IN APPEAL THE SUPREME COURT CAN NULLIFY SUCH ORDER / DECISION. THE POWER OF JUDICIAL REVIEW CAN BE EFFECTIVELY EXERCISED BY THE SUPERIOR COURTS ONLY IF THE ORDER UNDER CHALLENGE CONTAINS REASONS. IF SUCH ORDER IS CRYPTIC AND DEVOID OF REASONS, THE COURTS CANNOT EFFECTIVELY EXERCISE THE POWER OF JUDICIAL REVIEW. 6.4 . THE HON'BLE SUPREME COURT IN THE CASE OF MANGALORE GANESH BEEDI WORKS VS. CIT AND ANOTHER (2005) 273 ITR 56 HAS HELD AS UNDER: 'THOUGH IN AN ORDER OF AFFIRMATION IN A N APPEAL U/S 260A OF INCOME TAX ACT, 1961 REPETITION OF THE REASONS ELABORATELY MAY NOT BE NECESSARY, THE ARGUMENTS ADVANCED / POINTS URGED HAVE TO BE DEALT WITH. REASONS FOR AFFIRMATION HAVE TO BE INDICATED, THOUGH IN APPROPRIATE CASES THEY MAY BE BRIEF. IT HAS FURTHER BEEN HELD : 'RECORDING OF REASONS IS A PART OF FAIR PROCEDURE. REASONS ARE THE HARBINGER BETWEEN THE MIND OF THE MAKER OF THE DECISION IN THE CONTROVERSY AND THE DECISION OR CONCLUSION ARRIVED AT. THEY SUBSTITUTE SUBJECTIVITY WITH OBJECTIV ITY. FAILURE TO GIVE REASONS AMOUNTS TO DENIAL OF JUSTICE. 6.5 . AS WE HAVE ALREADY POINTED OUT THAT IN THE PRESENT CASE, THE LD. CIT(A) HAS NOT RECORDED ANY REASON IN SUPPORT OF HIS DECISION, THEREFORE, THE FAILURE TO GIVE REASONS AMOUNTS TO DENIAL OF JUS TICE AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE AFORESAID CASE AND THE PRESENT CASE REQUIRES RE - ADJUDICATION AT THE LEVEL OF LD. CIT(A). 6.6 . THE HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS VIKAS CHEMI GUM INDIA (2005) 276 ITR 32 HAS HELD AS UNDER: THE REQUIREMENT OF RECORDING OF REASONS AND COMMUNICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PROCEDURE. THE NECESSITY OF GIVING REASONS FLOWS FROM THE CONCEPT OF RULE OF LAW WHICH CONSTITUTES ON E OF THE CORNER STONES OF OUR CONSTITUTIONAL SET UP. THE ADMINISTRATIVE AUTHORITIES CHANGED WITH THE DUTY TO ACT JUDICIALLY CANNOT DECIDE THE MATTERS ON CONSIDERATIONS OF POLICY OR EXPEDIENCY. THE REQUIREMENT OF RECORDING OF REASONS BY SUCH AUTHORITIES IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, ITA NO.1833 /KOL/2010 M/S. RASHMI LOGISTICS PVT.LTD., A.YR . 2006 - 07 5 CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE DECISION MAKING PROCESS. ANOTHER REASON WHICH MAKES IT IMPERATIVE F OR THE QUASI JUDICIAL AUTHORITIES TO GIVE REASONS IS THAT THEIR ORDERS ARE NOT ONLY SUBJECT TO THE RIGHT OF THE AGGRIEVED PERSONS TO CHALLENGE THE SAME BY FILING STATUTORY APPEAL AND REVISION BUT ALSO BY FILING WRIT PETITION UNDER ARTICLES 226 OF THE CONST ITUTION. SUCH DECISIONS CAN ALSO BE CHALLENGED BY WAY OF APPEAL UNDER ARTICLE 136 OF THE CONSTITUTION OF INDIA. THE HIGH COURTS HAVE THE POWER TO ISSUE WRIT OF CERTIORARI TO QUASH THE ORDERS PASSED BY A QUASI JUDICIAL AUTHORITY/TRIBUNAL. LIKEWISE IN APPEAL THE SUPREME COURT CAN NULLIFY SUCH ORDER/DECISION. THESE POWERS CAN BE EFFECTIVELY EXERCISED BY THE SUPERIOR COURTS ONLY IF THE ORDER UNDER CHALLENGE CONTAINS REASONS. 6.7 . AS POINTED OUT EARLIER THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS WITHO UT ANY REASONING, THEREFORE KEEPING IN VIEW THE RATIO LAID DOWN IN THE AFORESAID REFERRED TO JUDICIAL PRONOUNCEMENT, IT DESERVES TO BE REMANDED BACK FOR FRESH ADJUDICATION AT THE LEVEL OF THE AO. THEREFORE, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND REMAND THE CASE BACK TO HIS FILE , TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7 . IN THE RESULT THE APPEAL FILED BY THE DEPARTMENT IS ALLOWED FOR STATISTICAL PUR POSES . O RDER PRONOUNCE D IN THE OPEN COURT ON 22 .01.2015. SD/ - SD/ - [ MAHAVIR SINGH ] [ N.K.SAINI ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 22 .01.2015. R.G.(.P.S.) ITA NO.1833 /KOL/2010 M/S. RASHMI LOGISTICS PVT.LTD., A.YR . 2006 - 07 6 COPY OF THE ORDER FORWARDED TO: 1 . M/S.RASHMI LOGISTICS PVT. LTD.K, 5, CLIVE ROW, 3 RD FLOOR, RM - 72, KOLKATA - 700001. 2 I.T.O., WARD - 4(1), KOLKATA. 3 . CIT(A) - IV, KOLKATA 4. CIT - KOLKATA CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BE NCHES