Arihant Properties, Howrah V. ITO, Ward - 47(1), Kolkata, Kolkata

ITA 184/KOL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5534 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2010
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 17-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 01-02-2010
• Court: TRIBUNAL
• Department Lawyers: R K PAULSR
• Assessee Lawyers: SHANTI KR SARAOGIMANAGER
• Keywords: Opportunity of being heard; Principle of natural justice; Audi alteram partem
• Section: 133(6)

Judgement Text

, .. , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH SMC, KOLKATA () BEFORE , , , , , SMT. DIVA SINGH, JUDICIAL MEMBER. ! ! ! ! / ITA NO .184 /KOL/2010 '# $%/ ASSESSMENT YEAR : 2006-07 ('( / APPELLANT ) M/S.ARIHANT PROPERTIES (PAN: AAMFA 5919 N ) - ' - - VERSUS - . (*+'(/ RESPONDENT ) THE ITO, WARD-47(1), KOLKATA '( , - ./ FOR THE APPELLANT: SHRI SHANTI KR.SARAOGI,MANAGER *+'( , - ./ FOR THE RESPONDENT: SHRI R.K.PAUL,SR.DR ./ / ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-XXX, KOLKATA DATED 02.12.2009 PERTAINING TO 2006-07 ASS ESSMENT YEAR WHEREIN THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: - 1. FOR THAT AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) WHILE ALLOWING THE APPELLANTS APPEAL ERRED IN DIRE CTING THAT A SUM OF RS.5,00,000/- SPENT BY THE APPELLANT IN COURSE OF I TS BUSINESS IS NOT COST TO THE BUSINESS. INASMUCH AS THE SAID SUM WAS SPENT FOR TH E PURPOSES OF BUSINESS AND WAS A PART OF APPELLANTS WORK-IN-PROGRESS. 2. FOR THAT AND IN THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE ASSESSING OFFICER WHILE OBTAINING INFORMATION U/S 133(6) OF THE INCOM E-TAX ACT, 1961 ERRED IN NOT GIVING AN OPPORTUNITY TO THE APPELLANT FOR EXPL AINING THE CORRECT FACT ABOUT THE INFORMATION FURNISHED AND TO FURTHER EXAMINE TH E PERSON WHO HAD GIVEN INFORMATION IN PURSUANCE TO NOTICE U/S 133(6) OF TH E ACT, IN AS MUCH AS USING ANY INFORMATION, EVIDENT OR MATTER GATHERED IN COUR SE OF SUCH EXAMINATION AGAINST THE APPELLANT IS AGAINST LAW AND THE LEARNE D CIT(A) ERRED IN UPHOLDING SUCH ACTION OF THE ASSESSING OFFICER. 3. YOUR APPELLANT CRAVES LEAVE TO ARGUE FURTHER GRO UNDS, IF NECESSARY, AT THE TIME OF APPEAL. 2 2. AT THE TIME OF HEARING AN ADJOURNMENT REQUEST W AS MOVED ON BEHALF OF THE ASSESSEE. HOWEVER ON PERUSAL OF THE MATERIAL AVAIL ABLE ON RECORD QUA THE GROUNDS RAISED BY THE ASSESSEE, IT WAS CONSIDERED APPROPRIA TE TO REJECT THE SAME AND DECIDE THE APPEAL OF THE ASSESSEE ON MERIT. 3. THE RELEVANT FACTS OF THE CASE ARE AS FOUND DISC USSED IN THE IMPUGNED ORDER READ AS UNDER :- THE AO NOTICED THAT THE APPELLANT CLAIMED PAYMENT OF RS.5,00,000/- TO M/S. MATH BAGAN SANGHA, HOWRAH. THE AO VERIFIED FORM THE MATH BAGAN SANGHA. THE SANGHA CONFIRMED THE FINANCIAL TRANSACTIONS FOR RS.5,00,000/- FOR DEVELOPMENT OF LAND OF THEIR ORGANISATION. THE AO H ELD THAT THE PAYMENT CLAIMED TO THE MATH BAGAN SANGHA OF RS.5,00,000/- I S NOT INCURRED FOR DEVELOPMENT AND THE CHARGES CLAIMED OF RS.5,00,000/ - IS NOT ALLOWABLE. THE AO ASSESSED THIS AMOUNT AS INCOME FROM OTHER SOURCE S. 3.1. THE SAID ACTION WAS AGITATED BY THE ASSESSEE BEFORE THE CIT(A). 3.2. BEFORE THE CIT(A) IT WAS CONTENDED THAT THE L AND WAS UTILIZED BY M/S. MATH BAGAN SANGHA FOR A CLUB FOR RUNNING VARIOUS SOCIAL ACTIVITIES. THE LAND IT WAS SUBMITTED WAS DEVELOPED BY FILLING EARTH AND LEVEL ED BEFORE HANDING IT OVER TO THE ASSESSEE. ACCORDINGLY FOR THIS ACTIVITY AN AMOUNT O F RS.5,00,000/- WAS PAID TO M/S.MATH BAGAN SANGHA THROUGH ACCOUNT PAYEE CHEQUES FOR THE DEVELOPMENT WORK DONE BY M/S.MATH BAGAN SANGHA. IT WAS AGITATED THAT THE RECEIPT OF MONEY WAS CONFIRMED BY M/S. MATH BAGAN SANGHA. IN THESE CIRCU MSTANCES, IT WAS SUBMITTED THE DISALLOWANCE OF EXPENDITURE RESULTED IN REDUCTION O F THE CONSTRUCTION EXPENSES CLAIMED OF RS.1,10,29,035/-. THE CONSTRUCTION EXPEN SES, IT WAS STATED WERE CARRIED FORWARD TO THE NEXT YEAR AS WORK-IN-PROGRESS AND TH E DISALLOWANCE OF RS.5,00,000/- CONSEQUENTLY LEADS TO REDUCTION IN THE VALUE OF WOR K IN PROGRESS. 3.3. HOWEVER, NOT CONVINCED BY THE EXPLANATION OFFE RED BY THE ASSESSEE THE CIT(A) UPHELD THE ACTION OF THE AO. 3.4. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BE FORE THE TRIBUNAL. 3.5. A PERUSAL OF THE GROUNDS RAISED ON BEHALF OF THE ASSESSEE SHOWS THAT THE ASSESSEE HAS AGITATED LACK OF OPPORTUNITY BEFORE TH E TRIBUNAL VIDE GROUND NO.2. ON PERUSAL OF THE GROUND RAISED BEFORE THE LD. CIT(A) IT IS ALSO SEEN THAT THE SAID ISSUE 3 WAS AGITATED ON BEHALF OF THE ASSESSEE EVEN BEFORE THE CIT(A). FOR READY REFERENCE THE GROUND RAISED BEFORE THE CIT(A) IS REPRODUCED AS UN DER :- 2. FOR THAT AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER HAS ERRED IN COMPLETING THE ASSESSMENT IN HASTE WIT HOUT GIVING PROPER AND ADEQUATE OPPORTUNITY TO THE APPELLANT FOR EXPLAININ G THE ANOMALIES FOUND BY THE ASSESSING OFFICER IN THE REPLY GIVEN BY THE NGO IN RESPONSE TO NOTICE U/S 133(6) OF THE ACT AND HENCE CONSIDERING THE COST OF CONSTRUCTION AS INCOME OF THE APPELLANT. 4. THE LD. DR WAS REQUIRED TO ADDRESS THIS FACT. MR .PAL, SR.DR APPEARING ON BEHALF OF THE DEPARTMENT SUBMITTED THAT AS PER THE ASSESSMENT ORDER THE ASSESSEE WAS CONFRONTED WITH THE LETTER DATED. 27.12.2008 HOWEVE R THE ASSESSEE DID NOT CHOOSE TO REPLY TO THE SAME. HOWEVER, FROM THE PERUSAL OF TH E IMPUGNED ORDER HE COULD NOT POINT OUT TO ANY SPECIFIC FINDING IN REGARD TO THE SPECIFIC GROUND AGITATED BY THE ASSESSEE BEFORE THE CIT(A). 5. HAVING HEARD THE SUBMISSIONS QUA THE GROUND AND ON A PERUSAL OF THE RECORD IT IS SEEN THAT NO DOUBT AS PER THE ASSESSMENT ORDER T HE ASSESSEE CHOSE NOT TO REPLY TO THE LETTER DATED 27.12.2008 WHICH WAS CONFRONTED TO THE ASSESSEE BY THE AO. HOWEVER, THIS FINDING OF FACT HAS NOT BEEN ACCEPTED BY THE A SSESSEE AS A SPECIFIC GROUND AGITATING THE OPPORTUNITY TO REBUT THE INFORMATION ON RECORD WAS RAISED. APART FORM RAISING A SPECIFIC GROUND EVEN IN THE STATEMENT OF FACTS AVA ILABLE ON RECORD THE ASSESSEE HAS HIGHLIGHTED THIS GRIEVANCE. A PERUSAL OF THE IMPUGN ED ORDER SHOWS THAT EVIDENTLY THIS SPECIFIC GRIEVANCE AGITATED BY WAY OF THE SPECIFIC GROUND HAS NOT BEEN ADDRESSED BY THE CIT(A) AS NO FINDING THEREON HAS BEEN GIVEN.. I T IS A SETTLED PROPOSITION OF LAW THAT IF ANY INFORMATION HAS BEEN RELIED UPON BY THE AUTH ORITY AGAINST A PERSON WHO IS ADVERSELY AFFECTED BY IT THEN THAT OPPORTUNITY TO R EBUT THE SAME HAS NECESSARILY TO BE GIVEN. ESPECIALLY SINCE A SPECIFIC GROUND HAD BEEN RAISED BEFORE THE CIT(A) IT WAS INCUMBENT ON THE PART OF THE CIT(A) TO GIVE A FINDI NG THEREON. ACCORDINGLY IT IS CONSIDERED APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DIRECTION TO SPECIFICALLY CONFRONT THE EVIDENCE RELIED UPON BY H IM TO THE ASSESSEE AND AFTER CONSIDERING THE EXPLANATION OFFERED THE AO SHALL DE CIDE THE ISSUE IN ACCORDANCE WITH LAW BY WAY OF A SPEAKING ORDER. 4 5.1. IT MAY NOT BE OUT OF PLACE TO BRIEFLY REFER TO THE SETTLED LEGAL POSITION ON THE ISSUE OF THE RELEVANCE AND IMPORTANCE OF THE OPPORT UNITY OF BEING HEARD TILL QUITE SOME TIME THE GENERAL VIEW WAS THAT THE RULES OF NATURAL JUSTICE WOULD APPLY ONLY TO THE JUDICIAL AND QUASI-JUDICIAL PRONOUNCEMENTS AND NOT TO THE ADMINISTRATIVE ACTION. HOWEVER, IN THE CASE OF STATE OF ORISSA VS- DR. MI SS BINAPANI (1967) 2 SCR 625 THE DISTINCTION BETWEEN QUASI -JUDICIAL AND ADMINISTRAT IVE DECISIONS WAS PERCEPTIVELY MITIGATED AND IT WAS HELD THAT EVEN ADMINISTRATIVE ORDER OR DECISIONS IN MATTERS INVOLVING CIVIL CONSEQUENCES HAVE TO BE MADE CONSIS TENTLY WITH THE RULES OF NATURAL JUSTICE. SINCE THEN THE CONCEPT OF NATURAL JUSTICE HAS MADE GREAT STRIDES AND IS INVARIABLY READ INTO ADMINISTRATIVE ACTIONS INVOLVI NG CIVIL CONSEQUENCES, UNLESS OF COURSE THE STATUE CONFERRING THE POWER EXCLUDES ITS APPLICATION BY EXPRESS LANGUAGE. 5.2. THE RIGHT TO FAIR HEARING IS A GUARANTEED RIG HT. EVERY PERSON BEFORE AN AUTHORITY EXERCISING THE ADJUDICATING POWERS HAS A RIGHT TO K NOW THE EVIDENCE TO BE USED AGAINST HIM. THE RIGHT TO KNOW WOULD NECESSARILY LEAD TO TH E RIGHT OF AN OPPORTUNITY TO REBUT THE SAME. HENCE ONCE ADMITTEDLY ON RECORD THE ASSES SEE HAS AGITATED THE ISSUE AND RAISED A SPECIFIC GROUND IT GOES WITHOUT SAYING AND NO LEGAL DECISIONS NEED BE CITED SO AS TO HOLD THAT THE SPECIFIC GROUND HAS TO BE ADJUD ICATED UPON IN ALL FAIRNESS. 5.3. THE CONCEPT, SCOPE, HISTORY OF DEVELOPMENT AND SIGNIFICANCE OF THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN DISCUSSED EXTENSIVELY WITH REFERENCE TO EARLIER CASES BY THEIR LORDSHIPS OF THE APEX COURT IN THE CASE OF CA NARA BANK VS- V.K.AVASTHI (2005) 6 SCC 321. THEIR LORDSHIPS OBSERVED THAT THE PRINCIPLES OF NATURAL JUSTICE ARE THOSE WHICH HAVE BEEN LAID OUT BY THE COURTS AS BEI NG THE MINIMUM PROTECTION OF THE RIGHTS OF AN INDIVIDUAL AGAINST THE ARBITRARY PROCE DURE THAT MAY BE ADOPTED BY A JUDICIAL, QUASI-JUDICIAL AND ADMINISTRATIVE AUTHORI TY WHILE MAKING AN ORDER AFFECTING THOSE RIGHTS. 5.4. THE RATIONALE BEHIND THE RULES OF NATURAL JUST ICE WHICH HAVE EVOLVED UNDER THE COMMON LAW THOUGH ARE NOT CAPABLE OF A PRECISE DEFI NITION HOWEVER THE UNDERLYING PRINCIPLE IS TO CHECK THE ARBITRARY EXERCISE OF POW ER BY THE STATE OR ITS FUNCTIONARIES. ACCORDINGLY, THE PRINCIPLE BY ITS VERY NATURE IMPLI ES THE DUTY TO ACT FAIRLY I.E. FAIR PLAY IN ACTION MUST BE EVIDENT AT EVERY STAGE. 5 5.5. IN THE CELEBRATED JUDGEMENT OF THE APEX COURT IN THE CASE OF A.K.KRAIPAK VS- UNION OF INDIA (1969) 2 SCC 262, IT IS OBSERVED TH AT THE AIM OF RULES OF NATURAL JUSTICE IS TO SECURE JUSTICE OR TO PUT IT NEGATIVEL Y TO PREVENT MISCARRIAGE OF JUSTICE. THE SAID RULES ARE MEANS TO AN END AND NOT AN END IN TH EMSELVES AND THOUGH IT IS NOT POSSIBLE TO MAKE AN EXHAUSTIVE CATALOGUE OF SUCH R ULES HOWEVER IT CAN BE READILY SAID THAT THERE ARE TWO BASIC MAXIMS OF NATURAL JUSTICE NAMELY AUDI ALTERAM PARTEM AND NEMO JUDEX IN RE SUA. IN THE PRESENT FACTS OF TH E CASE WE ARE CONCERNED WITH THE MAXIM AUDI ALTERAM PARTEM WHICH AGAIN MAY HAVE MANY FACETS TWO OF THEM BEING (A) NOTICE OF THE CASE TO BE MET; AND (B) OPPORTUNITY TO EXPLAIN. THEIR LORDSHIPS HAVE CAUTIONED THAT THESE RULES CANNOT BE SACRIFICED AT THE ALTAR OF THE ADMINISTRATIVE CONVENIENCE OR CELEBRITY. 5.6. ACCORDINGLY IN THE AFORE MENTIONED FACTS AND C IRCUMSTANCES WHERE IN THE ASSESSEE VENTILATED ITS GRIEVANCE ON ACCOUNT OF OPP ORTUNITY TO REBUT THE EVIDENCE RELIED UPON AS OBSERVED THE AGITATION VENTILATED IN THE SA ID GROUND IN ALL FAIRNESS NECESSARILY HAD TO BE ADDRESSED. IN THE LIGHT OF THE ABOVE FACT S, CIRCUMSTANCES AND SETTLED LEGAL PRINCIPLES FOR THE REASONS GIVEN HEREIN ABOVE AT LE NGTH THE ISSUE IS RESTORED BACK TO THE FILE OF THE AO WITH THE DIRECTION TO DECIDE THE SAM E IN ACCORDANCE WITH LAW BY WAY OF A SPEAKING ORDER AFTER TAKING INTO CONSIDERATION TH E EXPLANATION/REBUTTAL OF THE ASSESEE FOR WHICH A REASONABLE OPPORTUNITY OF BEING HEARD S HALL BE GRANTED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES AS PER THE PRONOUNCEMENT MADE IN THE OPEN COURT IN THE PRE SENCE OF THE PARTIES ON THE DATE OF HEARING ITSELF I.E. 01.11.2010. SD/- , , , , , DIVA SINGH, JUDICIAL MEMBER. DATE : 01.11.2010. R.G.(.P.S.) 6 ./ , *0 1.0$2- COPY OF THE ORDER FORWARDED TO: 1. M/S.ARIHANT PROPERTIES, 12/1, KEDAR NATH MUKHERJEE LANE, HOWRAH- 711101. 2 THE I.T.O., WARD-47(1), KOLKATA. 3. THE CIT, 4. THE CIT(A)-XXX, KOLKATA, 5. DR, KOLKATA BENCHES, KOLKATA +0 */ TRUE COPY, ./'7/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES