M/S. RAINBOW DYERS, KARUR V. ITO, WARD-2, , KARUR

ITA 1866/CHNY/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9354 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 20-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N QUADIR HOSEYN
• Keywords: Tax effect; Set aside
• Section: 250; 251

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.1866/CHNY/2019 & '& / ASSESSMENT YEAR : 2007-08 M/S RAINBOW DYERS, NO.6/136, SELVA NAGAR, VADIVEL NAGAR, ANDANKOIL POST, KARUR. PAN : AADFR 6561 J V. THE INCOME TAX OFFICER, WARD 2, KARUR. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI N. QUADIR HOSEYN, ADVOCATE +,)* - . / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT / - 0# / DATE OF HEARING : 21.11.2019 12' - 0# / DATE OF PRONOUNCEMENT : 29.11.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, TRICHY, DA TED 06.05.2019 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2. WE HEARD SHRI N. QUADIR HOSEYN, THE LD.COUNSEL F OR THE ASSESSEE AND SHRI AR.V. SREENIVASAN, THE LD. DEPART MENTAL REPRESENTATIVE. 2 I.T.A. NO.1866/CHNY/19 3. THE CIT(APPEALS) HAS DISPOSED OF THE APPEAL OF T HE ASSESSEE AS FOLLOWS:- 4. THE ASSESSEE HAS NEITHER ATTENDED, NOR SOUGHT ADJOURNMENT AND THERE HAS BEEN NO COMMUNICATION FRO M APPELLANTS SIDE. KEEPING IN VIEW CBDTS DIRECTION SO AS TO HAVE FASTER DISPOSAL OF CASES INVOLVING TAX AMOUNT B ELOW 10 LAKHS WITH A VIEW TO REDUCTION IN LITIGATION AND HE NCE RELIEF TO TAX PAYER AS WELL TO PROVIDE SMOOTHER AND BETTER TAX ADMINISTRATION, THE APPEAL IS HEREBY DISMISSED. 4. IT IS NOT KNOWN WHETHER THE PROVISIONS OF SECTIO N 251 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') WAS BROUG HT TO THE NOTICE OF THE CIT(APPEALS) AT ANY POINT OF TIME. FOR THE PURPOSE OF APPRECIATING THE ISSUE INVOLVED IN THIS CASE, WE REPRODUCE PROVISION S OF SECTION 251 OF THE ACT WHICH READS AS FOLLOWS:- (1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (AP PEALS) SHALL HAVE THE FOLLOWING POWERS-- (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT ; (AA) IN AN APPEAL AGAINST THE ORDER OF ASSESSMENT I N RESPECT OF WHICH THE PROCEEDING BEFORE THE SETTLEMENT COMMI SSION ABATES UNDER SECTION 245HA, HE MAY, AFTER TAKING INTO CONSIDERATION ALL THE MATERIAL AND OTHER INFORMATIO N PRODUCED BY THE ASSESSEE BEFORE, OR THE RESULTS OF THE INQUIRY HELD OR EVIDENCE RECORDED BY, THE SETTLEMEN T COMMISSION, IN THE COURSE OF THE PROCEEDING BEFORE IT AND SUCH OTHER MATERIAL AS MAY BE BROUGHT ON HIS RECORD , CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT ; 3 I.T.A. NO.1866/CHNY/19 (B) IN AN APPEAL AGAINST AN ORDER IMPOSING A PENALT Y, HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO AS EITHE R TO ENHANCE OR TO REDUCE THE PENALTY; (C) IN ANY OTHER CASE, HE MAY PASS SUCH ORDERS IN T HE APPEAL AS HE THINKS FIT. (2) THE COMMISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REF UND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNI TY OF SHOWING CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION . EXPLANATION IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) MAY CONSIDER AND DECIDE ANY MATTER ARISIN G OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED, NOTWITHSTANDING THAT SUCH MATTER WAS NOT RA ISED BEFORE THE COMMISSIONER (APPEALS) BY THE APPELLANT. 5. THE ABOVE SECTION 251 OF THE ACT SPECIFICALLY EM POWERS THE CIT(APPEALS) NOT ONLY TO CONFIRM THE ORDER OF THE A SSESSING OFFICER BUT ALSO TO ENHANCE THE ASSESSMENT AND PENALTY. BY WAY OF EXPLANATION, THE PARLIAMENT HAS CLARIFIED THAT THE CIT(APPEALS) TO C ONSIDER AND DECIDE THE ISSUE ARISING OUT OF ASSESSMENT ORDER, NOTWITHSTAND ING THAT SUCH MATTER WAS NOT RAISED BEFORE HIM BY WAY OF GROUNDS OF APPE AL. WHEN SUCH A POWER WAS CONFERRED ON THE CIT(APPEALS) BY PARLIAME NT UNDER THE SCHEME OF THE ACT, THE PRESENT APPEAL WAS DISMISSED BY THE CIT(APPEALS) ON THE BASIS OF SO-CALLED CBDT CIRCULA R INSTRUCTING TO DISPOSE OF THE APPEAL INVOLVING TAX AMOUNT BELOW 10 LAKHS WITH A VIEW TO REDUCE THE LITIGATION. THIS TRIBUNAL IN EARLIER OCCASION, HAS COME ACROSS THIS KIND OF ORDER OF THE CIT(APPEALS) DISMI SSING THE APPEAL OF THE 4 I.T.A. NO.1866/CHNY/19 ASSESSEE ON THE BASIS OF SO-CALLED CBDT CIRCULAR WI TH A VIEW TO REDUCE THE LITIGATION. THIS TRIBUNAL IN EARLIER OCCASIONS FOUND THAT INSTRUCTIONS TO GIVE PRIORITY WHERE THE TAX EFFECT INVOLVED IS LESS THAN 10 LAKHS, WAS MISCONSTRUED AND INSTEAD OF DISPOSAL OF APPEAL ON M ERIT, ON PRIORITY BASIS, THE CIT(APPEALS) DISMISSED THE APPEAL. THIS TRIBUNAL IS CONFIDENT THAT CBDT WOULD NOT HAVE DIRECTED THE CIT(APPEALS) TO DISMISS THE APPEAL OF THE INNOCENT TAX PAYER WITH AN INTENTION TO REDUCE THE PENDENCY. 6. THE PROCEEDING BEFORE THE CIT(APPEALS) IS A JUDI CIAL PROCEEDING. THEREFORE, ALL THE ESTABLISHED JUDICIAL NORMS HAVE TO BE FOLLOWED. THE CBDT, BEING THE APEX ADMINISTRATIVE BODY OF DIRECT TAXES, MIGHT HAVE DIRECTED ITS OFFICERS TO DISPOSE THE APPEALS AT AN EARLY STAGE. THIS INSTRUCTION OF CBDT WAS MISUNDERSTOOD BY THE CIT(AP PEALS) AS IF THE APPEALS FILED BY THE INNOCENT TAX PAYERS ARE TO BE DISMISSED WITH A VIEW TO REDUCE THE LITIGATION. DISMISSING THE APPEAL FI LED BY THE INNOCENT TAX PAYERS IN SUCH A WAY WOULD NOT REDUCE THE PENDENCY AS THE CIT(APPEALS) FELT IN THIS CASE. RATHER THIS WOULD INCREASE THE LITIGATION ONE WAY OR OTHER BEFORE ALL HIGHER FORUMS. UNDER T HE INCOME-TAX ACT, APPEAL / REVISIONAL REMEDIES ARE PROVIDED BEFORE VA RIOUS FORUMS AND CONSTITUTIONAL COURT. THE PARLIAMENT WOULD NOT HAV E ENVISAGED A SITUATION THAT THE APPEAL WOULD BE DISMISSED WHEREV ER THE TAX AMOUNT 5 I.T.A. NO.1866/CHNY/19 INVOLVED IS LESS THAN 10 LAKHS. PROVIDING APPEAL REMEDY BEFORE VARIOUS AUTHORITIES/FORUM IS NOT ONLY TO BRING CONFIDENCE I N THE MIND OF THE TAXPAYER / LITIGANT BUT ALSO TO RECTIFY THE POSSIBL E HUMAN ERROR WITH DECISION AND DECISION MAKING PROCESS. THE POWER TO DISPOSE OF THE APPEAL BY CIT(APPEALS), EVEN THOUGH TECHNICALLY FLO WS FROM SECTION 250 AND 251 OF THE ACT, IN FACT, SUCH POWER FLOWS FROM THE CONFIDENCE / TRUST OF THE INNOCENT TAXPAYERS / CITIZENS OF THE COUNTRY , ON THE JUDICIAL ADMINISTRATION OF OUR COUNTRY. ONCE THE TAXPAYER / LITIGANT LOOSES CONFIDENCE ON THE JUDICIAL SYSTEM, THERE WOULD BE L AW AND ORDER PROBLEM. THEREFORE, THE GRIEVANCE REDRESSAL MECHANISM ESTABL ISHED UNDER THE SCHEME OF THE INCOME-TAX ACT HAS TO FUNCTION EFFECT IVELY. IN OTHER WORDS, UNLESS THE APPEAL FILED BY THE ASSESSEE IS DISPOSED OF ON MERIT BY A SPEAKING ORDER, THE MECHANISM PROVIDED UNDER THE SC HEME OF THE INCOME-TAX ACT FOR REDRESSAL OF THE GRIEVANCE WOULD BE MEANINGLESS. IN OUR COUNTRY, CONSTITUTION OF INDIA IS SUPREME AND C IT(A) IS BOUND TO FOLLOW THE RULE OF LAW. 7. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) SHOULD BE PROACTIVE TO DISPOSE THE APPEAL ON MERIT CONSIDERING THE RESPONSIBILITY IMPOSED ON HIM UNDER THE SCHEME OF T HE INCOME-TAX ACT. BY DISMISSING THE APPEAL WITH A VIEW TO REDUCE THE LITIGATION, THE CIT(APPEALS) IN THIS CASE FORCED THE ASSESSEE TO AP PROACH THE TRIBUNAL 6 I.T.A. NO.1866/CHNY/19 BY WAY OF PRESENT APPEAL. THIS COULD HAVE BEEN AVO IDED IN CASE THE APPEAL WAS DISPOSED ON MERIT. THE CIT(APPEALS) HIM SELF MIGHT HAVE EARNED THE CONFIDENCE OF THE TAXPAYER / APPELLANT I N CASE THE APPEAL WAS DISPOSED OF ON MERIT BY A SPEAKING ORDER. DISPOSAL OF APPEAL ON MERIT BY A SPEAKING ORDER WOULD NOT ONLY REDUCE THE UNWANTED LITIGATION IN ALL FORUMS BUT ALSO REPOSE THE CONFIDENCE OF THE CITIZE NS ON THE ADMINISTRATION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT DISPOSAL OF THE APPEAL OF THE TAX PAYER, EVEN IN THE CASE WHERE THE TAX AMOUNT IS LESS THAN .10 LAKHS, WOULD NOT PREJUDICE THE INTEREST OF THE REVENUE IN ANY WAY. SINCE THE PRESENT APPEAL WAS DISMISSED DUE TO MISUNDERSTANDING OF CBDT CIRCULAR, THE CIT(APPEALS) NOT ONLY FACILITATED TO INCREASE THE LITIGATION BUT ALSO BE A CAUSE FOR LOOSING CONFIDENCE OF THE TAXPAYERS. 8. FOR FILING APPEAL BEFORE THIS TRIBUNAL, THE ASSE SSEE HAS REMITTED THE STATUTORY APPEAL FEE OF 8100/- APART FROM INCURRING EXPENDITURE TOWARDS FEES TO ENGAGE THE COUNSEL TO ARGUE THE APP EAL AND MISCELLANEOUS EXPENDITURE FOR PREPARATION OF APPEAL BEFORE THIS TRIBUNAL. WHO IS GOING TO COMPENSATE THIS LOSS TO THE ASSESSE E? THIS LOSS TO THE ASSESSEE COULD HAVE BEEN AVOIDED IF THE CIT(APPEALS ) DISPOSED OF THE APPEAL ON MERIT BY A SPEAKING ORDER. THIS TRIBUNAL IS CONFIDENT THAT THE CIT(APPEALS) WOULD REALISE HIS STATUTORY RESPONSIBI LITY IN FUTURE AND 7 I.T.A. NO.1866/CHNY/19 DISPOSE OF THE APPEAL ON MERIT BY A SPEAKING ORDER WITH AN INTENTION TO REGAIN THE CONFIDENCE / TRUST OF THE TAXPAYER. THE CBDT AND PRINCIPAL CHIEF COMMISSIONERS OF INCOME TAX SHALL ENSURE THAT SUCH THINGS WOULD NOT HAPPEN IN FUTURE. 9. WITH THE ABOVE OBSERVATION, THE ORDER OF THE CIT (APPEALS) IS SET ASIDE AND THE ENTIRE ISSUE RAISED BY THE ASSESSEE I S REMITTED BACK TO HIS FILE. WE MAKE IT VERY CLEAR THAT THE CIT(APPEALS) SHALL DISPOSE OF THE APPEAL ON MERIT IRRESPECTIVE OF THE FACT WHETHER TH E ASSESSEE APPEARED BEFORE HIM OR NOT AFTER RECEIPT OF NOTICE OF HEARIN G. IT IS OPEN TO THE CIT(APPEALS) TO DISPOSE THE APPEAL ON MERIT AFTER R E-APPRECIATING THE MATERIAL AVAILABLE ON RECORD, INCLUDING THE ASSESSM ENT RECORD BY A SPEAKING ORDER. 10. WITH THE ABOVE OBSERVATION, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 29 TH NOVEMBER, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 29 TH NOVEMBER, 2019. 8 I.T.A. NO.1866/CHNY/19 KRI. - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-1, TRICHY 4. PRINCIPAL CIT, TRICHY-1, TRICHY 5. 69 +0 /DR 6. :& ; /GF.