Shri Kanaksinh Chandubhai Zala, Banaskantha V. The CIT.,A'bad-IV, Ahmedabad

ITA 1936/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0382 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-10-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 12-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Opportunity of being heard; Principle of natural justice; Assessment record; Set aside
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 7.10.09 DRAFTED ON: 7.10.2009 ITA NO.1936/AHD/2009 ASSESSMENT YEAR : 2005-2006 SHRI KANAKSINH CHANDUBHAI ZALA C/O. OM GAYATRI PETROLEUM SHIHORI, TAL. KANKAREJ, DIST.B.K. VS. THE CIT, AHMEDABAD-IV, AHMEDABAD. PAN/GIR NO. : AAFP 28347 O (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S.N.DIVETIA RESPONDENT BY: SHRI SHELLEY JINDAL SR. D.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF THE LD.CIT-IV, AHMEDABAD, DATED 24.03.2009. 2. IN THIS APPEAL, ASSESSEE HAS TAKEN FOLLOWING GRO UNDS: 1.1 THE ORDER PASSED U/S.263 OF THE ACT ON 24.03.2 009 FOR A.Y.2005-06 BY CIT, ABAD-VI, ABAD SETTING ASIDE THE ASSTT. ORDER PASSED BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND WITHOUT JURISDICTION. 2.1 THE LD. CIT HAS GRIEVOUSLY ERRED IN PASSING ORD ER U/S.263 IN GROSS VIOLATION OF NATURAL JUSTICE BY IGNORING THE REPLY DATED 30.01.2 008 AND WITHOUT ALLOWING SUFFICIENT OPPORTUNITY OF HEARING. (IN VIEW OF SO C ALLED NOTICES DATED 5.02.2009 AND 26.02.2009 NOT PROPERLY SERVED). 3.1 THE LD. CIT WAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN HOLDING THAT THE ASSTT. ORDER PASSED BY LEARNED ASSESSING OFFICER WA S ERRONEOUSLY AND PREJUDICIAL TO THE INTEREST OF REVENUE IN VIEW OF N O PROPER INQUIRY MADE BY AO. ITA NO.1936/AHD/ 2009 SHRI KANAKSINH CHANDULAL ZALA ASST.YEAR -2005-2006 - 2 - 3.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT OUGHT TO HAVE APPRECIATED THAT THE LEARNED ASSESSING OFFICER HAD MADE PROPER INQUIRY RELATING TO THE AGRICULTURE INCOME AND HAD CALLED F OR DETAILS. 4.1 IT IS THEREFORE, PRAYED THAT THE IMPUGNED ORDER PASSED BY CIT MAY PLEASE BE QUASHED. 3. THE FACTS OF THE CASE ARE THAT THE CIT HAS PASSE D THE FOLLOWING ORDER UNDER SECTION 263 OF THE ACT SETTING ASIDE THE ORDER PASS ED BY THE LEARNED ASSESSING OFFICER ON 10.11.2006 UNDER SECTION 143(3) DETERMINING THE INCOME OF THE ASSESSEE AT RS.5,09,276/. 1. IN THIS CASE, THE RETURN OF INCOME WAS FILED ON 29. 10.2005 DECLARING TOTAL INCOME OF RS.NIL AND AGRICULTURAL INCOME OF RS.6,67 ,017/-. THE ASSESSMENT WAS FINALIZED U/S. 143(3) OF THE ACT ON 10.11.2006 DETE RMINING THE TOTAL INCOME AT RS.5,09,276/-. 2. ON GOING THROUGH THE STATEMENTS OF ACCOUNT FILE D AND THE ASSESSMENT ORDER PASSED, IT IS NOTICED THAT THE ASSESSEE IS A PARTNE R IN M/S. OM GAYATRI PETROLEUM AND HE HAS INVESTED AN AMOUNT OF RS.9,75,0007- IN THE F IRM AS PER HIS CAPITAL ACCOUNT. IT IS FURTHER NOTICED THAT THE ONLY INCOME DISCLOSED BY T HE ASSESSEE IN THE RETURN OF INCOME FILED WAS AGRICULTURAL INCOME OF RS.6,67,017/-. IT IS FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE SOURCE OF INTRODUCTION OF CASH IN HIS CAPITAL ACCOUNT, WHICH IS IN EXCESS OF AGRICULTURAL INCOME BY RS.3,0 7,983/- (RS.9,75,000/- - RS.6,67,017/- ). 3. THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFF ICER WITHOUT ANY PROPER INQUIRY, PROBE AND VERIFICATION IS THEREFORE ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. A SHOW CAUSE NOTICE WAS ISSUED BY MY PREDE CESSOR ON 19.12.2007 REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY PROCEEDINGS U/ S263 OF THE INCOME TAX ACT SHOULD NOT BE INITIATED. IN RESPONSE TO THE SHOW CA USE NOTICE, SHRI JAY PRAKASH SHAH C.A ATTENDED ON BEHALF OF THE ASSESSEE AND MADE SUBMISS IONS. VIDE ORDER SHEET ENTRY DATED 30.01.2008, THE ASSESSEE WAS ONCE AGAIN REQUI RED TO EXPLAIN THE SOURCE OF INTRODUCTION OF CAPITAL OF RS.3,07,983/- WHICH WAS OVER AND ABOVE THE AGRICULTURAL INCOME OF RS.6,67,0177- DECLARED BY HIM. NOBODY ATT ENDED ON BEHALF OF THE ASSESSEE IN THE SUBSEQUENT HEARINGS. 4. A REMINDER NOTICE WAS ISSUED ON 05.02.2009, UPO N THE CHANGE OF THE INCUMBENT OFFICER ALLOWING THE ASSESSEE ANOTHER OPP ORTUNITY TO FURNISH HIS EXPLANATION. THE REMINDER NOTICE REMAINED UN COMPLI ED WITH. ANOTHER REMINDER NOTICE WAS ISSUED ON 26.02.2009 REQUIRING THE ASSESSEE TO FURNISH HIS EXPLANATION, IF ANY, ON 06.03.2009. THE ASSESSEE HOWEVER, DID NOT RESPOND T O THE NOTICE SO ISSUED. I HAVE NO ALTERNATIVE BUT TO PRESUME THAT THE ASSESSEE HAS NO FURTHER EXPLANATION TO OFFER. ITA NO.1936/AHD/ 2009 SHRI KANAKSINH CHANDULAL ZALA ASST.YEAR -2005-2006 - 3 - 5. AS IS EVIDENT FROM THE ASSESSMENT RECORDS THE A SSESSING OFFICER HAS FAILED TO EXAMINE THE SOURCE OF INTRODUCTION OF CAPITAL BY TH E ASSESSEE TO HIS CAPITAL ACCOUNT IN THE FIRM WHERE HE IS A PARTNER. I THEREFORE, HAVE R EASON TO BELIEVE THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WITHOUT ANY P ROPER INQUIRY, PROBE AND VERIFICATION IS THEREFORE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 6. I, THEREFORE, SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER WITH A DIRECTION TO MAKE A FRESH ASSESSMENT ORDER IN THE LIGHT OF THE O BSERVATIONS MADE HEREIN, AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUBMITTED THAT GROUND NO.1 OF THE APPEAL IS GENERAL. ARGUING GROUND NO.2. 1 OF THE APPEAL, IT WAS A SUBMISSION THAT LD.CIT ERRED IN PASSING ORDER UNDER SECTION 26 3 IN GROSS VIOLATION OF NATURAL JUSTICE IGNORING THE REPLY DATED 3.01.2008 AND WITHOUT ALLO WING SUFFICIENT OPPORTUNITY OF HEARING AS THE NOTICES DATED 5.02.2009 AND 26.02.20 09 WAS NOT PROPERLY SERVED UPON THE ASSESSEE. THEREFORE, IT WAS SUBMITTED THAT THE MATTER SHOULD BE RESTORED BACK TO THE CIT FOR PASSING ORDER AFRESH AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALLOWING SUFFICIENT OPPORTUNITY OF HEARING TO THE A SSESSEE. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT OBJECT TO THE ABOVE SUBMISSIONS OF THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IT IS OBSERVED FROM THE ORDER OF THE CIT THAT NOTICE OF HEARING WAS ISSUED ON 5.02.2009 AND 20.06.2009 REQUIRING THE ASSESSEE TO FURNISH HIS EXPLANATION, IF ANY, ON 6.0 3.2009. HOWEVER, THERE IS NO MENTION IN THE ORDER OF THE CIT THAT THE NOTICES OF HEARING WERE SERVED UPON THE ASSESSEE. IT IS THE SUBMISSION OF THE LEARNED AUTHORISED REPRESENTA TIVE OF THE ASSESSEE, SINCE NOTICE OF HEARING WAS NOT SERVED UPON THE ASSESSEE, THE AS SESSEE COULD NOT MAKE THE SUBMISSIONS AND THEREFORE, THE MATTER SHOULD BE RES TORED BACK TO THE CIT FOR PASSING ORDER AFRESH AFTER ALLOWING PROPER OPPORTUNITY OF H EARING TO THE ASSESSEE. FURTHER, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT OBJ ECTED TO THE SUBMISSIONS OF THE ITA NO.1936/AHD/ 2009 SHRI KANAKSINH CHANDULAL ZALA ASST.YEAR -2005-2006 - 4 - ASSESSEE THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE CIT FOR PASSING ORDER AFRESH AFTER CONSIDERING THE SUBMISSION OF TH E ASSESSEE. HENCE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE CIT AND R EMAND THE MATTER BACK TO THE FILE TO PASS THE ORDER AFRESH AFTER TAKING INTO CONSIDERATI ON THE SUBMISSIONS OF THE ASSESSEE AND AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARIN G TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON 07/10/2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 7/10/2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT-IV, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD