ITO, New Delhi V. M/s Woodhouse Developers Ltd., New Delhi

ITA 1982/DEL/2011

• Counselvise Citation: 198220114 RSA 2011
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 17-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 21-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA
• Keywords: Opportunity of being heard; Additional evidence; Non passing of speaking order
• Section: 40A(3); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SMT DIVA SINGH JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1982/DEL/2011 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, M/S WOODHOUSE DEVELOPERS WARD-18 (3), LTD., 6-COMMUNITY CENTRE, NEW DELHI. V. SAKET, NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACW AAACW AAACW AAACW- -- -6325 6325 6325 6325- -- -M MM M APPELLANT BY : SHRI RAMESH CHANDRA, CIT-DR RESPONDENT BY : SHRI RAJESH MALHOTRA, C.A. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 15.2.2011. THE GROUNDS RAISED BY THE R EVENUE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD CIT(A) HAS ERRED BY DELETING ADDITIONS OF ` .5 LAKHS MADE U/S 68 ON ACCOUNT OF UNEXPLAINED INCREASE IN SHARE CAPITAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD CIT(A) HAS ERRED BY DELETING ADDITIONS OF ` .19.63 CRORES OUT OF ADDITION OF ` .19.76 CRORES MADE U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED RECEIPTS OF UNSECURED LOANS. ITA NO../DEL/ 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED BY NOT DECIDING THE CASE ON MERITS A ND BY DELETING THE ADDITIONS WITH THE SIMPLE OBSERVATION THA T HE HAD GONE THROUGH THE ASSESSMENT ORDER, REMAND REPORT AND ASSESSEES REPLIES AND IN HIS CONSIDERED VIEW, OUT OF THE T OTAL ADDITIONS ONLY AN ADDITION OF ` .13,25,000/- CAN BE SUSTAINED U/S 40A(3) OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCE IN CONTRAVENTION TO THE PROVISION OF RULE 46A SINCE THE EXPLANATION OF THE ASSESSEE THAT NOTICES SERVED BY THE ASSESSING OFFICER COULD NOT BE RESPONDED TO DUE TO LACK OF COMMUNICAT ION BETWEEN THE JUNIOR ASSISTANT AND MANAGEMENT IS NOT ACCE PTABLE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD CIT(A) HAS ERRED BY NOT CALLING FOR THE COMMENTS OF T HE ASSESSING OFFICER ON THE ADDITIONAL SUBMISSIONS OF THE ASSESSEE MADE IN RESPONSE TO THE REMAND REPORT SINCE THESE CONSTITUTED IM PORTANT SUBMISSIONS WHICH WERE NOT MADE EITHER DURING THE ASSESSME NT PROCEEDINGS OR DURING THE INITIAL STAGES OF ASSESSMENT PROCEEDINGS WHERE REMAND REPORT WAS CALLED FOR. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSEE S SUBMISSIONS DO NOT SATISFACTORILY EXP[LAIN THE OBSERVATION S MADE IN THE REMAND REPORT DATED 13.10.2009 AND THE GENUI NENESS OF THE SOURCE OF THE INCREASE IN SHARE CAPITAL AND UNSECUR ED LOAN RECEIPTS ARE NOT PROVED. ITA NO../DEL/ 3 2. FROM THE CRUX OF GROUNDS OF APPEALS THE MAIN GRIE VANCE OF REVENUE IS ACCEPTANCE OF ADDITIONAL EVIDENCE IN CONT RAVENTION OF PROVISIONS OF RULE 46A AND DELETION OF AN AMOUNT OF ` .19.63 CRORES WHICH WERE MADE BY THE ASSESSEE ON ACCOUNT OF UNEXPLAIN ED RECEIPTS U/S 68 OF THE INCOME TAX ACT, 1961 . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A GROUP COMPANY OF UNITECH LIMITED. THE ASSESSMENT HAS BEEN COM PLETED VIDE ORDER DATED 30.12.2008 U/S 144 OF THE IT ACT. THE ASSE SSING OFFICER IN ITS ONE AND HALF PAGE ASSESSMENT ORDER HAS MADE THE ADDIT ION OF ` .5 LAKHS ON ACCOUNT OF INCREASE IN SHARE CAPITAL AND ` .19,76,98,311/- ON ACCOUNT OF ACCEPTANCE OF UNSECURED LOANS. 4. AGGRIEVED WITH THE ASSESSMENT ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND SUBMITTED ADDITIONAL EVIDENCE I N RESPECT OF UNSECURED LOANS AND SHARE CAPITAL. IN THE REMAND REPO RT SUBMITTED BY THE ASSESSING OFFICER HE OBJECTED TO THE ACCEPTANCE OF ADDITIONAL EVIDENCE AND ALSO PRESENTED HIS CASE ON MERIT. HOWEVER , THE ASSESSING OFFICER ON THE BASIS OF SUBMISSIONS OF ASSESSEE DELETE D THE ADDITION MADE BY THE ASSESSING OFFICER. HOWEVER, HE MAD E A DISALLOWANCE OF ` .13,25,000/- ON ACCOUNT OF CASH PAYMENT TO FARMERS FOR PURCHASE OF LAND U/S 40A(3) OF THE ACT AS IN HIS O PINION THE PAYMENTS WERE ON ACCOUNT OF LAND WHICH WAS PART OF STO CK IN TRADE OF ASSESSEE. 5. AGGRIEVED, THE REVENUE HAS FILED APPEAL BEFORE TH IS TRIBUNAL. 6. AT THE OUTSET, THE LD DR STATED THAT THE ASSESSEE HAD NO RESPECT FOR LAW AND DESPITE VARIOUS REMINDERS HAD NOT CARED TO APPEAR BEFORE ITA NO../DEL/ 4 ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER ON THE BASIS OF MATERIAL AVAILABLE ON RECORD HAD MADE THE ADDITION U/S 144 OF THE ACT. THE LD DR BROUGHT BEFORE OUR NOTICE THAT LD CIT(A) HAD NOT GONE INTO THE FACT OF THE CASE AND HAS MOSTLY QUOTED FROM ASSESSEES REPLY AND DELETED THE ADDITION. IN THIS RESPECT HE TOOK US TO PAGE 8 AND INVITED OUR ATTENTION TO PARA 3.3. ONWARDS UP TO PAGE 11. TH EN AGAIN HE TOOK US TO PAGE 11 TO PAGE 16 WHICH AS PER LD DR WAS QUOTE D FROM ASSESSEES REPLY. HE FURTHER ARGUED THAT AT PAGE 16 VID E PARA 3.3. THE LD CIT(A) IN 6 TH LINE OF PARA HAS GIVEN ITS FINDING AND HAD DELETED THE ADDITION WITHOUT GIVING ANY FINDING AND HAD DELETED THE ADDITION BY OBSERVING THAT HE HAS GONE THROUGH THE REMAND REPORT AND ASSESSEES REPLY. THEREFORE, IN VIEW OF THE ABOVE, HE ARGUED THAT LD CIT(A) HAS NOT GIVEN ANY REASON FOR GIVING RELIEF. RELIANCE WA S PLACED ON THE JUDGMENTS IN THE CASE OF MANGALORE GANESH BIDI WORKS 27 3 ITR 57 AND SJ & SP FAMILY TRUST V. DCIT 277 ITR 557 WHEREIN IT WAS HELD THAT APPELLATE ORDER MUST BE ONE WHICH REFLECTS NOT ONLY I TS CONCLUSION BUT THE DECISION MAKING PROCESS ALSO. IN VIEW OF THE ABOVE, THE LD DR PLEADED THAT CASE SHOULD GO BACK TO THE ASSESSING OFFICER FOR RE- ADJUDICATION. 7. THE LD AR, ON THE OTHER HAND, ARGUED THAT THE ASSE SSEE IS A CORPORATE BODY AND IT DEPENDS FOR ITS WORKING UPON A NUMBER OF EMPLOYEES AND PROFESSIONALS AND DUE TO CERTAIN MISCOMMUN ICATION AMONGST ITS EMPLOYEES THE COMPANY COULD NOT APPEAR BE FORE ASSESSING OFFICER AND AS AND WHEN THE ASSESSMENT ORDER WAS R ECEIVED IT FILED APPEAL BEFORE LD CIT(A). THEREFORE, IT CAN NOT BE SAID THAT ASSESSEE HAD NO RESPECT FOR LAW. HE FURTHER ARGUED THAT ON THE BASIS OF SUBMISSIONS BY THE ASSESSEE, THE LD CIT(A) HAD EXERCISED HIS POWERS AVAILABLE UNDER THE ACT AND AFTER OBTAINING REMAND REPORT FROM ASSESSING OFFICER HAD ADMITTED ADDITIONAL EVIDENCE AND HAD GIVEN ITA NO../DEL/ 5 RELIEF TO THE COMPANY AFTER GOING THROUGH ALL DETAI LS AND DOCUMENTS. THEREFORE, IN HIS OPINION, THE LD CIT(A) HAD RIGHTLY DELETED THE DISALLOWANCE. RELIANCE WAS PLACED ON THE FOLLOWING JU DGMENTS:- 1. ANMUL COLOURS INDIA (P) LTD. V. ITO 31 SOT 18 2. CIT V. K. RAVINDERNATHAN NAIR 131 TAXMAN 743 3. CIT V. JINDAL SAW PIPES LTD. 328 ITR 338. 8. IN HIS REJOINDER, THE LD DR SUBMITTED THAT DURING REMAND PROCEEDINGS THE ASSESSING OFFICERS INVESTIGATION BECOMES LIMITED TO THE DOCUMENTS SENT BY LD CIT(A) FOR COMMENTS. THEREFOR E, THE DECISION ARRIVED AT BY THE LD CIT(A) ON THE BASIS OF REMAND RE PORT IS NEVER JUSTIFIED AND ASSESSING OFFICER SHOULD GET OPPORTUNITY TO INVESTIGATE AGAIN AND RE-ADJUDICATE AGAIN ON THE ASSESSEES CASE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES A ND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE F IND THAT ASSESSING OFFICER HAS LITERALLY PASSED AN ORDER IN ONE PAGE WHIC H IS A NON SPEAKING ORDER AND ASSESSMENT HAS BEEN COMPLETED U/S 144 O F THE IT ACT. SIMILARLY, THE LD CIT(A) HAS NOT GIVEN ANY FIND ING AS TO WHY HE IS DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. HE HAS JUST REPRODUCED THE SUBMISSIONS OF ASSESSEE AND WITHOUT COMMENT ING ON THE ADVERSE REMAND REPORT OF ASSESSING OFFICER HAS DELETE D THE ADDITION WITHOUT RECORDING ANY REASONS. RECORDING OF REASON IS A PART OF FAIR PROCEDURE AS REASONS ARE HARBINGER BETWEEN THE MIND OF THE MAKERS OF THE DECISION IN THE CONTROVERSY AND THE DECI SION OR CONCLUSION ARRIVED AT. THEY SUBSTITUTE SUBJECTIVITY WI TH OBJECTIVITY AND FAILURE TO GIVE REASON AMOUNTS TO DENIAL OF JUSTICE AS HAS BEEN HELD BY THE HON'BLE APEX COURT IN THE CASE OF MANGALORE GANE SH BIDI WORKS V. CIT 273 ITR 57. REASONS HOWEVER BRIEF ARE SOUL AND BA CKBONE OF THE ITA NO../DEL/ 6 ORDER. A PERUSAL OF SECTION 250(6) OF THE ACT SHOWS TH AT THE STATUTE MANDATORILY REQUIRED THE CIT(A) WHILE DECIDING THE APPEAL TO SET OUT THE ISSUE FOR DETERMINATION AND THE DECISION THEREOF A LONG WITH REASONS FOR ARRIVING AT THE DECISION. THE SAID EXERCISE WHICH IS NECESSARY IS MISSING IN THE IMPUGNED ORDER. IN THE LIGHT OF THE A BOVE PECULIAR FACTS AND CIRCUMSTANCES AND POSITION OF LAW, WE ARE OF THE V IEW THAT THE ACTION OF LD CIT(A) WAS NOT IN CONFORMITY WITH THE R EQUIREMENT OF THE INCOME TAX ACT. AT THE SAME TIME, THE ASSESSING OFFICER HAS ARRIVED AT THE ASSESSMENT U/S 144 I.E. WITHOUT LISTENING TO THE ASSESSEE S SUBMISSION. THEREFORE, IN THE INTEREST OF JUSTICE, WE AR E OF THE OPINION THAT THE CASE SHOULD BE RE-ADJUDICATED BY THE ASSESSING O FFICER AFRESH. NEEDLESS TO SAY THAT ASSESSEE WILL BE PROVIDED A REASONABLE OPPORTUNITY OF BEING HEARD. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 26TH DAY OF OCTOBER, 2012. SD/- SD/- (DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 26.10.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER ITA NO../DEL/ 7 (ITAT, NEW DELHI). DATE OF HEARING 17.10.2012 DATE OF DICTATION 19.10.2012 DATE OF TYPING 19.10.2012 DATE OF ORDER SIGNED BY 26.10.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 30.10.2012 & SENT TO THE BENCH CONCERNED.