M/s Vivekananda Medical Mission Ltd, Bhubaneswar V. ACIT, Bhubaneswar

ITA 214/CTK/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0756 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 28-05-2010
• Court: TRIBUNAL
• Department Lawyers: P C MOHANTY
• Assessee Lawyers: N PANDA
• Keywords: Unexplained cash credit; Depreciation; Principle of natural justice; Additional evidence
• Section: 68; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 214/CTK/2010 / ASSESSMENT YEAR 2006 - 07 M/S.VIVEKANANDA MEDICAL MISSION LTD., PLOT NO.A/54 & 55/1, NAYAPALLI, BHUBANESWAR. PA N AACCV 2075 K. - - - VERSUS - ACIT, CIRCLE 2(1), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI N.PANDA, AR / FOR THE RESPONDENT: / SHRI P.C.MOHANTY, DR / ORDER . . . , , SHR I K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2006 - 07 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN THE GROUNDS OF APPEAL. I. FOR THAT THE ORDER OF THE LEARNED C.I.T APPEAL - I, CUTTACK (IN SHORT C.I.T (A) ) DATED 16.02.2010 CONFORMING THE ASSESSMENT ORDER DATED 02.12.2008 PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, BHUBAN ESWAR CIRCLE 2( 1), ( IN SHORT AO ) IS ILLEGAL & BAD IN LAW ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. F OR THAT THE LEARNED CIT(A) ACTED AGAINST THE PROVISIONS OF LAW IN NOT ADMITTING THE EVIDENCES SUBMITTED BEFORE HIM ON THE PLEA THAT THE ADDITIONAL EVIDENCE FILED C ANNOT BE ADMITTED AS PER RULE 46A IGNORING THE FACT THAT SUFFICIENT OPPORTUNITY WAS NOT GIVEN TO THE APPELLANT FOR PRODUCING THE DOCUMENTS BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. 3. FOR THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THE CONTENTION OF THE APPELLANT THAT LEARNED A.O HAS INVOKED THE PROVISIONS OF SECTION - 144 WITHOUT GIVING SUFFICIENT OPPORTUNITY AND WITHOUT SERVING SHOW CAUSE NOTICE ON THE APPELLANT IS A GROSS VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE. I.T.A.NO. 2 14/CTK/2010 2 4. FOR THAT THE LEARNED CIT (A) HAS ACTED AGAINST THE PROVISIONS OF LAW IN CONFIRMING THE ADDITION OF 45,00,000 MADE BY THE A.O U/S 68 ON ACCOUNT OF SHARE CAPITAL INVESTMENT IN THE HANDS OF THE APPELLANT COMPANY IN SPITE OF THE FACT THAT ALL THE EVIDENCES SUBSTANTIATING THE IDENTITY, GENUINENESS OF THE TRANSACTION & CREDITWORTHINESS OF THE INVESTORS WERE SUBMITTED BEFORE THE LEARNED CIT(A) DURING THE APPEAL PROCEEDINGS. 5. FOR THAT WITHOUT PREJUDICE TO THE GROUNDS TAKEN ABOVE LEARNED CIT(A) ERRED IN ADDING THE SHARE CAPITAL INVESTMENT OF 45,00,000/ - IN TH E HANDS O THE APPELLANT COMPANY, HE SHOULD HAVE A DDED THE SAME IN THE HANDS OF THE RESPECTIVE INVESTING SHAREHOLDERS IF HE IS NOT SATISFIED WITH THE IDENTITY, GENUINENESS OF THE TRANSACTION & CREDI TWORTHINESS OF THE INVESTO RS. 6. FOR THAT THE LEARNED CIT (A) HAS ACTED CONTRARY TO LAW IN CONFIRMING THE ADDITION OF 6,62,025 MADE BY THE A.O U/S 68 ON ACCOUNT OF LOAN FROM OF ONE OF THE DIRECTORS AS ON 31 .03.2006 IN THE HANDS OF THE APPELLANT COMPANY IN SPITE OF THE FACT THAT ALL THE EVIDENCES SUBSTANTIATING THE IDENTITY, GENUINENESS OF THE TRANSACTION & CREDITWORTHI NESS OF THE CONCERNED DIRECTOR WAS SUBMITTED BEFORE THE LEARNED CIT(A) DURING THE APPEAL PROCEEDINGS. 7. FOR THAT LEARNED CIT (A) HAS ACTED ILLEGALLY IN CONFIRMING THE ADDITION OF DEPRECIATION MADE BY THE A.O TO THE INCOME OF THE APPELLANT IN SPITE OF TH E FACT THAT THE DETAILS OF ACQUISITION OF ASSETS TOGETHER WITH ALL THE BILLS & VOUCHERS WERE SUBMITTED BEFORE LEARNED CIT (A) DURING THE APPEAL PROCEEDINGS. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLIC ATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL THE UNDISPUTED FACTS RELATING TO THE MATTER ARE THAT THE ASSESSEE IS A COMPANY RUNNING A PRIVATE HOSPITAL IN BHUBANESWAR FILED RETURNED INCOME FOR ASSESSMENT YEAR 2006 - 07 SH OWING TOTAL LOSS OF 21,63,759. THIS RETURN WAS TAKEN UP FOR SCRUTINY AND NOTICE U/S.143(2) WAS ISSUED. IN RESPONSE THERETO SHRI S.N.PATTNAIK, THE AR OF THE ASSESSEE APPEARED. A NOTICE U/S.142(1) WAS ISSUED REQUIRING THE ASSESSEE TO SUBMIT CERTAIN DOCUMENTS. THAT WAS COMPLI ED BY THE ASSESSEE. AGAIN NOTICE U/S.142(1) WAS ISSUED N 7.10.2008 REQUIRING THE ASSESSEE TO SUBMIT CERTAIN MORE DOCUMENTS. THIS WAS NOT COMPLIED BY THE ASSESSEE DUE TO PROLONGED DISPUTES AMONGST THE I.T.A.NO. 2 14/CTK/2010 3 PROMOTING DIRECTORS WITH RESPECT TO MANAGEMENT & DILUTIO N OF RECORDS AND THE ACCOUNT OFFICER WHO WAS LOOKING AFTER FINANCE, ACCOUNTS AND TAXATION MATTER LEFT THE JOB. THE DISPUTES AMONGST THE PROMOTING DIRECTORS HAVE GONE TO SUCH AN EXTENT THAT THE FOLLOWING LEGAL LITIGATIONS WERE INITIATED BY DIFFERENT PARTIE S INDIFFERENT FORUMS AT DIFFERENT STAGES, AS UNDER. 1 ) A COMPANY PETITION HAS BEEN FILED BEFORE LEARNED COMPANY LAW BOARD, KOLKATA BENCH, VIDE COMPANY PETITION NO.3 (KOL) OF 2010, U/S. 397 OF COMPANIES ACT1956 TITLED VIVEKANANDA MEDICAL MISSION LIMITED & ORS VS. SHIBA NANDAN PATI & ORS. 2 ) COPET NO. 3 OF 2010 IN THE HIGH COURT OF ORISSA, CUTTACK, AN WINDING UP PETITION FILED U/S. 433 OF COMPANIES ACT 1956. 3 ) MISC. CASE NO. 07/2010 ARISING OUT OF COPET NO. 3 OF 2010. 4 ) MISC. CASE NO.11/2010 ARISING OUT OF COPET NO. 3 OF 2010. 5 ) MISC. CASE NO. 14/2010 ARISING OUT OF COPET NO. 3 OF 2010. 6 ) COPET NO. 9 OF 2010 IN THE HIGH COURT OR ORISSA, CUTTACK. 7 ) FIR FILED BY SECOND PARTY BEFORE THE CANTONMENT POLICE STATION WHICH WAS REGISTERED AS G.R.CASE NO.13 OF 2010 ALLEGING FALSIFICAT ION OF CERTAIN DOCUMENTS BY ONE OF THE DIRECTORS OF THE COMPANY. IN PURSUANCE OF THESE DISPUTES, A MOU WAS SIGNED SPELLING OUT THE TERMS AND CONDITIONS OF SETTLEMENT AND ACCORDINGLY A COMPROMISE PETITION WAS FILED BEFORE HONBLE HIGH COURT OF ORISSA. BASI NG ON THE SAID COMPROMISE PETITION, HONBLE ORISSA HIGH COURT HAS PASSED AN ORDER DT.30.7.2010 ADMITTING THE COMPROMISE PROPOSAL AND ACCORDINGLY DISPOSED OF ALL OTHER MISC. CASES. BASING ON THE ORDER OF HONBLE ORISSA HIGH COURT, LEARNED COMPANY LAW BOARD, KOLKATA BENCH VIDE ITS ORDER DT.6.9.2010 RECORDED THE COMPROMISE BETWEEN THE PARTIES AND ACCORDINGLY DISPOSED OF THE CASE. THE HOSPITAL IS RUN BY THE ASSESSEE BY A GROUP OF DOCTORS. FOR ACCOUNTS AND TAX MATTERS THEY COMPLETELY RELIED ON THEIR ACCOUNTS OFF ICER WHO LEFT THE JOB DURING THIS INTERVENING PERIOD AS STATED SUPRA. THE SAID FACT WAS INTIMATED TO THE ASSESSING OFFICER VIDE LETTER NO. VH/132/08.THAT IS THE REASON AS TO WHY THE ASSESSEE FAILED TO COMPLY THE NOTICE ISSUED U/S.142(1) IN TIME. BUT THE LE ARNED ASSESSING OFFICER WITHOUT APPRECIATING THE FACTS AND I.T.A.NO. 2 14/CTK/2010 4 CIRCUMSTANCES OF THE CASE STATED SUPRA MADE THE ASSESSMENT INVOKING THE PROVISIONS OF SECTION 144 OF THE I.T.ACT,1961 BY TREATING 45 LAKHS THAT WAS RECEIVED AS SHARE CAPITAL AS UNEXPLAINED CREDIT, TREATING 6,62,025 RECEIVED AS UNSECURED LOAN AS UNACCOUNTED CREDIT. THE ASSESSING OFFICER FURTHER MADE ADDITION OF 4,40,053 DISALLOWING THE CLAIM OF DEPRECIATION. HAVING BEEN AGGR IEVED W ITH THIS ORDER OF THE AO , THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCOME - TAX (APPEALS) .BEFORE THE LEARNED CIT(A) THERE WAS NO COMPLIANCE BY THE ASSESSEE. THEREFORE, THE LEARNED CIT(A) HAS CONSIDERED THE MATERIAL MADE AVAILABLE IN THE ASSE SSMENT RECORD AND CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE HAS PASSED THE IMPUGNED ORDER BY DISMISSING THE APPEAL OF THE ASSESSEE. HENCE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED THAT BOTH THE DEPARTMENTAL AUTHORITIES HAVE NOT FOLLOWED THE PRINCIPLES OF NATURAL JUSTICE AS ARE REQUIRED TO BE FOLLOWED WHILE ADJUDICATING THE ASSESSMENT AND APPEAL OF THE ASSESSEE. THE REASON FOR NON - COMPLIANCE BY THE ASSESSEE IS WELL EXPLAINED AS STATED SUPRA AND HENCE, THERE IS NO INTENTIONAL NON - COMPLIANCE OF THE DIRECTIONS OF THE LOWER AUTHORITIES. UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER OUGHT TO HAVE GIVEN MUCH MORE TIME TO THE ASSESSEE TO COMPLY WI TH THE NOTICES SO ALSO THE LEARNED CIT(A) OUGHT TO HAVE GIVEN FURTHER TIME TO THE ASSESSEE TO PARTICIPATE IN THE APPEAL PROCEEDINGS BEFORE HIM. CONTRARY TO THIS, BOTH THE LOWER AUTHORITIES HAVE TAKEN HASTY VIEW IN THE MATTER, WHICH IS CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE WHICH THEY ARE EXPECTED TO FOLLOW AS AUTHORITIES UNDER THE ACT. THEREFORE, HE PRAYED FOR SETTING ASIDE THE ORDER OF THE LEARNED CIT(A) BY ALLOWING THE APPE AL OF THE ASSESSEE AS THEY ARE P ASED WITHOUT COMPLIANCE OF PRINCIPLES OF NATUR AL JUSTICE. I.T.A.NO. 2 14/CTK/2010 5 6. CONTRARY TO THIS, THE LEARNED DR HAS CONTENDED VEHEMENTLY ASSAILING THE CONTENTION OF THE ASSESSEE AND SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES STATING THAT AS CAN BE SEEN FROM THE IMPUGNED ORDERS OF THE DEPARTMENTAL AUTHORITIES IT IS CLEAR THAT THE ASSESSEE HAS NOT RESPONDED TO THE OFFICERS INSPITE OF RECEIVING NOTICES. THEREFORE, THE AUTHORITIES WERE LEFT WITH NO OPTION BUT TO PASS THE IMPUGNED ORDERS AS PER THE AUTHORITIES CONFERRED BY THE ACT ON THEM. THEREFO RE, THE ORDERS PASSED BY THE LOWER AUTHORITIES ARE VERY MUCH RIGHT AND THEY ARE NOT INFIRM ANY WAY REQUIRING ANY INTERFERENCE. ACCORDINGLY HE PRAYED FOR UPHOLDING THE SAID ORDERS OF THE LOWER AUTHORITIES BY DISMISSING THE APPEAL OF THE ASSESSEE. 7. ON CARE FUL ANALYSIS OF THE FACTS OF THE CASE IN THE LIGHT OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, IT IS FOUND THAT UNDISPUTEDLY THE LITIGATION PLEADED BY THE ASSESSEE WERE THERE DURING THE PERIOD WHEN THE IMPU GNED ORDERS ARE PASSED. THEREFORE, IT CAN NEVER BE SAID THAT THE ASSESSEE HAS INTENTIONAL LY NOT RESPONDED TO THE NOTICES OF THE AUTHORITIES. THIS IS EVIDENT FROM THE FA CT THAT THE ASSESSEE HAS MADE WRITTEN SUBMISSIONS BEFORE THE LEARNED CIT(A) AS WAS FOUND EXTRACTED IN THE IMPUGNED ORDER. THEREFORE, THERE IS NO REASONABLE AND SUFFICIENT OPPORTUNITY GIVEN TO THE ASSESSEE TO VENTILATE ITS CASE FULLY AND PROPERLY BEFORE THE AUTHORITIES, WHICH IS NOTHING BUT VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, AS PLEADED BY THE ASSESSEE. UNDER T HESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THIS IS A FIT CASE TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ASSESSMENT STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE AND PASS NECESSARY CONSEQUENTIAL ORDER AS PER LAW. HOWEVER, THE ASSESSEE IS ALSO HEREBY DIRECTED TO COOPERATE WITH THE ASSESSING OFFICER IN PRODUCING ALL THE MATERIAL THAT WILL BE REQUIRED BY THE I.T.A.NO. 2 14/CTK/2010 6 ASSESSING OFFICER AND ALSO FOR EARLY DISPOSAL OF THE MATTER BY THE ASSESSING OFFICER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 14 TH MARCH, 2011 S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER. ( ) DATE: 14 TH MARCH, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.VIVEKANANDA MEDICAL MISSION LTD., PLOT NO.A/54 & 55/1, NAYAPALLI, BHUBANESWAR. 2 / THE RESPONDENT: ACIT, CIRCLE 2(1), BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.