M/s K.M Shakar Karkhana Pvt. Ltd., Kanpur V. Dy. Commissioner of Income Tax, Kanpur

ITA 22/LKW/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4686 (ITAT-LUCKNOW)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 21-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P K KAPOOR
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 22 TO 24/LKW/2016 ASSESSMENT YEAR: 2009 - 10 TO 2011 - 12 M/S K. M. SHAKAR KARKHANA PVT. LTD. 11, MOTI BHAWAN 52/1, COLLECTORGANJ KANPUR V. DY. CIT RANGE 5 KANPUR T AN /PAN : AADCK1730D (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. P. K. KAPOOR, C.A. RESPONDENT BY: SHRI. AMIT NIGAM, D.R. DATE OF HEARING: 18 02 201 6 DATE OF PRONOUNCEMENT: 02 03 201 6 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: - 1. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN DECIDING THE APPEAL THROUGH AN E X - PARTE ORDER AND DISMISSING VARIOUS GROUNDS AS HAD BEEN TAKEN IN THE 'GROUNDS OF APPEAL' PREFERRED BEFORE HIM (AGAINST THE ASSESSMENT ORDER DATED 16.12.2011). 2. BECAUSE ON A DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY THAT A) ON THE LAST DATE OF HEARING [BEFORE THE CIT(APPEAL)] I.E. 17.11.2015, THERE WAS A PRIORITY/HIGH DEMAND APPEAL FIXED BEFORE THE HON'BLE ITAT, LUCKNOW BENCH, LUCKNOW (ITA NO.642 : - 2 - : & 641/LKW/2013) & C.O. NO.45/LKW/2013 IN THE CASE OF K.M. SUGAR MILLS LTD.; AND B) AN APPLICATION FOR ADJOURNMENT HAD DULY BEEN PRESENTED ON THE DATE OF HEARING I.E. 17.11.2015 ITSELF, READING AS UNDER: - 'THE HEARING OF AFORESAID APPEAL WAS ADJOURNED FOR TODAY OWING TO THE FACT THAT COUNSEL SLIRI SANTOSH GUPTA I.T.P. IS OUT OF STATION DUE TO SOME 2ND APPEALS OF ANOTHER CASE FIXED BEFORE THE HON'BLE I.T.A.T. 'A' BENCH, LUCKNOW. IT IS, THEREFORE, REQUESTED KINDLY TO ADJOURN THE HEARING FOR NEXT MONTH.' THE LEGITIMATE REQUEST FOR ADJOURNMENT DESERVED TO BE GRANTED AND EX - PARTE DECISION OF APPEAL WAS NOT JUSTIFIED EITHER ON FACTS OR IN LAW. WITHOUT PREJUDICE TO THE AFORESAID 3. BECAUSE THE 'CIT(A)' HAS ERRED IN LAW AND ON FACTS IN REJECTING VARIOUS GROUNDS PLACED BEFORE HIM (AGAINST THE REGULAR ASSESSMENT ORDER DATED 16.12.2011) BY OBSERVIN G AND HOLDING AS UNDER: - '8. THE CONTENTS OF THE AOS ORDER HAVE BEEN PERUSED AND I HAVE NO REASONS TO INTERFERE WITH THE STAND TAKEN BY THE AO. THE AO HAS COMPLETED THE ASSESSMENT AT RS.2,05,88,260/ - . DURING THE APPEAL PROCEEDINGS ALSO, THE DETAILS AND EVI DENCES IN SUPPORT OF THE CLAIMS MADE I I THE GROUNDS OF APPEAL ARE NOT FILED. THEREFORE, THE ASSESSMENT ORDER IS NOT INTERFERED WITH.' 4. BECAUSE ON THE ISSUES INVOLVED IN APPEAL I.E. (A) BECAUSE IN COMPLIANCE WITH THE REQUISITION MADE BY DY. CIT BY ISSUE OF NOTICES UNDER SECTION 142(1) READ WITH SECTION 143(2), THE 'APPELLANT' HAD SUBMITTED ALL SUCH DETAILS, : - 3 - : DOCUMENTS AND EVIDENCES AS WERE IN ITS POSSESSION AND THE 'DY. CIT' COULD NOT HAVE PROCEEDED TO MAKE ASSESSMENT BY INVOKING THE PROVISIONS OF S ECTION 144 ON THE GROUND THAT BOOKS OF ACCOUNT OF SUGAR MANUFACTURING UNITS OF A) JARANDESHWAR SAHAKARI SHAKHAR KARKHANA (P) LTD (SATARA FACTORY); AND B) YASHWANT SAHAKARI SHAKHAR KARKHANA (P) LTD. (NAGEWADA FACTORY) HAD NOT BEEN PRODUCED (TH E REASON BEING THAT THE 'APPELLANT' WAS NOT IN POSSESSION OF THE SAME). (B) BECAUSE IN CASE, PRODUCTION OF ACCOUNT OF THE TWO UNITS WAS CONSIDERED ECESSARY /, THE DY. CIT HIMSELF WAS UNDER A STATUTORY OBLIGATION TO FACILITATE THE PRODUCTION OF THE SAME BY EXERCISING HIS POWERS UNDER SECTION 131(1) AND WITHOUT DOING SO HE COULD NOT HAVE PROCEEDED LAWFULLY TO MAKE ASSESSMENT IN UTTER DISREGARD OF AUDITED STATEMENT OF ACCOUNT ETC. AS HAVE BEEN PLACED ON RECORD AND MAKE ASSESSMENT UNDER SECTION 144 OF THE AC T. (C) BECAUSE THE 'APPELLANT'S' VERSION OF INCOME AS DISCLOSED IN THE 'RETURN', STOOD FULLY VERIFIED BY THE AUDITED STATEMENT OF ACCOUNT WHICH WAS LIABLE TO BE TREATED AS 'MATERIAL' FOR THE PURPOSES OF ASSESSMENT, PARTICULARLY IN THE ABSENCE OF ANY OTHER MATERIAL AND INFORMATION COLLECTED BY THE 'DY.CIT' (WHICH COULD GO TO CONTRADICT THE 'APPELLANT'S' VERSION) AND ESTIMATE OF INCOME (BY APPLYING DIFFERENT NET PROFIT RATE FOR DIFFERENT SEGMENTS) IS NOT ONLY (D) BECAUSE ON A DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE PARTICULARLY THAT : - 4 - : A) SEPARATE SET OF ACCOUNT OF THE ABOVE REFERRED TWO UNITS (WHICH WERE RUN BY THE 'APPELLANT' UNDER LEASE AGREEMENT) HAD UNLAWFULLY BEEN WITHHELD BY THE MANAGEMENT/STAFF OF THE SAID TWO UNITS; B) THE RESULTS OF THE SAID UNITS HAD, UNDISPUTEDLY BEEN INCORPORATED IN THE STATEMENT OF ACCOUNT OF THE APPELLANT COMPANY, WHICH WERE SUBJECTED TO STATUTORY AUDIT UNDER SECTION 227 OF THE COMPANIES ACT 1956, AS ALSO TAX AUDIT UNDER SECTION 44AB OF THE ACT.; C) IN THE ABS ENCE OF ANY OTHER MATERIAL AVAILABLE ON RECORD WHICH COULD GO TO CONTRADICT THE OVERALL VERSION OF THE 'APPELLANT' AS CONTAINED IN THE CONSOLIDATED STATEMENT OF ACCOUNT REFERRED TO ABOVE, THE AUDITED STATEMENT OF ACCOUNT THEMSELVES CONSTITUTED EVIDENCE OF THE CORRECTNESS OF TRADING RESULT DISCLOSED BY THE 'APPELLANT'; AND D) SUCH AUDITED STATEMENT OF ACCOUNT, READ WITH STATUTORY REPORT AND TAX AUDIT REPORT HAD DULY BEEN MADE AVAILABLE TO THE 'DY.CIT'. 'DY. CIT' CARRIED AN OBLIGATION TO COMPLETE THE ASSESSME NT, STRICTLY ON THE BASIS OF SUCH DOCUMENTS, INSTEAD OF PROCEEDING TO INVOKE THE PROVISIONS OF SECTION 144 AND TO MAKE A 'BEST JUDGMENT ASSESSMENT', AND THAT TOO IN AN ARBITRARY MANNER. A DETAILED STATEMENT OF FACTS (WHICH ACCOMPANIED THE MEMO OF APPEAL IT SELF) HAD BEEN PLACED BEFORE THE CIT(A) AND THE SAME WAS LIABLE TO BE CONSIDERED BY HIM EVEN IN EX - PARTE PROCEEDINGS. 5. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. : - 5 - : 2 . DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ORDER OF THE LD. CIT(A) WITH THE SUBMISSION THAT THE LD. CIT(A) HAS DISPOSED OF THE APPEAL EX - PARTE WITHOUT DEALING WITH THE ISSUES ON MERIT WHEREAS AS PER LAW THE LD. CIT(A) OUGHT TO HAVE ADJUD ICATED THE APPEAL ON MERIT EVEN IF THE ASSESSEE DOES NOT APPEAR. THEREFORE, IN THE INTEREST OF JUSTICE, THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THE MATTER MAY BE RESTORED TO HIS FILE FOR ADJUDICATION OF THE APPEAL ON MERIT. 3 . THE LD. D.R. HAS ALSO AGREED TO THIS SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE, AS THE LD. CIT(A) HAS NOT DISPOSED OF THE APPEAL ON MERIT. 4 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE LD. CIT(A) HAS DISPOSED OF THE APPEAL WITHOUT DEALING WITH THE ISSUES ON MERIT. W E ARE OF THE VIEW THAT SINCE THE LD. CIT(A) HAS NOT DISPOSED OF THE APPEAL ON MERIT, HIS ORDER DESERVES TO BE SET ASIDE AND WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO RE - ADJUDICATE THE APPEAL AFRESH AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT O N THE DATE MENT I ONED ON THE CAPTION ED PAGE. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 ND JJ: 1802 MARCH , 2016 : - 6 - : COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR