M/s. Shree Sibhbali Exports Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2344/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0606 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 11-01-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIYUSH SARKAR
• Keywords: Opportunity of being heard; Set aside
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G DELHI) BEFORE SHRI A.D. JAIN AND SHRI K.D. RANJAN ITA NO. 1152(DEL)2010 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, SHRI SID HBHALI EXPORTS (P)LTD., WARD 8(3), NEW DELHI. V. VIJAY LAXMI APT. IP EXTN. NEW DELHI. ITA NO. 2344(DEL)2010 ASSESSMENT YEAR: 2006-07 SHRI SIDHBHALI EXPORTS (P)LTD. INCOME TAX O FFICER, VIJAY LAXMI APT.IP EXTN. V. WARD 8(3), NEW DELHI. (APPELLANT) (RESPOND ENT) DEPARTMENT BY: SHRI PIYUSH SARKAR, DR ASSESSEE BY: SHRI SALIL KA POOR, ADVOCATE ORDER PER A.D. JAIN, J.M. THESE ARE CROSS APPEALS FOR ASSESSMENT YEAR 2006-0 7. ITA NO 1152(DEL)2010 HAS BEEN FILED BY THE DEPARTMENT, WHE REAS ITA NO 2344(DEL)2010 IS THE ASSESSEES APPEAL. 2. THE DEPARTMENT,IN ITS APPEAL, HAS RAISED THE FOL LOWING SOLE GROUND:- LD. COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN L AW AND ON HE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELE TING THE ADDITION OF ITA NOS. 1152&2344(DEL)2010 2 ` 60,79,764/- AND ` 17,78,311/- MADE BY THE AO ON ACCOUNT OF SECURED LOANS AND TERM LOANS. 3. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE IMPUGNED APPELLATE ORDER PASSED U/S 144 IS BAD IN LAW AND WR ONG ON FACTS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED LOWER AUTHORITIES HAVE PASSED THE IMPUGNED ORDERS W ITHOUT PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW IN MAKI NG AND CONFIRMING AN ADDITION OF ` 17,00,000/- BEING INCREASE IN SHARE CAPITAL DURING THE YEAR UNDER APPEAL BY TREATING IT UNEXPLAINED C ASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED LOWER AUTHORITIES HAVE ERRED IN LAW IN MAKI NG AND CONFIRMING AN ADDITION OF ` 60,75,000/- BEING INCREASE IN UNSECURED LOAN DURING THE YEAR UNDER APPEAL BY TREATING IT UNEXPL AINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. 5. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSIT ION OF THE CASE, THE LEARNED LOWER AUTHORITIES HAVE ERRED IN MAKING AND CONFIRMING ADHOC DISALLOWANCE OF ` 17,19,242/- BEING 5% OF TOTAL EXPENSES OF ` 3,43,84,836/- INCURRED DURING THE PREVIOUS YEAR REL EVANT TO ASSESSMENT YEAR UNDER APPEAL. 6. WITHOUT PREJUDICE, IN ANY CASE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FOR NOT APPEARING BEFORE THE LOWER AUTHORITIES HENCE, THE ASSESSMENT ORDER AND THE APPELLATE ORDER PASSED ARE LIABLE TO BE SET ASIDE. 4. AS PER GROUNDS 2&6 OF THE ASSESSEES APPEAL, THE AUTHORITIES BELOW HAVE ERRED IN NOT PROVIDING A REASONABLE OPPORTUNIT Y OF HEARING TO THE ASSESSEE ITA NOS. 1152&2344(DEL)2010 3 AND THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT C AUSE FROM APPEARING BEFORE THE LOWER AUTHORITIES. 5. BEFORE US, IN SUPPORT OF GROUNDS 2&6, THE ASSESS EE COMPANY HAS FILED AN AFFIDAVIT OF SHRI R.K. MANGAL, DIRECTOR. THIS AFFIDAVIT IS BEING REPRODUCED AS UNDER, FOR READY REFERENCE:- 1. THAT THERE ARE TWO DIRECTORS IN THE COMPANY, M YSELF AND SMT. SHIKHA MANGAL. 2. THAT THE BUSINESS OPERATION OF THE COMPANY WAS CLOSED IN THE FINANCIAL YEAR 2006-07. 3. THAT THERE WAS NO EMPLOYEE IN THE COMPANY FROM T HE FINANCIAL YEAR 2006-07 ONWARDS. 4. THAT THE OFFICE OF THE COMPANY WAS CLOSED DUE TO SHUT DOWN OF THE BUSINESS OF THE COMPANY. 5. THAT THE DIRECTORS WERE OUT OF INDIA IN THE MOST OF THE TIME IN THE YEAR IN WHICH NOTICES WERE SENT BY THE ITO. 6. THAT WE HAVE NOT RECEIVED ANY NOTICE SENT BY THE ITO, WARD 8(3), NEW DELHI AS THE OFFICE OF THE COMPANY WAS CLOSED. 7. THAT THE CERTIFIED TRUE COPY OF ORDER PASSED BY THE ITO WAS RECEIVED PERSONALLY BY MY COUNSEL ON 6.8.2009. 8. THAT WE HAVE FILED AN APPEAL BEFORE CIT(A) AGAI NST THE ORDER ON 3.9.2009 SPECIFICALLY MENTIONING THE ADDRESS OF OUR COUNSEL FOR THE PURPOSE OF SENDING THE NOTICE OF HEARING. 9. THAT THE LD. CIT(A) HAS NOT SENT THE NOTICE ON THE ADDRESS SPECIFICALLY MENTIONED IN THE FORM 35. ALL THE NOT ICES WERE SENT AT THE OFFICE OF THE COMPANY WHICH WAS CLOSED. ITA NOS. 1152&2344(DEL)2010 4 10. THAT WE HAVE NOT RECEIVED ANY NOTICE AT THE AD DRESS MENTIONED IN FORM 35 AND ON PERSONALLY VISITING THE OFFICE OF CI T(A) BY OUR COUNSEL IT HAS COME TO OUR KNOWLEDGE THAT EX-PARTE ORDER WA S PASSED IN OUR CASE ON 27.01.2010. 11. THAT THE ORDER WAS RECEIVED BY US ON 23.4.2010 AND ACCORDINGLY APPEAL BEFORE HONBLE TRIBUNAL IS BEING FILED. 12. I FURTHER DECLARE THAT THE ABOVE STATEMENT IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE AND BELIEF. 6. FROM THE ABOVE AFFIDAVIT, IT GIVES OUT THE VIEW THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM APPEARING BEFORE THE AUTHORITIES BELOW, SINCE ITS DIRECTORS WERE OUT OF INDIA FOR MOST OF T HE TIME DURING THE YEAR IN WHICH THE NOTICES WERE SENT BY THE ITO. IT HAS BEE N POINTED OUT THAT IN FACT, IN FORM NO. 35 FILED BEFORE THE LD. CIT(A), IN THE LAS T COLUMN THEREOF THE ADDRESS TO WHICH THE NOTICES OUGHT TO HAVE BEEN SENT, WERE GIVEN AS DEVENDER AGGARWAL & CO., CHARTERED ACCOUNTANT, 7, KIRAN VIHA R, DELHI-110092 . IT HAS BEEN CONTENDED THAT THIS IS THE ADDRESS OF THE CHARTERED ACCOUNTANT OF THE ASSESSEE COMPANY, WHEREAS THE NOTICES WERE NOT SENT AT THIS ADDRESS. 7. WE FIND THE GRIEVANCE OF THE ASSESSEE IN THIS RE GARD TO BE JUSTIFIED. THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM APP EARING BEFORE THE AUTHORITIES BELOW. AS SUCH, THE ASSESSEE DID NOT GET ANY PROPER OPPORTUNITY OF HEARING EITHER BEFORE THE AO OR BEFORE THE LD. C IT(A). ITA NOS. 1152&2344(DEL)2010 5 8. ACCORDINGLY, THE MATTER IS REMITTED TO THE FILE OF THE AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW ON AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, FOR STATISTICAL PURPOSES, BOTH TH E APPEALS ARE TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.01.2011. SD/- SD/- (K.D. RANJAN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11.01.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR