The Nainital Bank Ltd., Nainital V. CIT, Haldwani

ITA 2351/DEL/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97565 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Assessee Lawyers: K R RASTOGI
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income; Reasonable cause
• Section: 143(3); 14A; 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA A. PILLAI , JM ITA NO S . 2351 & 2352 /DEL /20 1 5 : ASSTT. YEAR S : 2010 - 11 & 2011 - 12 THE NAIN ITAL BANK LTD. 7, OAKS, MALLITAL, NAINITAL VS THE COMMISSIONER OF INCOME TAX, HALDWANI (APPELLANT) (RESPONDENT) PAN NO. A AA CT5714D ASSESSEE BY : SH . K. R. RASTOGI, CA REVENUE BY : MS. SULEKHA VERMA , CIT DR DATE OF HEARING : 19.10 .2015 DATE O F PRONOUNCEMENT : 19 . 10 .2015 ORDER PER N.K . SAINI , A.M. THESE APPEAL S BY THE A SSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S EACH DATED 10.03.2015 FOR THE ASSESSMENT YEARS 2010 - 11 & 2011 - 12 OF THE L D. CIT , HALDWANI . 2. CO MMON ISSUES ARE INVOLVED IN THESE APPEALS WHICH WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3 . FIRST WE WILL DEAL WITH THE APPEAL IN ITA NO. 2351/DEL/2015 FOR THE ASSESSMENT YEA R 2010 - 11 . FOLLOWING GROUNDS HA VE BEEN RAISED IN THIS APPEAL: ITA NO S . 2351 & 2352 /DE L/20 1 5 THE NAINITAL BANK LTD. 2 1. THE LD. CIT, HALDWANI ERRED ON FACTS AND IN LAW IN REJECTING THE ADJOURNMENT APPLICATION DUE TO ILLNESS OF THE ADVOCATE AND THEREBY PASSING AN EX - PARTE ORDER U/S 263 OF I.T. ACT, INSPITE OF THE FACT, THAT THERE WAS A REASONABLE CAUSE. 2. THAT ON 25.02.2015, THE ASSOCIATE VICE PRESIDENT OF APPELLANT BANK ATTENDED THE PROCEEDINGS AT HALDWANI OFFICE. HOWEVER LD. CIT WAS NOT AT HALDWANI ON THAT DATE AND IT WAS EXPLAINED THAT NO OFFICER HAS BEEN AUTHORIZED FOR THIS PROCEEDING. HENCE REQUEST FOR ADJOURNMENT WITH MEDICAL REASON WAS SUBMITTED ON DAK. ACCORDINGLY, THE ORDER PASSED U/S 263 IS NOT A VALID ORDER. \ WITHOUT PREJUDICE TO ABOVE 3. THE ORDER U/S 263 OF I.T. ACT WAS PASSED ON 10.03.2015 REJE CTING THE ADJOURNMENT PRAYER BEING GENUINE HARDSHIP OF APPELLANT S COUNSEL FOR MEDICAL REASON ON 25.02.2015. THUS, THERE IS A DENIAL OF NATURAL JUSTICE ON 25.02.2015 AS PRESENT ORDER HAD BEEN PASSED MUCH AFTER THE DATE OF 25.02.2015. WITHOUT PREJUDICE TO ABOVE 4. THAT NOTICE U/S 263 OF I.T. ACT DATED 20.02.2015 WAS SIGNED AND ISSUED BY LD. CIT, HALDWANI ON 20.02.2015 AT HALDWANI, HOWEVER, ON 20.02.2015, THE LD. CIT WAS NOT AT HALDWANI. HENCE THE SAID NOTICE DOES NOT MEET THE REQUIREMENT OF LAW. 5. THAT A PHOTOCOPY OF NOTICE DT. 20.02.2015 U/S 263 OF I.T. ACT WAS RECEIVED ON 21.02.2015. THE SAID NOTICE WAS NOT ATTESTED BY CONCERNED AUTHORITIES OF INCOME TAX ITA NO S . 2351 & 2352 /DE L/20 1 5 THE NAINITAL BANK LTD. 3 OFFICE, HALDWANI, MEANING THEREBY NO VALID NOTICE IS SERVED. THE DULY SIGNED NOTICE DT. 20.02.2015 W AS ACTUALLY SERVED ON 27.02.2015 I.E. AFTER THE DATE FIXED FOR HEARING. 6. THAT THE LD. CIT DID NOT APPRECIATED THAT ALL THE DETAILS WERE EXAMINED BY LD. AO WITH REGARD TO DISALLOWANCE U/S 14A AND THE CASE LAWS OF EARLIER YEAR DECIDED ON THIS ISSUE IN FAV OUR OF ASSESSEE WERE PRODUCED, HENCE THE ASSESSMENT ORDER COULD NOT BE SAID TO ERRONEOUS OR WAS PASSED WITHOUT APPLICATION OF MIND. 7. THAT THE PRESENT ASSESSMENT ORDER CANNOT BE TERMED AS ERRONEOUS AS LD. AO MADE NECESSARY ENQUIRIES APPLIED HIS MIND TO T HE FACTS AND CIRCUMSTANCES OF THE CASE AND ACCEPTED THE DISALLOWANCE UNDER SECTION 14A OF I.T. ACT AS DISCLOSED BY ASSESSEE. 8. THE INITIATION OF PROCEEDING U/S 263 OF I.T. ACT AND ORDER U/S 263 OF I. T. ACT IS CONTRARY TO THE FACTS, LAW, PRINCIPLE OF NAT URAL JUSTICE AND WITHOUT PROVIDING PROPER OPPORTUNITY TO HAVE ITS SAY ON THE REASONS RELIED UPON BY HIM. 4 . THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE EX - PARTE ORDER PASSED BY THE LD. CIT BY REJECTING THE APPLICATION FOR ADJOURNM ENT DUE TO ILLNESS OF THE COUNSEL FOR THE ASSESSEE . 5 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED ELECTRONICALLY THE RETURN OF INCOME ON 30.09.2010 DECLARING AN INCOME OF RS. 61,24,18,940/ - WHICH WAS ITA NO S . 2351 & 2352 /DE L/20 1 5 THE NAINITAL BANK LTD. 4 PROCESSED U/S 143(1) OF INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT). LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO FRAMED THE ASSESSMENT U/S 143(3) OF THE ACT AT AN INCOME OF RS. 61,44,18,940/ - . THEREAFTER THE LD. CIT EXERCISED HIS POWERS U/S 263 OF THE ACT AND CONSIDERED THE O RDER OF THE AO TO BE ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. CIT IN THE IMPUGNED ORDER MENTIONED THAT THE ASSESSEE WAS GIVEN OPPORTUNITY OF BEING HEARD VIDE LETTER DATED 20.02.2015 AND WAS ASKED TO FURNISH ITS SUBM ISSION BY 25.02.2015. THE LD. CIT ALSO POINTED OUT THAT THE ORIGINAL NOTICE WAS SERVED ON THE ASSESSEE ON 27.02.2015. THE ASSESSEE SOUGHT ADJOURNMENT , AT LEAST FOR A MONTH ON THE GROUND THAT IT NEEDED TO CONSULT ITS COUNSEL, SH. K. R. RASTOGI, FCA, WHO HAD BEEN ILL. IN SUPPORT OF ITS CONTENTION , T HE ASSESSEE ALSO FURNISHED COPY OF DISCHARGE SUMMARY FR OM SHEKHAR HOSPITAL PVT. LTD., L UCKNOW. T HE LD. CIT DID NOT FIND MERIT IN THE SUBMISSION OF THE ASSESSEE AND SET ASIDE THE ASSESSMENT ORDER , HE DIRECTED THE AO TO EXAMINE THE ASSESSEE S ESTIMATE OF EXPENDITURE INCURRED IN RELATION TO THE EXEMPT INCOME. ITA NO S . 2351 & 2352 /DE L/20 1 5 THE NAINITAL BANK LTD. 5 6. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE LD . CIT WITHOUT GIVING THE OPPORTUNITY OF BEING HEARD PASSED THE IMPUGNED ORDER EX - PARTE, I N SPITE OF THE FACT THAT THE ASSESSEE WAS NOT IN A POSITION TO REPRESENT ITS CASE DUE TO ILLNESS OF ITS COUNSEL SH. K. R. RASTOGI, WHO WAS HOSPITALIZED AND WAS NOT IN A POSITION TO REPRESENT THE CASE ON 25.02.2015. 7. IN HER RIVAL SUBMISSIONS THE LD. CIT DR STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT AND FURTHER SUBMITTED THAT THE LD. COUNSEL FOR THE ASSESSEE HAD BEEN DISCHARGED FROM THE HOSPITAL ON 08. 02.2015 AND THERE WAS NOTHING ON RECORD TO SUGGEST THAT HE WAS NOT AVAIL ABLE FOR CONSULTATION EVEN BY 25 .02.2015. THEREFORE, THE REQUEST FOR ADJOURNMENT WAS RIGHTLY REJECTED BY THE LD. CIT AND THE CASE WAS DECIDED ON MERIT. 8. WE HAVE CONSIDERED THE SUBMI SSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE LD. COUNSEL FOR THE ASSESSEE WAS ILL AND COULD NOT ITA NO S . 2351 & 2352 /DE L/20 1 5 THE NAINITAL BANK LTD. 6 REPRESENT THE CASE OF THE ASSESSEE ON 25.02.2015 WHEN THE LD . CIT ASKED THE ASSESSEE TO FURNISH ITS SUBMISSION VIDE LETTER DATED 20.02.2015. IT IS ALSO NOTICED THAT THE LD. CIT HIMSELF ADMITTED THAT THE ORIGINAL NOTICE OF HEARING DATED 20.02.2015 WAS SERVED ON THE ASSESSEE ON 27.02.2015. THEREFORE, IT IS NOT CLEAR HOW THE LD. CIT FIXED THE CASE FOR HEARING ON 25.02.2015 WHEN THE NOTICE OF HEARING ITSELF WAS SERVED ON THE ASSESSEE AFTER TWO DAYS I.E. ON 27.02.2015. IT IS WELL SETTLED THAT NOBODY SHOULD BE CONDEMNED UNHEARD AS PER THE MAXIM AUDI ALTERAM PARTEM , WE T HEREFORE, KEEPING IN VIEW THE PECULIAR FACTS OF THE PRESENT CASE, ARE OF THE VIEW THAT A DUE AND REASONABLE OPPORTUNITY OF BEING HEARD WAS NOT AFFORDED TO THE ASSESSEE BY THE LD. CIT. IN THAT VIEW OF THE MATTER THE IMPUGNED ORDER IS SET ASIDE AND THE LD. C IT IS DIRECTED TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. THE FACTS OF THE CASE IN ITA NO. 2352/DEL/2015 FOR THE ASSESSMENT YEAR 2011 - 12 ARE IDENTICAL TO THE FACTS IN VOLVED IN ITA NO. 2351/DEL/2015 FOR THE ASSESSMENT YEAR 2010 - 11 WHICH WE HAVE ALREADY ADJUDICATED. ITA NO S . 2351 & 2352 /DE L/20 1 5 THE NAINITAL BANK LTD. 7 THEREFORE, OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER IN RESPECT OF ASSESSMENT YEAR 2010 - 11 SHALL APPLY WITH THE SAME FORCE FOR THE ASSESSMENT YEAR 2011 - 12. 10 . IN THE RESULT , BOTH THE APPEAL S OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 19 /10 / 2015) . SD/ - SD/ - (BEENA A. PILLAI ) ( N. K. SAINI ) JUDI CIAL MEMBER ACCOUNTANT MEMBER DATED: 19 / 10 /2015 * SUBODH * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR