SIDDHAARTH JALAN, MUMBAI V. ITO RG 12(1)(2), MUMBAI

ITA 2373/MUM/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49096 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 24-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Keywords: Unexplained cash credit; Depreciation; Opportunity of being heard; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.2373/MUM/2011 (ASSESSMENT YEAR: 2007-08) MR. SIDDAARTH JALAN, 1 ST FLOOR, KAMANI CHAMBERS, 32, R. KAMANI MARG, BALLARD ESTATE, MUMBAI -400 038 ....... APPELLANT VS ITO, RANGE -12(1))(2), MUMBAI ..... RESPONDENT PAN: ADHPJ 1949 F APPELLANT BY: MR. SUNIL NAHTA RESPONDENT BY: MR. G.P. TRIVEDI O R D E R PER R.S. PADVEKAR, JM THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT (A)-23 DATED 16.12.2010 FOR TH E A.Y. 2007-08. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- THE GROUNDS OF APPEAL SET OUT BELOW ARE WITHOUT PRE JUDICE TO ONE ANOTHER. 1(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN PASSING THE ORDER EX-PARTE WITHOUT GIVING ADEQUA TE OPPORTUNITY FOR THE HEARING WHICH IS WRONG AND CONT RARY TO THE PRINCIPLES OF NATURAL JUSTICE, THE PROVISIONS OF IN COME-TAX ACT, 1961 AND THE RULES MADE THEREUNDER. ITA NO.2373/MUM/2011 MR. SIDDAARTH JALAN 2 (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN HOLDING THAT THE APPELLANT NEITHER APPEARED FOR HEA RING NOR DID HE FILE ANY REQUEST FOR ADJOURNMENT, WHICH IS WRONG AND CONTRARY TO THE FACTS OF THE CASE, THE PROVISIONS O F INCOME TAX ACT, 1961 AND THE RULES MADE THEREUNDER. 2(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AUTHORITIES BELOW ERRED IN TREATING THE UNSECURED LOANS OF THE APPELLANT AMOUNTING TO RS 24,52,552/- AS UNEXPLAINED CASH CREDIT U/S.68 OF THE INCOME TAX AC T, 1961 AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE PROVISIONS OF THE INCOME TAX ACT, 1961 AND T HE RULES MADE THEREUNDER. (B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FA ILED TO APPRECIATE THAT MAJORITY OF THE UNSECURED LOANS WER E BROUGHT FORWARD FROM PREVIOUS YEAR, THAT THE SAME WERE NOT TAKEN DURING THIS YEAR. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN DISALLOWING AN AMOUNT OF RS 70,860/- BEING INTEREST PAID ON UNSECURED LOANS BY HOLDING THAT THE SAME IS NOT ALL OWABLE AS EXPENSES AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN DISALLOWING AN AMOUNT OF RS 4,07,727/- BEING 50% OF THE EXPENSES ON AD-HOC BASIS, WITHOUT APPRECIATING THE FACT THAT THE EXPENSES INCURRED WERE WHOLLY FOR THE PURPOSES OF BUSINESS OF THE APPELLANT AND THE REASONS ASSIGNED FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS OF THE CASE, THE PROVISIONS OF THE INCOME TAX ACT, 1961 AND THE RULE S MADE THEREUNDER. ITA NO.2373/MUM/2011 MR. SIDDAARTH JALAN 3 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN DISALLOWING THE CLAIM OF DEPRECIATION AMOUNTING TO RS 2,24,303/- ON THE GROUND THAT THE SAME IS NOT SHOWN IN THE SCHEDULE OF DEPRECIATION FORMING PART OF THE RETURN OF INCOME, WITHOUT APPRECIATING THE FACT THAT THE SAME WAS SHO WN IN THE SCHEDULE OF COMPUTATION OF INCOME FROM BUSINESS OR PROFESSION IN THE RETURN OF INCOME WHICH IS WRONG AND CONTRARY TO THE FACTS OF THE CASE, THE PROVISIONS O F THE INCOME TAX ACT, 1961 AND RULES MADE THEREUNDER. 2. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL SUBM ITS THAT THE LD. CIT (A) HAS PASSED THE ORDER EX-PARTE WITHOUT GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND SAME IS TOTALLY CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE. THE LD. COUNSEL ALSO TOOK US THROUGH THE AFFIDAVIT (PAGE NOS.38 TO 40 OF COMPILATION) OF THE CHARTERED ACCOUNTANT WHO WAS REPRESENTING THE ASSES SEE BEFORE THE LD. CIT (A) AND SUBMITS THAT THE LD. CIT (A) PASSED THE ORDER IN HASTE. HE, FURTHER, PRAYS THAT WITH THE SUITABLE DIRECTION S THE APPEAL MAY BE RESTORED TO THE FILE OF THE LD. CIT (A) TO DECIDE T HE SAME ON MERIT. WE HAVE ALSO HEARD THE LD. D.R. 3. WE HAVE PERUSED THE ORDER OF THE LD. CIT (A) AND ALSO PERUSED AN AFFIDAVIT FILED BY THE CHARTERED ACCOUNTANT OF T HE ASSESSEE. THE LD. CIT (A) HAS MENTIONED THREE DATES ON WHICH THE APPE AL WAS FIXED FOR THE HEARING. HE HAS OBSERVED THAT THE ASSESSEE NEI THER APPEARED NOR THERE WAS REQUEST FOR ADJOURNMENT AND HENCE, HE HAS TO DECIDE THE APPEAL EX-PARTE ON MERIT. AS PER THE AFFIDAVIT FILED BY THE CHART ERED ACCOUNTANT OF THE ASSESSEE, IT IS STATED THAT HE SU BMITTED THE LETTER DATED 10.08.2010 IN THE OFFICE OF THE CIT (A) REQUE STING FOR ADJOURNMENT AND CASE WAS ADJOURNED TO 26.8.2010. I T IS FURTHER STATED THAT ON 8.9.2010 HE VISITED THE OFFICE OF TH E LD. CIT (A) BUT HE WAS BUSY. WE FIND THAT AS PER THE ORDER OF THE LD. CIT (A), THE LAST ITA NO.2373/MUM/2011 MR. SIDDAARTH JALAN 4 DATE OF HEARING IS GIVEN AS 8.9.2010 AND ORDER IS P ASSED ON 16.12.2010. IN OUR OPINION, NO PREJUDICE SHOULD HA VE BEEN CAUSED TO THE LD. CIT (A), IF ONE MORE NOTICE WOULD HAVE BEEN ISSUED TO THE ASSESSEE. WE, THEREFORE, CONSIDER IT FIT TO RESTOR E ENTIRE MATTER TO THE LD. CIT (A) FOR FRESH ADJUDICATION AS PER LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE ALSO SHOULD CO-OPERATE WITH THE LD. CIT (A) FOR DISPOSAL OF THE PRESENT APPEAL. WE, ACCORDINGLY, SET ASIDE THE ORDER OF THE LD. CIT (A) AND RESTORE THE MATTER BACK TO HIS FILE IN THE LIGHT OF OUR ABOVE O BSERVATIONS. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 6 TH JUNE 2011. SD/- SD/- ( RAJENDRA SINGH ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 6 TH JUNE 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)23, MUMBAI. 4) THE CIT-12, MUMBAI. 5) THE D.R. E BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA NO.2373/MUM/2011 MR. SIDDAARTH JALAN 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 06.06.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 06.06.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER