M/s. Ganpati Finsec Pvt. Ltd., Rajasthan V. DCIT, New Delhi

ITA 2425/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3464 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 30-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 143(3); 14A

Judgement Text

I.T.A .NO.-2425/DEL/2016 GANPATI FINSEC PVT. LTD. VS DCIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SH. SUDHANSHU SRIVASTAVA, JUDIC IAL MEMBER AND SH.ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A .NO.-2425/DEL/2016 (ASSESSMENT YEAR-2012-13) GANPATI FINSEC PVT. LTD., 37-K BLOCK, SRI GANGA NAGAR, RAJASTHAN-335001. PAN-AAACG7719B ( APPELLANT) VS DCIT, CIRCLE-10(1), NEW DELHI. (RESPONDENT) ASSESSEE BY SH. VED JAIN, CA REVENUE BY SH.ANIL KUMAR SHARMA, SR.DR ORDER PER ANADEE NATH MISSHRA, ACCOUNTANT MEMBER (A). THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGA INST THE ORDER DATED 15.03.2016 OF CIT(A)-4, NEW DELHI PERTAINING TO A. Y. 2012-13. GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )] IS BAD, BOTH IN THE EYES OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A) HAS GROSSLY ERRED, BOTH ON FACTS AND IN LAW IN DISPOSIN G OFF THE APPEAL EX-PARTE, DESPITE THE FACT THAT THE ASSESSEE HAS BEEN APPEARI NG BEFORE HIM AND HAS EVEN FILED THE WRITTEN SUBMISSIONS AND PAPER BOOK. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSEE FAILED TO APPEAR ON THE DATE GIVEN AS PER THE NOTICE ISSUED BY HIM. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ORDER PASSED BY THE LEARNED CIT(A) WITHOUT GIVING PROPER AND ADEQUATE O PPORTUNITY OF BEING HEARD IS BAD AND LIABLE TO BE QUASHED. 5. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE DISALLOWANCE OF RS.1,61,310/- MADE BY THE AO BY INVOKING THE PROVIS IONS OF SECTION 14A OF THE ACT. (II) THE LEARNED CIT(A) HAS ERRED IN CONFI RMING THE ABOVE DISALLOWANCE BY IGNORING THE FACT THAT THE OWN FUND S OF THE ASSESSEE BEING PAGE 2 OF 6 I.T.A .NO.-2425/DEL/2016 GANPATI FINSEC PVT. LTD. VS DCIT MORE THAN THE BORROWED FUNDS, NO DISALLOWANCE ON AC COUNT OF INTEREST COULD HAVE BEEN MADE UNDER SECTION 14A OF THE ACT. 6. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING THE D ISALLOWANCE OF RS.45,37,865/- MADE BY THE AO ON ACCOUNT OF ALLOCAT ION OF EXPENSES BEFORE AND AFTER THE DATE OF SURVEY. (II) THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE ABOVE ADDITION BY MISINTERPRETING THE FACTS OF THE CASE AND BY CONCLU DING THAT THE ASSESSEE HAS UNDERSTAND ITS INCOME TO THIS EXTENT. 7. THE APPELLANT CARVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. (B). THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.90,61,570/-. THE ASSESSMENT ORDER DATED 18.02.2 015 WAS PASSED BY ASSESSING OFFICER (IN SHORT AO) U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WHEREIN THE FOLLOWING ADDITIONS WE RE MADE:- (A) DISALLOWANCE AMOUNTING TO RS.1,61,310/- U/S 14A OF THE ACT; (B) ADDITIONS OF RS.45,37,865/- ON ACCOUNT OF SURVEY. (B.1). THE ASSESSEE FILED APPEAL AGAINST THE ASSESS MENT ORDER BEFORE THE LD. CIT(A). THE LD. CIT(A), VIDE ORDER DATED 1 5.03.2016, DISMISSED THE ASSESSEES APPEAL WITHOUT GIVING FINDING ON MERITS OF ADDITIONS MADE BY THE AO. THE RELEVANT PORTION OF THE APPELLATE ORDE R OF LD. CIT(A) IS REPRODUCED BELOW:- 2. THE CASE WAS FIXED FOR HEARING ON 24/11/2015 BU T NOBODY ATTENDED AND FINALLY A LETTER DATED 15/12/2015 WAS SENT SEEK ING FOR SOME MORE TIME AND THE NEXT DATE OF HEARING WAS FIXED FOR 22/12/20 15. ANOTHER APPLICATION COMES SEEKING FOR ADJOURNMENT WHICH WAS GIVEN TO 28 /12/2015. ON 28/12/2015 ANOTHER APPLICATION WAS SENT SEEKING MOR E TIME, WHICH WAS REJECTED. AFTER THAT NOBODY ATTENDED AND NOW I FIND THAT THE APPELLANT HAD QUIETLY SUBMITTED THE WRITTEN SUBMISSIONS AND PAPER BOOK ON 1/01/2016 AND NOBODY CAME FORWARD TO DISCUSS THE SAME WITH ME OR SOUGHT ANY DATE TO COME AND DISCUSS WITH ME. NOW, I FIND THIS SITUA TION VERY TRICKY WHEN THE APPELLANT KEEPS ON SEEKING THE TIME ON ONE PRETEXT OR THE OTHER AND FINALLY QUIETLY SUBMITS THE DETAILS IN MY OFFICE AND NEVER COMES FORWARD TO DISCUSS THE CASE AND THE SUBMISSIONS. IN THIS WAY THE BASIC IDEA OF HEARING AND PAGE 3 OF 6 I.T.A .NO.-2425/DEL/2016 GANPATI FINSEC PVT. LTD. VS DCIT EXPLAINING THE MATTER STANDS DEFECTED. THIS KIND OF SITUATION IS NOT ACCEPTABLE AND I HEREBY DISMISS THE APPEAL. (B.2). A PERUSAL OF THE FOREGOING PORTION OF THE OR DER OF LD. CIT(A) SHOWS THAT THE ASSESSEE HAD ALREADY FILED WRITTEN SUBMISS IONS AND PAPER BOOK ON 01.01.2016, WHICH HOWEVER WERE NOT CONSIDERED IN THE AFORESAID ORDER DATED 15.03.2016 OF THE LD. CIT(A). AGGRIEVED BY TH E ORDER OF LD. CIT(A), THE ASSESSEE IS NOW IN APPEAL IN ITAT. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL APPEARING FOR THE ASSESSEE CONTENDE D THAT THE ACTION OF LD. CIT(A) WAS AGAINST THE LAW AND THE LD. CIT(A) W AS REQUIRED TO DECIDE THE APPEAL ON MERITS EVEN WHEN HE PASSED AN EX-PART E ORDER. THE COUNSEL FOR THE ASSESSEE PLEADED THAT IN THE ABSENCE OF APP EAL BEING DECIDED BY LD.CIT(A) ON MERIT, THE ORDER OF LD.CIT(A) WAS BAD IN LAW AND WAS LIABLE TO BE SET ASIDE. HE DREW OUR ATTENTION TO THE DECISIO NS OF THE CO-ORDINATE BENCHES OF ITAT, DELHI IN THE CASES OF GAURAV GOEL VS ITO, WARD-1(2) [ITA NO.605/DEL/2012 DATED 09.04.2012] AND M/S HARYANA LIQUOR COMPANY VS ACIT (ITA NO.1852/DEL/2012 DATED 25.06.2012) AND PLEADED THAT THE MATTER SHOULD BE SET ASIDE TO THE FILE OF LD. CIT(A ) FOR FRESH ORDER ON MERIT. LD. DEPARTMENTAL REPRESENTATIVE (IN SHORT DR) REL IED UPON THE ORDER OF THE LD. CIT(A). (C). WE HAVE HEARD BOTH SIDES. WE HAVE ALSO PERUSE D ALL MATERIALS ON RECORD CAREFULLY. IN THE CASE OF GAURAV GOEL VS ITO (SUPRA), IT WAS HELD BY THE CO-ORDINATE BENCH OF ITAT, DELHI AS UNDER:- '7. THE LD.DR. RELIED UPON THE ORDER OF CIT(A) AND PLEADED FOR ITS CONFIRMATION AND MAINLY CONTENDED THAT ASSESSEE IS HABITUAL DEFAULTER. HE PAGE 4 OF 6 I.T.A .NO.-2425/DEL/2016 GANPATI FINSEC PVT. LTD. VS DCIT HAS NOT APPEARED BEFORE THE ASSESSING OFFICER NOR B EFORE THE CIT(A) AND HIS ATTITUDE HAS NOT CHANGED EVEN BEFORE THE TRIBUNAL. THEREFORE, THE APPEAL SHOULD BE DISMISSED. 8. AFTER HEARING LD.DR. AND CONSIDERING THE MATERIA L ON RECORD, WE FIND THAT THE ASSESSEE HAS DEFAULTED IN APPEARING BEFORE CIT( A) DESPITE REPEATED OPPORTUNITIES AND EVERY TIME HE WAS SEEKING ADJOURN MENT AND AFTER HAVING BEEN GIVEN FINAL OPPORTUNITY, CIT(A) REFUSED FURTHE R ADJOURNMENT AND PROCEEDED EX-PANE AND PASSED THE ORDER ON MERITS IN PARAS.4.1 AND 5 AS REPRODUCED IN EARLIER PART OF THE ORDER. FROM THE C ONCLUSION AS DRAWN BY THE CIT(A), WHILE PASSING THE ORDER ON MERIT, WE FIND T HAT HE HAS JUST CONFIRMED THE ACTION OF THE ASSESSING OFFICER WITHOUT PROPERL Y DISCUSSING THE CASE ON MERITS. HE HAS JUST CONFIRMED THE ORDER OF THE ASSE SSING OFFICER. THE LAW PROVIDES THAT EVEN FOR PASSING EX-PARTE ORDER, FIRS T APPELLATE AUTHORITY IS REQUIRED TO DECIDE THE APPEAL ON MERITS BY PASSING A SPEAKING ORDER WHICH IS ABSENT IN THIS CASE. AS SUCH WHILE CONSIDERING T HE ENTIRETY OF FACTS, CIRCUMSTANCES AND MATERIAL ON RECORD, WE FIND IT JU ST AND APPROPRIATE TO SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTE R BACK ON HIS FILE WITH THE DIRECTION TO RE-DECIDE THE APPEAL AFRESH AFTER GIVI NG DUE OPPORTUNITY TO THE ASSESSEE WELL AS TO THE ASSESSING OFFICER AND TO PA SS A SPEAKING ORDER IN ACCORDANCE WITH LAW. WE HOLD AND DIRECT ACCORDINGLY .' (C.1). IN THE CASE OF M/S HARYANA LIQUOR COMPANY VS ACIT (SUPRA) HELD BY CO-ORDINATE BENCH OF ITAT, DELHI AS UNDER:- 'A MERE GLANCE AT THE IMPUGNED ORDER REVEALS THAT T HE ORDER PASSED BY THE ID. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICIAL /QUASI -JUDICIAL BODY/AUTHORITY MUST PASS REASONED ORDER, WHICH SHOULD REFLECT APPL ICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEF ORE IT. THE APPLICATION OF MIND TO THE MATERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF THE ACT MANDATES THAT THE ORDER O F THE CIT(A) WHILE DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHA LL STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REASONS FOR THE DECISION. THE REQUIREMENT OF RECORDING OF REASONS AND COMMUNICATI ON THEREOF BY THE QUASI- JUDICIAL AUTHORITIES HAS BEEN READ AS AN INT EGRAL PART OF THE CONCEPT OF FAIR PROCEDURE AND IS AN IMPORTANT SAFEGUARD TO ENS URE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTR ODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINE SS IN THE DECISION- MAKING PROCESS. WE MAY REITERATE THAT A 'DECISION' DOES NOT MERELY MEAN THE 'CONCLUSION'. IT EMBRACES WITHIN ITS FOLD THE R EASONS FORMING BASIS FOR THE CONCLUSION. [MUKHTIAR SINGH VS. STATE OF PUNJAB,(19 95)1 SCC 760(SC)J. IT IS WELL SETTLED THAT REASONS ARE THE LINKS BETWEEN THE MATERIAL ON RECORD AND THE CONCLUSION ARRIVED AT BY THE COURT AND THE APPE LLATE AUTHORITY BEING A QUASI JUDICIAL AUTHORITY, THE ORDER PASSED BY HIM S HOULD SHOW THAT HE HAS APPLIED HIS MIND AND TAKEN INTO CONSIDERATION THE B ASIC REQUIREMENTS PAGE 5 OF 6 I.T.A .NO.-2425/DEL/2016 GANPATI FINSEC PVT. LTD. VS DCIT GERMANE TO THE ISSUE [V.N. PURUSHOTHAMAN VS. AG.ITO (1984) 149 ITR 120 (KER.)]. (C.2.). IN THE CASE OF GUJARAT THEMIS BIOSYN LTD. VS. JT. CIT 74 ITD 339 ( AHD), IN SIMILAR CIRCUMSTANCES, IT WAS HELD AS UNDER: '3. WE HAVE CAREFULLY CONSIDERED THE FACTS AND CIRC UMSTANCES OF THE CASE AS WELL AS SUBMISSIONS MADE BEFORE US. THE IMPUGNED OR DER PASSED BY THE CIT(A) IS CLEARLY VIOLATIVE OF THE EXPRESS PROVISIO NS OF S. 250(6), WHICH PROVIDES THAT THE APPELLATE ORDERS OF THE CIT(A) AR E TO STATE THE POINTS ARISING IN THE APPEAL, THE DECISION OF THE AUTHORIT Y THEREON AND THE REASONS FOR SUCH DECISION. THE UNDERLYING RATIONALE OF THE PROVISION IS THAT SUCH ORDERS ARE SUBJECT TO FURTHER APPEAL TO THE TRIBUNA L. SPEAKING ORDER WOULD OBVIOUSLY ENABLE A PARTY TO KNOW PRECISE POINTS DEC IDED IN HIS FAVOUR OR AGAINST HIM. ABSENCE OF THE FORMULATION OF THE POIN T FOR DECISION FOR WANT OF CLARITY IN A DECISION UNDOUBTEDLY PUTS A PARTY IN Q UANDARY. SEC. 250(6) EXPRESSLY EMBODIES THE PRINCIPLES OF NATURAL JUSTIC E AND SUCH A PROVISION IS CLEARLY MANDATORY IN NATURE. THE IMPUGNED ORDER PAS SED BY THE CIT(A) IN VIOLATION OF THE PROVISIONS OF S. 250(6) CANNOT, TH EREFORE, BE SUSTAINED. REGARDING THE DECISIONS OF THE DELHI BENCH OF THE T RIBUNAL IN MULTIPLAN INDIA LTD. (SUPRA) CITED BY THE LEARNED CIT(A), WE FIND T HAT THE SAID DECISION IS CLEARLY DISTINGUISHABLE. SEC 254 REFERRING TO THE O RDERS OF THE TRIBUNAL CONFERS PLENARY JURISDICTION ON THE TRIBUNAL IN THE MATTER OF PASSING ORDERS UNDER S. 254(1). THERE IS NO SUCH EXPRESS STIPULATI ON IN S. 254 AS CONTAINED UNDER THE PROVISIONS OF S. 250(6) RELATING TO THE O RDERS OF FIRST APPELLATE AUTHORITY. THEREFORE, RELIANCE PLACED BY THE CIT(A) ON MULTIPLAN INDIA LTD. (SUPRA) IS ENTIRELY MISPLACED. SIMILARLY, THE CASE OF LATE TUKOJIRAO HOLKAR (SUPRA) CITED BY THE LEARNED CIT(A) IS DISTINGUISHA BLE AND DOES NOT SUPPORT THE VIEW TAKEN BY THE CIT(A). FOR THE REASONS INDICATED ABOVE, WE HEREBY SET ASID E THE IMPUGNED ORDER OF THE CIT(A) AND DIRECT THE CIT(A) TO DISPOSE OF THE APPEAL OF THE ASSESSEE AFRESH AFTER ALLOWING PROPER OPPORTUNITY IN ACCORDA NCE WITH LAW.' 6. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE ID . CIT(A) HAS NOT PASSED A SPEAKING ORDER ON VARIOUS ISSUES RAISED BEFORE HIM ,WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE ID. CIT(A ) AND RESTORE THE MATTER TO HIS FILE FOR DECIDING THE ISSUES RAISED IN THE GROU NDS RAISED BEFORE HIM BY THE ASSESSEE, AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY TH AT WHILE RE-DECIDING THE APPEAL, THE ID. CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF T HE ACT.' (C.3). RESPECTFULLY FOLLOWING THE AFORESAID PRECEDE NTS, INCLUDING ORDERS OF CO-ORDINATE BENCHES OF ITAT, DELHI IN THE CASES OF GAURAV GOEL VS ITO (SUPRA) AND M/S HARYANA LIQUOR COMPANY VS ACIT (SUPRA), WE SET ASIDE PAGE 6 OF 6 I.T.A .NO.-2425/DEL/2016 GANPATI FINSEC PVT. LTD. VS DCIT THE ORDER OF LD.CIT(A) AND RESTORE THE MATTER TO TH E FILE OF LD. CIT(A) WITH THE DIRECTION TO THE LD.CIT(A) TO PASS A DENOVO ORDER ON MERITS. (D). IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH OF APRIL 2017. SD/- SD/- (SUDHANSHU SRIVASTAVA) (ANAD EE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:- 19 TH APRIL, 2017 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI