Sheetal Mercantile Pvt. Ltd, New Delhi V. ITO, New Delhi

ITA 2428/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4255 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-04-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 21-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SAMPATH; NIKHIL MEHTA ADV S
• Assessee Lawyers: J SAMPATH; NIKHIL MEHTA ADV S SS
• Keywords: Business income; Principle of natural justice
• Section: 144

Judgement Text

I.T.A.2428/DEL./2010 (A.Y. 2007-08) 1 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) (DELHI BENCH G : NEW DELHI) (DELHI BENCH G : NEW DELHI) (DELHI BENCH G : NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.2428/DEL./2010 ITA NO.2428/DEL./2010 ITA NO.2428/DEL./2010 ITA NO.2428/DEL./2010 (ASSESSMENT YEAR : 2002 (ASSESSMENT YEAR : 2002 (ASSESSMENT YEAR : 2002 (ASSESSMENT YEAR : 2002- -- -03) 03) 03) 03) SHEETAL MERCANTILE PVT. LTD., SHEETAL MERCANTILE PVT. LTD., SHEETAL MERCANTILE PVT. LTD., SHEETAL MERCANTILE PVT. LTD., VS. VS. VS. VS. ITO, CIRCLE ITO, CIRCLE ITO, CIRCLE ITO, CIRCLE 8(1), 8(1), 8(1), 8(1), 159 159 159 159- -- -161, 1 161, 1 161, 1 161, 1 ST STST ST FLOOR, KATRA BANYAN, FLOOR, KATRA BANYAN, FLOOR, KATRA BANYAN, FLOOR, KATRA BANYAN, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. FATEHPURI, DELHI. FATEHPURI, DELHI. FATEHPURI, DELHI. FATEHPURI, DELHI. (PAN/GIR NO. : AAACS2346C) (PAN/GIR NO. : AAACS2346C) (PAN/GIR NO. : AAACS2346C) (PAN/GIR NO. : AAACS2346C) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : S/SHRI J. SAMPATH & NIKHIL MEHTA, ADV S. ASSESSEE BY : S/SHRI J. SAMPATH & NIKHIL MEHTA, ADV S. ASSESSEE BY : S/SHRI J. SAMPATH & NIKHIL MEHTA, ADV S. ASSESSEE BY : S/SHRI J. SAMPATH & NIKHIL MEHTA, ADV S. REVENUE BY : SHRI B. KISHORE,DR REVENUE BY : SHRI B. KISHORE,DR REVENUE BY : SHRI B. KISHORE,DR REVENUE BY : SHRI B. KISHORE,DR ORDER ORDER ORDER ORDER PER A.D. JAIN: JM PER A.D. JAIN: JM PER A.D. JAIN: JM PER A.D. JAIN: JM THESE ARE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2002-03 TAKING THE FOLLOWING GROUNDS: 1. LD.CIT(A) IS NOT JUSTIFIED IN LAW AND FACTS AND CI RCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION MADE BY THE A O WITHOUT EXAMINING THE LEGALITY OF THE ASSESSMENT. THE ASSESSMENT PASSED BY AO IS BAD IN LAW BRING NO COMPLIANCE IS MADE OF SECTION 144(1). THEREFORE, THE ASSESSMENT ORDER ITSELF IS BAD. 2. LD.CIT(A) IS NOT JUSTIFIED IN LAW AND FACTS AND CIR CUMSTANCES OF THE CASE IN CONFIRMING SALE CONSIDERATION OF SHARES O F `20,00,000 AS BUSINESS INCOME. THE SALES PROCEEDS HAVE ALREADY BEEN DISCLOSED AND EXAMINED AND ACCEPTED VIDE ORDER DATED 30.11.2005 U/S 153A. 3. LD.CIT(A) IS NOT JUSTIFIED IN LAW AND FACTS AND CIR CUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION ON ACCOUNT OF DISALLOWING THE CLAIM OF LOSS OF `41,509 DECLARED UNDE R THE HEAD LONG TERM CAPITAL GAIN PARTICULARLY IN THE I N CIRCUMSTANCES WHEN THE ENTIRE SALES PROCEEDS ADDED INTO THE INCOME OF THE ASSESSEE. I.T.A.2428/DEL./2010 (A.Y. 2007-08) 2 2. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE HAS CONTENDE D THAT THE ASSESSEE WAS NOT AFFORDED ADEQUATE OPPORTUNITY BY TH E AO; THAT THIS MATTER WAS DULY BROUGHT TO THE KNOWLEDGE OF THE CIT(A) BOTH, BY WAY OF ARGUMENTS AS WELL AS THROUGH STATEMENT OF FACTS; THAT HOWEVER, THE CIT(A) ALSO DID NOT TAKE THIS INTO CONSIDERATION; THAT AS SUCH, THE ASSESSEE HAS BEEN VISITED WITH DETRIMENT IN THE SHAPE OF M ISCARRIAGE OF JUSTICE; AND THAT, THEREFORE, THE MATTER BE REMIT TED TO THE FILE OF THE AO FOR DECISION AFRESH IN ACCORDANCE WITH LAW ON AFFO RDING DUE AND ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE . 3. THE LD.DR., ON THE OTHER HAND, HAS STRONGLY RELIED ON THE IMPUGNED ORDER. 4. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MAT ERIAL ON RECORD. 5. WE FIND THE AVERMENTS ON BEHALF OF THE ASSESSEE TO BE CORRECT. THE STATEMENT OF FACTS FILED BEFORE THE CIT(A), AS AV AILABLE ON RECORD, READS AS FOLLOWS: AO VIDE HIS ORDER DATED 30.10.2009 COMPLETED THE ASSE SSMENT U/S 144 AT ASSESSED INCOME OF `19,21,364 AGAINST RETURNED INCOME AS WELL AS ASSESSED INCOME U/S 153A/143(3) OF `78,9 80. ASSESSMENT IN QUESTION HAS FRAMED U/S 144 WITHOUT PROVIDING SUFFICIENT OPPORTUNITY TO THE APPELLANT. LAST DATE OF HEARING WAS FIXED ON 16 TH OCTOBER, 2007 (STATED IN ORDER AS 16.10.2009 WHICH IS TYPOGRAPHICAL ERROR) AND THERE W AS DIWALI, ON 17 TH OCTOBER, 2007. ON THE DATE OF HEARING COUNSEL OF T HE ASSESSEE WAS APPEARED BUT AO WAS NOT AVAILABLE ON THE CHA IR. AS ALWAYS HAPPENS ON THE DATE BEFORE DIWALI OFFICERS HA VE USED TO BUSY IN GRE3TING EACH OTHER AND PARTICULARLY ON T HAT DAY NO WORKING HAS BEEN DONE IN THE DEPARTMENT. ON THE NEX T WORKING DAY COUNSEL OF THE ASSESSEE AGAIN APPEARED BEFORE THE AO AND AO STATED THAT A FRESH NOTICE SHALL BE ISSUED. AFTER WA ITING AROUND ONE MONTH WHEN CASE WAS NOT FIXED THE APPELLAN T FILED ALL THE DETAILS THROUGH SPEED POST ON 14.11.2009. ON 30.1 0.2009 ORDER WAS PASSED BY THE AO IN HASTE MANNER WITHOUT APPL ICATION OF MIND AS BEING MATTER WAS NOT GOING TO TIME BARRED AND THERE WAS MORE THAN TWO MONTHS WERE LEFT BEFORE THE AO. TH EREFORE, WITHOUT PROVIDING ANY OPPORTUNITY TO ASSESSEE FRAMING ASSESSMENT U/S 144 IS BAD IN LAW. THE AFFIDAVIT OF THE L GAL I.T.A.2428/DEL./2010 (A.Y. 2007-08) 3 REPRESENTATIVE IS ENCLOSED HEREWITH. THE ORDER, 30.10 .2009 WAS DISPATCHED BY AO ON 19.11.2009.' 6. THE CIT(A), HOWEVER, DID NOT ACCEPT THE ABOVE PL EA OF THE ASSESSEE. IT WAS OBSERVED, INTER ALIA, THAT AFTER THE AD JOURNMENT DATE OF 16.10.07, THE ASSESSEE STOPPED ATTENDING THE PROCEEDI NGS BEFORE THE AO; THAT ADJOURNMENT WAS GIVEN ON 16.10.07 AND T HE SAME WAS DULY COMMUNICATED TO THE ASSESSEE; THAT THE ASSESSEE HAD N OT FILED ANY REPLY BEFORE THE AO, NOR THE BOOKS WERE PRODUCED BEFORE THE AO, IN SPITE OF REPEATED OPPORTUNITIES; AND THAT THEREFOR E, THERE WAS NO FAILURE OF JUSTICE OCCASIONED TO THE ASSESSEE. 7. A PERUSAL OF THE AFORESAID STATEMENT OF FACTS FILED BY THE ASSESSEE BEFORE THE CIT(A) SHOWS THAT IT ACCOMPANIED AN A FFIDAVIT ON BEHALF OF THE ASSESSEE. HOWEVER, THE CIT(A) DOES NOT MA KE ANY MENTION OF, MUCH LESS DISCUSSION REGARDING, SUCH AFFIDAVI T. 8. COPY OF THE SAID AFFIDAVIT DATED 3.12.09 HAS BEEN PLACED BEFORE US. THIS AFFIDAVIT READS AS FOLLOWS: AFFIDAVIT I RANJEET KUMAR KESARWANI, S/ON THE OTHER HAND, LD.A R FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER UNDER APPEAL. SHRI RAM BABU KESARWANI, R/O D-25, PRITHIVIRAJ ROAD, ADARSH NAGAR, DELHI, PARTNER OF M/S V.D. AGGARWAL & CO., C.A.S MAKE THIS AFFIDAVIT ON SOLEMN AFFIRMATION AS UNDER: 1. THAT, I AM COMPETENT TO MAKE THIS AFFIDAVIT AS AUT HORIZED REPRESENTATIVE OF ASSESSEE. 2. THAT, I APPEARED IN THE CASE OF M/S SHEETAL MERCAN TILE PVT. LTD. HAVING ITS OFFICE AT B-159-161, FIRST FLOOR, KATRA BA RYAN, FATEHPURI, DELHI-110006, FOR ASSESSMENT YEAR 2002-03 BE FORE ACIT, CIRCLE 8(1), NEW DELHI FROM TIME TO TIME. 3. LAST DATE OF HEARING WHICH WAS FIXED ON 16.10.2009 , I VISITED THE OFFICE OF THE AO BUT AO WAS NOT AVAILABLE ON SEAT AND THEREFORE NO ATTENDANCE WAS MARKED IN THE ORDER SHEET. 4. ON THE NEXT WORKING DAY WHEN I APPROACHED THE AO HE SAID THAT CASE SHALL BE REFIXED AND A FRESH NOTICE SHALL BE ISSUED. I.T.A.2428/DEL./2010 (A.Y. 2007-08) 4 5. AFTER WAITING AROUND A MONTH DESIRED DETAILS AS ASKE D WERE FURNISHED BY SPEED POST. AO WAS PER RECORD PASSED EX-ART E ORDER ON 30.10.2009 ALTHOUGH THE SAME WAS DISPATCHED B Y HIM ON 19.11.2009. SD/- (RANJEET KUMAR KESARWANI) 9. A STATEMENT OF FACTS HAS BEEN FILED BEFORE US ALSO. THIS STATEMENT OF FACTS READS AS FOLLOWS: AO VIDE HIS ORDER DATED 30.10.2009 COMPLETED THE ASSE SSMENT U/S144 AT ASSESSED INCOME OF `19,21,364 AGAINST RETURNED INCOME AS WELL AS ASSESSED INCOME U/S 153A/143(3) OF `78,9 80. ASSESSMENT IN QUESTION HAS FRAMED U/S 144 WITHOUT PROVIDIN G SUFFICIENT OPPORTUNITY TO THE APPELLANT. LAST DATE O F HEARING WAS FIXED ON 16 TH OCTOBER, 2009 (STATED IN ORDER AS 16.10.2007 HICH IS TYPOGRAPHICAL ERROR) AND THERE WAS DIWALI ON 17 TH OCTOBER, 2007. ON THE DATE OF HEARING COUNSEL OF THE ASSESSEE WAS APPEAR ED BUT AO WAS NOT AVAILABLE ON THE CHAIR. AS ALWAYS HAPPENS O N THE DATE BEFORE DIWALI OFFICERS HAVE USED TO BUSY IN GREET ING EACH OTHER AND PARTICULARLY ON THAT DAY NO WORKING HAS BE EN DONE IN THE DEPARTMENT. ON THE NEXT WORKING DAY COUNSEL OF THE ASSESSEE AGAIN APPEARED BEFOR ETH AO AND AO STATED THAA FRESH OTICE SHALL BE ISSUED. AFTER WAITING AROUND ONE MONTH WHEN CASE WAS NOT FIXED THE APPELLANT FILED ALL THE DETAILS THR OUGH SPEED POST ON 14.11.2009. ON 30.10.2009 ORDER WAS PASSED BY THE AO IN HASTE MANNER WITHOUT APPLICATION OF MIND AS BEING MATTER WAS NOT GOING TO TIME BARRED AND THERE WAS MORE THAN TWO MONTHS WERE LEFT BEFORE THE AO. THEREFORE, WITHOUT PROVID ING ANY OPPORTUNITY TO ASSESSEE FRAMING ASSESSMENT U/S 144 IS BAD IN LAW. THE AFFIDAVIT OF THE LEGAL REPRESENTATIVE IS EN CLOSED HEREWITH. THE ORDER DATED 30.10.2009 WAS DISPATCHED BY AO ON 19.11.2009. FURTHER CIT(A) HAS CONFIRMED THE ACTION OF AO. 10. FROM THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS REMAINED DEPRIVED OF DUE AND ADEQUATE OPPO RTUNITY OF HEARING BEFORE THE AO. AS SUCH, THE MATTER IS REMITTE D TO THE FILE OF THE AO TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, ON AFFORDING DUE AND ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE IN ACCORDANCE WITH THE NATURAL JUSTICE OF THE PRINCIPLE OF AUDI AL TEREM PARTEM. THE I.T.A.2428/DEL./2010 (A.Y. 2007-08) 5 ASSESSEE, NO DOUBT, SHALL COOPERATE WITH THE AO IN THE F RESH ASSESSMENT PROCEEDINGS. 11. SINCE THE MATTER IS BEING REMITTED TO THE FILE O F THE AO FOR DECISION AFRESH, AS ABOVE, WE ARE NOT GOING INTO THE M ERITS OF THE CASE AT THIS STAGE. 12. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 03.05.2011. SD/- SD/- (SHAMIM YAHYA) (SHAMIM YAHYA) (SHAMIM YAHYA) (SHAMIM YAHYA) (A.D. JAIN) (A.D. JAIN) (A.D. JAIN) (A.D. JAIN) ACCOUNTA ACCOUNTA ACCOUNTA ACCOUNTANT MEMBER NT MEMBER NT MEMBER NT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED, 03.5. 2011 DATED, 03.5. 2011 DATED, 03.5. 2011 DATED, 03.5. 2011 SKB SKB SKB SKB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: 1.APPELLANT 1.APPELLANT 1.APPELLANT 1.APPELLANT 2.RESPONDENT 2.RESPONDENT 2.RESPONDENT 2.RESPONDENT 3.CIT 3.CIT 3.CIT 3.CIT 4.CIT(A) 4.CIT(A) 4.CIT(A) 4.CIT(A)- -- -XI, NEW DELHI XI, NEW DELHI XI, NEW DELHI XI, NEW DELHI 5.CIT(ITAT), NEW DELHI. 5.CIT(ITAT), NEW DELHI. 5.CIT(ITAT), NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT