PRAKASH H. NALAWADE, MUMBAI V. ITO WD 22(2)(4), MUMBAI

ITA 2469/MUM/2011

• Counselvise Citation: 246919914 RSA 2011
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYK
• Assessee Lawyers: MANDAR TELANG
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 44AD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: MUMBAI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.2469/MUM/2011 (ASSESSMENT YEAR: 2007-08) PRAKASH H. NALAWADE, D/157, NALAWADE HOUSE, R.C. MARG, CHEMBUR, MUMBAI -400 071 ...... APPELLANT VS INCOME-TAX OFFICER, WARD -22(2)(4), MUMBAI ..... RESPONDENT PAN: AAAPN 7749 M APPELLANT BY: SHRI MANDAR TELANG RESPONDENT BY: SHRI A.K. NAYK DATE OF HEARING: 19.01.2012 DATE OF PRONOUNCEMENT: 31.01.1012 O R D E R PER R.S. PADVEKAR, JM : IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-33, MUMBAI DATED 21.1.2011 FOR T HE A.Y. 2007-08. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN DISMISSING THE APPEAL IN LIMINE WITHOUT APPRECIATIN G THE FACT THAT THE APPELLANT HAD DULY FILED ADJOURNMENT LETTERS FOR THE APPEAL HEARINGS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THE FACT THAT THE APPELLANT WAS UNABLE T O ATTEND THE HEARING FIXED ON 21. 01.2011 SINCE HE WAS OUT O F TOWN ON THE SAID DATE AND ACCEPT THE ADJOURNMENT LETTER FILED BY THE APPELLANT SUBSEQUENTLY. ITA 2469/M/2011 PRAKASH H. NALAWADE 2 3. THE LEARNED CIT (APPEALS) ERRED IN NOT APPRECIAT ING THAT THE SUM OF ` 39,99,068/- ARE IN THE NATURE OF CONTRACT RECEIPTS RECEIVED FOR CONSTRUCTION OF FLATS AND NOT INCOME F ROM SALE OF FLATS AND CONSEQUENTLY CONFIRMED THE ACTION OF T HE ASSESSING OFFICER IN TREATING THE CONTRACT RECEIPTS AS INCOME FROM SALE OF INVESTMENT AND CHARGING UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF BUSINESS IN COME 4. THE LEARNED CIT (APPEALS) HAVING FAILED TO APPRE CIATE THE FACT THAT THE APPELLANTS GROSS RECEIPTS FROM BUSIN ESS RECORDED AT ` 70,24,518/- EXCEEDED THE THRESHOLD LIMIT OF ` 40 LAKHS AND WAS SUBJECTED TO AUDIT U/S.44AB OF THE ACT, SHE ERRED IN CONFIRMING AND APPLYING THE PROVISIONS OF SECTION 44AD OF THE ACT. 5. THE LEARNED COMMISSIONER ERRED IN APPLYING 8% TO THE CONTRACT RECEIPTS OF ` 38,58,450/- AND MAKING AN ADDITION OF ` 3,08,676/- TO THE TOTAL INCOME WITHOUT APPRECIATIN G THE FACT THAT THE APPELLANT HAS ALREADY CHARGED THE SAI D BUSINESS RECEIPTS AS PER THE NORMAL SLAB RATES. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DENYING THE EXEMPTION UNDER SECTION 10(1) OF THE I. T. ACT IN RESPECT OF AGRICULTURAL INCOME OF ` 2,05,272/-. 2. WE HAVE HEARD THE PARTIES. THE TWO MAIN GRIEVAN CES OF THE ASSESSEE ARE THAT: (I) THE LD. CIT (A) PASSED EX-PARTE ORDER IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE WITHOUT GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE; AND (II) THE ASSESSEE FILED SUBMISSION BEFORE THE ASSESSING OFFICER BUT BY THAT TIME THE A SSESSMENT WAS COMPLETED. 3. THE ASSESSEE IS AN INDIVIDUAL WHO IS A CIVIL CON TRACTOR AND DEVELOPER. THE ASSESSEE FILED THE RETURN OF INCOME OF RS. 7,22,487/- ON 30.10.2007. THE ASSESSEES CASE WAS SELECTED FO R SCRUTINY AND ITA 2469/M/2011 PRAKASH H. NALAWADE 3 ASSESSMENT WAS COMPLETED U/S.143(3) DETERMINING THE TOTAL INCOME AT RS. 46,29,016/- BY MAKING THE DIFFERENT ADDITIONS. IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS SHOWN THE RECEIPTS O F RS. 70,24,518/- DURING THE FINANCIAL YEAR 2006-07 TOWARDS SALE OF T HE FLATS. THE A.O. NOTED THAT THE ASSESSEE WAS ASKED TO GIVE THE COMPL ETE DETAILS OF THE SALE OF THE FLATS. THE ASSESSEE ONLY FILED ONE LIN E STATEMENT STATING THAT HE HAS RECEIVED RS.39,99,068/- TOWARD SALE OF FLAT. THE A.O. ALSO ASKED FOR THE DETAILS OF THE WIP. AS NOTED BY THE A.O,. FROM THE DETAILS GIVEN BY THE ASSESSEE IN RESPECT OF THE OPENING AND CLOSING STOCK, NEITHER THE COST OF THE FLATS SOLD OUT CAN BE ARRIV ED AT NOR THE FLATS CAN BE IDENTIFIED. AS NOTED BY THE A.O. AS REQUIRED DE TAILS WERE NOT FILED BY THE ASSESSEE IT WAS DIFFICULT TO WORK OUT THE CO ST OF THE FLATS WHICH WERE CLAIMED TO HAVE BEEN SOLD. THE A.O. HAS ALSO NOTED THAT THE ASSESSEE HAS NEITHER FILED THE COPIES THE SALE AGRE EMENTS OF THE FLATS NOR THE NUMBER OF FLATS SOLD. THE ASSESSEE DID NOT FILE THE NAME AND ADDRESSES OF THE PURCHASERS OF THE FLATS. THE A.O. MADE THE ADDITION OF ` 33,99,068/- BY GIVING SOME VAGUE REASONS. THE ASS ESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT (A) BUT THE CIT (A) DISPOSED OFF THE APPEAL EX-PARTE . IT APPEARS THAT THE APPEAL FILED BY THE ASSESSEE WAS FIXED FOR HEARING ON 16.11.2010 BUT AS ON THAT DATE NONE APPEARED NOR ADJOURNMENT LETTER WAS FILED. THE LD. CIT (A) AGAIN ISSUED NOTICE TO THE ASSESSEE ON 26.11.2010 DURING THE FINAL NOTICE OF HEARING 09.12.2010. NON ATTENDED ON THAT DATE. AS NOTED BY THE LD. CIT (A) THE HEARING WAS AGAIN FIXED ON 21.01.2011 B UT ON THAT DAY ALSO THAT THERE WAS NO RESPONSE FROM THE ASSESSEE. HENCE, THE LD. CIT (A) DISPOSED OFF THE APPEAL ON THE MERIT. IN THE A FFIDAVIT, THE ASSESSEE HAS STATED THAT IN RESPECT OF THE DATE FIXED ON 16. 11.2010 THE ADJOURNMENT LETTER WAS FILED ON 15.11.2010 ALONG WI TH THE POWER OF ATTORNEY. IT IS ALLEGED THAT NO DATE OF HEARING WA S GRANTED ON THE SAID DATE AND THE ASSESSEE WAS TOLD THAT FRESH NOTICE OF HEARING WOULD BE SENT TO HIM. IN RESPECT OF THE DATE OF HEARING ON 9.11.2010, THE ASSESSEE FILED AN ADJOURNMENT LETTER ON 7.12.2010 A ND IT IS DENIED IN THE AFFIDAVIT THAT NO ADJOURNMENT LETTER WAS FILED BY THE ASSESSEE. IT IS FURTHER STATED THAT IN RESPECT OF THE DATE OF HEARI NG ON 11.1.2011 THE ASSESSEE WAS OUT OF TOWN WITH THE FAMILY AND CARETA KER HAS RECEIVED ITA 2469/M/2011 PRAKASH H. NALAWADE 4 THE NOTICE. HE HAS FURTHER STATED THAT THE ASSESSE E WAS CONTINUOUSLY PURSUING THE APPEAL AND HE INCIDENTALLY RESPONDED O N NEXT DATE OF HEARING I.E. 21.10.2011 WITH A WRITTEN PRAYER FOR S HORT ADJOURNMENT OF THE APPEAL AND REQUESTED THE CIT (A) TO CONDONE THE DELAY FOR NON- APPEARANCE. THE ORIGINAL AFFIDAVIT IS PLACED ON RE CORD. 4. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL SUBM ITS THAT THE ASSESSEE WAS SERIOUS IN PURSUING THE MATTER BUT DUE TO THE REASONS STATED IN THE AFFIDAVIT THE AUTHORISED REPRESENTATI VE OF THE ASSESSEE COULD NOT REMAIN PRESENT ON THE DATES OF HEARING. THE LD. COUNSEL PRAYED FOR RESTORING THE MATTER TO THE FILE OF THE A.O. HE SUBMITS THAT THE ASSESSEE HAS ALSO FILED AN ADDITIONAL EVIDENCE THAT MAY BE ADMITTED. THE LD. D.R. HAS NOT OBJECTION FOR RESTO RING THE MATTER TO THE FILE OF THE A.O. WE, ACCORDINGLY, SET ASIDE TH E ORDER OF THE LD. CIT (A) AND RESTORE THE ENTIRE MATTER TO THE FILE OF TH E A.O. FOR PASSING THE FRESH ASSESSMENT ORDER IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER P RINCIPLES OF NATURAL JUSTICE. SO FAR AS ADDITIONAL EVIDENCE FILED BY TH E ASSESSEE BEFORE IS CONCERNED, WE DIRECT THE A.O. TO CONSIDER THE SAME. AS WE HAVE SET ASIDE THE ENTIRE ASSESSMENT ORDER TO THE FILE OF TH E A.O. ACCORDINGLY, ALL THE GROUNDS ARE ALLOWED FOR THE STATISTICAL PUR POSE. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 1ST JANUARY, 2012. SD/- ( R. S. SYAL ) ACCOUTANT MEMBER SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 31ST JANUARY, 2012 ITA 2469/M/2011 PRAKASH H. NALAWADE 5 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT -33, MUMBAI. 4) THE CIT -22, MUMBAI. 5) THE D.R. C BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN