M/S. KALYAN SINGH, MAHOBA V. INCOME TAX OFFICER-6(3), BANDA

ITA 252/ALLD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1210 (ITAT-ALLAHABAD)
• Duration Of Justice: 3 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-06-2021
• Assessment Year: 2003-2004
• Appeal Filed On: 11-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Period of limitation; Set aside
• Section: 143(3)

Judgement Text

P A G E | 1 ITA NO.252/ALLD/2018 A.Y. 2003 - 04 M/S KALYAN SINGH VS. INCOME TAX OFFICER - 6(3), BANDA IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD SMC BENCH, ALLAHABAD BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER THROUGH VIRTUAL COURT ITA NO.252/ALLD/2018 ASSESSMENT YEAR: 2003 - 04 M/S KALYAN SINGH KABRAI 210424, DISTT. MAHOBA, VS. INCOME TAX OFFICER - 6(3), BANDA PAN: AAACH3613H (APPELLANT) (RESPONDENT) APPELLANT BY: MR. ASHISH BANSAL, ADV. RESPONDENT BY: MR. A.K. SINGH SR. DR. DATE OF HEARING: 07.07.2021 DATE OF PRONOUNCEMENT: 09 .07.2021 O R D E R PER VIJAY PAL RAO (JUDICIAL MEMBER): THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.03.2015 OF CIT(A) FOR ASSESSMENT YEAR 2003 - 04 . S INCE THIS APPEAL HAS BEEN FILED AFTER A GAP OF ABOUT 3 YEARS FROM THE DATE OF THE IMPUGNED ORDER OF THE CIT(A) THEREFORE, A QUESTION REGARDING THE MAINTAINABILITY OF THE PRESENT APPEAL ARISES. THE LD. D.R HAS SUBMITTED THAT THERE IS A DELAY OF MORE THAN 2 YEARS IN FILING THE PRESENT APPEAL AND ASSESSEE HAS NOT EXPLAINED THE DELAY AS THE ASSESSEE HAS NOT FILED ANY APPLICATION FOR CONDONATION OF DELAY. THUS, THE LD. D.R HAS CONTENDED THAT THE PRESENT APPEAL OF THE ASSESSEE IS NOT MAINTAINABLE BEING BARRED BY LIMITATION. ON THE OTHER HAND THE LD. A.R OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS EXPLAINED THE CAUSE OF DELAY IN BRIEF SYNOPSIS WHICH HAS BEEN SUPPORT ED BY THE AFFIDAVIT OF THE PARTNER OF THE ASSESSEE FIRM . THE LD. A.R HAS POINTED OUT THAT THE CIT(A) HAS PASSED THE IMPUGNED ORDER EXPARTE WHEREBY ADHOC ADDITION MADE BY THE A.O WAS CONFIRMED AND ENHANCEMENT P A G E | 2 ITA NO.252/ALLD/2018 A.Y. 2003 - 04 M/S KALYAN SINGH VS. INCOME TAX OFFICER - 6(3), BANDA OF INCOME WAS ALSO MADE BY THE CIT(A) BY ESTIMATING THE INCOME OF RS.50 LAC. AFTER ENHANCEMENT MADE BY THE CIT(A) THE PROFIT RATE COMES TO 40% WHICH IS JUST I MPOSSIBLE IN CASE OF A GOVERNMENT CONTRACTOR. THE LD. A.R HAS FURTHER SUBMITTED THAT EVEN THE SHOW CAUSE NOTICE FOR ENHANCEMENT OF THE INCOME WAS NOT SERVED UPON THE ASSESSEE. THEREFORE, THE LD. A.R HAS PLEADED THAT WHEN THE ASSESSEE WAS NOT SERVED WITH TH E NOTICES ISSUED BY THE CIT(A) AND EVEN THE IMPUGNED ORDER WAS NOT SERVED UPON THEN THE PRESENT APPEAL FILED BY THE ASSESSEE ONLY AFTER RECEIVING THE DEMAND NOTICE AND OBTAINING A CERTIFIED COPY FROM THE OFFICE OF THE CIT(A) ON 28 TH MAY, 2018 IS WITHIN THE LIMITATION PRESCRIBED U/S 253(3) OF THE INCOME TAX ACT. THUS, THE LD. A.R HAS SUBMITTED THAT THE ASSESSEE HAS DULY EXPLAINED THE DELAY AND SINCE APPEAL HAS BEEN FILED WITHIN THE PERIOD OF LIMITATION AFTER RECEIVING THE COPY OF THE IMPUGNED ORDER THEREFOR E, THERE IS NO DELAY ON PART OF THE ASSESSEE IN FILING THE PRESENT APPEAL. 2. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE RELEVANT RECORD. ON DIRECTION OF THE BENCH LD. D.R HAS ALSO PRODUCED THE RECORD OF THE CIT(A) . ON PERUSAL OF THE CIT ( A) RECORD FILED BY THE LD. D.R IT TRANSPIRES THAT THE SHOW CAUSE NOTICE ISSUED BY THE CIT(A) DATED 16 TH MARCH, 2015 FOR ENHANCEMENT OF ASSESSMENT WAS ALSO RECEIVED BACK UNSERVED WITH THE POSTAL REMARKS THAT THE RECIPIENT WAS OUT OF PLACE AND ACCORDINGLY IT WAS RETURNED TO THE SENDER . THOUGH THE IMPUGNED ORDER WAS SEND TO THE ASSESSEE THROUGH SPEED POST DATED 24 TH APRIL, 2015 HOWEVER , THERE IS NOTHING ON RECORD TO SHOW THAT THE SAID SPEED POST WAS DELIVERED TO THE ASSESSEE OR RECEIVED BACK UNSERVED . I N THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE IMPUGNED ORDER WAS DELIVERED TO THE ASSESSEE AND FURTHER IN VIEW OF THE F ACT THAT THE SHOW CAUSE NOTICE ISSUED BY THE CIT(A) DURING THE PENDENCY OF THE APPEAL WAS RECEIVED BACK UNSERVED AND CONSEQUENTLY THE IMP UGNED ORDER WAS PASSED EXPARTE T HE EXPLANATION FOR FILING THE APPEAL AFTER GAP OF ABOUT 3 YEARS CANNOT BE DOUBTED. THEREFORE, IN THE FACTS OF THE CIRCUMSTANCES OF THE CASE WHEN THE CIT(A) HAS ENHANCED THE ASSESSMENT WHILE PASSING THE EXPARTE ORDER AND THAT TOO WITHOUT SERVE THE SHOW CAUSE NOTICE ON THE ASSESSEE T HE APPEAL OF THE ASSESSEE IS ADMITTED FOR DISPOSAL ON MERIT S. P A G E | 3 ITA NO.252/ALLD/2018 A.Y. 2003 - 04 M/S KALYAN SINGH VS. INCOME TAX OFFICER - 6(3), BANDA 3. THE ASSESSEE HAS RA ISED FOLLOWING GROUNDS: 1. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ARBITRARILY ENHANCING THE INCOME, BY A SUM OF RS.50,00,000/ - WHICH ENHANCEMENT OF INCOME IS CONTRARY TO FACTS BAD IN LAW BE DELETED. 2. BECAUSE THE SHOW CAUSE NOTICE DATED 16.03.2015 ALLEGED TO HAVE BEEN ISSUED FOR ENHANCEMENT OF INCOME, AS REFERRED TO IN THE APPELLATE ORDER, HAS NOT BEEN SERVED NOR RECEIVED BY THE ASSESSEE, AS SUCH, THE ASSESSEE WAS DEPRIVED OF THE OPPORTUNITY, THE ENHANCEMENT MADE IS CONTRARY TO THE PROVISIONS OF LAW BOTH ON ACCOUNT OF OPPORTUNITY OF HEARING AND THE TIME GIVEN, THE ENHANCEMENT MADE BE DELETED. (SHOW CAUSE NOTICE HA S BEEN RECEIVED BACK BY THE CI T(A)'S OFFICE UNDELIVERED). 3. BE CAUSE NO NOTICE OF ENHANCEMENT BEING SERVED ON THE ASSESSEE, NOR THE OPPORTUNITY OF BEING HEARD WAS ALLOWED, THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN MAKING THE ENHANCEMENT TO THE INCOME, THE ENHANCEMENT SO MADE BE DELETED AND THE APPEAL ORDER BE QUASHE D. 4. BECAUSE THE CIT{A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE FOLLOWING DISALLOWANCES MADE BY THE ASSESSING OFFICER: (I) RS.20,000/ - OUT OF REPAIRS & MAINTENANCE EXPENSES (II) RS.20,000/ - OUT OF SALARY EXPENSES. (III) RS.10,000/ - OUT OF VEHICLE RUNNING AND MAINTENANCE EXPENSES. (IV) RS.50,000/ - OUT OF DIESEL EXPENSES. (V) RS.12,118/ - ON ACCOUNT OF DEPRECIATION ON TATA SUMO. 5. BECAUSE ON A PROPER CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, THE DISALLOWANCES MADE BY THE ASSESSING OFFIC ER AND UPHELD BY THE CIT(A) ARE BAD IN LAW, ARBITRARY, CONTRARY TO PROVISIONS OF LAW BE DELETED. 4. AT THE OUTSET THE LD. A.R OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS A GOVERNMENT CONTRACTOR AND FILE ITS RETURN OF INCOME ON 1 ST FEBRUARY, 2003 DECLARING TOTAL INCOME OF RS.2,25,850/ - . THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT U/S 143(3) ON 17.01.2006 HAS MADE VARIOUS ADHOC DISALLOWANCES ON ACCOUNT OF EXPENSES. HE HAS FURTHER SUBMITTED THAT THE CIT(A) NOT ONLY CONFIRMED TH E ADHOC DISALLOWANCES MADE BY THE A.O BUT ALSO ENHANCED THE INCOME OF THE ASSESSEE WITHOUT ANY BASIS. T HE ENHANCEMENT IS ALSO AN ADHOC ESTIMATION BY THE CIT(A). SINCE THE ASSESSEE WAS NOT GIVEN APPROPRIATE OPPORTUNITY BEFORE THE ENHANCEMENT OF THE ASSESSM ENT THEREFORE, THE IMPUGNED ORDER OF THE CIT(A) IS NOT SUSTAINABLE. HE HAD PLEADED THAT THE MATTER MAY BE REMANDED TO THE RECORD OF THE CIT(A) FOR GRANTING A FRESH OPPORTUNITY OF HEARING AND THEN DECIDE THE APPEAL ON MERITS. ON THE OTHER HAND THE LD. D.R. HAS SUBMITTED THAT THE CIT(A) HAD RECORDED IN THE IMPUGNED ORDER THAT THE SHOW CAUSE NOTICE AND SUMMONS WERE ISSUED TO THE ASSESSEE BUT THERE IS NO COMPLIANCE ON THE P A G E | 4 ITA NO.252/ALLD/2018 A.Y. 2003 - 04 M/S KALYAN SINGH VS. INCOME TAX OFFICER - 6(3), BANDA PART OF THE ASSESSEE AND THEREFORE THE CIT(A) WAS LEFT WITH NO OPTION BUT TO PASS IMPUGNED ORDER. HE H AS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5 . I HAVE CONSIDERED THE RIVAL SUBMISSION AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U/S 143(3) HAS MADE ADHOC DISALLOWANCES OF VARIOUS EXPENSES TO THE TUNE OF RS.20,000/ - , RS. 10,000/ - AND RS.50,000/ - AND THEREBY ASSESSED THE TOTAL INCOME OF RS.3,37,970/ - AS AGAINST THE RETURNED INCOME OF RS.2,25,852/ - . ON APPEAL, BEFORE THE CIT(A)THE ASSESSEE CHALLENGED THE ADHOC DISALLOWANCE MADE BY THE A.O HOWEVER , THE CIT(A) NOT ONLY CONFIRMED THE ADHOC DISALLOWANCE MADE BY THE A.O BUT ALSO ENHANCED THE ASSESSMENT FROM RS.3,37,972/ - TO RS. 50 LAC. IT IS EVIDENT FROM THE RECORD THAT THE SHOW CAUSE NOTICE DATED 16.03.2015 ISSUED BY THE CIT(A) FOR ENHANCEMENT OF ASSESSMENT WA S RECEIVED BACK UNSERVED. THEREFORE, THE ADHOC ENHANCEMENT WAS MADE BY THE CIT(A) WITHOUT SERVING THE SHOW CAUSE NOTICE ON THE ASSESSEE. THUS, IT IS CLEAR THAT THOUGH THE CIT(A) ISSUED A SHOW CAUSE NOTICE U/S 251(2) BUT THE SAID NOTICE WAS NOT SERVED UPON THE ASSESSEE AND CONSEQUENTLY THE ASSESSEE WAS NOT GIVEN ANY EFFECTIVE OPPORTUNITY OF HEARING BEFORE THE ENHANCEMENT. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE THE IMPUGNED ORDER PASSED BY THE CIT(A) IS SET ASIDE AND THE MATTER IS REMANDED TO THE RECORD OF THE CIT(A) FOR DECIDING THE SAME AFRESH AFTER GIVING ONE MORE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE RECORD FILE OF THE CIT ( A) BE RETURNED TO LD.D.R. 6 . THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT THROUGH V IDEO CONFERENCING ON 09 .07.2021 AT THE TIME OF HEARING. SD/ - [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 09 /07/2021 PS: ROHIT P A G E | 5 ITA NO.252/ALLD/2018 A.Y. 2003 - 04 M/S KALYAN SINGH VS. INCOME TAX OFFICER - 6(3), BANDA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT - ALLAHABAD, U.P. 5. DR THE SR. DR, AAYAKAR BHAWAN, CIVIL LINES, ALLAHABAD, U.P. BY ORDER ASSISTANT REGISTRAR TRUE COPY