M/s Bhoomi Colonisers (P) Ltd., New Delhi V. ITO, New Delhi

ITA 2532/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3630 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-04-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Non compliance
• Section: 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 2532 & 2533/DEL/11 A.Y. 2006-07 M/S BHOOMI COLONISERS (P) LTD., VS. INCOME-TAX OF FICER, A-33, DENA APARTMENTS, SECTOR-13, WARD 2(4), NEW D ELHI. ROHINI, NEW DELHI. PAN/ GIR NO.AACCB5389G ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI VISHAL AGARWAL CA. RESPONDENT : SHRI A.K. SINGH SR. DR O R D E R PER R.P. TOLANI, J.M: : THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS DATED 28-02-2011 PASSED BY THE CIT(APPEALS)-V, NEW DELHI, FOR SAME ASSESSMENT YEAR 2006-07, ONE AGAINST EX PARTE ASSE SSMENT ORDER U/S 144 AND THE OTHER AGAINST ORDER PASSED U/S 154 OF THE I.T. ACT. 2. BRIEF FACTS ARE: ASSESSEE FILED RETURN DECLARING INCOME OF RS. 1,96,959/-. THE CASE WAS SELECTED FOR SCRUTINY; ACC ORDING TO ASSESSING OFFICER ASSESSEE DID NOT RESPOND FOR HEARING, CONS EQUENTLY, AO EX PARTE ASSESSMENT WAS FRAMED ON THE BASIS OF FACTS AVAILA BLE ON RECORD. AO FOUND THAT ASSESSEE HAD RAISED SHARE CAPITAL OF RS. 3,41 ,000/- AND UNSECURED LOANS AMOUNTING TO RS. 83,51,000/-, THEY WERE PROPOSED T O BE ADDED IN EX PARTE ASSESSMENT. HOWEVER, IN THE ASSESSMENT ORDER ONLY AN AMOUNT OF RS. 83,51,000/- WAS ADDED. SUBSEQUENTLY TO THIS ORDER, AO REALIZED THE MISTAKE AND PASSED ORDER U/S 154 MAKING FURTHER ADDITION OF RS. 3,41,000/- IN RESPECT OF SHARE APPLICATION MONEY. 2 2. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEALS TO T HE CIT(APPEALS), WHERE IT - (I) CHALLENGED THE PASSING OF EX PARTE ORDER ON TH E PLEA THAT NOTICES WERE NOT SERVED; (II) APPLIED FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A. (III) RAISED A GROUND FOR DELETION OF ADDITION. (IV) RAISED A GROUND ABOUT 154 ORDER BEING WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THEREFO RE BAD IN LAW. 2.1. THE CIT(APPEALS) CALLED FOR THE REGISTER OF S ERVICE OF NOTICES AND OBSERVED AS UNDER: IN VIEW OF THE ABOVE CLEAR EVIDENCE THAT NOTICE DA TED 3/1-/07 WAS DISPATCHED BY SPEED POST ON 5/10/07 AND NOT REC EIVED BACK UNSERVED, IT IS INFERRED THAT NOTICE HAS BEEN SERVE D WITHIN 3-4 DAYS AND THEREFORE NOTICE IS HELD TO BE VALIDLY SER VED. DUE TO NON COMPLIANCE TO THE VARIOUS NOTICES, THE ASSESSME NT WAS COMPLETED UNDER SECTION 144 OF THE ACT. IF THERE WA S ANY CHANGE IN ADDRESS, THAT FACT WAS NOT INTIMATED TO A O AND THEREFORE THE NOTICES WERE SERVED AT THE LAST KNOWN ADDRESS. I AM THEREFORE OF THE VIE THAT BECAUSE OF REPEATED NO N COMPLIANCE, THE AO HAD NO OTHER OPTION BUT TO COMPL ETED THE ASSESSMENT U/S 144 OF THE ACT. THEREFORE, GROUND 1 AND 2 IS DECIDED AGAINST THE APPELLANT. 2.2. ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WAS REFUSED TO BE ADMITTED, OBSERVING AS UNDER: 16. IT IS EVIDENT UPON A BARE READING OF RULE 46A THAT THE ASSESSEE DOES NOT HAVE A RIGHT TO FILE ADDL. EV IDENCE UNLESS HIS CASE FALLS WITHIN ONE OF THE SITUATIONS PRESCRIBED UNDER RULE 46A. THE DISCRETION TO PERMIT THE ASSESSEE TO ADDUCE ADDL. EVIDENCE LIES WITH THE CIT (A). THEREFORE, IT CANNOT BE SAID THAT THE CIT(A) IS DUT Y BOUND TO ADMIT ANY EVIDENCE THAT THE ASSESSEE WISHES TO A DDUCE 3 BASED ON WHICH HE WOULD CONDUCT A DE NOVO EXAMINATI ON TO THE CASE BEFORE HIM. 3.7. IT IS CLEAR FROM THE DECISION OF THE DELHI TRI BUNAL AND THE DELHI HIGH COURT THAT THE CIT(A) DOES NOT HAVE UNF ETTERED POWER TO ADMIT ADDITIONAL EVIDENCE AT THE APPELLATE STAGE. NOT ONLY THE ASSESSEE HAS TO FALL UNDER THE EXCEPTIONAL CLAUSES AS GIVEN IN RULE 46A(1) BUT ALSO HAS THE ONUS TO ESTAB LISH THAT IT FALLS UNDER THE EXCEPTIONAL CIRCUMSTANCES. IN THIS CASE THE PLEA TAKEN FOR FILING ADDITIONAL EVIDENCE WAS THAT NOTIC ES WERE NOT SERVED AND HENCE DOCUMENTS COULD NOT BE PRODUCED. 3.8. HOWEVER, THIS PLEA IS NOT ACCEPTABLE IN VIEW O F THE FACT THAT IT HAS BEEN ESTABLISHED ABOVE THAT NOTICES HAV E BEEN SERVED AND ASSESSEE FOR REASON BEST KNOWN TO THEM CHOSE NO T TO COMPLY. I AM OF THE VIEW THAT THE AO IS JUSTIFIED I N OPPOSING THE ADMISSION OF ADDITIONAL EVIDENCE AS AMPLE OPPOR TUNITY WAS PROVIDED TO THE APPELLANT BUT THE APPELLANT CHOSE N OT TO AVAIL OF THE OPPORTUNITY AND THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THAT THE CASE FALLS UNDER THE EXCEPTIONAL CLAUSES A S MANDATED BY THE DELHI HIGH COURT IN THE CASE OF MOSER BAER (SUP RA) 3.9. IN VIEW OF THE ABOVE DISCUSSION, THE ADDITIONA L EVIDENCE PRODUCED DURING THE APPELLATE STAGE IS NOT BEING AC CEPTED FOR THE DISPOSAL OF THIS APPEAL. 2.3. ON MERIT AND ON 154, CIT(A) UPHELD THE ADDITI ON BY FOLLOWING OBSERVATIONS: 4.2. I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AS WELL AS THE ASSESSMENT ORDER. THE ADDITIONAL EVIDENCE FI LED BY THE APPELLANT DURING REMAND HAS NOT BEEN ACCEPTED AS DI SCUSSED IN DETAIL ABOVE. IN VIEW OF THE SAME, THE ADDITION MAD E BY THE AO IS CONFIRMED. 2.4. AGGRIEVED, ASSESSEE IS BEFORE US. 3. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ASSESSEE WAS REGULARLY ON THE RECORD OF THE AO WHICH EMERGES FRO M THE FACT MENTIONED BY 4 AO ON PAGE NO. 2 OF HIS 144 ORDER TO THE EFFECT THA T THE ADDRESSES OF THE DIRECTORS WERE OBTAINED FROM THE RECORD FOR A.Y. 20 07-08. THE ASSESSMENT ORDER IN QUESTION HAS BEEN PASSED ON 29-12-08, WHER EAS THE CIT(A) HAD VERIFIED THE ISSUE ABOUT SERVICE OF NOTICE DATED 3- 10-07, WHICH WAS DISPATCHED ON 5-10-07, ONLY ON THE BASIS OF DISPATC H. LD. COUNSEL THUS CONTENDS THAT THE ASSESSEES APPEAL HAS BEEN DISMI SSED WITHOUT APPRECIATING THE CONTROVERSY ABOUT THE ACTUAL SERVICE OF NOTICE ON THE BASIS OF FACTS AND CIRCUMSTANCES ON RECORD. CIT(A) HAS FAILED TO DECID E THE ISSUE ABOUT SERVICE OF NOTICE IN PROPER TERMS WITHOUT REFERRING TO THE ASSESSEES EXPLANATION. 3.1. WHEN THE SERVICE OF NOTICE IS IN QUESTION, THE PRINCIPLE OF NATURAL JUSTICE DEMAND THAT IN NORMAL CIRCUMSTANCES THE ASS ESSEES ADDITIONAL EVIDENCE SHOULD BE ACCEPTED BY CALLING A PROPER REM AND REPORT FROM THE ASSESSING OFFICER. IN THIS CASE THOUGH THE REMAND R EPORT WAS RECEIVED, THE ADDITIONAL EVIDENCE HAS BEEN REFUSED TO BE ADMITTED . IT IS CONCEDED THAT INITIALLY THE ASSESSEE COULD NOT RESPOND TO THE NOT ICE BUT THE LAST NOTICE HAS NOT BEEN SERVED, WHICH IS THE REASON FOR THE EX PAR TE ASSESSMENT. THE COMPANY HAS NOT RECEIVED ANY NOTICE AND THERE BEING NO PROOF OF ACTUAL SERVICE OF NOTICE, CIT(A) HELD THE FACT AGAINST AS SESSEE ON THE BASIS OF DISPATCH REGISTER. 3.2. APROPOS ALLEGED LAPSE IF ANY, LD. COUNSEL PLE ADS THAT SUITABLE COST MAY BE AWARDED ON THE ASSESSEE. THE ITAT IS THE LAST FA CT FINDING AUTHORITY AND SO FAR THE ASSESSEES CASE HAS NOT BEEN DECIDED ON THE BASIS OF THE EVIDENCE AVAILABLE WITH IT, IN THE INTEREST OF JUSTICE THE M ATTER MAY BE SET ASIDE, RESTORED BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME AFRESH. ASSESSEE UNDERTAKES TO PAY APPROPRIATE COST AND FUL L COOPERATION IN THE FRESH ASSESSMENT . 5 3.3. APROPOS 154 ORDER, IT IS PLEADED THAT IF THE R ECTIFICATORY ORDERS TENDS TO INCREASE THE LIABILITY OF THE ASSESSEE, LAW PROVIDE S MANDATORY OPPORTUNITY OF HEARING AND SUCH ORDER PASSED WITHOUT COMPLYING WIT H THIS CONDITION IS BAD IN LAW. IN THE EVENTUALITY OF SETTING ASIDE, THE IS SUE ABOUT THE SHARE APPLICATION MONEY SHOULD ALSO STAND SET ASIDE. 4. LD. DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. APROPOS THE ISSUE ABO UT NON-SERVICE OF NOTICE, IN OUR CONSIDERED VIEW CIT(A) HAS REFERRED ONLY TO A NOTICE DATED 3-10- 2007 WHICH ACCORDING TO DEPARTMENTAL RECORD WAS DIS PATCHED ON 5-10-2007. THE DATE OF DISPATCH HAS BEEN HELD TO BE TANTAMOUNT TO SERVICE OF NOTICE. BESIDES, THE ASSESSMENT YEAR IN QUESTION WAS FRAME D ON 29-12-2008 AND WITH A REFERENCE TO DISPATCH OF TWO NOTICES ON DIR ECTORS, THE NAME OF THE DIRECTOR AND THE PROOF OF SERVICE IS ALSO NOT MENTI ONED BY ASSESSING OFFICER . CIT(A) HAS REFUSED TO ADMIT THE ADDITIONAL EVIDENCE , CONSEQUENTLY THE ADDITIONS MADE ON THE ASSESSEE REMAIN ON THE BASIS OF EX PARTE ASSESSMENT ONLY. 5.1. APROPOS 154 ACTION, IF THE SAME HAS EFFECT OF INCREASING THE TAX LIABILITY OF THE ASSESSEE AN OPPORTUNITY OF BEING H EARD IS MANDATORY. IN THE INTEREST OF NATURAL JUSTICE, WE ARE INCLINED TO SET ASIDE THE ASSESSMENT BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME A FRESH. WE IMPOSE COSTS OF RS. 10,000/- (TEN THOUSAND) WHICH THE ASSESSEE UNDE RTAKES TO PAY BEFORE COMMENCEMENT OF THE SET ASIDE PROCEEDINGS. THE ASSE SSEE FURTHER UNDERTAKES FULL COOPERATION IN THE ASSESSMENT PR OCEEDINGS. 5.2. SINCE WE HAVE SET ASIDE THE ASSESSMENT THE ISS UE ABOUT 154 ORDER STANDS SET ASIDE BACK TO THE FILE OF ASSESSING OFFI CER AS A CONSEQUENCE. 6 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES SUBJECT TO PAYMENT OF RS. 10, 000/- (TEN THOUSAND) AS INDICATED ABOVE. ORDER PRONOUNCED IN OPEN COURT ON 29-6-2012. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29-6-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR