Sharat Kumar, New Delhi V. Addl. CIT, New Delhi

ITA 27/DEL/2012

• Counselvise Citation: 2720114 RSA 2012
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 03-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTHY
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Speculation loss

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI G BENC H BEFORE SMT. DIVA SINGH, JM & SHRI A.N. PAHUJA, AM (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SALIL AGGARWAL, AR REVENUE BY SHRI S. MOHANTHY, DR DATE OF HEARING 06-03-2012 DATE OF PRONOUNCEMENT 06-03-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 03.01.2012 BY THE ASSESSEE AGA INST AN ORDER DATED 15 TH NOVEMBER, 2011 OF THE LD. CIT(A)-XXIII, NEW DELHI RAISES THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS GROSSLY ERRED I N IN LAW AND ON FACTS IN PASSING AN ORDER WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD, WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN OVERLOOKING THE FACT THAT THE COUNSEL F OR THE APPELLANT HAD APPEARED ON 26 TH APRIL, 2011. HOWEVER, THE CIT WAS NOT AVAILABLE AND THE STAFF REFUSED TO ACCEPT AN ADJOURNMENT APPLICATION. 2. THAT THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN NOT ADJUDICATING ALL THE GROUNDS OF APP EAL RAISED BY THE APPELLANT AND THUS, HE FAILED IN HIS DUTY ITA NO.27/DEL/2012 ASSESSMENT YEAR:2008-09 SHARAT KUMAR 305, LAXMI BHAWAN, 72, NEHRU PLACE, NEW DELHI V/S . ADDL. C.I.T.,RANGE-XXIII, NEW DELHI [PAN : AAAPK 0235 D] I.T.A. NO.27/DEL./2012 2 TO DECIDE THE CASE ON MERITS ON ALL THE GROUNDS RAI SED BEFORE HIM. 3. THAT THE LD. CIT(A) ERRED HAS GROSSLY ERRED IN LAW AND ON FACTS BY UPHOLDING THE ACTION OF THE ASSESSI NG OFFICER IN COMPUTING THE INCOME OF THE APPELLANT FR OM BUSINESS AND PROFESSIONAL IN SHARE TRADING AT ` `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` `3,20,000/- AS AGAINST ` ` 1,60,000/- AS REFLECTED BY THE APPELLANT. I.T.A. NO.27/DEL./2012 3 THAT THE LEARNED CIT(A) IGNORED THE BASIC FACT THAT THE APPELLANT HAS ONLY 50% OWNERSHIP IN THE PROPERTY AN D THE ENTIRE INCOME FROM RENT COULD NOT HAVE BEEN ASSESSED IN THE HANDS OF THE APPELLANT. 6. THAT THE LD. CIT(A) ERRED HAS GROSSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF THE AO IN LEVYING OF INTEREST U/S 234B, WHICH IN ANY CASE COU LD NOT BE CHARGED. 7. THAT THE LEARNED CIT(A) HAS FURTHER ERRED IN UPHOLDING THE ACTION OF THE AO INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. ADVERTING FIRST TO GROUND NOS 1 &.2 IN THE APPE AL ,FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT E-RETURN DECLARING IN COME OF ` `1,56,83,050/-FILED ON 27.09.2008 BY THE ASSESSEE, AN ARCHITECT & TRADER I N LEATHER GOODS, AFTER BEING PROCESSED ON 20.07.2009 U/S 143(1) OF THE INCOME-TA X ACT, 1961 (HEREAFTER REFERRED TO AS THE ACT) WAS SELECTED FOR SCRUTINY W ITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT, ISSUED ON 21 ST AUGUST, 2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE WAS TRADING IN SHARES. TO A QUERY BY THE AO AS TO WHY THE GAINS FROM TRADING IN SHARES SHOULD NOT BE TREATED AS BUSINESS INCOME, TH E ASSESSEE SUBMITTED A DETAILED REPLY. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO WHILE REFERRING TO DECISIONS IN KARAM CHAND THAPAR AND BROTHERS PVT . LTD. VS. CIT, 82 ITR 899; M/S IMMORTAL FINANCIAL SERVICES (P) LTD. VS. DCIT IN I.T.A. NO.4094/MUM/2010; CIT VS. SMT. MINAL RAMESHCHANDRA (1987) 167 ITR 507 (GUJ.); LOKA SHIKSHANA TRUST VS. CIT (175) 101 ITR 234 (SC); DCIT VS. SMT. DEEPABEN AMITBHAI SHAH,99 ITD 219 AND CIRCULAR NO.4 OF 2007 DATED 15 TH JUNE, 2007 ISSUED BY THE CBDT, ASSESSED PROFIT OF ` ` 36,43,050/- ON SALE OF SHARES AS INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PROFESSION . BESIDE, THE AO ADOPTED THE ANNUAL LETTING OF THE PROPERTY LOCATED AT C-243 , SECTOR-44, NOIDA, (U.P.) AT I.T.A. NO.27/DEL./2012 4 ` ` 3,20,000/- INSTEAD OF ` `1,60,000/- SHOWN BY THE ASSESSEE. ACCORDINGLY, TO TAL INCOME OF THE ASSESSEE WAS ASSESSED AT ` `1,59,77,750/-. 3. ON APPEAL, THE LD. CIT(A) WITHOUT RECORDING ANY FINDINGS ON MERITS OF THE ADDITIONS UPHELD THE FINDINGS OF THE AOIN TH E FOLLOWING TERMS: 2. THE APPEAL WAS FIXED FOR HEARING ON 26.04.2011 VIDE NOTICE U/S 250 DATED 08.03.2011, SENT TO APPELLANT THROUGH SPEED POST AT THE ADDRESS GIVEN IN FORM NO.35 I.E. 305, LAXMI BHA WAN, 72, NEHRU PLACE, NEW DELHI-19. NONE ATTENDED ON THE SP ECIFIED DATE. AGAIN A NOTICE DATED 18.08.2011 WAS SENT TO THE APP ELLANT FIXING THE APPEAL FOR HEARING ON 29.09.2011. THIS TIME AL SO NEITHER THE APPELLANT ATTENDED NOR WAS ANY ADJOURNMENT SOUGHT. A FURTHER NOTICE DATED 14.10.2011 WAS ISSUED TO THE APPELLANT GIVING HIM FINAL OPPORTUNITY TO ATTEND ON 14.11.2011. BUT THE APPEL LANT DID NOT ATTEND EITHER IN PERSON, OR THROUGH AR, AND DID NOT FILE ANY WRITTEN REPLY. 3. IN CIT VS. B.N. BHATTACHARYA (1977) 118 ITR 461 (S.C.), THE HONBLE APEX COURT WHILE DEALING WITH THE ISSUE OF PROSECUTION OF APPEAL HAS STATED THAT PREFERRING AN APPEAL MEANS MORE THAN FORMALLY FILING IT BUT EFFECTIVELY PURSUING IT. T HE DELHI TRIBUNAL IN CIT VS. MULTIPLAN INDIA PVT. LTD. AS REPORTED IN 38 ITD 320 (DELHI) WHEN FACED WITH A SIMILAR SITUATION OF NON PROSECUT ION OF APPEAL DISMISSED THE APPEAL OF REVENUE. 4. IN VIEW OF THE ABOVE FACTS, IT IS CRYSTAL CLEAR THAT THE APPELLANT IS NOT INTERESTED IN PROSECUTING THE APPEAL. ON TH E BASIS OF THE DECISIONS AS DISCUSSED IN THE PRECEDING PARAGRAPH, THE APPEAL OF THE APPELLANT IS, THEREFORE, DISMISSED. 4.. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAIN ST THE AFORESAID FINDINGS OF THE LD.CIT(A).AT THE OUTSET, THE LD. AR ON BEHALF OF THE ASSESSEE WHILE INVITING OUR ATTENTION TO GROUND NOS.1 AND 2 OF THE APPEAL CONTENDED THAT THE LD. CIT(A) DID NOT PASS A SPEAKING ORDER ON THE VARIOUS ISSUES RAISED BEFORE HIM AND, THEREFORE, MATTER IS REQUIRED TO BE RESTORED TO HIS FILE FOR ADJUDICATION OF VARIOUS GROUNDS RAISED BY THE ASSESSEE BEFORE HIM. THE LD. DR DID NOT OPPOSE THESE SUBMISSIONS ON BEHALF OF THE ASSESSEE. TO A QUERY BY THE BENCH, THE LD. AR SUBMITTED THAT NONE OF THE NOTICES ISSUED BY THE LD. CIT(A) WERE RECEIVED BY I.T.A. NO.27/DEL./2012 5 THE ASSESSEE AND THAT LD. CIT(A) WAS NOT JUSTIFIED IN DISPOSING OF THE APPEAL IN A SUMMARY MANNER WITHOUT ALLOWING SUFFICIENT OPPORTUN ITY TO THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AS IS APPARENT FROM THE FACTS OF THE CASE, NONE OF THE NOTICE DATED 8.3.2011,18.8.2011 AND 14.10.2011 ISSUED BY THE LD . CIT(A) APPEAR TO HAVE BEEN SERVED UPON THE ASSESSEE NOR THE LD. DR PLACED BEFORE US ANY MATERIAL REGARDING SERVICE OF ANY OF THESE NOTICE. IN THESE CIRCUMSTANCES, THE LD. CIT(A) DISMISSED THE APPEAL WITHOUT EVEN ANALYZING THE ISS UES OR RECORDING HIS SPECIFIC FINDINGS ON THE SAID ISSUES RAISED IN THE GROUNDS OF APPEAL BEFORE HIM . THIS APPROACH OF THE LEARNED CIT(A) IS NOT IN ACCORDANCE WITH LAW. A MERE GLANCE AT THE IMPUGNED ORDER REVEALS THAT THE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICI AL/QUASI-JUDICIAL BODY/AUTHORITY MUST PASS REASONED ORDER, WHICH SHOU LD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO T HE ISSUES/POINTS RAISED BEFORE IT. THE APPLICATION OF MIND TO THE MA TERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF THE ACT MANDATES THAT THE ORDER OF THE CIT(A) WHIL E DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POIN TS FOR DETERMINATION, THE DECISION THEREON AND THE REASONS FOR THE DECISION. THE REQUIREMENT OF RECORDING OF REASONS A ND COMMUNICATION THEREOF BY THE QUASI-JUDICIAL AUTHORI TIES HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PRO CEDURE AND IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RUL E OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTR ANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINE SS IN THE DECISION-MAKING PROCESS. WE MAY REITERATE THAT A D ECISION DOES NOT MERELY MEAN THE CONCLUSION. IT EMBRACES WITHI N ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS. STATE OF PUNJAB,(1995)1SCC 760(SC)]. AS IS APPARENT, THE IMPUGNED ORDER I.T.A. NO.27/DEL./2012 6 SUFFERS FROM LACK OF REASONING AND IS NOT A SPEAKI NG ORDER. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE LD. CIT(A) HA VE NOT PASSED A SPEAKING ORDER ON VARIOUS ISSUES RAISED IN THE APP EAL BEFORE HIM, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE TH E ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR DECID ING THE ISSUES RAISED IN THE GROUNDS RAISED BEFORE HIM BY THE ASS ESSEE, AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWING SUFFICIENT OPPO RTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF T HE ACT. THE ASSESSEE SHALL SUO MOTU APPROACH THE LD. CIT(A) WI THIN THREE MONTHS OF THE RECEIPT OF THIS ORDER FOR EXPEDITIOUS DISPOSAL OF APPEAL AND SHALL NOT SEEK ANY ADJOURNMENT WITHOUT VALID RE ASONS. WITH THESE OBSERVATIONS, GROUND NOS. 1 & 2 IN THE APPEAL ARE DISPOSED OF. AS A COROLLARY, OTHER GROUND NOS. 3 TO 7 DO N OT SURVIVE FOR OUR ADJUDICATION AT THIS STAGE. 6. NO OTHER PLEA OR ARGUMENT WAS RAISED BEFORE US . 7. IN THE RESULT, APPEAL IS ALLOWED BUT FOR STATI STICAL PURPOSES . SD/- SD/- (SMT. DIVA SINGH) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. SHARAT KUMAR,305, LAXMI BHAWAN,72, NEHRU P LACE, NEW DELHI. 2. ADDL. C.I.T., RANGE-XXIII, NEW DELH I 3. CIT CONCERNED. 4. CIT(A), XXIII, NEW DELHI 5. DR, ITAT,G BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT