M/s. Weather Bys Constructions Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 2713/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0179 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO S . - 790 & 2713 /DEL/201 4 (ASSESSMENT YEAR S - 200 7 - 08 & 2009 - 10 ) WEATHER BYS CONSTRUCTIONS PVT.LTD, (NOW KNOWN AS PASSION HEIGHTS PVT.LTD.), E - 210, 2 ND FLOOR, CHATTARPUR EXTENSION, NEW DELHI - 110074. PAN - AAACW5325R (APPELLANT ) VS ACIT, CENTRAL CIRCLE - 17, NEW DELHI (RESPONDENT ) APPELLANT BY NONE RESPONDENT BY SH.GAGAN SOOD, SR.DR ORDER IN BOTH THESE APPEALS THE ASSESSEE ASSAIL S THE CORRECTNESS OF THE ORDER DATED 11.12.2013 AND 19.03.2014 RESPECTIVELY OF CIT(A) - II, NEW DELHI PERTAINING TO 2007 - 08 AND 2009 - 10 ASSESSMENT YEARS ON VARIOUS GROUNDS WHICH WE SHALL REFER SUBSEQUENTLY. HOWEVER, BEFORE WE ADDRESS THOSE IT IS MATERIAL TO REFER TO THAT A T THE TIME OF HEARING, AN ADJOURNMENT PETITION WAS MOVED ON BEHALF OF THE LD.AR PLEADING INABILITY TO COME ON ACCOUNT OF THE SUMMER H EA T. C ONSIDERING THE MATERIAL AVAILABLE ON RECORD AND THE ARGUMENTS OF THE LD. SR. DR IT WAS CONSIDERED APPROPRIATE TO PROCEED WITH THE PRESENT APPEAL S EX - PARTE QUA THE ASSESSEE APPELLANT ON MERIT S . A CCORDINGLY THE PETITION WAS REJECTED. 2. A PERUSAL OF THE RECORD SHOWS THAT AS A RESULT OF THE SEARCH CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 20.10.2006, N OTICE U/S 153A WAS ISSUED TO THE ASSESSEE ON 06.04.2010 REQUIRING THE ASSESSEE TO FURNISH RETURN OF INCOME. IN RESPONSE THERETO, THE ASSESSEE FURNISHED ITS RETURN OF INCOME AT RS.2,26,900/ - . SUBSEQUENTLY NOTICE U/S 142(1) & 143(2) ALONGWITH QUESTIONNAIRE ETC. WERE ISSUED REQUIRING THE ASSESSEE TO FURNISH CERTAIN DETAILS. SPECIFIC QUESTION NO. - DATE OF HEARING 01 .0 7 .2015 DATE OF PRONOUNCEMENT 29 .07.2015 I.T.A .NO. - 790 & 2713/ DEL/2014 PAGE 2 OF 4 19 IN QUESTIONNAIRE DATED 11.10.2010 IS FOUND REFERRED TO IN THE ASSESSMENT ORDER AND WHEREIN THE ASSESSEE WAS REQUIRED TO SUBMIT ITS REPLY THEREON. NOT CONVINCED W ITH THE EXPLANATION OFFERED AN ADDITION OF RS. 5 LACS WAS MADE. THE RELEVANT FACTS ARE EXTRACTED FROM THE ASSESSMENT ORDER HEREUNDER : - IN REPLY TO QUESTIONNAIRE DATED 11.10.2010, QUESTION NO.19 THE ASSESSEE STATED AS FOLLOWS: - THE COMPANY HAS PAID RS.5 ,00,000/ - AS RENT TO MRS.JASPREET THAPAR, R/O - A - 11, 2 ND FLOOR, ANAND NIKETAN, NEW DELHI AND HAVING P.A/C NO.ACSPT5991K FOR REGISTERED OFFICE TAKEN ON RENT. WE ARE ENCLOSING CONFIRMATION FROM MRS. JASPREET THAPAR AND COPY OF RENT ACCOUNT FOR YOUR KIND REFE RENCE. WHILE GOING THROUGH THE LEDGER ACCOUNT SUBMITTED IT WAS FOUND THAT ASSESSEE COMPANY HAS PAID RENT @ RS.1,00,000/ - P.M. UPTO AUGUST, 2006, I.E. FOR FIVE MONTHS. NO RENT AGREEMENT COPY WAS SUBMITTED EXCEPT A COPY OF CONFIRMATION OF ACCOUNT OF MRS. JASPREET THAPAR. THE ASSESSEE DID NOT EVEN DIVULGED THE INFORMATION AS TO FOR HOW MANY MONTHS THE PREMISES WAS TAKEN ON RENT. IT WAS FURTHER OBSERVED THAT MRS. JASPREET THAPAR IS ONE OF THE DIRECTOR OF THE COMPANY HAVING SHARE OF MORE THAN 62%. IN THE NE XT FINANCIAL YEAR THE ASSESSEE HAS SHOWN NIL AGAINST PAYMENT OF RENT. AS THE ASSESSEE HAS NOT PROVED THAT AN AMOUNT OF RS.5,00,000/ - WAS ACTUALLY BEING PAID AS RENT, THE SAME IS TREATED AS AN UNEXPLAINED EXPENDITURE AND ADDED TO THE ASSESSEE S INCOME U/S 69C. 2.1. APART FROM TH E ABOVE THE AO PROCEEDED TO MAKE ANOTHER ADDITION OF RS.5 1 ,000/ - HOLDING AS UNDER: - DURING THE YEAR THE ASSSESSEE COMPANY HAS PURCHASED A LANCER CAR FOR RS.2,00,000/ - AND THE AMOUNT WAS PAID IN CASH VIDE RECEIPTS DATED 10.11.2006. ANY PURCHASE MADE IS EXPENDITURE. THE CAR WAS PURCHASED FOR BUSINESS PURPOSE AND NOT FOR INVESTMENTS PURPOSE. THEREFORE, THE ASSESSEE HAS VIOLATED PROVISION OF SECTION 40A(3). SO, AN AMOUNT OF RS.2,00,000/ - X 20%=RS.40,000/ - IS ADDED TO THE ASSESSEE S INCOME U/S 40A(3). FURTHER THE CAR IS AN OLD 2000M MODEL AND HAS NO MARKET VALUE. MOREOVER, IT IS NOT CLEAR HOW MUCH DEPRECIATION HAS ALREADY BEEN CLAIMED ON IT. THEREFORE, THE DEPRECIATION CLAIMED BY THE ASSESSEE ON THIS CAR AT RS.15,000/ - IS DISALLOWED . 2.2. THE SAID ADDITION WAS CHALLENGED IN APPEAL BEFORE THE CIT(A) UNSUCCESSFULLY AS CONSIDERING THE WRITTEN SUBMISSION FILED THE ADDITION IN THE ASSESSMENT ORDER WERE SUSTAINED. 3. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. IN THE AFORE - MENTIONED PECULIAR FACTS & CIRCUMSTANCES, CONSIDERING THE SUBMISSION OF THE LD. SR. DR, IT IS DEEMED APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER AND GRANT THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AS I.T.A .NO. - 790 & 2713/ DEL/2014 PAGE 3 OF 4 ADMITTEDLY THE IMPUGNED ORDER WAS PASSED C ONSIDERING THE WRITTEN SUBMISSION. IT IS WORTH MENTIONING THAT THERE IS A LETTER DATED 29.06.2015 OF THE DIRECTOR, SH. GURSHARAN SINGH INTIMATING CHANGE OF ADDRESS GIVEN IN COLUMN NO. - 10 WHICH ORIGINALLY WAS AS UNDER: - OLD ADDRESS: - WEATHER BYS CONSTRUCTI ONS PVT.LTD., (NOW KNOWN AS :PASSION HEIGHTS PVT.LTD.) M - 78, BASEMENT, MALVIYA NAGAR, NEW DELHI - 110017 4.1. THE CHANGED ADDRESS TO BE TAKEN IS AS UNDER: - NEW ADDRESS: - WEATHER BYS CONSTRUCTIONS PVT.LTD., (NOW KNOWN AS: - PASSION HEIGHTS PRIVATE LIMITED) E - 210, 2 ND FLOOR, CHATTARPUR EXTENSION, NEW DELHI - 110074. 5 . ACCORDINGLY IN VIEW OF THE AFORE - MENTIONED PECULIAR FACTS AND CIRCUMSTANCES THE IMPUGNED ORDER IS SET ASIDE T H E S A I D EXTENT AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE CIT(A) WITH TH E DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. THE RIGHT TO BE HEARD IS AN IMPORTANT RIGHT VESTED IN THE TAX PAYER. IN A SITUATION WHERE AN ADVERSE ORDER IS BEING PASSED ON FACTS A GAINST HIM THE CONCERNED AUTHORITY IS REQUIRED TO GIVE AN OPPORTUNITY OF BEING HEARD. IN THE FACTS OF THE PRESENT CASE WHETHER THE SAID OPPORTUNITY WAS GIVEN OR NOT IS NOT COMING OUT . FOR THIS SPECIFIC PURPOSE, A PASS OVER WAS GIVEN. HOWEVER , EVEN IN THE SECOND ROUND ALSO, THE LD. SR. DR THOUGH PLACED RELIANCE UPON THE IMPUGNED ORDER SUBMITTED THAT THE APPEAL WAS DECIDED ON THE BASIS OF THE WRITTEN SUBMISSIONS AND WHETHER THE ASSESSEE SPECIFICALLY WAIVED THE RIGHT TO BE HEARD OR NOT WA S NOT CLEARLY COM I N G OUT , F R O M T H E O R D E R . IT IS SEEN THAT ALTHOUGH WRITTEN SUBMISSIONS DATED 13.09.2013 HAVE BEEN CONSIDERED THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAD WAIVED ITS RIGHT TO BE HEARD. VIDE GROUND NO. - 1 APART FROM ASSAILING T HE ISSUE ON JURISDICTIONAL ASPECT, THE ASSESSEE HAS ALSO ASSAILED THE ACTION AS BEING VIOLATIVE OF PRINCIPLE S OF NATURAL JUSTICE. I N VIEW OF THE ABOVE THE IMPUGNED ORDER IS SET ASIDE WITH THE ABOVE DIRECTION SO AS TO ENABLE THE CIT(A TO GIVE AN EFFECTIVE OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. I.T.A .NO. - 790 & 2713/ DEL/2014 PAGE 4 OF 4 6 . A PERUSAL OF FACTS IN ITA NO. - 2213/DEL/2014 SIMILARLY SHOW THAT AS A RESULT OF THE SAME SEARCH, THE ASSESSEE WAS REQUIRED TO FURNISH ITS RETURN AFTER ISSUANCE OF APPROPRIATE NOTICE ETC. IN RESPONSE TO WHICH A N IL INCOME WAS FILED. CONSIDERED THE FACTS, AN ADDITION OF RS.7,67,690/ - WAS MADE. THE ISSUE ON CHALLENGE BY THE CIT(A) RESULTED IN CONFIRMING THE ORDER AGAIN RELYING UPON WRITTEN SUBMISSIONS DATED 13.09.2013. IT WAS T H E STAND OF THE LD. SR. DR THAT THERE IS NO FURTHER DISTINCTION IN THE ORDERS AS HEREIN ALSO, IT IS NOT COMING OUT FROM THE ORDER WHETHER RIGHT TO BE HEARD WAS WAIVED BY THE ASSESSEE OR NOT. HEREIN ALSO THE ORDER IS ASSAILED ON THE GROUNDS OF BEING VIOLATIVE OF NATURAL JUSTICE . IN VIEW OF THE ABOVE, THE ISSUE HEREIN ALSO IS RESTORED TO THE FILE OF THE CIT(A) WITH A DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 7 . IN THE RESULT, THE APPEAL S OF THE ASSESSEE ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 9 T H OF JULY , 2015. - S D / - (DIVA SINGH) JUDICIAL MEMBER DATED: 2 9 /07 /2015 * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI