Shri Manoj Karia , Bangalore V. The Income Tax Officer Ward-2(2)(4), Bangalore

ITA 2754/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5547 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 18-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause; Accommodation entries
• Section: 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 2754 /BANG/201 7 ASSESSMENT YEAR : 20 06 - 07 SHRI MANOJ KARIA, NO. 6, TULASI THOTA ROAD, BALEPET CROSS, BANGALORE 560 053. PAN: ABHPK 1281B VS. THE INCOME TAX OFFICER, WARD 2 (2)(4), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SMT. SUMAN LUNKAR, CA REVENUE BY : SHRI SUNIL KUMAR AGARWAL, JCIT (DR) DATE OF HEARING : 22 . 0 2 .201 8 DATE OF PRONOUNCEMENT : 23 . 0 2.201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER; THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A) 5, BANGALORE DATED 27.09.2016 FOR ASSESSME NT YEAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSI NG THE ORDER IN THE MANNER PASSED BY HER AND THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. THE IMPUGNED ORDERS ARE BAD IN LAW FOR WANT OF JURISDICTION AND FOR NOT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE AND ARE LIABLE TO BE QUASHED. 2. IN ANY CASE, THE CONDITIONS PRECEDENT FOR THE IS SUE OF NOTICE U/S. 148 OF THE ACT BEING ABSENT. THE RE-OPENING OF ASSE SSMENT BECOMES BAD IN LAW AND CONSEQUENTLY THE ORDER AS PASSED/CON FIRMED BEING ALSO BAD IN LAW IS REQUIRED TO BE QUASHED. 3.1 IN ANY CASE THE ORDER PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY, ESPECIALLY IN THE ABSENCE OF THE CROSS EXAMINATIONS OF THE PERSON WHOSE AVERMENTS ARE SOUG HT TO BE RELIED UPON BY THE ASSESSING OFFICER WHILE PASSING THE ORD ER. MAKE THE ORDER TOTALLY BAD IN LAW AND LIABLE TO BE CANCELLED . ITA NO. 2754/BANG/2017 PAGE 2 OF 6 3.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS INSTEAD OF QUASHING THE IMPUGNED ORDER ON THE ABOVE GROUNDS , HAS JUST CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT PR OPERLY CONSIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, ARGUMENTS OF THE APPELLANT AND THE LAW APPLICABLE. 3.3 IN ANY CASE AND WITHOUT PREJUDICE, THE ORDERS P ASSEDBY THE AUTHORITIES BELOWBEING CONTRARY TO BINDING DICTUM O F THE JURISDICTIONAL HIGH COURT ARE BAD IN LAW AND ARE LI ABLE TO BE QUASHED. 4. IN ANY CASE. THE ASSESSING OFFICER HAD ERRED IN HOLDING THAT THE APPELLANT HAD NOT EARNED CAPITAL GAINS ON SALE OF S HARES AND ALSO ERRED IN TAXING A SUM OF RS.15,55.850/- AS INCOME F ROM OTHER SOURCES AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE SAME. SUCH A FINDING/ ACTIO N OF THE ASSESSING OFFICER BEING AGAINST THE FACTS OF THE CASE IS TO B E IGNORED AND THE INCOME FROM CAPITAL GAIN AS RETURNED BY THE APPELLA NT IS TO BE ACCEPTED. 5.1 THE LOWER AUTHORITIES HAVE ALSO ERRED IN OBSERV ING THAT THEREWASACTUALLY NO PURCHASE/SALE OF SHARES; THAT T HE APPELLANT HAD GOT ACCOMMODATION ENTRIES AND THAT THE APPELLANT'S OWN MONEY WAS INTRODUCED AS SALE CONSIDERATION. SUCH FINDINGS BEI NG TOTALLY AGAINST THE FACTS, WRONG IN LAW AND ALSO IN A WAY IMPLICATI NG STATUTORY GOVERNMENT AUTHORITIES ARE TO BE REJECTED IN ENTIRE TY. 5.2 THE SEVERAL OBSERVATIONS MADE AND VARIOUS CONCL USIONS DRAWN BY THE LOWER AUTHORITIES IN THE COURSE OF ORDER ARE WITHOUT BASIS AND EVIDENCE AND ARE MADE/DRAWN ON SURMISES, PROBABILIT IES AND CONJECTURES. SUCH OBSERVATIONS AND CONCLUSIONS BY Q UASI-JUDICIAL AUTHORITIES HAVE NO SUPPORT IN LAW AND DESERVE TO B E REJECTED IN TOTO. 6. THE APPELLANT HAD ACTUALLY SOLD SHARES THROUGH D EMAT ACCOUNT AND HAD EARNED CAPITAL GAIN THEREON AND SAME NEEDS TO BE ACCEPTED AS SUCH. 7. THE APPELLANT DENIES THE LIABILITY TO PAD INTERE ST U/S 234A, 234B AND 234C OF THE ACT. THE INTEREST HAVING BEEN LEVIE D ERRONEOUSLY IS TO BE DELETED IN ENTIRETY. 8. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR ATLEAST INCOME ASSESSED AS INCOME FROM OTHER SOU RCES BE TREATED AS LONG TERM CAPITAL GAINS, INCOME AS RETURNED BY A PPELLANT BE ACCEPTED AND INTEREST LEVIED BE DELETED. 3. THIS APPEAL IS FILED LATE BY ASSESSEE AFTER A DE LAY OF 331 DAYS. THE ASSESSEE HAS SUBMITTED AN APPLICATION FOR CONDONATION OF DEL AY IN FILING THE APPEAL ALONG ITA NO. 2754/BANG/2017 PAGE 3 OF 6 WITH AN AFFIDAVIT OF THE ASSESSEE. IN THE APPLICAT ION FOR CONDONATION OF DELAY, IT IS SUBMITTED THAT THE IMPUGNED ORDER PASSED BY THE CIT(A) WAS SERVED ON THE ASSESSEE ON 21.11.2016 AND THE ASSESSEE WAS REQUIRE D TO FILE THE APPEAL BEFORE THE TRIBUNAL ON OR BEFORE 20.01.2017. IT IS FURTHER SUBMITTED THAT THE ASSESSEE WAS SUFFERING FROM SEVERE BACK PAIN AND SK IN ALLERGIES AND ON MEDICAL ADVICE, THE ASSESSEE HAD GONE TO HIS HOMETO WN SAVARKUNDLA IN SAURASHTRA FOR COMPLETE REST FOR TWO MONTHS. HE FU RTHER SUBMITTED IN THE SAID APPLICATION THAT IN THE MEANWHILE, THE APPEAL MEMO WAS DRAFTED AND MAILED TO THE ASSESSEE. HOWEVER, IN THE ABSENCE OF THE ASSES SEE, THE DOCKET CONTAINING APPEAL MEMO WAS NOT ATTENDED TO AND COMPLETELY LOST SIGHT OF. IT IS ALSO SUBMITTED THAT THE ASSESSEE WAS UNWARE OF THIS FACT AND THEREFORE, EVEN AFTER COMING BACK FROM NATIVE PLACE, THE ASSESSEE HAS NOT DONE ANYTHING WITH RESPECT TO THIS ISSUE AND THE ASSESSEE WAS UNDER BO NAFIDE BELIEF THAT THE APPEAL FILED BEFORE CIT(A) WAS STILL PENDING BEFORE CIT(A). IT IS FURTHER SUBMITTED THAT AFTER MUCH LAPSE OF TIME, THE REGULA R AUDITOR OF THE ASSESSEE NOTICED SOME OUTSTANDING DEMAND WITH RESPECT TO YEA R UNDER APPEAL IN THE INCOME TAX PORTAL AND UPON ENQUIRY, THE ASSESSEE GO T TO KNOW THAT THE APPELLATE ORDER HAS ALREADY BEEN PASSED AND NO APPE AL HAS BEEN FILED AGAINST SUCH ORDER. THEREAFTER THE ASSESSEE CONSULTED HIS COUNSEL WHO ADVISED THE ASSESSEE TO FILE APPEAL IMMEDIATELY AND AFTER THAT THE ASSESSEE HAS MADE ARRANGEMENTS TO FILE THE APPEAL BEFORE THE TRIBUNAL . IN THE COURSE OF HEARING BEFORE US, THE LD. AR OF ASSESSEE SUBMITTED THE MED ICAL PRESCRIPTIONS AS PER WHICH THE ASSESSEE WAS PRESCRIBED SEVERAL MEDICINES IN THE MONTH OF NOVEMBER, 2016. SHE ALSO PLACED RELIANCE ON A JUDG MENT OF HONBLE APEX COURT RENDERED IN THE CASE OF K. SUBBARAYUDU AND OT HERS VS. THE SPECIAL DEPUTY COLLECTOR (LAND ACQUISITION) IN CIVIL APPEAL NO. 9288 OF 2017 DATED 19.07.2017 AND SUBMITTED A COPY OF THIS JUDGMENT. S HE POINTED OUT THAT AS PER PARA NO. 12 OF THIS JUDGMENT, IT WAS HELD THAT THE TERM SUFFICIENT CAUSE IS TO RECEIVE LIBERAL CONSTRUCTION SO AS TO ADVANCE SUBST ANTIAL JUSTICE, WHEN NO NEGLIGENCE, INACTION OR WANT OF BONA FIDE IS ATTRIBUTABLE TO THE APPELLANTS, THE COURT SHOULD ADOPT A JUSTICE-ORIENTED APPROACH IN C ONDONING THE DELAY. SHE FURTHER SUBMITTED THAT IN THAT CASE, THE DELAY WAS OF 3671 DAYS AND EVEN THAT MUCH DELAY WAS CONDONED AND THEREFORE, IN THE PRESE NT CASE ALSO, THE DELAY OF 331 DAYS SHOULD BE CONDONED BECAUSE THERE IS NO NEG LIGENCE, INACTION OR WANT ITA NO. 2754/BANG/2017 PAGE 4 OF 6 OF BONA FIDE ATTRIBUTABLE TO THE ASSESSEE. THE LD. DR OF REVENUE STRONGLY OPPOSED THE CONDONATION OF DELAY. HE SUBMITTED THA T THE MEDICAL PRESCRIPTIONS FILED ARE OF BANGALORE ONLY AND THERE IS NO EVIDENC E PRODUCED THAT THE ASSESSEE HAS PROCEEDED TO HIS HOMETOWN IN GUJARAT. HE SUBMITTED THAT THERE IS NO REASONABLE CAUSE SHOWN BY THE ASSESSEE TO EXP LAIN THIS DELAY OF 331 DAYS AND THEREFORE, THE DELAY SHOULD NOT BE CONDONE D. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FA CTS AND EXPLANATION OF THE ASSESSEE REGARDING THE DELAY ARE ALREADY NOTED ABOV E. NOW I REPRODUCE PARA 12 OF THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF K. SUBBARAYUDU AND OTHERS VS. THE SPECIAL DEPUTY CO LLECTOR (LAND ACQUISITION) (SUPRA). THE SAME IS AS UNDER. 12. THE TERM SUFFICIENT CAUSE IS TO RECEIVE LIBE RAL CONSTRUCTION SO AS TO ADVANCE SUBSTANTIAL JUSTICE, WHEN NO NEGLIGEN CE, INACTION OR WANT OF BONA FIDE IS ATTRIBUTABLE TO THE APPELLANTS , THE COURT SHOULD ADOPT A JUSTICE-ORIENTED APPROACH IN CONDONING THE DELAY. IN STATE OF NAGALAND V. LIPOK AO AND OTHERS (2005) 3 SCC 752: 2005 (4) JT 10, IT WAS HELD AS UNDER:- SECTION 5 IS TO BE CONSTRUED LIBERALLY SO AS TO DO SUBSTANTIAL JUSTICE TO THE PARTIES. THE PROVISION CONTEMPLATES THAT THE COURT HAS TO GO INTO THE POSITION OF THE PERSON CONCERNED AND TO FIND OUT IF THE DELAY CAN BE SAID TO HAVE BEEN RESULTED FROM THE CAUSE WHICH HE HAD ADDUCED AND WHETHER THE CAUSE RECORDED IN THE PECULIAR CIRCUMSTANCES OF THE CASE IS SUFFICIENT. 5. FROM THE ABOVE PARA OF THIS JUDGEMENT OF HONBLE APEX COURT, IT IS SEEN THAT FOR THE PURPOSE OF CONDONING THE DELAY IN FILING TH E APPEAL, IT IS TO BE SEEN AS TO WHETHER THE DELAY IS CAUSED BY NEGLIGENCE, INACT ION OR WANT OF BONA FIDE ATTRIBUTABLE TO THE APPELLANTS. IN THE PRESENT CAS E, THIS IS NOT THE ALLEGATION OF THE REVENUE THAT THE ASSESSEE WAS NEGLIGENT OR INAC TIVE OR THERE IS LACK OF BONA FIDE ATTRIBUTABLE TO THE ASSESSEE AND THEREFOR E, IN THE FACTS OF THE PRESENT CASE, I RESPECTFULLY FOLLOW THIS JUDGEMENT OF HONBLE APEX COURT AND CONDONE THIS DELAY OF 331 DAYS AND ADMIT THE APPEAL OF THE ASSESSEE. 6. REGARDING MERIT OF THE ISSUE INVOLVED IN THE PRE SENT APPEAL, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT SIMILAR ISSUE WAS DECIDED B Y THE TRIBUNAL IN THE CASE OF SHRI MUKESH KUMAR SOLANKI VS. ITO IN ITA NO. 2168/B ANG/2016 DATED ITA NO. 2754/BANG/2017 PAGE 5 OF 6 17.03.2017. SHE SUBMITTED A COPY OF THIS TRIBUNAL ORDER AND POINTED OUT THAT AS PER PARA NOS. 5 AND 6 OF THIS TRIBUNAL ORDER, TH E TRIBUNAL HAS FOLLOWED THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CHANDRA DEVI KOTHARI IN WRIT PETITION NO. 39370/2014 DATED 02.02.2015. SHE ALSO POINTED OUT THAT IN PARA 5 OF THIS TRIBUNAL ORDER, THE TRIBUNAL HAS REPRODUCED THE RELEVANT PARA 8 OF THE JUDGEMENT OF HON'BLE KARNATA KA HIGH COURT AND RESTORED THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISIO N WITH THE SAME DIRECTION AS WERE GIVEN BY HON'BLE KARNATAKA HIGH COURT IN PARA 8 OF THE JUDGEMENT. SHE SUBMITTED THAT IN THE PRESENT CASE ALSO, THE MATTER MAY BE RESTORED BACK TO THE FILE OF AO FOR FRESH DECISION WITH SIMILAR DIRECTIO NS. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRS T OF ALL, I REPRODUCE PARAS 5 AND 6 OF THIS TRIBUNAL ORDER RENDERED IN THE CASE OF SH RI MUKESH KUMAR SOLANKI VS. ITO (SUPRA). THE SAME ARE AS UNDER. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIRS T OF ALL, I REPRODUCE PARA NO.8 OF THE JUDGMENT OF HON'BLE KARN ATAKA HIGH COURT RENDERED IN THE CASE OF M/S CHANDRA DEVI KOTH ARI (SUPRA) AND THIS IS AS UNDER:- 8. IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES AS A DVERTED TO ABOVE, AND AS THE PETITIONER HAS BEEN DENIED AN OPP ORTUNITY OF FAIR HEARING BY PROVIDING COPY OF THE STATEMENT AND RELATED DETAILS REGARDING THE ALLEGED SHARE AMOUNT, I AM OF THE VIEW THAT THE MATTER REQUIRES TO BE RE-CONSIDERED BY THE RESPONDENT BY PROVIDING FAIR AND REASONABLE OPPORTUNITY OF HEA RING TO THE PETITIONER AND BY FURNISHING THE DETAILS/COPY OF TH E STATEMENT BASED ON WHICH THE IMPUGNED ASSESSMENT ORDER HAS BE EN PASSED.' 6. FROM THE ABOVE PARA FROM THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, IT IS SEEN THAT MATTER WAS RESTORED BAC K TO THE FILE OF THE AO FOR FRESH DECISION AFTER PROVIDING COPY OF THE S TATEMENT OF SHRI MUKESH CHOKSI. AS PER THE FACTS NOTED BY THE HIGH C OURT IN THE EARLIER PARAS OF JUDGMENT AND AS PER THE FACTS OF THE PRESE NT CASE, I FIND THAT THE FACTS ARE SIMILAR AND LD DR OF THE REVENUE ALSO COULD NOT POINT OUT ANYDIFFERENCE IN FACTS AND HENCE, BY RESPECTFULLY F OLLOWING THIS JUDGMENT OF KARNATAKA HIGH COURT, I SET ASIDE THE O RDER OF LD CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR FR ESH DECISION WITH THE SAME DIRECTIONS AS WERE GIVEN BY THE HON'BLE KARNAT AKA HIGH COURT IN THE CASE AS PER PARA NO.8 OF THE JUDGMENT REPROD UCED ABOVE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FO R AT THIS STAGE REGARDING THE MERIT OF THE ADDITION. ITA NO. 2754/BANG/2017 PAGE 6 OF 6 8. THIS IS NOT THE CASE OF THE REVENUE THAT THERE I S DIFFERENCE IN FACTS OF THE PRESENT CASE AND THAT CASE AND HENCE, I FIND NO REA SON TO TAKE A CONTRARY VIEW IN THE PRESENT CASE. RESPECTFULLY FOLLOWING THIS T RIBUNAL ORDER, I SET ASIDE THE ORDER OF CIT(A) IN THE PRESENT CASE ALSO AND RESTOR E THE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION WITH THE SAME DIRECTIONS A S WERE GIVEN BY THE HON'BLE KARNATAKA HIGH COURT IN THE JUDGMENT RENDERED IN TH E CASE OF CHANDRA DEVI KOTHARI (SUPRA) AS PER PARA 8 OF THE JUDGEMENT ALRE ADY REPRODUCED WHILE REPRODUCING PARA 5 OF THE TRIBUNAL ORDER. THE AO S HOULD PASS NECESSARY ORDER AS PER LAW AND AS PER ABOVE DISCUSSION AFTER PROVID ING ADEQUATE OPPORTUNITY OF BEING HEARD TO ASSESSEE. IN VIEW OF THIS DECISION, NO ADJUDICATION IS CALLED FOR AT THIS STAGE REGARDING THE MERIT OF THE ADDITION. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 23 RD FEBRUARY, 2018. /MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.