Atut Fincap Ltd., Pune V. Income-tax Officer,

ITA 3042/AHD/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1532 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-09-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S B PRASAD
• Assessee Lawyers: ASHOK KOTHARY
• Keywords: Unexplained investment; Principle of natural justice; Set aside
• Section: 271(1)(c); 144; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO S.3042 & 3043/AHD/ 201 3 / ASSESSMENT YEAR : 2008 - 09 ATUT FINCAP LTD., C/O. R. SRIDHAR, B - 11, KUMAR MEADOWS, OPP. SAGAR INN HOTEL, MAN J ARI, PUNE 412307 PAN : AADCA3793J ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 1(3), AHMEDABAD / RESPONDENT ASSESSEE BY : S HRI ASHOK KOTHAR Y REVENUE BY : SHRI S.B. PRASAD / DATE OF HEARING : 09 - 01 - 2019 / DATE OF PRONOUNCEMENT : 19 - 03 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH ESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE EX - PARTE ORDER S OF COMMI SSIONER OF INCOME TAX (APPEALS) - 6, AHMEDABAD. IN ITA NO. 3042/A HD /2013 THE ASSESSEE HAS ASSAILED THE QUANTUM ADDITION 2 ITA NO S.3042 & 3043/ AHD /2013, A.Y. 2008 - 09 CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). ITA NO. 3043/A HD /2013 IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). BOTH THE IMPUGNED ORDERS ARE OF EVEN D ATE I.E. 11 - 10 - 2013. SINCE, BOTH THE APPEALS ARE ARISING OUT OF SAME SET OF FACTS, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED VIDE THIS COMMON ORDER. ITA NO. 3042/A HD /2013 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE : THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES , SECURITIES AND MUTUAL FUNDS. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 29 - 09 - 2008 DECLARING TOTAL INCOME OF RS.31,01,950/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY , CONSEQUENTLY, STATUTORY NOTICE U/S. 143(2) O F THE ACT WAS ISSUED TO THE ASSESSEE ON 2 9 - 09 - 2009. THE NOTICES ISSUED BY THE ASSESSING OFFICER WERE RETUNED BACK BY THE POSTAL AUTHORITY WITH REMARKS LEFT. THE REAFTER, THE ASSESSING OFFICER ISSUED NOTICES U/S. 143(2) AND U/S. 142(1) ALONG WITH DETAILED QUESTIONNAIRE AT THE NEW ADDRESS OF THE ASSESSEE AT PUNE . THE NOTICES SENT TO THE ASSESSEE ON PUNE ADDRESS WERE ALSO RECEIVED BACK UN - SERVED FROM THE POSTAL AUTH ORITY WITH REMARKS NF. THE ASSESSEE TRIED TO SERVE NOTICES TO THE ASSESSEE COMPANY THROUGH ITS DIRECTOR. ALL THE NOTICES WERE AGAIN RETURNED BACK BY THE POSTAL AUTHORITY WITH REMARKS NF . AS A LAST RESORT, THE ASSESSING OFFICER SERVED THE NOTICE ON A SSESSEE THROUGH AFFIXTURE AT THE ADDRESS MENTIONED IN THE RETURN OF 3 ITA NO S.3042 & 3043/ AHD /2013, A.Y. 2008 - 09 INCOME AND PROCEEDED WITH THE ASSESSMENT U/S. 144 OF THE ACT. THE ASSESSING OFFICER IN SCRUTINY ASSESSMENT PROCEEDINGS MADE FOLLOWING ADDITIONS IN THE INCOME RETURNED BY THE ASSESSEE : I . UN EXPLAINED ADDITION IN C APITAL , SHARE PREMIUM AND SHARE APPLICATION MONEY RS.1,22,99,500/ - . II . UNEXPLAINED BANK DEPOSITS RS.7,07,07,464/ - . III . UNEXPLAINED INVESTMENTS IN MUTUAL FUNDS AND SHARES AND SECURITIES RS.1,17,84,445/ - . IV . DISALLOWANCE OF VARIOUS EXPENSES RS.12,62,155/ - . AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 30 - 12 - 2010 PASSED U/S. 14 4 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). EVEN BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) NONE APPEARED TO REPRESENT THE ASSESSEE HENCE, THE COMMISSIONER OF INCOME TAX (APPEALS) IN AN EX - PARTE PROCEEDINGS DISMISSED THE APPEAL AND CONFIRMED THE ADDITIONS. NOW, THE ASSESSEE IS IN SECOND APPE AL BEFORE THE TRIBUNAL. 3. SHRI ASHOK KOTHARY APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE COMPANY WAS INITIALLY HAVING ITS REGISTERED OFFICE AT AHMEDABAD, THEREFORE, THE ASSESSEE FILED ITS RETURN OF INCOME AND WAS ASSESSED AT AHMEDAB AD. THE ASSESSEE SHIFTED ITS OPERATIONS AND REGISTERED OFFICE FROM AHMEDABAD TO PUNE IN MARCH, 2009. ALL THE DIRECTORS OF ASSESSEE COMPANY WERE RESIDENTS OF PUNE, HENCE, THERE WAS NO ONE IN AHMEDABAD AT THE RELEVANT TIME WHEN THE ASSESSING OFFICER HAD IS SUED NOTICES FOR THE IMPUGNED ASSESSMENT YEAR . THIS FACT WAS BROUGHT TO 4 ITA NO S.3042 & 3043/ AHD /2013, A.Y. 2008 - 09 THE NOTICE TO COMMISSIONER OF INCOME TAX (APPEALS) DURING FIRST APPELLATE PROCEEDINGS. IN PROCEEDINGS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) SHRI RUPESH SHAH, ADVOCATE REPRE SENT ED THE ASSESSEE ON SOME INITIAL DATES OF HEARING . THEREAFTER, THE COMMISSIONER OF INCOME TAX (APPEALS) ISSUED NOTICE DATED 22 - 07 - 2013 FIXING THE DATE OF HEARING OF APPEAL ON 22 - 08 - 2013. HOWEVER, THE SAID NOTICE WAS NOT RECEIVED BY THE ASSESSEE. CONS EQUENTLY, NEITHER THE AUTHORIZED REPRESENTATIVE OF ASSESSEE NOR THE COUNSEL OF ASSESSEE COULD APPEAR ON THE DATE FIXED. THE LD. AR CONTENDED THAT SHRI RAJGOPALAN SRIDHAR , DIRECTOR OF THE ASSESSEE COMPANY WAS LOOKING AFTER THE AFFAIRS OF COMPANY TILL 16 - 11 - 2008. HE WAS ARRESTED BY THE POLICE IN SEPTEMBER, 2009 IN SOME CRIMINAL COMPLAINT LODGED BY ONE OF THE ERSTWHILE EMPLOYERS. AFTER ARREST OF SHRI RAJGOPALAN SRIDHAR THE OTHER TWO DIRECTORS WERE SHRI K. RAJAGOPALAN IYER AGED ABOUT 7 0 YEARS AND MRS. DAHURA M SRIDHAR WIFE OF SHRI RAJAGOPALAN SRIDHAR. SHRI K. RAJAGOPALAN IYER COULD NOT APPEAR BECAUSE OF HIS ADVANCED AGE AND EVEN THE DIRECTOR OF THE COMPANY MRS. DAHURAM SRIDHAR COULD NOT ATTAINED THE PROCEEDINGS DUE TO ILL HEALTH. HER MEDICAL CERTIFICATE WAS FURNISHED. THE LD. AR FILED AFFIDAVIT OF MRS. DAHURAM SRIDHAR TO SUPPORT HIS CONTENTIONS. THE LD. AR SUBMITTED THAT NON - APPEARANCE OF ASSESSEE BEFORE THE AUTHORITIES BELOW WAS NOT DELIBERATE OR INTENTIONAL. THE NOTICES COULD NOT BE RECEIVED BY THE ASSES SEE AS THE ASSESSEE HAS SHIFTED ITS OFFICE. THE LD. AR SUBMITTED THAT AN OPPORTUNITY MAY BE AFFORDED TO THE ASSESSEE TO EXPLAIN ITS CASE , THE ASSESSEE HAS GOOD CASE ON MERITS. 4. PER CONTRA, SHRI S.B. PRASAD REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. DR SUBMITTED THAT THE 5 ITA NO S.3042 & 3043/ AHD /2013, A.Y. 2008 - 09 ASSESSEE NEVER COMMUNICATED CHANGE OF ADDRESS TO THE ASSESSING OFFICER. T H E ASSESSING OFFICER GAVE AM P LE OPPORTUNITY BY ISSUING NOTICES ON THE ADDRESS MENTIONED IN THE RETURN OF INCOME. SINCE, THE ASSESSEE HAS SHIFTED ITS OPERATIONS FROM AHMEDABAD TO PUNE WITHOUT INTIMATING THE ASSESSING OFFICER , T HE ASSESSING OFFICER CANNOT BE FAULTED FOR INVOKING THE PROVISIONS OF SECTION 144 OF THE ACT. THE LD. DR FURTHER CONTENDED THAT EVEN BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THE ASSESSEE HAS FAILED TO DEFEND THE APPEAL. THE ASSESSEE HAS BEEN NON - COOPERATIVE THROUGHOUT. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE AND CONFIRMING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 5. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERUSED. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE NEITHER APPEARED BEFORE ASSESSING OFFICER NOR MADE ADEQUATE EFFORT TO DEFEND THE APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. OSTENSIBLY, THE ASSESSEE HAS NOT COMMUNICATED CHANGE IN ADDRESS FROM AHME DABAD TO PUNE TO THE ASSESSING OFFICER . UNDER SUCH CIRCUMSTANCES THE ASSESSING OFFICER HAD NO OPTION BUT TO ISSUE NOTICES ON THE ADDRESS AVAILABLE WI TH HIM. THE ASSESSING OFFICER ISSUED NOTICES ON THE ADDRESS MENTIONED IN THE RETURN OF INCOME AS WELL AS NEW ADDRESS OF THE ASSESSEE AT PUNE. HOWEVER, THE NOTICES WERE RETUNED BACK UN - SERVED BY THE POSTAL AUTHORITY WITH REMARKS LEFT/NF. THUS, THE ASSE SSING OFFICER WAS CONSTRAINED TO PROCEED U/S. 144 OF THE ACT. EVEN BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER INITIAL REPRESENTATION NONE APPEARED AT THE TIME OF FINAL HEARING OF FIRST APPEAL. MRS. DAHURAM SRIDHAR ONE OF THE DIRECTORS OF ASSES SEE COMPANY HAS FILED AN AFFIDAVIT STATING REASONS FOR NON - REPRESENTATION OF ASSESSEE BEFORE THE 6 ITA NO S.3042 & 3043/ AHD /2013, A.Y. 2008 - 09 AUTHORITIES BELOW. A PERUSAL OF AFFIDAVIT INDICATE , THAT THE NON - APPEARANCE OF ASSESSEE BEFORE AUTHORITIES BELOW WAS ON ACCOUNT OF CRISIS FACE D BY THE ASSESSE E DUE TO ARREST OF DIRECTOR WHO WAS ACTIVELY INVOLVED IN THE CONDUCT AS ASSESSEES BUSINESS AND THE OTHER DIRECTOR BEING IN THE ADVANCE D AGE. TAKING INTO CONSIDERATION ENTIRETY OF FACTS AND THE PRINCIPLES OF NATURAL JUSTICE , WE ARE OF CONSIDERED VIEW THAT AN OPPORTUNITY SHOULD BE AFFORDED TO THE ASSESSEE TO REPRESENT ITS CASE BEFORE THE AUTHORITIES BELOW. CONSEQUENTLY, THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUES/ADDITIONS ASSAILED IN APPEAL ARE RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR DE - NOVO ADJUDICATION. THE ASSESSING OFFICER SHALL GRANT REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO CO - OPERATE AND BE PRESENT DURING ASSESSMENT PROCEEDINGS. IT IS MADE CLEAR THAT IF THE ASSESSEE F AILS TO APPEAR BEFORE THE ASSESSING OFFICER, THE ASSESSING OFFICER IS AT LIBERTY TO TAKE ADVERSE VIEW. THUS, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE WITH THE AFORESAID DIRECTIONS. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ITA NO. 3043/A HD /2013 7. THE ASSESSEE IN APPEAL HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING PENALTY LEVIED U/S. 271(1)(C) OF THE ACT , IN RESPECT OF ADDITIONS MADE BY ASSESSING OFFICER IN ASSESSMENT ORDER DATED 30 - 12 - 2010 PASSED U/S. 144 OF THE ACT FOR ASSESSMENT YEAR 2008 - 09 . SINCE, WE HAVE SET ASIDE THE ADDITIONS IN QUANTUM PROCEEDINGS, THE PENALTY 7 ITA NO S.3042 & 3043/ AHD /2013, A.Y. 2008 - 09 LEVIED U/S. 271(1)(C) ON SUCH ADDITI ONS D OES NOT SURVIVE. CONSEQUENTLY, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 8. TO SUM UP, THE APPEAL OF ASSESSEE IN ITA NO. 3042/A HD /2013 IS ALLOWED FOR STATISTICAL PURPOSE AND ITA NO. 3043/A HD /2013 IS ALLOWED. ORDER P RONOUNCED ON THURSDAY, THE 19 TH DAY OF MARCH, 2019 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 19 TH MARCH, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 6, AHMEDABAD 4. / THE CIT - 1, AHMEDABAD 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE