NAKODA TRADERS, CHENNAI V. ACIT NON CORPORATE CIRCLE-5(1), CHENNAI

ITA 31/CHNY/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7018 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 07-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANITA
• Assessee Lawyers: T BANUSEKAR
• Keywords: Opportunity of being heard; Principle of natural justice; Notional interest; Set aside
• Section: 143(3); 251; 143(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI , $ % .. ' , ) * BEFORE SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER AND SHRI DUVVURU R.L.REDDY , JUDICIAL MEMBER ITA NO.31/CHNY/2020 )+ + /ASSESSMENT YEAR: 2016-17 HEARD THROUGH VIDEO CONFERENCING M/S.NAKODA TRADERS, NO.60A, NSC BOSE ROAD, MARUTI COMPLEX, SOWCARPET, CHENNAI-600 079. V . THE ASST. COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-5(1), CHENNAI-600 034. [PAN: AAMFN 1767 F ] ( . /APPELLANT) ( /0. /RESPONDENT) . 1 / APPELLANT BY : MR.T.BANUSEKAR, CA /0. 1 /RESPONDENT BY : MRS.ANITA, JCIT 1 /DATE OF HEARING : 09.09.2020 1 /DATE OF PRONOUNCEMENT : 09.09.2020 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST APPELLATE ORDER DATED 21.10.2019 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI (HEREINAFTER CALLED THE CIT(A )), IN ITA NO.121/CIT(A)-5/2018-19 FOR ASSESSMENT YEAR (AY) 20 16-17, THE ITA NO.31/CHNY/2020 :- 2 -: APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A) HAD ARI SEN FROM ASSESSMENT ORDER DATED 20.12.2018 PASSED BY LEARNED ASSESSI NG OFFICER (HEREINAFTER CALLED THE AO) U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). THE APPELLATE PROCEEDINGS ARE CO NDUCTED BY INCOME-TAX APPELLATE TRIBUNAL, CHENNAI BENCH B, CHENNAI THRO UGH VIRTUAL COURT VIA VIDEOCONFERENCING USING WEBEX PLATFORM. 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN MEM O OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, CHENNAI (HE REINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCO ME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CAS E AND IS OPPOSED TO THE PRINCIPLES OF EQUITY, NATURAL JUSTICE AND FAIR PLAY . 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEA LS) FAILED TO APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER IS WITHOUT JURISDICTION. 3. FOR THAT NO SUFFICIENT OPPORTUNITY OF BEING HEA RD WAS PROVIDED TO THE APPELLANT. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING THE ADDITION OF RS.96,28,152/- BEING THE PURPORTED DIFFERENCE IN PURCHASE VALUE OF GOLD. 5. FOR THAT WITHOUT PREJUDICE TO THE ABOVE, THE C OMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ABOVE D IFFERENCE IN PURCHASE VALUE OF GOLD IS ALLOWABLE U/S.37(1) AS BUSINESS EX PENDITURE. 6. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING THE ADDITION OF RS.16,77,666/- BEING NOTIONAL INTER EST INCOME IN RESPECT OF INTEREST FREE LOAN. 7. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEA LS) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER ERRED IN BRIN GING TO TAX THE NOTIONAL INCOME OF THE APPELLANT WHICH IS NOT REAL INCOME. ITA NO.31/CHNY/2020 :- 3 -: 8. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEA LS) FAILED TO APPRECIATE THAT THERE IS NO SPECIFIC PROVISION TO T AX NOTIONAL INTEREST IN RESPECT OF INTEREST FREE LOANS. PRAYER FOR THESE GROUNDS AND SUCH OTHER GROUNDS THAT MAY B E URGED BEFORE OR DURING THE HEARING OF THE APPEAL IT IS MOST HUMBLY PRAYED THAT THE HON'BLE TRIBUNAL MAY BE PLEASED TO A. DELETE THE ADDITION OF RS.96,28,152/- AND / OR B. DELETE THE ADDITION OF RS.16,77,666/- AND / OR C. PASS SUCH OTHER ORDERS AS THE HON'BLE TRIBUN AL MAY DEEM FIT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM. THE ASSESSEE FILED ITS RETURN OF INCOME ON 17.10.20 16 SHOWING NET INCOME OF ()RS.1,19,23,205/-. THE CASE OF THE ASSESSEE WA S SELECTED BY REVENUE FOR FRAMING SCRUTINY ASSESSMENT U/S 143(3) READ WIT H SECTION 143(2) OF THE 1961 ACT, WHICH LED TO FRAMING OF AN ASSESSMENT ORDER DATED 20.12.2018 PASSED BY LEARNED ASSESSING OFFICER ASSE SSING INCOME OF (-) RS.6,17,387/- , VIDE ASSESSMENT ORDER DATED 20.12.2 018 PASSED BY AO U/S 143(3) OF THE 1961 ACT. THE AO MADE TWO ADDITIO NS TO THE TUNE OF RS. 1,13,05,818/- TO THE RETURNED INCOME OF THE ASSESSE E VIDE AFORESAID ASSESSMENT ORDER. 4. AGGRIEVED BY AN ASSESSMENT ORDER DATED 20.12.201 8 PASSED BY AO U/S 143(3) OF THE 1961 ACT, THE ASSESSEE FILED FIRST AP PEAL WITH LEARNED CIT(A) WHO WAS PLEASED TO DISMISS THE APPEAL OF THE ASSESS EE , VIDE APPELLATE ITA NO.31/CHNY/2020 :- 4 -: ORDER DATED 21.10.2019 , WHEREIN ADDITIONS AS WERE MADE BY THE AO TO TUNE OF RS. 1,13,05,818/- STOOD CONFIRMED BY LEARNE D CIT(A). 5. BEING AGGRIEVED BY AN APPELLATE ORDER DATED 21.1 0.2019 PASSED BY LEARNED CIT(A), THE ASSESSEE HAS FILED SECOND APPEA L WITH TRIBUNAL. THE HEARING OF THIS APPEAL BEFORE THE BENCH WAS HEARD T HROUGH VIDEO CONFERENCING. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE BENCH THAT THE ASSESSEE FILED WRITTEN SUBMISSIONS B EFORE LEARNED CIT(A) VIDE EMAIL DATED 16.10.2019 SENT AT 3.49 PM FROM EM AIL ID ACCOUNT OF COUNSEL OF THE ASSESSEE VIZ . [e-mail] TO EMAIL ID OF LEARNED CIT(A)-5, CHENNAI AT [e-mail] , WHEREIN TWO ATTACHMENT FILES (NAMELY NAKODALETTER.PDF AND NOTE TO ASSESSING OFF.PDF ) WERE SENT TO LEARNED CIT(A) WHICH CONTAI NED WRITTEN SUBMISSIONS FILED BEFORE LEARNED CIT(A) AS WELL NOTE SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED BY LEA RNED COUNSEL FOR THE ASSESSEE THAT AFORESAID WRITTEN SUBMISSIONS WERE NO T TAKEN COGNIZANCE BY LEARNED CIT(A) WHILE ADJUDICATING APPEAL OF THE ASS ESSEE AND THE APPELLATE ORDER DATED 21.10.2019 WAS PASSED BY LEARNED CIT(A) DISMISSING APPEAL OF THE ASSESSEE WITHOUT TAKING INTO ACCOUNT AFORESA ID WRITTEN SUBMISSIONS DATED 16.10.2019 SENT BY LEARNED COUNSEL OF THE ASS ESSEE VIA EMAIL TO LEARNED CIT(A). THE COPY OF SAID EMAIL DATED 16.10. 2019 ALONG WITH ATTACHMENT FILES ARE FILED BEFORE THE TRIBUNAL WHIC H ARE PLACED ON RECORD IN FILE. THE PRAYERS WERE MADE BY LEARNED COUNSEL FOR THE ASSESSEE TO SET ASIDE AND RESTORE THE MATTER TO THE FILE OF LEARNED CIT(A) FOR FRESH ITA NO.31/CHNY/2020 :- 5 -: ADJUDICATION. THE LEARNED DR ON THE OTHER HAND SUBM ITTED THAT THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT APPEAR BEF ORE LEARNED CIT(A) ON SEVERAL OCCASIONS WHEN THE APPEAL OF THE ASSESSEE WAS CALLED FOR HEARING BY LEARNED CIT(A). THE LEARNED DR DREW OUR ATTENTIO N TO PARA 3 OF LEARNED CIT(A) APPELLATE ORDER DATED 21.10.2019. THE LEARNE D DR SUBMITTED THAT THE AR OF THE ASSESSEE NAMELY MR. T R ACHHA, FCA EN TERED INTO APPEARANCE BEFORE LEARNED CIT(A)ON 23.07.2019 WHERE IN LEARNED CIT(A) INFORMED HIM ABOUT THE INFORMATION DESIRED ON VARIO US ASPECTS OF THE APPEAL FOR ADJUDICATING APPEAL FILED BY ASSESSEE A ND NEXT DATE OF HEARING WAS GRANTED BY LEARNED CIT(A) FOR 06.08.2019. IT WA S SUBMITTED THAT THE ASSESSEE DID NOT ENTERED APPEARANCE ON THE AFORESAI D DATE . IT WAS SUBMITTED BY LEARNED DR THAT THEREAFTER THERE WAS N O COMPLIANCE ON THE PART OF THE ASSESSEE AND ON SEVERAL OCCASIONS WHEN THE APPEAL WAS CALLED FOR HEARING BY LEARNED CIT(A) VIZ. ON 20.08.2019, 2 9.08.2019, 13.09.2019 . 03.10.2019 AND 15.10.2019, THERE WAS NO COMPLIANC E BY ASSESSEE NOR ANY WRITTEN SUBMISSIONS WERE FILED. THUS, LEARNED D R WOULD SUBMIT THAT IT IS DUE TO THE FAULT ON THE PART OF THE ASSESSEE THA T THE APPEAL OF THE ASSESSEE STOOD DISMISSED BY LEARNED CIT(A) VIDE APP ELLATE ORDER DATED 21.10.2019. THE LEARNED DR WOULD ALSO CONTEND THAT THE GROUNDS RAISED BY ASSESSEE BEFORE TRIBUNAL DID NOT MENTION THAT NO OPPORTUNITY WAS GRANTED AND HENCE MATTER SHOULD NOT BE RESTORED TO LEARNED CIT(A) AS PRAYED BY LEARNED COUNSEL FOR THE ASSESSEE AND THE APPEAL FILED BY THE ASSESSEE BEFORE TRIBUNAL BE DISMISSED. ITA NO.31/CHNY/2020 :- 6 -: 6. WE HAVE HEARD RIVAL PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE HAVE OBSERVED THAT THE ASSESSEE IS A PARTNERSHIP FI RM. THE ASSESSEE FILED ITS RETURN OF INCOME ON 17.10.2016 SHOWING NET INCO ME OF ()RS. 1,19,23,2905/-. THE CASE OF THE ASSESSEE WAS SELECT ED BY REVENUE FOR FRAMING SCRUTINY ASSESSMENT U/S 143(3) READ WITH SE CTION 143(2) OF THE 1961 ACT, WHICH LED TO FRAMING OF AN ASSESSMENT ORD ER DATED 20.12.2018 PASSED BY LEARNED ASSESSING OFFICER ASSESSING INCOM E OF THE ASSESSEE AT (-) RS.6,17,387/- WHEREIN ADDITIONS TO THE TUNE OF RS. 1,13,05,818/- WERE MADE BY THE AO, VIDE ASSESSMENT ORDER DATED 20.12.2 018 PASSED BY AO U/S 143(3) OF THE 1961 ACT. THE ASSESSEE FILED FIRS T APPEAL BEFORE LEARNED CIT(A) WHICH STOOD DISMISSED BY LEARNED CIT(A), VID E APPELLATE ORDER DATED 21.10.2019. WE HAVE OBSERVED THAT THE ASSESSE E ENTERED APPEARANCE BEFORE LEARNED CIT(A) THROUGH AR ON 23.0 7.2019 , WHEREIN LEARNED CIT(A) DIRECTED HIM TO FILE CERTAIN INFORMA TION CONCERNING ASSESSEES APPEAL. THEREAFTER , THE ASSESSEE DID NO T APPEAR BEFORE LEARNED CIT(A) ON SEVERAL OCCASIONS WHEN THE APPEAL OF THE ASSESSEE WAS CALLED FOR HEARING BY LEARNED CIT(A) VIZ. ON 06.08.2019 ,2 0.08.2019, 29.08.2019, 13.09.2019, 03.10.2019 AND 15.10.2019. NOW, EVIDENCE IS PLACED BEFORE THE BENCH VIDE EMAIL COPY SENT BY LEA RNED COUNSEL FOR THE ASSESSEE TO LEARNED CIT(A)-5, CHENNAI ON 16.10.2019 WHICH IS PLACED ON RECORD , WHEREIN IT IS CLAIMED BY LEARNED COUNSEL F OR THE ASSESSEE THAT WRITTEN SUBMISSIONS WERE FILED BEFORE LEARNED CIT(A ) ALONG WITH NOTE SUBMITTED BEFORE THE AO AND IT CLAIMED THAT THE LEA RNED CIT(A) DID NOT TOOK COGNIZANCE OF THE AFORESAID WRITTEN SUBMISSION S FILED VIA EMAIL BY ITA NO.31/CHNY/2020 :- 7 -: LEARNED COUNSEL FOR THE ASSESSEE ON 16.10.2019. THE LEARNED CIT(A) PASSED APPELLATE ORDER ON 21.10.2019 DISMISSING APP EAL OF THE ASSESSEE. THE ASSESSEE IS EQUALLY RESPONSIBLE FOR ITS WOES AS THE ASSESSEE DID NOT ENTERED APPEARANCE BEFORE LEARNED CIT(A) ON SEVERAL OCCASIONS, AS DETAILED ABOVE . WE HAVE OBSERVED THAT VIDE GROUND NUMBER 3 RAISED IN MEMO OF APPEAL FILED WITH TRIBUNAL, THE ASSESSEE HA S RAISED GROUND THAT SUFFICIENT OPPORTUNITY OF BEING HEARD WAS NOT PROVI DED TO THE APPELLATE. THOUGH, THIS GROUND MAY BE GENERAL AND CONCISE IN N ATURE BUT IT COULD NOT BE SAID THAT THE ASSESSEE HAS NOT RAISED THE GROUND AS TO INFRINGEMENT OF PRINCIPLES OF NATURAL JUSTICE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS PRAYED BEFORE US TO GRANT ONE MORE OPPORTUNITY OF B EING HEARD BY SETTING ASIDE TO THE FILE OF LEARNED CIT(A) SO THAT IT COUL D PLACE ALL RELEVANT EXPLANATIONS AND EVIDENCES BEFORE LEARNED CIT(A) IN ITS DEFENSE INCLUDING WRITTEN SUBMISSIONS AS WERE CLAIMED TO BE SENT VIAL EMAIL ON 16.10.2019 WHICH WAS NOT CONSIDERED BY LEARNED CIT(A) IN THE F IRST ROUND OF LITIGATION, SO THAT THE ASSESSEES APPEAL CAN BE ADJUDICATED O N MERITS IN ACCORDANCE WITH LAW. BE AS IT MAY BE, KEEPING IN VIEW FACTS AN D CIRCUMSTANCE OF THE CASE IN TOTALITY AND IN FAIRNESS TO BOTH THE RIVAL PARTIES ,IT IS CONSIDERED FIT AND APPROPRIATE THAT THE APPELLATE ORDER PASSED BY LEARNED CIT(A) DATED 21.10.2019 BE SET ASIDE AND THE APPEAL FILED BY ASS ESSEE BEFORE LEARNED CIT(A) BE RESTORED BEFORE LEARNED CIT(A) FOR FRESH ADJUDICATION ON MERITS IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT LEARNE D CIT(A) SHALL GIVE PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE IN SET ASIDE PROCEEDINGS IN SECOND ROUND OF LITIGATION. TH E ASSESSEE SHALL BE ITA NO.31/CHNY/2020 :- 8 -: ALLOWED BY LEARNED CIT(A) TO FILE EVIDENCES IN ITS DEFENSE IN SECOND ROUND OF LITIGATION. WE MAKE IT CLEAR THAT THE LEARNED CIT(A) SHALL HAVE ALL THE POWERS TO ADJUDICATE APPEAL FILED BY ASSESSEE IN SE COND ROUND OF LITIGATION IN SET ASIDE PROCEEDINGS AS ARE ENSHRINED U/S 251 OF THE 1961 ACT, INCLUDING POWER OF ENHANCEMENT. THE APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. WE ORDER ACCORDINGLY. ORDER PRONOUNCED ON THIS 09 TH DAY OF SEPTEMBER , 2020 IN CHENNAI IN OPEN COURT AT THE CONCLUSION OF THE HEARING THRO UGH VIDEO CONFERENCING MODE . SD/- SD/- ( $ % . . ' ) ( DUVVURU R.L.REDDY ) ) /JUDICIAL MEMBER ( ) ( RAMIT KOCHAR ) /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 09 TH SEPTEMBER, 2020. TLN 1 /)6 76 /COPY TO: 1. . /APPELLANT 4. 8 /CIT 2. /0. /RESPONDENT 5. 6 /)) /DR 3. 8 ( ) /CIT(A) 6. + /GF