Mugundhan Projects Private Limited, CHENNAI V. ACIT Corporate Circle 4(1), CHENNAI

ITA 3131/CHNY/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2056 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR A SUNDARARAJANADDL
• Assessee Lawyers: N KAUSHIK
• Keywords: Unexplained expenditure; Opportunity of being heard; Principle of natural justice
• Section: 271(1)(c); 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , !'# $ , % '& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ ITA NO.3131/CHNY/2017 ' (' /ASSESSMENT YEAR: 2012-13 M/S.MUGUNDHAN PROJECTS PRIVATE LIMITED , 20/12,NEDUNCHEZIAN STREET, NEHRU NAGAR,GUINDY, CHENNAI. [PAN: AAFCM 3266 N] V . THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(1), CHENNAI-600 034. ( )* /APPELLANT) ( +,)* /RESPONDENT) )* - . / APPELLANT BY : MR.N.KAUSHIK ADVOCATE +,)* - . /RESPONDENT BY : DR.A.SUNDARARAJAN,ADDL. CIT, D.R / - #% /DATE OF HEARING : 05.12.2019 0$( - #% /DATE OF PRONOUNCEMENT : 05.12.2019 / O R D E R PER RAMIT KOCHAR , ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE INC OME TAX APPELLATE TRIBUNAL, CHENNAI BENCHES, CHENNAI (HEREINAFTER CAL LED THE TRIBUNAL) CHALLENGING THE APPELLATE ORDER PASSED BY LEARNED C OMMISSIONER OF INCOME TAX (APPEALS)-8, CHENNAI ( HEREINAFTER CALLE D THE CIT(A) ), IN ITA NO.220/15-16 DATED 22.11.2017 FOR ASSESSMENT YE AR (AY) 2012-13. THE APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM PENALTY ORDER DATED 28.09.2015 PASSED BY LEARNED ASSESSING OFFICER(HEREINAFTER ITA NO.3131/CHNY/2017 :- 2 -: CALLED THE AO) U/S 271(1)(C) OF THE INCOME-TAX ACT 1961(HEREINAFTER CALLED THE ACT). 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ASSESSEE HAS FILED AN APPEAL BEFORE LD.CIT(A), WHICH WAS ADJUDICATED BY L D.CIT(A) VIDE APPELLATE ORDER DATED 22.11.2017. THE LD.CIT(A) HAS ISSUED NOTICES TO THE ASSESSEE ON SEVERAL OCCASIONS., BUT HOWEVER, THE AS SESSEE EXCEPT ON ONE OCCASION WHEN IT SOUGHT ADJOURNMENT , DID NOT APPEA R BEFORE LD.CIT(A). THE LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE VIDE APPELLATE ORDER DATED 22.11.2017 MAINLY FOR NON-PROSECUTION OF ITS APPEAL BY ASSESSEE, BUT HOWEVER, WHILE PASSING APPELLATE ORDER THE LD.C IT(A) SIMPLY UPHELD PENALTY ORDER PASSED BY THE AO WITHOUT INDEPENDENT LY DISCUSSING ISSUES/GROUNDS ON MERITS RAISED BY ASSESSEE IN ITS FIRST APPEAL FILED WITH LEARNED CIT(A), AS IS REQUIRED UNDER THE PROVISION S OF SEC.250(6) OF THE 1961 ACT. 3. AGGRIEVED BY AN APPELLATE ORDER 22.11.2017 PASS ED BY LEARNED CIT(A), THE ASSESSEE HAS FILED THIS APPEAL BEFORE T RIBUNAL AND ARGUMENTS ARE ADVANCED BY BOTH THE RIVAL PARTIES BEFORE THE B ENCH. THE LD.COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THIS APPEAL BEFORE TRIBUNAL RELATES TO PENALTY LEVIED BY INVOCATION OF PROVISIO NS OF SECTION 271(1)(C) OF THE 1961 ACT . IT WAS SUBMITTED THAT QUANTUM IS NOT CHALLENGED BY ASSESSEE AND IT HAS ATTAINED FINALITY. ON BEING ASK ED BY THE BENCH, IT WAS ADMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT T HE ASSESSEE DID NOT APPEAR BEFORE LEARNED CIT(A) WHEN THE APPEAL WAS CA LLED FOR HEARING ITA NO.3131/CHNY/2017 :- 3 -: BEFORE THE LEARNED CIT(A) EXCEPT ON ONE OCCASION W HEN ADJOURNMENT WAS SOUGHT BY ASSESSEE. IT WAS SUBMITTED BY LEARNED COU NSEL FOR THE ASSESSEE THAT LEARNED CIT(A) SIMPLY UPHELD PENALTY ORDER PAS SED BY THE AO AND NO INDEPENDENT REASONS WERE GIVEN BY LEARNED CIT(A) WH ILE UPHOLDING PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE 1961 ACT. 4. THE LD.DR SUBMITTED THAT ASSESSEE DID NOT APPEA R BEFORE LEARNED CIT(A) DESPITE NOTICES BEING SENT TO ASSESSEE. IT W AS SUBMITTED THAT SURVEY OPERATIONS WERE CONDUCTED BY REVENUE AND ADD ITIONS WERE MADE ON THE BASIS OF DETECTION MADE IN SURVEY PROCEEDING S. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE OBSERVED THAT SURVEY OPERATIONS WER E CONDUCTED IN THE CASE OF THE ASSESSEE BY REVENUE U/S 133A OF THE 196 1 ACT. DURING THE COURSE OF SURVEY OPERATIONS, THE ASSESSEE WAS NOT A BLE TO EXPLAIN THE SOURCES OF EXPENDITURE TO THE TUNE OF RS. 6,81,000/ - WHICH LED TO ADDITIONS BEING MADE BY AO TO THE INCOME OF THE ASSESSEE WHIL E FRAMING QUANTUM ASSESMENT , AS AN UNEXPLAINED EXPENDITURE . THE ASS ESSMENT ORDER HAS ATTAINED FINALITY AS THE ASSESSEE DID NOT CHALLENGE THE ADDITIONS MADE BY THE AO IN ASSESSMENT ORDER BEFORE HIGHER APPELLATE AUTHORITIES. THE AO LEVIED PENALTY OF RS. 4,00,000/- BY INVOKING PROVIS IONS OF SECTION 271(1)(C) VIDE PENALTY ORDER DATED 28.09.2015 PASSE D U/S 271(1)(C) OF THE 1961 ACT . THE ASSESSEE CHALLENGED AND ASSAILE D THE SAID PENALTY ORDER PASSED BY AO U/S 271(1)(C) OF THE 1961 ACT BY FILING FIRST APPEAL BEFORE LEARNED CIT(A). IT IS OBSERVED THAT THE ASS ESSEE DID NOT APPEAR ITA NO.3131/CHNY/2017 :- 4 -: BEFORE LD.CIT(A) DESPITE OPPORTUNITIES GRANTED BY L EARNED CIT(A) EXCEPT ON ONE OCCASION WHEN ASSESSEE SOUGHT ADJOURNMENT , BUT , HOWEVER, LD.CIT(A) ON ITS PART PASSED AN APPELLATE ORDER WIT HOUT DISCUSSING ISSUES IN THE APPEAL FILED BY ASSESSEE INDEPENDENTLY ON ME RITS AND HAS , INTER- ALIA, DISMISSED APPEAL OF THE ASSESSEE FOR NON-PRO SECUTION AND SIMPLY UPHELD PENALTY ORDER PASSED BY THE AO WITHOUT INDE PENDENTLY DISCUSSING ALL THE ISSUES/GROUNDS IN APPEAL FILED BY ASSESSEE ON MERITS BASED ON MATERIAL ON RECORD, AS IS REQUIRED U/S 250(6) OF TH E 1961 ACT. IN OUR CONSIDERED VIEW, THE MATTER NEEDS TO BE RESTORED TO FILE OF LD.CIT(A) FOR FRESH ADJUDICATION ON MERITS IN ACCORDANCE WITH THE LAW OF ALL THE ISSUES/GROUNDS RAISED BY ASSESSEE IN ITS FIRST APPE AL FILED WITH LEARNED CIT(A). THE ASSESSEE ON ITS PART IS ALSO EQUALLY RE SPONSIBLE FOR ITS WOES AS IT DID NOT CO-OPERATED WITH LEARNED CIT(A) IN FIRST ROUND OF LITIGATION. WE HEREBY DIRECT ASSESSEE TO APPEAR BEFORE LD.CIT(A) A ND SUBMIT ALL NECESSARY EVIDENCES, EXPLANATIONS ETC., IN SUPPORT OF ITS CONTENTION , WHEN THE APPEAL COMES FOR HEARING BEFORE LD.CIT(A) IN DE NOVO APPELLATE PROCEEDINGS IN SECOND ROUND OF LITIGATION. IT IS MA DE CLEAR THAT IF THE ASSESSEE STILL DID NOT COME FORWARD AND CO-OPERATE IN DENOVO APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A), THEN LD.CIT(A) S HALL BE AT LIBERTY TO DECIDE THE ISSUES ON MERITS IN ACCORDANCE WITH LAW , BASED ON MATERIAL ON RECORD. THE LD.CIT(A) IS DIRECTED TO DENOVO ADJUDI CATE ALL THE ISSUES/GROUNDS RAISED BY ASSESSEE IN ITS FIRST APPE AL FILED WITH LEARNED CIT(A) DENOVO ON MERITS IN ACCORDANCE WITH LAW BY P ASSING A SPEAKING AND REASONED ORDER. NEEDLESS TO SAY THAT LEARNED CI T(A) SHALL PROVIDE ITA NO.3131/CHNY/2017 :- 5 -: PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN AC CORDANCE WITH LAW, IN DENOVO APPELLATE PROCEEDINGS. WE ALSO NOTE DECISIO N OF HONBLE MADRAS HIGH COURT IN THE CASE OF AJJI BASHA V. CIT REPORTE D IN (2019) 111 TAXMANN.COM 348(MAD.) IN W.P. NO. 26091 OF 2019 AND W.M.P. NO. 25462 OF 2019, JUDGMENT DATED 09.09.2019 WHICH IS R ELEVANT. THUS, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTIC AL PURPOSES. WE ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 3131/CHNY/2017 FOR AY: 2012-13 IS ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 5THDECEMBER , 2019, IN CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( !'# $ ) (RAMIT KOCHAR) % /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 05 TH DECEMBER, 2019. KSS - +#!2 32(# /COPY TO: 1. )* /APPELLANT 4. / 4# /CIT 2. +,)* /RESPONDENT 5. 25 +# /DR 3. / 4# ( ) /CIT(A) 6. 8' 9 /GF