M/s. Sawhney Brothers, New Delhi V. ACIT, New Delhi

ITA 320/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2919 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 15-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Assessee Lawyers: R K MEHRA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DLEHI BEFORE SHRI G.D. AGRAWAL, PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NOS. 319 & 320/DEL/2015 ASSESSMENT YEARS: 2010-11 M/S SAWHNEY BROTHERS, VS JT. COMMISSIONER OF INCO ME-TAXD- 924, NEW FRIENDS COLONY, RANGE -32, CIVIC CENTRE, NEW DELHI. NEW DELHI. (PAN: AABFS7303M) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.K. MEHRA, CA RESPONDENT BY: SHRI KAUSHLENDRA TIWARI, SR. DR ORDER DATE OF HEARING: 28.02.2018 DATE OF PRONOUNCEMENT: 12.03.2018 PER BENCH AGGRIEVED BY THE ORDER DATED 29.10.2014 OF THE COMMI SSIONER OF INCOME- TAX (APPEALS) {CIT(A)} IN APPEAL NOS.130 & 340/20 13-14, ASSESSEE PREFERRED THESE APPEALS MAINLY CONTENDING THAT THERE WAS NO SU FFICIENT OPPORTUNITY TO THE ASSESSEE FIRM TO RAISE ITS PLEAS AGAINST THE PROPOS ED ENHANCEMENT OF TOTAL INCOME AT APPELLATE PROCEEDINGS, BY DRAWING NEXUS BETWEEN B ORROWING OF THE INTEREST BEARING FUNDS AND THE ADVANCES GIVEN AND ALSO THAT NON-INTEREST BEARING FUNDS HAVE NOT BEEN UTILIZED FOR MAKING ADVANCES. 2. FACTS, IN BRIEF, ARE THAT THE ASSESSEE, A PARTNE RSHIP FIRM IS ENGAGED IN THE MANUFACTURE AND EXPORT OF READYMADE GARMENTS, TEXTIL E ITEMS AND HANDICRAFTS. DURING THE SCRUTINY OF THE RETURN OF INCOME FOR THE ASSTT. YEAR 2010-11, LD. AO MADE TWO ADDITIONS, NAMELY, RS.28,37,361/- ON ACCOUN T OF THE INTEREST EXPENSE ON THE GROUND THAT A PORTION OF THE BORROWED AMOUNT S WERE NOT UTILIZED FOR BUSINESS PURPOSE, AND RS.1,19,064/- ON ACCOUNT OF 1 0% OF THE EXPENSES RELATING TO CONVEYANCE, STAFF WELFARE AND FOREIGN TRAVEL ATTR IBUTABLE TO THE PERSONAL EXPENSES. 3. LIKEWISE, FOR THE ASSTT. YEAR 2011-12 LEARNED AO MADE AN ADDITION OF RS.33,79,839/- ON ACCOUNT OF DISALLOWANCE OF PROPOR TIONATE INTEREST EXPENSE, RS.16,88,620/- ON ACCOUNT OF THE DISALLOWANCE OF IN SURANCE CLAIM AND RS.1,86,459/- ON ACCOUNT OF 10% OF THE TELEPHONE AN D TELEX, VEHICLE MAINTENANCE AND FOREIGN TRAVEL EXPENSE ATTRIBUTING TO PERSONAL EXPENSE. 4. IN APPEAL, LD. CIT(A) ENHANCED THE ADDITION OF I NTEREST EXPENSE OF RS.28,37,361/- MADE BY THE AO TO RS.98,59,785/- AND SUSTAINED THE 10% DISALLOWANCE OF RS.1,19,064/- ON ACCOUNT OF PERSONA L USE OF CONVEYANCE ETC. IN RESPECT OF THE ASSTT. YEAR 2010-11. SIMILARLY, IN R ESPECT OF THE YEAR 2011-12, LD. CIT(A) ENHANCED THE INTEREST EXPENSE DISALLOWANCE F ROM RS.33,79,839/- TO RS.1,17,69,071/- AND SUSTAINED THE DISALLOWANCE ON ACCOUNT OF INSURANCE EXPENSE TO A TUNE OF RS.16,88,620/-. HOWEVER, LD. CIT(A) G RANTED RELIEF TO THE ASSESSEE IN RESPECT OF THE ADDITION OF RS.1,86,459/- MADE BY THE AO IN RESPECT OF AY 2011-12. THE ASSESSEE IS, THEREFORE, BEFORE US EXPRESSING TH EIR GRIEVANCE THAT LD. CIT(A) DID NOT GIVE THEM THE MINIMUM OPPORTUNITY OF EXPLAINING THEIR CASE. LD. DR PLACED RELIANCE ON THE IMPUGNED ORDER. 5. LD. AR BROUGHT TO OUR NOTICE THE ORDER SHEET ENT RIES MADE BY THE LD. CIT(A) IN THESE APPEALS. IT IS EVIDENT FROM THE ORDER SHE ET THAT ON 27.8.2014 AND 8.9.L2014, THE ADVOCATES FOR THE ASSESSEE ENTERED A PPEARANCE BEFORE THE CIT(A) AND EXPLAINED THEIR CASE. FROM 8.9.2014, IT SEEMS THAT THE MATTER WAS HEARD AGAIN ON 10.10.2014 ON WHICH DATE IT WAS RECORDED A S FOLLOWS,- SHRI D.S. SAHNI, PARTNER AND SHRI VIPIN GUPA ATTEN DED. FILED DETAILED SUBMISSIONS, DOCUMENTS. IT IS NOTICED THAT THE OD TAKEN AGAINST THE MUTUAL FUND WAS ADVANCED TO RELATIVES, THEREFORE, INTEREST ON THAT REQUIRES TO BE DISALLOWED. EXPLAIN ENHANCEMENT IN DISALLOWANCE. . THIS CASE ON 16.10.2014. 6. LD. AR SUBMITS THAT THERE WAS NO HEARING ON 16.1 0.2014 BUT THE LEARNED CIT(A) PROCEEDED TO PASS THE ORDER ON 29.10.2014 WI THOUT HEARING THE ASSESSEE ON THE POINT OF CLARIFICATION RELATING TO THE ENHAN CEMENT OF DISALLOWANCE. 7. LD. DR SUBMITS THAT THERE IS POSSIBILITY OF THE O RDER SHEET BEING CONTINUED BEYOND 10.10.2014. HOWEVER, LD. AR REPRESENTED ACRO SS THE BAR THAT NO HEARING TOOK PLACE SUBSEQUENT TO 10.10.2014. BE THAT AS IT MAY, THE FACT REMAINS THAT THE LD. CIT(A) PASSED THE ORDER ON 29.10.2014 WHICH IS BARELY TWO AND HALF WEEKS AFTER SEEKING THE EXPLANATION OF THE ASSESSEE AND BY NO PA RAMETER IT COULD BE SAID THAT PROPER OPPORTUNITY, LET ALONE SUFFICIENT OPPORTUNIT Y, IS GRANTED TO THE ASSESSEE. WHEN THE PROPOSED ENHANCEMENT WAS FROM RS.28,37,361 /- TO RS.98,59,785/- IN RESPECT OF THE AY 2010-11 AND WAS FROM RS.33,79,839 /- TO RS.1,17,69,071/- IN RESPECT OF THE ASSTT. YEAR 2011-12 APART FROM THE A DDITIONS ON OTHER COUNTS, WE ARE OF THE CONSIDERED OPINION THAT THE OPPORTUNITY I N THIS MATTER TO THE ASSESSEE WAS NEITHER SUFFICIENT NOR PROPER AND THE MATTER NE EDS A FRESH CONSIDERATION AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. IT IS THE CARDINAL PRINCIPLE OF ADJUDICATION THAT JUSTICE SHOULD NOT O NLY BE DONE BUT MANIFESTLY SEEMS TO HAVE BEEN DONE. 8. WITH THIS VIEW OF THE MATTER, WE ARE NOT INCLINE D TO DELVE DEEPER INTO THE MERITS OF THE CASE, INASMUCH AS THE ENDS OF JUSTICE WOULD BE MET BY AFFORDING AN OPPORTUNITY TO THE ASSESSEE TO PUT FORTH THEIR CASE EFFECTIVELY AND COMPLETELY BEFORE THE FIRST ADJUDICATING AUTHORITY. WE, THEREF ORE, SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE LD. C IT(A) TO ADJUDICATE IT AFRESH AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE OF B EING HEARD AND TO SUBMIT THE EVIDENCES AT THEIR COMMAND. GROUNDS ARE ANSWERED AC CORDINGLY. 9. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 12 TH DAY OF MARCH, 2018. SD/- SD/- (G.D. AGRAWAL) (K. NARASIMHA CHARY) PRESIDENT JUDICIAL MEMBER DATED: 12 TH MARCH, 2018 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR , ITAT