M/s Prabha Electronics Pvt. Ltd., Chandigarh V. ITO, Chandigarh

ITA 358/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0689 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-09-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 23-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B M KHANNA
• Keywords: Principle of natural justice
• Section: 43B; 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 358/CHD/2012 (ASSESSMENT YEAR : 2004-05) M/S PRABHA ELECTRONICS PVT. LTD., VS. THE INCOME TAX OFFICER, # 209, INDUSTRIAL AREA, PHASE-I, WARD 2 (1), CHANDIGARH. CHANDIGARH. PAN: AADCP2295E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.M.KHANNA RESPONDENT BY : SHRI AKHILESH GUPTA, DR DATE OF HEARING : 26.02.2013 DATE OF PRONOUNCEMENT : 28.02.2013 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE CIT (APPEALS), CHANDIGARH DATED 20.01.2012 RELATING TO ASSESSMENT YEAR 2004-05 AGAINST THE ORDER PASSED U/S 154 OF THE INC OME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: 1) THAT THE ASSESSING AUTHORITIES HAS ERRED IN LA W ON FACTS IN REFUSING TO RECTIFYING THE ORDER THOUGH TH E MISTAKE IN APPARENT ON THE FACE OF THE RECORDS & ORDER. NON E OF THE ADDITION IS SUSTAINABLE IN THE LIGHT OF THE LEG AL PROVISION AND JUDICIAL PRONOUNCEMENT. 2) THE LEARNED CIT (A) HAS ERRED IN LAW IN UPHOLDI NG THE ORDER OF THE ASSESSING AUTHORITIES WITHOUT TAKI NG NOTICE OF THE LEGAL PROVISIONS, TAX AUDIT REPORT AS WELL AS JUDICIAL PRONOUNCEMENT IT IS THEREFORE PRAYED THAT THE AUTHORITY BELOW BE DIRECTED TO DELETE THE ADDITIONS AS PRAYED IN APPLICATION FOR RECTIFICATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT IN THE CASE WAS COMPLETED ON TAXABLE INCOME OF RS.3,14,810/- VIDE O RDER DATED 4.10.2006. THEREAFTER THE ASSESSING OFFICER NOTED THAT THOUGH BONUS OF RS.89,313/- AND TDS AMOUNTING TO RS.1,36,662/- WERE DEBITED AS EXPENDITURE IN THE PROFIT & LOSS ACCOUNT BUT AS PER THE AUDITORS REPORT THESE WERE SHOWN AS PAYABLE. THE ASSESSEE HAD FAIL ED TO FURNISH EVIDENCE OF PAYMENT ALONGWITH RETURN OF INCOME. AS PER THE ASSESSING OFFICER THE SAID AMOUNT WAS DISALLOWABLE UNDER SECT ION 43B OF THE ACT. FURTHER THE ASSESSING OFFICER ALSO NOTED THAT THE P F/ESI CONTRIBUTION AMOUNTING TO RS.38,755/- WERE NOT DEPOSITED WITHIN THE PRESCRIBED LIMITS AND THE SAME WERE TO BE DISALLOWED UNDER SECTION 43 B OF THE ACT. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 154 O F THE ACT DATED 4.8.2008, WHICH WAS SERVED UPON THE ASSESSEE ON 18. 8.2008. THE ASSESSEE FAILED TO APPEAR BEFORE THE ASSESSING OFFI CER NOR ANY REPLY WAS FILED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER ACCORDINGLY ENHANCED THE INCOME OF THE ASSESSEE BY MAKING AFORE SAID ADDITIONS OF RS.89,313/- PLUS RS.1,36,662/- PLUS RS.38,755/-, TO TALING RS.2,64,730/-. 4. BEFORE THE CIT (APPEALS) IN THE APPEAL FILED AGA INST THE ORDER UNDER SECTION 154 OF THE ACT, THE CONTENTION OF THE ASSESSEE WAS THAT THE ASSESSING OFFICER HAD REJECTED ITS APPLICATION FOR RECTIFICATION. THE CIT (APPEALS) OBSERVED THAT THE PRESENT ORDER UNDER SEC TION 154 OF THE ACT WAS PASSED PURSUANT TO THE NOTICE ISSUED UNDER SECT ION 154 OF THE ACT BY THE ASSESSING OFFICER AND THERE WAS NO MERIT IN THE PLEA OF THE ASSESSEE THAT ITS APPLICATION UNDER SECTION 154 OF THE ACT W AS REJECTED. 5. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT NO OPPORTUNITY WAS ALLOWED BY THE ASSESSING OFFICER WHILE PASSING THE ORDER UNDER 3 SECTION 154 OF THE ACT. THE SECOND CONTENTION OF T HE LEARNED A.R. FOR THE ASSESSEE WAS THAT THE PERUSAL OF THE AUDIT REPO RT ITSELF WOULD REFLECT THAT THE BONUS OF RS.89,313/- WAS PAID ON 11.9.2004 I.E. BEFORE FILING OF RETURN OF INCOME AND HENCE THE SAME WAS NOT TO BE D ISALLOWED UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. OUR ATTENTIO N WAS DRAWN TO THE ENTRIES IN THE AUDIT REPORT AT PAGE 7 OF THE PAPER BOOK. IN RESPECT OF TDS AMOUNTING TO RS.1,36,662/-, THE LEARNED A.R. FO R THE ASSESSEE CONTENDED THAT THE SAID AMOUNTS WERE ALSO PAID IN T HE SUCCEEDING YEAR AND NO DISALLOWANCE ON THIS ACCOUNT WAS TO BE MADE. FURTHER THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT DUE DATES OF PAYMENT OF PF OR ESI AND DATES OF DEPOSIT OF THE SAID AMOUNTS MONTH-WISE ARE INCORPORATED IN THE ORDER PASSED UNDER SECTION 154 ITSELF, PERUSAL OF WHICH REFLECTS THAT THE AMOUNTS WERE PAID WITHIN THE STIPULATED TIME AN D MUCH BEFORE THE DATE OF FILING THE RETURN OF INCOME. 6. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE ORDER OF RECTIFICATION PASSED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 154 OF THE ACT. THE ASSESSING OFFICER HAD ISSUED NOTICE UNDER SECTION 154 OF THE ACT ON 4.8.2008 FOR APPEARANCE O N 17.8.2008. THE COPY OF THE SAID NOTICE IS PLACED AT PAGE 25 OF THE PAPER BOOK. AS PER THE ASSESSING OFFICER, FOLLOWING MISTAKES WERE PROP OSED TO BE RECTIFIED IN THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT : BONUS PAYABLE RS.89313/- AND TDS PAYABLE 136662/- LEFT TO BE ADDED BACK AS NO EVIDENCE OF PAYMENT WAS FILED. PF/ESI CONTRIBUTED BY EMPLOYEES NOT DEPOSIT ED IN TIME, HENCE AMOUNT OF RS.38755/- LEFT TO BE ADDE D TO THE INCOME. 4 8. THE ORDER UNDER SECTION 154 OF THE ACT IS DATED 3.12.2008. THE PERUSAL OF THE SAID ORDER PASSED BY THE ASSESSING O FFICER UNDER SECTION 154 OF THE ACT REFLECTS THAT THE ASSESSING OFFICER HAS NOTED THAT NOTICE UNDER SECTION 154 OF THE ACT DATED 4.8.2008 WAS SER VED UPON THE ASSESSEE FOR 18.8.2008. HOWEVER, THE ASSESSEE NEIT HER ATTENDED THE PROCEEDINGS, NOR FURNISHED ANY REPLY TILL DATE I.E. THE DATE OF PASSING THE ORDER I.E. 3.12.2008. HOWEVER, THE ASSESSING OFFIC ER DID NOT ISSUE ANY NOTICE OF HEARING TO THE ASSESSEE EXCEPT FOR THE NO TICE DATED 4.8.2008. IN THE INTEREST OF JUSTICE AND FOLLOWING THE PRINCI PLE OF NATURAL JUSTICE, WE ARE OF THE VIEW THAT REASONABLE AND PROPER OPPOR TUNITY OF HEARING HAD NOT BEEN AFFORDED TO THE ASSESSEE BEFORE PASSING TH E ORDER UNDER SECTION 154 OF THE ACT. IT IS IMPEDIMENT THAT BEFORE PASSI NG ORDER ATLEAST REASONABLE OPPORTUNITY OF HEARING SHOULD BE AFFORDE D TO THE PERSON AGAINST WHOM THE ORDER IS TO BE PASSED. IN THE FAC TS OF THE PRESENT CASE WHERE DISALLOWANCE UNDER SECTION 43B OF THE ACT HAD BEEN MADE BY THE ASSESSING OFFICER SPECIALLY IN VIEW OF THE EVIDENCE S REFERRED TO BY THE ASSESSING OFFICER IN RESPECT OF THE PAYMENT OF BONU S, DEPOSIT OF TDS AND ALSO DEPOSIT OF EMPLOYERS CONTRIBUTION TO PF A ND ESI WITHIN THE PRESCRIBED LIMITS AS PROVIDED UNDER THE PROVISIONS OF SECTION 43B OF THE ACT, THE ORDER PASSED BY THE ASSESSING OFFICER UNDE R SECTION 154 OF THE ACT IS TO BE QUASHED. HOWEVER, THE ISSUE IS SET AS IDE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AFTER AFFORDIN G REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE GROUND S OF APPEAL RAISED BY 5 THE ASSESSEE ARE THUS ALLOWED FOR STATISTICAL PURPO SES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF FEBRUARY, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH FEBRUARY, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH