M/s. Fortune Fibre Pvt. Ltd. (Dormant), Mumbai V. The ACIT, Vapi Circle, Vapi

ITA 368/AHD/2016

• Counselvise Citation: [2018] 111 COUNSELVISE.COM (IT) 1918 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 12-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS R KAVITHA
• Assessee Lawyers: SHRIDHARMESHSHAH
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL,SURAT BENCH,SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.368/AHD/2016/SRT [ [ / ASSESSMENT YEAR: 2006-07 M/S. FORTUNE FIBRE P. LTD., (DORMANT) 384-M, DABHOLKARWADI, 3 RD FLOOR, KALBADEVI ROAD, MUMBAI 400 002. [PAN: AABPK 7529B] VS. ASST. COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI. ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRIDHARMESHSHAH, C.A /RESPONDENT BY : MRS. R.KAVITHA, SR. DR /DATE OF HEARING : 09-03-2018 /DATE OF PRONOUNCEMENT : 14-03-2018 / ORDER PERC.M.GARG, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE HAS BEEN FILED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VALSAD (CIT(A) FOR SHORT) DATED 02.12.2015 FOR THE ASSESSMENT YEAR (AY) 2006-07 PASSED IN THE FIRST APPEALNO.CIT(A)/VLS/75/14-15. 2. IN THE VERY BEGINNING OF HEARING THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUNDS 1 TO 4, 2 ITA NO.368/AHD/2016/SRT (A.Y: 2006-07) M/S. FORTUNE FIBRE P. LTD. HENCE, THE SAME IS DISMISSED AS NOT PRESSED. THE REMAINING EFFECTIVE GROUNDS OF ASSESSEE FOR ADJUDICATION READ AS UNDER: 5.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE (SIC ADDITION) OF A SUM OF RS. 82,00,000/- MADE BY ASSESSING OFFICER SOLELY RELYING UPON AIR INFORMATION RECEIVED BY HIM. 6.WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER FOR NOT CONSIDERING CALCULATION AND TAX THE GAINS AS PER THE PROVISIONS OF THE ACT, INCLUDING SS. 45, 48, 112 ETC. 7.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMED THE ACTION OF THE ASSESSING OFFICER FOR NOT ALLOWING INTEREST PAID RS. 1,04,00,000/- U/S. 43B OF THE ACT. 3. WE HAVE HEARD THE ARGUMENTS OF THE BOTH SIDES, AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL. INTER ALIA ASSESSMENT ORDER AND FIRST APPELLATE ORDER ALONG WITH PAPER BOOK OF ASSESSEE SPREAD OVER 70 PAGES, THE LD. AR SUBMITTED THAT DURING THE ASSESSMENT AND FIRST APPELLATE PROCEEDINGS, THE ASSESSEE COULD NOT GET AN OPPORTUNITY TO EXPLAIN ITS CASE PROPERLY AND IT WAS NOT ALLOWED TO SUBMIT RELEVANT DOCUMENTS EXPLAINING THE FACTS AND CIRCUMSTANCES. THE LD. AR SUBMITTED THAT THE ASSESSEE COMPANY HAS CLOSED ENTIRE ITS OPERATIONS AFTER JUNE, 1985 AND THEREFORE, NOTICES ISSUED TO THE ASSESSEE BY THE AUTHORITIES BELOW COULD NOT BE REACHED TO THE ASSESSEE COMPANY AND ITS DIRECTORS. THE LD. AR FURTHER SUBMITTED THAT THE STATEMENT OF THE BANK AND GIDC WHICH ACCOUNTED FOR LOAN LIABILITY (PRINCIPAL AMOUNT AND INTEREST) WAS CALCULATED FROM JUNE, 1984 AND THE INTEREST LIABILITY WAS FOR THE PERIOD ALMOST 21 YEARS WHICH ACCUMULATED TO HUGE AMOUNT PAYABLE TO THE BANK AND THE ASSESSEE COMPANY HAD NO CHOICE TO SELL OF ITS ASSETS. THE LD. AR SUBMITTED THAT IN THE 3 ITA NO.368/AHD/2016/SRT (A.Y: 2006-07) M/S. FORTUNE FIBRE P. LTD. ABSENCE OF ANY DOCUMENTARY EVIDENCE, THE AO NEITHER GAVE CREDIT OF THE WRITTEN DOWN VALUE NOR THE ACCUMULATED LOSSES. THEREFORE, A GREAT PREJUDICE HAS BEEN CAUSED TO THE ASSESSEE DUE TO EXPARTE ASSESSMENT AND FIRST APPELLATE ORDER. THE LD. AR VEHEMENTLY POINTED OUT THAT THE NOTICE WAS SERVED/PASTED AT THE FACTORY ADDRESS WHICH WAS BELONGING TO OTHER PARTY AS PER SALE AGREEMENT. THEREFORE, THE ASSESSEE WAS PREVENTED FROM APPEARING BEFORE AUTHORITIES BELOW DUE TO THIS BONA FIDE REASON WHICH WAS BEYOND CONTROL OF THE ASSESSEE. THE LD. AR ALSO POINTED OUT THAT THE AMOUNT PAID TO THE BANK IS PRINCIPALLY TOWARDS THE INTEREST AND IT HAS BEEN PAID DUE TO THE STATEMENT. THEREFORE, THE ASSESSEE SUBMITS THAT THE ASSESSEE SHOULD BE ALLOWED OPPORTUNITY OF BEING HEARD IN THE INTEREST OF JUSTICE. THE LD. AR SUBMITTED THAT THE ASSESSEE SUBMITTED RELEVANT DOCUMENTS OF THE LD. CIT(A) BUT THE SAME WERE NOT CONSIDERED BY THE FIRST APPELLATE AUTHORITY AND HENCE APPEAL OF THE ASSESSEE WAS DISMISSED EXPARTILY. THE LD. AR FINALLY SUBMITTED THAT THE ASSESSEE MAY BE GRANTED AN OPPORTUNITY TO EXPLAIN ITS CASE AND SUBMISSIONS BEFORE THE AUTHORITIES BELOW IN THE INTEREST OF JUSTICE. 4. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) STRONGLY SUPPORTED THE ASSESSMENT AND FIRST APPELLATE ORDER AND CONTENDED THAT WHEN THE ASSESSEE HAS NOT APPEARING BEFORE THE AUTHORITIES BELOW THEN HAVING NO ALTERNATIVE TO PASS EXPARTE ORDERS. THEREFORE, GRIEVANCE OF THE ASSESSEE IS BASELESS. HOWEVER, IN ALL FAIRNESS, THE LD. DR SUBMITTED THAT THE FUNDS FOUND JUST AND PROPER IN THE INTEREST OF JUSTICE THEN THE DEPARTMENT HAS 4 ITA NO.368/AHD/2016/SRT (A.Y: 2006-07) M/S. FORTUNE FIBRE P. LTD. NO SERIOUS OBJECTION IF THE CASE IS RESTORED TO THE FILE OF AO FOR A FRESHDENOVO ADJUDICATION. 5. IN VIEW OF THE ABOVE RIVAL SUBMISSIONS, FIRST OF ALL WE NOTE THAT UNDISPUTEDLY BUSINESS OPERATIONS OF THE ASSESSEE COMPANY WERE CLOSED AFTER JUNE, 1985 AND THERE WERE HUGE LOAN AND INTEREST LIABILITY ON THE ASSESSEE COMPANY FROM THE BANK AND GIDC. OBVIOUSLY, THE AO AS WELL AS THE LD. CIT(A) ISSUED NOTICES FOR HEARING TO THE ASSESSEE ON THE ADDRESS AVAILABLE IN THE DEPARTMENTAL RECORD BUT THE SAME COULD NOT BE REACHED TO THE ASSESSEE DUE TO CLOSURE OF BUSINESS OPERATIONS FROM SUCH OFFICE PREMISES. IN OUR CONSIDERED OPINION, THE REVENUE HAS ALL RIGHTS TO COLLECT TAX ETC., ON THE TAXABLE INCOME OF THE ASSESSEE, BUT AT THE SAME TIME IT ALSO REQUIREMENT OF THE FACT THAT THE ASSESSEE SHOULD BE ALLOWED AN OPPORTUNITY OF BEING HEARD DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE PRESENT CASE, DUE TO THE CIRCUMSTANCES AS NOTED ABOVE THE ASSESSEE WAS NOT ALLOWED OPPORTUNITY OF BEING HEARD DURING ASSESSMENT AND FIRST APPELLATE PROCEEDINGS. THEREFORE, IN THE INTEREST OF JUSTICE, WE FIND IT APPROPRIATE TO RESTORE THE CASE TO THE FILE OF THE AOFOR A FRESH DENOVO ADJUDICATION AFTER ALLOWING DUE OPPORTUNITY TO THE ASSESSEE. NEEDLESS TO SAY THAT THE ASSESSEE WILL BE ALLOWED TO EXPLAIN ITS CLAIM BY THE AO AND THE ASSESSEE SHALL CO-OPERATE REVENUE AUTHORITIES DURING THE PROCEEDINGS. ACCORDINGLY, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE WITH THE DIRECTIONS TO THE AO AS MENTIONED ABOVE. 5 ITA NO.368/AHD/2016/SRT (A.Y: 2006-07) M/S. FORTUNE FIBRE P. LTD. 6. IN THE RESULT,THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 14 TH MARCH, 2018. / SURAT ; DATED :14 TH MARCH, 2018 EDN / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A), VALSAD; 4. THE PRL. CIT, VALSAD; 5 . , , / DR, ITAT, SURAT ; 6. [ / GUARD FILE. / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR , / ITAT, SURAT SD/ - SD/ - ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) / JUDICIAL MEMBER