M/s Creative Home Fashion Pvt. Ltd., New Delhi V. ACIT (OSD), New Delhi

ITA 3717/DEL/2013

• Counselvise Citation: 371720114 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: S KRISHNAN
• Keywords: Opportunity of being heard; Principle of natural justice; Bad and doubtful debts
• Section: 14A

Judgement Text

PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. T .S. KAPOO R, ACCOUNTANT MEMBER I.T.A .NO. - 3717 /DEL/201 3 (ASSESSMENT YEAR - 200 8 - 09 ) CREATIVE HOME FASHION PVT.LTD., A - 201, VARDHMAN APARTMENTS, MAYUR VIHAR, PHASE - I, NEW DELHI. PAN - AABCC4828Q (A PPELLANT) VS ACIT (OSD), CIT - I, NEW DELHI (RESPONDENT) APPELLANT BY SH.S.KRISHNAN, ADV. RESPONDENT BY SH.RAVI JAIN, CIT DR ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 22.03.2013 OF CIT(A) - V, NEW DELHI PE RTAINING TO 200 8 - 09 ASSESSMENT YEAR ON VARIOUS GROUNDS INCLUDING GROUND NOS. - 1 & 2 WHICH READ AS UNDER: - 1. THAT EX - PARTY APPELLATE ORDER PASSED BY FIRST APPELLATE AUTHORITY IS ILLEGAL, ARBITRARY AND UNCALLED FOR. 2. THE CIT(A) - V DIDN T ACCEPTED ADJOURNMENT APPLICATION WITHOUT GIVING PLAUSIBLE R EASON AND DISMISS APPEAL WITHOUT ON MERITS. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IN THE YEAR UNDER CONSIDERATION AS PER THE STATEMENT OF FACTS WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF HOME FURNISHING GOODS AS PER THE SPECIFICATIONS GIVEN BY THE BUYER IN VARIOUS SIZES, COLOUR, TEXTURE AND STYLE FROM COUNTRY TO COUNTRY . RETURN WAS FILED ON 29.09.2008 DECLARING A LOSS OF RS.23 , 18 , 0 2 ,239/ - . A S A RESULT OF VARIOUS ADDITIONS MADE BY WAY OF VARIOUS DISALLOWANCES ADDITION O F RS.15, 86,29,391/ - WAS MADE REDUCING THE AFORESAID LOSS RETURN TO LOSS OF RS .7,31,72,848/ - . THE FOLLOWING ADDITIONS WERE MADE BY THE AO: - DATE OF HEARING 13 .0 7 .2015 DATE OF PRONOUNCEMENT 1 9 .0 8 .2015 I.T.A .NO. - 3717/DEL/2013 PAGE 2 OF 5 I) DIFFERENCE IN THE VALUATION OF CLOSING STOCK RS.82905237/ - II) DISALLOWANCE OF BAD DEBTS WRITTEN OFF RS.55126862/ - III) DISALLOWANCE U/S 14A READ WITH RULES 8D RS.2747953/ - IV) ADVANCES FROM BUYERS RS.6600726/ - V) INFLATION OF EXPENSES RS.4372957/ - VI) ADDITION ON ACCOUNT OF EXCESS CONSUMPTION OF RAW MATERIAL RS.6875656/ - TOTAL RS.158629391/ - 3. AGGRIEVED BY THIS, THE ASSESSEE CAME IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHO AFTER ISSUANCE OF NOTICE TO THE ASSESSEE TWICE FINALLY DISMISSED THE APPEAL FOR NON - REPRESENTATION HOLDING AS UNDER : - 2 ..IN VIEW OF THE AFORESAID, THERE IS NO LOGIC IN FIXING THE APPEAL AGAIN AND AGAIN. IN THE CASE OF CIT VS B.N.BHATTACHARJEE (1977), REPORTED IN 118 ITR 461 (SC) [RELEVANT PAGES 477 AND 478] THEIR LORDSHIPS HAVE HELD THAT THE APPEAL DOES NOT ME AN MERELY FILING OF THE APPEAL BUT ACTIVELY PURSUING IT . THEREFORE, THE GROUNDS OF APPEAL RAISED BY THE APPELLANT AGAINST THE DISALLOWANCE/ADDITIONS MADE BY THE AO ARE DISMISSED AND THE ACTION OF THE AO IN RESPECT OF THE A DDITIONS/DISALLOWANCES IS CONFI RMED. IN VIEW OF THE AFORESAID THE APPEAL IS DISMISSED. 4. AGGRIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. AR INVITING ATTENTION TO THE IMPUGNED ORDER SUBMITTED THAT THE RECORD WOULD SHOW THAT EFFECTIVELY THREE OPPORTUNITIES H AVE BEEN GIVEN BY THE CIT(A ) . ON THE FIRST OPPORTUNITY DATED 11.03.2013 IT WAS HIS SUBMISSION THAT NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE BECAUSE THE NOTICE FOR THE SPECIFIC DATE OF HEARING HAD NOT BEEN RECEIVED. HOWEVER, ON THE NEXT DATE I.E 19.03 .2013 ON BEHALF OF THE ASSESSEE, AN ADJOURNMENT PETIT I ON WAS SENT BY POST. REFERRING TO THE STATEMENT OF FACT FILED BY THE ASSESSEE IT WAS SUBMITTED THAT THE ADJOURNMENT HA D BEEN SOUGHT AS THE COUNSEL WAS NOT WELL DUE TO HIGH BLOOD PRESSURE FOR WHICH PURP OSE AN APPLICATION WAS ALSO SENT BY STAFF CLERK OF THE COUNSEL. ON THE SAID REQUEST, IT WAS SUBMITTED REFERRING TO THE IMPUGNED ORDER THAT ADJOURNMENT FO R ONLY TWO DAYS WAS GIVEN I.E 21 .03.2013 ON WHICH DATE ALSO TIME WAS SOUGHT WHICH WAS NOT GRANTED BY THE CIT(A) WHO PROCEEDED TO PASS AN ORDER ON 22.03.2013 DISMISSING THE APPEAL OF THE ASSESSEE IN LIMINE. IN VIEW OF THE AFORE - MENTIONED PECULIAR FACTS AND CIRCUMSTANCES, IT WAS HIS LIMITED PRAYER THAT THE ISSUE MAY BE RESTORED TO THE FILE TO THE CIT(A ) D IRECTING THE SAID AUTHORITY TO GRANT AN OPPORTUNITY OF HEARING TO THE ASSESSEE AND A DECISION ON MERIT. I.T.A .NO. - 3717/DEL/2013 PAGE 3 OF 5 5.1. LD. CIT DR, MR. RAVI JAIN APPEARING FOR THE REVENUE , I N THE AFORE - MENTIONED PE CULIAR FACTS AND CIRCUMSTANCES HAD NO OBJECTION TO THE SAID PRAYER OF THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION THEREOF, WE HOLD THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES, THE LD. CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE APPEAL OF THE ASSESS EE IN LIMINE. SECTION 250(6) OF THE INCOME TAX ACT, 1961 MANDATES THAT THE CIT(A) WHILE DECIDING THE APPEALS IS REQUIRED TO DECIDE THE APPEAL IN WRITING SETTING OUT THE POINTS FOR DETERMINATION; THE DECISION THEREON IS TO BE SUPPORTED BY REASON S IN THAT ORDER. FOR READY - REFERENCE, WE REPRODUCE 250(6) OF THE ACT WHICH READ AS UNDER: 250. (1) . (2) (3) (4) . (5) . (6) THE ORDER OF THE COMMISSIONER (APPEALS) DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REASON FOR THE DECISION. (6A).............................................................. ..... 7. IN THE FACTS OF THE PRESENT CASE, T HE SAID EXERCISE IT IS SEEN IS MISSING . IT IS FURTHER SEEN THAT NOT ONLY AS PER THE STATUTORY MANDATE OF SECTION 250( 6) OF THE INCOME TAX ACT, 1961, T HE IMPU GNED ORDER IS UNSUSTAINABLE LAW, E VEN OTHERWISE ON FACTS, IT CANNOT BE SAID THAT AN EFF ECTIVE AND ADEQUATE OPPORTUNITY WAS PROVIDED TO THE ASSESSEE . RIGHT TO BE HEARD IS AN IMPORTANT RIGHT TO WHICH A PARTY WHO IS FACED WITH AN ADVERSE VIEW IS ENTITLED TO AUDI ALTERAM PARTEM IS ONE OF THE MOST FAMOUS A ND CELEBRATED RULE OF NATURAL JUSTICE. THE PRINCIPLES OF NATURAL JUSTICE ARE THOSE WHICH HAVE BEEN LAID OUT BY THE COURTS AS BEING THE MINIMUM PROTECTION OF THE RIGHTS OF AN INDIVIDUAL AGAINST THE ARBITRARY PROCEDURE THAT MAY BE ADOPTED BY A JUDICIAL, QUA SI - JUDICIAL AND ADMINISTRATIVE AUTHORITY WHILE MAKING AN ORDER AFFECTING THOSE RIGHTS. T HE PRINCIPLE BY ITS VERY NATURE IMPLIES THE DUTY TO ACT FAIRLY I.E. FAIR PLAY IN ACTION MUST BE EVIDENT AT EVERY STAGE. FAIR PLAY DEMANDS THAT NOBODY SHALL BE CONDEMN ED UNHEARD. IN THE CELEBRATED I.T.A .NO. - 3717/DEL/2013 PAGE 4 OF 5 JUDGEMENT OF THE APEX COURT IN THE CASE OF A.K.KRAIPAK VS - UNION OF INDIA (1969) 2 SCC 262, IT IS OBSERVED THAT THE AIM OF RULES OF NATURAL JUSTICE IS TO SECURE JUSTICE OR TO PUT IT NEGATIVELY TO PREVENT MISCARRIAGE OF JUSTIC E. THE SAID RULES ARE MEANS TO AN END AND NOT AN END IN THEMSELVES AND THOUGH IT IS NOT POSSIBLE TO MAKE AN EXHAUSTIVE CATALOGUE OF SUCH RULES HOWEVER IT CAN BE READILY SAID THAT THERE ARE TWO BASIC MAXIMS OF NATURAL JUSTICE NAMELY AUDI ALTERAM PARTEM AND NEMO JUDEX IN RE SUA . IN THE PRESENT FACTS OF THE CASE WE ARE CONCERNED WITH THE MAXIM AUDI ALTERM PARTEM WHICH AGAIN MAY HAVE MANY FACETS TWO OF THEM (A) NOTICE OF THE CASE TO BE MET; AND (B) OPPORTUNITY TO EXPLAIN. THEIR LORDSHIPS HAVE CAUTION ED THAT THESE RULES CANNOT BE SACRIFICED AT THE ALTAR OF THE ADMINISTRATIVE CONVENIENCE OR CELEBRITY. IN THE AFORE - MENTIONED PECULIAR FACTS AND CIRCUMSTANCES, CONSIDERING G ROUND NO S . - 1 & 2 RAISED BY THE ASSESSEE, THE IMPUGNED ORDER ACCORDINGLY ON ACCOUNT OF BOTH THESE COUNTS, THE IMPUGNED ORDER IS SET ASIDE ON BOTH THESE COUNTS AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH LAW BY WAY OF A SPEAKING ORDER AFTER AFFORDING THE ASSESSEE A REAS ONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY THE GROUND NOS.1 & 2 RAISED BY THE ASSESSEE IS ALLOWED AND THE REMAINING GROUNDS ARE RESTORED BACK TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING THE ASSES SEE A REASONABLE OPPORTUNITY OF BEING HEARD. AT THE SAME TIME, IT IS HOPED THAT THE OPPORTUNITY SO PROVIDED IS GAINFULLY UTILIZED BY THE ASSESSEE AND NOT ABUSED. 7.1. THE SAID ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE OF HEARING ITSELF. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 9 T H OF AUGUST , 2015. S D / - S D / - ( T . S. KAPOO R) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 9 / 0 8 /2015 *AMIT KUMAR* I.T.A .NO. - 3717/DEL/2013 PAGE 5 OF 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI