M/s Sandhu Sran Commission Agent, Muktsar V. The Incoem-tax Officer, Muktsar

ITA 376/ASR/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1461 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-12-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 09-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Principle of natural justice; Opportunity of cross examination
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NOS. 376 TO 378(ASR)/2014 ASSESSMENT YEARS:2003-04 TO 2005-06 PAN: AALFS7314Q M/S. SANDHU SRAN COMMISSION AGENT, VS. INCOME TAX O FFICER, MUKTSAR WARD-II(2), MUKTSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.P.N.ARORA, ADVOCATE RESPONDENT BY:SMT. RATINDER KAUR, DR DATE OF HEARING: 07/12/2015 DATE OF PRONOUNCEMENT: 17/12/2015 ORDER THESE THREE APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2003-04 TO 2005-06, AGAINST THE ORDERS, EACH DATED 20.12.2013, PASSED BY THE LD. CIT(A), BATHINDA, INVOLVING A COMMON ISS UE IN ALL THE APPEALS, EXCEPT THE VARIATION IN AMOUNTS. THEREFORE, FOR THE SAKE OF CONVENIENCE, I AM DISPOSING OF THEM BY THIS COMMON ORDER. 2. FIRST I SHALL TAKE UP ITA NO. 376/ASR/2015, WHER EIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND LAW IN CONFIRMING THE ADDITION OF RS.5,87,208/- MADE BY THE AO. 2. THAT THE APPELLATE ORDER DATED 20.12.2013 OF THE CIT(A) CONFIRMING THE ADDITION OF RS.5,87,208/- MADE BY TH E AO IN THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 08.12 .2009 IS IN COMPLETE VIOLATION OF PRINCIPLES OF NATURAL J USTICE. DURING THE COURSE OF ASSESSMENT AS WELL AS APPELLAT E PROCEEDINGS THE ASSESSEE MADE SPECIFIC REQUEST TO C ONFRONT THE ASSESSEE WITH THE ORIGINAL DOCUMENTS ON THE BAS IS OF WHICH REASONS U/S 148 HAD BEEN RECORDED AND ALSO TO CROSS ITA NOS. 376 TO378(ASR)/2014 2 EXAMINE THE COMPLAINANT SH. GURBHEJ SINGH WHO HAD PROVIDED THE PHOTOCOPIES OF THE DOCUMENTS ON THE BA SIS OF WHICH REASONS U/S 148 HAD BEEN RECORDED. BUT NEITH ER THE AO NOR THE CIT(A) EITHER CONFRONTED THE ASSESSEE WI TH THE ORIGINAL DOCUMENT OR ALLOWED THE ASSESSEE TO CROSS EXAMINE SH. GURBHEJ SINGH. THE ASSESSMENT ORDER/APPELLATE O RDER DESERVES TO BE QUASHED. 3. THE LD. CIT(A) ERRED ON FACTS AND LAW IN CONFIRM ING THE ADDITION OF RS.5,32,358/- MADE BY THE AO ON ACCOUNT OF ALLEGED ADVANCES MADE TO SH.GURBHEJ SINGH IN DIFFER ENT DATES. 4. THE LD. CIT(A) ERRED ON FACTS AND LAW IN CONFIRMING THE ADDITION OF S.54,850/- MADE BY THE AO ON ACCOUNT OF ALLEGED INTEREST CHARGED FROM SH. GURBHEJ SINGH. 3. THE REGISTRY REPORTS THAT THERE IS A DELAY OF 87 DAYS IN FILING THE APPEAL. THE LD. CIT(A) PASSED THE ORDER ON 20.12.20 13 AND THE APPEAL WAS DUE TO BE FILED ON 13.03.2014. HOWEVER, IT WAS FILED ON 09.06.2014. THE REASON FOR THE DELAY AS PER THE APPLICATION FOR CONDONATION OF DELAY, WHICH IS ACCOMPANIED BY AFFIDAVITS OF SH. BO HAR SINGH, PARTNER OF THE ASSESSEE FIRM AND SH.VIJAY PATHELA, INCOME TAX CONSULTANT AND DOCTORS CERTIFICATE, THE ASSESSEE SUFFERED BRAIN HEMORRHAGE DUE TO HIGH BLOOD PRESSURE IN THE MONTH OF NOVEMBER, 2013. FURT HER, ON 04.12.2013, THE ASSESSEES FATHER EXPIRED. HIS MOTHER AND SON M ET WITH ACCIDENTS. THE ASSESSEE, DUE TO THESE TRAGEDIES, LAY SEMI CONS CIOUS AT HOME. IN MAY 2014, THE ASSESSEES COUNSEL, NAMELY, SH. VIJAY PAT HELA AND SH. GAGAN PATHELA INFORMED THE ASSESSEE THAT THEY HAD RECEIVE D THE FIRST APPELLATE ORDER FOR ASSESSMENT YEARS 2003-04, 2004-05 AND 200 5-06 ON 13.01.2014 AND THAT FURTHER APPEALS WERE REQUIRED T O BE FILED BEFORE THE ITAT. THE ASSESSEE ARRANGED MONEY TO PAY THE APPEA L FEE OF RS.26,100/- AND THE SAME WAS DEPOSITED ON 19.05.2014. HOWEVER, AGAIN, DUE TO ILL HEALTH, THE ASSESSEE COULD NOT VISIT HIS TAX COUNSE L TO SIGN THE REQUISITE DOCUMENTS TO FILE THE APPEAL BEFORE THE TRIBUNAL. T HE ASSESSEE WAS ULTIMATELY ABLE TO SIGN THESE DOCUMENTS ONLY ON 07. 06.2014 AND THE ITA NOS. 376 TO378(ASR)/2014 3 APPEALS WERE FILED ON 09.06.2014 THEREBY INCURRING THE DELAY OF 87 DAYS IN FILING THE APPEALS. 4. THE ABOVE FACTS ARE PATENT ON RECORD REMAIN UNDI SPUTED AND, THEREFORE, I FIND THE REASON FOR THE DELAY IN FILIN G THE APPEALS TO BE SUFFICIENT CAUSE PREVENTING THE ASSESSEE FROM FILIN G THE APPEALS IN TIME. ACCORDINGLY, THE DELAY IN FILING THESE APPEALS IS C ONDONED. 5. APROPOS THE MERITS OF THE CASE, THE AO MADE THE ADDITIONS OF RS.5,87,208/- FOR THE ASSESSMENT YEAR 2003-04, RS.9 ,88,504 FOR THE ASSESSMENT YEAR 2004-05 AND RS.10,69,420/- FOR THE ASSESSMENT YEAR 2005-06 ON ACCOUNT OF LOAN ADVANCED TO SH. GURBHEJ SINGH AND INTEREST CHARGED FROM HIM. 6. THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON T HE BUSINESS OF COMMISSION AGENT. NOTICES U/S 148 OF THE I.T. ACT, 1961 WERE ISSUED ON THE BASIS OF INFORMATION IN THE POSSESSION OF THE D EPARTMENT THAT THE ASSESSEE HAD MADE SUCH ADVANCES OF LOAN AND HAD CHA RGED INTEREST. THE TRANSACTIONS WITH SH.GURBHEJ SINGH HAD NOT BEEN REF LECTED IN THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET FILED ALONGWITH TH E RETURN OF INCOME. THE AO OBSERVED THAT BOOKS OF ACCOUNT HAD NOT BEEN PRODUCED DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSMENT ORDERS W ERE PASSED U/S 143(3) OF THE ACT MAKING THE ADDITIONS WHICH WERE C ONFIRMED BY THE LD. CIT(A). 7. THE ASSESSEE CONTENDS THAT THE LD. CIT(A) HAS ER RED IN CONFIRMING THE ADDITIONS WRONGLY MADE BY THE AO IN COMPLETE V IOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, IN AS MUCH AS NEITHE R DURING THE ASSESSMENT PROCEEDINGS, NOR BEFORE THE LD. CIT(A), THE ASSESSEES SPECIFIC REQUEST TO CONFRONT IT WITH THE ORIGINAL DOCUMENTS, ON THE BASIS OF WHICH THE REASONS HAD BEEN RECORDED U/S 148 OF THE ACT, A ND ALSO TO CROSS ITA NOS. 376 TO378(ASR)/2014 4 EXAMINE THE COMPLAINANT, SH. GURBHEJ SINGH, WHO HA D PROVIDED PHOTOCOPIES OF THE DOCUMENTS ON THE BASIS OF WHICH THE REASONS U/S 148 HAD BEEN RECORDED, HAD BEEN ALLOWED TO THE ASSESSEE . THE LD. COUNSEL FOR THE ASSESSEE HAS BROUGHT TO MY ATTENTION THE REASON S RECORDED FOR REOPENING THE COMPLETED ASSESSMENT FOR ALL THE THRE E YEARS UNDER CONSIDERATION. THESE ARE AT APB 37 TO 48. ATTENTION HAS ALSO BEEN INVITED TO APB 76-77, WHEREBY, THE ASSESSEE HAS MADE SPECIF IC WRITTEN REQUEST TO THE AO, TO BE PROVIDED WITH THE DOCUMENTS ON THE BA SIS OF WHICH THE REASONS U/S 148 HAD BEEN RECORDED. THE REQUEST AT A PB-77 FINDS MENTION OF AN EARLIER APPLICATION DATED 01.09.2009 IN THIS REGARD. 8. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE IN THE IMPUGNED ORDERS IN THIS REGARD, WHEREIN, IT HAS BEE N OBSERVED THAT THE AO COMPUTED THE ESCAPED INCOME ON THE BASIS OF DOCU MENTS IN HIS POSSESSION AND THAT THEREFORE, NO OPPORTUNITY WAS R EQUIRED TO BE GIVEN TO THE ASSESSEE TO CROSS-EXAMINE THE COMPLAINANT, SH. GURBHEJ SINGH. APROPOS THE DOCUMENTS ON THE BASIS OF WHICH THE REA SONS TO REOPEN THE COMPLETED ASSESSMENTS WERE RECORDED, THE LD. CIT(A) HAS OBSERVED THAT IT WAS ON THE BASIS OF THE PHOTOCOPIES OF THE DOCUMENT S IN HIS POSSESSION, THAT THE AO DETERMINED THE ESCAPEMENT OF INCOME AT THE HANDS OF THE ASSESSEE FIRM AND THAT THE ORIGINALS, THEREOF WERE WITH THE CIVIL COURT, WHERE THE COMPLAINANT HAD FILED A SUIT AGAINST THE ASSESSEE. 9. IN THIS REGARD, IT IS SEEN THAT THOUGH THE COMP LETED ASSESSMENTS WERE REOPENED ON THE BASIS OF THE COMPLAINT OF SH. GURBHEJ SINGH, MAKING THE DOCUMENTS FILED BY THE COMPLAINANT AS TH E BASIS FOR SUCH REOPENING, THESE DOCUMENTS WERE NEVER PROVIDED BY T HE AO TO THE ASSESSEE. THIS, DESPITE THE FACT THAT THE ASSESSEE HAD MADE REPEATED WRITTEN REQUESTS IN THIS REGARD TO THE AO, AS ABOVE . THE ASSESSMENT ORDER SONLY MENTION IN THIS REGARD THAT DOCUMENTS ON THE BASIS OF WHICH NOTICE U/S 148 WAS ISSUED WERE ALSO SHOWN TO THE ASSESSEE DURING THE ITA NOS. 376 TO378(ASR)/2014 5 COURSE OF ASSESSMENT PROCEEDINGS, THEREBY ADMITTIN G THAT THE COPIES THEREOF WERE NOT PROVIDED TO THE ASSESSEE IN VIOLAT ION OF THE SETTLED NATURAL JUSTICE PRINCIPLE OF AUDI ALTEREM PARTEM. 10. IN THIS REGARD, THE ORDER OF THE LD. CIT(A) IS EQUALLY CRYPTIC. PARA-2, THEREOF RUNS AS FOLLOWS: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER/REMAN D REPORT OF THE AO AND THE ARGUMENTS OF THE A/R OF THE APPELLANT AN D I FIND THAT THE ESCAPEMENT OF INCOME BY THE APPELLANT FIRM HAS BEEN DETERMINED BY THE AO ON THE BASIS OF PHOTOCOPIES OF THE DOCUMENTS IN HIS POSSESSION WHICH WERE PROVIDED BY SH. GURBHEJ SINGH , COMPLAINANT AND ORIGINAL OF THE SAME WERE WITH THE CIVIL COURT WHERE THE COMPLAINANT HAD FILED SUIT AGAINST THE APPELLANT. T HE PHOTOCOPIES OF THE SAME HAVE BEEN PROVIDED TO THE A/R OF THE APPEL LANT. THE ENTRIES IN THESE DOCUMENTS RELATING TO ADVANCES TO SH. GURBHEJ SINGH AND INTEREST RECEIVED HAVE NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT PRODUCED BY THE APPELLANT BEFORE THE AO DUR ING THE COURSE OF REMAND PROCEEDINGS. THE AO WAS JUSTIFIED IN MAKI NG THE ADDITION OF RS.5,32,358/- ON ACCOUNT OF ALLEGED DISCLOSED IN VESTMENT FOR THE ADVANCES MADE TO SH. GURBHEJ SINGH AND RS.54,850/- ON ACCOUNT OF UNDISCLOSED INTEREST CHARGED FROM SH. GURBHEJ SINGH AS THESE WERE UNACCOUNTED IN THE BOOKS OF ACCOUNT OF THE APPELLAN T. SINCE THE AO HAS COMPUTED THE ESCAPED INCOME ON THE BASIS OF DOC UMENTS IN HIS POSSESSION THERE WAS NO NEED FOR GIVING THE APPELLA NT AN OPPORTUNITY TO CROSS EXAMINE THE COMPLAINANT. 11. THE LD. CIT(A) DOES NOT DISPUTE THE ASSESSEES CONTENTION THAT THE COPIES OF THE DOCUMENTS ON THE BASIS OF WHICH THE R EASONS U/S 148 WERE RECORDED, WERE NOT PROVIDED TO HIM. RATHER, THE LD. CIT(A) OBSERVED THAT THE ORIGINAL OF THESE DOCUMENTS WERE WITH THE CIVIL COURT WHERE THE COMPLAINANT HAD FILED A SUIT AGAINST THE ASSESSEE. THIS, HOWEVER, DOES NOT ABSOLVE THE DEPARTMENT OF ITS DUTY TO CONFRONT THE ASSESSEE WITH THE DOCUMENTS ON THE BASIS OF WHICH THE REASONS WERE RE CORDED U/S 148 OF THE ACT. THE LD. CIT(A) IS ALSO NOT CORRECT IN OBSE RVING THAT THERE WAS NO NEED FOR GIVING THE ASSESSEE AN OPPORTUNITY TO CROS S EXAMINE THE COMPLAINANT, SINCE THE AO HAD COMPUTED THE ESCAPED ASSESSMENT ON THE BASIS OF THE DOCUMENTS IN HIS POSSESSION. SINCE THE COMPLAINT FORMS THE ITA NOS. 376 TO378(ASR)/2014 6 BASIS OF THE REOPENING OF THE COMPUTED ASSESSMENTS OF THE ASSESSEE, CROSS EXAMINING THE COMPLAINANT IS A BASIC RIGHT OF THE ASSESSEE, AND NOT PROVIDING SUCH OPPORTUNITY OF CROSS EXAMINATION CLE ARLY VIOLATES THE PRINCIPLES OF NATURAL JUSTICE, WHICH ARE THE BASIS OF OUR VERY DEMOCRACY. 12. IN VIEW OF THE ABOVE, IN THE INTEREST OF SUBSTA NTIAL JUSTICE, ALL THESE THREE APPEALS ARE REMITTED TO THE FILE OF THE AO TO BE DECIDED AFRESH, IN ACCORDANCE WITH LAW, ON AFFORDING DUE AND ADEQUAT E OPPORTUNITY OF HEARING TO THE ASSESSEE BY PROVIDING HIM WITH COPI ES OF THE DOCUMENTS ATTACHED WITH THE COMPLAINT, WHICH FORMED THE BASIS OF THE REASONS RECORDED U/S 148 OF THE ACT FOR ALL THESE YEARS AND BY PROVIDING DUE OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THE CO MPLAINANT, VIZ., SH. GURBHEJ SINGH. IT IS ONLY THEREAFTER, THAT THE AO S HALL DECIDE THE MERITS OF THE MATTER AFRESH. 13. ORDERED ACCORDINGLY. 14. IN THE RESULT, ALL THE THREE APPEALS ARE TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH DECEMBER, 2015. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 17/12/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. SANDHU SRAN COMMISSION AGENT, MUKTSAR 2. THE ITO, WARD II(2), MUKTSAR. 3. THE CIT(A), BATHIDNA 4. THE CIT, BATHINDA. 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER