KULDIP SINGH BHASIN, MUMBAI V. ITO WD 18(3)(2), MUMBAI

ITA 3816/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4166 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-07-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 30-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Assessee Lawyers: MRUGAKSHI K JOSHI
• Keywords: Opportunity of being heard; Principle of natural justice; Difference of opinion; Right to appeal; Change of opinion
• Section: 143(3)

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENC H, MUMBAI . . , . , ! '#$ ' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI D. KARUNAKARA RAO, AM ' ./I.T.A. NO.3816/M/2012 ( %& ' / ASSESSMENT YEAR :2002-2003) KULDIP SINGH BHASIN , 4A/3B, 1 ST FLOOR, 552 KRISHNA KUNJ BUILDING, 8 TH ROAD, PALI HILL, KHAR (W), MUMBAI 400 052. & / VS. ITO - WARD - 18(3)(2), MUMBAI. $( ! ' ./PAN : AEZPB 3997 C ( () /APPELLANT) .. ( *+() / RESPONDENT) () , - ' / APPELLANT BY : MS. MRUGAKSHI K. JOSHI *+() , - ' / RESPONDENT BY : MS. DIVYA BAJPAI ' & , .! /DATE OF HEARING : 15.07.2013 /0' , .! /DATE OF PRONOUNCEMENT : 15.07.2013 #1 #1 #1 #1 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 30.5.2012 IS A GAINST THE ORDER OF CIT (A)- 29, MUMBAI DATED 15.3.2012 FOR THE ASSESSMENT YEAR 2002-2003. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GRO UNDS WHICH READ AS UNDER: 1(A) THE LD CIT (A) IS ERRED IN PASSING AN EX-PARTE ORDER AND ERRED IN CONFIRMING THE ADDITION MADE BY AO WITHOUT GIVING OPPORTUNITY OF BEING BEARD . (B) THE LD CIT (A) FAILED TO TAKE INTO CONSIDERATIO N THAT THE NOTICE OF THE HEARING WAS NOT DULY SERVED TO THE ASSESSEE. 2(A)WITHOUT PREJUDICE TO GROUND NO.1, THE LD CIT (A ) ERRED IN CONFIRMING THE ACTION OF THE AO IN REOPENING THE ASSESSMENT U/S 147/148, MER ELY ON CHANGE OF OPINION. (B) THE LD CIT (A) FAILED TO TAKE INTO CONSIDERATIO N THAT AFTER DULY CONSIDERING ALL THE FACTS & CIRCUMSTANCES THE ORIGINAL ASSESSMENT W AS DONE U/S 143(3) ON 17.8.2004 AND NO NEW MATERIAL HAVE BEEN BROUGHT ON RECORD BY AO, IN ORDER TO SUBSTANTIATE THE RE-OPENING OF THE ASSESSMENT. 3(A) WITHOUT PREJUDICE TO GROUND NO.1 & 2, THE LD C IT (A) ERRED IN CONFIRMING THE ADDITION UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF CAPITAL GAINS IN RESPECT OF RS. 15,00,000/- RECEIVED ON RETIREMENT F ROM PARTNERSHIP FIRM. (B) THE LD CIT (A) ERRED IN DENYING EXPLANATION U/S 54EC AS CLAIMED BY ASSESSEE IN HIS RETURN OF INCOME. 2 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 3,53,087/-. ASSESSEE RECEIVED INTEREST INCOME FROM M/S. PIONEER STEEL INDUSTRIES. FURTHER, THE ASSESSEE ALSO RECEIVED A SUM OF RS. 15 LACS TOWARDS GOODWILL FROM M/S. EAGLE STEELS ON THE EVE OF RETIREMENT FROM THE SAID COMPA NY AND INVESTED THE SAME IN BONDS ISSUED BY NABARD. ASSESSEE CLAIMED THE SAID I NVESTMENT AS DEDUCTION U/S 54EC OF THE ACT. THE REGULAR ASSESSMENT WAS COMPLET ED U/S 143(3) OF THE ACT ACCEPTING THE CLAIM OF THE ASSESSEE. SUBSEQUENTLY, IN CONNECTION WITH THE ISSUE RELATING TO SAID CLAIM U/S 54EC OF THE ACT, RE-ASSE SSMENT PROCEEDINGS WERE INITIATED AND DENIED THE CLAIM HOLDING THAT THE SAID AMOUNT O F RS. 15LACS IS NOT ALLOWABLE AS IT DOES NOT AMOUNT TO CAPITAL GAINS. AGGRIEVED WIT H THE SAME, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, ASSESSEE SUBMITTED THAT THE AMOUNT OF RS. 15 LACS CONSTITUTE S CAPITAL GAIN AND ON INVESTMENT IN THE NABARD BONDS, THE DEDUCTION U/S 54EC IS AVAI LABLE TO THE ASSESSEE. ON THE OTHER HAND, AOS CASE IS THAT THERE IS NO TRANSFER OF ANY IMMOVABLE PROPERTY AND THEREFORE, THE PROVISIONS OF SECTION 54EC OF THE AC T ARE NOT APPLICABLE TO THE SUM OF RS. 15 LACS. 5. RELEVANT TO THE GRANT OF REASONABLE OPPORTUNITY TO THE ASSESSEE IN THE FIRST APPELLATE PROCEEDINGS, CIT(A) MENTIONED IN PARA 4 O F THE IMPUGNED ORDER THAT THE APPEAL WAS SCHEDULED FOR HEARING ON 12.3.2012 AND T HE ASSESSEE DID NOT TURN UP ON THE SCHEDULED DATE. ASSESSEE DID NOT FILE WRITTEN SUBMISSIONS TOO. THEREFORE, THE CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE IN AN EX-PARTE MANNER. AGGRIEVED WITH THE SAME, ASSESSEE RAISED THE ABOVE GROUNDS BE FORE US. 6. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO GROUND 1(A) OF THE APPEAL AND MENTIONED THAT GROUNDS ARE REQUIRED TO BE REMANDED TO THE CIT (A). AS PER LD AR, CIT(A) HAS NOT ADHERED TO THE PRINCIPLES OF NATURAL JUSTICE IN MATTERS OF GRANTING OF ADEQUATE OPPORTUNITY. HE ALSO HIGHLIGHTED THE FACT OF ISSUING NOTICE ONLY ONCE BEFORE CONCLUDING THE APPEAL. FURTHER, LD COUNSEL FOR THE ASSESSEE MENTIO NED THAT THERE ARE NO FINDINGS IN THE ORDER OF CIT (A) THAT NOTICE OF HEARING WAS SERVED UPON THE ASSESSEE. 3 FURTHER ALSO, HE MENTIONED THAT THE ASSESSEE IS INT ERESTED IN PURSUING THE APPEAL AND PRAYED FOR GRANTING AN OPPORTUNITY BEFORE THE C IT (A) ONCE AGAIN. 7. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE REVENUE AUTHORITIES. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES. THE PRELIMINARY OBJECTION RAISED BY TH E ASSESSEE VIDE GROUND 1(A) RELATES TO THE GRANTING OF ADEQUATE OPPORTUNITY TO THE ASSESSEE BEFORE THE APPEAL IS DISMISSED WITH JUST ONE HEARING NOTICE. THE CONTENT S OF PARA 4 REVEALS THAT A SINGULAR OPPORTUNITY WAS GIVEN ON 12.3.2012 AND THE APPEAL WAS ACCORDINGLY POSTED FOR HEARING ON 15.3.2012. THE CIT (A) DID NOT ENFO RCE THE ASSESSEES PRESENCE BEFORE HIM ON THE SAID DATE AND SIMPLY DISMISSED THE APPEAL OF THE ASSESSEE. CONSIDERING THE REASONS NARRATED BY THE LD COUNSEL, WE ARE OF THE OPINION THAT THE ASSESSEE DESERVES ONE MORE OPPORTUNITY AND IT IS IN THE INTEREST OF JUSTICE. THE IMPUGNED EX-PARTE ORDER PASSED BY THE CIT (A) IS CERTAINLY A CASE OF ADJUDICATION OF APPEAL WITHOUT HEARING THE ASSESSEE ADEQUATELY. 9. THIS ISSUE FOR GRANTING OF AN OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE WAS EXAMINED THOROUGHLY BY THE VARIOUS HIGH COURTS AND THE JUDGMENT IN THE CASE OF RADHIKA CHARAN BANERJEE VS. SAMBALPUR MUNICIPALITY, AIR 1979 (ORI) 69 IS RELEVANT. ON THIS ISSUE, RELEVANT DISCUSSION WAS PROVIDED AT PAGE 7639 OF CHATURVEDI & PITHISARIAS INCOME TAX LAW, FIFTH EDITION AND FOR THE SAKE COMPLETENESS OF THE ORDER, THE SAME IS REPRODUCED AS UNDER: RIGHT TO BE HEARD:- A RIGHT OF APPEAL WHEREVER CONFERRED INCLUDES A RI GHT OF BEING AFFORDED AN OPPORTUNITY OF BEING HEARD, IRRES PECTIVE OF THE LANGUAGE CONFERRING SUCH RIGHT. THAT IS A PART AND PARCEL O F THE PRINCIPLE OF NATURAL JUSTICE. WHERE AN AUTHORITY IS REQUIRED TO ACT IN A QUASI-JU DICIAL CAPACITY, IT IS IMPERATIVE TO GIVE THE APPELLANT AN ADEQUATE OPPORTUNITY OF BEING HEARD BEFORE DECIDING THE APPEAL. 10. THUS, IN THE INSTANT CASE ALSO, THE CIT (A) HAS NOT MADE SERIOUS EFFORTS FOR GRANTING ADEQUATE OPPORTUNITY. IN OUR OPINION, MERE SENDING HEARING NOTICE FIXING THE DATE OF HEARING ON 15.3.12 DOES NOT CONSTITUTES GRANTING ADEQUATE OPPORTUNITY. CIT(A) IS EXPECTED TO MAKE REASONABLE EFFORTS TO EN FORCE THE ATTENDANCE OF THE ASSESSEE BEFORE THE APPEAL IS FINALLY ADJUDICATED EX-PARTE QUA THE ASSESSEE. IN FACT, THE REQUIREMENT OF PRINCIPLE OF NATURAL JUSTI CE IS NOT MET BY THE CIT (A) IN THIS 4 CASE. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT AS REQUESTED BY LD COUNSEL, ALL THE GROUNDS RAISED BEFORE US ARE REMANDED TO THE CIT (A) FOR FRESH ADJUDICATION AFTER GRANTING A REASONABLE AND ADEQUA TE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE IMPUGN ED ORDER IN TOTO AND REMAND THE MATTER TO THE CIT (A) WITH A DIRECTION TO DECIDE TH E APPEAL AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15.7.2013. SD/- SD/- (H.L. KARWA) (D. KARUNAKARA RAO ) / PRESIDENT ! '#$ / ACCOUNTANT MEMBER MUMBAI; 2#& DATED 15/07/2013 . %& . ' ./ OKK , SR. PS #1 #1 #1 #1 , ,, , *%.34 *%.34 *%.34 *%.34 54'. 54'. 54'. 54'. / COPY OF THE ORDER FORWARDED TO : 1. () / THE APPELLANT 2. *+() / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 478 *%.%& , , / DR, ITAT, MUMBAI 6. 8 9 / GUARD FILE. '+4. *%. //TRUE COPY// #1& ' #1& ' #1& ' #1& ' / BY ORDER, : :: : / '; '; '; '; < < < < (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI