M/S. E-SERVE INTERNATIONAL LTD ( NOW KNOWN AS CITIGROUP GLOBAL SERVICES LTD ), MUMBAI V. THE ACIT (OSD) RG 9(1), MUMBAI

ITA 3823/MUM/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2677 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 08-12-2009
• Assessment Year: 1999-2000
• Appeal Filed On: 16-05-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANT J LAL
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice; Bonafide belief; Set aside
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI R.K. PANDA, AM AND SHRI V.D. RAO, JM I.T.A. NO. 3823/MUM/2007 I.T.A. NO. 1678/MUM/2008 (ASSESSMENT YEAR 1999-2000) M/S. E-SERVE INTERNATIONAL LTD. (NOW KNOWN AS CITIGROUP GLOBAL SERVICES LTD.) 1 ST FLOOR, CITITOWER BUILDING, 61, DR. S.S. RAO ROAD, PAREL, MUMBAI-400 012 PAN: AAACC4480F VS. THE ASST. CIT (OSD) RANGE 9(1), AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400 020 APPELLANT RESPONDENT APPELLANT BY: SHRI PORUS KAKA RESPONDENT BY: SHRI HEMANT J. LAL O R D E R DATE OF HEARING: 08.12.2009 DATE OF ORDER: 11.12.2009 PER R.K. PANDA, AM: THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DI RECTED AGAINST THE SEPARATE ORDERS DATED 28 TH MARCH, 2007 AND 22 ND AUGUST, 2007 OF THE CIT(A)-IX, MUMBAI RELATING TO ASSESSMENT YEAR 1999- 2000. IN I.T.A. NO. 3823/MUM/07 THE ASSESSEE HAS CHALLENGED THE ORDER O F THE CIT(A) IN CONFIRMING THE QUANTUM ADDITIONS MADE BY THE ASSESS ING OFFICER WHEREAS IN I.T.A. NO. 1678/MUM/08, THE ASSESSEE HAS CHALLEN GED THE ORDER OF THE CIT(A) DISMISSING THE RECTIFICATION APPLICATION FIL ED U/S. 154 OF THE ACT. FOR THE SAKE OF CONVENIENCE BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS IN THE BUSINESS OF FINANCING AND IS A NBFC AS PER RBI GUIDELINES. IN THIS CASE AN ASSESSMENT ORDER WAS PASSED FOR THE A.Y. 1996-97 ON 12 TH MARCH, 1999. THE ASSESSEE THEREAFTER FILED A SETTLEMENT APPLICATION BEFORE TH E INCOME-TAX SETTLEMENT COMMISSION FOR THE A.YS. 1996-97 AND 1997-98. THE SETTLEMENT E-SERVE INTERNATIONAL LTD. ================= 2 COMMISSION VIDE ITS ORDER DATED 12 TH AUGUST, 1999 HAS ADMITTED THE ASSESSEES CASE U/S. 245D OF THE INCOME-TAX ACT, 19 61 (THE ACT). THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U /S. 143(3) MADE CERTAIN ADDITIONS HOLDING THAT SOME OF THE DEDUCTIO NS CLAIMED CANNOT BE ALLOWED BEFORE THE NATURE OF TRANSACTION IS DECIDED BY THE SETTLEMENT COMMISSION. AGGRIEVED WITH SUCH ORDER OF THE ASSES SING OFFICER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). TH E ASSESSEE WAS SEEKING ADJOURNMENT FROM TIME TO TIME ON THE GROUND THAT TH E MATTER IS PENDING BEFORE THE SETTLEMENT COMMISSION. THE CIT(A) HAS F IXED THE DATE OF HEARING FOR 26 TH MARCH, 2007. ON THAT DATE THE ASSESSEE FILED AN APPLICATION SEEKING ADJOURNMENT OF THE CASE. HOWEV ER, THE CIT(A) IN HER ORDER PASSED ON 28 TH MARCH, 2007 DISMISSED THE APPEAL FILED BY THE ASSESSEE. 3. SUBSEQUENTLY, THE ASSESSEE FILED A RECTIFICATION AP PLICATION U/S.154 OF THE ACT CONTENDING THAT IN SPITE OF THE ADJOURNM ENT GRANTED TO THE ASSESSEE BY THE OFFICE CLERK UP TO 28.3.2007, THE A PPEAL ORDER WAS PASSED ON 28 TH MARCH, 2007 I.E., PRIOR TO THE DATE OF ADJOURNMENT . ACCORDINGLY IT WAS SUBMITTED THAT THE EX-PARTE ORDER FOR THE YEAR UNDER CONSIDERATION HAS TO BE SET ASIDE AND THE MATTER BE RESTORED. 4. THE CIT(A) OBSERVED THAT DURING THE COURSE OF APPEA L PROCEEDINGS IT WAS SEEN THAT APART FROM THE ISSUE WHICH WAS PEN DING BEFORE THE SETTLEMENT COMMISSION THERE WERE VARIOUS OTHER GROU NDS OF APPEAL WHICH WERE TO BE DISPOSED OFF. THEREFORE, THE ASSE SSEE WAS ASKED TO ATTEND THE HEARING ON 26 TH MARCH, 2007. HOWEVER, INSTEAD OF COMPLYING WITH THE NOTICE ISSUED FOR HEARING THE ASSESSEE FIL ED AN ADJOURNMENT PETITION IN THE OFFICE. SHE HELD THAT MERELY FILIN G AN APPLICATION FOR ADJOURNMENT IN THE APPEAL DOES NOT NECESSARILY MEAN THAT ADJOURNMENT HAS BEEN AUTOMATICALLY GRANTED TO THE ASSESSEE. EV EN DURING THE RECTIFICATION PROCEEDINGS ON 7 TH JULY, 2007 NO DETAILS SUPPORTING THE GROUNDS OF APPEAL WERE FILED. SHE, THEREFORE, HELD THAT THERE IS NO MISTAKE APPARENT FROM THE RECORD. ACCORDINGLY SHE DISMISSE D THE RECTIFICATION E-SERVE INTERNATIONAL LTD. ================= 3 APPLICATION ALSO. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US IN THE ABOVE 2 APPEALS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO T HE ADJOURNMENT PETITION FILED IN THE OFFICE OF THE CIT(A), A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 1 AND 2, SUBMITTED THAT THE ADJOURNMENT PETITION FILED ON 26 TH MARCH, 2007 WAS ACKNOWLEDGED BY THE OFFICE OF THE C IT(A) AND THE HEARING WAS ADJOURNED TO 28 TH MAY, 2007. THEREFORE, THE ORDER PASSED ON 28 TH MARCH, 2007 WITHOUT GIVING AN OPPORTUNITY TO THE A SSESSEE VIOLATES THE PRINCIPLES OF NATURAL JUSTICE. THEREFORE, THE ORDER SHOULD BE SET ASIDE AND THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE CIT(A). REFERRING TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 1998-99, HE SUBMITTED THAT UNDER SOMEWHAT IDENTICAL FACTS AN D CIRCUMSTANCES, THE MATTER WAS RESTORED TO THE FILE OF THE CIT(A) FOR F RESH ADJUDICATION AFTER ALLOWING PROPER AND REASONABLE OPPORTUNITY OF HEARI NG TO THE ASSESSEE. ACCORDINGLY HE SUBMITTED THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER SINCE THE MATTER IS COMING UP BEFORE THE SETTLEMENT COMMISSION IN THE MONTH OF DECEMBER, 2009. 6. THE LEARNED DR, ON THE OTHER HAND, STRONGLY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT MERELY BECAUSE THE M ATTER IS PENDING BEFORE THE SETTLEMENT COMMISSION, THE ASSESSING OFF ICER OR THE CIT(A) CANNOT WAIT FOR YEARS. THE ASSESSEE SHOULD HAVE AR GUED THE MATTER ON MERIT INSTEAD OF SEEKING ADJOURNMENT ON THE PLEA TH AT THE MATTER IS PENDING BEFORE THE SETTLEMENT COMMISSION. IN HIS A LTERNATE ARGUMENTS, HE SUBMITTED THE MATTER AT BEST BE RESTORED TO THE FILE OF THE CIT(A) AND NOT TO THE ASSESSING OFFICER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS FILED AN ADJOURNMENT PETITION ON 2 6 TH MARCH, 2007 SEEKING ADJOURNMENT OF THE CASE, A COPY OF WHICH WA S FILED IN THE OFFICE OF THE CIT(A) AND WHICH WAS ACKNOWLEDGED BY HER OFFICE . WE FIND FROM THE SAID ADJOURNMENT PETITION, A COPY OF WHICH IS PLACE D AT PAPER BOOK PAGES E-SERVE INTERNATIONAL LTD. ================= 4 1 AND 2, THAT SOMEBODY IN THE OFFICE OF THE CIT(A) HAS PUT THE INITIAL WITH THE STAMP OF THE OFFICE OF THE CIT(A) AND ADJOURNED THE CASE TO 28 TH MAY, 2007. THE FACT OF FILING OF THIS LETTER IS ALSO AC KNOWLEDGED BY THE CIT(A) IN THE RECTIFICATION ORDER PASSED U/S. 154 OF THE ACT. HOWEVER, WE FIND THE CIT(A) HAS PASSED THE ORDER ON 28 TH MARCH, 2007. UNDER THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT AN OPPORT UNITY OF HEARING TO THE ASSESSEE SHOULD HAVE BEEN GIVEN SINCE THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE CASE HAS BEEN ADJOURNED TO 28 TH MAY, 2007. FURTHER THERE IS ALSO NO DISPUTE TO THE FACT THAT T HE ASSESSING OFFICER IN THE BODY OF THE ASSESSMENT ORDER WHILE MAKING CERTAIN A DDITIONS/ DISALLOWANCES HAS MENTIONED THAT HE IS REJECTING TH E CLAIM OF THE ASSESSEE TILL ANY DECISION IS TAKEN BY THE SETTLEMENT COMMIS SION (PAGE 4 PARA 4(V) OF ASSESSING OFFICERS ORDER). WE FIND THAT THE TR IBUNAL HAS RESTORED THE MATTER TO THE FILE OF THE CIT(A) IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR UNDER SOMEWHAT SIMILAR CIRCUMSTANCES SINCE NO PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE WAS AFFORDED. UNDER THE SE CIRCUMSTANCES, WE DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION OF THE ISSUES IN ACCORDANCE WITH LAW A ND AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORD INGLY I.T.A. NO. 3823/MUM/2007 IS ALLOWED FOR STATISTICAL PURPOSES. 8. AS FAR AS I.T.A. NO. 1678/MUM/2008 IS CONCERNED, WE FIND THE SAME IS FILED AGAINST THE ORDER OF THE CIT(A) DISMI SSING THE RECTIFICATION APPLICATION FILED U/S. 154 OF THE ACT. SINCE WE HA VE RESTORED THE MATTER TO THE FILE OF THE CIT(A) IN I.T.A. NO. 3823/MUM/2007, THEREFORE, THE GROUNDS RAISED IN I.T.A. NO.1678/MUM/2008 BECOME INFRUCTUOU S AND ACCORDINGLY THE SAME ARE DISMISSED. 9. IN THE RESULT, I.T.A. NO. 3823/MUM/2007 IS ALLOWED FOR STATISTICAL PURPOSES AND I.T.A. NO. 1678/MUM/2008 IS DISMISSED. ORDER PRONOUNCED ON 11 TH DECEMBER, 2009. SD/- (V.D. RAO) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 11 TH DECEMBER, 2009 E-SERVE INTERNATIONAL LTD. ================= 5 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT(A)-IX, THANE, (4) THE CIT-IX, THANE, (5) THE DR, E BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO