JCIT, New Delhi V. M/s. Indian Iron Steel Co. Ltd., New Delhi

ITA 3995/DEL/2016

AI Insights

The case involves an appeal by the Revenue against the order of the CIT (A)-1, Kolkata, which had deleted an addition of Rs.62.43 crore made by the AO. The addition was initially made due to un-reconciled differences in income reported by various parties. The CIT (A) found that the additions were made without providing the assessee a proper opportunity to examine and rebut the discrepancies, which was contrary to the principles of natural justice. The Revenue contended that the CIT (A) should have sought a remand report from the AO instead of summarily deleting the addition. The ITAT agreed with the Revenue's position and remitted the issue back to the AO for a fresh assessment after providing a proper hearing to the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113778 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 11-06-2023
• Assessment Year: 2004-2005
• Appeal Filed On: 10-07-2016
• Other Referred Cases: Kishanchand Chellaram vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘C’ : NEW DELHI) SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR US, JUDICIAL MEMBER ITA No.3995/Del./2016 (ASSESSMENT YEAR : 2004-05) JCIT, Spl. Range 8, vs. India Iron & Steel Co. Ltd., New Delhi. (since merged in Steel Authority of India Ltd.) Ispat Bhawan, Lodhi Road, New Delhi – 110 003. (PAN : AAACI7171D) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri M.P. Rastogi, Advocate Shri P.N. Shastry, CA REVENUE BY : Shri Anuj Garg, Sr. DR Date of Hearing : 12.06.2023 Date of Order : 16.06.2023 ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : This appeal filed by the Revenue is directed against the order of ld. CIT (A)-1, Kolkata dated 14.03.2016 for the assessment year 2004-05. 2. The ground of appeal taken by the Revenue is as under :- “Whether the Ld. CIT (A) was justified in deleting the addition of Rs.62.43 crore made by the AO on account of un-reconciled difference of income even through the remand report was not called for by him from the AO regarding the issue and also has not given a finding that he has verified and reconciled the difference in income found by the AO.” ITA No.3995/Del./2016 2 3. In this case, on the impugned issue, the AO had made additions on account of difference in the balance of parties as under :- (i) Tata Steel Rs.38.52 crores (ii) Aroma Coke Rs. 0.66 crores (iii) Adhunik Corporation Ltd. Rs.23.25 crores Total : Rs.62.43 crores 4. Upon assessee’s appeal, ld. CIT (A) noted the submissions as under :- “The AOs findings, written submissions and material on record were carefully considered. Its observed from perusal of the A Os finding that the impugned additions/disallowances under these grounds were made on account of alleged discrepancies noticed in a few cases, and based on the ITR's report dated 28.11.2006 that the above mentioned discrepancies remained un-reconciled. The appellant's AR has contended that the alleged report of the inspector and assessment order being both dated 28.11.2006, the same could not be confronted and an opportunity provided to the appellant on the same date, there is also no mention of it being confronted by the AO to the assessee in the assessment order. It was thus argued that proper opportunity was not provided to the appellant on the alleged discrepancies and adverse findings by the AO, which is contrary to principles of natural justice. In this regard, the appellant's AR has placed reliance upon the decision of Hon'ble Supreme Court - in the case of Kishanchand Chellaran 125 ITR 713, wherein it has been held that any information collected by the department cannot be used against the assessee, unless shown/ confronted to the assessee •and an opportunity given to controvert it.” 5. Thereafter, ld. CIT (A) deleted the addition by observing as under:- “ After careful consideration of the above contentions, it is found that there is force in the appellant's argument that impugned additions were made by the AO without affording proper opportunity to the appellant to examine and rebut the ITA No.3995/Del./2016 3 alleged discrepancies under various heads, as admittedly the assessment order was passed on the same date as that of the Inspector's report about the alleged discrepancies. Therefore, the disallowances made by the AO are found to be not justified, being contrary to the principles of natural justice. In view thereof and respectfully following the decision of the hon'ble Supreme Court in Kishanchand Chellaram (supra), the AO is directed to delete the additions of Rs.62.43 crores mentioned in Ground No.2.1 to 2.5. This ground is allowed.” 6. Against this order, Revenue is in appeal before us. We have heard both the parties and perused the records. 7. Ld. DR for the Revenue submitted that ld. CIT (A) deleted the addition without providing AO the necessary opportunity and he submitted that powers of the CIT (A) are co-terminus to that of AO and if there was shortcoming in the AO’s enquiry, ld. CIT (A) should have asked for the remand report. 8. Per contra, ld. Counsel for the assessee submitted that after due analysis of the reconciliation, addition has been deleted. He relied upon the order of the ld. CIT (A). 9. Upon careful consideration, we note that the ld. CIT (A) has passed an order wherein he has held that addition was made without affording proper opportunity to the assessee. It is abundantly clear that the powers of the CIT (A) are co-terminus to that of AO. Even if there is some issue of non-affording of proper opportunity to the assessee by the AO, ld. CIT(A) should have remanded the matter to the AO. By summarily deleting the addition in a manner as above is totally not proper, hence we ITA No.3995/Del./2016 4 remit the issue to the AO. AO is directed to consider the issue afresh after giving the assessee proper opportunity of being heard. 9. In the result, this appeal filed by the Revenue is allowed for statistical purposes. Order pronounced in the open court on this day of 16 th June, 2023. Sd/- sd/- (YOGESH KUMAR US) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 16 th day of June, 2023 TS Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A)-1, Kolkata. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.