BASHIRUDDIN KAGZI, Jaipur V. ACIT, Jaipur

ITA 408/JPR/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1969 (ITAT-JAIPUR)
• Duration Of Justice: 45 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Keywords: Recovery proceedings; Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 143(3); 244A; 234B; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 408/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI BASHIRUDDIN KAGZI A-46, KAGZI COLONY SANGANER, JAIPUR CUKE VS. THE ACIT CIRCLE- 7 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACVPB 2588 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 409/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI ALIMUDDIN KAGZI A-46, KAGZI COLONY SANGANER, JAIPUR CUKE VS. THE ACIT CIRCLE- 7 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACCPA 2489 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 410/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI NIZAMUDDIN KAGZI A-46, KAGZI COLONY SANGANER, JAIPUR CUKE VS. THE ACIT CIRCLE- 7 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AELPK 1145 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 411/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI ISLAMUDDIN KAGZI A-46, KAGZI COLONY SANGANER, JAIPUR CUKE VS. THE ACIT CIRCLE- 7 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AADPI 9465 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT ITA NO.408/JP/2014 SHRI BASHIRUDDIN KAGZI VS. ACIT, CIRCLE- 7, JAIPUR . 2 VK;DJ VIHY LA-@ ITA NO. 412/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI MOINUDDIN KAGZI A-46, KAGZI COLONY SANGANER, JAIPUR CUKE VS. THE ACIT CIRCLE- 7 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AELPK 1360 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 413/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI AMINUDDIN KAGZI A-46, KAGZI COLONY SANGANER, JAIPUR CUKE VS. THE ACIT CIRCLE- 7 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ACCPA 2488 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL, C.A. JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 03/11/2015 VKNS'K@ ORDER PER R.P. TOLANI, JM:- THESE ARE SIX APPEALS FILED BY THE ABOVE ASSESSEE' S AGAINST SEPARATE ORDERS OF THE LD. CIT(A)-III, JAIPUR DATED 24-03-20 14 FOR THE ASSESSMENT YEAR 2009-10 RAISING SOLE COMMON GROUND AS UNDER: THE LD. CIT(A) HAS ERRED IN HOLDING AND JUSTIFYING THE ACTION OF AO WHO INVOKED THE PROVISI ONS OF SECTION 179(1) WITHOUT FULFILLING THE BASIC CONDITI ON LAID DOWN U/S 179(1) OF THE I.T. ACT, 1961. ITA NO.408/JP/2014 SHRI BASHIRUDDIN KAGZI VS. ACIT, CIRCLE- 7, JAIPUR . 3 2.1 THE FACTS IN THESE APPEALS ARE THAT THE APPELLA NTS ARE THE DIRECTORS OF A PRIVATE LIMITED COMPANY M/S. SANGA BUILDERS (P ) LTD. IN THE CASE OF THE SAID COMPANY, THE ASSESSMENT WAS COMPLETED U/S 144 R.W.S. 143(3) OF THE ACT VIDE ORDERS DATED 30-12-2011 AT A TOTAL INC OME OF RS. 20,20,86,710/- WHEREIN DEMAND OF RS. 9,92,81,59 0/- WAS RAISED. THE SAID DEMAND INCLUDED TAX OF RS. 6,86,89,272/-, INTE REST U/S 234A OF RS. 85,58,797/-, INTEREST U/S 234B OF RS. 2,17,26,177/- , INTEREST U/S 234D OF RS. 1,50,464/-AND INTEREST U/S 244A OF RS. 1,56,882 /-. SINCE IN THE CASE OF THE COMPANY, THE DEMAND COULD NOT BE PAID WITHIN 30 DAYS OF THE SERVICE OF THE DEMAND NOTICE, THE AO INITIATED PROCEEDINGS U/S 179(1) AGAINST THE APPELLANT DIRECTORS FOR THE RECOVERY OF TAX DUES OF THE COMPANY AND PASSED THE ORDER U/S 179(1) OF THE ACT HOLDING THE DIRECTORS OF THE COMPANY JOINTLY AND SEVERALLY LIABLE FOR THE PAYMEN T OF TOTAL DEMAND OF RS. 9,92,81,590/-. 2.2 IN FIRST APPEAL, THE LD. CIT(A) UPHELD THE ACTI ON OF THE AO OF INVOKING THE PROVISIONS OF SECTION 179(1) OF THE AC T AND DISMISSED THE APPEALS OF THE APPELLANTS. 2.3 AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE D IRECTORS OF THE COMPANY ARE IN APPEAL BEFORE US. ITA NO.408/JP/2014 SHRI BASHIRUDDIN KAGZI VS. ACIT, CIRCLE- 7, JAIPUR . 4 2.4 THE LD. AR OF THE APPELLANTS AT THE OUTSET CONT ENDS THAT THE QUANTUM APPEAL OF THE COMPANY M/S. SANGA BUILDERS ( P) LTD. QUA WHICH PROCEEDINGS U/S 179(1) ARE TAKEN AGAINST APPELLANTS , CAME UP BEFORE THE COORDINATE BENCH OF ITAT IN ITA NO. 432/JP/2014 FOR THE 2009-10 WHICH VIDE ITS ORDER DATED 30-04-2015 WAS PLEASED T O SET ASIDE THE QUANTUM ASSESSMENT BACK TO THE FILE OF THE AO BY FO LLOWING OBSERVATIONS. 3.3 WE HAVE HEAD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE ASSESSMENT I N QUESTION IS EX-PARTE WHICH PRESUPPOSES PROPER EXERC ISE OF STATUTORY POWERS BY AO INCLUDING THE PERUSAL OF PAS T RECORD AND NOT UNSETTLING WHAT I ALREADY SETTLED. MORE SO WHEN THE AO IS FRAMING THE ASSESSMENT IN THE ABSENCE OF THE ASSESSEE, THE DISALLOWANCE OF PURCHASE PRICE OF THE CONVEYANC E LAND COUPLED WITH MAKING OF DOUBLE ADDITIONS IN A SUMMAR Y MANNER REFLECT ELEMENT OF ARBITRARINESS. THE FIRST APPELLATE AUTHORITY I.E. LD. CIT(A) HAS CALLED FOR REMAND REP ORTS FROM AO WHO IN TURN CARRIED OUT EXERCISE OF VERIFICATIO N OF EVIDENCE; THEREAFTER, LD. CIT(A) DID NOT CONSIDER T HE ASSESSEE'S APPLICATION FOR ADDITIONAL EVIDENCE IN E FFECTIVE TERMS AS CONTEMPLATED UNDER RULE 46A OF INCOME TAX RULES. THE SUMMARY REJECTION REFLECTS DENIAL OF ADEQUATE OPPORTUNITY OF BEING HEARD AND PRINCIPLES OF NATURA L JUSTICE TO THE ASSESSEE ON THE ISSUE OF ADMISSION OF ADDITI ONAL EVIDENCE. IN CONSIDERATION OF ENTIRETY OF FOREGOING S AND CALL OF SUBSTANTIAL JUSTICE, WE FIND MERIT IN THE ARGUME NTS OF THE ITA NO.408/JP/2014 SHRI BASHIRUDDIN KAGZI VS. ACIT, CIRCLE- 7, JAIPUR . 5 LD. COUNSEL FOR THE ASSESSEE THAT IF THE JUDICIAL I NTERVENTION IS NOT MADE BY THE ITAT THEN FACTS WILL REMAIN UNVERIF IED. IT MAY RESULT IN MISCARRIAGE OF NATURAL JUSTICE INFLIC TING WHAT MAY BE TERMED AS IRREPARABLE INJURY TO THE ASSESSEE . THUS IN CONSIDERATION OF THE FACTS AND CIRCUMSTANCES STATED ABOVE, WE ARE INCLINED TO SET ASIDE THE ASSESSMENT BACK TO THE FILE OF THE AO FRAME THE ASSESSMENT DE NOVO AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE IN ACCORDANCE WITH LAW. THE ASSESSEE ALSO UNDERTAKES T O COOPERATE IN ASSESSMENT PROCEEDINGS IN DILIGENT MAN NER. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES. SINCE THE DEMAND IN QUESTION DOESNT SURVIVE IN VIE W OF THE SETTING ASIDE OF THE ASSESSMENT BACK TO THE FILE OF THE AO, THERE FORE, THE ALLEGED JOINT AND SEVERAL LIABILITY ON THE APPELLANT DIRECTORS U/ S 179(1) FOR PAYMENT OF TAX DOES NOT SURVIVE ANY MORE. SINCE THERE IS NO PE NDING OUTSTANDING DEMAND AGAINST THE DIRECTORS OF THE ASSESSEE COMPAN Y, THEIR APPEALS BECOME INFRUCTUOUS. 2.5 THE LD. DR IS HEARD/ 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. CONSEQUENT TO THE SETTING ASID E ORDER OF THE ITAT DATED 30-04-2015 (SUPRA), THE ORIGINAL OUTSTANDING DEMAND AGAINST THE ASSESSEE COMPANY NO MORE SURVIVES AS A NECESSARY CO NSEQUENCE, NO ITA NO.408/JP/2014 SHRI BASHIRUDDIN KAGZI VS. ACIT, CIRCLE- 7, JAIPUR . 6 OUTSTANDING LIABILITY EXISTS AGAINST THE APPELLANT DIRECTORS OF THE COMPANY M/S. SANGA BUILDERS (P) LTD. U/S 179(1) OF THE ACT. IN VIEW THEREOF, ALL THE ABOVE APPEALS BECOME INFRUCTOUS FOR WANT OF ANY DEM AND . 3.0 IN THE RESULT, THE APPEALS OF THE RESPECTIVE AS SESSEE'S ARE DISMISSED AS INFRUCTIOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 03 /11/201 5. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03 /11/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- (1) SHRI BASHRIUDDIN KAGZI (2) SHRI ALIMUDDIN KAGZI (3) SHRI NIZAMUDDIN KAGZI (4) SHR I ISLAMUDDIN KAGZI (5) SHRI MOINUDDIN KAGZI (6) SHRI AMINUDDIN KAGZI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT ,CIRCLE- 7, JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.408/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR