JCIT Range-3, Gwalior V. Shri Laxmi NarayanShivhare, Gwalior

ITA 416/AGR/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2441 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 24-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: APPLICATION REJECTED
• Keywords: Rectification of order; Principle of natural justice
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 416/AGR/2009 ASST. YEAR: 2005-06 JOINT COMMISSIONER OF INCOME TAX, VS. SHRI LAXMI N ARAYAN SHIVHARE, RANGE-3, GWALIOR. B-17, ASHOK VIHAR COLONY, GWALIOR. (PAN : NOT MENTIONED) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD KUMAR JR. D.R. RESPONDENT BY : APPLICATION REJECTED ORDER PER H.S. SIDHU, J.M. : THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E ORDER DATED 02.07.2009 PASSED BY THE LD. CIT(A), GWALIOR ON THE FOLLOWING GROUND :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 50,00,000/- ON ACCOUNT OF VARIOUS EXPENSES. 2. THE NOTICES OF HEARING WERE ISSUED TO THE PARTIE S FOR TODAY I.E. 24.03.2011 BY REGISTERED POST ACKNOWLEDGEMENT DUE. IN RESPONSE T O THE SAME, THE ASSESSEE FILED APPLICATION DATED 23.03.2011 REQUESTING FOR ADJOURN MENT ON THE GROUND THAT DUE TO 2 UNAVOIDABLE CIRCUMSTANCES THE LD. COUNSEL FOR THE A SSESSEE COULD NOT ATTEND THIS BENCH AND REQUESTED FOR ADJOURNMENT. AFTER GOING T HROUGH THE REASONS MENTIONED BY THE ASSESSEE FOR ADJOURNMENT, WE ARE OF THE CONS IDERED OPINION THAT THE ASSESSEE HAS NOT MENTIONED ANY PLAUSIBLE REASON FOR ADJOURNM ENT. HENCE, THE SAME IS REJECTED AND WE ARE DECIDING THE ISSUE IN DISPUTE O N THE BASIS OF THE RECORDS AVAILABLE WITH US AFTER HEARING THE LD. D.R. 3. AT THE TIME OF HEARING, THE LD. D.R. RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER. 4. WE HAVE HEARD THE LD. D.R. AND PERUSED THE RELEV ANT RECORDS AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDERS PASSED BY THE LD. FI RST APPELLATE AUTHORITY AND WE ARE OF THE CONSIDERED OPINION THAT IN THE ORIGINAL ASSESSMENT THE ASSESSING OFFICER MADE AN ADHOC ADDITION OF ` 5,00,000/-. AGGRIEVED BY THE SAME, THE ASSESSEE FI LED APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO VIDE ORDER DATED 21.05.2008 PASSED IN APPEAL NO.133/IT/07-08/GWL DELETED THE IM PUGNED ADDITION OF ` 5,00,000/-. INSPITE OF THE SAME, THE ASSESSING OFF ICER RECTIFIED THE ORIGINAL ASSESSMENT BY PASSING THE ORDER UNDER SECTION 154 O F THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) ON 01.08.2008 MAKING THE DI SALLOWANCE OF ` 50,00,000/- (RUPEES FIFTY LAKHS ONLY) INSTEAD OF ` 5,00,000/- (RUPEES FIVE LAKHS ONLY). THE LD. 3 CIT(A) IN THE IMPUGNED ORDER HAS SHOWN HER DISPLEAS URE ON THE ORDER OF ASSESSING OFFICER PASSED UNDER SECTION 154 OF THE ACT DATED 0 1.08.2008. THE RELEVANT PORTION OF THE SAME, WHICH IS AT PAGE NO.5, IS REPRODUCED A S UNDER : - THE DOCTRINE OF MERGER OF ASSESSMENT ORDER WITH TH E APPELLATE ORDER WOULD APPLY IN SO FAR AS THE ABOVE DISALLOWAN CE WAS CONCERNED. THE EXERCISE OF POWERS OF U/S 154 IS THUS WITHOUT J URISDICTION. BESIDES NO OPPORTUNITY WAS GIVEN TO THE ASSESSES AFTER 03.0 4.2008 ESPECIALLY WHEN FAIRNESS DEMANDED IN THE WAKE OF GIT(A) AS ORD ER DATED 21.08.2008 BEFORE THE RECTIFICATION ORDER U/S 154 W AS PASSED ON 01.08.2008. IN VIEW OF THE ABOVE APPELLATE ORDER, IT WAS INCUMBENT UPON THE A.O. TO FURTHER GIVE HEARING OPPORTUNITY. IT IS ALSO KNOWN AS 'HEAR IN1 OPPORTUNITY AND IS BASED UPON THE RULE OF AUDI ALTERM PARTEM'. THIS PRINCIPLE IS KNOWN SINCE TIME IMMEMO RIAL. IT IS A FUNDAMENTAL RULE OF LAW THAT NO DECISION MUST BE TA KEN WHICH WILL AFFECT THE RIGHTS OF ANY PERSON WITHOUT FIRST GIVING HIM A N OPPORTUNITY OF PUTTING FORWARD HIS CASE. THE PRINCIPLES OF NATURA L JUSTICE ARE FUNDAMENTAL IN NATURE, VERY BASIC AND IT IS NOT TO BE CONSTRUED OR MISTAKEN AS A MERE FORMALITY. IN THE CASE OF SHREE RAM DURGA PRASAD & FATEH CHAND NURSING DAS VS. ITSC (1989) 176 ITR 169 (SC) IT HAS BEEN HELD THAT THE ORDER PASSED IN VIOLATION OF PRI NCIPLES OF NATURAL JUSTICE IS VOID & NULL. IN VIEW OF ABOVE SUBMISSIONS THE ORDER MADE U/S 154 BEING AGAINST THE PROVISIONS OF SEC. 154(LA) OF THE I.T. ACT AND ALSO IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. GROUND NO. IS AGAINST PASSING A RECTIFICATION ORDER U/S. 154 OF THE I.T. ACT. IT IS WELL SETTLED THAT AFTER THE OR DER PASSED BY AN APPELLATE AUTHORITY, THE ORDER IN QUESTION MERGES WITH THE AP PELLATE ORDER AS REGARDS THE ISSUES DEALT WITH IN THAT ORDER ARE CON CERNED AND HENCE IT WAS BEYOND THE JURISDICTION OF THE A.O. TO RECTIFY THE ASSESSMENT ORDER WHICH MERGED WITH THE APPELLATE ORDER DTD. 23.1.06. PROVISIONS OF SECTION 154(1A) ARE CLEAR IN THIS REGARD LEAVING NO SCOPE FOR AMBIGUITY. THE CONTENTIONS TAKEN BY THE APPELLANT ON THIS GROUND 4 REPRODUCED ABOVE SUBSTANTIATE THIS. THE A.O. WAS, THEREFORE, NOT ENTITLED TO RECTIFY THE ORDER AND THE SAID RECTIFIC ATION ON THE ABOVE GROUNDS IS VOID AB INITIO. IN VIEW OF THE ABOVE, GROUND NO.1 IS ALLOWED. OTHE R GROUNDS HAVING BECOME INFRUCTUOUS AND ONLY OF AN ACADEMIC I NTEREST IN VIEW OF THE DECISION ON GROUND NO.1 IS NOT BEING SEPARATELY ADJUDICATED. IN THE RESULT, THE APPEAL IS ALLOWED. 5. AFTER GOING THROUGH THE IMPUGNED ORDER, ESPECIAL LY THE AFORESAID PORTION OF THE ORDER, WE ARE OF THE CONSIDERED OPINION THAT TH E LD. FIRST APPELLATE AUTHORITY HAS PASSED A WELL REASONED ORDER WHICH DESERVES TO BE U PHELD AND WE UPHOLD THE SAME BY DISMISSING THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 24.03.2011). SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 24 TH MARCH, 2011 PBN/* 5 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRI BUNAL, AGRA TRUE COPY