AWADH NARAYAN SINGH, MUMBAI V. ITO 24(1)(3), MUMBAI

ITA 4227/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3928 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 05-02-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2011
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Keywords: Opportunity of being heard; Principle of natural justice; Right to appeal
• Section: 143(3); 142(1)

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.4227/M/2011 ( %& ' / ASSESSMENT YEAR :2006-2007) AWADH NARAYAN SINGH, C-104/105 AHIMSA ENCLAVE, OPP. SHAKTI FORD SHOWROOM, LINK ROAD, CHINCHOLI, MALAD (W), MUMBAI 400 064. & / VS. ITO - 24(1)(3), MUMBAI. $( ! ' ./PAN : ACEPS 2629 F ( () /APPELLANT) .. ( *+() / RESPONDENT) () , - ' / APPELLANT BY : NONE *+() , - ' / RESPONDENT BY : MS. DIVYA BAJPAI ' & , .! /DATE OF HEARING : 18.07.2013 /0' , .! /DATE OF PRONOUNCEMENT : 18.07.2013 #1 #1 #1 #1 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 24.5.2011 IS A GAINST THE ORDER OF CIT (A)- 34, MUMBAI DATED 28.2.2011 FOR THE ASSESSMENT YEAR 2006-2007. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GRO UNDS WHICH READ AS UNDER: 1. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO HAD MADE CERTAIN DISALLOWANCE NAMELY SALARY IN CASH RS. 2,88,000/-, SUNDRY EXPENSES RS. 1,48,570/-, TELEPHONE EXPENSES RS. 25,000/- AND MOT OR CAR EXPENSES RS. 25,000/- VIDE ORDER PASSED U/S 143(3) DATED 24.10.2008. 2. FURTHER, LD CIT (A) PARTLY ALLOWED THE APPEAL BY GRANTING RELIEF OF RS. 20,000/- ON ACCOUNT OF TELEPHONE AND MOTOR CAR EXPE NSES RESPECTIVELY. 3. AR MR. B G VYAS, ACCOUNTANT ALONG WITH BOOKS OF ACCOUNTS, VOUCHERS ETC COULD ATTEND THE ASSESSMENT PROCEEDINGS ONLY FOR TWO DAYS NAMELY 21.7.2008 AND 6.8.2008. INSUFFICIENT TIME WAS MADE AVAILABLE TO PROVIDE ANY FURTHER EXPLANATION AND EVIDENCES TO PROVE THE GENUINENESS OF THE CASH EXPENSES. 4. AS NOTICES FOR FIRST APPEAL WERE NOT RECEIVED , FIRST APPEAL WAS CONCLUDED EXPARTE . 2 5. REQUESTING AND PLEADING BEFORE YOUR KIND-SELF TO SET ASIDE THE ORDER PASSED BY THE LD AO AND FOR DIRECTING TO GIVE OPPORTUNITIES FOR FURNISHING EXPLANATION AND EVIDENCES TO PROVE THE GENUINENESS OF CASH EXP ENSES. 6. NOTWITHSTANDING POINT 5, THEN AS PER SECTION 40A (3) OF THE IT ACT WHEN CASH PAYMENTS EXCEEDS RS. 20,000/-, 20% OF TOTAL PAYMENT S IS TO BE DISALLOWED FOR THE PREVIOUS YEAR IN APPEAL. BUT IN THE AFORESAID CASH AUTHORITY HAS WRONGLY DISALLOWED THE ENTIRE PAYMENT OF CASH SALARY OF RS. 2,88,000/- . FURTHER, THERE ARE CERTAIN EXPENSES IN BUSINESS OF GENERAL NATURE LIKE TRAVELL ING, CONVEYANCE ETC CATEGORIES AS SUNDRY EXPENSES OF RS. 1,48,570/-. AS ANY RELATED EXPENSES OF REVENUE NATURE PERTAINING TO BUSINESS CAN BE ALLOWED AS EXPENSES S O WAS SUNDRY EXPENSES CONSIDERED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EDITING OF TV SERIAL. ASSESSEE F ILED RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 5,99,820/-. IN CONNECTION WITH THE SCRUTINY PROCEEDINGS U/S 143(2) OF THE ACT, ASSESSING OFFICER ISSUED VARIOUS NOTICES U/S 143(2) AND U/S 142(1) POSTING THE CASE FOR HEARING AT VARIOUS DATES DURIN G THE PERIOD FROM 24.10.2007 TO 8.8.2008. THERE WAS NO RESPONSE FROM THE ASSESSEE. EVENTUALLY, CONSIDERING THE NON-COOPERATION OF ASSESSEE, AO MADE CERTAIN DISALL OWANCES ON AD-HOC BASIS ON ACCOUNTS OF (I) SALARY (II) SUNDRY EXPENSES AND (II I) TELEPHONE AND MOTOR CAR EXPENSES AND THE TOTAL INCOME OF THE ASSESSEE WAS D ETERMINED AT RS. 10,86,420/-. AGGRIEVED WITH THE SAME, ASSESSEE FILED AN APPEAL B EFORE THE CIT (A). 4. DURING THE PROCEEDINGS BEFORE THE CIT (A) ALSO, NONE APPEARED TO REPRESENT THE CASE OF THE ASSESSEE. AS SEEN FROM PARA 2 OF T HE IMPUGNED ORDER, CIT (A) COMMENTED THAT MANY NOTICES WERE ISSUED TO THE ASSESSEE BUT THEY W ERE RETURNED AS UN-SERVED BY THE POSTAL AUTHORITIES . AS PER THE DETAILS AVAILABLE ON RECORD IT IS NOTICED THAT THERE IS A CHANGE IN THE ADDRESS OF TH E ASSESSEE AND THE SAME IS NOT COMMUNICATED TO THE DEPARTMENT FORMALLY. THEREFORE , THE ASSESSEE HAS NO COMMUNICATION FROM THE CIT (A). EX-PARTE ORDER WAS PASSED AND PARTLY CONFIRMED THE ADDITIONS. 5. BEFORE US, THERE IS NONE TO REPRESENT THE ASSESS EE. AT THE OUTSET, LD DR FAIRLY BROUGHT OUR ATTENTION TO THE GROUNDS AT SL.NO. 3, 4 & 5 AND MENTIONED THAT THE ASSESSING OFFICER MADE AN ASSESSMENT IN AN EXPARTE MANNER. EVEN, THE CIT (A) HAS NOT SUCCESSFULLY SERVED THE NOTICE BEFORE THE APPEA L WAS ADJUDICATED EXPARTE. WITHOUT CONCEDING, LD DR MENTIONED THAT THE APPEAL MAY BE REMANDED TO THE FILE OF 3 CIT (A) FOR MAKING FRESH ADJUDICATION CONSIDERING T HE ADJUDICATION WITHOUT SERVICE OF NOTICE BY THE CIT (A). FURTHER, LD DR STATED THAT THE ASSESSEE FAILED TO COMMUNICATE THE DEPARTMENT ABOUT THE CHANGE OF ADDR ESS IN ACCORDANCE WITH THE PROCEDURE LAID DOWN IN THE ACT. 6. WE HAVE HEARD THE LD DR AND PERUSED THE ORDERS O F THE REVENUE AUTHORITIES AND THE OTHER INFORMATION AVAILABLE ON RECORD. IT I S A FACT THAT THE ASSESSING OFFICER MADE ADDITIONS WITHOUT THE ASSESSEES PRESENCE AND ANY INFORMATION OR EXPLANATION FROM HIM. FURTHER, IT IS A FACT THAT NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE THE CIT (A) AS THE NOTICES OF HEARING WERE NOT SUCC ESSFULLY SERVED ON THE ASSESSEE. CIT (A) CATEGORICALLY MENTIONED ABOUT THIS IN HIS O RDER. FURTHER, WE FIND THAT THERE IS A CHANGE OF ADDRESS AND THE SAME WAS NOT COMMUNI CATED TO THE REVENUE. THE ADDRESSES GIVEN IN FORM NO.36 AND FORM NO.35 ARE FO UND DIFFERENT AND REFLECT THE CHANGE OF ADDRESS. THUS, THE APPEAL OF THE ASSESSE E WAS DECIDED BY THE CIT (A) WITHOUT SERVICE OF NOTICE, WHICH IS A BASIC REQUIRE MENT OF ANY ADJUDICATION PROCESS. CONSIDERING THE ABOVE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THE ASSESSEE DESERVES ONE MORE OPPORTUNITY IN THE INTEREST OF JU STICE. ACCORDINGLY, THE IMPUGNED EX-PARTE ORDER PASSED BY THE CIT (A) IS CERTAINLY A CASE OF ADJUDICATION OF APPEAL WITHOUT HEARING THE ASSESSEE ADEQUATELY. 7. 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. 8. THUS, IN THE INSTANT CASE ALSO, THE CIT (A) HAS NOT MADE SERIOUS EFFORTS FOR SERVICE OF THE NOTICE AND FOR GRANTING ADEQUATE OPP ORTUNITY BEFORE ADJUDICATING THE 4 APPEAL. IN OUR OPINION, CIT (A) IS EXPECTED TO MAK E REASONABLE EFFORTS TO ENFORCE THE ATTENDANCE OF THE ASSESSEE BY SERVICING THE NOT ICE OF HEARING THROUGH ALTERNATE MODES OF SERVICE, IF NECESSARY. THUS, THE REQUIREM ENT OF PRINCIPLE OF NATURAL JUSTICE IS NOT MET BY THE CIT (A) IN THIS CASE. CONSIDERIN G THE ABOVE, WE ARE OF THE OPINION THAT THE IMPUGNED ORDER NEEDS TO BE SET ASIDE AND REMAND THE MATTER TO THE FILE OF CIT (A) FOR FRESH ADJUDICATION AFTER GRANTING A REA SONABLE AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18.7.2013. SD/- SD/- (H.L. KARWA) (D. KARUNAKARA RAO ) / PRESIDENT ! '#$ / ACCOUNTANT MEMBER MUMBAI; 2#& DATED 18.7.2013 . %& . ' ./ 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