M/s. Aparna Ashram, New Delhi V. ADIT (E), Delhi

ITA 431/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4210 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1982-1983
• Appeal Filed On: 21-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RC DANDEY
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice; Procedural lapse
• Section: 234B; 6; 154; 139

Judgement Text

1 ITA NOS. 382/DEL/2015 & ORS. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 382/DEL/2015 ( A.Y 1979-80) ITA NO. 383/DEL/2015 ( A.Y 1980-81) ITA NO. 430/DEL/2015 ( A.Y 1981-82) ITA NO. 431/DEL/2015 ( A.Y 1982-83) ITA NO. 395/DEL/2015 ( A.Y 1983-84) ITA NO. 396/DEL/2015 ( A.Y 1984-85) ITA NO. 432/DEL/2015 ( A.Y 1986-87) ITA NO. 433/DEL/2015 ( A.Y 1987-88) APARNA ASHRAM C/O. SH. K. S. PATHANIA, R/O. C- 3A/20A, JANAKPURI NEW DELHI AAATA3999E (APPELLANT) VS ADIT(E) INV. CIRCLE, AAYAKAR BHAWAN, ROOM NO. 309, LAXMI NAGAR, DISTT CENTRE DELHI (RESPONDENT) APPELLANT BY SH. SUBHASH DUTTA, SH. MANU K GIRI, ADVS. SH. K. S. PATHANIA, MEMBER GOVERNING COUNSELS RESPONDENT BY SH. R. C. DANDEY, SR. DR ORDER PER BENCH THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDERS DATED 27/10/2014 PASSED BY CIT(A)-XI, NEW DELHI FOR VARIOUS ASSESSMENT YEARS. DATE OF HEARING 28.09.2017 DATE OF PRONOUNCEMENT 29.09.2017 2 ITA NOS. 382/DEL/2015 & ORS. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1) THAT THE ORDER UNDER APPEAL IS AGAINST LAW AND FAC TS OF THE CASE. 2) THAT THE LD. CIT (A) HAS ERRED IN LAW IN HOLDING TH AT NON ISSUANCE OF U/S 154(3) IS A PROCEDURAL LAPSE ON THE PART OF TH E A.O. WHEN IN LA SERVICE OF THE NOTICE U/S 154(3) GIVES JURISDICTION TO THE A.O. TO PAS: U/S 154 OF THE INCOME TAX ACT AS NOTICE U/S 154(3) IS A JURISDICTIONAL NOTICE. 3) THAT THE LD. CIT (A) HAS ALSO ERRED IN LAW IN NOT H OLDING THE ORDER BY THE A.O. PASSED UNDER SECTION 154 IS NULL AND VOID AS T HE ORDER PASSED BY THE A.O. IS NULLITY IN LAW. 4) THAT IN ADDITION AND RATHER IN THE ALTERNATIVE AND WITHOUT JURISDICTION GROUNDS NO. 3 AND 4 ABOVE, IT IS SUBMITTED: (A) THAT THE OBSERVATIONS MADE BY THE LD. CIT(A) IN TH E IMPUGNED ORDER REGARDING CHARGING OF INTEREST UNDER SECTION 139(8) ,2 234A, 234B IN ANY CASE ARE NOT CORRECT IN LAW AND LIABLE TO BE ASIDE ; (B) THAT THE LD. A.O. HAS ERRED IN LAW IN INCREASING / CHARGING INTEREST U/S 139(8)217, 234A&234B. (C) THAT THE APPELLANT CRAVES THE INDULGENCE OF THE HO NBLE TRIBUNAL : ALLOW THE APPELLANT TO TAKE UP SUCH OTHER /AMENDED / ALTERNATE C ADDITIONAL GROUND OF APPEAL AT THE TIME OF HEARING FOR WHICH THE PERMISSION MAY BE SOUGHT AT THE TIME OF HEARING. THE GROUNDS OF APPEAL IN ALL THE ASSESSMENT YEARS A RE COMMON THEREFORE, WE ARE TAKING UP THE FACTS OF THE LEAD C ASE FOR ASSESSMENT YEAR 1979-80 (ITA NO. 382/2015) . 3. THE ORDER U/S 254/143(3) OF THE INCOME TAX ACT, 1961 WAS PASSED ON 30/12/2010 AND ADDITION OF RS.16,02,84,68 9/- WAS MADE. THE ASSESSING OFFICER OBSERVED THAT THE CALC ULATION OF INTEREST CHARGED U/S 220(2) OF THE ACT WAS WRONGLY MADE AND SOME 3 ITA NOS. 382/DEL/2015 & ORS. ERROR OCCURRED IN CHARGING OF INTEREST U/S 217 & SE CTION 139 (8) OF THE ACT AT THE TIME OF RE-ASSESSMENT PROCEEDINGS WH ICH WAS APPARENT FROM RECORD. HENCE, THE ASSESSING OFFICER RECTIFIED THE SAME U/S 154 OF THE ACT. THE ASSESSING OFFICER PA SSED FOLLOWING RECTIFICATION ORDER:- ORDER U/S 154/254 OF THE INCOME TAX ACT THE ORDER U/S 254/143(3) WAS PASSED ON 30/12/2010 A ND A DEMAND OF RS.16,02,84,689/- WAS CREATED. ON GOING THROUGH THE RECORDS, IT IS FOUND THAT THE CALCULATION OF INTEREST CHARGED U/S 220(2) WAS WRONGLY MADE AND SO ME ERROR OCCURRED IN CHARGING OF INTEREST U/S 217 AND 139(8) AT THE TIME OF RE-ASSESSMENT WHICH IS APPARENT FROM THE RECORD. HE NCE, THE SAME IS RECTIFIED U/S 154 ISSUE DEMAND NOTICE & CHALLAN. 4. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEA L BEFORE THE CIT(A). THE CIT(A) OBSERVED THAT THE PERUSAL OF T HE RECTIFICATION ORDER PASSED BY THE ASSESSING OFFICER SHOWS THAT T HE ASSESSING OFFICER REDUCED THE TAX LIABILITY OF INTEREST U/S 220(2) OF THE ACT WHICH WAS WRONGLY CHARGED BY HIM AT THE TIME OF PAS SING OF RE- ASSESSMENT ORDER. THE ASSESSING OFFICER WAS COMPET ENT TO MAKE AMENDMENT/RECTIFICATION IN THE RE-ASSESSMENT ORDER AS PER SECTION 154(2) OF THE ACT ON HIS OWN MOTION AS A MISTAKE AP PARENT FROM RECORD WAS NOTICED BY HIM. THE CIT (A) FURTHER OBS ERVED THAT THE ASSESSING OFFICER RIGHTLY RECTIFIED THE COMPUTATION OF INTEREST U/S 139(8) AND U/S 270 OF THE ACT WHICH RESULTED IN ENH ANCEMENT OF THE 4 ITA NOS. 382/DEL/2015 & ORS. INTEREST CHARGED UNDER THESE SECTIONS, THOUGH THE O VERALL DEMAND AGAINST THE ASSESSEE GOT REDUCED BECAUSE OF WRONG C HARGING OF INTEREST U/S 220 (2) OF THE ACT. THE CIT(A) ALSO O BSERVED THAT THE ASSESSING OFFICERS ORDER IS SILENT ABOUT ANY OPPOR TUNITY OF BEING HEARD GIVEN TO THE ASSESSEE IN RESPECT OF ENHANCEME NT IN THE INTEREST AMOUNTS U/S 139 (8) AND SECTION 217 OF THE ACT. THE CIT(A) VIDE LETTER DATED 14/10/2014 ADMITTED THAT T HE ASSESSING OFFICER HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSES SEE AND THEREFORE, WITHOUT PREJUDICE TO THE SAME, THE CIT(A) GAVE SPEC IFIC OPPORTUNITY TO SUBMIT ASSESSEES OBJECTION IN RESPECT OF ASSESS ING OFFICERS COMPUTATION OF INTEREST U/S 139(8) & SECTION 217 OF THE ACT. 6. THE LD. AR SUBMITTED THAT THE CIT(A) HIMSELF ADM ITTED THAT THE ASSESSING OFFICER HAS NOT GIVEN OPPORTUNITY TO THE ASSESSEE, WHILE RECTIFYING THE ORIGINAL ASSESSMENT ORDER DESPITE TH E FACT THAT THE TAX LIABILITY INCREASED UPON THE ASSESSEE. THE LD. AR RELIED UPON THE JUDGMENT OF THE HONBLE APEX COURT IN CASE OF M CHO CKALINGAM & M. MEYYAPPAN VS. CIT (1963) 48 ITR 34 WHEREIN IT IS HELD THAT IF OPPORTUNITY IS GIVEN TO THE ASSESSEE, THE ASSESSEE MAY CONVINCE THE AUTHORITY THAT THEY HAD GOOD GROUNDS FOR NOT PAYING THE ADVANCE TAX BECAUSE THEIR CASES WERE STILL IN PROCESS OF CO NSIDERATION AND SETTLEMENT. SINCE THE ASSESSEE WAS NOT GIVEN AN OP PORTUNITY TO BRING THE CASES TO THE NOTICE OF THE AUTHORITIES WH ICH WAS DENIED TO THE ASSESSEE, THEREFORE, THERE WAS A BREACH OF PRIN CIPLES OF NATURAL OF JUSTICE. THE LD. AR FURTHER SUBMITS THAT AS PER SECTION 234A & SECTION 234B OF THE ACT, THE ASSESSEE IS NOT LIABLE TO PAY INTEREST AS THERE WAS NO DEFAULT IN FURNISHING RETURN OF INCOME OR DEFAULT IN 5 ITA NOS. 382/DEL/2015 & ORS. PAYMENT OF ADVANCE TAX. THEREFORE, LD. AR SUBMITTE D THAT THE ASSESSING OFFICER AS WELL AS THE CIT (A) HAS ERRONE OUSLY PASSED THE ORDERS AGAINST THE ASSESSEE. THE SAME NEEDS TO BE SET ASIDE. 7. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) RIGHTLY PASSED THE ORDERS. THE ASSESSING OF FICER HAS RECTIFIED THE ORDER AS THERE WAS ERROR IN THE ORIGINAL ASSESS MENT ORDER ABOUT CALCULATION AND CHARGING OF INTEREST WHICH IS ALLOW ED UNDER THE RELEVANT PROVISIONS OF THE ACT. THE LD. DR RELIED UPON THE ORDER OF APEX COURT IN CASE OF M/S DEEPAK AGRO FOOD VS. STAT E OF RAJASTHAN AND ORS. (CIVIL APPEAL NOS. 4327-28/2008 ORDER DATE D 11 TH JULY 2008) WHEREIN IT IS HELD THAT THE IRREGULARITIES CO MMITTED BY THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS WILL NOT MAKE ASSESSMENT ORDERS NULL AND VOID. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE PRINCIPLE OF NATURAL JUST ICE WAS NOT FOLLOWED BY THE ASSESSING OFFICER WHILE RECTIFYING THE ORIGINAL ASSESSMENT ORDER AND THE SAID FACT WAS ADMITTED BY THE CIT(A). IT IS NOT PROPER TO IMPROVE THE ASSESSING OFFICERS DE FECT BY THE CIT(A) WHICH IS NOT PERMISSIBLE UNDER THE INCOME-TAX STATU TE WHEREIN THE NOTICE HAS TO BE GIVEN TO THE ASSESSEE WHEN THERE I S AN INCREASE IN TAX LIABILITY ON THE ASSESSEE. THE RELIANCE UPON THE APEX COURT JUDGMENT IN CASE OF CHOCKALINGAM & MEYYAPPAN VS. CI T (1963) 48 ITR 34 BY THE LD. AR IS PRECISELY HOLDING THAT PRIN CIPLE OF NATURAL JUSTICE HAS TO BE FOLLOWED BY THE AUTHORITIES. IN CASE OF M/S. DEEPAK AGRO FOOD (SUPRA), THE HONBLE APEX COURT DE ALT WITH SEC. 6 ITA NOS. 382/DEL/2015 & ORS. 29(8)(B) OF THE ACT WHICH IS NOT HAVING SIMILAR WOR DINGS LIKE THAT OF SEC. 154 (3) OF THE ACT UNDER WHICH IT IS MANDATORY TO ISSUE NOTICE. AS PER SECTION 154(3) OF THE ACT AMENDMENT/RECTIFIC ATION WHICH HAS EFFECT OF ENHANCEMENT OF AN ASSESSMENT OR REDUCING A REFUND OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE SHALL NOT BE MADE UNLESS THE AUTHORITY CONCERNED GIVES NOTICE TO THE ASSESSEE OF ITS INTENTION TO DO SO. THEREFORE, IT IS OBLIGATORY UND ER THE STATUTE TO ISSUE NOTICE BY THE ASSESSING OFFICER TO GIVE A REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS I S CLEARLY SET OUT U/S 154 OF THE INCOME TAX ACT AND IT HAS TO BE FOLL OWED BY THE TAX AUTHORITIES AT THE INITIAL STAGES. IF THIS PROCEDUR E IS NOT FOLLOWED OF ISSUING THE NOTICE AND GIVING REASONABLE OPPORTUNIT Y OF BEING HEARD, FURTHER EXERCISE WILL BE NON EST. THEREFORE, THE A SSESSMENT ORDER ITSELF BECOMES VOID AB INITIO. THE ORDER U/S 154/25 4 OF THE ACT IS SET ASIDE. IN ALL THE ASSESSMENT YEARS THE ISSUE I S IDENTICAL; HENCE ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. 9. IN RESULT, ALL THE APPEALS OF THE ASSESSEE ARE A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH SEPTEM BER, 2017 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 29/09/2017 R. NAHEED * COPY FORWARDED TO: 7 ITA NOS. 382/DEL/2015 & ORS. 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 28/09/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 28/09/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 29.09.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 9 .09.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.