LALIT POLYESTER P.LTD, THANE V. ITO 3(2)(2), MUMBAI

ITA 4343/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3271 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 26-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMACHANDRAN
• Assessee Lawyers: ROVIN KOTHARI
• Keywords: Principle of natural justice
• Section: 131

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.4343 /MUM/2012 ( / ASSESSMENT YEAR : 2006-07) LALIT POLYESTER PVT. LTD., GALA NO. 88, ATGAON INDUSTRIAL ESTATE, MUMBAI NASIK HIGHWAY, VILLAGE ATGAON, SHAHAPUR, DIST. THANE, MAHARASHTRA 421 601. / V. INCOME TAX OFFICER 3(2)(2), MUMBAI. ./ PAN : AAACL 4855 B ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI ROVIN KOTHARI REVENUE BY : SHRI RAMACHANDRAN / DATE OF HEARING : 16-6-2016 / DATE OF PRONOUNCEMENT : 09-09-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING ITA NO. 4343/MUM/2012, IS DIRECTED AGAINST THE APPELLATE OR DER DATED 20 TH JANUARY, 2011 PASSED BY LEARNED COMMISSIONER OF INCOME TAX ( APPEALS)- 7, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSME NT YEAR 2006-07, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARI SING FROM THE ASSESSMENT ORDER DATED 29 TH DECEMBER, 2008 PASSED BY THE LEARNED ASSESSING OFF ICER (HEREINAFTER CALLED THE AO) U/S 144(1)(B) AND (C) OF THE INCOME TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 4343/MUM/2012 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE COM PANY IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL , MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE LEARNED C.I.T. (APPEALS) HAS ERRED IN PASSI NG AN EX PARTE ORDER WITHOUT GIVING TRUE AND CORRECT OPPORTUNITY TO THE APPELLANT OF BEING HEARD BY WAY OF REJECTING THE FINAL REQUEST OF ADJOURNMENT FOR THE HEARING, WHICH WAS FIXED ON 4-1-2011 / 11-1-2011. I T IS SUBMITTED THAT KEEPING IN MIND THE VIEW OF PRINCIPLE OF NATURAL JU STICE AND GIVING FAIR OPPORTUNITY TO THE APPELLANT OF BEING HEARD, THE EX P ARTE ORDER PASSED BY THE LEARNED C.I.T. (APPEALS) BE CANCELLED AND HE BE DIRECTED TO HEAR THE APPEAL AFRESH CONSIDERING THE DETAILS FILED WITH AP PLICATION UNDER RULE 46A OF THE I.T. RULES. IT IS SUBMITTED THAT HON' BLE TRIBUNAL MAY PLEASE BE KIND ENOUGH TO PASS APPROPRIATE ORDER AND GIVE DIRECTION ACCORDINGLY. 2. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SUBMITS TH AT THE APPELLANT WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE FOR NOT BEING ABLE TO APPEAR AND FURNISH THE DETAILS BEFORE LE ARNED C.I.T. (APPEALS) FOR WHICH SEPARATE APPLICATION AND AFFIDA VITS ARE BEING FILE. IT IS SUBMITTED THAT THESE DETAILS AND SUBMISSIONS BE CONS IDERED AND C.I.T. (APPEALS) BE DIRECTED TO HEAR THE APPEAL OF THE APPELLANT AFRESH. 3. THE LEARNED ASSESSING OFFICER HAD PASSED THE ASS ESSMENT ORDER IN CASE OF THE APPELLANT DETERMINING THE TOTAL INCOME A T RS.8,55.38,420/- BY MAKING EXORBITANT AND HIGH-PITCH ED ADDITIONS. A DETAILED PAPER BOOK WITH ALL EVIDENCES ALONG WITH APP LICATION UNDER RULE 46A AND THE REASON OF NON-PRODUCTION OF SUCH DE TAILS BEFORE THE ASSESSING OFFICER ETC. HAD BEEN FULLY FILED WITH THE LEARNED C.I.T. (APPEALS). HOWEVER, THE LEARNED C.I.T. (APPEALS) HA S REJECTED ALL THE CLAIMS AND SUBMISSIONS, HAS NOT AT ALL CONSIDERED THE APPLICATION UNDER RULE 46A, VARIOUS OTHER MATERIALS AND EVIDENCE S AND SUBMISSIONS FILED. KEEPING IN VIEW OF THESE FACTS IT IS SUBMITTED THAT HON. I.T.A.T. BE KIND ENOUGH TO SET ASIDE THE ORDER O F C.I.T. (APPEALS) AND MAY BE HEARD AFRESH BY LEARNED C.I.T. (APPEALS) OR ASSESSING OFFICER BE DIRECTED ACCORDINGLY. 4. THE ORDER PASSED BY THE LEARNED C.I.T. (APPEALS) IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. ITA 4343/MUM/2012 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IN ITS RETURN OF INCOME FILED ON 23-11-2006 DECLARED TOTAL TAXABLE INCOME O F RS. 27,98,330/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 22-11-2007 R AISING DEMAND OF RS.11,77,865/- . THE ASSESSEE DID NOT DEPOSIT ANY T AXES BY WAY OF TDS, TCS, ADVANCE TAX OR SELF ASSESSMENT TAX WHILE FILING THE RETURN OF INCOME FILED BY THE ASSESSEE DESPITE THE FACT THAT ASSESSEE RETURNE D INCOME OF RS. 27,98,330/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING AND TRADING OF PET PREFORM AND FLEXIBLE LAMINATED PLASTIC FILMS. NOTI CES WERE ISSUED U/S 143(2) OF THE ACT ON 27 TH SEPTEMBER, 2007 WHICH WAS RETURNED UN-SERVED BY TH E POSTAL AUTHORITIES. SEVERAL NOTICES WERE THEREAFTER ISSUED U/S 143(2)/142(1)/144 OF THE ACT AS LAID DOWN IN THE AS SESSMENT ORDER AND SUMMONS U/S 131 OF THE ACT WERE ALSO ISSUED BUT THE ASSESSEE DID NOT COMPLY WITH THE NOTICES / SUMMONS ISSUED BY THE AO AND ACCORDINGLY EX- PARTE ASSESSMENT WAS FRAMED BY THE AO WHEREIN SEVER AL ADDITIONS AGGREGATING TO RS. 8,27,40,090/- WERE MADE BY THE A .O. AS LAID DOWN IN THE ASSESSMENT ORDER BASED UPON THE MATERIAL AVAILABLE ON RECORD VIDE ASSESSMENT ORDER DATED 29 TH DECEMBER, 2008 PASSED U/S 144(1)(B) AND (C) OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 29-12-20 08 PASSED BY THE A.O. U/S 144(1) (B) AND (C)) OF THE ACT, THE ASSESSE FIL ED ITS FIRST APPEAL BEFORE THE LD. CIT(A). 5. BEFORE THE LD. CIT(A) THE ASSESSEE FILED AN APPL ICATION UNDER RULE 46A OF INCOME TAX RULES, 1962 ALONG WITH PAPER BOOK WHICH WAS FORWARDED BY THE LD. CIT(A) TO THE A.O. FOR HIS COMMENTS. THE A.O. SUBMITTED HIS REMAND REPORT REQUESTING THE LD. CIT(A) TO REJECT THE APPL ICATION UNDER RULE 46A OF THE INCOME TAX RULES, 1962. FRESH NOTICE WERE ISSUED B Y THE LD. CIT(A) FIXING THE ITA 4343/MUM/2012 4 HEARING ON 13 TH SEPTEMBER, 2010 WHICH WAS RETURNED WITH THE REMARK UNCLAIMED. THE LD.CIT(A) AGAIN ISSUED NOTICE WHE REBY THE ASSESSEE SOUGHT ADJOURNMENT FROM TIME TO TIME WHICH WERE GRANTED BY LEARNED CIT(A) AND ULTIMATELY ON 11-1-2011 WHEREIN THE ASSESSEES COUN SEL WAS ASKED TO APPEAR ALONG WITH DIRECTOR OF THE ASSESSEE COMPANY, NONE A PPEARED ON 11-1-2011 AND THE LEARNED CIT(A) THEN DECIDED THE APPEAL BASE D ON THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE AO BY HOLDING THAT THE ASSESSEE HAS NOT COOPERATED IN THE ASSESSMENT AND AS ALSO DURING THE APPELLATE PROCEEDINGS . IT WAS ALSO OBSERVED BY LEARNED CIT(A) THAT THE ASSESSEE DID NOT CO-OPERATED BEFORE THE AO AND THE CIT(A) IN PROCEEDINGS FOR IMMEDIATELY PRECEDING ASSESSMENT YE AR . THE LD. CIT(A) HELD THAT THE ASSESSEE MIGHT HAVE BENEFITED BY NOT ATTEN DING THE PROCEEDINGS BY NON-APPEARING BEFORE THE A.O. AS WELL AS LD. CIT(A) AND ADDITIONS MADE BY THE AO WERE CONFIRMED/SUSTAINED BY LEARNED CIT(A) VIDE APPELLATE ORDER DATED 20- 1-2011. 6. AGGRIEVED BY THE APPELLATE ORDER DATED 20-1-2011 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED ITS SECOND APPEAL BEFORE THE TRI BUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT THE CHARTERED ACCOUNTANTS(CA), SH SHANKARLAL JAIN WHO H AD HANDLED THE CASE OF THE ASSESSEE FAILED TO APPEAR BEFORE THE A.O. AND T HE LD. CIT(A). THE LD. COUNSEL SUBMITTED THAT ALL THE DETAILS WERE HANDED OVER TO THE CA BUT HE FAILED TO APPEAR BEFORE THE A.O. AS WELL AS THE LD. CIT(A) TO PRESENT THE CASE OF THE ASSESSEE AND SERIOUS PREJUDICE IS CAUSED TO THE ASSESSEE DUE TO FAILURE OF THE SAID CA TO REPRESENT THE CASE OF THE ASSESSEE B EFORE THE AUTHORITIES BELOW. THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 21-06-201 2 DULY SIGNED BY THE DIRECTOR OF THE COMPANY SHRI MANOJ SHAH WHEREIN IT IS STATED THAT THE EARLIER C.A. SHRI SHANKARLAL JAIN WHO WAS ASSIGNED THE JOB OF PRESENTING THE CASE BEFORE AO AS WELL CIT(A) AS AUTHORIZED REPRESENTATI VE OF THE ASSESSEE NEITHER ITA 4343/MUM/2012 5 ATTENDED THE HEARING BEFORE THE A.O. NOR BEFORE THE LD. CIT(A) DESPITE BEING PAID HUGE FEE BY THE ASSESSEE. THE SAID C.A. REFUSE D TO RETURN BACK THE DETAILS AND DOCUMENTS IN HIS POSSESSION TO THE ASSESSEE OR TO THE NEW C.A. SH R R MANDALI APPOINTED BY THE ASSESSEE DESPITE HEFTY FEE PAID TO THE SAID OLD CA. THE AFFIDAVIT DATED 11-06-2012 OF NEW CA NAMELY MR R R MANDALI IS ALSO FILED TO THIS EFFECT CONFIRMING THE NON CO-OPERATIVE ATTI TUDE AND BEHAVIOR OF OLD CA , SH SHANKARLAL JAIN. IN NUTSHELL, THE ASSESSEE PRAYE D THAT IF OPPORTUNITY IS GRANTED, THE ASSESSEE WILL BE ABLE TO EXPLAIN THE C OMPLETE DETAILS WITH RESPECT TO EACH AND EVERY ADDITION AND PRESENT THE CASE BEF ORE THE AUTHORITIES BELOW.THE ASSESSEE HAS ALSO FILED APPEAL LATE BY 45 8 DAYS FOR WHICH APPLICATION FOR CONDONATION IS FILED BY THE ASSESSE E ALONG WITH AFFIDAVIT FOR CONDONING THE DELAY IS FILED EXPLAINING THE AFORE-S TATED REASONS FOR DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL. 8. THE LD DR RELY ON THE ORDERS OF THE LEARNED CIT( A). 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE AFFIDAVIT DATED 2 1-06-2012 FILED BY THE ASSESSEES DIRECTOR , SH MANOJ SHAH AND AFFIDAVIT F ILED BY NEW CA SH R R MANDALI DATED 11-06-2012 OF THE ASSESSEE WHICH ARE PLACED ON RECORD IN FILE. WE HAVE OBSERVED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FOR NOT PRESENTING APPEAL IN TIME BEFORE THE TRIBUNAL AS TH E CA OF THE ASSESSEE , MR SHANKARLAL JAIN OF M/S SHANKARLAL JAIN AND ASSOCIAT ES AT 12, ENGINEER BUILDING, 265, PRINCESS STREET, MUMBAI-400002 HAS N OT CO-OPERATED WITH THE ASSESSEE AND RETAINED THE POSSESSION OF THE RELEVAN T DOCUMENTS DISABLING THE ASSESSEE TO TAKE APPROPRIATE ACTION IN THIS MATTER DESPITE THE ASSESSEE PAYING HEFTY FEES TO THE SAID CA WHICH HAS LED TO DELAY IN FILING APPEAL BEFORE THE TRIBUNAL WHICH IS SUPPORTED BY AN AFFIDAVIT OF DIRE CTOR, MR MANOJ SHAH OF THE ASSESSEE AND ALSO AFFIDAVIT OF NEW CA, MR. R R MAND ALI AND HENCE KEEPING IN VIEW PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE W E ARE INCLINED TO CONDONE ITA 4343/MUM/2012 6 THE DELAY OF 458 DAYS IN FILING THE APPEAL BY THE A SSESSEE BEFORE THE TRIBUNAL. WE WOULD AT THE SAME TIME LIKE TO PLACE ON RECORD O UR UN-HAPPINESS IN THE MANNER IN WHICH CA SH SHANKARLAL JAIN CONDUCTED HIM SELF PROFESSIONALLY WITH THE ASSESSEE COMPANY WHICH LED TO THE SERIOUS PREJUDICE TO THE ASSESSEE AS DETAILED IN THE AFFIDAVITS OF THE DIRECTOR OF TH E ASSESSEE AND NEW CA OF THE ASSESSEE , WHICH PROFESSIONAL CONDUCT IS NOT HEALTH Y FOR GROWTH AND DEVELOPMENT OF PROFESSION OF CA. WE HAVE OBSERVED THAT THE LD. CIT(A) HAS PASSED AN APPELLATE ORDER AS THERE WAS NO COMPLIANCE FROM THE ASSESSEE DURING APPELLAT E PROCEEDINGS AS THE ASSESSEE GO ON SEEKING ADJOURNMENTS AND FINALLY DID NOT APPEARED WHEN CALLED UPON TO APPEAR ALONG WITH DIRECTOR ON 11.01. 2011. THE ASSESSEE HAS FILED AFFIDAVITS FROM THE DIRECTOR AS WELL NEW CA STATING THE NON- COMPLIANCE/NON-ATTENDANCE BEFORE THE AUTHORITIES BE LOW WAS MAINLY DUE TO NON CO-OPERATION FROM THE CA , MR SHANKARLAL JAIN WHO DESPITE BEING PAID HEFTY FEE DID NOT APPEAR BEFORE THE AUTHORITIES BEL OW CAUSING GREAT AND SERIOUS PREJUDICE TO THE ASSESSEE NOR HANDED OVER THE FILES AND DOCUMENTS OF THE ASSESSEE WHICH WE HAVE DISCUSSED IN PRECEDING P ARAS ALSO. IN OUR CONSIDERED VIEW KEEPING IN VIEW PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, SUBSTANTIAL INTEREST OF JUSTICE WILL BE BEST SERVED IN THE INSTANT CASE, IF THE MATTERS ARE SET ASIDE AND RESTORED TO THE FILE OF THE LD. CIT(A) TO CONSIDER THE ISSUES AFRESH AFTER CONSIDERING THE RELEVANT EVIDE NCES AND EXPLANATIONS OF THE ASSESSEE . THE LD. CIT(A) HAS POWER CO-TERMIN US WITH THE A.O. INCLUDING POWER OF ENHANCEMENT AND OUR ABOVE SET ASIDE TO THE FILE OF LEARNED CIT(A) IS OPEN SET ASIDE WHEREBY THE LEARNED CIT(A) WILL BE O PEN TO MAKING SCRUTINY OF ENTIRE BOOKS OF ACCOUNTS AND OTHER RECORDS OF THE C OMPANY TO MAKE ANY NEW ADDITIONS ON MERITS AND/OR UPHOLD THE ADDITIONS ON MERITS AS WERE MADE BY THE AO IN ACCORDANCE WITH LAW AND SHALL NOT BE BOUN D BY THE ADDITIONS MADE BY THE AO IN HIS ASSESSMENT ORDER DATED 29-12-2008. WE, ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE M ATTER TO THE FILE OF LEARNED ITA 4343/MUM/2012 7 CIT(A) FOR REDETERMINATION OF THE ENTIRE ASSESSMENT IN ACCORDANCE WITH LAW AS INDICATED ABOVE. THE ASSESSEE IS DIRECTED TO CO-OP ERATE IN THE PROCEEDINGS AND PRODUCE ALL NECESSARY AND RELEVANT DOCUMENTS IN CLUDING THE BOOKS OF ACCOUNT ETC. IN SUPPORT OF ITS CLAIM BEFORE THE AUT HORITIES BELOW IN ACCORDANCE WITH PROVISIONS OF LAW AS CALLED BY THE AUTHORITIES BELOW TO COMPLY WITH OUR DIRECTIONS. NEEDLESS TO SAY THAT SUFFICIENT AND AD EQUATE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD IN ACCORDANCE WITH PRINCIPL ES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW SHALL BE GRANTED BY THE AUTHORI TIES BELOW. WE ORDER ACCORDINGLY 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO. 4343/MUM/2012 FOR THE ASSESSMENT YEAR 2006-07 IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER, 2016. # $% &' 09-09-2016 ( ) SD/- SD/- (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 09-09-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI