ICON INFRASTRUCTURES P. LTD, MUMBAI V. ACIT 10(3), MUMBAI

ITA 4555/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55570 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 20-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 02-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAHUL LATHI
• Keywords: Opportunity of being heard

Judgement Text

1 ITA NO. 4555/MUM/2010 (ASST YEAR 2007-08 ) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI J SUDHAKAR REDDY, AM & SHRI VIJAY PAL RAO, JM ITA NO. 4555/MUM/2010 (ASST YEAR 2007-08 ) ICON INFRASTRUCTURES P LTD 25/A MOHEMEDI LAKDA BAZAR NO.1 M SROAD MUMBAI 400 008 VS THE ASST COMMR OF INCOME TAX 10(3), MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AABCI 3391J ASSESSEE BY SH RAHUL LATHI REVENUE BY SHRI SUNIL KUMAR SINGH DT.OF HEARING 20 TH SEPT 2011 DT OF PRONOUNCEMENT 28 TH , SEPT 2011 PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 25.3.2010 OF THE CIT(A) FOR THE ASSESSMENT YEAR 2007-08. 2 THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE G ROUNDS IN THIS APPEAL: I) THE LD CIT(A) ERRED IN PASSING EX-PARTE ORDER U/S 250 OF THE I T AT, 1961 II) THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF T HE ASSESSING OFFICER WHEREBY THE ASSESSING OFFICER TREATED THE INTEREST INCOME RE CEIVED BY THE APPELLANT, AMOUNTING TO RS. 40,07,545/- AS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST UNDER THE HEAD BUSINESS IN COME, DECLARED BY THE APPELLANT IN ITS RETURN OF INCOME. III) THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING THE EXPENSES AMOUNTING TO RS. 7,00,047/- CLAIMED BY THE APPELLANT BY HOLDING THAT THE APPELLANT HAD NOT EARNED ANY BUSINESS INCO ME DURING THE YEAR APART FROM THE INTEREST INCOME. IV) WITHOUT PREJUDICE TO THE ABOVE, AND IN ALTERNATIV E, IT IS SUBMITTED THAT THE AO FAILED TO APPRECIATE THAT THE INTEREST INCOME SO EARNED BY THE APPELLANT WAS LIABLE TO BE REDUCED BY THE EXPENSES IN VIEW OF SEC 57 OF THE ACT. 3 GROUND NO.1 IS REGARDING PASSING EX-PARTE ORDER. 2 ITA NO. 4555/MUM/2010 (ASST YEAR 2007-08 ) 3.1 THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME BY WAY OF E-FILING ON 27.10.2007 DECLARING THE TOTAL INCOME AT RS. 34,07, 685/-. THE RETURN WAS PROCESSED U/S 143(1) AND THEREAFTER, THE CASE WAS SELECTED FO R SCRUTINY ASSESSMENT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143( 3) ON A TOTAL INCOME OF RS. 40,06,295/- BY MAKING CERTAIN DISALLOWANCE. TH E ASSESSEE FILED APPEAL AGAINST THE ASSESSMENT ORDER BEFORE THE CIT(A). THE CIT(A) PASSED EX-PARTE IMPUGNED ORDER WHEN NOBODY APPEARED ON BEHALF OF THE ASSESSEE DE SPITE SEVERAL NOTICES WERE ISSUED TO THE ASSESSEE. 4 BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE ASSESSEE WAS PREVENTED BY REASONS AND SUFFICIENT CAUSES FOR APPE ARING BEFORE THE CIT(A); THEREFORE, THE ASSESSEE WAS NOT GIVEN AN EFFECTIVE OPPORTUNITY OF BEING HEARD BY THE CIT(A). HE HAS REFERRED THE AFFIDAVIT FILED BY ONE SHRI SALEH N MITHIBORWALA, DIRECTOR OF THE ASSESSEE COMPANY AND SUBMITTED THAT THE ASSESSEE COMPANY WAS INCORPORATED IN THE YEAR 2005. SINCE THE ASSESSEE COMPANY INCORPORATED TO DO INFRASTRUCTURE DEVELOPMENT BUSINESS AND THE ACTIVIT Y OF THE COMPANY REQUIRED HUGE INITIAL INVESTMENT FOR PURCHASING LAND AND DEVELOPM ENT; THEREFORE, IT WAS DIFFICULT FOR THE ASSESSEE TO PROCURE LOANS FROM FINANCIAL INSTIT UTIONS AND BANKS FOR THE REASON BEING NEWLY INCORPORATED COMPANY. THE ASSESSEE CO MPANY USED TO OPERATE FROM THE PREMISES OF ONE OF THE ASSOCIATE CONCERNS. AS THE ASSESSEE WAS FUNCTIONING FROM THE PREMISES OF THE ASSOCIATED CONCERN, ALL T HE NOTICES RECEIVED AT THE OFFICE WERE LATER ON FORWARDED TO THE DIRECTOR AND THIS PR OCESS TOOK SOME TIME. HE HAS FURTHER SUBMITTED THAT THE DIRECTOR OF THE COMPANY USED TO REMAIN OUT OF STATION IN CONNECTION WITH PROCURING FINANCE AND CONTRACTS FOR THE NEWLY SET UP COMPANY; THEREFORE, THERE WAS A DELAY IN COMMUNICATION OF TH E NOTICES INCLUDING THE NOTICE RECEIVED FROM THE CIT(A) AND FURTHER IN FORWARDING TO THE TAX CONSULTANT OF THE 3 ITA NO. 4555/MUM/2010 (ASST YEAR 2007-08 ) ASSESSEE. HE HAS FURTHER SUBMITTED THAT BECAUSE O F THE TIME GAP, THE TAX CONSULTANT, WHO HAD APPEARED BEFORE THE CIT(A) COUL D HAVE RECEIVED THE NOTICE OF HEARING WELL IN TIME AND THEREFORE, THERE WAS NO AT TENDANCE ON BEHALF OF THE ASSESSEE BEFORE THE CIT(A) BECAUSE, BY THE TIME THE NOTICES WERE RECEIVED BY THE TAX CONSULTANT, THE DATE OF HEARING WAS ALREADY EX PIRED. THAT IS HOW THE IMPUGNED ORDER WAS PASSED EX-PARTE. THUS, HE HAS PLEADED TH AT THE NON-ATTENDANCE BEFORE THE CIT(A) WAS DUE TO THE REASON BEYOND THE CONTROL OF THE ASSESSEE AND WAS NEITHER DELIBERATELY NOR MALAFIDE. THUS, THE LD AR HAS URGED THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY OF HEARING IN THE INT EREST OF JUSTICE. 4.1 THE LD DR, ON THE OTHER HAND, VEHEMENTLY OPPOSE D THE CONTENTION OF THE LD AR AND SUBMITTED THAT THE ASSESSEE WAS GIVEN SEVERA L OPPORTUNITIES BY THE LD CIT(A). HE HAS REFERRED THE DETAILS OF NOTICES IS SUED AND SERVED UPON THE ASSESSEE AS MENTIONED IN THE IMPUGNED ORDER THE CIT(A) AND S UBMITTED THAT DESPITE REPEATED NOTICES RECEIVED BY THE ASSESSEE NOBODY HA S APPEARED BEFORE THE CIT(A) AND THEREFORE, THE CIT(A) WAS LEFT WITH NO OPTION B UT TO DECIDE THE APPEAL OF THE ASSESSEE EX-PARTE. 5 WE HAVE CONSIDERED THE RIVAL CONTENTION AND CAREF ULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THERE IS NO DOUBT THAT THE CIT (A) HAS ISSUED FOUR NOTICES OF HEARING OF APPEAL FROM 1.2.2010 TO 12.3.2010 AND NO BODY HAS APPEARED IN RESPONSE TO THESE NOTICES. THE REASONS GIVEN BY THE ASSESSE E, THOUGH, ARE NOT SUFFICIENT FOR NOT APPEARING BEFORE THE CIT(A); HOWEVER, IN VIEW OF T HE FACT THAT ALL THE NOTICES WERE ISSUED WITHIN A PERIOD OF LESS THAN 1 MONTHS AND THERE MAY BE GENUINE CIRCUMSTANCES AND PRACTICAL DIFFICULTIES OF NOT RE CEIVING THOSE NOTICES BY THE CONCERNED PERSON (DIRECTOR OF THE ASSESSEE COMPANY) DUE TO HIS BEING OUT OF 4 ITA NO. 4555/MUM/2010 (ASST YEAR 2007-08 ) STATION AND TIME GAP BETWEEN THE RECEIPT OF NOTICE AND COMMUNICATING THE SAME TO THE TAX CONSULTANT. 5.1 MOREOVER, IT IS ALWAYS A QUESTION WHETHER THE R EASONS EXPLAINED BY THE ASSESSEE ARE BONAFIDE OR ARE MERELY A DEVICE TO COV ER AN ULTERIOR PURPOSE TO DELAY THE PROCEEDINGS. WHEN IT HAS NOT BEEN BROUGHT ON R ECORD THAT THE ASSESSEE WAS HAVING SOME ULTERIOR MOTIVE OR MALAFIDE INTENTION I N NOT ATTENDING BEFORE THE CIT(A), THEN, THE CAUSE OF SUBSTANTIAL JUSTICE HAS TO BE PR EFERRED AGAINST THE TECHNICAL CONSIDERATION AND THE MATTER SHOULD BE DECIDED ON M ERIT, AFTER GIVING PROPER OPPORTUNITY OF HEARING TO THE AGGRIEVED PARTY. 5.2 HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, TAKING A LENIENT VIEW, WE GRANT ONE MOR E OPPORTUNITY TO THE ASSESSEE TO APPEAR BEFORE THE CIT(A) TO DEFEND ITS CASE. ACCOR DINGLY, THE MATTER IS SET ASIDE TO THE RECORD OF THE CIT(A) FOR DECIDING THE ISSUE AFR ESH AFTER GIVING ONE MORE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESS EE IS DIRECTED TO APPEAR THROUGH ITS DIRECTOR BEFORE THE CIT(A) ON 21.11.2011 ALONG WITH COPY OF THIS ORDER AND TAKE NOTICE IN PERSON FOR THE DATE OF HEARING OF THE APP EAL. IF THE ASSESSEE FAILS TO APPEAR BEFORE THE CIT(A) AT THE TIME OF HEARING OR TAKES UNNECESSARY ADJOURNMENTS, THE OPPORTUNITY GIVEN BY US STANDS WI THDRAWN. 6 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 28 TH DAY OF SEPT 2011. SD/- S D/- (J SUDHAKAR REDDY ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 28 TH SEPT 2011 RAJ* 5 ITA NO. 4555/MUM/2010 (ASST YEAR 2007-08 ) COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI