ACME Luminaries P Ltd., Bangalore V. ITO, Bangalore

ITA 511/BANG/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63688 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 13-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H P MALLEGAODA
• Keywords: Principle of natural justice; Cost of acquisition

Judgement Text

PAGE 1 OF 6 ITA NO.5 11/BANG/2012 & S.P.NO.126/BANG/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, J.M ITA NO.511/BANG/2012 (ASSESSMENT YEAR 2006-07) & S.P.NO.126/BANG/2012 (IN ITA NO.511/BANG/2012) M/S ACME LUMINARIES PVT. LTD., NO.7/B, VEERASANDRA INDUSTRIAL AREA, 19 TH K M HOSUR ROAD, ELECTRONIC CITY P.O., BANGALORE. PA NO. AABCA 2028 G VS THE INCOME TAX OFFICER, WARD-11(1), BANGALORE. (APPELLANT) (RESPONDENT) DATE OF HEARING : 21.09.2012 DATE OF PRONOUNCEMENT : 21.09.2012 APPELLANT BY : SHRI H P MALLEGAODA , ADVOCATE RESPONDENT BY : SHRI SARAVANAN, B., J CIT ORD ER PER GEORGE GEORGE K : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE EX- PARTE ORDER OF THE CIT (A)-I, BANGALORE, DATED 16.8 .2010. THE RELEVANT ASSESSMENT YEAR IS 2006-07. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS WHICH ARE AS UNDER: (1) THAT THE CIT(A) ERRED IN DISMISSING THE APPEAL EX-P ARTE WITHOUT DISPOSING IT OFF ON MERITS; PAGE 2 OF 6 ITA NO.5 11/BANG/2012 & S.P.NO.126/BANG/2012 2 (2) THAT THE CIT (A) ERRED IN NOT FOLLOWING THE JURISDI CTIONAL HIGH COURTS RULING REPORTED IN 242 ITR 342 REFERRE D TO IN THE GROUNDS OF APPEAL RAISED BEFORE HIM; (3) THAT THE CIT (A) ERRED IN NOT HOLDING THAT THE SALE OF (I) LAND PROPERTY RELATES TO LONG TERM CAPITAL GAINS; AN D (II) THE SALE OF FACTORY BUILDING SUBJECTED TO DEPRECIATI ON WAS SHORT TERM GAIN AS HELD BY THE JURISDICTIONAL HI GH COURT; (4) GENERAL IN NATURE. 3. BRIEFLY STATED, THE ISSUES ARE AS UNDER: THE ASSESSEE A COMPANY ENGAGED IN THE BUSINES S OF MANUFACTURE OF ELECTRICAL FITTINGS HAD FILED ITS RE TURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, ADMITTING A TOT AL INCOME OF RS.9,52,840/- WHICH WAS INITIALLY PROCESSED U/S 143( 1) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT WAS TAKEN UP FOR SCRUTI NY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD, AMONG OTHERS , NOTICED THAT THE ASSESSEE HAD SOLD A PART OF PROPERTY FOR A SUM OF RS .90 LAKHS. HOWEVER, IN THE STATEMENT OF INCOME ANNEXED TO THE RETURN OF IN COME, THE ASSESSEE HAD BIFURCATED THE VALUE OF THE LAND AND BUILDINGS SEPA RATELY AND WORKED OUT THE COST OF ACQUISITION OF THE PROPERTY BY REVALUING THE LAND AND BUILDING FOR THE PURPOSE OF CALCULATING LONG TERM CAPITAL GAINS. HO WEVER, THE AO TOOK A DIVERGENT VIEW FOR THE REASONS RECORDED IN THE ASSE SSMENT ORDER AND PROPOSED TO WORK OUT THE COST OF ACQUISITION OF LAN D AND BUILDING AS BLOCK OF ASSETS AS PER THE PROVISIONS OF S. 50 OF THE ACT. ACCORDINGLY, HE HAD WORKED OUT THE STCG AT RS.87.14 LAKHS AND CONCLUDED THE AS SESSMENT. PAGE 3 OF 6 ITA NO.5 11/BANG/2012 & S.P.NO.126/BANG/2012 3 4. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE WITH THE CIT (A) FOR RELIEF. HOWEVER, THE CIT (A) HAD DISMISSED THE APP EAL IN LIMINE ON TWO COUNTS, NAMELY: (I) THAT THERE WAS ALLEGED DELAY OF 44 DAYS IN FILING THE APPEAL, FOR WHICH, ACCORDING TO THE CIT (A), THERE WAS NO A PPLICATION REQUESTING FOR CONDONATION OF DELAY; & (II) THAT THERE WAS NO COMPLIANCE TO THE HEARING NOTICES ISSUED FIXING THE HEARING ON THREE OCCASIONS. 5. AGGRIEVED, THE ASSESSEE HAS COME UP WITH THE P RESENT APPEAL. DURING THE COURSE OF HEARING, THE LEARNED AR DISPUT ED THE FINDINGS OF THE CIT (A). THE SUM AND SUBSTANCE OF THE ARGUMENT PUT -FORTH BY THE LEARNED A R IS AS UNDER: - THAT NO HEARING NOTICES WERE SERVED ON THE ASSESS EE AS CLAIMED BY THE CIT(A). THE HEARING NOTICES APPEAR T O HAVE BEEN SERVED ONLY WITH THE PREVIOUS AUDITORS WHO HAD ALREADY BEEN DISPENSED WITH; - THAT AS NOTHING WAS HEARD FROM THE CIT (A) EVEN A FTER FILING OF THE APPEAL ALMOST THREE YEARS BACK, THE ASSESSEE HAD APPROACHED THE CIT (A) ON 10.4.2012 THROUGH ITS PRE SENT A.R TO KNOW THE STAGE AT WHICH ITS APPEAL STANDS, BUT, IT WAS FOUND THAT ITS APPEAL HAD BEEN DISPOSED OFF EX-PARTE, DIS MISSING THE APPEAL FOR NON-COMPLIANCE OF THE HEARING NOTICES AN D ALSO THE APPELLATE ORDER COULD NOT BE SERVED ON THE ASSESSEE ETC., - THAT THE ISSUE UNDER CONSIDERATION IS DIRECTLY COV ERED BY THE RULING OF THE JURISDICTIONAL HIGH COURT (SUPRA) WHI CH HAS BEEN SPECIFICALLY POINTED OUT IN THE GROUNDS APPEAL FILED BEFORE THE CIT (A); - THAT IT IS NOW SETTLED LAW, IF AN ISSUE HAS TO BE D ECIDED EX- PARTE, THE DISPOSAL OF SUCH AN APPEAL SHOULD ALSO B E ON PAGE 4 OF 6 ITA NO.5 11/BANG/2012 & S.P.NO.126/BANG/2012 4 MERITS. HOWEVER, IN THE PRESENT CASE, THE CIT (A) HAD, FOR THE REASONS UNKNOWN, OVERLOOKED THIS VITAL POINT. IN CONCLUSION, IT WAS SUBMITTED THAT THE CIT (A) OU GHT TO HAVE GONE THROUGH ALL THE RELEVANT PAPERS SUBMITTED BY THE ASSESSEE AT THE TIME OF FILING OF ITS APPEAL AND DECIDED THE ISSUE ON MERITS EVEN FOR AN ARGUMENT-SAKE, THERE WAS NON-COMPLIANCE ON THE PART OF THE ASSESSEE. IN STE AD, THE ASSESSEES APPEAL HAS BEEN DECIDED EX-PARTE IN HASTE WITHOUT PROPER A PPLICATION OF MIND IN A BETTER PERSPECTIVE. IT WAS, THEREFORE, PRAYED THAT THE LEGITIMATE REQUEST OF THE ASSESSEE BE ORDERED TO BE CONCEDED TO BY THE REVENUE. 6. ON THE OTHER HAND, THE LEARNED DR SUBMITTED TH AT THERE WAS NO INFIRMITY EITHER IN THE STAND OF THE AO OR IN THE AC TION OF THE CIT (A) AS THE ASSESSEE HAD FAILED TO COMPLY WITH THE STATUTORY HEAR ING NOTICES ISSUED BY THE CIT (A). IT WAS, THEREFORE, ARGUED THAT NO INT ERFERENCE OF THIS BENCH IS CALLED FOR. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. AT THE OUT-SET, WE WOULD LIKE TO POINT OUT THAT WHILE FILING THE APPEAL, THE ASSESSE E IN ITS LETTER DATED 30.3.2009 HAD MENTIONED AS UNDER: WITH REFERENCE TO THE ABOVE, PLEASE FIND ENCLOSE H EREWITH THE FOLLOWING DOCUMENTS IN DUPLICATE TOWARDS THE AP PEAL FOR THE ASSESSMENT YEAR 2006-07: (I) MEMORANDUM OF APPEAL; (II) STATEMENT OF FACTS; (III) GROUNDS OF APPEAL (IV) ORIGINAL DEMAND NOTICE ALONG WITH ASSESSMENT ORDER; (V) CONDOLENCE (SIC) CONDONATION OF DELAY; PAGE 5 OF 6 ITA NO.5 11/BANG/2012 & S.P.NO.126/BANG/2012 5 THE SAID LETTER ALONG WITH ITS ENCLOSURES HAS BEEN DULY ACKNOWLEDGED BY THE OFFICE OF THE CIT (A)-I, BANGALORE ON 31.3.2009 [SO URCE: P 13 OF FORM NO.36]. THUS, THE CIT (A), WITHOUT NOTICING THE C ONDONATION PETITION, CAME TO A CONCLUSION THAT THE APPEAL DESERVES TO BE DISM ISSED IN LIMINE. FURTHER, THE CIT (A) HAD ASSERTED THAT THE NOTICES OF HEARIN G WERE DULY SERVED ON THE ASSESSEE ON 22.3.2010, 17.5.2010 AND 27.7.2010 RESPECTIVELY. HOWEVER, THE ASSESSEE HAD EMPHATICALLY DENIED FOR HAVING RECE IVED ANY SUCH HEARING NOTICES. THE ASSERTION OF THE ASSESSEE CANNOT BE D ISBELIEVED FOR A SIMPLE REASON THAT HAD THE HEARING NOTICES BEEN SERVED O N THE ASSESSEE AS CLAIMED BY THE CIT (A), THE EX-PARTE APPELLATE ORDER DATED 16.8.2010 COULD HAVE ALSO BEEN SERVED ON THE ASSESSEE? HOWEVER, TH E POSTAL AUTHORITIES HAVE RETURNED THE ENVELOPE CONTAINING THE APPELLATE ORDER TO THE SENDER WITH A REMARK ADDRESSEE LEFT THUS, THIS VERY FA CT MAKES IT IMPLICIT THAT NO HEARING NOTICES HAVE BEEN SERVED ON THE ASSESSEE AS CLAIMED BY THE CIT (A). THE APPEAL HAS BEEN DECIDED AT THE BACK OF T HE ASSESSEE THEREBY THE INTERESTS OF NATURAL JUSTICE HAS BEEN DENIED TO THE ASSESSEE FOR NO FAULT ON ITS PART. FURTHERMORE, THE ASSESSEE HAD, IN ITS GRO UNDS OF APPEAL BEFORE THE CIT (A), VERY SPECIFICALLY RELIED ON THE CASE LAWS WH ICH SHOULD HAVE AT LEAST BEEN CONSIDERED BY THE CIT (A). HOWEVER, THIS HAS N OT PRECISELY BEEN DONE BY THE CIT (A). 7.1 CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT THE CIT (A) SHOU LD HAVE CONSIDERED THE ISSUE ON MERITS AS THE INTEREST OF NATURAL JUSTICE AND EQUITY SO WARRANT. THIS VITAL POINT HAS BEEN LOST SIGHT OF THE CIT (A) WHIL E DECIDING THE ASSESSEES APPEAL EX-PARTE, PERHAPS, BY OVERSIGHT. TAKING INTO ACCOUNT THE ABOVE, WE PAGE 6 OF 6 ITA NO.5 11/BANG/2012 & S.P.NO.126/BANG/2012 6 ARE OF THE FIRM VIEW THAT THE ISSUE REQUIRES A FRES H CONSIDERATION BY THE CIT (A). TO ENABLE THE CIT (A) TO LOOK INTO THE MA TTER AFRESH, THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE CIT (A) W ITH A SPECIFIC DIRECTION TO CONSIDER THE MATTER AFRESH AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND ALSO KEEPING THE JUDICIAL PRONOUNCEMENTS ON THE MATTER IN VIEW. WHILE DOING SO, THE ASSESSE E SHALL BE GIVEN A REASONABLE OPPORTUNITY TO PUT-FORTH ITS VIEW. IT IS ORDERED ACCORDINGLY. 8. WE HAVE SINCE REMITTED BACK THE ENTIRE ISSUE T O THE CIT (A) FOR A FRESH CONSIDERATION, THE MERITS AND DEMERITS OF THE CONTENTION RAISED BY THE ASSESSEE HAS NOT BEEN ADDRESSED TO. 9. SINCE THE APPEAL HAS BEEN DECIDED, THE STAY PETI TION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED AS INFRUCTUOUS. 10. IN THE RESULT , THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED ON THE 21 ST DAY OF SEPTEMBER, 2012 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BAN GALORE.