WONDER PEN TIPS P.LTD, MUMBAI V. ITO WD 8(3)(4), MUMBAI

ITA 571/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2359 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUMBAI BEFORE SHRI B.R.BASKARAN, AM & SHRI PAWAN SIN GH, JM ITA NO.571/MUM/2 015 (ASSESSMENT YEAR : 2006-07) WONDER PEN TIPS PRIVATE LTD., F/402, THE SPRING FIELDS, NEXT TO GREEN ACCRS, LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI-400053. VS. SHRI RANGNATH R. ITO -8(3)(4), MUMBAI. PAN/GIR NO.: AAACW3423A ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI B.S. BIST (DR) DATE OF HEARING : 25/07/2016 DATE OF PRONOUNCEMENT: 29/07/2016 O R D E R PER PAWAN SINGH, JM: 1. THE PRESENT APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF CIT(A)-18, MUMBAI DATED 26.11.2014 FOR ASSESSMENT YEAR (AY)-2006-07 C ONFIRMING THE PENALTY ORDER DATED 25.03.2013. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 28.11.2006 DECLARING NIL INCOME . THE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT ON 01.12.2006 AND THE INCOME OF ASSESSEE WA S ASSESSED AT RS. 27,21,399/- WHEREIN THE FOLLOWING DISALLOWANCE WAS MADE WHICH I S AS UNDER: (I) RENT RS. 1,74,500/- (II) SALES RETURN RS. 2,29,890/- (III) LABOUR CHARGES RS. 7,54,834/- (IV) CUSTOM DUTY RS. 1,09,409/- (V) UNEXPLAINED CASH CREDIT RS. 5,70,000/- (VI) ESTIMATED EXPENDITURE RS. 3,38,788/- THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) WHEREI N THE ADDITION ON ACCOUNT OF RENT, CUSTOM DUTY AND UNEXPLAINED CASH CREDIT WAS D ELETED AND REST OF THE ADDITIONS WERE SUSTAINED. AFTER RECEIPT OF ORDE R FROM FIRST APPELLATE AUTHORITY (FAA), THE AO INITIATED THE PENALTY PROCEEDING BY I SSUING NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT ON 01.12.2008. THE SHOW CAUSE NOTICE WAS CONTESTED BY ASSESSEE. THE ASSESSEE CONTENTED THAT HE HAS NOT C ONCEALED THE PARTICULAR OF INCOME AND REQUESTED TO DROP THE PROCEEDINGS. THE C ONTENTION OF ASSESSEE WAS NOT ACCEPTED AND THE AO LEVIED PENALTY OF RS. 5,66,670/ - BEING 100% ON THE AMOUNT OF TAX SOUGHT TO BE EVADED. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED ITA NO.571/M/15 WONDER PEN TIPS PRIVATE LTD. 2 APPEAL BEFORE THE CIT(A) AND THE SAME WAS DISMISSE D VIDE ORDER IMPUGNED IN THE PRESENT APPEAL. FURTHER, AGGRIEVED BY THE IMPUGNED ORDER OF CIT (A), THE PRESENT APPEAL IS FILED BEFORE US. 3. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE. WE HAV E HEARD DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE. LD. DR FOR REVENUE ARGUED THAT THE ASSESSEE CONCEALED THE INCOME AND FURNISHED INACCURATE PARTI CULARS WITH THE INTENTION TO REDUCE THE TAX LIABILITY. THE ASSESSEE HAS NOT OFFE RED ANY EXPLANATION FOR THE CLAIMS WHICH WERE OTHERWISE NOT ALLOWABLE AS DEDUCTION OF THE CASE OF THE ASSESSEE IS COVERED IN ACCORDANCE WITH CLAUSE-A OF EXPLANATION 1 OF SECTION 271(1)(C) OF THE ACT AND PENALTY WAS LEVIED FOR FURNISHING INACCURAT E PARTICULAR OF INCOME AND THE SAME IS LIABLE TO BE UPHELD. WE HAVE CONSIDERED THE CONTENTION OF LD. DR FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. 4. WE HAVE SEEN THAT THE AO PASSED EX-PARTE ORDER WHER EIN DISALLOWANCE OF RENT, SALES RETURN, LABOUR CHARGES, CUSTOM DUTY, UNEXPLAI NED CASH CREDIT AND ESTIMATED EXPENDITURE WAS DISALLOWED. IN APPEAL, TH E ASSESSEE WAS GIVEN PARTIAL RELIEF BY LD. CIT(A) IN QUANTUM APPEAL WHILE HEARIN G THE APPEAL AGAINST THE LEVY OF PENALTY, THE FAA OBSERVED THAT ADDITION ON ACCOUNT OF SALES RETURN, LABOUR CHARGES, CUSTOM DUTY, UNEXPLAINED CASH CREDIT AND E STIMATED EXPENDITURE WAS NOT SUBSTANTIALLY EXPLAINED WITH DOCUMENTARY EVIDEN CE, THUS THE PENALTY WAS LEVIED. WE HAVE FURTHER OBSERVED THAT LD. CIT(A) PA SSED THE IMPUGNED ORDER EX- PARTY. LD. CIT(A) HAS NOT REFERRED IN ITS ORDER I F NOTICE OF HEARING AND SERVED UPON THE ASSESSEE OR NOT. SERVING OF PROPER NOTICE FOR HEARING OF CASE IS AN ESSENTIAL ELEMENT OF AUDI ALTERAM PARTEM . THUS THE PRINCIPAL OF NATURAL JUSTICE WAS NOT FOLLOWED BY CIT(A). HENCE, WE DEEM IT APP ROPRIATE TO RESTORE THE PRESENT APPEAL TO THE FILE OF CIT(A) TO DECIDE THE CASE AFRESH AFTER GIVING PROPER AND ADEQUATE OPPORTUNITY TO THE ASSESSEE. WITH THES E OBSERVATIONS, THE PRESENT APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29/07/2016. SD/- SD/- (B.R.BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 29/07/2016 SK, PS ITA NO.571/M/15 WONDER PEN TIPS PRIVATE LTD. 3 COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/