PROMA INDUSTRIES LTD, MUMBAI V. ITO WD 8(2)(4), MUMBAI

ITA 5790/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9008 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 23-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Assessee Lawyers: KEYURI DESAI
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Reasonable cause
• Section: 143(3); 142(1); 115JB; 68

Judgement Text

1 ITA NO.5790 /MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.5790/MUM/2015 (ASSESSMENT YEAR 2010-11) PROMA INDUSTRIES LTD 11/12, RAYFREDA, 2 ND FLOOR SIR M.V. MARG, CHAKALA ANDHERI (E), MUMBAI-93 PAN : AAACP6230G ITO, WD.8(2)(4), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI KEYURI DESAI RESPONDENT BY SHRI SUMAN KUMAR DATE OF HEARING 27-09-2017 DATE OF PRONOUNCEMENT 11 -10-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)-17, MUMBAI DATED 21-08-2014 AND IT PERTAINS TO AY 2010-11. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1.1 THE LEARNED COMMISSIONER OF INCOME - TAX (APPE ALS) - 17, MUMBAI [ ' LC. CIT (A)'], ERRED IN CONFIRMING THE ACTION OF TH E INCOME TAX OFFICER, WARD - 8 (2) (4), MUMBAI ['THE A.O.'] IN PASSING THE ORDER EX - PARTE AND DISMISSING THE APP EAL ON THE GROUND THAT THE APPELLANT WAS NOT INTERESTED IN PUR SUING THE APPEAL. 1.2 WHILE DOING SO, THE LD. CIT (A) ERRED IN CONFIR MING THE ACTION OF 2 ITA NO.5790 /MUM/2015 THE A.O. AND IN PASSING THE ORDER WITHOUT GIVING PR OPER, EFFECTIVE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE AP PELLANT. 1.3 WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT (A) FAILED TO APPRECIATE THAT THE APPELLANT WAS PREVENTED FROM RE ASONABLE CAUSES FOR RIOT BEEN ABLE TO REPRESENT BEFORE THE L D. CIT (A). 1.4 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, NO SUCH ACTION WAS CALLED FOR. WITHOUT PREJUDICE TO THE ABOVE 2.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN MAKING ADDITION OF RS. 8 LACS, BEING THE AMOUNT RECEIVED T OWARDS ISSUE OF PREFERENCE SHARES, U/S. 68 OF THE INCOME - TAX ACT, 1961, ON ACCOUNT OF ALLEGED UNEXPLAINED CASH CREDIT. 2.2 T IS SUBMITTED THAT IN THE FACTS AND THE CIRCUM STANCES OF THE CASE, AND IN LAW, NO SUCH ADDITION WAS CALLED FOR. 3.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITIO N OF THE A.O. IN MAKING DISALLOWANCE OF RS. 4,11,935/-, BEING LEGAL AND PROFESSIONAL CHARGES INCURRED BY THE APPE LLANT, BY REGARDING THE SAME AS CAPITAL IN NATURE. 3.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, NO SUCH DISALLOWANCE WAS CALLED F OR. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE E NGAGED IN THE BUSINESS OF MANUFACTURING OF TEXTILE PRODUCTS FILED ITS RET URN OF INCOME FOR THE AY 2010- 11 ON 14-10-2010 DECLARING TOTAL INCOME OF RS.6,80, 720 COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT OF RS. 26,44,068 COMPUTED U/S 115JB OF THE ACT. THE CASE WAS SELECTED OR SCRUTIN Y AND NOTICES U/S 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WERE ISSUED. IN RE SPONSE TO NOTICE THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED FROM TIME TO TIME AND 3 ITA NO.5790 /MUM/2015 SUBMITTED DETAILS AS CALLED FOR. THE ASSESSMENT WA S COMPLETED U/S 143(3) ON 28-03-203 DETERMINING THE TOTAL INCOME AT RS.19,46, 460 UNDER NORMAL PROVISIONS OF THE ACT, INTERALIA MAKING DISALLOWANC E OF UNEXPLAINED CREDIT TOWARDS SHARE PREMIUM ACCOUNT U/S 68 OF THE ACT FOR RS.8 LAKHS, DISALLOWANCE OF LEGAL AND PROFESSIONAL CHARGES OF RS.4,11,935, D ISALLOWANCE OF ROC FILING FEES AND REGISTRATION EXPENSES OF RS.48,805. AGGRI EVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 3. BEFORE THE CIT(A), THE ASSESSEE NEITHER APPEARED NO R FILED ANY DETAILS DESPITE FIXING THE CASE FOR HEARING ON 13-05-2014, 26-05-2014, 10-06-2014, 07- 08-2014 AND 19-08-2014. THEREFORE, THE CIT(A), FOR THE DETAILED REASONS RECORDED IN HIS ORDER DATED 21-08-2014 DISMISSED TH E APPEAL FILED BY THE ASSESSEE AND UPHELD ADDITIONS MADE BY THE AO TOWARD S CASH CREDITS U/S 68, DISALLOWANCE OF LEGAL AND PROFESSIONAL CHARGES AND DISALLOWANCE OF ROC FILING FEES AND REGISTRATION EXPENSES. AGGRIEVED BY THE O RDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD.CI T(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN PASSING THE ORDE R EXPARTE AND DISMISSING THE APPEAL ON THE GROUND THAT THE ASSESSEE WAS NOT INTE RESTED IN PURSUING THE APPEAL. THE LD.AR FURTHER SUBMITTED THAT THE LD.CI T(A) WAS ERRED IN NOT GIVING 4 ITA NO.5790 /MUM/2015 PROPER, EFFECTIVE AND SUFFICIENT OPPORTUNITY OF BEI NG HEARD THEREBY REJECTING THE CASE OF THE ASSESSEE BEHIND THE BACK AND IN VIO LATION OF PRINCIPLES OF NATURAL JUSTICE. THE ASSESSEE COULD NOT APPEAR BEF ORE THE AO FOR THE REASONS BEYOND HIS CONTROL. THEREFORE, THE CASE MAY BE SET ASIDE TO THE FILE OF THE CIT(A) AND ONE MORE OPPORTUNITY MAY BE GIVEN TO THE ASSESSEE TO JUSTIFY ITS CASE. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIA L AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE EXPARTE ON THE GRO UND THAT THE ASSESSEE COULD NOT APPEAR TO JUSTIFY HIS CASE DESPITE FIXING THE C ASE FOR HEARING ON VARIOUS OCCASIONS. THE CIT(A) FURTHER OBSERVED THAT EVERY COURT THAT HAS TO DECIDE ON A MATTER OF DISPUTE INHERENTLY POSSESES THE POWER TO DISMISS THE CASE FOR DEFAULT FOR NON PROSECUTION FROM THE LITIGANTS SIDE. WHER E A CASE IS CALLED UP FOR HEARING AND THE PARTY IS NOT PRESENT, THE COURT OR THE JUDICIAL OR QUASI JUDICIAL BODY IS UNDER NO OBLIGATION TO KEEP THE MATTER PEND ING ON OR TO PURSUE THE MATTER ON BEHALF OF THE COMPLAINANT, WHO HAD INSTIT UTED THE PROCEEDINGS. THEREFORE, BY RELYING UPON CERTAIN JUDICIAL PRECEDE NTS INCLUDING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CHEMIPOL V S UOI (CENTRAL EXCISE) APPEAL NO. 62 OF 2009 AND OTHER DECISIONS, DISMISSE D THE APPEAL FILED BY THE ASSESSEE FOR NON PROSECUTION AND CONFIRMED ADDITION S MADE BY THE AO. NO 5 ITA NO.5790 /MUM/2015 DOUBT, THE CIT(A) HAS GIVEN NUMBER OF OPPORTUNITIES TO THE ASSESSEE TO ARGUE ITS CASE. BUT THE FACT REMAINS THAT THE ASSESSEE W AS PREVENTED FROM REASONABLE CAUSE FOR NOT BEEN ABLE TO REPRESENT BEF ORE THE LD.CIT(A). THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO KEEPING VIEW THE NATURAL JUSTICE, WE ARE OF THE VIE W THAT THE ISSUE NEEDS TO BE SET ASIDE TO THE FILE OF THE CIT(A) TO GIVE ONE MOR E OPPORTUNITY OF HEARING TO THE ASSESSEE TO JUSTIFY ITS CASE. HENCE, WE SET AS IDE THE ISSUE TO THE FILE OF THE CIT(A) AND DIRECT HIM TO CONSIDER THE ISSUE AFRESH AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEEE. NEEDLESS TO SAY THE ASSESSEE IS DIRECTED NOT TO SEEK ANY ADJOURNMENT BEFORE CIT(A). 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON11TH OCTOBER, 2017. SD/- SD/- (D.T. GARASIA) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 11 TH OCTOBER, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI