SAWHNEY TEA TRADERS, NEW DELHI V. ITO, WARD- 47(1), NEW DELHI

ITA 6006/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9273 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 18-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 148; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 6006/DEL/2018 ASSESSMENT YEAR: 2010-11 SAWHNEY TEA TRADERS, VS. ITO, WARD-47(1), C/O RAJ KUMAR & ASSOCIATES, NEW DELHI CHARTERED ACCOUNTANTS, L-7A (LGF) SOUTH EXTN., PART-2, NEW DELHI 49 (PAN: AAAFS0340R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJ KUMAR, CA DEPARTMENT BY : SH. S.L. ANURAGI, SR. DR. ORDER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 25.6.2018 OF THE LD. CIT(A)-16, NEW DELHI RELA TING TO ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES LD. CIT ( A) GROSSLY ERRED IN LAW AS WELL AS ON MERITS IN DISMIS SING THE APPEAL AS NON ADMITTED ON THE GROUND OF APPEAL NOT BEING SIGNED AND VERIFIED BY THE PERSON WHO IS AUTHORIZED TO SIGNED THE RETURN U/S.140 OF THE I.T. ACT, ALTHOUGH THE APPEAL WAS SIGNED BY THE AUTHORIZED PER SON 2 U/S.140 BEING A PARTNER OF THE ASSESSEE FIRM, TILL TH E DATE OF ITS DISCONTINUANCE AND DISSOLUTION ON 31.03.1999. 1.1 THAT WITHOUT PREJUDICE, LD. CIT (A), EVEN DID N OT ISSUE A SHOW CAUSE NOTICE BEFORE TAKING FACTUALLY ERRONEOUS VIEW OF THE APPEAL NOT BEING SIGNED BY THE PERSON AS AUTHORIZED U/S.140 OF THE I.T. ACT. 1.2 THAT WITHOUT PREJUDICE, UNDER THE FACTS AND CIRCUMSTANCES, THE APPEAL HAS BEEN WRONGLY DISMISSE D FOR ALLEGED TECHNICAL DEFICIENCY WITHOUT PROVIDING A REASONABLE OPPORTUNITY TO CORRECT THE ALLEGED TECHNICAL CURABLE DEFICIENCY, IF ANY, SO EXISTED. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE IMPUGNED ASSTT. IS A NULLITY BEING UNSUSTAINABLE IN L AW AS THE ASSESSEE BEING THE ALLEGED PARTNERSHIP FIRM STOOD DISSOLVED ON 31.03.1999 AND CONSEQUENTLY DISCONTINUE D ITS BUSINESS W.E.F. 31.03.1999, HENCE THE ASSESSEE W AS NOT IN EXISTENCE AT ALL IN A.Y.2010-11. 3. THAT, WITHOUT PREJUDICE, UNDER THE FACTS AND CIRCUMSTANCES, THE INITIATION OF RE-ASSTT. PROCEEDING S U/S.147 / 148 ARE UNSUSTAINABLE IN LAW AS WELL AS O N MERITS, AND ALSO MECHANICAL AND WITHOUT APPLICATION O F MIND. 3 4. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD. A.O. GROSSLY ERRED IN LAW IN DETERMINING THE ASSESSA BLE INCOME AT RS. 15,11,000/- AGAINST NIL AS THE ASSESSE E DID NOT EXISTS IN A.Y.2010-11. 5. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD. A.O. FURTHER ERRED IN LAW AS WELL AS ON MERITS IN TRE ATING THE CASH DEPOSIT OF RS.15,11,000/- IN SAVINGS BANK A/ C WITH HDFC BANK, CHANDNI CHOWK DELHI AS UNEXPLAINED AND CONSEQUENTLY IN ADDING THE SAME AS THE SAID BANK A/C DID NOT BELONG TO NON EXISTENCE ASSESSEE BUT BELONGED TO M/S SAWHNEY TEA TRADERS, A SOLE PROPRIE TARY CONCERNED OF SH. BHUSHAN KUMAR SAWHNEY, WHO WAS EARLIER A PARTNER IN ASSESSEE FIRM. 6. THAT THE ORDER OF CIT (APPEALS) IS SO MUCH SO ERRONEOUS THAT IT HAS ADOPTED THE GROUNDS OF APPEAL AND THE FIGURE OF INCOME ASSESSED OF SOME OTHER ASSESSEE WHICH SHOWS ABSOLUTELY NO APPLICATION OF MIND WHILE ADJUDICATING THE IMPUGNED APPEAL ORDER WHICH MAKES THE CIT (APPEALS) ORDER NON-SUSTAINABLE IN LAW. 4 2. FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT REPEATED HERE FOR THE SAKE OF CONVENIENCE. 3. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSEE STATED THAT THE APPEAL OF THE ASSESSEE WAS DISMISSED BY THE LD. C IT(A) AS NOT ADMITTED, BEING DEFECTIVE, BECAUSE THE SAME WAS NOT SI GNED AND VERIFIED BY THE PERSONS WHO IS AUTHORIZED TO SIG THE RETURN U/S. 140 OF THE I.T. ACT, ALTHOUGH THE APPEAL WAS SIGNED BY TH E AUTHORIZED PERSON U/S.140 BEING A PARTNER OF THE ASSESSEE FIRM , TILL THE DATE OF ITS DISCONTINUANCE AND DISSOLUTION ON 31.03.1999. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) EVEN DID NOT ISSUE A SHOW CA USE NOTICE BEFORE TAKING FACTUALLY ERRONEOUS VIEW OF THE APPEAL NOT BEING SIGNED BY THE PERSON AS AUTHORIZED U/S.140 OF THE I.T. ACT. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) HAS NOT PROVIDED A RE ASONABLE OPPORTUNITY TO CORRECT THE ALLEGED TECHNICAL CURABLE DE FICIENCY, IF ANY. IT WAS FURTHER SUBMITTED THAT THE IMPUGNED ASSTT. I S A NULLITY BEING UNSUSTAINABLE IN LAW AS THE ASSESSEE BEING THE A LLEGED PARTNERSHIP FIRM STOOD DISSOLVED ON 31.03.1999 AND C ONSEQUENTLY DISCONTINUED ITS BUSINESS W.E.F. 31.03.1999, HENCE TH E ASSESSEE WAS NOT IN EXISTENCE AT ALL IN A.Y.2010-11. IT WAS FU RTHER SUBMITTED THAT, WITHOUT PREJUDICE, UNDER THE FACTS AND CIRCUMSTAN CES, THE INITIATION OF RE-ASSTT. PROCEEDINGS U/S.147 / 148 ARE UNSUSTAINABLE IN 5 LAW AS WELL AS ON MERITS, AND ALSO MECHANICAL AND W ITHOUT APPLICATION OF MIND. HENCE, HE REQUESTED TO REMIT BA CK THE ISSUES IN DISPUTE TO THE FILE OF THE LD. CIT(A) TO DECIDE THE SAME AFRESH ON MERITS OF THE CASE, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND UNDERTAKE THAT ASSESSEE WILL RECTI FY THE DEFECT AS POINTED OUT BY THE LD. CIT(A). 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. BUT DID NOT RAISE ANY SERIOUS OBJEC TION FOR SETTING ASIDE THE ISSUES IN DISPUTE TO THE FILE OF THE LD. C IT(A), FOR FRESH CONSIDERATION ON MERITS OF THE CASE. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS ESPECIALLY THE IMPUGNED ORDER. I FIND THAT LD. CIT( A) VIDE HIS IMPUGNED ORDER HAS OBSERVED THAT AS PER FORM NO. 35 , APPEAL IS FILED IN THE NAME OF SAWHNEY TEA TRADERS, PAN: AAAF S0340R. THE EXPARTE ASSESSMENT U/S. 144/147 IS ALSO COMPLETED IN THIS NAME WITH THE SAME PAN. THE APPEAL IS VERIFIED AND SIGNE D BY SHRI BHUSHAN KUMAR SAWHNEY HAVING PAN AABS0979D BEING THE PROPRIETOR OF SAWHNEY TEA TRADERS. HOWEVER, THE FIR M NAMELY SAWHNEY TEA TRADERS WITH PAN AAAFS0340R, IS STATED TO BE DISSOLVED IN 1999. I FURTHER NOTE THAT LD. CIT(A) HAS OBSERVED THAT AS PER RULE 45 OF THE RULES, THE APPEAL MUST BE SIGNE D AND VERIFIED BY THE PERSON WHO IS AUTHORIZED TO SIGN THE RETURN UN DER SECTION 6 140 OF THE ACT. WHEN THE FIRM IS STATED TO BE DISSOLVED AND APPEAL HAS BEEN FILED BY THE ABOVE CITED PERSON WHO IS NE ITHER PARTNER NOR AUTHORIZED PERSONS TO VERIFY AND SIGN THE CURRENT APPE AL AGAINST THE ASSESSMENT ORDER. THEREFORE, HE HELD THAT THE APPEAL F ILED CANNOT BE CONSIDERED AN APPEAL FILED IN AND VERIFIED IN PR ESCRIBED MANNER. IN VIEW OF THIS THE APPEAL WAS TREATED AS INVALID A ND NON-EST. THEREFORE, LD. CIT(A) DISMISSED THE APPEAL AS NOT AD MITTED. HOWEVER, IN MY CONSIDERED OPINION, LD. CIT(A) HAS NOT DISCUSSED IN DETAIL THE FACTS AND CIRCUMSTANCE OF THE CASE A ND ALSO DID NOT DEAL THE ISSUE ON MERIT AND PASSED A NON-SPEAKING ORDER, WHI CH IN MY OPINION, IS NOT IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE AND IT IS AN ERRONEOUS APPROACH. AFTER READING SECTION 250(6) OF THE ACT, I AM ALSO OF THE CONSIDERED VIEW THAT ASSESSEES CASE SHOULD BE DECIDED ON MERITS, WHICH THE LD. CIT(A) HAS NOT DONE. HOWEVER, IT IS A SETTLED LAW THAT EVEN AN ADMINISTRATIVE ORDER HAS TO BE SPEAKING ONE. I N THIS REGARD, I DRAW SUPPORT FROM HONBLE APEX COURT IN THE CASE M/S SA HARA INDIA (FARMS) VS. CIT & ANR. IN [2008] 300 ITR 403 WHEREIN IT HAS BEEN HELD THAT EVEN AN ADMINISTRATIVE ORDER HAS TO BE CONSISTENT WITH THE RULES OF NATURAL JUSTICE. 5.1 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND IN THE INTEREST OF JUSTICE, THE ASSESSEE IS DIRECTED TO RECTIFY T HE DEFECT AS POINTED OUT BY THE LD. CIT(A) IN HIS IMPUGNED ORDER. IN THE IN TEREST OF JUSTICE, I REMIT BACK THE ISSUES IN DISPUTE TO THE FILES OF T HE LD. COMMISSIONER OF 7 INCOME TAX (APPEALS) FOR HEARING WITH THE DIRECTION S TO CONSIDER EACH AND EVERY ASPECTS OF THE ISSUES INVOLVED IN THE APPEA L AND DECIDE THE SAME AFRESH, AFTER CONSIDERING ALL THE EVIDENCES/DOCUMEN TS AND PASS A SPEAKING ORDER ON THE MERITS OF THE CASE AND GIVE A DEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, AFTER RECTIFICATION OF THE DEFECT BY THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE ALL NECESSARY EVIDENCES / DOCUMENTS BEFORE THE LD. CIT(A) TO SUBSTANTIATE ITS CASE AND DID NOT TAKE ANY UNNECESSARY ADJOURNMENT IN THE PROCEEDINGS BEFORE THE LD. CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STA NDS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 03/04/2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED:03/04/2019 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR