Auchlite Chemical Private Limited, Kanpur V. Dy. Commissioner of Income Tax-V, Kanpur

ITA 605/LKW/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6001 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 29-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAKESH GARG S HRI AJAY KUMA
• Keywords: Opportunity of being heard; Principle of natural justice; Rule 8D; Set aside
• Section: 14A

Judgement Text

I.T.A. NO.605/LKW/2018 ASSESSMENT YEAR:2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A LUCKNOW [THROUGH VIRTUAL COURT] BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.605/LKW/2018 ASSESSMENT YEARS: 2008-09 M/S. AUCHLITE CHEMICAL PVT. LTD., 3/64, VISHNU PURI, KANPUR - 208002 PAN: AABCA 6854G VS. DCIT - 6 , KANPUR (APPELLANT) (RESPONDENT) O R D E R PER A.D. JAIN, V.P. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-II, KANPUR DATED 08/06/2018 PERTAINING TO ASSESSMENT YEAR 2008-09, TAKING THE FOLLOWING GROUNDS: 01. BECAUSE THE C!T(A) HAS ERRED ON FACTS AND IN LAW IN SUMMARILY DISMISSING THE APPEAL EX-PARTE WITHOUT GIVING ANY OPPORTUNITY OF BEING HEARD. 02. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT NONE OF THE NOTICES FIXING THE HEARING OF THE CASE AS MENTIONED IN THE APPELLATE ORDER WAS SERVED ON THE ASSESSEE, THE ORDER PASSED EX-PARTE IS BAD IN LAW AND BE QUASHED. APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY S HRI AJAY KUMAR, D.R. DATE OF HEARING 1 3 / 0 9 /20 2 1 DATE OF PRONOUNCEMENT 14/09/2021 I.T.A. NO.605/LKW/2018 ASSESSMENT YEAR:2008-09 2 03. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN PASSING THE APPELLATE ORDER ON 08.06.2018 AFTER A TIME GAP OF ABOUT SEVEN MONTHS WHEREAS A SPEAKING ORDER SHOULD HAVE BEEN PASSED WITHIN FIFTEEN DAYS FROM THE LAST HEARING OF THE CASE, BASED ON STATEMENT OF FACTS AND GROUNDS OF APPEAL AS MENTIONED IN THE MEMORANDUM OF APPEAL, THE ORDER PASSED IS CONTRARY TO THE PROVISIONS OF LAW AND BE QUASHED. 04. BECAUSE THE DY. CIT ERRED AND WRONGLY ADDED RS.64,49,000/- BY INVOKING THE PROVISIONS OF SECTION 14A OF THE INCOME-TAX ACT, 1951 READ WITH RULE 8D OF THE INCOME- TAX RULES, 1962 WHICH ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, THE ADDITION MADE BE DELETED. 05. BECAUSE WITHOUT PREJUDICE THE CIT(A) HAS ERRED IN UPHOLDING THE FINDING OF THE DY. CIT WHO HAS WRONGLY INVOKED SECTION 14A IN THE PRESENT CASE, THE CIT(A) AS WELL AS DY.CIT FAILED TO APPRECIATE THAT NO EXPENDITURE WAS INCURRED BY THE APPELLANT TO EARN THE EXEMPTION INCOME. 06. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT RULE 8D WAS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION, HENCE NO DISALLOWANCE CAN BE MADE INVOKING THE PROVISIONS OF RULE 8D OF THE ACT, 1961. 07. BECAUSE NO SATISFACTION AS CONTEMPLATED IN SECTION 14A READ WITH RULE 8D HAS BEEN RECORDED BY THE AO, NO DISALLOWANCE CAN BE MADE U/S.14A, THE CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE, THE DISALLOWANCE MADE BE DELETED. 08. BECAUSE THE TOTAL INCOME FROM DIVIDEND (TAX FREE INCOME BEING RS.4,24,387/- THE DISALLOWANCE IF AT ALL HAS TO BE MADE IS TO BE CONFINED TO THE TAX FREE RECEIVED, THE CIT(A) HAS FAILED TO APPRECIATE THE FACTS AND HAS ARBITRARILY UPHELD THE DISALLOWANCE, THE SAME BE DELETED. 2. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) HAS DISMISSED THE ASSESSEES APPEAL FOR NON PROSECUTION, OBSERVING THAT VARIOUS NOTICES, AS MENTIONED THEREIN, WERE SERVED ON THE E-MAIL ADDRESS SUBMITTED BY THE ASSESSEE WHILE E-FILING THE APPEAL, I.E., [e-mail]; THAT HOWEVER, NO WRITTEN SUBMISSION OR PAPER BOOK HAD BEEN FILED IN SUPPORT OF I.T.A. NO.605/LKW/2018 ASSESSMENT YEAR:2008-09 3 ANY OF THE GROUNDS OF APPEAL TAKEN; AND THAT NONE HAD ATTENDED ON BEHALF OF THE ASSESSEE. SUCH SERVICE OF NOTICE HAS, HOWEVER, BEEN DISPUTED BY THE ASSESSEE. 3. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE NOTED THAT THE LEARNED CIT(A) HAS PASSED AN EX- PARTE ORDER AS ACCORDING TO HIM, NOBODY HAS APPEARED ON THE DATES WHEN THE APPEAL WAS FIXED FOR HEARING BEFORE HIM. FROM THE ORDERS OF CIT(A), IT IS APPARENT THAT THE LD. CIT(A) HAD ISSUED VARIOUS NOTICES TO THE ASSESSEE HOWEVER, NEITHER ANYBODY APPEARED NOR FILED WRITTEN SUBMISSIONS ON THE DATES FIXED AND ULTIMATELY THE CIT(A) PASSED THE EX-PARTE ORDER. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED AT THE BAR THAT DATE OF HEARING WAS NOT COMMUNICATED TO HIM, THEREFORE, HE COULD NOT APPEAR BEFORE THE CIT(A). THEREFORE, WE FEEL THAT ONE MORE OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE, AS THE LEARNED CIT(A) HAS NOT DECIDED THE APPEAL ON MERITS. THE PROVISION OF SECTION 250, WHICH DEALS WITH THE PROCEDURE IN APPEAL BEFORE THE CIT(A), ALLOWS A RIGHT TO AN ASSESSEE TO BE HEARD AT THE TIME OF HEARING OF APPEAL. EVEN THE NATURAL JUSTICE DEMANDS THAT NO APPEAL SHOULD BE DISPOSED OF WITHOUT HAVING HEARD THE PARTY OR WITHOUT GIVING HIM THE PROPER AND SUFFICIENT OPPORTUNITY. WE ARE OF THE VIEW FROM THE FACTS OF THE CASE THAT THE ASSESSEE HAS NOT BEEN GIVEN PROPER AND SUFFICIENT OPPORTUNITY BEFORE DISPOSING OF THE APPEAL BY THE CIT(A). WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE APPEAL TO THE FILE OF THE CIT(A) WITH THE DIRECTION THAT THE CIT(A) SHALL REFIX THE SAID APPEAL AND DECIDE THE APPEAL AFRESH AFTER GIVING PROPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO BE PRESENT ON THE DATE OF I.T.A. NO.605/LKW/2018 ASSESSMENT YEAR:2008-09 4 HEARING FIXED BY THE LEARNED CIT(A) AND NOT TO SEEK UNDUE ADJOURNMENT AND CO-OPERATE WITH THE LEARNED CIT(A) IN DISPOSING OF THE APPEAL. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 14/09/2021) SD/- SD/- (T. S. KAPOOR ) ( A. D. JAIN ) ACCOUNTANT MEMBER VICE PRESIDENT DATED: 14/09/2021 AKS/- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW