N- Serve Software Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 6313/DEL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9912 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 18-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Corroborative evidences; Benefit of exemption
• Section: 271(1)(c)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH E, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 6313/DEL/2014 ASSESSMENT YEAR: 2011-12 N - SERVE SOFTWARE PVT. LTD.,(FORMERLY KNOWN AS NSYS DESIGN SYSTEM PVT. LTD.), 31, 2 ND FLOOR, ASHOKA PARK EXTN., PUNJABI BAGH, NEW DELHI. PAN : AABCN0032D (APPELLANT) VS. INCOME - TAX OFFICER, WARD 13(1), NEW DELHI (RESPONDENT) APPELLANT BY SH. RAVI SHARMA, ADVOCATE & SH. RISHABH MALHOTRA, AR RESPONDENT BY SH. SRIDHAR DORA, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER PASSED BY THE LD. CIT(A)-VIX, DELHI DATED 29.08.2014 FOR THE ASSESSME NT YEAR 2011-12 ON THE FOLLOWING GROUNDS : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY CIT (A) IS CONTRARY TO FACTS AND BAD IN LAW. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE CIT(A) WAS NOT JUSTIFIED IN NOT PROVIDING PROPER AND REASONABLE OP PORTUNITY OF BEING HEARD TO THE ASSESSEE DURING THE COURSE OF THE APPE LLATE PROCEEDINGS. DATE OF HEARING 25.01.2019 DATE OF PRONOUNCEMENT 01 .04.2019 ITA NO. 6313/DEL/2014 2 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE ORDER PASSED BY CIT(A) IS EVIDENTLY PRE-DATED, SINCE THE AFFIDAVIT O F CA RAVINDER GOEL WAS FILED VIDE LETTER DATED 27.08.2014 WHICH WAS DISPAT CHED BY SPEED POSTON 28.08.2014 (UNDER TRACKING NO. ED 650676719IN) WAS DELIVERED IN THE OFFICE OF CIT(A) AT 18.04 HRS. ON 29.8.2014 AS PER ONLINE TRACKING SYSTEM OF INDIA POST. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT (A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF TH E ASSESSING OFFICER IN TREATING ASSESSEES GENUINE MISTAKE AS DELIBERATE A ND MALAFIDE ACT AND IMPOSITION OF PENALTY AGGREGATING RS. 2,04,02,170/- U/S 271 (1 )(C ) OF THE I.T. ACT MENTIONING THAT THE ASSESSEE HAS CONCEALED ITS INCOME BY FILING INACCURATE PARTICULARS OF ITS INCOME. 2. THE LEARNED AR OF THE ASSESSEE ALSO FILED FOLLOW ING ADDITIONAL GROUNDS SIGNED BY NSERVE SOFTWARE LLP : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE PENALTY PROCEEDING STAND VITIATED ON THE GROUND THAT THE AS SESSING OFFICER HAS FAILED TO SPECIFY THE PRECISE CHARGE IN THE PENALTY NOTICE UNDER SECTION 274 R.W.S. 271(1)(C) AND HENCE, THE SAME IS BAD IN LAW AND INVALID. 3. FOR ADMISSION OF ABOVE ADDITIONAL GROUND, THE AS SESSEE HAS RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. VS. CIT, 187 ITR 688 AND IN CIT VS. SSAS EMERALD MEADO WS, 73 TAXMANN.COM 248. 4. A PERUSAL OF RECORD REVEALS THAT THE ADDITIONAL GROUND SO FILED BY ASSESSEE IS SIGNED AND STAMPED BY NSERVE SOFTWARE L LP AND NOT BY THE APPELLANT HERE. THEREFORE, THE CASE WAS LISTED FOR HEARING TO CLARIFY AND REMOVE THE DEFECT ON 22.01.2019, BUT NONE ATTENDED ON THIS DATE OF HEARING. ITA NO. 6313/DEL/2014 3 THEREAFTER, IT WAS FIXED FOR HEARING ON 25.01.2019, WHEN THE ABOVE DEFECT WAS BROUGHT TO THE NOTICE OF ASSESSEE, BUT STILL THE SA ID DEFECT NEITHER STANDS REMOVED NOR IS THERE ANY CLARIFICATION FROM THE SID E OF ASSESSEE AS TO HOW THE ADDITIONAL GROUND SIGNED BY A PERSON OTHER THAN APP ELLANT CAN BE ADMITTED ON RECORD FOR CONSIDERATION. WE, THEREFORE, DO NOT FIN D ANY JUSTIFICATION TO ADMIT SUCH ADDITIONAL GROUND ON RECORD AND IN THESE PECUL IAR CIRCUMSTANCES, THE DECISION RELIED BY THE LD. AR DOES NOT RENDER ANY H ELP TO THE ASSESSEE. ACCORDINGLY, THE ADDITIONAL GROUND RAISED BY THE AS SESSEE IS DISMISSED. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS REGISTERED WITH STPI (SOFTWARE TECHNOLOGY PARK) AND IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF SOFTWARE. IT ASSESSEE FILED ITS RETU RN OF INCOME ON 29.09.2011 DECLARING AN INCOME OF RS.17,25,935/-. THE ASSESSIN G OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.6,80,07,232/- U/S. 10A OF THE IT ACT. SINCE THE INITIAL ASSESSMENT YEAR WAS 2000-01 AND T HE ASSESSEE WAS GETTING BENEFIT OF EXEMPTION U/S. 10A CONTINUOUSLY FOR 10 Y EARS PRECEDING TO THE YEAR UNDER CONSIDERATION, THEREFORE, THE ASSESSING OFFIC ER OBSERVED THAT THE ASSESSEE WAS NOT ELIGIBLE FOR CLAIMING EXEMPTION U/ S. 10A OF THE ACT IN THE DISPUTED YEAR. ACCORDINGLY, THE ASSESSING OFFICER M ADE ADDITION TO THE EXTENT OF EXEMPTION CLAIMED BY THE ASSESSEE AND NO FURTHER APPEAL WAS FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER. ON BEING ASK ED, THE ASSESSEE FILED REVISED COMPUTATION OF INCOME AND DEPOSITED THE TAX ON THE CLAIM WRONGLY MADE BY THE ASSESSEE. THE ASSESSING OFFICER, BASED ON THE ABOVE ADDITION, IMPOSED PENALTY U/S. 271(1)(C) OF THE ACT FOR FILIN G INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF TAX SOUGHT TO BE EVADED AMO UNTING TO RS.2,04,02,170/- ITA NO. 6313/DEL/2014 4 AND IN SUPPORT RELIED ON VARIOUS CASE LAWS. THE ASS ESSEE CARRIED THE MATTER OF PENALTY IN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE UPHELD THE ACTION OF THE ASSESSING OFFICER VIDE IMPUGNED ORDER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. AR OF THE ASSESSEE, REITERATING ITS SUBM ISSIONS MADE BEFORE THE LD. CIT(A), SUBMITTED THAT THE LD. CIT(A) WHILE AFF IRMING THE PENALTY IMPOSED, DID NOT GIVE PROPER AND ADEQUATE OPPORTUNITY OF BEI NG HEARD AND ASSESSEES SUBMISSIONS WERE NOT PAID ANY HEED IN THE APPELLATE PROCEEDINGS BY THE LD. CIT(A) DUE TO HIS BUSY STATE OF AFFAIRS IN ELECTION DUTY ETC. AND THE ASSESSEE WAS NOT GIVEN TIME TO PLEAD ITS CASE PROPERLY. THE LD. AR HAS ALSO FILED A SMALL WRITTEN SYNOPSIS AND A PAPER BOOK CONTAINING 76 PAG ES BEFORE US WHICH ARE PLACED ON RECORD. IT WAS ALSO SUBMITTED THAT THE LD . CIT(A) WAS NOT JUSTIFIED IN NOT ADMITTING THE AFFIDAVIT OF ASSESSEES AR SHRI R AVINDER GOEL, CHARTERED ACCOUNTANT, WHO DEPOSED TO HAVE GIVEN WRONG ADVICE TO THE ASSESSEE TO CLAIM THE IMPUGNED DEDUCTION DURING THE YEAR UNDER CONSID ERATION. 7. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT HAD THE CASE OF ASSESSEE N OT BEEN TAKEN FOR SCRUTINY, THE ASSESSEE WOULD HAVE ESCAPED FROM PAYMENT OF TAX AS WELL AS PENALTY. THE CLAIM OF THE ASSESSEE WAS NOT BONA FIDE. HIS CLAIM OF EXEMPTION DURING THE YEAR UNDER CONSIDERATION WAS AVAILABLE TO HIM U/S. 10A AND WAS BEYOND THE PROVISIONS OF LAW, AS THE ASSESSEE HAD ALREADY EXHA USTED THE LIMITATION OF SUCH EXEMPTION UPTO THE PRECEDING ASSESSMENT YEAR. THE C HARTERED ACCOUNTANT HAD ALSO CERTIFIED FORM NO. 56F IN WHICH HE HAS CLE ARLY MENTIONED THAT IT IS 11 TH YEAR OF EXEMPTION AND THUS, IN VIEW OF THIS NOTING OF CA, THE AFFIDAVIT GIVEN BY THE CHARTERED ACCOUNTANT NEEDED VERIFICATI ON, AS IT WAS AFTERTHOUGHT. ITA NO. 6313/DEL/2014 5 IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD SUFFICI ENT TIME TO REVISE ITS RETURN, BUT HE FILED ONLY THE REVISED COMPUTATION THAT TOO WHEN THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. THE LD. C IT(A) HAS GIVEN AMPLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE CASE LAWS RELIED BY THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRE SENT CASE. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD AND WE FIND THA T VIDE GROUND N0. 2, THE ASSESSEE HAS CONTENDED THAT PROPER OPPORTUNITY OF H EARING WAS NOT GIVEN TO THE ASSESSEE TO PUT UP ITS CASE BEFORE THE LD. CIT( A). THE VERSION OF THE ASSESSEE IS DISCERNIBLE FROM THE LETTER DATED 27.08 .2014, THE RELEVANT CONTENTS OF WHICH READ AS UNDER : 2. A NOTICE DATED 30.06.2014 WAS ISSUED BY YOUR OFF ICE ON 07.07.2014 FIXING THE CASE FOR HEARING ON 24.07.2014. 3. AN ADJOURNMENT WAS SOUGHT ON 24.07.2014 WHICH YO UR OFFICE WAS PLEASED TO GRANT FIXING THE NEXT DATE OF HEARING ON 26.08.2014. 4. ON THE DATE OF HEARING I.E. 26.08.2014 THE UNDE RSIGNED APPEARED IN YOUR OFFICE AT ABOUT 12 NOON AND WAS INFORMED BY TH E STAFF THAT YOU WILL BE COMING LATE TO THE OFFICE AND WAS THEREFORE ADVISED EITHER TO SEEK AN ADJOURNMENT OR COME AGAIN AFTER 2.30 PM. THE UNDERSIGNED WAS ALSO INFORMED BY THE STAFF THAT IN OTHER MATTER S FIXED FOR THE DAY, ADJOURNMENTS HAD BEEN TAKEN. IT WAS FURTHER IN FORMED THAT YOU SHALL BE ON ELECTION DUTY FROM 30TH AUGUST ONWARDS AND THEREFORE IF AN ADJOURNMENT IS SOUGHT THE NEXT DATE OF HEARING W OULD BE FIXED SOMEWHERE IN THE 3RD WEEK OF SEP., 2014. SINCE THE UNDERSIGNED WAS INTERESTED IN EARLY DISPOSAL OF THE CAPTIONED APPEA L, NO ADJOURNMENT WAS SOUGHT. 5. ON THE SAME DATE I.E. 26.08.2014 THE UNDERSIGNED APPEARED IN YOUR OFFICE FOR A PERSONAL HEARING AT ABOUT 5 PM. THE MAT TER WAS HEARD BY YOU FOR ABOUT 10-15 MINUTES. WRITTEN SUBMISSIONS AND POWER OF ITA NO. 6313/DEL/2014 6 ATTORNEY WERE FILED. IT WAS, THEREAFTER, SAID BY YO U THAT SINCE YOU ARE BUSY IN FINALIZING SOME URGENT REPORT THE UNDERSIGN ED MAY COME TO YOUR OFFICE AGAIN ON THE NEXT DAY I.E. 27.08.2014 F OR PERSONAL HEARING. HOWEVER, AS FAR AS THE ORDER SHEET ENTRY I S CONCERNED IT WAS RECORDED AS 'CASE DISCUSSED'. 6. THE UNDERSIGNED APPEARED IN YOUR OFFICE ON 27.08 .2014 AT ABOUT 12.45 PM. THERE WERE TWO MORE APPELLANTS WAITING FOR THEIR TURN AT THAT POINT OF TIME, SINCE PRESUMABLY YOU WERE-GIVIN G DICTATION. THEREAFTER, YOU TOOK A LUNCH BREAK AND THE UNDERSIGN ED'S TURN FOR HEARING FINALLY CAME AT ABOUT 3.15 PM. SINCE THE HE ARING HAD BEEN SHIFTED BY ONE DAY (FROM 26TH 27TH AUGUST, 2014), T HE UNDERSIGNED WANTED TO PLACE ON RECORD THE FOLLOWING A) COPY OF FORM NO. 56F DATED 27.09.2011 WHEREIN I T HAS BEEN CLEARLY STATED THAT IT IS THE 11TH CONSECUTIVE YEAR FOR WHI CH DEDUCTION U/S 10A IS BEING CLAIMED; B) AFFIDAVIT OF SH. RAVINDER GOEL, CA DULY NOTARIZ ED STATING THAT THE DEDUCTION HAD BEEN CLAIMED MISTAKENLY. C) CERTAIN CITATIONS IN SUPPORT OF THE APPEAL. 7. IN THE HEARING HELD ON 27.08.2014 YOU ONLY ACCE PTED THE COPY OF FORM NO. 56F AND REFUSED TO TAKE ON RECORD THE AFFI DAVIT OF SH. RAVINDER GOEL, CA STATING THAT SINCE IT WAS NOT FIL ED BEFORE THE A.O., YOU SHALL NOT ACCEPT THE SAME. AT THIS, THE UNDERSI GNED TRIED TO EXPLAIN THAT EVEN IN THE CASE OF PRICE WATER HOUSE COOPERS PVT. LTD. VS. CIT 348 ITR 306 (SC) THE SUPREME COURT HAD TAKEN COGNIZANCE OF AN AFFIDAVIT WHICH WAS FILED FOR THE FIRST TIME BEFORE THEM AND WAS NOT AVAILABLE WITH ANY OF THE LOWER AUTHORITIES. THE UNDERSIGNED ALSO REQUESTED THAT THE AFFIDAVIT MAY BE TAKEN ON R ECORD AND THE OFFICE OF CIT (APPEALS) MAY CHOOSE TO DEAL WITH IT I N ANY MANNER AS IT MAY DEEM FIT, EITHER BY NOT ADMITTING THE SAME O R REJECTING THE CONTENTS THEREOF, BUT IN ANY CASE THE RIGHT GIVEN T O THE APPELLANT UNDER THE ACT CANNOT BE DENIED BY REFUSING TO TAKE ANY MATERIAL BEING FILED IN SUPPORT OF THE APPEAL. 8. SINCE THE APPELLANT IS LEFT WITH NO OTHER OPTIO N THE ABOVE REFERRED COVERING LETTER ALONG WITH AFFIDAVIT IS BEING FURNI SHED BY WAY OF THE ITA NO. 6313/DEL/2014 7 PRESENT COVERING LETTER WHICH IS BEING SENT THROUGH SPEED POST/AD. YOUR OFFICE MAY CHOOSE TO DEAL WITH THE SAME IN ANY MANNER AS IT MAY DEEM FIT. 7. IT MAY ALSO BE BROUGHT ON RECORD THAT WHEN THE UNDERSIGNED ATTEMPTED TO MAKE AN ARGUMENT AND DRAW YOUR ATTENTI ON TO THE PROPOSITION OF LAW LAID DOWN IN CERTAIN CITATIONS E NCLOSED ALONGWITH THE WRITTEN SUBMISSIONS, YOU CATEGORICALLY DENIED T HE OPPORTUNITY BY STATING THAT IT IS NOT REQUIRED. SUCH APPROACH D EFEATS THE VERY PURPOSE OF PERSONAL HEARING WHICH IS THE RIGHT OF E VERY TAX-PAYER NOT ONLY UNDER THE INCOME TAX ACT BUT IS ALSO THE BA SIC PRINCIPLE OF JURISPRUDENCE KNOWN AS 'NATURAL JUSTICE'. 8. DUE TO PAUCITY OF TIME AND URGENCY OF MATTER TH E PRESENT LETTER IS BEING ADDRESSED TO YOUR OFFICE WITH A REQUEST TO TA KE ON RECORD THE AFFIDAVIT OF SH. RAVINDER GOEL, CA. HOWEVER, THE CO NTENTS OF THE PRESENT LETTER WILL ALSO BE BROUGHT ON RECORD BY WA Y OF SWORN AFFIDAVIT OF THE UNDERSIGNED, SUBSEQUENTLY. 9. THE CONTENTS OF AFORESAID LETTER ARE ALSO SUPPOR TED BY THE AFFIDAVIT OF SH. HIREND MEHTA, CHARTERED ACCOUNTANT OF THE ASSESSEE. THIS LETTER OF THE ASSESSEE FURTHER SPEAKS A LOT AS TO WHY THE ASSESSE E SENT THIS REPLY ALONGWITH RELEVANT EVIDENCES THROUGH SPEED POST. THE LD. DR A LSO COULD NOT PROPERLY OBJECT TO THE ALLEGATIONS OF THE ASSESSEE MADE IN T HIS LETTER. THE LD. CIT(A) APPEARS TO HAVE TERMED THE AFFIDAVIT OF CA AS SELF SERVING EVIDENCE, AS IT WAS NOT FILED BEFORE THE ASSESSING OFFICER. HOWEVER, TH E FACT OF WRONG INTERPRETATION OF AMENDMENT RELATING TO SECTION 10A UNDER THE WRONG ADVICE BY THE CHARTERED ACCOUNTANT STOOD RAISED BEFORE THE ASSESSING OFFICER IN THE PENALTY PROCEEDINGS. HOWEVER, WITHOUT GOING DEEP IN TO THIS CONTROVERSY, WE THINK IT APPROPRIATE IN THE INTEREST OF NATURAL JUS TICE THAT THE ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY OF BEING HEARD AND TH E MATTER SHOULD GO BACK TO THE FILE OF LD. CIT(A) TO DECIDE THE APPEAL AFRE SH AFTER GIVING REASONABLE AND PROPER OPPORTUNITY HEARING AND DUE CONSIDERATION AN D VERIFICATION OF ALL THE ITA NO. 6313/DEL/2014 8 CONTENTIONS AND SUPPORTING EVIDENCES THERETO. THE ASSESSEE IS DIRECTED TO PUT UP ITS CASE WITH SUPPORTING EVIDENCE BEFORE THE LD. CIT(A). WE ORDER ACCORDINGLY. IN VIEW OF OUR THIS FINDING, WE NEED N OT TO ENTER INTO OTHER CONTENTIONS ON MERITS OF THE CASE. 10. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01.04.2019. SD/- SD/- (AMIT SHUKLA) (L.P. S AHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01.04.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI