HIMAR SPECIALITY CHEMICALS PVT. LTD., MUMBAI V. ITO 10 (1)(1), MUMBAI

ITA 6372/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7347 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 05-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHANLAL
• Assessee Lawyers: SHAILESH N DOSHI
• Keywords: Charitable institution; Principle of natural justice; Reassessment proceedings
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H , MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI N.K.PRADHAN, ACCOUNTANT MEMBER ITA NO.6372/MUM/2018(A.Y. 2012-13) HIMAR SPECIALITY CHEMICALS PVT. LTD., SHOP NO.S/15, HAZARI BAUG CHS, LBS MARG, STATION ROAD, VIKHROLI(WEST) MUMBAI 400 083 PAN:AAACH8277M ...... APPELLANT VS. ITO-10(1)(1), MUMBAI ..... RESPONDENT APPELLANT BY : SHRI SHAILESH N. DOSHI RESPONDENT BY : SHRI MOHANLAL DATE OF HEARING : 09/10/2019 DATE OF PRONOUNCEMENT : 17/10/2019 ORDER PER VIKAS AWASTHY, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A) - 17, MUMBAI DATED 13/08/2018 FOR THE ASSESSMENT YEA R 2012-13. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM D OCUMENTS ON RECORD ARE; THE ASSESSEE COMPANY IS ENGAGED IN TRADING A ND MARKETING OF PHARMACEUTICAL PRODUCTS. DURING THE ASSESSMENT YEA R UNDER APPEAL, THE ASSESSEE MADE DONATIONS TO THE TUNE OF RS.4,50,000/ - TO NAVJEEVAN CHARITABLE TRUST AND CLAIMED THE SAME AS DEDUCTION UNDER SECTION 35AC OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). A SE ARCH ACTION UNDER 2 ITA NO.6372/MUM/2018(A.Y. 2012-13) SECTION 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF NAVJEEVAN CHARITABLE TRUST ON 27/10/2014, CONSEQUENTLY, ASSESSMENT OF T HE ASSESSEE FOR ASSESSMENT YEAR 2012-13 WAS REOPENED. IN REASSESS MENT PROCEEDINGS THE ASSESSING OFFICER HELD THAT THE DONATIONS MADE TO NAVJEEVAN CHARITABLE TRUST ARE NOT GENUINE AND HENCE, DISAL LOWED THE DONATIONS TO THE TUNE OF RS.3,00,000/-. AGAINST THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DATED 27/12/20 16, THE ASSESSEE FILED APPEAL BEFORE CIT(A). 3. THE CIT(A) ISSUED NOTICE FOR ENHANCEMENT AND THE REAFTER DISALLOWED ASSESSEES ENTIRE CLAIM OF RS.4,50,000/ - UNDER SECTION 35AC OF THE ACT. HENCE, THE PRESENT APPEAL BY THE ASSESSEE. 4. SHRI SHAILESH N. DOSHI APPEARING ON BEHALF OF TH E ASSESSEE SUBMITTED THAT THE CIT(A) HAS PASSED THE IMPUGNED O RDER IN A MECHANICAL MANNER WITHOUT APPRECIATING THE FACTS ON RECORD AND WITHOUT AFFORDING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. THE LD.AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT NOTI CE OF ENHANCEMENT WAS GIVEN TO THE ASSESSEE ON 10/08/2018 WITH A DIRE CTIONS TO FURNISH EXPLANATION WITHIN SEVEN DAYS FROM THE DATE OF RECE IPT OF THE SAID NOTICE. THE IMPUGNED ORDER WAS PASSED BY THE CIT(A) WITHIN A PERIOD OF THREE DAYS FROM THE DATE OF NOTICE I.E. ON 13/08/2018, WI THOUT WAITING FOR THE ASSESSEES EXPLANATION. THE IMPUGNED ORDER HAS BEE N PASSED WITHOUT CONSIDERING THE FACT THAT THE STATEMENT OF SHRI SUB HASH RAJARAM KADAM, WHICH WAS RECORDED ON 10/11/2014 WAS RETRACTED SUB SEQUENTLY. IN CROSS-EXAMINATION, THE SAID SHRI SUBHASH RAJARAM KA DAM ADMITTED THAT HE WAS NOT AWARE OF THE FACT THAT HE WAS ONE OF TRU STEES OF NAVJEEVAN 3 ITA NO.6372/MUM/2018(A.Y. 2012-13) CHARITABLE TRUST. HE FURTHER ADMITTED THAT HE WAS NOT AWARE OF THE DONATIONS RECEIVED BY THE TRUST AND WAS NOT IN POSS ESSION OF THE LEDGER ACCOUNTS OR BOOKS OF THE TRUST. UNDER THESE CIRCUM STANCES, THE ASSUMPTION OF THE LOWER AUTHORITIES THAT THE AMOUNT PAID BY THE ASSESSEE AS DONATION WAS RECEIVED BACK IN CASH IS UNSUSTAINA BLE. 5. ON THE OTHER HAND, SHRI MOHAN LAL REPRESENTING T HE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED F OR DISMISSING THE APPEAL OF ASSESSEE. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IN APPEAL HAS ASSAILED THE FINDINGS OF THE CIT(A) IN D ISALLOWING THE ASSESSEES CLAIM OF DONATION OF RS.4,50,000/- UNDER SECTION 35 AC OF THE ACT. THE MAIN CONTENTION OF THE ASSESSEE IS THAT THE IMPUGNE D ORDER HAS BEEN PASSED WITHOUT APPRECIATING THE FACTS AND DOCUMENTS ON RECORD AND WITHOUT AFFORDING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. A PERUSAL OF THE ASSESSMENT ORDER REVEAL THAT TH E DONATIONS MADE BY THE ASSESSEE TO NAVJEEVAN CHARITABLE TRUST HAS B EEN DISALLOWED IN REASSESSMENT PROCEEDINGS PRIMARILY ON THE BASIS OF THE STATEMENT OF ONE SUBHASH RAJARAM KADAM, ONE OF THE TRUSTEES OF THE A FORESAID TRUST. THOUGH THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.4,5 0,000/- UNDER SECTION 35AC OF THE ACT ON ACCOUNT OF DONATIONS MAD E TO THE TRUST, THE ASSESSING OFFICER HAD DISALLOWED RS.3,00,000/- ONLY . DURING THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) ENHANCED THE DISA LLOWANCE TO RS.4,50,000/-. NOTICE OF ENHANCEMENT WAS GIVEN TO THE ASSESSEE ON 10/08/2018 BY CIT(A) SEEKING EXPLANATION WITHIN A P ERIOD OF 7 DAYS FROM 4 ITA NO.6372/MUM/2018(A.Y. 2012-13) THE DATE OF RECEIPT OF THE SAID NOTICE. HOWEVER, T HE IMPUGNED ORDER WAS PASSED WITHIN THREE DAYS I.E. ON 13/08/2018. A PER USAL OF THE IMPUGNED ORDER REVEAL THAT THE ORDER HAS BEEN PASSED IN VIOL ATION OF THE PRINCIPLES OF NATURAL JUSTICE, WITHOUT AFFORDING PROPER OPPORT UNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. IN THE FACTS OF THE CASE, WE DEEM IT PROPER TO RESTORE THIS APPEAL BACK TO THE FILE OF C IT(A) WITH A DIRECTION TO PASS FRESH ORDER ON MERITS AFTER CONSIDERING THE DO CUMENTS AND STATEMENT ON RECORD AND AFTER AFFORDING REASONABL E OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. 8. IN THE RESULT, IMPUGNED ORDER IS SET-ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 17TH DAY OF OCTOBER, 2019. SD/- SD/- (N.K.PRADHAN) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 17/10/2019 VM , SR. PS(O/S) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI