M/s Sree Shabareesh Agencies, Shimoga V. Addl CIT, Shimoga

ITA 639/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0619 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-09-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 19-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Set aside
• Section: 143(3); 142(1); 40(a)(ia); 143(1); 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.639/BANG/2009 ASSESSMENT YEAR : 2006-07 M/S. SREE SHABAREESH AGENCIES, BALRAJ URS ROAD, SHIMOGA. : APPELLANT VS. THE ADDL. COMMISSIONER OF INCOME-TAX, SHIMOGA RANGE, SHIMOGA. : RESPONDENT APPELLANT BY : SHRI S. PARTHASARATHI RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(APPEALS), HUBLI NO.IT-212/CIT(A)HBL/08-09 DATED 25.03.2009. 2. THE ASSESSEE IS A C&F AGENT FOR ACC AND ALSO A T RANSPORT CONTRACTOR. THE ASSESSEE FILED ITS RETURN OF INCOM E ON 31.10.06 DECLARING TOTAL INCOME OF RS.35,57,350. RETURN OF INCOME WAS INITIALLY PROCESSED U/S. 143(1) ON 27.12.06. HOWEVER, THE CASE WAS SELECTED FOR SCRUTINY AS IT WAS FOUND THAT THE ASSESSEE HAD OBTAINED LOAN ABOVE RS. 10 LAKHS DURING THE PREVIOUS YEAR. SUBSEQUENTLY NOTICE U/S. 143(2) AND 142(1) WERE ISSUED ON ITA NO.639/B/09 PAGE 2 OF 6 02.08.07. NOTICE UNDER SECTION 143(2) WAS ONCE AGA IN ISSUED ON 31.12.2007. FINALLY THE ASSESSMENT WAS COMPLETED U /S. 143(3) ON 24.12.2008. AGGRIEVED BY THIS ORDER, THE ASSESSEE CAME ON APPEAL BEFORE THE CIT(APPEALS) ON 29.1.2009. LD. CIT(APPEALS) D ECIDED AGAINST THE ASSESSEE BY DISMISSING THE APPEAL GIVING ARISE TO T HIS APPEAL BEFORE US. 3. THE ASSESSEE HAS RAISED SEVERAL GROUNDS BEFORE U S WHICH ARE REPRODUCED HEREBELOW: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE EX-PARTE ORDER PASSED BY THE CIT(APPEALS) IS OPPOSED TO LAW AND LIABLE TO BE SET ASIDE. 2. ON THE FACTS, THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAD FILED ADJOURNMEN T LETTER DATED 16.03.2009 REQUESTING FOR AN ADJOURNMENT OF THE CAS E FROM 18.03.2009 TO ANY OTHER DATE AFTER 2 ND WEEK OF APRIL, 2009 SINCE THE PARTNER REPRESENTING THE APPELLANT FIRM WAS SUF FERING FROM ORTHOPEDIC PROBLEM, THE DOCTOR HAD ADVISED HIM NOT TO TRAVEL FOR HOURS AND CLAIM THE STAIRCASE. THE LEARNED CIT(APP EALS) WITHOUT CONSIDERING THE SAME, POSTED THE MATTER ON 25.03.20 09 AND DISPOSED OF THE APPEAL EX-PARTE THEREBY DENYING THE APPELLANT SUFFICIENT OPPORTUNITY. 3. HAD THERE BEEN AN OPPORTUNITY, THE APPELLANT WOU LD HAVE BEEN ABLE TO PROVE WITH SUFFICIENT EVIDENCE TO AVER T THE IMPUGNED ADDITION AS MADE BY THE ASSESSING OFFICER AND ACCOR DINGLY IN THE INTEREST OF JUSTICE, THE LEARNED CIT(APPEALS) OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE APPELLANT AND ADMITTED THE EV IDENCE TO DETERMINE THE INCOME CORRECTLY. 4. THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIAT ED THAT THE CASE OF THE APPELLANT IS NOT COVERED BY THE PRO VISIONS OF SECTION 194C(2) OF THE ACT AS THERE WAS NO OBLIGATI ON TO DEDUCT TAX AT SOURCE AND HENCE OUGHT NOT TO HAVE DISALLOWE D THE PAYMENT OF FREIGHT CHARGES UNDER SECTION 40(A)(IA) OF THE A CT. 5. THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIAT ED THAT THE APPELLANT HAD SUFFICIENT NON-INTEREST BEARING F UNDS AND NO PORTION OF BORROWED FUNDS HAVE BEEN DIVERTED FOR NO N-BUSINESS PURPOSES AND ACCORDINGLY OUGHT TO HAVE DELETED THE IMPUGNED ADDITION IN FULL. ITA NO.639/B/09 PAGE 3 OF 6 6. THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIAT ED THAT THE GENUINENESS OF THE LOAN WAS NOT QUESTIONED DURI NG THE RELEVANT YEAR AND THE ENTIRE TRANSACTION WAS ONLY T HROUGH BANKING CHANNEL AND OUGHT TO HAVE REFRAINED FROM MAKING THE ADDITION OF RS.75,000/- AS UNEXPLAINED CASH CREDIT UNDER SECTIO N 68 OF THE ACT WITHOUT AFFORDING OPPORTUNITY TO THE APPELLANT TO EXPLAIN THE SAME. 7. WITHOUT PREJUDICE, THE DISALLOWANCES ARE ARBITRA RY, EXCESSIVE AND OUGHT TO BE REDUCED SUBSTANTIALLY. 8. THE LEARNED CIT(APPEALS) OUGHT TO HAVE DELETED T HE INTEREST CHARGES UNDER SECTION 234B, 234C AND 234D OF THE ACT. 4. AT THE OUTSET, THE LD. AR RAISED GROUND NO.2 AND 3 OF THE APPEAL. LD. AR STRONGLY OBJECTED TO THE MANNER IN WHICH THE LD. CIT(APPEALS) CONDUCTED THE PROCEEDINGS. HE CONTENDED THAT ONE O F THE PARTNERS IN THE FIRM WHO WAS LOOKING AFTER THE ACCOUNTS AND TAXATIO N ASPECT OF THE FIRM HAD FILED A LETTER REQUESTING FOR AN ADJOURNMENT OF HEA RING ON 6.3.09 AS HE COULD NOT BE PRESENT ON THE DATE OF THE HEARING ON MEDICA L GROUNDS. HOWEVER, WITHOUT ADHERING TO THE REQUEST OF THE APPELLANT BY WAY OF PROVIDING REASONABLE TIME FOR HEARING, LD. CIT(APPEALS) CONCL UDED THE PROCEEDINGS AND PASSED THE IMPUGNED ORDER EX PARTE IN A HURRIED MANNER ON 25.3.2009. LD. AR VEHEMENTLY URGED BEFORE US THAT HAD THE ASSE SSEE BEEN PROVIDED WITH A REASONABLE OPPORTUNITY OF BEING HEARD, HE WO ULD HAVE BEEN IN A POSITION TO BRING OUT ALL RELEVANT FACTS AND MATERI ALS BEFORE THE CIT(APPEALS) WHICH ARE VITAL FOR DECIDING THE CASE IN FAVOUR OF THE ASSESSEE. 5. LD. DR STRONGLY OBJECTED TO THE ARGUMENTS OF LD. AR AND CONTENDED THAT THE ASSESSEE WAS GIVEN SUFFICIENT NUMBER OF OP PORTUNITIES ON THREE DIFFERENT OCCASIONS. HOWEVER, THE ASSESSEE DID NOT CO-OPERATE BUT ON EACH ITA NO.639/B/09 PAGE 4 OF 6 OCCASION FILED ADJOURNMENT LETTER. FINALLY, ON THE THIRD OPPORTUNITY PROVIDED BY THE LD.CIT(A), THE ASSESSEE NEITHER APPEARED NOR SUBMITTED ANY LETTER FOR ADJOURNMENT. IN SUCH SITUATION CIT(APPEALS) HA D NO OTHER OPTION BUT TO CONCLUDE THE HEARING AND PASS ORDERS EX PARTE RELYI NG ON THE RECORDS AND MATERIALS FURNISHED BEFORE HIM. FURTHER LD. DR PLE ADED THAT THE ISSUES INVOLVED WERE CONSIDERED BY THE CIT(APPEALS) IN A J UDICIOUS MANNER KEEPING INTO ACCOUNT OF ALL THE FACTS AND THE RELE VANT PROVISIONS OF LAW WITHOUT BIAS AND THEREFORE THE ORDER DESERVES TO BE CONFIRMED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS APPAR ENT FROM THE ORDER OF THE LD. CIT(A) THAT THE DATE OF THE INSTITUTION OF THE APPEAL BEFORE THE LD. CIT(A) WAS ON 29/01/2009. THE DATE OF THE ORDER OF LD, CIT(A) IS 25/03/2009. THUS IT IS CLEAR THAT THE LD. CIT(A) HA S CONCLUDED THE HEARING AND PASSED THE ORDER WITHIN A PERIOD OF THREE MONTH S FROM THE DATE OF THE INSTITUTION OF THE APPEAL. HOWEVER, ON VERIFYING THE DATE OF NOTICE AND DATE OF HEARING IT IS OBSERVED THAT THE ENTIRE PROCEEDIN GS BEFORE THE LD. CIT(APPEALS) LASTED ONLY FOR A PERIOD OF ONE MONTH. BY THE NOTICE DATED 23.02.09 HEARING WAS FIXED ON 11.03.09. HOWEVER, AT THE REQUEST OF THE ASSESSEE THE HEARING WAS ADJOURNED, AND ON THE SAME DAY ANOTHER NOTICE WAS ISSUED INTIMATING THE NEXT DATE OF HEARING TO B E ON 18.03.09. ONCE AGAIN THE ASSESSEE REQUESTED FOR ADJOURNMENT. IMME DIATELY THEREAFTER ON THE VERY SAME DAY ANOTHER NOTICE WAS ISSUED PROVIDI NG THE ASSESSEE A WEEKS TIME. THE ASSESSEE FAILED TO REPRESENT ON THE GIVEN DATE I.E., ON 25.03.09. THE LD. CIT(APPEALS) THEREAFTER PASSED AN ORDER EX PARTE ON 25.3.2009 WITHOUT FURTHER GIVING AN OPPORTUNITY TO THE ASSESSEE IN SPITE OF THE ASSESSEES REPRESENTATION CITING THE MEDICAL RE LATED PROBLEMS OF THE ITA NO.639/B/09 PAGE 5 OF 6 CONCERNED PARTNER IN THE ASSESSEE FIRM. THESE KIND OF STRINGENT PURSUIT BY THE LD. CIT(A) INDICATES THAT THE PROCEEDINGS HAVE BEEN CONDUCTED IN AN UNJUST MANNER. 7. IN VIEW OF THESE FACTS WE FIND THAT THERE IS A G RAVE VIOLATION ON THE PART OF LD. CIT(A) ON COMPLIANCE WITH THE PRINCIPLE S OF NATURAL JUSTICE. ADHERENCES OF THE PRINCIPLES OF NATURAL JUSTICE ARE THE BASIC ESSENTIAL FACTOR IN ANY QUASI-JUDICIAL PROCEEDINGS AND HAVE TO BE ST RICTLY COMPLIED WITH. IN THIS GIVEN CASE IT APPEARS THAT THE LD. CIT(A) HAS CONDUCTED HIMSELF IN A HURRIED MANNER AS ALLEGED BY THE ASSESSEE AS IT COU LD BE SEEN FROM THE RECORDS THAT THE WHOLE PROCEEDINGS HAS BEEN CONCLUD ED WITH IN A SHORT PERIOD BEING LESS THAN A MONTH AND FURTHER WITH OUT TAKING INTO ACCOUNT OF THE HARDSHIPS FACED BY THE ASSESSEE. THEREFORE IN T HE INTEREST OF JUSTICE WE FIND IT APPROPRIATE TO REMIT THE MATTER BACK TO THE FILE OF LD. CIT(A) WITH DIRECTIONS TO CONSIDER THE MATTER AFRESH AFTER PROV IDING REASONABLE OPPORTUNITY OF BEING HEARD. IT IS ORDERED ACCORDING LY. WE ALSO DIRECT THE ASSESSEE TO COOPERATE WITH THE REVENUE IN THE PROCE EDINGS PROMPTLY AND WITHOUT LAXITY. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF OCTOBER, 2009. SD/- SD/- ( GEORGE GEORGE K.) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 9 TH OCTOBER, 2009. DS/- ITA NO.639/B/09 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.