NAGREEKA FABRICS P. LTD, MUMBAI V. ITO 5(2)(4), MUMBAI

ITA 6409/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6402 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 20-12-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 11-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: VIJAY B MEHTA
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KU MAR,(AM) ITA NO.6409/MUM/2009 ASSESSMENT YEAR : 2005-06 M/S. NAGREEKA FABRICS PVT. LTD. 7, KALA BHAVAN 3, MATHEW ROAD MUMBAI-4. ..( APPELLANT ) P.A. NO. (AAACN 2323 G) VS. INCOME TAX OFFICER WARD -5(2)(4) 5 TH FLOOR ROOM NO.525 AAYAKAR BHAVAN, M.K. ROAD MUMBAI-20. ..( RESPONDENT ) APPELLANT BY : SHR I VIJAY B. MEHTA RESPONDENT BY : SHRI SURENDRA KUMAR O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 6.11.2009 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED RETURN DECLARING TOTAL INCOME OF RS.14,91,618/-. IT HAS BEEN OBSERVED BY THE ASSESSING OFFICER THAT DURING THE YEAR T HE ASSESSEE IS NOT HAVING ANY BUSINESS ACTIVITY. IN THE COMPUTATION OF INCOME THE ASSESSEE HAS SHOWN DIVIDEND INCOME, CAPITAL GAIN ON SALE OF FIXED ASSETS AND UNITS. THE BOOK PROFIT HAS BEEN SHOWN AT RS.5 2,15,949/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED B Y THE ITA NO.6409/M/09 A.Y:05-06 2 ASSESSING OFFICER THAT THE ASSESSEE HAS SHOWN LAND AND FACTORY BUILDING UNDER THE HEAD FIXED ASSETS WHICH HAVE BEEN SO LD DURING THE YEAR. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE GAI N ARISING FROM THE SALE SHOULD NOT BE ASSESSED U/S.50 OF THE I.T. ACT , 1961(THE ACT). IT WAS EXPLAINED BY THE ASSESSEE THAT THE LAND IS NOT PART OF THE BLOCK ASSET ON WHICH NO DEPRECIATION HAS BEEN CLAIMED, THE REFORE, PROVISIONS OF SEC.50 ON THE SALE OF LAND IS NOT APPLICABLE . IT WAS FURTHER SUBMITTED THAT CAPITAL GAIN ON SALE OF BUILDIN G HAS BEEN TAXED AT NORMAL RATES IN CONSISTENCY WITH THE PROVISIONS OF SEC.50 OF THE ACT. HOWEVER, THE ASSESSING OFFICER AFTER VERIFICATION WORKED OUT THE SHORT TERM CAPITAL GAIN ON SALE OF BUILDING AT RS.12,12,225/ -AND SHORT TERM CAPITAL GAIN ON UNITS RS.1,14,703/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AND ACCORDINGLY COMPLETED THE ASSESSMENT AT A N INCOME OF RS.25,76,260/- VIDE ORDER DATED 26.11.2007 PASSED U/S.143(3) OF THE ACT. WHILE MAKING THE ASSESSMENT THE A SSESSING OFFICER ALSO INITIATED PENALTY PROCEEDING U/S.271(1)(C) OF THE ACT. IN RESPONSE TO NOTICE TO SHOW CAUSE AS TO WHY PENALTY U/S.271 (1)(C) SHOULD NOT BE LEVIED, THERE WAS NO RESPONSE FROM THE AS SESSEE . IN THE ABSENCE THEREOF THE ASSESSING OFFICER IMPOSED PENALTY O F RS.3,87,228/- VIDE ORDER DATED 27.5.2008 PASSED U/S.271 (1)(C) OF THE ACT. ON APPEAL, BEFORE THE LD. CIT(A) THE CASE WAS FI XED FOR HEARING ON 5.11.2009 AT 12.45 P.M. AGAIN THERE WAS NO RESPONSE . THE LD. CIT(A) WITHOUT GIVING ANY FURTHER OPPORTUNITY WHILE UPHOLDING THE ACTION OF THE ASSESSING OFFICER FOR LEVYING PENALTY OF R S.3,87,228/-, UPHELD THE PENALTY IMPOSED BY THE ASSESSING OFFICER . 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE VA LIDITY OF THE ORDER PASSED BY THE LD. CIT(A) IN SUSTAINING THE PENALTY OF RS.3,87,228/- ITA NO.6409/M/09 A.Y:05-06 3 IMPOSED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE ACT I N LAW AND AS WELL AS ON FACTS. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT SINCE NO PROPER AND DUE OPPORTUNITY WAS PROVIDED TO THE ASSESSEE, THEREFORE, IN THE INTEREST OF JUSTICE THE MATTER MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER OR LD. CIT(A) . 5. ON THE OTHER HAND THE LD. DR WHILE RELYING ON TH E ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A) FURTHER SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUE IS SET ASIDE TO THE FILE OF THE LD . CIT(A) . 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL P ARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND THA T THERE IS NO DISPUTE THAT THE LD. CIT(A) HAS PROVIDED ONLY ONE OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE ABSENCE OF ANY COMPLIANCE BY THE ASSESSEE HE PASSED EXPARTE ORDER UPHOLDING THE PENALTY IMPOSED BY THE ASSESSING OFFICER MAINLY ON THE GROUND THAT THE ASSESSE E HAS NOT DISPUTED THE ADDITION MADE BY THE ASSESSING OFFICER IN T HE QUANTUM PROCEEDING. IT IS SETTLED LAW THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS. IT MAY BE A GOOD GROUND FOR QUANTUM OF ADDITION/DISALLOWANCE BUT MAY NOT BE FOR I MPOSITION OF PENALTY AS PENALTY PROCEEDINGS AND QUANTUM PROCEEDINGS A RE ALTOGETHER DIFFERENT. CONSIDERING THE TOTALITY OF T HE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT IN THIS CA SE PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WAS NOT PROVI DED BY THE LD. CIT(A), THEREFORE, IN THE INTEREST OF JUSTICE WE ARE OF THE VIEW THAT ONE MORE OPPORTUNITY OF BEING HEARD BE PROVIDED BEFORE THE LD. CIT(A) AND ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY THE LD. CIT( A) AND SEND BACK THE MATTER TO HIS FILE WHO SHALL DECIDE THE SAME A FRESH AND ITA NO.6409/M/09 A.Y:05-06 4 ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE THER EFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE ASSESSEE'S APPEAL STANDS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.12.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.