I T O WD - 2(3), Aurangabad V. M/S SIVA ENTERPRISES, Aurangabad

ITA 664/PUN/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49811 (ITAT-PUNE)
• Duration Of Justice: 5 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 31-05-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C M NAIK
• Keywords: Principle of natural justice; Additional evidence; Condonation of delay
• Section: 143(3); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI D. KARUNAKARA RAO, AM. I.T.A. NO. 664/PN/2006 : A.Y. 2002-03 I.T.O. WARD 2(3) AURANGABAD .. APPELLANT VS. M/S. SHIVA ENTERPRISES PLOT NO. 18-P TOWN CENTRE CIDCO, AURANGABAD PAN AALES 2884 H .. RESPONDENT I.T.A. NO. 10/PN/2007 : A.Y. 2002-03 M/S. SHIVA ENTERPRISES PLOT NO. 18-P TOWN CENTRE CIDCO, AURANGABAD PAN AALES 2884 H APPELLANT VS. I.T.O. WARD 2(3) AURANGABAD RESPONDENT ASSESSEE BY: WRITTEN SUBMISSIONS DEPARTMENT BY: SHRI C.M. NAIK ORDER PER SHAILNDRA KUMAR YADAV, JM THESE CROSS APPEALS ARISE OUT OF THE ORDER OF THE CIT(A)-II AURANGABAD DATED 31-3-2008 FOR A.Y. 2002- 03. THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . ITA NO. 664 AND 10/PN/2006 SHIVA ENTERPRISES A.Y. 200203 2 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVE R, THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS WITH RES PECT TO BOTH THE APPEALS. ON BEHALF OF THE REVENUE, THE LEARNED DR SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. SO THE APPEALS ARE BEING DISPOSED OFF ON THE BASIS OF ARGUMENTS ADVANCED ON BEHALF OF THE REVENUE AS WELL AS WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE . 3. THE ASSESSEE IN ITS APPEAL HAS RAISED VARIOUS GROUNDS. THE ASSESSEE HAS ALSO FILED AN APPLICATIO N DATED 3-9-2010 FOR CONDONATION OF DELAY, INTER ALIA , STATING THAT THERE WERE INTERNAL DISPUTES AMONGST T HE PARTNERS AS THE TRANSACTION WAS DONE BY NOT TAKING INTO CONFIDENCE TO ALL PARTNERS OF THE FIRM, AS A RESULT , THE PRESENT ASSESSEE HAS STOPPED LOOKING AFTER AFFAIRS OF THE FIRM. THE ASSESSEE HAS ALSO FILED ANOTHER APPLICAT ION FOR CONDONATION OF DELAY DATED 27-12-2006 WHEREIN IT HA S BEEN STATED THAT THE ASSESSEE HAS TO RUSH TO NATIVE PLACE AND THEREFORE, THERE WAS SOME DELAY IN FILING THE A PPEAL. ASSESSEE HAS NOT SUBSTANTIATED THE SAME IN ANY MANN ER. THUS, THERE ARE TWO APPLICATIONS FOR CONDONATION OF DELAY. THE ASSESSEE HAS FURTHER SUBMITTED THAT SOME DISPUTES ARE GOING ON BEFORE THE CONCERNED CIVIL JU DGE, SENIOR DIVISION, AURANGABAD. THE APPLICATION FOR ITA NO. 664 AND 10/PN/2006 SHIVA ENTERPRISES A.Y. 200203 3 CONDONATION OF DELAY IN FILING THE APPEAL CAME TO B E FILED BY MANAGING PARTNER OF THE ASSESSEE. THE REASONS F OR CONDONATION OF DELAY IN BOTH THE ABOVE MENTIONED APPLICATIONS HAVE BEEN CLAIMED TO BE THE INTERNAL DISPUTES, CIVIL LITIGATIONS. HOWEVER, THE SAME HAV E NOT BEEN SUBSTANTIATED BY ANY CORROBORATIVE DOCUMENTARY EVIDENCE. IN ABSENCE OF THE SAME, IT CANNOT BE APPRECIATED IN ISOLATION. ACCORDINGLY, BOTH THE APPLICATIONS FOR CONDONATION OF DELAY ARE REJECTED. HAVING REJECTED THE APPLICATIONS FOR CONDONATION OF DELAY, WE HOLD THAT THE APPEAL FILED BY THE ASSESSE E IS NOT MAINTAINABLE. SO THE SAME IS DISMISSED ON ACCO UNT OF DELAY IN FILING THE APPEAL. SINCE WE ARE REJECT ING THE APPEAL ON A PRELIMINARY ISSUE, WE ARE REFRAINED TO COMMENT ON MERITS OF THE ISSUE AT HAND. THE ASSES SEE HAS ALSO SOUGHT TO RAISE AN ADDITIONAL GROUND. HOW EVER, THE APPEAL ITSELF IS HELD TO BE NOT MAINTAINABLE, T HE QUESTION OF CONSIDERING THE ADDITIONAL GROUND FOR ADMISSION DOES NOT ARISE AT ALL. THEREFORE, THE SAM E IS DISMISSED. 4. COMING TO THE APPEAL FILED BY THE REVENUE, THE RELEVANT FACTS ARE THAT DURING THE YEAR, THE ASSESS EE HAS EXECUTED CONTRACT WORK TO THE TUNE OF RS. 2,79,10,5 19/- ITA NO. 664 AND 10/PN/2006 SHIVA ENTERPRISES A.Y. 200203 4 OUT OF WHICH THE WORK CONTRACT TO THE EXTENT OF RS. 2,39,29,631/- WAS GIVEN TO SUB-CONTRACTORS. THE ASSESSEE HAS FILED ITS RETURN OF INCOME DISCLOSING AN INCOME OF RS. 1,50,798/- IN RESPECT OF ITS BUSINESS . THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY. ACCORDI NG TO THE LEARNED DR THE ASSESSEE HAS BEEN NON-CO-OPERATI VE IN THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFIC ER HAS CLAIMED TO HAVE GIVEN SEVEN OPPORTUNITIES TO TH E ASSESSEE. ACCORDING TO THE LEARNED DR, EVEN THERE A RE SOME INSTANCES THAT THE SUMMONS ISSUED WERE NOT ACCEPTED BY THE ASSESSEE. HOWEVER, THE ASSESSEE HA S FILED WRITTEN SUBMISSIONS ON 21-3-2005 BUT THE ASSE SSEE DID NOT PRODUCE ANY RECORD BEFORE THE ASSESSING OFF ICER. ACCORDING TO THE LEARNED DR EVEN THE AUTHORIZED REPRESENTATIVE HAS REFUSED TO SIGN THE ORDER SHEET. IN THE CIRCUMSTANCES, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) READ WITH SECTION 144 OF THE ACT ON 31-3-2005. IN THE ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 144, THE ASSESSING OFFICER MADE THE FOLLOWING ADDITIONS. 1) UNSECURED LOANS AND CASH CREDIT 45,000 2) DISALLOWANCE ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS 2,58,848 3) DISALLOWANCE OF INTEREST ON TDS 28,535 4) ACCRUED INTEREST ON FIXED DEPOSITS 43,407 5) DISALLOWANCE OUT OF EXPENDITURE CLAIMED 2,65,110 6) ON ACCOUNT OF ESTIMATED PROFIT ITA NO. 664 AND 10/PN/2006 SHIVA ENTERPRISES A.Y. 200203 5 ON SUBCONTRACT 9,57,185 7) ON ACCOUNT OF INTEREST ON PARTNERS CAPITAL 72,106 8) DISALLOWANCE OF INTEREST DUE TO DIVERSION OF INTEREST BEARING FUNDS FOR NON-BUSINESS PURPOSE 7,50,168 ----------- 24,20,359 ---------- 5. IN APPEAL, THE CIT(A) AFTER TAKING INTO CONSIDER ATION THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE, GAV E FOLLOWING RELIEFS. 1) UNSECURED LOAN/CASH CREDIT 45,000 2) UNEXPLAINED SUNDRY CREDITORS (RS. 10,000 RETAINED) 2,58,848 3) ACCRUED INTEREST ON FDRS 43,407 4) DISALLOWANCE OUT OF EXPENDITURE CLAIMED 2,65,110 5) PROFIT ON SUBCONTRACT (957195/2) 4,78,593 6) INTEREST ON PARTNERS CAPITAL 72,106 7) DISALLOWANCE OF INTEREST ON ACCOUNT OF DIVERSION OF FUNDS 7,50,168 TOTAL 19,13,232 6. THE SUBSTANTIAL RELIEF WAS GRANTED BY THE CIT(A) ON ALL THE ISSUES. EXCEPT THE ADDITION ON ACCOUNT OF T DS INTEREST AS EXPENDITURE AND 50% RELIEF OUT OF THE ADDITION ON ACCOUNT OF ESTIMATED PROFIT ON SUBCONTR ACT. THUS, OUT OF AN ADDITION OF RS. 24,20,359/- THE CIT (A) GRANTED RELIEF TO THE TUNE OF RS. 19,13,232/-. 7. IN THE REVENUES APPEAL, THE GENERAL CONTENTION OF THE ASSESSEE AS MENTIONED IN THE WRITTEN SUBMISSION IS ITA NO. 664 AND 10/PN/2006 SHIVA ENTERPRISES A.Y. 200203 6 THAT WHILE GIVING THE SUBSTANTIAL RELIEF AS DISCUSS ED ABOVE, THE CIT(A) HAD ADMITTED THE ADDITIONAL EVIDE NCE WITHOUT GIVING PROPER OPPORTUNITY TO THE DEPARTMENT IN CONTRAVENTION OF PROVISIONS OF RULE 46A OF THE INCO ME- TAX RULES 1962. ACCORDING TO THE LEARNED DR THE ADDITIONAL EVIDENCE FILED BEFORE THE FIRST APPELLAT E AUTHORITY CAN BE CATEGORIZED INTO TWO PARTS. THE ASSESSEE FILED ADDITIONAL EVIDENCE BEFORE THE CIT(A ) IN SUCH A SITUATION THAT THE CIT(A) HAS NOT PROVIDED P ROPER OPPORTUNITY OF HEARING BEFORE ADMITTING THE ADDITIO NAL EVIDENCE. IN SECOND CATEGORY, THE EVIDENCE WHICH I S DIRECTED TO BE PRODUCED BEFORE THE FIRST APPELLATE AUTHORITY FOR DISPOSAL OF THE APPEAL BEFORE HIM WHE N THE ADDITIONAL EVIDENCE IS FILED. THUS, THERE IS NO REQUIREMENT FOR CONFRONTING THE A.O WITH THE DOCUME NTS. ACCORDING TO THE LEARNED DR THE ASSESSEE WAS NON- COOPERATIVE THROUGHOUT BEFORE THE ASSESSING OFFICER AND THE CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCE ON THE BACK OF THE ASSESSING OFFICER AND RELIEF HAS BEEN G RANTED TO THE ASSESSEE WITHOUT GIVING AN OPPORTUNITY TO TH E ASSESSING OFFICER ABOUT THE ADDITIONAL EVIDENCE PRODUCED BEFORE THE CIT(A) WHICH IS NOT JUSTIFIED. IT IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AS WELL AS VIOLATION OF PROVISIONS CONTAINED IN RULE 46A OF TH E I.T. ITA NO. 664 AND 10/PN/2006 SHIVA ENTERPRISES A.Y. 200203 7 RULES . THE LEARNED DR HAS RELIED ON THE DECISION OF GUWHATI HIGH COURT IN THE CASE OF CIT VS. RANJEET KUMAR CHOUDHARY (288 ITR 179) AND THE DECISION OF GUJARAT HIGH CURT IN THE CASE OF N.B. SURTI FAMILY TRUST VS. CIT (288 ITR 523). EVEN BEFORE US NONE APPEARE D ON BEHALF F THE ASSESSEE. WE THEREFORE, FIND FROM THE GROUNDS OF APPEAL RAISED ON BEHALF OF THE REVENUE T HAT OBJECTION WITH REGARD TO ADMITTING ADDITIONAL EVIDE NCE HAS BEEN TAKEN IN GENERAL AND SPECIFIC WITH THE GRO UNDS OF APPEAL. SO, THERE IS NON-APPEARANCE ON BEHALF OF THE ASSESSEE TO OPPOSE THE OBJECTION RAISED ON BEHALF O F THE REVENUE WITH REGARDS TO ENTERTAINING THE ADDITIONAL EVIDENCE WHILE GRANTING SUBSTANTIAL RELIEF TO THE A SSESSEE ON VARIOUS COUNTS DISCUSSED IN VARIOUS GROUNDS RAIS ED ON BEHALF OF THE REVENUE. 8. AFTER GOING THROUGH THE SUBMISSIONS MADE BY THE LEARNED DR ON BEHALF OF THE REVENUE AS WELL AS THE WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSING OFF ICER WAS GIVEN PROPER OPPORTUNITY OF HEARING AS PER THE PROVISIONS OF RULE 46A OF THE I.T. RULES WHILE GRAN TING VARIOUS RELIEFS TO THE ASSESSEE BY THE CIT(A) ON VA RIOUS GROUNDS AS DISCUSSED IN THE GROUNDS RAISED ON BEHAL F OF ITA NO. 664 AND 10/PN/2006 SHIVA ENTERPRISES A.Y. 200203 8 THE REVENUE WHICH IS VIOLATION OF PRINCIPLES OF NAT URAL JUSTICE. TAKING OVERALL VIEW OF THE MATTER, WE FIN D THAT THE ISSUE NEEDS DEEP PROBE INTO THE MATTER BEFORE ADJUDICATING THE ISSUES AT HAND ON MERITS. SO IN TH E INTEREST OF JUSTICE WE SET ASIDE THE ORDER OF THE C IT(A) WITH REGARDS TO THE GROUNDS RAISED IN THE REVENUES APPEAL TO THE FILE OF THE CIT(A) WITH A DIRECTION T O DECIDE THE SAME AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. SINCE WE ARE SETTING ASIDE THE R ELIEFS GRANTED BY THE CIT(A) ON PRELIMINARY ISSUE OF NOT G IVING A PROPER OPPORTUNITY OF HEARING TO THE ASSESSING OF FICER UNDER THE PROVISIONS OF RULE 46A OF THE I.T. RULES, WE ARE REFRAINED TO COMMENT ON MERITS OF THE ISSUES AT HAN D. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES WHILE THE APPEAL OF THE AS SESSEE IS DISMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY 2011. SD/- SD/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE: DATED: 31 ST MAY, 2011 ANKAM ITA NO. 664 AND 10/PN/2006 SHIVA ENTERPRISES A.Y. 200203 9 COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A) II NASIK 4. THE CIT, - II NASIK 5. THE D.R, B BENCH, PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE