M/s. Anshika Investments Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6966/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6986 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 05-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 24-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-3 NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-6966/DE L/2014 (ASSESSMENT YEAR-2010-11) ANSHIKA INVESTMENTS PVT. LTD., 305, 3TH FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, GREATER KAILASH-1, NEW DELHI-110048. PAN-AAACB0113E (APPELLANT ) VS DCIT, CENTRAL CIRCLE-18, NEW DELHI (RESPONDENT ) ASSESSEE BY SH. RAJIV KUMAR, CA REVENUE BY SH. DEEPAK GARG, SR.DR ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 14.11.2014 OF CIT(A) -III, NEW DELHI PERTAINING TO 2010-11 ASSESSMENT YEAR WHEREIN VARIOUS GROUNDS HAV E BEEN RAISED BY THE ASSESSEE IN THE PRESENT APPEAL INCLUDING GROUND NO. 7 ASSAILING THE ENHANCEMENT MADE BY THE CIT(A). 2. THE RELEVANT FACTS QUA THE GROUNDS RAISED IN THE PRESENT APPEAL ARE THAT THE AO INVOKING RULE 8D MADE ADDITIONS BY WAY OF DI SALLOWANCES U/S 14A TOTALING TO RS. 16,37,007/-. THESE ADDITIONS WERE CONFIRMED IN APPEAL BY THE CIT(A) RELYING UPON THE VIEW TAKEN IN THE EARLIER Y EARS. THE LD.AR SUBMITTED THAT THE ADDITION WAS CHALLENGED IN APPEAL AND THE CIT(A) APART FROM SUSTAINING THE ADDITION FURTHER ENHANCED THE ADDITIONS MADE B Y THE AO WITHOUT ISSUING A SHOW CAUSE NOTICE FOR ENHANCEMENT. THE SAID FACT W AS NOT DISPUTED BY THE REVENUE. 3. BOTH THE PARTIES HAVE BEEN HEARD. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT NO NOTICE WAS ISSUED TO THE ASSESSEE BY THE C IT(A) BEFORE THE DATE OF HEARING 05.07.2016 DATE OF PRONOUNCEMENT 26.09.2016 I. T.A .NO.-6595/DEL/2014 PAGE 2 OF 3 ENHANCEMENT. CONSIDERING THIS OBVIOUS AND PATENT SHORTCOMING IN THE IMPUGNED ORDER, THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO PAS S A SPEAKING ORDER IN ACCORDANCE WITH LAW. IT WOULD BE APPROPRIATE TO EXTRACT SECTI ON 251 OF THE INCOME TAX ACT, 1961 WHICH SETS OUT THE POWERS OF THE COMMISSIONER (APPEALS). THE SAME IS REPRODUCED HEREUNDER FOR READY-REFERENCE:- POWERS OF THE COMMISSIONER (APPEALS). 251. (1) IN DISPOSING OF AN APPEAL, THE COMMISSIONE R (APPEALS) SHALL HAVE THE FOLLOWING POWERS (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; (AA) IN AN APPEAL AGAINST THE ORDER OF ASSESSMENT I N RESPECT OF WHICH THE PROCEEDING BEFORE THE SETTLEMENT COMMISSI ON ABATES UNDER SECTION 245HA, HE MAY, AFTER TAKING INTO CONS IDERATION ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE ASSESSEE BEFORE, OR THE RESULTS OF THE INQUIRY HELD OR EVIDE NCE RECORDED BY, THE SETTLEMENT COMMISSION, IN THE COURSE OF THE PRO CEEDING BEFORE IT AND SUCH OTHER MATERIAL AS MAY BE BROUGHT ON HIS RECORD, CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT; (B) IN AN APPEAL AGAINST AN ORDER IMPOSING A PENALT Y, HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO AS EITHE R TO ENHANCE OR TO REDUCE THE PENALTY; (C) IN ANY OTHER CASE, HE MAY PASS SUCH ORDERS IN T HE APPEAL AS HE THINKS FIT. (2) THE COMMISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE A GAINST SUCH ENHANCEMENT OR REDUCTION. EXPLANATION.IN DISPOSING OF AN APPEAL, THE COMMISS IONER (APPEALS) MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF T HE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED, NOTWIT HSTANDING THAT SUCH MATTER WAS NOT RAISED BEFORE THE COMMISSIONER (APPEALS) BY THE APPELLANT. (EMPHASIS PROVIDED) 4. A PERUSAL OF THE ABOVE WOULD SHOW THAT INCASE WH ILE DECIDING THE APPEAL, THE CIT(A) EXERCISING THE POWER VESTED IN HIM U/S 2 51(1) PROPOSES TO ENHANCE THE ASSESSMENT THEN IN TERMS OF SUB-SECTION (2) OF SECTION 251 THE STATUTE MANDATES THAT HE IS REQUIRED TO SHOW CAUSE WHY ENHA NCEMENT SHOULD NOT BE CARRIED OUT AND PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE FOR ADDRESSING I. T.A .NO.-6595/DEL/2014 PAGE 3 OF 3 THE SAME. WE FIND THAT THE SAID EXERCISE IS MISSIN G IN THE FACTS OF THE PRESENT CASE. THUS, WE MAKE IT CLEAR THAT INCASE ANY ENHAN CEMENT IS PROPOSED BY THE CIT(A) THEN AS PER ACCEPTED LEGAL STANDARDS TO WHIC H THE CIT(A) IS EXPECTED TO ADHERE TO A SPECIFIC SHOW CAUSE NOTICE PUTTING THE ASSESSEE TO NOTICE OF THE REASONS FOR CONTEMPLATING ENHANCEMENT. THE ASSESS EES EXPLANATION IF OFFERED TO THE SHOW CAUSE NOTICE IS NECESSARILY REQUIRED TO BE ADDRESSED AND THEREAFTER THE CIT(A) IS REQUIRED TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW JUSTIFYING THE REASON TO AGREE/DISAGREE OR PARTIALLY AGREE WIT H THE EXPLANATION OFFERED. IN THE ABSENCE OF ANY SUCH EXERCISE THE IMPUGNED ORDE R CANNOT BE SUSTAINED AS THE PROCEDURE FOLLOWED BY THE CIT(A) IS NOT IN CONF ORMITY WITH THE STATUTORY MANDATE. THE IMPUGNED ORDER IS ACCORDINGLY SET ASI DE. THE REMAINING ISSUES ADDRESSING THE ADDITION MADE AT THE ASSESSMENT STAG E SINCE IS LINKED TO THE VERY SAME INCOME. ACCORDINGLY, NO COMMENT ON THE C ORRECTNESS OF THE SAME IS BEING MADE AT THIS STAGE AND ISSUES ARE RESTORED B ACK TO THE CIT(A) WITH A DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WI TH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. T HE SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARIN G IN THE PRESENCE OF THE PARTIES. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 6 TH OF SEPTEMBER, 2016. SD/- (DIVA SINGH) JUD ICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT A SSISTANT REGISTRAR ITAT NEW DELHI