M/s. Chandgi Ram Atma Ram, Delhi V. ITO, New Delhi

ITA 704/DEL/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3550 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-06-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 132; 144

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH B, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NOS. 704 & 705/DEL./2012 ASSESSMENT YEAR: 2004-05 & 2005-06 M/S. CHANDGI RAM ATMA RAM, THROUGH SH. NARESH KUMAR GARG, C-3, PANCHVATI, AZAD PUR, DELHI. PAN AACFC6537C (APPELLANT) VS. INCOME - TAX OFFICER, WARD 30(4), NEW DELHI. (RESPONDENT) APPELLANT BY SH. K. SAMPATH, ADVOCATE RESPONDENT BY MS. RA C HNA SINGH, CIT/DR ORDER PER L.P. SAHU, A.M.: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINS T SEPARATE ORDERS OF THE LD. CIT(A)-XXV, NEW DELHI DATED 12.12.2011 FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06. THE ASSESSEE HAS RAISED COMMON GROUNDS IN BOTH THE APPEALS, WHICH READ AS UNDER : 1. THE ORDERS PASSED BY THE AUTHORITIES BELOW ARE IL LEGAL, INVALID AND BAD IN LAW, IN AS MUCH AS THE SAME HAVE BEEN PASSED WIT HOUT AFFORDING A REASONABLE AND PROPER OPPORTUNITY OF BEING HEARD AN D THUS DENYING THE PRINCIPLES OF NATURAL JUSTICE ON THE FACTS AND CIRC UMSTANCES OF THE CASE. 2. THE LD. ASSESSING OFFICER ERRED IN COMPLETING THE ASSESSMENT UNDER SECTION 143(3)/153-C/153A OF THE ACT WITHOUT ISSUE OF ANY NOTICE UNDER SECTION 143(2) OF THE ACT ON THE FACTS AND CIRCUMST ANCES OF THE CASE AND AS DATE OF HEARING 16.11.2017 DATE OF PRONOUNCEMENT 01 .02.2018 ITA NOS. 704 & 705/DEL./2012 2 SUCH THE ORDER OF ASSESSMENT IS ERRONEOUS AND BAD I N LAW AND LIABLE TO BE CANCELLED. 3. THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE ADDI TION OF RS.4 LACS BEING THE AMOUNT OF ALLEGED HUNDI LOAN TAKEN THROUGH SHRI BRIJ MOHAN GUPTA, RESIDENT OF GALI HINGA BEG, TILAK BAZAR, DELHI WITHO UT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE IN AS MUCH AS T HAT THE SEIZED ORIGINAL DOCUMENTS FOUND AT THE TIME OF SEARCH OF SH. BRIJ M OHAN GUPTA WERE NOT EXAMINED AND NO DEFINITE CONCLUSION WAS ARRIVED AT BY EITHER OF THE AUTHORITIES ABOUT ITS VERACITY BEFORE MAKING THE IM PUGNED ADDITION. A. THE ID. CIT(APPEALS) ERRED IN CONFIRMING THE ADDIT ION OF RS. 10,000/- ON ACCOUNT OF PAYMENT OF INTEREST ON THE ALLEGED LOAN OF RS. 4,00,000/- WITHOUT THERE BEING ANY MATERIAL ON RECORD AND WITH OUT ANY BASIS WHATSOEVER. B. WITHOUT PREJUDICE TO GROUND NO. 3A ABOVE, THE PA YMENT OF INTEREST WAS AN ALLOWABLE EXPENDITURE, IT THE ADDITION OF LOAN I S CONFIRMED. C. THE ID. CIT(APPEALS) ERRED IN CONFIRMING THE ADDIT ION OF RS. 400/- ON ACCOUNT OF PAYMENT OF COMMISSION ON ALLEGED LOAN OF RS. 4,00,000- WITHOUT THERE BEING ANY MATERIAL ON RECORD AND WITH OUT ANY BASIS WHATSOEVER. 4. THE AUTHORITIES BELOW ERRED IN NOT APPRECIATING T HE FACT THAT THE ALLEGED LETTER (HUNDI) REGARDING THE LOAN OF RS. 4,00,000/- WAS FOUND IN POSSESSION OF SHRI BRIJ MOHAN GUPTA AT HIS RESIDENCE AT GALI H INGA BEG, TILAK BAZAR, DELHI, WHEREAS THE SAME SHOULD HAVE BEEN FOUND IN P OSSESSION OF THE LENDER OF THE AMOUNT AS IS THE PRACTICE IN THE CASE OF SUCH LOANS. 5. THE LD. CIT (APPEALS) ERRED IN NOT FOLLOWING THE P RINCIPLES LAID DOWN BY THE HON'BLE HIGH COURT IN THE CASE OF DEXON PHARMAC EUTICALS PRIVATE LIMITED, REPORTED IN 214 ITR 576 ON THE FACTS OF THE CASE AND THUS THE ORDER PASSED BY THE AUTHORITIES BELOW IS BAD IN LAW . 6. THAT THE LD. CIT (APPEALS) ERRED IN NOT FOLLOWING THE ORDERS OF THE SUPERIOR AUTHORITIES ON THE ISSUE AND KEPT ASIDE 'T HE PRINCIPLES OF JUDICIAL DISCIPLINE WHILE DECIDING THE APPEAL OF THE APPELLA NT. ITA NOS. 704 & 705/DEL./2012 3 7. THE LD. CIT (APPEALS) ERRED IN NOT EVEN DISCUSSIN G THE VARIOUS SUBMISSIONS AND CASE LAWS BROUGHT TO HIS NOTICE ON THE ISSUE IN HAND AND THUS THE ORDER IS BAD IN LAW AND LIABLE TO BE QUASH ED. 2. THE GROUNDS RAISED IN APPEAL FOR A.Y. 2005-06 AR E ALSO SAME BARRING THE DIFFERENCE IN THE AMOUNTS OF ADDITIONS MADE. SINCE THE COMMON QUESTIONS OF LAW AND FACTS ARE INVOLVED IN BOTH THESE APPEALS, T HE SAME ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONV ENIENCE AND BREVITY, WE FIRST TAKE UP THE APPEAL FOR A.Y. 2004-05, THE DECISION O N WHICH SHALL EQUALLY APPLY TO THE APPEAL FOR A.Y. 2005-06. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH WA S CONDUCTED U/S. 132 OF THE IT ACT ON 15.12.2004 IN THE CASE OF BRIJ MOHAN GUPTA, GALI HINGA BEG, TILAK BAZAR, DELHI. DURING THE COURSE OF SEARCH VARIOUS D OCUMENTS WERE FOUND AND SEIZED, INTER ALIA, INCLUDING LETTER HEAD OF ASSESS EE DULY DATED, STAMPED AND SIGNED IN THE FORM OF HUNDI, MENTIONING THE RATE OF INTEREST OF 1.25%, NAME OF CASH PROVIDER/LENDER ETC. IN HIS STATEMENTS, SHRI B RIJ MOHAN GUPTA ADMITTED HIS INVOLVEMENT IN THE UNACCOUNTED CASH HUNDI TRANS ACTIONS/CASH LOAN TRANSACTIONS ON BEHALF OF VARIOUS PARTIES AND EARNI NG OF BROKERAGE ON SUCH TRANSACTIONS. THEREFORE, THE ASSESSING OFFICER OF T HE SEARCHED PERSON RECORDED SATISFACTION THAT THE ABOVE DOCUMENTS FOUND DURING THE COURSE OF SEARCH BELONG TO THE ASSESSEE AND HANDED OVER THE SAME TO THE ASSESSING OFFICER OF ITA NOS. 704 & 705/DEL./2012 4 THE ASSESSEE FOR INITIATION ACTION U/S. 153C OF THE ACT. THEREFORE, THE ASSESSING OFFICER OF THE ASSESSEE INITIATED PROCEEDINGS U/S. 153C AND SUPPLIED THE COPY OF REASONS RECORDED AND COPY OF HUNDI TO THE ASSESS EE. HE FOUND THAT THE TRANSACTION OF CASH LOAN OF RS.4,00,000/- HAVING BE EN MADE THROUGH SHRI BRIJ MOHAN GUPTA WAS NOT SHOWN BY THE ASSESSEE NOR ANY P ROPER EXPLANATION WAS OFFERED WITH RESPECT THERETO. THEREFORE, THE ASSESS ING OFFICER COMPLETED THE ASSESSMENT U/S. 144 READ WITH SECTION 153C/153A OF THE ACT AND MADE ADDITIONS OF RS.4,00,000/-, RS. 10,000/- AND RS.400 /- ON ACCOUNT OF UNEXPLAINED HUNDI, INTEREST PAID AND COMMISSION TO BRIJ MOHAN GUPTA RESPECTIVELY, TO THE TOTAL DECLARED INCOME OF RS.1, 08,163/-. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER VIDE IMPUGNED ORDER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS IN THE PRESENT APPEALS, WHICH RE AD AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW - I) THE PROCEEDINGS U/S. 143(3)/153C/153A OF THE ACT WER E TIME BARRED AND SO MUST BE QUASHED; II) THE PROCEEDINGS HAVING BEEN CONCLUDED WITHOUT DUE PR OCESS OF LAW IS ILLEGAL AND MUST BE QUASHED. LAYING MUCH EMPHASIS ON THE ABOVE ADDITIONAL GROUND S, THE LD. AR CONTENDED THAT THE ABOVE ADDITIONAL GROUNDS ARE PURELY LEGAL IN NATURE AND GO TO THE ROOT ITA NOS. 704 & 705/DEL./2012 5 OF THE MATTER. THEREFORE, THE SAME SHOULD BE ADMITT ED FOR CONSIDERATION IN VIEW OF THE DECISION OF HONBLE SUPREME COURT RENDE RED IN THE CASE OF NTPC LTD. VS. CIT, 229 ITR 383 (SC). IT WAS STATED THAT THE PROCEEDINGS U/S. 153C BEING BARRED BY LIMITATION, ARE, THEREFORE, LIABLE TO BE QUASHED. 5. THE LD. DR, ON THE OTHER HAND, STRONGLY OPPOSED THE ABOVE CONTENTIONS OF THE ASSESSEE ON ADMISSION OF ADDITIONAL GROUND. THE LD. DR ALSO FILED A WRITTEN SYNOPSIS ON THIS ISSUE WHICH IS PLACED ON R ECORD. SHE CONTENDED THAT THE DECISION OF HONBLE SUPREME COURT IN NTPC LTD. (SUPRA) IS NOT APPLICABLE TO THE PRESENT CASE ON THE PREMISE THAT IN THE INST ANT CASES THE ISSUE THAT THE ORDER U/S 143(3)/153A/153C WERE BARRED BY LIMITATIO N WAS NOT RAISED BY THE APPELLANT BEFORE THE CIT(A); THAT THIS ISSUE HAS NO T BEEN ADJUDICATED UPON BY THE CIT(A) AND DOES NOT EMANATE FROM THE ORDER OF T HE FIRST APPELLATE AUTHORITY; THAT THE ORDER IS BARRED BY LIMITATION IS NOT STRICTLY A LEGAL ISSUE BUT IS BASED ON A FINDING OF FACT THAT WAS NOT RAISED B EFORE AND HENCE AMOUNTS TO ACQUIESCENCE BY THE ASSESSEE; THAT THIS ISSUE DOES NOT ARISE OUT OF THE FACTS ASCERTAINED BY THE A.O OR CIT(A); THAT THIS ISSUE H AS NO BEARING ON THE QUANTIFICATION OF TAXABLE INCOME BUT INCORRECTLY SE EKS TO TAKE REFUGE IN AN ISSUE THAT HAS NO BEARING ON THE 'RECORD' BEFORE TH E LOWER AUTHORITIES; THAT THE ASSESSEE HAS NOT GIVEN A BONAFIDE REASONS FOR MAKIN G SUCH A CLAIM AT THIS LATE ITA NOS. 704 & 705/DEL./2012 6 JUNCTURE; THAT THE OBSERVATION OF THE CIT(A) REGARD ING THE ASSESSEE IN THIS CASE IS ALSO PERTINENT AND HIGHLIGHTS THE FACT THAT THE ASSESSEE HAS A TRACK RECORD OF NON-COMPLIANCE AND IS SIMPLY RAISING A NEW TECHNICA L ISSUE TO DIVERT ATTENTION FROM THE MERITS OF THE CASE THAT IS STRONGLY IN FAV OUR OF THE REVENUE AND AGAINST THE ASSESSEE. SHE HAS ALSO PLACED RELIANCE ON VARIOUS DECISIONS AS UNDER : (I). INDIAN STEEL AND WIFE PRODUCTS LTD. VS. CIT, 208 ITR 740 (CAL.) (II). UNION OF INDIA V. MAJOR BAHADUR SINGH, (2006 ) 1SCC 368 (SC) (III). HIRA LAL V. KALINATH, AIR 1962 SC 1999 (IV). SUSHIL KUMAR JALAN VS. ITO, ITA NO. 34/GAU/11 -DATED 03.02.12(ITAT GAUHATI BENCH). (V). CIT VS. GURJARGRAVURES P. LTD., 111 ITR 1 (SC) 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. IT IS NOTABLE THAT THE ISSUE OF LIMITATION RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL FOR THE FIRST TIME DIRECTLY HITS THE QUESTION WHETHER THE IMPUGNED ASSESSMENT MADE BY TH E REVENUE AUTHORITIES IS LEGALLY VALID OR NOT. IT IS, THEREFORE, IN OUR O PINION IS A LEGAL ISSUE. IT IS NOW SETTLED IN VARIOUS DECISIONS, INCLUDING THE DECISIO N OF HONBLE SUPREME COURT IN NTPCS CASE THAT THE LEGAL ISSUES CAN BE RAISED BY THE LITIGANT AT ANY STAGE OF PROCEEDINGS. THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE BEING LEGAL IN NATURE GOING TO THE ROOT OF THE MATTER, THEREFORE, DESERVE TO BE ADMITTED ON RECORD. WE, HOWEVER, FIND THAT THERE IS NOTHING ON RECORD FROM THE SIDE OF ASSESSEE AS TO HOW THE IMPUGNED ASSESSMENT ORDER IS BEING TERMED AS BARRED ITA NOS. 704 & 705/DEL./2012 7 BY LIMITATION. IT IS, HOWEVER, AN UNDISPUTED FACT T HAT THIS ISSUE WAS NEVER RAISED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND THEREFORE, THERE IS NO DECISION OF THE LOWER AUTHORITIES ON THIS ASPECT OF THE CASE. IN PRESENCE OF THESE FACTS, WE DEEM IT EXPEDIENT IN THE INTEREST O F JUSTICE THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE LD. CIT(A) FOR DE CIDING THE APPEAL OF THE ASSESSEE ON LEGAL ASPECT AS WELL AS ON MERITS OF AD DITIONS AFRESH. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN ONE MORE OPPORTUNI TY OF BEING HEARD. THE ASSESSEE IS DIRECTED TO RAISE THE LEGAL ISSUE, CO-O PERATE IN FINALIZATION OF THE MATTER EXPEDITIOUSLY BEFORE THE LD. CIT(A) AND NOT TO SEEK UNNECESSARY ADJOURNMENTS. ACCORDINGLY, BOTH THE APPEALS OF THE ASSESSEE DESERVE TO BE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEB., 2018 SD/- SD/- (BHAVNESH SAINI) (L.P. SA HU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01.02.2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI