JAGSONS SERVICES PVT LTD., MUMBAI V. ITO 10(1)(4), MUMBAI

ITA 815/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6574 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 07-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBRAMANIAN

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL MUMBAI - I BENCH MUMBAI . . , / ! ! ! ! , '# '# '# '# BEFORE S/SH. H.L.KARWA,PRESIDENT & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 815/MUM/2011, $ $ $ $ % % % % / ASSESSMENT YEAR 2007-08 JAGSONS SERVICES PVT.LTD. 21,VEENA BEENA,GROUND FLOOR, OPP. BANDRA RAILWAY STATION, BANDRA(W), MUMBAI-400050 VS. ITO 10(1)(4) AAYAKAR BHAVAN, M.K.ROAD, CHURCHGATE, MUMBAI-400020 PAN: AAACJ9565A ( &' / APPELLANT) ( ()&' / RESPONDENT) &' * / APPELLANT BY : SHRI SUBR AMANIAN ()&' + * / RESPONDENT BY : SHRI AIRIJU JAIKARAN $ $ $ $ + ++ + ,- ,- ,- ,- / DATE OF HEARING : 07-05-2014 ./% + ,- / DATE OF PRONOUNCEMENT : 07- 05- 2014 $ $ $ $ , 1961 + ++ + 254 )1( ,0, ,0, ,0, ,0, '1 '1 '1 '1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM: CHALLENGING THE ORDER DATED 08.12.2010 OF THE CIT(A )-21,MUMBAI, ASSESSEE-COMPANY HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1)THE APPELLANT IS A PRIVATE LIMITED COMPANY AND A SSESSED TO TAX UNDER P.A.NO.AMCJ9565A, BY INCOME TAX OFFICER,WARD-10(1)( 4), MUMBAI. 2)RETURN FOR ABOVE ASSESSMENT YEAR WAS FILED ON 31. 10.2007, DECLARING INCOME OF RS.2,01, 534/-. 3)THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS INF ORMATION FOR VERIFICATION OF CONTRACT RECEIPTS. THE LEARNED INCOME TAX OFFICER, HAD ACCORDINGLY COMPLETED THE ASSESSMENT BY MAKING FOLLOWING ADDITIONS :- ( I) OUT OF EXPENSES ...RS.20,00,000/- ( II) OUT OF SUNDRY CREDITORS ...RS.40,00,000/- (III) CASH LOANS ... RS.90,502/- 4)APPELLANT PREFERRED AN APPEAL WITH THE COMMISSION ER OF INCOME-TAX (APPEALS)-21, MUMBAI. APPELLANT COULD NOT APPEAR BEFORE THE COMMI SSIONER OF INCOME TAX (APPEALS) - 21, MUMBAI, AND APPEAL WAS DISMISSED. 5)APPELLANT ACCORDINGLY PREFERRED AN APPEAL WITH TH E TRIBUNAL AUTHORITIES FOR FOLLOWING RELIEF: ( I) OUT OF EXPENSES ...RS.20,00,000/- ( II) OUT OF SUNDRY CREDITORS ...RS.40,00,000/- (III) CASH LOANS ... RS.90,502/- 6)APPELLANT CRAVES LEAVE TO ADD, ALTER,AMEND OR DEL ETE ALL OR ANY OF THE GROUNDS OF APPEAL, AT ANY TIME. 2 ITA NO. 815/MUM/2011 JAGSONS SERVICES PVT. LTD . 2 .ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF PROVID ING MANPOWER,FILED ITS RETURN OF INCOME ON 31.10.2007, DECLARING A TOTAL INCOME OF R S.2,01,534/-.ASSESSING OFFICER(AO) FINALISED THE ASSESSMENT U/S.144 OF THE ACT ON 10.1 2.2009,DETERMINING THE INCOME OF THE ASSESSEE AT RS.62,92, 040/-.WHILE PASSING THE ORDER ,AO HAD MADE ADDITIONS UNDER THE HEADS OUT OF EXPENSES(RS.20LAKHS),OUT OF SUNDRY CRE DITORS (RS.40LAKHS)AND CASH LOANS(RS.90,502/-) 3 .ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPE LLATE AUTHORITY (FAA).AS PER THE FAA APPEAL WAS FIXED FOR HEARING FROM TIME TO TIME, BUT NOBODY APPEARED BEFORE HIM NOR ANY REQUEST FOR ADJOURNMENT WAS FILED.HE FURTHER ME NTIONED THAT NO ONE ATTENDED THE HEARING ON 15.11.2010, WHEN THE ASSESSEE WAS GIVEN LAST CHANCE TO REPRESENT ITS CASE.AS THE ASSESSEE DID NOT APPEAR BEFORE HIM,SO CONFIRMIN G THE ORDER OF THE AO,HE DISMISSED THE APPEAL FILED BY THE ASSESSEE.FAA HELD THAT ASSE SSEE WAS NOT INTERESTED IN DEFENDING ITS APPEAL. 4 .BEFORE US,AUTHORISED REPRESENTATIVE (AR)SUBMITTED THAT THE FAA HAD DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT ASSIGNING ANY REASON ,THAT FAA HAD NOT DECIDED THE ISSUE ON MERITS.HE RELIED UPON THE ORDER OF AHMEDABAD TRI BUNAL DELIVERED IN THE CASE OF GUJARAT THEMIS BIOSYN LTD. (74 ITD 339).DEPARTMENTA L REPRESENTATIVE(DR) LEFT THE MATTER TO THE DISCRETION OF THE BENCH. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT FAA HAD DECIDED THE APPEAL WITHOUT DISCUSSING THE M ERITS OF THE ISSUES RAISED BEFORE HIM.IT IS A FACT THAT THE ASSESSEE HAD NOT COOPERAT ED WITH HIM,BUT AS AN APPELLATE AUTHORITY IT WAS HIS DUTY TO PASS A REASONED ORDER. PROVISIONS OF SECTION 250(6) OF THE ACT ENVISAGE TH AT APPEAL SHOULD BE PASSED BY SPEAKING ORDER. FAAS ARE SUPPOSED TO PASS THE ORDER ON MERITS ON THE BASIS OF AVAILABLE MATERIAL. SO, DISMISSING AN APPEAL FOR NON APPEARAN CE OF THE ASSESSEE HAS NOT BEEN APPROVED BY THE COURTS.IT IS SAID THAT APPEALS SHOU LD BE DECIDED ON MERITS AND ON AVAILABLE MATERIAL,EVEN IF IT VERY SCANTY OF INSUFF ICIENT.WE FIND THAT IN THE CASE OF GUJARAT THEMIS BIOSYN LTD.(SUPRA),AHMEDABAD TRIBUNAL HAS DE ALT THE ISSUE OF DISMISSAL OF APPEAL BY FAA IN FOLLOWING MANNER. 3.WE HAVE CAREFULLY CONSIDERED THE FACTS AND CIRC UMSTANCES OF THE CASE AS WELL AS SUBMISSIONS MADE BEFORE US.THE IMPUGNED ORDER PASSE D BY THE CIT(A) IS CLEARLY VIOLATIVE OF THE EXPRESS PROVISIONS OF SECTION 250( 6), WHICH PROVIDES THAT THE APPELLATE ORDERS OF THE CIT(A) ARE TO STATE THE POINTS ARISIN G IN THE APPEAL, THE DECISION OF THE AUTHORITY THEREON AND THE REASONS FOR SUCH DECISION .THE UNDERLYING RATIONALE OF THE PROVISION IS THAT SUCH ORDERS ARE SUBJECT TO FURTHE R APPEAL TO THE APPELLATE TRIBUNAL.SPEAKING ORDER WOULD OBVIOUSLY ENABLE A PA RTY TO KNOW PRECISE POINTS DECIDED IN HIS FAVOUR OR AGAINST HIM. ABSENCE OF THE FORMUL ATION OF THE POINT FOR DECISION FOR WANT OF CLARITY IN A DECISION UNDOUBTEDLY PUTS A PA RTY IN QUANDARY.SECTION 250(6) EXPRESSLY EMBODIES THE PRINCIPLES OF NATURAL JUSTIC E AND SUCH A PROVISION IS CLEARLY MANDATORY IN NATURE. THE IMPUGNED ORDER PASSED BY T HE COMMISSIONER (APPEALS) IN VIOLATION OF THE PROVISIONS OF SECTION 250(6) CANNO T, THEREFORE, BE SUSTAINED. REGARDING THE DECISIONS OF THE DELHI BENCH OF THE TRIBUNAL IN MULTIPLAN INDIA (P.) LTD.'S CASE (SUPRA) CITED BY THE LD. CIT(A),WE FIND THAT THE SA ID DECISION IS CLEARLY 3 ITA NO. 815/MUM/2011 JAGSONS SERVICES PVT. LTD . DISTINGUISHABLE.SECTION254 REFERRING TO THE ORDERS OF THE TRIBUNAL CONFERS PLENARY JURISDICTION ON THE TRIBUNAL IN THE MATTER OF PASSI NG ORDERS UNDER SECTION 254(1). THERE IS NO SUCH EXPRESS STIPULATION IN SECTION 254 AS CO NTAINED UNDER THE PROVISIONS OF SECTION 250(6) RELATING TO THE ORDERS OF FIRST APPELLATE AU THORITY. THEREFORE, RELIANCE PLACED BY THE CIT(A) ON MULTIPLAN INDIA (P.) LTD.'S CASE (SUP RA) IS ENTIRELY MISPLACED. SIMILARLY, THE CASE OF ESTATE OF LATE TUKOJIRAO HOLKAR (SUPRA) CITED BY THE LD. CIT(A) IS DISTINGUISHABLE AND DOES NOT SUPPORT THE VIEW TAKEN BY THE CIT(A). SIMILARLY,HONBLE ASSAM HIGH COURT HAS HELD,IN THE CASE OF BUILDWELL ASSAM (P.) LTD.(133 ITR 736),AS UNDER: SECTION 250(6) OF THE I.T. ACT, 1961, PRESCRIBES T HE MANNER OF DISPOSAL OF AN APPEAL. AN ORDER MUST BE IN WRITING CONTAINING THE POINTS FOR DETERMINATION AND DECISION.THE OBJECT IS OBVIOUS. IT ENABLES A PARTY TO KNOW THE PRECISE POINTS DECIDED IN HIS FAVOUR OR AGAINST HIM. ABSENCE OF FORMULATION OF POINTS FOR DECISION OR WANT OF CLARITY IN DECISION PUTS A PARTY IN A QUANDARY. A DECISION AGAINST A PARTY ENA BLES HIM TO GO UP IN APPEAL.A DECISION BY ITS VERY NATURE MUST BE FIRM AND SHOULD NOT BE VAGUE AND UNCLEAR. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS AND IN T HE INTEREST OF JUSTICE,WE ARE RESTORING BACK THE MATTER TO THE FILE OF THE FAA FOR FRESH AD JUDICATION OF ALL THE ISSUE,RAISED BY THE ASSESSEE BEFORE HIM.HE IS DIRECTED TO AFFORD A REAS ONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND PASS A REASONED ORDER.WE ALSO DIRECT T HE ASSESSEE-COMPANY TO EXTENT FULL COOPERATION TO THE FAA. AS A RESULT, APPEAL FILED BY THE ASSESSEE-COMPA NY IS ALLOWED FOR STATISTICAL PURPOSES. 2,3 2,3 2,3 2,3 $4, $4, $4, $4, 5 5 5 5 '6 '6 '6 '6 + ++ + 0 0 0 0 7+ 89: #;, 7+ 89: #;, 7+ 89: #;, 7+ 89: #;, + ++ + , , , , <= <=<= <= . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH MAY,2014. '1 + ./% > ?'$ 7 , 2014 / + 0 @ SD/- SD/- ( . . / H.L.KARWA ) ( ! / RAJENDRA ) / PRESIDENT '# '# '# '# /ACCOUNTANT MEMBER / MUMBAI, ?'$ /DATE: 07 . 05.2014 SK '1 '1 '1 '1 + ++ + (,B (,B (,B (,B CB%, CB%, CB%, CB%, / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT (A) / D E , 4. THE CONCERNED CIT / D E 5. DR I BENCH, ITAT, MUMBAI / BF0 (,$ , . . . 6. GUARD FILE/ 0 2 )B, )B, )B, )B, (, (,(, (, //TRUE COPY// '1$ / BY ORDER, 8 / < DY./ASST. REGISTRAR , /ITAT, MUMBAI