M/s Bala Ji Sale, Kanpur V. Income Tax Officer-2(1), Kanpur

ITA 827/LKW/2014

• Counselvise Citation: 82723714 RSA 2014
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Opportunity of being heard; Principle of natural justice

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.827/LKW/2014 ASSESSMENT YEAR 2006-07 INCOME TAX OFFICER 2 ( 1 ), KANPUR VS M/S BALA JI SALE 79/75, BANSMANDI KANPUR PAN AAAFB 7995 H (RESPONDENT) (APPELLANT) SHRI R.K. JAIN, CA APPELLANT BY SHRI AMIT NIGAM, DR RESPONDENT BY 19 / 10 /2015 DATE OF HEARING 21 / 10 /2015 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. 1. THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-II, PASSED EX-PARTE QUA THE ASSESSEE, ASSAIL ING THE ORDER OF LD. CIT(A) MAINLY ON FOLLOWING GROUNDS WHICH ARE AS UND ER:- 1. (A) HONOURABLE COMMISSIONER OF INCOME TAX (APPE AL) HAS IN ERRED IN LAW AS WELL AS IN FACT BY PASSING EXPARTE ORDER WIT HOUT PROVIDING REASONABLE OPPORTUNITY TO THE APPELLANT. (B) HONOURABLE COMMISSIONER OF INCOME TAX (APPEAL) HAS FAILED TO APPRECIATE THAT APPELLANT HAD CLOSED ITS BUSINESS I N 2008 AND PARTNERS OF DISSOLVED FIRM HAS SHIFTED ITS ADMINIST RATIVE OFFICE TO 79/75 BANSMANDI KANPUR. (C) HONOURABLE COMMISSIONER OF INCOME TAX (APPEALS ) HAS FURTHER FAILED TO APPREATE THAT APPELLANT HAD NO KNOWLEDGE OF SERVICE OF NOTICE FIXING THE DATE OF HEARING NOR OF PASSING OF EXPARTE ORDER. IT 2 IS ONLY CAME INTO KNOWLEDGE OF PASSING OF EXPARTE O RDER DURING HEARING OF PENALTY PROCEEDINGS U/S. 271 (1) (C) OF THE ACT,. WITHOUT PREJUDICE TO THE ABOVE 2. HONOURABLE CIT (A) HAS ERRED IN LAW AS WELL IN FACT BY NOT ADJUDICATING THE ISSUE JUDICIOUSLY WHILE DELIVERING EXPARTE DECISION AND DENIED NATURAL JUSTICE AND BY NOT FOLLOWING DEC ISIONS OF VARIOUS COURTS FOR ADJUDICATION THE ISSUES ON EVENT DELIVER ING EXPARTE DECISIONS. 3. HONOURABLE CIT (A) HAS ERRED IN LAW AS WELL ON FACTS BY CONFIRMING ADDITION OF RS. 153591.00 IN RESPECT OF ALLEGED NAT IONAL INTEREST RECEIVABLE OUT OF INTEREST PAID U/S. 36 (1) (III) O N INTEREST FREE ADVANCE OF RS. 1279929.00 TO PARTIES COVERED U/S. 4 0A(2)(B) OF THE ACT,. 4. HONOURABLE CIT (A) HAS FAILED TO APPRECIATE THE FACT THAT THESE DEBIT BALANCES HAD ARISEN ON ACCOUNT OF LOSSES ETC OF THE FIRM BORNE BY EX-PARTNERS AND THERE HAD NOT BEEN ANY CLAUSE FO R CHARGING/PAYMENT OF INTEREST ON DEBIT BALANCE/CREDI T BALANCE IN PARTNERSHIP DEED. 5. HONOURABLE CIT (A) HAS FURTHER FAILED TO APPREC IATE THE FACT THAT APPELLANT HAD FOLLOWED PRECEDENT AND CONSISTENT PRA CTICE OF NOT TO CHARGE/PAY INTEREST ON DEBIT/CREDIT BALANCE OF PART IES COVERED U/S. 40 A (2) (B) OF THE ACT,. 6. HONOURABLE CIT (A) HAS FURTHER ERRED IN LAW IN NOT APPRECIATING THE FACT THAT TOTAL AMOUNT ADVANCED ARE ALMOST EQUA L AMOUNT (RS. 11.27 LACS) WERE TAKEN AS INTEREST FREE LOAN FROM P ARTIES COVERED U/S. 40 A (2) (B) ACT TO WHOM NO AMOUNT OF INTEREST HAS BEEN PAID. THEREFORE THERE IS NO IMPACT ON PROFIT/LOSS O F THE FIRM AND HAS NOT APPRECIATED SUBMISSIONS EXPLAINING THE MATT ER FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 7. HONOURABLE CIT (A) HAS ERRED IN LAW AS WELL AS O N FACTS BY CONFIRMING DISALLOWANCE AND ADDITION ESTIMATED ON A DHOC BASIS OF RS. 16808.00 BEING 20% OUT OF MISCELLANEOUS EXPENSE S AND RS. 11338.00 BEING 20% OUT OF HEAD OF VEHICLE RUNNING O F MAINTENANCE ON ALLEGED NON BUSINESS EXPENSES WITHOU T INDICATING ANY TRANSACTION OR ENTRY FOUND TO BE NON BUSINESS O R PERSONAL NATURE. 8. HONOURABLE CIT (A) HAS ERRED IN LAW IN CONFIRMIN G DISALLOWANCE IN THE HEAD OF MISCELLANIES EXPENSES AND NOT APPRECIAT ED THE FACT THAT TOTAL EXPENSES CLAIMED IN THIS HEAD IN PROFIT AND LOSS A/C. OF RS. 1337.00 ONLY WHILE DISALLOWANCE AND ADDITION IN THIS HEAD OF 3 RS. 16808.00 HAS BEEN DONE. THEREFORE PATENT ERROR HAS BEEN IGNORED. 9. HONOURABLE CIT (A) HAS FURTHER ERRED IN LAW AS W ELL AS ON FACTS THAT APPELLANT HAD ALREADY PAID FRINGE. BENEFIT TAX AS PER LAW IN RESPECT OF POSSIBLE DISALLOWANCE ON EXPENSE IN THE HEAD OF VEHICLE RUNNING EXPENSES. THEREFORE NO FURTHER DISALLOWANCE IS PERMISSIBLE UNDER LAW. 10. THE AVERMENT MADE AND REASONING RELIED UPON BY HONOURABLE CIT (A) FOR DISMISSING THE APPEAL ARE BASED ON CONJECTU RE AND SURMISES ARBITRARY AND WITHOUT APPRECIATING FACTS O N RECORD. 11. APPELLANT ORDER IS UNJUST ARBITRARY EXC ESSIVE UNLAWFUL AND BAD IN LAW. 2. DURING THE COURSE OF HEARING, ATTENTION WAS INVI TED TO THE ORDER OF LD. CIT(A) WITH THE SUBMISSION THAT THE CIT(A) HAS RECORDED DATES OF HEARING OF NOTICE BUT HAS NOT RECORDED ANY FACT WIT H REGARD TO SERVICE OF NOTICE OF HEARING UPON THE ASSESSEE. THE CIT(A) HAS DISMISSED THE APPEAL SUMMARILY WITHOUT DEALING ISSUES ON MERIT. THEREFOR E, THE ORDER OF LD. CIT(A) DESERVES TO BE SET ASIDE. 3. LD. DR SIMPLY PLACED RELIANCE UPON THE ORDER OF LD. CIT(A). 4. HAVING CAREFULLY EXAMINED THE ORDER OF LD. CIT(A ), WE FIND THAT THE CIT(A) HAS RECORDED VARIOUS DATES OF ISSUANCE OF NO TICE BUT NOTHING HAS BEEN RECORDED IN RESPECT OF SERVICE OF NOTICE OF HE ARING UPON THE ASSESSEE. IN THE LIGHT OF THESE FACTS, WE ARE OF TH E VIEW THAT LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT AF FORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ACCORDINGLY SET ASI DE THE ORDER OF LD. CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE WITH THE DIRECTION TO READJUDICATE THE APPEAL AFRESH AFTER AFFORDING OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. 4 5. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALL OWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21/10/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. RE GISTRAR