Ravindera Hire Purchase & Finance, Haryana V. ITO ward-2(2), Faridabad

ITA 8398/DEL/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8482 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 24-10-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Opportunity of being heard; Audit objection; Principle of natural justice
• Section: 143(3); 263

Judgement Text

1 ITA NO. 8398/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 8398/DEL/20 19(A.Y 2013-14) (THROUGH VIDEO CON FERENCING) RAVINDERA HIRE PURCHASE & FINANCE E-1/58, SECTOR-11, FARIDABAD HARYANA PAN: AAECR1509A (APPELLANT) VS ITO WARD-2(2) FARIDABAD HARYANA (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDE R DATED 24/3/2017 PASSED BY PRINCIPAL COMMISSIONER OF INCOME TAX, SEC TOR-11 FARIDABAD, FOR ASSESSMENT YEAR 2013-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX (PR. C IT) UNDER SECTION 263 OF THE ACT IS BAD, BOTH IN THE EYES OF LAW AND ON FACT S. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED PR. CIT UNDER SECTION 263 OF THE ACT IS BAD , BOTH IN THE EYES OF LAW AND ON FACTS, HAVING BEEN PASSED WITHOUT GIVING ASS ESSEE AN OPPORTUNITY OF BEING HEARD IN VIOLATION OF PRINCIPLE OF NATURAL JU STICE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED PR.CIT HAS ERRED APPELLANT BY MRS. RANO JAIN, ADV RESPONDENT BY MRS. AASHNA PAUL, CIT DATE OF HEARING 07.01.2021 DATE OF PRONOUNCEMENT 14 .01.2021 2 ITA NO. 8398/DEL/2019 BOTH ON FACTS AND IN LAW ASSUMING JURISDICTION UNDE R SECTION 263 IN THE ABSENCE OF TWIN CONDITIONS OF THE ORDER PASSED BY T HE A.O. BEING ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, BEING SATISFIED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED PR.CIT ASSUMING JURISDICTION UNDER SECTION 263 IS BAD IN LAW HAVING BEEN INITIATED AT THE INSTANCE OF AUDIT OBJECTION O NLY. 5(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED PR.CIT HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE FACT THAT THE ISSUE RAISED BY HER IN NOTICE UNDER SECTION 263 WAS BEFORE THE A.O. AND AS SUCH THE JURISDICTION ON THIS ISSUE UNDER SECTION 263 CANNOT BE ASSUMED BY H ER. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LEARNED PR.CIT HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE FACT THAT THE PROCEEDING UNDER SECTION 263 CANNOT BE USED FOR SUBSTITUTING OPINION OF THE A.O. BY THAT OF THE CIT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY PR. CIT UNDER SECTION 263 OF THE INCOME TAX ACT IS UNSUSTAI NABLE AS POWER TO REVISE CAN BE INVOKED IN THE CASE OF LACK OF ENQUIRY, NOT IN THE CASE OF INADEQUATE ENQUIRY. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED PR. CIT HAS ERRED BOTH ON FACTS AND IN LAW IN SETTING ASIDE THE MATTE R TO THE FILE OF THE AO WITHOUT GIVING A FINDING AS TO THE ERROR AND PREJUD ICE CAUSED TO THE REVENUE BY THE ASSESSMENT ORDER, AND AS SUCH THE ORDER PASS ED IS BAD IN LAW AND LIABLE TO BE QUASHED. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, PR C IT HAS ERRED BOTH ON FACTS AND IN LAW IN SETTING ASIDE THE ISSUE OF SHARE APPL ICATION OF RS.1,90,50,000/- TO THE FILE OF THE LD AO WITHOUT PROPERLY APPRECIAT ING THE EXPLANATION OF ASSESSEE GIVEN DURING THE ASSESSMENT PROCEEDINGS BR OUGHT ON RECORD TO PROVE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS A S WELL AS THE GENUINENESS OF THE TRANSACTIONS. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FINAN CE. RETURN DECLARING AN INCOME OF RS.2,06,380/- WAS FILED BY THE ASSESSEE O N 30.09.2013. THE 3 ITA NO. 8398/DEL/2019 ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143( 3) OF THE INCOME TAX ACT, 1961 ON 21.03.2016 AT TOTAL INCOME OF RS. 2,76,380/ -. THEREAFTER THE PROCEEDINGS U/S 263 OF THE ACT WAS INITIATED AND SH OW CAUSE NOTICE WAS ISSUED ON 21.02.2017 FOR COMPLIANCE ON 02.03.2017. THE PR. CIT PASSED THE ORDER UNDER SECTION 263 OF THE ACT ON 24.03.2017 THEREBY SETTING ASIDE THE ASSESSMENT ORDER AND DIRECTING THE ASSESSING OFFICE R TO FRAME AFRESH ORDER AFTER FOLLOWING THE PROCEDURE LAID DOWN IN LAW. 4. BEING AGGRIEVED BY THE ORDER DATED 24.03.2017 PA SSED BY THE PR. CIT U/S 263 OF THE ACT, THE ASSESSEE HAD FILED THE PRESENT APPEAL BEFORE US. 5. THE LD. AR SUBMITTED THAT THE PR. CIT HAS SET AS IDE THE ISSUE OF SHARE APPLICATION OF RS. 1,90,50,000/- TO THE FILE OF THE ASSESSING OFFICER WITHOUT PROPERLY APPRECIATING THE EXPLANATION OF ASSESSEE G IVEN DURING THE ASSESSMENT PROCEEDINGS BROUGHT ON RECORD TO PROVE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS AS WELL AS THE GENUINENESS OF TRANSACT ION. THE LD. AR SUBMITTED THAT THE ORDER U/S 263 AND CONSEQUENTIAL ORDER PASS ED U/S 144/263 HAS BEEN PASSED WITHOUT GIVING ASSESSEE AN OPPORTUNITY OF BE ING HEARD AND IN VIOLATION OF PRINCIPAL OF NATURAL JUSTICE. THIS IS SO BECAUSE NONE OF THE NOTICES WERE SERVED TO THE ASSESSEE AND NEITHER OF THE ORDERS WE RE RECEIVED. THE ASSESSEE ONLY CAME TO KNOW ABOUT THE SAME WHEN THE DEMAND NO TICE WAS SERVED TO THE DIRECTORS. THE PRINCIPAL OFFICE OF THE ASSESSEE IS AT H. NO. SCF-24, SECTOR-11D, FARIDABAD, EVEN THE ORIGINAL ORDER U/S 143(3) WAS I SSUED AND SERVED AT THIS ADDRESS ONLY. IN SECTION 263 PROCEEDING, THE PR.CIT ISSUED NOTICE AS WELL AS THE ASSESSMENT ORDER AT E-1/58, SECTOR-11, FARIDABAD, W HICH IS NOT ASSESSEES ADDRESS. THE ASSESSEE COMPANY FURTHER ON RECEIPT OF DEMAND NOTICES ISSUED TO THE DIRECTORS, CAME TO KNOW ABOUT ALL THE DEVELOPME NTS AND GOT THE CERTIFIED TRUE COPIES OF ALL THE ORDERS, IN ORDER TO FILE THE RESPECTIVE APPEALS. SINCE THE ASSESSEE GOT TO KNOW ABOUT THE SAID PROCEEDINGS ONL Y ON THE RECEIPT OF DEMAND NOTICE THEREFORE COULD NOT PRODUCE THE RELEVANT DOC UMENTS AND EXPLANATIONS BEFORE THE REVENUE. IN VIEW OF THE ABOVE, THE LD. A R THEREFORE PRAYED THAT THE 4 ITA NO. 8398/DEL/2019 MATTER MAY BE REMANDED BACK TO THE FILE OF THE PR. CIT, TO GIVE ASSESSEE AN OPPORTUNITY OF BEING HEARD. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF K.V. FINLEASE PVT. LTD. VS. PR.CIT, ITA NO. 817/2017 ORDER DATED 09.07.2019 (ITAT PROCEEDING DE TAILS ITA NO. 4578/DEL/2016). THE LD. AR FURTHER POINTED OUT THE PAPERS/DOCUMENTS FILED BY THE LD. DR DURING THE HEARING, THEREBY SPECIFICA LLY POINTING OUT NOTICE DATED 09.03.2017 ISSUED BY THE DEPARTMENT WHEREIN IT IS C LEARLY MENTIONED BY THE INSPECTOR WHILE SERVING THE NOTICES THAT THE CONCER NED ASSESSEE WAS NOT FOUND AND HAS NOT TALKED TO THE ASSESSEE OR HIS REPRESENT ATIVE BUT GOT INFORMATION OF ONE RAJESH CHAUDHARY OF M/S SRC DEVELOPERS WHICH IS NOT CONCERNED ASSESSEE. THE SECOND NOTICE DATED 21.02.2017 ALSO M ENTIONED SOME PERSON NAME RAJESH CHAUDHARY WHICH IS NOT AT ALL CONCERNED TO THE PRESENT ASSESSEE. THUS, THE LD. AR SUBMITTED THAT THE NOTICE WAS NOT AT ALL SERVED TO THE ASSESSEE, THEREFORE, THE ASSESSEE COULD NOT MAKE AN Y REPRESENTATION BEFORE THE PR. CIT. HENCE, THE ORDER UNDER CHALLENGE IS NOT JU ST AND PROPER AND VIOLATES PRINCIPLES OF NATURAL JUSTICE. THEREFORE, THE LD. A R PRAYED THAT THE MATTER MAY BE REMANDED BACK TO THE FILE OF THE PR. CIT FOR DEC IDING THE SAME AFRESH AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. THE LD. DR SUBMITTED THAT THE PR. CIT HAS MENTIO NED IN THE ORDER THAT THE ASSESSEE WAS GIVEN NOTICE, BUT COULD NOT CONTRO VERT THE RECORDS WHICH WERE SUBMITTED BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF THE RECORD S AND THE DOCUMENTS PRODUCED BEFORE US BY THE LD. DR, IT IS PERTINENT T O NOTE THAT THE ASSESSEE ONLY CAME TO KNOW ABOUT THE ORDER UNDER SECTION 263 OF T HE ACT WHEN THE DEMAND NOTICE WAS SERVED TO THE DIRECTORS. THE PRINCIPAL O FFICE OF THE ASSESSEE IS AT H. NO. SCF-24, SECTOR-11D, FARIDABAD, AND THE ORIGINAL ASSESSMENT ORDER U/S 143(3) WAS ISSUED AND SERVED AT THIS ADDRESS ONLY. THIS FACT WAS NOT CONTRADICTED BY THE LD. DR. IN SECTION 263 PROCEEDI NG, THE PR.CIT ISSUED NOTICE AS WELL AS THE CONSEQUENTIAL ASSESSMENT ORDER AT E- 1/58, SECTOR-11, 5 ITA NO. 8398/DEL/2019 FARIDABAD, WHICH IS NOT ASSESSEES ADDRESS. IT IS P ERTINENT TO NOTE THAT THE NOTICE U/S 263 WAS NOT PROPERLY SERVED TO THE ASSES SEE AND THE FACTS MENTIONED IN THE ORDER OF THE PR. CIT WERE NOT PROP ER ABOUT THE SERVICE OF NOTICE TO THE ASSESSEE. THUS, THE ORDER U/S 263 AND CONSEQUENTIAL ORDER PASSED U/S 144/263 HAS BEEN PASSED WITHOUT GIVING A SSESSEE AN OPPORTUNITY OF BEING HEARD AND IN VIOLATION OF PRINCIPAL OF NAT URAL JUSTICE. THIS IS SO BECAUSE NONE OF THE NOTICES WERE SERVED TO THE ASSE SSEE. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT I N CASE OF K. V. FINLEASE PVT. LTD. (SUPRA) WHEREIN THE HONBLE HIGH COURT HAS CON FIRMED THE ITAT ORDER WHEREIN THE REMAND TO THE PR. CIT IN SEC. 263 WAS D IRECTED AS THE NOTICE PRECEDING THE ORDER U/S 263 WAS SENT TO THE ASSESSE E AT THE WRONG ADDRESS AND SUFFICIENT OPPORTUNITY WAS NOT GRANTED TO THE ASSES SEE TO OPPOSE THE NOTICE U/S 263 OF THE ACT. THUS, IN THE PRESENT CASE, THE ASS ESSEE WAS NOT GIVING SUFFICIENT OPPORTUNITY TO OPPOSE THE NOTICE U/S 263 AND PLEAD FOR THE CASE. THEREFORE, THE MATTER IS REMANDED BACK TO THE FILE OF THE PR. CIT FOR DECIDING THE ISSUE AFRESH. NEEDLESS TO SAY, THE ASSESSEE BE GIVE N OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. HENCE, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8. IN RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF JANUARY, 2021 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 14/01/2021 R. NAHEED * 6 ITA NO. 8398/DEL/2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI