M/s. Industrial Transport Organisation, Ahmedabad V. The Income tax Officer,Ward-2(1), Baroda

ITA 844/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9457 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: SHIR KISHOR GOYAL
• Keywords: Reopening of assessment; Principle of natural justice; Period of limitation; Reasonable cause; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 194C; 147; 148; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV , JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NOS. 844 & 845/AHD/2013 ASSESSMENT YEAR :2006-07 INDUSTRIAL TRANSPORT ORGANISATION G-7, SMRUDDHI COMPLEX, OPP. DAEWOO MOTORS, NR. MAKARPURA BUS DEPOT, BARODA -10 V/S . INCOME TAX OFFICER, WARD 2 (1), BARODA. PAN NO. AABFI2681Q (APPELLANT) .. (RESPONDENT) ' /BY ASSESSEE SHIR KISHOR GOYAL, A.R. $ ' / BY REVENUE SMT. SONIA KUMAR, SR. D.R. % ' /DATE OF HEARING 16.02.2016 &'() ' /DATE OF PRONOUNCEMENT 19.02.2016 O R D E R PER : SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER THESE TWO APPEALS FILED BY ASSESSEE ARE AGAINST THE ORDERS OF CIT(A)-II, BARODA, DATED 17.08.2012 AND 29.03.2011 PASSED U/S.144 R.W.S. 147 AND PASSED U/.S. 143(3) OF THE ACT RESPECTIVELY FOR A.Y. 2006-07. 2. BEFORE US, AT THE OUTSET, LD. A.R. SUBMITTED THA T THOUGH THERE ARE TWO APPEALS OF THE ASSESSEE, BUT THE FACTS IN BOTH THE CASES ARE IDENTICAL IN AS MUCH AS THAT IN BOTH THE APPEALS, LD. CIT(A) HAS PA SSED EX PARTE ORDERS. HE, THEREFORE, SUBMITTED THAT HIS SUBMISSIONS BEING COM MON TO BOTH THE ITA NOS. 844 & 845/AHD/13 A.YS. 06-07 [INDUSTRIAL TRANSPORT ORGANISATION VS. ITO] PAGE 2 APPEALS, BOTH THE APPEALS CAN BE HEARD TOGETHER. L D. D.R. DID NOT OBJECT TO THE AFORESAID SUBMISSIONS OF LD. A.R. WE THEREFORE FOR THE SAKE OF CONVENIENCE PROCEED TO DISPOSE OF BOTH THE APPEALS BY A COMMON ORDER. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: WE FIRST PROCEED WITH ASSESSEES APPEAL IN ITA NO.8 45/AHD/2013 4. THE ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF TRANSPORTATION. THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 06-07 ON 29.12.2006 DECLARING TOTAL INCOME AT RS.1, 84,646/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER, THE ASSESSMEN T WAS FRAMED U/S.143(3) OF THE ACT VIDE ORDER DATED 26.12.2008 AND THE TOTA L INCOME WAS DETERMINED AT RS.16,32,700/-. AGGRIEVED BY THE ORDER OF ASSES SING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO VIDE O RDER DATED 29.03.2011 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSING OFFICER ERRED IN DISALLOWANCE OF VARIOUS EXPENSES UNDER VAR IOUS PROVISION OF THE IT ACT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCE. FU RTHER COMMISSIONER OF INCOME TAX (APPEAL) DISMISSED APPEAL WITHOUT CONSID ERING THE FACTS OF THE CASE AND INTENTION OF THE LAW OF NATURAL JUSTICE. THE APPELLANT PRAYS THAT THE FOLLOWING ADDITION MAD E ON ACCOUNT OF VARIOUS DISALLOWANCES OF EXPENSES IN THE ASSESSMENT ORDER U /S 143(3) TO THE INCOME MAY BE DELETED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN PASSING THE ORDER U/ S 143(3) IN RESPECT OF THE RETURN OF INCOME WITHOUT APPRECIATING THE FACTS AND RECORDS ON RECORDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN HO LDING THAT DISALLOWANCE OF DETENTION CHARGES ON AD-HOC BASIS R S.25,000 OUT OF TOTAL EXPENSES 1,26,570. FAILING TO APPRECIATE THAT DETENTION CHARGES ITA NOS. 844 & 845/AHD/13 A.YS. 06-07 [INDUSTRIAL TRANSPORT ORGANISATION VS. ITO] PAGE 3 WAS NOT THE INCOME OF THE ASSESSEE AS THE SAME CHAR GES RECOVERED FROM THE CLIENT ON BEHALF OF THE TRUCK OWNER AND REFUNDE D TO TRUCK OWNER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN HO LDING THAT DISALLOWANCE OF PETROL AND CONVEYANCE EXPENSES RS.2 4,659 OUT OF TOTAL EXPENSES RS. 43,166. FAILING TO APPRECIATE THAT PET ROL AND CONVEYANCE EXPENSES WAS INCURRED EXCLUSIVELY FOR BUSINESS PURP OSE ACCORDING TO NATURE AND SIZE OF ITS BUSINESS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN HO LDING THAT DISALLOWANCE OF OFFICE EXPENSES OUT OF TOTAL EXPENS ES RS.15,000 CLAIMED RS.47,644. FAILING TO APPRECIATE THAT OFFICE EXPENS ES WAS INCURRED EXCLUSIVELY FOR BUSINESS PURPOSE ACCORDING TO NATUR E AND SIZE OF ITS BUSINESS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN HO LDING DISALLOWANCE OF TRAVELLING EXPENSES RS.2,649. FAILI NG TO APPRECIATE THAT A SMALL TRAVELLING EXPENSES WAS INCURRED EXCLUSIVEL Y FOR BUSINESS PURPOSE ACCORDING TO NATURE AND SIZE OF ITS BUSINES S. 5. REGISTRY HAS INFORMED THAT THERE IS A DELAY IN F ILING OF APPEAL BY THE ASSESSEE OF 615 DAYS. BEFORE US, ASSESSEE HAS FILE D SWORN AFFIDAVIT OF ROHTAS SINGH SIHAG, EX-PARTNER OF THE DISSOLVED FIR M, WHEREIN THE REASONS FOR DELAY IN FILING OF APPEAL ARE STATED AND ASSESS EE HAS SOUGHT CONDONATION OF DELAY. BEFORE US, LD. A.R. TOOK US THROUGH THE REASON FOR DELAY AS STATED IN THE AFFIDAVIT AND SUBMITTED THAT IN THE INTEREST OF JUSTICE, THE DELAY BE CONDONED AND THE APPEAL BE ADMITTED. LD. D.R., ON THE OTHER HAND, OBJECTED TO THE CONDONATION PETITION FILED BY THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THE CONDO NATION OF DELAY. CONSIDERING THE REASONS STATED BY THE PARTNER OF AS SESSEE FIRM IN THE AFFIDAVIT AND IN THE ABSENCE OF ANY CONTRARY MATERI AL ON RECORD, WE ARE OF THE VIEW THAT ASSESSEE HAD A REASONABLE CAUSE AND H AS SATISFACTORILY EXPLAINED THE DELAY AND THAT THERE WAS NO MALAFIDE INTENTION ON THE PART OF THE ASSESSEE IN NOT PREFERRING THE APPEALS WITHIN T HE PERIOD OF LIMITATION. ITA NOS. 844 & 845/AHD/13 A.YS. 06-07 [INDUSTRIAL TRANSPORT ORGANISATION VS. ITO] PAGE 4 CONSIDERING THE AFORESAID FACTS AND IN THE LARGER I NTEREST OF JUSTICE, WE ARE OF THE VIEW THAT DELAY IN FILING THE APPEAL NEEDS TO B E CONDONED. WE ACCORDINGLY CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 7. ON THE MERITS OF THE ISSUE, BEFORE US, AT THE OU TSET, LD. A.R. SUBMITTED THAT ONE OF THE GRIEVANCE OF THE ASSESSEE IS THAT L D. CIT(A) HAS PASSED AN EX PARTE ORDER AS ASSESSEE COULD NOT APPEAR BEFORE HIM AND THAT LD. CIT(A) HAS NOT DECIDED THE APPEAL ON MERITS. THE REASON FOR N ON-APPEARANCE BEFORE LD. CIT(A) AS STATED BY LD. A.R. WAS ON ACCOUNT OF DISP UTE BETWEEN THE PARTNERS AS THEY WERE NOT ON TALKING TERMS WITH EACH OTHER. LD. A.R., THEREFORE, SUBMITTED THAT IN THE INTEREST OF JUSTICE, ASSESSEE BE GRANTED ONE MORE OPPORTUNITY TO PRESENT ITS CASE BEFORE LD. CIT(A) A ND FURTHER ASSURED THAT ASSESSEE WILL APPEAR BEFORE LD. CIT(A). LD. D.R., ON THE OTHER HAND, SUBMITTED THAT DESPITE VARIOUS OPPORTUNITIES GRANTE D TO ASSESSEE, ASSESSEE DID NOT APPEAR BEFORE LD. CIT(A) AND THEREFORE LD. CIT(A) HAD NO OTHER OPTION BUT TO DISMISS THE APPEAL OF THE ASSESSEE. HE, THUS, SUPPORTED THE ORDER OF LD. CIT(A) . 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, WE FIND THAT LD. CIT(A) HAS PASSED AN EX-PARTE ORDER AND DISMISSED THE APPEAL OF THE ASSESSEE WITH OUT GOING INTO THE MERITS OF THE ISSUE. IT IS A SETTLED LAW THAT LD. CIT(A) HAS NO JURISDICTION TO DISMISS THE APPEAL OF THE ASSESSEE WITHOUT GOING IN TO THE MERITS OF THE ISSUE BEFORE HIM. EVEN IN AN EX PARTE ORDER THE LD. CIT(A ) SHOULD HAVE DECIDED THE GROUNDS OF APPEAL OF THE ASSESSEE ON MERITS THE REOF. CONSIDERING THE AFORESAID FACTS, WE ARE OF THE VIEW THAT IN THE LAR GER INTEREST OF JUSTICE, THE ASSESSEE BE GIVEN ONE MORE OPPORTUNITY TO PRESENT I TS CASE BEFORE LD. CIT(A). WE THEREFORE REMIT ALL THE GROUNDS RAISED IN THE PRESENT APPEAL BACK TO THE FILE OF LD. CIT(A) FOR HIM TO DECIDE TH E ISSUE ON MERITS IN ITA NOS. 844 & 845/AHD/13 A.YS. 06-07 [INDUSTRIAL TRANSPORT ORGANISATION VS. ITO] PAGE 5 ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT LD. CI T(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. IN VIEW OF OUR DECISION TO RESTORE THE VARIOUS GROUNDS RAISED BY ASSESSEE TO LD. CIT(A ), WE ARE NOT ADJUDICATING ON MERITS THE GROUNDS OF THE APPEAL RA ISED BY THE ASSESSEE. 9. THUS, THE APPEAL OF ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES. NOW, WE TAKE ASSESSEES APPEAL IN ITA NO.844/AHD/20 13 10. THE GROUNDS RAISED BY ASSESSEE READ AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSING OFFICER ERRED IN DISALLOWANCE OF EXPENSES UNDER VARIOUS PRO VISION OF THE IT ACT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCE. FURTHER CO MMISSIONER OF INCOME TAX (APPEAL) DISMISSED APPEAL WITHOUT CONSIDERING THE F ACTS OF THE CASE AND INTENTION OF THE LAW OF NATURAL JUSTICE. THE APPELLANT PRAYS THAT THE FOLLOWING ADDITION ON ACCOUNT OF REOPENING OF ASSESSMENT YEAR AND COMPLETED ASSESSMENT ORDER PASS ED U/S 144 W.R.T. U/S 147 AND MADE ADDITION ON ACCOUNT OF DISALLOWANCE OF EXP ENSE WHERE THE A.O. EARLIER MADE THE SAME ADDITION U/S 143(3) DATED 26.12.2008 TO THE INCOME MAY BE DELETED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT (A) HAS ERRED IN HOLDING THAT THAT NOTICE U/S 148 OF TH E ACT, WHICH IS BAD IN LAW AND AGAINST THE NATURAL JUSTICE. FAILING TO APP RECIATE THE FACTS NOTICE ISSUED U/S 148 ONLY DUE TO CHANGE OF OPINION OF AUD ITOR DURING REVENUE AUDIT WHERE THE SAME FACTS AND FINDING ALREADY DISC USSED BY THE A.O. IN HIS ASSESSMENT ORDER PASSED U/S 143(3) DATED 26.12. 2008. IT IS NO REASON TO BELIEVE FOR AO THAT INCOME OF THE APPELLANT CHAR GEABLE TO TAX HAD ESCAPED ASSESSMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT(A) HAS ERRED IN HOLDING THAT THE ORDER PASSED U/S 144 W.R.T. 147 WAS BAD IN LAW AND VOID AB INITIO. FAILING TO APPRECIATE THAT THE SAME FACTS AS CONTENTS IN THE NOTICE ALREADY DEALT WITH BY THE AO IN HIS EARLIER ORDER DATED 26.12.2008 PASSED U/S 148 AGAINST WHICH THE C IT (A) ALREADY PASSED ORDER ON 29.03.2011. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL)HAS ERRED IN DIS ALLOWANCE OF SERVICE RECEIPT PAYMENT RS. 77,69,040 BY INVOKING S ECTION 40(A)(IA) W.R.T. 194C. FAILING TO APPRECIATE THAT: ITA NOS. 844 & 845/AHD/13 A.YS. 06-07 [INDUSTRIAL TRANSPORT ORGANISATION VS. ITO] PAGE 6 1. SECTION 194C IS NOT APPLICABLE TO THE APPELLAN T ACCORDING TO NATURE OF TRANSACTION ACCORDING VARIOUS RULING IN F AVOUR OF ASSESSEE. 2. SECTION 194C IS NOT APPLICABLE WHERE TRUCK OWNE R ALREADY SUBMITTED THE FORM 151 BEFORE THE APPELLANT AND HE SUBMIT TO THE DEPARTMENT ACCORDINGLY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN RE COMPUTATION OF AP PELLANT INCOME, CALCULATION OF TAX THEREUPON, ACCORDINGLY CALCULATI ON OF INTEREST U/S R 234A /234B/ 234C AND 234D. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN INITIATION OF PENALT Y PROCEEDING ON DISALLOWANCE OF EXPENSE U/S 271(1)(C). 11. BEFORE US, LD. A.R. SUBMITTED THAT ONE OF THE G RIEVANCE OF THE ASSESSEE IS THAT LD. CIT(A) HAS PASSED AN EX PARTE ORDER AS ASSESSEE DID NOT APPEAR BEFORE HIM AND THAT LD. CIT(A) HAS NOT DECIDED THE APPEAL ON MERITS. THE REASON FOR NOT APPEARING BEFORE LD. CIT(A) AS SUBMI TTED BY LD. A.R.WAS THAT THE PARTIES OF THE FIRM WERE NOT ON SPEAKING TERMS DUE TO CERTAIN DISPUTES BETWEEN THEM. HE THEREFORE SUBMITTED THAT IN THE I NTEREST OF JUSTICE, ASSESSEE BE GRANTED ONE MORE OPPORTUNITY TO PRESENT ITS CASE AND ASSURED THAT ASSESSEE WILL APPEAR BEFORE LD. CIT(A). LD. D .R. ON THE OTHER HAND OBJECTED TO THE PLEA OF LD. A.R. FOR GRANTING ONE M ORE OPPORTUNITY. HE THUS SUPPORTED THE ORDER OF LD. CIT(A). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, WE FIND THAT ONE OF THE GROUNDS RAISED BY ASSESSEE IS NOT PASSING OF ORDER BY LD. CIT(A) ON M ERITS. WE FIND THAT LD. CIT(A) HAS PASSED AN EX-PARTE ORDER AND DISMISSED T HE APPEAL OF THE ASSESSEE WITHOUT GOING INTO THE MERITS OF THE ISSUE . IT IS A SETTLED LAW THAT LD. CIT(A) HAS NO JURISDICTION TO DISMISS THE APPEA L OF THE ASSESSEE WITHOUT GOING INTO THE MERITS OF THE ISSUE BEFORE HIM. EVEN IN AN EX PARTE ORDER, THE LD. CIT(A) SHOULD HAVE DECIDED THE GROUNDS OF APPEA L OF THE ASSESSEE ON ITA NOS. 844 & 845/AHD/13 A.YS. 06-07 [INDUSTRIAL TRANSPORT ORGANISATION VS. ITO] PAGE 7 MERITS THEREOF. CONSIDERING THE AFORESAID FACTS, W E ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE AND FAIR PLAY, THE ASSESSEE BE GIVEN ONE MORE OPPORTUNITY TO PRESENT ITS CASE BEFORE LD. CIT(A). WE THEREFORE REMIT ALL THE GROUNDS RAISED IN THE PRESENT APPEAL BACK TO THE FI LE OF LD. CIT(A) TO DECIDE THE ISSUE ON MERITS IN ACCORDANCE WITH LAW. NEEDLE SS TO STATE THAT LD. CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. IN VIEW OF OUR DECISION TO RESTORE THE APPEAL TO LD. C IT(A), WE ARE NOT ADJUDICATING ON MERITS THE VARIOUS GROUNDS OF THE A PPEAL RAISED BY THE ASSESSEE. 13. THUS THE APPEAL OF ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES. 14. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE A RE ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 19/02/201 6 SD/- SD/- ( SHAILENDRA KUMAR YADAV ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 19 /02/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- *+ , -. / APPELLANT /+ 01-. / RESPONDENT 2+ 345 6 / CONCERNED CIT 4+ 6- , / CIT (A) 9+ :; < 045 , 45) = 3 / DR, ITAT, AHMEDABAD >+ < ?@ A B / GUARD FILE. BY ORDER/ ,/= ,$ , 45) = 3