Aangan Agrotech Exports Ltd., Ahmedabad V. The Income tax Officer,Ward-1(1), Ahmedabad

ITA 85/AHD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2097 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 07-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: G C PIPARA
• Keywords: Principle of natural justice; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA NO 85/A HD/2013 . A.Y. 2008- 09 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI D. K. TYAGI, J.M. & SHRI ANIL CHATURV EDI, A.M.) I.T. A. NO. 85 /AHD/2013 (ASSESSMENT YEAR:2008-09 AANGAN AGROTECH EXPORTS LTD. 31, MADHUBAN TOWER, B/H. TOWN HALL, ELLISBRIDGE, AHMEDABAD 380006 (APPELLANT) VS. THE INCOME-TAX OFFICER, WARD- 1(1), A-WING, 308, 3 RD FLOOR, PRATYAKSH KAR BHAVAN, NR. POLYTECHNIC, AMBAWADI, AHMEDABAD-380 015 (RESPONDENT) PAN: AADCA 1828 N APPELLANT BY : SHRI G.C. PIPARA RESPONDENT BY : SHRI Y.P. VERMA SR. D.R. ( )/ ORDER DATE OF HEARING : 04-03- 2013 DATE OF PRONOUNCEMENT : 10 -05-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-VI, AHMEDABAD DATED 23.11.2012 FOR ASSESSME NT YEAR 2008-09. ITA NO 85/A HD/2013 . A.Y. 2008- 09 2 2. THE FACTS AS CULLED OUT FROM THE ORDER OF THE LO WER AUTHORITIES ARE AS UNDER. 3. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF HDPE PLASTIC BAGS. IT ELECTRONICAL LY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 27. 09.2008 DECLARING THE LOSS OF RS. 38,63,645/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U NDER SECTION 143(3) VIDE ORDER DATED 15.12.2010 AND THE TOTAL LOSS WAS ASSESSED AT RS. 26,72,866/- AGGRIEVED BY THE OR DER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFO RE CIT(A). CIT(A) VIDE ORDER DATED 23.11.2012 DISMISSED THE AP PEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE ASS ESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWIN G GROUNDS. [1] THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN PAS SING AN EX-PARTE ORDER WITHOUT GRANTING ADEQUATE OPPORTUNIT Y TO THE APPELLANT. THE IMPUGNED ORDER THUS REQUIRES TO BE QUASHED AS VOID-AB-INITIO, THE SAME BEING IN VIOLAT ION OF THE PRINCIPLES OF NATURAL JUSTICE AND EQUITY. THE APPELLANT STATES THAT IN THE ALTERNATIVE, THE IMPUGNED ORDER BE SET ASIDE TO THE FILE OF THE LD. CIT(A) FOR FRESH DECIS ION ON MERITS OF THE CASE. [2] THE LEARNED CIT(A) HAS FURTHER ERRED IN LAW A ND ON FACTS IN CONFIRMING THE ADDITION OF RS. 5,99,012/- ON ACCOUNT OF DISALLOWANCE OF FINANCIAL EXPENSES WHILE APPLYING THE PROVISIONS OF SECTION 14A R.W.R 8D WIT HOUT PROPER APPRECIATION AND CONSIDERATION OF THE FACTS OF THE CASE AND SETTLED LEGAL POSITION THAT SECTION 14A CA NNOT APPLIED UNLESS THERE IS A PROXIMATE CAUSE FOR DISALLOWANCE AS HELD BY THE HON. SUPREME COURT IN T HE CASE OF CIT VS. WALFORT SHARE AND STOCK BROKERS (P. ) LTD. ITA NO 85/A HD/2013 . A.Y. 2008- 09 3 326 ITR 1 (SC). THE ASSESSING OFFICER HAVING FAILE D TO ESTABLISH SUCH PROXIMATE CAUSE, THE IMPUGNED ADDITI ON OF RS. 5,99,012/- DESERVED TO BE DELETED. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON PERUSAL OF PROFIT AND LOSS ACCOUNT NOTIC ED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 68,998/- ON SHARES AND RS. 38,26,196/- ON MUTUAL FUNDS WHICH WA S CLAIMED AS EXEMPTED FROM INCOME TAX. ASSESSING OFFICER FU RTHER NOTICED THAT ASSESSEE HAS NOT DISALLOWED ANY EXPEND ITURE WITH RESPECT TO EXPENSES FOR EARNING THE EXEMPT INCOME. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY DISALLOWANC E NOT BE MADE IN VIEW OF THE PROVISIONS OF SECTION 14A READ WITH RULE 8D. THE ASSESSEE INTERALIA SUBMITTED THAT THE ENTIR E INVESTMENTS HAS BEEN MADE OUT OF SHARE CAPITAL OF T HE COMPANY AND NOT OUT OF THE BORROWED FUNDS AND THERE FORE NO DISALLOWANCE UNDER SECTION 14A WAS CALLED FOR. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTIONS OF THE ASSES SEE HAS ALSO NOTICED THAT THE ASSESSEE HAS INCURRED INTEREST EX PENSES OF RS. 8,02,238/-. HE ACCORDINGLY WORKED OUT THE DISA LLOWANCE AS PER RULE 8D OF THE INCOME TAX RULES AMOUNTING TO RS . 5,99,012/- AND ADDED TO THE INCOME. 5. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASS ESSEE CARRIED THE MATTER BEFORE CIT(A). 6. BEFORE CIT (A) THERE WAS NO REPRESENTATION FROM ASSESSEES SIDE AND THEREFORE CIT(A) DISMISSED THE APPEAL OF T HE ASSESSEE BY PASSING A CRYPTIC ORDER. ITA NO 85/A HD/2013 . A.Y. 2008- 09 4 7. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 8. BEFORE US, AT THE OUTSET, THE LEARNED A.R. SUBMI TTED THAT DUE TO UNAVOIDABLE CIRCUMSTANCES NO REPRESENTATION COULD B E MADE BEFORE CIT(A). HE FURTHER SUBMITTED THAT CIT(A) HA S DISMISSED THE APPEAL OF THE ASSESSEE BY PASSING A VERY CRYPTI C ORDER. HE THEREFORE SUBMITTED THAT ONE MORE OPPORTUNITY BE GR ANTED TO THE ASSESSEE TO REPRESENT ITS CASE. 9. THE LEARNED D.R. ON THE OTHER HAND SUBMITTED THA T VARIOUS OPPORTUNITIES WERE GRANTED TO THE ASSESSEE BY CIT(A ) BUT THE ASSESSEE DID NOT AVAIL THE SAME. HE THEREFORE OPPO SED THE REQUEST OF THE A.R. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT ASSESSING OFFICER HAS DISAL LOWED THE EXPENSES U/S 14A. ON PERUSING THE ORDER OF CIT(A) WE FIND THAT THOUGH CIT(A) HAD FIXED THE HEARING ON VARIOUS DATE S AND DESPITE NOTICE BEING ISSUED TO ASSESSEE THERE WAS N O REPRESENTATION FROM ASSESSEES SIDE. CIT(A) WHILE D ISMISSING THE APPEAL HAS PASSED A VERY CRYPTIC ORDER AND NOT DECIDED THE ISSUE ON MERITS. WE ARE THEREFORE OF THE VIEW THAT TO MEET THE ENDS OF JUSTICE, ONE MORE OPPORTUNITY BE GRANTED TO THE ASSESSEE TO MAKE THE SUBMISSIONS BEFORE CIT(A). WE THEREFORE, SET ASIDE THE ISSUE TO THE FILE OF CIT(A ) FOR HIM TO ITA NO 85/A HD/2013 . A.Y. 2008- 09 5 DECIDE THE ISSUE DE NOVO ON MERITS AND BY PASSING A SPEAKING ORDER AND AFTER GIVING ADEQUATE OPPORTUNITY OF HEAR ING TO BOTH THE SIDES. THUS THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11. THUS THE APPEAL OF ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 10- 05 - 2013. SD/- SD/- (D.K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY AHMEDABAD. RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDA BAD