GE Intelligent Platforms Private Limited, Bangalore V. ACIT, Bangalore

ITA 909/BANG/2011

• Counselvise Citation: 90921114 RSA 2011
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 18-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K AMBUSTHA
• Assessee Lawyers: VIKAS BAHETI
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NOS.909 & 910/BANG/2011 (ASSESSMENT YEARS : 2005-06 & 2006-07) M/S. GE INTELLIGENT PLATFORMS PRIVATE LIMITED, (FORMERLY GE FANUC SYSTEMS PVT. LTD.) 43, ELECTRONIC CITY, 1 ST FLOOR, BUILDING 9, BANGALORE-560 100 . APPELLANT. PAN AAACG7573K VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 11(3), NRUPATHUNGA ROAD, BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI VIKAS BAHETI. RESPONDENT BY : SHRI S.K. AMBUSTHA. DATE OF HEARING : 22.08.2012. DATE OF PRONOUNCEMENT : 24.8.2012. O R D E R PER SHRI JASON P. BOAZ : THESE TWO APPEALS BY THE ASSESSEE COMPANY ARE DIR ECTED AGAINST THE COMMON ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, BANG ALORE DATED 4.8.2011 FOR BOTH ASSESSMENT YEARS 2005-06 & 2006-07. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDE R : 2.1 THE ASSESSEE COMPANY, A SUBSIDIARY OF GE FA NUC AUTOMATION AMERICAS INC. USA, IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF PROGRAMMA BLE LOGIC CONTROLLERS, AUTOMATION SOFTWARE AND RELATED AUTOMATION PRODUCTS. IT FILED ITS RETURNS OF INCOME FOR ASSESSMENT YEARS 2005-06 AND 2006-07 ON 26.9.2005 AND 18.11.20 06 RESPECTIVELY DECLARING INCOME OF 2 ITA NOS.909 & 910/BANG/11 RS.2,62,23,106 AND RS.3,69,28,730. THE CASE WAS TA KEN UP FOR SCRUTINY AND THEREAFTER THE ASSESSING OFFICER COMPLETED THE ASSESSMENTS BY ORDERS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED AS 'THE ACT') DETERMINING THE INCOME OF THE ASSESSEE AT RS.2,81,57,229 AND RS.4,45,23,826 FOR A SSESSMENT YEARS 2005-06 AND 2006- 07 RESPECTIVELY. IN THE ORDERS OF ASSESSMENT, THE DISALLOWANCES OF EXPENSES MADE WERE AS UNDER : ASSESSMENT YEAR 2005-06 DISALLOWANCE OF PROVISION FOR WARRANTY : RS. 19,34 ,123 ASSESSMENT YEAR 2006-07 I) DISALLOWANCE OF PROVISION FOR OBSOLETE AND : RS. 72,09,985 AND SLOW MOVING INVENTORY. II) DISALLOWANCE OF PROVISION FOR WARRANTY : RS. 3,85,111 2.2 AGGRIEVED BY THE ORDERS OF ASSESSMENT FOR A SSESSMENT YEARS 2005-06 AND 2006- 07, THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) DISMISSED BOTH THE APPEALS OF THE ASSESSEE FOR NON-PURSUANCE OF THE APPELLATE PROCEEDINGS ON THE GROUNDS THAT NOTICES WERE SERVED ON THE ASSESSEE ON 22.11.2010, 21.1.2011 AND 20.7.2011 FIXING THE HEARINGS ON 7.12.2010, 7.2.2011 AND 3.8. 2011 BUT NO ONE APPEARED ON THE DATES SPECIFIED. 3.1 THE ASSESSEE COMPANY IS NOW BEFORE US IN AP PEAL FOR BOTH ASSESSMENT YEARS 2005- 06 AND 2006-07. ALONGWITH THE GROUNDS OF APPEAL, T HE ASSESSEE BY LETTER DT.9.8.2012 HAS FILED WRITTEN SUBMISSIONS WHICH ARE EXTRACTED AND R EPRODUCED HEREIN BELOW : FACTS THE APPELLANT SUBMITS THAT APPEALS UNDER SECTION 24 6A OF THE ACT WERE FI L ED BEFORE THE COMMISSIONER OF INCOME-TAX (APPEA1S) - I [ ' LD. CI T( A) ' ] AGAINST THE ORDE R OF THE ASSESSING 3 ITA NOS.909 & 910/BANG/11 OFFICER PASSED U/S. 143(3) OF THE INCOME - TAX ACT, 1961 CTHE AC T ' ) FOR ASSESSMENT YEAR(AY ' ) 2005 - 06 AND AY 2006 - 07. THE SAID APPEALS FOR AY 2005 - 0 6 AND AY 2006-07 WAS FILED ON JANUAR Y 28,2009 AND DECEMBER 30,2009 RESPECTI V ELY. THE SEQUENCES OF HEARING BEFORE THE LD . CIT(A) HAS BEEN TABULATED BELOW: DATE OF NOTICE DATE OF HEARING SCHEDULED ACTION BY APPELLANT REMARKS DECEMBER 08, 2010 DECEMBER 27, 2010 SOUGHT ADJOURNMENT AS IT WAS IN THE PROCESS OF COLLATINGTHE DETAILS AND PREPARING THE SUBMISSIONS. ACKNOWLEDGED COPY OF THE ADJOURNMENT LETTER FILED BEFORE THE LEARNED CIT(A) ENCLOSED AS ANNEXURE 1. JANUARY 21, 2011 (SERVED ON THE APPELLANT ON FEBRUARY 03, 2012) FEBRUARY 07, 2011 THE APPELLANT SOUGHT ADJOURNMENT AS THE NOTICE OF HEARING WAS SERVED ON THE APPELLANT ONLY TWO WORKING DAYS BEFORE THE SCHEDULED HEARING DATE. ACKNOWLEDGED COPY OF ADJOURNMENT LETTER DATED FEBRUARY 04, 2011 FILED BEFORE LEARNED CIT(A) ATTACHED AS ANNEXURE 2. JULY 20, 2011 AUGUST 03, 2011 NO ACTION BY THE APPELLANT AS THE NOTICE WAS SERVED ON THE APPELLANT. THE PURPORTED NOTICE DATED JULY 20, 2011 SCHEDULING THE HEARING FOR AUGUST 3, 2011 WAS NOT SERVED ON THE APPELLANT A T ALL. NO FURTHER OPPORTUNITY TO PRESENT THE CASE WAS GIVE N TO THE APPELLANT AND THE LD. CIT(A) VIDE ORDER DATED AUGUST 04, 2011 DISMISSED THE APPE AL CONTEN D ING THAT THE APPELLANT HAS NOT RESPONDED TO THE NOTICES ISSUED AND HENCE APPEARS T O BE NOT SERIOUS AND DESIROUS OF PURSUING THE APPELLATE PROCEEDINGS. IN THE SAID ORD ER , THE LD CIT(A) HAS INDICATED THAT A NOTICE DATED JULY 20 , 2011 WAS ALSO SERVED ON THE APPELLANT FIXING THE DA TE OF HEARING ON AUGUST 3, 2011 . O U R S U B M ISSIO N AT THE OUTSET, THE APPELLANT WISHES TO SUBMIT T H AT WITH REGARD TO THE HEARINGS SCHEDULED ON DECEMBER 27, 2010 AND FEBRUARY 07, 2011, THE APPELL ANT HAD DULY RESPONDED BY WAY OF SEEKING ADJOURNMENTS FOR REASONS AS MENTIONED IN TH E AFORESAID TABLE . FURTHER , WITH REGARD TO ALLEGED NOTICE DATED JULY , 2011 FIXING THE HEARING ON AUGUST 03,2011 , THE APPELLANT WISHES TO SUBMIT THAT THE SAID NOTICE WAS NEVER SERVED ON TH E APP E LLANT . AN AFFIDA V IT TO THIS EFFECT IS ATTACHED AS A NN EX UR E 3 FOR Y OUR REFERENCE . IN V IEW OF ABOVE, THE APPELLANT WISHES TO SUBMIT THAT T HE LD . CIT(A) HAS ERRED IN DISMISSING THE APPEALS BY HOLDING THAT THE APPELLANT IS NO T SERIOUS AND DESIROUS OF PURSUING TH E APPELLATE PROCEEDINGS. 4 ITA NOS.909 & 910/BANG/11 PRIN C IPLE OF N ATURAL JUSTICE VIOLAT E D TH E A PPELL A NT W I S HES TO S UBMIT TH A T TH E LD. CIT(A) HA S A CTED IN H A ST E AND G RO SS L Y E RRED IN N O T PR OV IDIN G AD E QU A T E OPPORTUNIT Y OF BEING H E ARD T O TH E APPELLANT . ACCORDIN G L Y , TH E LD . C IT (A) H A S V IOLAT E D THE PRINCIPLE OF N A TUR A L JU S TICE. I T IS S UBMITT E D TH A T A F A IR O PPORTUNIT Y O F H EA RIN G I S PR E - C ONDITI O N FOR A N Y A PP E LL A T E P ROCEE DIN G. THIS IS O N E O F TH E B AS IC PRINCIPL ES OF N A TURAL JUSTICE W HICH IMPLI E S TH A T A P E R SO N HAS R IG HT TO B E H E ARD B Y W A Y OF A N O PP O RTUNIT Y, W HICH S H O ULD B E A D E QUAT E A ND R E A S ON A BL E . I N S UPPORT OF THE A B OV E , TH E A PP E LL A NT W I S HES T O PL ACE R E LI A NC E O N TH E D EC I S I O N O F TH E SUPR E M E COURT I N TH E C A S E OF C.B GAUTHAM VS UOI AND OTHERS (199 ITR 530) (SC) W H E R E IN TH E C O URT WA S OF THE V I EW TH A T TH E COURT S H AVE GE N E R A LL Y R EA D INTO TH E PRO V I S ION S O F TH E RE L EVA NT SE CTION S A R E QUIR E M E NT O F G I V IN G R EASO N A BLE O PP O RTUNIT Y OF B E IN G H EA RD B E FOR E A N O RD E R I S M A DE W HICH W OULD HA VE A D VE R SE CI V IL CO N SE QU E NC E FOR TH E P A RTI ES A FF E CT E D. THI S WO UL D B E P A RTICUL A RL Y S O IN A C ASE W HERE TH E VA LIDIT Y OF TH E SE CTI O N WO ULD B E OP E N T O A S E RI O U S C H A LL E N GE FO R WA NT O F S U C H A N O PP O RTUNIT Y . WE WO UL D LIK E T O DR AW A TT E NTI O N OF TH E H O N O R A BL E M E MB E R S T O TH E D E CI S I O N OF TH E H O N ' BL E A LL A H A B A D HI G H C O U R T IN TH E C ASE O F MUNNALAL MURLIDHAR VS CIT (79 ITR 540) , W H E R E IN THE HO N ' B L E CO URT , R E L Y IN G O N IT S D E CI S I O N IN TH E C ASE O F E . M . C. W O RK S (P.) LTD VS ITO ( 49 I T R 650), HAS H E LD TH A T W H E R E A D E QU ATE O PP O RTUNIT Y H AS N O T B EE N G I VE N T O TH E ASSESSEE, TH E ASSESS M EN T WO ULD B E V ITI A T E D. TH E AP P EL L A N T A L S O W OULD LIK E T O DR AW TH E A TT E NTI O N OF TH E H O N O R A BL E M E MB E R S T O TH E DEC I S I O N OF T H E H O N ' BL E PUNJ A B HI G H C O URT IN TH E CASE O F M. MOHD. ISHAQ VS CIT (27 ITR 510). IN TH E SA ID C ASE, TH E H O N ' BL E C O URT H AS O B SE R VE D THU S : 'THERE CAN BE LITTLE DOUBT THAT A PERSON IS ENTITLE D TO BE HEARD BEFORE HE CAN BE SADDLED WITH A PECUNIARY LIABILITY. IT IS TRUE THAT PUBLIC REVENUES ARE TO BE COL L ECTED PROMPTLY AND EXPEDITIOUSLY BUT IT MUST BE REMEMBE R ED THAT IF A N I NCOME - TAX OFFICER RECOVERS ANY TAX EXCEP T IN ACCO R DANCE WITH THE PROCEDURE ESTABLISHED BY LAW IT IS T A KI NG OF PROPERTY IN CONTRAVE NTI ON OF T H E PROVISIONS OF ARTI C LE 31 OF THE CONSTITUTION.' PRAYER THU S, IT I S S UBMITT E D TH A T TH E O RD E R P ASSE D B Y TH E LD . C IT( A ) IN AGA IN S T TH E PRIN C IPL ES OF N AT UR A L J U S TIC E A ND H E NC E BAD IN L AW. AC C O RDIN G L Y, IT I S PRA YE D TH A T TH E IMPU G N E D O RD E R OF TH E LD . CIT (A) B E QU AS H E D A ND DIR EC TI O N S B E G I VE N T O AD J UDIC A TE TH E CASE O N M E RIT S AF T E R P ROV IDIN G A N O PP O RTUNIT Y O F B E IN G H E ARD T O TH E A PP E L L ANT. ALONG WITH THE WRITTEN SUBMISSIONS, THE ASSESSEE HA S ALSO FILED AN AFFIDAVIT WHICH READS AS UNDER : I, A SH OK KUM A R DHOOT A G E D ABOUT 35 Y E A R S, AUTHORI SE D SI G N A TOR Y O F GE INT E LLIG E NT PL A TFORM S PRI VA TE LIMIT E D ( , GEIPPL ' OR ' TH E COMP A N Y ' ) (FORME R L Y KNOWN AS GE FANUC SYSTEMS PRIVAT E LIMIT E D) H AV IN G R E GI S TER E D OFFI CE A T NO 43 , 1 ST FLOOR , BUILDING NO 9 , VEL A K A NI T EC H P A R K, EL E CTRONIC CIT Y, HOSUR RO A D , BANGALORE 560 100. 5 ITA NOS.909 & 910/BANG/11 TH A T TH E COMPAN Y HAS NOT RECEIVED AN Y NOTIC E O F H EAR IN G B EFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) PERTAINING TO ASSE S SM E NT Y EAR 2 005-06 ( APP EA L NO ITA 156/ AC-LL(3)/ A- I/ 08-09) OR 2006-07 ( A PP EA L N O. IT A 51/AC-LL(3) / A-I/09-10) PURPORTED TO BE S C H E DUL E D ON A U G U ST 03 , 2 011 AS P ER TH E ORD E R OF THE COMMISSIONER ON INCOM E -T AX (APP EA L S) D A T E D A UGU S T 0 4, 2 011 . THAT W H A T HAS B E EN STAT E D ABOVE IS THE FACT AND TRUE TO M Y KNO W L E D GE . FOR GE INTELLIGENT PLATFORMS PVT. LTD. AUTHORISED SIGNATORY (SIGNATURE) 3.2 IN VIEW OF THE WRITTEN SUBMISSIONS (SUPRA) AND AFFIDAVIT FILED (SUPRA), THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE O RDERS PASSED BY THE LEARNED CIT(A) ARE AGAINST THE PRINCIPLES OF NATURAL JUSTICE, THEY BE QUASHED AND CIT(A) BE DIRECTED TO ADJUDICATE THE CASE ON MERITS AFTER PROVIDING AN OP PORTUNITY OF BEING HEARD TO THE ASSESSEE. 3.3 THE LEARNED DEPARTMENTAL REPRESENTATIVE HAD NO OBJECTION TO THE PROPOSITION LAID FORTH BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE MATTER BE REMITTED TO THE FILE OF THE LEARNED CIT(A) AND HE BE DIRECTED TO ADJUDICATE THE CASE ON MERITS. 3.4 WE HAVE HEARD BOTH PARTIES AND HAVE CAREFUL LY PERUSED AND CONSIDERED THE SUBMISSIONS MADE, DETAILS FILED AND THE IMPUGNED OR DER OF THE LEARNED CIT(A) FOR ASSESSMENT YEARS 2005-06 AND 2006-07 DT.4.8.2011. FROM THE SUBMISSIONS ON RECORD, WE FIND THAT FOR THE HEARINGS FIXED BY THE LEARNED CIT (A) ON 27.10.2010 AND 7.2.2011, THE ASSESSEE SUBMITTED THAT IT HAD FILED LETTERS SEEKIN G ADJOURNMENT WHICH WERE DULY ACKNOWLEDGED BY THE OFFICE OF THE LEARNED CIT(A) W HICH HAS NOT BEEN DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. IN RESPECT O F THE THIRD HEARING FIXED ON 3.8.2011, 6 ITA NOS.909 & 910/BANG/11 THE ASSESSEE STATES THAT THIS NOTICE WAS NOT SERVED ON IT AT ALL AND HAS FILED AN AFFIDAVIT TO THIS EFFECT (SUPRA) WHICH HAS NOT BEEN CONTROVERTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. IN THESE CIRCUMSTANCES, IT IS CLEA R THAT THE PRINCIPLES OF NATURAL JUSTICE HAS BEEN VIOLATED IN THIS CASE AND WE ARE, THEREFOR E, OF THE CONSIDERED OPINION THAT IN THE INTEREST OF EQUITY AND JUSTICE, THE ORDERS OF THE L EARNED CIT(A) DT.4.8.2011 BE QUASHED AND THE APPEALS FOR ASSESSMENT YEARS 2005-06 AND 20 06-07 BE RESTORED TO THE FILE OF THE LEARNED CIT(A) WITH THE DIRECTION THAT THEY BE DISPOSED OFF ON MERITS AND IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE ADEQU ATE OPPORTUNITY OF BEING HEARD. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE WITH THE DE PARTMENT BY FILING DETAILS CALLED FOR, ATTENDING HEARING, ETC SO THAT THE APPEALS FOR THE RELEVANT ASSESSMENT YEARS BE DISPOSED OFF EXPEDITIOUSLY. 4. IN VIEW OF THE FACT THAT THE APPEALS FOR ASS ESSMENT YEARS 2005-06 AND 2006-07 HAVE BEEN REMANDED TO THE FILE OF LEARNED CIT(A) FO R DISPOSAL ON MERITS, THE RELEVANT GROUNDS OF APPEAL PREFERRED IN THE APPEALS BEFORE U S ARE NOT BEING ADJUDICATED UPON. 5. IN THE RESULT, THE ASSESSEES APPEALS FOR AS SESSMENT YEARS 2005-06 AND 2006-07 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2012. SD/- SD/- (N.V. VASUDEVAN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE, DATED: 24.8.2012. *REDDY GP 7 ITA NOS.909 & 910/BANG/11 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - A BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDE R SR. PRIVATE SECRETARY, ITAT, BANGALORE