M/s Amarjit Enterprises, Mandi Gobindgarh V. ITO, Rajpura

ITA 97/CHANDI/2010

• Counselvise Citation: 9721514 RSA 2010
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-08-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 22-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: H R SHALDI
• Keywords: Reopening of assessment; Opportunity of being heard
• Section: 142(1); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 97/CHD/2010 ASSESSMENT YEAR: 2005-06 M/S AMARJIT ENTERPRISES, VS THE ITO, MANDI GOBINDGARH RAJPURA PAN NO. AABFA9068P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.R.SHALDI RESPONDENT BY : SMT. JAISHREE SHARMA DATE OF HEARING : 06.08.2012 DATE OF PRONOUNCEMENT : 07.08.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), PATIALA DATED 10.12.2009 RELATING TO ASSESS MENT YEAR 2005-06. 2. GROUND NOS. 1 & 2 OF THE APPEAL READ AS UNDER:- 1. THAT THE LD. CIT(A) HAS WRONGLY AND ARBITRARILY DISMISSED THE GROUND THAT NOTICE ISSUED U/S 148 IS NOT VALID. WHEREAS ALL THE FACTS WERE ON RECORD AND THE NOTICE ISSUED IS ILLEGAL AND AGAINST THE FACTS OF THE CASE. 2. THAT THE LD. CIT(A) HAS WRONGLY AND ARBITRARILY DISMISSED THE GROUND THAT THE ITO, RAJPURA HAD NO JURISDICTION OVER THE CASE, BECAUSE JURISDICTION 2 LIES WITH ITO WARD-I, MANDI GOBINDGARH. THIS GROUND HAS BEEN DISMISSED UNDER MISCONCEPTION OF FACTS STATING THAT ITO RAJPURA HAS THE JURISDICTION AS HE HAS ISSUED THE NOTICE US/ 148, WHEREAS NOTICE WAS ISSUED BY THE ITO, WARD-I, MANDI GOBINDGARH WHO HAS THE JURISDICTION AND THE ASSESSMENT HAS BEEN FRAMED BY ITO RAJPURA, WHO HAD NO JURISDICTION OVER THE CASE. AS SUCH THE ASSESSMENT ORDER IS LIABLE TO BE ANNULLED FOR WANT OF JURISDICTION AND THE LD. CIT(A) HAS ERRED IN DISMISSING THE GROUND OF APPEAL . 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS DEALING IN THE SALE AND PURCHASE OF IRON AND STEELS GOODS. IN THIS CASE, RETURN OF INCOME WAS FILED ON 26.10.2005 DECLARING INCOME OF RS. 2,2 4,488/-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE FIRM HAS NOT CARR IED FORWARD THE LOSSES AS PER THE PROVISIONS OF SECTION 78 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') WHICH RESULTED IN ESCAPEMENT OF INCOME OF RS. 13,03,820/-. THEREFORE, PROCEEDINGS U/S 147 / 148 OF THE ACT WERE INITIATED AND NOTICE U/S 148 OF THE ACT WAS ISSUED ON 12.7.2006 AND SERVED UPON THE ASS ESSEE ON 13.7.2007. IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT, THE ASSE SSEE FILED RETURN OF INCOME ON 6.9.2006. THEREAFTER, NOTICE U/S 143(2), 142(1) AND A QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. HOWEVER, THERE WAS NO COMP LIANCE TO THE ABOVE NOTICES BY THE ASSESSEE AND CONSEQUENTLY, THE ASSES SING OFFICER FRAMED THE ASSESSMENT U/S 144 OF THE ACT ON 24.12.2007. IN THE ASSESSMENT ORDER U/S 144 OF THE ACT, THE ASSESSING OFFICER MADE CERTAIN ADDI TIONS / DISALLOWANCES. 4. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT (A), THE ASSESSEE HAD RAISED AS MANY AS EIGHT GROUNDS OF APPEAL. GROUND NO.1, 2 AND 3 OF THE APPEAL FILED BY THE ASSESSEE BEFORE THE CIT(A) READ AS UNDER:- 3 1. THAT THE LD. ASSESSING OFFICER HAS WRONGLY AND ARBITRARILY ISSUED THE NOTICE U/S 148 WHICH IS ILLE GAL, BAD IN LAW AND AS SUCH ALL SUBSEQUENT PROCEEDINGS ARE L IABLE TO THE CANCELLED. 2. THAT WITHOUT PREJUDICE TO ABOVE, THE LD. ITO RAJPUR A HAS NO JURISDICTION TO FRAME THE ASSESSMENT AS SUCH THE ASSESSMENT IS LIABLE TO BE ANNULLED. 3. THAT THE LD. ASSESSING OFFICER HAS WRONGLY FRAMED T HE ASSESSMENT U/S 144 WHEREAS THE ASSESSEE HAD BEEN REGULARLY ATTENDING THE PROCEEDINGS FROM TIME TO TI ME WHICH IS ON RECORD AND IN THE ASSESSMENT ORDER ITSE LF. AS SUCH THE ASSESSMENT FRAMED U/S 144 IS LIABLE TO BE CANCELLED. 5. FROM THE ABOVE GROUNDS, IT IS CLEAR THAT THE ASS ESSEE HAS CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT U/S 147 /148 OF THE ACT. VIDE GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF ITO, RAJPURA TO FRAME THE ASSESSMENT AND WHEREAS VIDE GROUND NO.3 OF THE APPEAL, THE ASSESSEE HAS CHALLENGED THE ASSESSMENT FRAMED U/S 144 OF THE ACT . 6. THE CIT(A) HAS DECIDED THE ABOVE GROUNDS OBSERVI NG AS UNDER:- 2.1 THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER AT PARA 1 HAS RECORDED THE REASON THAT ASSESSEE FIRM H AD NOT CARRY FORWARD THE LOSSES AS PER PROVISIONS OF SECTI ON 78 OF THE ACT WHICH HAD RESULTED INTO ESCAPEMENT OF INCOM E. SINCE THE ASSESSING OFFICER HAS RECORDED PROPER REASONING BEFORE ISSUE OF NOTICE U/S 148, THEREFORE , THE NOTICE ISSUED BY ASSESSING OFFICER ON THIS SCORE IS VALID. SIMILARLY, ISSUE RAISED BY THE ASSESSEE THAT ITO RA JPURA HAS NO JURISDICTION IS ALSO WITHOUT BASIS AS HE HAS RIGHTLY ISSUED NOTICE U/S 148. IN REGARD TO GROUND NO.3, I FIND THAT ORDER PASSED BY ASSESSING OFFICER IS OF ACADEM IC IN NATURE AND AT APPELLATE STAGE ISSUE HAS BEEN EXAMIN ED IN 4 DETAIL BY AFFORDING ADEQUATE OPPORTUNITY BOTH TO TH E ASSESSEE AND ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE ORDER OF CIT(A) WITH RESPECT TO THE GROUND NOS. 1 TO 3 OF TH E APPEAL FILED BY THE ASSESSEE BEFORE HIM. WE FIND THAT THE LD. CIT(A) HAS NOT PASSED A SPEAKING ORDER WHILE DISPOSING OF GROUND NOS. 1 TO 3 OF THE APPEAL. IT IS TRUE THAT THE LD. CIT(A) HAS NOT DECIDED THE ISSUE REGARDING VALI DITY AND REOPENING OF ASSESSMENT U/S 147 / 148 OF THE ACT. THE CIT(A) HAS ALSO NOT DECIDED THE ISSUE REGARDING FRAMING OF ASSESSMENT U/S 144 OF TH E ACT, PARTICULARLY WHEN THE ASSESSEE HAS STATED THAT THE ASSESSMENT WAS FRA MED WRONGLY AS THE ASSESSEE HAD REGULARLY BEEN ATTENDING THE PROCEEDIN GS. AS REGARDS GROUND NO.3, THE LD. CIT(A) STATED THAT IN REGARD TO GROUND NO.3, I FIND THAT ORDER PASSED BY ASSESSING OFFICER IS ACAMADIC IN NA TURE AND AT APPELLATE STAGE THE ISSUE HAS BEEN EXAMINED IN DETAIL BY AFFO RDING ADEQUATE OPPORTUNITY BOTH TO THE ASSESSEE AND ASSESSING OFFI CER. IN FACT, THE CIT(A) HAS NOT ADJUDICATED THIS ISSUE IN ACCORDANCE WITH L AW. AS REGARDS GROUND NO.2 OF THE APPEAL, THE CIT(A) STATED THAT THE ISSU E RAISED BY THE ASSESSEE THAT ITO RAJPURA HAS NO JURISDICTION HAS ALSO NO B ASIS AS HE HAS RIGHTLY ISSUED NOTICE U/S 148. IN OUR VIEW, THE CIT(A) HAS NOT PASSED A REASONED ORDER AS PER SETTLED LAW. THUS, THE ORDER OF THE CIT(A) IS A NON-SPEAKING AND HENCE NOT TENABLE. IN FACT, THE LD. CIT(A) WA S REQUIRED TO GIVE REASONS IN SUPPORT OF HIS DECISION REGARDING THE ABOVE ISSU ES. IN OUR VIEW, STATING OF REASONS IS ONE OF THE ESSENTIALS OF JUSTICE. THE C IT(A) WAS REQUIRED TO GIVE ADEQUATE REASONS. THE REASONS PROVIDE A LIVE LINK BETWEEN THE CONCLUSION AND THE EVIDENCE. IT IS A SETTLED LAW THAT REASONS FOR ORDER TO BE GIVEN BY 5 APPELLATE AUTHORITY. IN THE CASE OF MANEKLAL D.SHA H VS P.K. GUPTA AND OTHERS (2004) 267 ITR 340 (BOM.), THE HON'BLE HIGH COURT HELD AT PAGE 344 AS UNDER:- A RIGHT TO REASONS IS, THEREFORE, AN INDISPENSABLE PART OF A SOUND SYSTEM OF JUDICIAL REVIEW. A REASONED DECISION IS NOT ONLY FOR THE PURPOSE OF SHOWING THA T THE CITIZEN IS RECEIVING JUSTICE, BUT ALSO A VALID DISC IPLINE FOR THE AUTHORITY ITSELF. THEREFORE, STATING OF REA SONS IS ONE OF THE ESSENTIALS OF JUSTICE. THE APPELLATE AUT HORITY IS ENJOINED AND IT IS INCUMBENT UPON IT TO APPRECI ATE THE EVIDENCE CONSIDER THE REASONING OF THE PRIMARY AUTH ORITY AND ASSIGN ITS OWN REASONS AS TO WHY IT DISAGREES WITH THE REASONS AND FINDINGS OF THE PRIMARY AUTHORITY. UNLESS ADEQUATE REASONS ARE GIVEN, MERELY BECAUSE I T IS AN APPELLATE AUTHORITY, IT CANNOT BRUSH ASIDE THE REASONING OR FINDINGS RECORDED BY THE PRIMARY AUTHO RITY. THE ORDER SHOULD BE SELF-EXPLANATORY AND SHOULD NO T KEEP THE HIGHER COURT GUESSING FOR REASONS. THE REA SONS PROVIDE A LIVE LINK BETWEEN THE CONCLUSION AND THE EVIDENCE. THAT VITAL LINK IS THE SAFEGUARD AGAINST ARBITRARINESS. IT GIVES AN OPPORTUNITY TO THE HIGHE R COURT TO SEE WHETHER OR NOT THE SUBORDINATE COURT OR AUT HORITY OR THE TRIBUNAL CONSIDERED THE RELEVANT MATERIAL. SINCE NO REASONS ARE FOUND IN THE ORDER, WE ARE LEFT WITH NO OTHER ALTERNATIVE BUT TO QUASH AND SET ASIDE THE IMPUGNED ORDER TO THE EXTENT IT IS CHALLENGED AND TO REMIT THE PROCEEDINGS BACK TO THE COMMISSIONER OF INCOME-TAX, CENTRAL-II, MUMBAI, FOR HEARING AND CONSIDERATION AFRESH ON THE MERITS. 8. CONSIDERING THE FACTS OF THE PRESENT CASE AND AL SO THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF MAN EKLAL D.SHAH VS P.K. 6 GUPTA AND OTHERS (SUPRA), WE SET ASIDE THE ORDER OF CIT(A) IN TOTO AND REMAND THE MATTER TO CIT(A) WITH A DIRECTION TO DECIDE THE ISSUES RAISED IN THE APPEAL AFRESH ON MERITS IN ACCORDANCE WITH LAW AFTER AFFOR DING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ALS O DIRECT THE CIT(A) TO DECIDE ALL THE GROUNDS OF THE APPEAL OF THE ASSESSE E AFRESH ON MERITS IN ACCORDANCE WITH LAW PREFERABLY WITHIN THREE MONTHS FROM THE DATE OF RECEIPT OF A COPY OF THIS ORDER. 9. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF AUGUST, 2012 SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 7 TH AUGUST, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR