S Ramappa , Harihar V. The Income Tax Officer Ward-1(3), Davangere

ITA 974/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7144 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 28-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Keywords: Opportunity of being heard; Principle of natural justice; Reasonable cause
• Section: 143(3); 133A; 234B; 143(1); 147; 148; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 974 /BANG/201 8 ASSESSMENT YEAR : 20 12 - 13 SHRI. S. RAMAPPA, #21, HUCHENGAMMA NILAYA, SUNAGARBIDI, HALLADEKERI, HARIHAR 577 601. PAN : ANBPR 5185 M VS. THE INCOME TAX OFFICER, WARD 1(3), PARKVIEW BUILDING, P J EXTENSION, DAVANGERE. APPELLANT RESPONDENT ASSESSEE BY : SHRI. ZAIN AHMED KHAN, CA REVENUE BY : DR. P. V. PRADEEP KUMAR, ADDL. CIT DATE OF HEARING : 2 0 . 1 2 .201 8 DATE OF PRONOUNCEMENT : 11 . 01 .201 9 O R D E R PER SHRI JASON P BOAZ, A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE EX-PARTE ORDER OF THE CIT(A), DAVANGERE, DATED 17.01.2018 FOR ASSESSMENT YEAR 2012-13. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE, AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF MUD BRICKS AND REAL ESTATE, FILED HIS RETURN FOR ASSESSMENT YEAR 2012-13 ON 26.11.2012 DECLARING INCOME OF RS.6,34,680/- . THE RETURN WAS PROCESSED U/S 143(1) ITA NO. 974/BANG/2018 PAGE 2 OF 6 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED, THE ASSESSING OFFICER (AO) INITIATED PROCEEDINGS U/S 147 OF THE ACT AS HE HAD FORMED REASONS TO BELIEVE THAT INCOME OF THE ASSESSEE EXIGIBLE TO TAX AMOUNTING TO RS.37.64 LAKHS HAD ESCAPED ASSESSMENT AND AFTER RECORDING REASONS IN THIS REGARD, ISSUED NOTICE U/S 148 OF THE ACT TO THE ASSESSEE ON 22.07.2013. IN RESPONSE THERETO, THE ASSESSEE REQUESTED THE AO TO TREAT THE ORIGINAL RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13, FILED ON 26.11.2012 TO BE TREATED AS FILED IN RESPONSE TO THE NOTICE ISSUED U/S 148 OF THE ACT. ON 13.02.2015, A SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE ASSESSEES PREMISES AND IN CONTINUATION OF PROCEEDINGS THEREOF, THE ASSESSEE ADMITTED TO AND DECLARED ADDITIONAL INCOME AMOUNTING TO RS.10,05,110/- (AS LISTED ON PAGE 4 OF THE ORDER OF ASSESSMENT). THE AO, HOWEVER, AFTER FURTHER EXAMINATION OF THE ASSESSEES CASE, CONCLUDED THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 30.03.2015 AND DETERMINED THE ASSESSEES INCOME AT RS.1,42,49,790/-. THIS WAS IN VIEW OF ADDITION OF RS.1,36,15,110/- WHEREIN THE INCOME FROM COMMISSION ON SALE OF SITES WAS COMPUTED BY THE AO AT RS.1,29,50,000/- AS AGAINST AN AMOUNT OF RS.3,40,000/- ADMITTED BY THE ASSESSEE CONSEQUENT TO SURVEY PROCEEDINGS. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 30.03.2015 FOR ASSESSMENT YEAR 2012-13, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), DAVANGERE. THE CIT(A) DISMISSED THE ASSESSMENT VIDE THE IMPUGNED EX-PARTE ORDER DATED 17.01.2018 FOR NON- PROSECUTION FOLLOWING, INTER ALIA, THE DECISION OF THE ITAT, DELHI BENCH IN THE CASE OF MULTIPLAN (INDIA) LTD., 38 ITD 320 (DEL), AS THE ASSESSEE DID NOT APPEAR BEFORE HIM ON THE TWO DATES FIXED FOR HEARING OF THE CASE I.E., ON 09.08.2017 AND 17.01.2018. 3. THE ASSESSEE, BEING AGGRIEVED BY THE EX-PARTE ORDER OF CIT(A), DAVANGERE DATED 17.01.2018 FOR ASSESSMENT YEAR 2012-13, HAS PREFERRED THIS APPEAL, WHEREIN HE HAS RAISED THE FOLLOWING GROUNDS: ITA NO. 974/BANG/2018 PAGE 3 OF 6 1. THE ORDER OF THE LEARNED CIT (A) IS OPPOSED TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER OF THE LD. AO AND LD. CIT (A) IS PASSED IN HASTE, WITHOUT PROVIDING SUFFICIENT AND REASONABLE OPPORTUNITY OF BEING HEARD. 3. THE ORDER IS PASSED AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND THUS LIABLE TO BE QUASHED. 4. THE LD. CIT(A) FAILED TO COGNIZANCE OF THE ILL-HEALTH OF THE APPELLANT AND THUS ERRED IN CONCLUDING THE APPELLATE PROCEEDINGS FOR WANT OF PROSECUTION. 5. THE NOTICE ISSUED U/S. 148 BY THE LD. AO IS BAD IN LAW AND ACCORDINGLY THE ASSESSMENT PROCEEDINGS ARE LIABLE TO BE QUASHED. 6. THE LD. AO ERRED IN ADDING A SUM OF RS. 1,29,50,000/- TO THE RETURNED INCOME OF THE APPELLANT. 7. THE LD. AO ERRED IN TREATING THE APPELLANT AS THE OWNER OF THE SITES AND BRINGING TO TAX AN AMOUNT WHICH WAS NEVER PAID BY HIM. 8. THE LD. AO AND LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE APPELLANT WAS ONLY ACTING AS A MIDDLEMAN AND THAT THE SITES NEVER BELONGED TO HIM. 9. THE LD. AO ERRED IN CHARGING INTEREST U/S 234A AND 234B OF THE ACT, WHEN THE APPELLANT WAS NOT OBLIGED TO PAY ANY SUCH INTEREST. THE APPELLANT SEEKS THE LEAVE OF THE HON'BLE ITAT TO ADD, ALTER, AMEND OR DELETE ANY OF THE GROUNDS URGED AT THE TIME OF HEARING. 4. GROUND NOS. 1 TO 4 4.1 IN THESE GROUNDS (SUPRA), THE ASSESSEE CONTENDS THAT THE IMPUGNED EX-PARTE ORDER OF THE CIT(A) DISMISSING THE ASSESSEES APPEAL, IN LIMINE, FOR NON-PROSECUTION WAS PASSED IN HASTE AND WITHOUT CONSIDERING THE ASSESSEES APPEAL ON MERITS. ACCORDING TO THE LEARNED AR, THE CIT(A) AFFORDED THE ASSESSEE ONLY TWO HEARINGS AND THE ASSESSEE, BEING UNWELL, WAS UNABLE TO ATTEND. IT IS SUBMITTED THAT THERE WAS NO MALAFIDE OR WILLFUL INTENTION ON THE PART OF THE ASSESSEE TO NOT ATTEND THOSE TWO HEARINGS BEFORE THE CIT(A) BUT DUE TO REASONS BEYOND HIS CONTROL; WHICH CONSTITUTED REASONABLE CAUSE FOR NON-APPEARANCE; MORESO, WHEN THE AO HAD ASSESSED THE ASSESSEES INCOME OF THE YEAR AT RS.1,42,49,790/-, AS AGAINST RETURNED INCOME OF ITA NO. 974/BANG/2018 PAGE 4 OF 6 RS.6,34,680/-. IT IS SUBMITTED THAT THIS RESULTED IN THE ASSESSEE BEING FASTENED WITH A HUGE DEMAND OF RS.56,42,409/-; BASED ON A FLIMSY ADHOC ADDITION OF RS.1,36,15,110/- AS COMMISSION INCOME RECEIVED BY ASSESSEE ON SALE OF 34 SITES AS AGAINST RS.3,40,000/- DECLARED BY THE ASSESSEE. IT IS FURTHER SUBMITTED THAT THE ULTIMATE OBJECT OF ASSESSMENT IS THAT THE CORRECT INCOME OF AN ASSESSEE IS BROUGHT TO TAX AND IN THIS CONTEXT, IT IS PRAYED BY THE ASSESSEE THAT THE IMPUGNED EX-PARTE ORDER OF THE CIT(A) BE SET ASIDE AND THE MATTERS RESTORED TO THE FILE OF CIT(A) FOR HEARING AND ADJUDICATION ON MERITS. 4.2 PER CONTRA, THE LEARNED DR FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4.3 WE HAVE HEARD AND CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS PUT FORTH BY BOTH LEARNED DR FOR REVENUE AND THE LEARNED AR OF THE ASSESSEE. A PERUSAL OF THE IMPUGNED ORDER CONFIRMS THE FACT THAT THE CIT(A) DISMISSED THE ASSESSEES APPEAL EX-PARTE FOR NON-PROSECUTION FOLLOWING, INTER ALIA, THE DECISION OF THE DELHI BENCH OF ITAT IN THE CASE OF MULTIPLAN (INDIA) LTD., (38 ITD 320) (DEL.). IT IS SEEN THAT THE CIT(A) FIXED HEARING ON TWO DATES I.E., ON 09.08.2017 AND 17.01.2018; WHICH ACCORDING TO THE ASSESSEE HE COULD NOT ATTEND AS HE WAS UNWELL. IT WAS PLEADED THAT THIS DEFAULT WAS NEITHER DELIBERATE NOR INTENTIONAL, BUT WAS FOR CAUSES BEYOND HIS CONTROL AND CONSTITUTED REASONABLE CAUSE. IN THE INTEREST OF SUBSTANTIAL JUSTICE, WE ARE INCLINED TO CONCUR WITH THIS PLEA OF ASSESSEE, AS IT IS HIGHLY UNLIKELY THAT THE ASSESSEE WOULD INTENTIONALLY OR DELIBERATELY NOT ATTEND HEARINGS BEFORE THE CIT(A); AS THIS WOULD CAUSE IMMENSE HARM TO HIS OWN INTERESTS; ESPECIALLY WHEN HE HAS BEEN FASTENED WITH TAX DEMAND OF RS.56,42,409/- BY THE AO DUE TO ADDITION OF RS.1,36,15,110/- TO HIS RETURNED INCOME OF RS.6,34,680/-. ADMITTEDLY, THE ASSESSEES APPEAL HAS NOT BEEN DISPOSED OFF BY ADJUDICATION ON MERITS OF THE ISSUES RAISED BEFORE THE CIT(A). SINCE THE ULTIMATE AIM OF THE ASSESSMENT IS THAT ONLY THE CORRECT TAXES DUE BY THE ASSESSEE ITA NO. 974/BANG/2018 PAGE 5 OF 6 BE COLLECTED BY REVENUE, IN OUR VIEW, IT IS IMPERATIVE THAT THE ASSESSEES APPEAL BEFORE THE CIT(A) BE HEARD AND DISPOSED OFF ON MERITS. 4.3.2 IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPINION THAT THE INTEREST OF SUBSTANTIAL JUSTICE WILL BE WELL SERVED IF THE IMPUGNED ORDER OF THE CIT(A) DATED 17.01.2018 FOR ASSESSMENT YEAR 2012-13 BE SET ASIDE. WE, THEREFORE, SET ASIDE THE AFORESAID IMPUGNED ORDER OF THE CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR FRESH HEARINGS, EXAMINATION AND ADJUDICATION OF THE ISSUES RAISED BY THE ASSESSEE IN THE APPEAL BEFORE HIM. NEEDLESS TO ADD, THE CIT(A) SHALL AFFORD THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS/SUBMISSIONS REQUIRED, WHICH SHALL BE DULY CONSIDERED BEFORE DECIDING THE ISSUES. WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN VIEW OF THE ABOVE, WE REFRAIN FROM COMMENTING ON OR ADJUDICATING THE ISSUES RAISED ON TECHNICAL ISSUES/MERITS IN GROUNDS AT NOS. 5 TO 9 OF THIS APPEAL. 6. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF JANUARY, 2019. SD/- SD/ - SD/ - (PAVAN KUMAR GADALE) JUDICIAL MEMBER (JASON P BOAZ) ACCOUNTANT MEMBER BANGALORE. DATED: 11 TH JANUARY, 2019. /NS/* ITA NO. 974/BANG/2018 PAGE 6 OF 6 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.