M/s. Lachman Das Bhatia Hingwala (P) Ltd, New Delhi V. ACIT, New Delhi

ITA 974/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1299 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-11-2009
• Assessment Year: 2006-2007
• Appeal Filed On: 17-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A M GOVIL
• Assessee Lawyers: B L GUPTA ITP
• Keywords: Bad and doubtful debts; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: B NEW DELHI BEFORE SHRI D.R.SINGH, JM AND SHRI R.C.SHARMA, AM ITA NO. 974/DEL/2009 A.Y. 2006-07 M/S LACHMAN DAS BHATIA HINGWALA P.LTD. VS. ACIT, C .C.17 5162, KILAPUR ROAD, SABZI MANDI NEW DELHI DELHI 7 (APPELLANT) (RESPONDENT) APPELLANT BY : SH. B.L.GUPTA, I.T.P. RESPONDENT BY : SH. A.M.GOVIL, D.R. O R D E R PER D.R. SINGH, JUDICIAL MEMBER THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORD ER OF CIT(A) IN APPEAL NO. DEL/CIT(A)-II/07-08/223/544 DATED 12.2.2 009 ON AS MANY AS 14 GROUNDS. 2. THE FIRST 5 GROUNDS OF APPEAL RELATE TO THE GRIE VANCE THAT THE CIT(A) WRONGLY DIRECTED THE A.O. TO INCLUDE A SUM OF RS. 6,01,921/- AS ADDITIONAL PROFIT OF THE ASSESSEE EARNED ON TRADING WHILE COMPUTING THE TOTAL INCOME. 3. THE GROUND NO.6 PERTAINS TO THE GRIEVANCE THAT T HE CIT(A) WRONGLY TREATED AMOUNT OF RS. 5,91,381/- AS INCOME ON ACCOU NT OF FOREIGN EXCHANGE FLUCTUATION THOUGH THE SAME WAS ALLOWED B Y THE A.O. IN THE ASSESSMENT. 4. THE GROUND NO.7 PERTAINS TO THE GRIEVANCE THAT T HE CIT(A) WRONGLY DIRECTED THE AO TO INCLUDE A SUM OF RS. 20,000/- IN THE INCOME OF THE ASSESSEE U/S 40(A) OF THE ACT. 5. IN GROUND NO.8 THE ASSESSES GRIEVANCE IS THAT T HE CIT(A) HAS WRONGLY DIRECTED THE A.O. TO ADD A SUM OF RS. 68,81 4/- AS INCOME ON ACCOUNT OF BAD DEBTS WHEREAS THE SAME WAS ALLOWED B Y THE A.O. 6. IN GROUND NO.9 THE ASSESSEE HAS PROJECTED ITS GR IEVANCE AGAINST THE CIT(A) IN WRONGLY DIRECTING THE A.O. TO ADD A SUM O F RS. 1,17,843/- AS THE INCOME OF THE ASSESSEE. 7. IN GROUNDS NO. 10 TO 14 THE ASSESSEES GRIEVANCE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN ENHANCING AND TREATING THE AMO UNT MENTIONED ABOVE STATED GROUNDS AS THE INCOME OF THE ASSESSEE, WHICH WERE NOT CONSIDERED AND ADDED BY THE AO, WITHOUT ANY NOTICE OR OPPORTUN ITY BEING ALLOWED TO IT. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES, PERUSED THE RECORD AND CAREFULLY GONE THROUGH THE ORDERS OF TAX AUTHORITIES BELOW. 9. ON EXAMINING THE RELEVANT PROVISION OF S.251(2) OF I.T.ACT WE FIND THAT THIS SECTION PROVIDES THAT THE FIRST APPELLATE AUTHORITY I.E. CIT(A) IN THE INSTANT CASE, CANNOT ENHANCE THE AMOUNT OF TAX ASSESSED OR PENALTY IMPOSED OR REDUCE THE AMOUNT OF REFUND, WITHOUT FIR ST GIVING A NOTICE OF SHOW CAUSE AND AN ADEQUATE OPPORTUNITY OF BEING HEA RD TO THE APPELLANT TO SHOW CAUSE AGAINST THE PROPOSED ENHANCEMENT OR R EDUCTION. HENCE, FROM THE PROVISIONS IT IS CLEAR THAT THE POWER OF E NHANCEMENT BY THE FIRST APPELLATE AUTHORITY IS SUBJECT TO THE LIMITATION A S PROVIDED S.251(2) AND THE QUESTION OF ENHANCEMENT CAN BE CONSIDERED ONLY IF THE NOTICE WAS GIVEN IN THAT REGARD (REFERENCE IS MADE TO GEDORE TOOLS P.LTD. VS CIT (1999) 238 ITR 268 RELEVANT PG. 273(DEL). 10. WE HAVE CAREFULLY EXAMINED THE ORDER OF CIT(A) AND FIND THAT WHILE MAKING THE IMPUGNED ENHANCEMENT, AS MENTIONED HEREI NABOVE IN THIS ORDER, THE CIT(A) HAS NEITHER GIVEN SHOW CAUSE NOTI CE FOR THE ENHANCEMENT TO THE ASSESSEE NOR HAS GIVEN ANY OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE TO SHOW CAUSE AGAINST THE P ROPOSED ENHANCEMENTS. IT IS CLEAR THAT BEFORE MAKING THE I MPUGNED ENHANCEMENTS THE CIT(A) HAS NOT COMPLIED WITH THE R EQUIREMENTS OF S.251(2) OF I.T.ACT. 11. BEFORE US, BOTH THE LDAR AND THE LDDR, AGREED T HAT SINCE THE CIT(A) BEFORE MAKING THE IMPUGNED ENHANCEMENTS HAS NOT COMPLIED WITH THE MANDATORY CONDITIONS LAID DOWN IN S.251(2) OF I .T.ACT, THE ORDER OF CIT(A) ON THE ISSUE OF ENHANCEMENT MAY BE SET ASIDE AND RESTORED TO HIS FILE FOR PASSING AN ORDER AFRESH AFTER COMPLYING WI TH THE REQUISITE MANDATORY REQUIREMENTS OF S.251(2) OF THE I.T.ACT. 12. IN THIS VIEW OF THE MATTER AND FOR THE REASONS STATED ABOVE THE ORDER OF CIT(A) WITH REGARD TO IMPUGNED ENHANCEMENT S MADE BY HIM IS HEREBY SET ASIDE AND THE MATTER IS RESTORED TO HIS FILE TO DECIDE THE SAME AFRESH AFTER COMPLYING WITH THE REQUIREMENTS OF S.2 51(2) OF I.T.ACT AND, OF COURSE, AFTER ALLOWING ADEQUATE OPPORTUNITY OF B EING HEARD TO BOTH THE PARTIES. 13. IN THE RESULT, THE INSTANT APPEAL OF THE ASSESS EE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH NOVEMBER,2009, IMMEDIATELY AFTER CONCLUSION OF THE HEARING. (R.C. SHARMA ( D.R.SINGH) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED: NOVEMBER, 2009 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR 6.GUARD FILE BY ORDER DY. REGISTRAR // TR UE COPY //