L Veeresh, Secunderabad V. ACIT, Circle-7(1), Hyderabad

ITSSA 5/HYD/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0210 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 21-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Search and seizure; Principle of natural justice
• Section: 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER IT(SS)A NO. 5/HYD/2013 ASSESSMENT YEAR : 2006-07 L. VEERESH, SECUNDERABAD. PAN AAYPL9941P ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 7(1), HYDERABAD. (APPELLANT) (RESPONDENT) IT(SS)A NO. 6/HYD/2013 ASSESSMENT YEAR : 2006-07 L. MANJULA VANI, SECUNDERABAD. PAN ACYPL9120P ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 7(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEES BY SHRI V. RAGHAVENDRA RAO REVENUE BY SHRI P. SOMASEKHAR REDDY DATE OF HEARING 18-06-2014 DATE OF PRONOUNCEMENT 30-06-2014 O R D E R PER SAKTIJIT DEY, J.M.: THESE ARE APPEALS BY TWO DIFFERENT ASSESSEES AGAIN ST SEPARATE ORDERS OF CIT(A), BOTH, DATED 07/03/2013 PERTAINING TO THE BLOCK PERIOD 1997-98 TO 2002-03. FACTS BEING IDENTICAL, B OTH THESE APPEALS WERE CLUBBED AND HEARD TOGETHER, THEREFORE, THE SAM E ARE DISPOSED OF BY WAY OF COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 IT(SS)A NOS. 5 & 6/HYD/2013 L. VEERESH & L. MANJULA VANI 2. FACTS BEING IDENTICAL, WE DEAL WITH ITA NO. 05/H /2013. BRIEFLY, THE FACTS ARE, ASSESSEE IS AN INDIVIDUAL AND THE MA NAGING DIRECTOR OF VISHNU CHIT FUNDS (P) LTD. A SEARCH AND SEIZURE OP ERATION U/S 132 OF THE ACT WAS CONDUCTED IN THE PREMISES OF THE COMPAN Y AS WELL AS IN THE RESIDENTIAL PREMISES OF THE ASSESSEE. AS A CONS EQUENCE OF THE SEARCH AND SEIZURE OPERATION, THE AO INITIATED PROC EEDING U/S 158BC OF THE ACT FOR THE BLOCK PERIOD 1997-98 TO 05/09/20 02. AS IT APPEARS FROM RECORD, SINCE ASSESSEE FAILED TO RESPOND TO TH E NOTICES ISSUED BY THE AO, ASSESSMENT WAS COMPLETED U/S 144 READ WITH SECTION 158BC OF THE ACT ON 29/10/2004. BEING AGGRIEVED OF THE AS SESSMENT ORDER, SO PASSED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A) AND BEING UNSUCCESSFUL BEFORE THE CIT(A), ASSESSEE CARRIED TH E MATTER IN APPEAL BEFORE THE ITAT. ITAT, HYDERABAD BENCH AFTER CONSID ERING THE SUBMISSIONS OF THE PARTIES DISPOSED OF THE APPEAL V IDE ORDER DATED 02/04/2008 IN IT(SS)A NO. 30/HYD/2007 BY RESTORING THE MATTER BACK TO THE FILE OF THE AO FOR CONSIDERING THE ISSUE AFR ESH. 3. IN PURSUANCE TO THE DIRECTION OF THE ITAT, ASSES SMENT PROCEEDINGS WERE TAKEN UP AGAIN BY THE AO. AS IT AP PEARS FROM THE DISCUSSION MADE IN THE ASSESSMENT ORDER, THOUGH, NO TICES WERE ISSUED TO THE ASSESSEE ON MORE THAN ONE OCCASION, T HERE WAS NO RESPONSE FROM THE ASSESSEE. FINALLY, A LETTER WAS I SSUED ON 14/08/2009 REQUESTING THE ASSESSEE TO FILE RETURN O F INCOME AND INFORMATION/MATERIAL IN SUPPORT OF HIS CONTENTION. HOWEVER, ASSESSEE NEITHER FILED ANY RETURN OF INCOME NOR PRODUCED ANY MATERIAL IN SUPPORT OF HIS CLAIM. ON THE CONTRARY, AS ALLEGED B Y THE AO, ASSESSEE ON 01/09/2009 FILED A LETTER BEFORE HIM REQUESTING TO PROVIDE COPIES OF THE SEIZED MATERIAL. AS MENTIONED BY THE AO, THOUGH , ASSESSEE WAS REQUESTED TO COLLECT SEIZED MATERIAL, BUT, HE FAILE D TO DO SO. THEREFORE, FINDING NO OTHER ALTERNATIVE, AO AGAIN C OMPLETED THE ASSESSMENT EX-PARTE U/S 144 OF THE ACT BY DETERMINI NG THE TOTAL UNDISCLOSED INCOME FOR THE BLOCK PERIOD AT RS. 28,8 2,520/-. BEING 3 IT(SS)A NOS. 5 & 6/HYD/2013 L. VEERESH & L. MANJULA VANI AGGRIEVED OF THE ASSESSMENT ORDER, SO PASSED, ASSES SEE PREFERRED APPEAL BEFORE THE CIT(A). 4. THERE WAS A DELAY OF MORE THAN THREE MONTHS IN F ILING THE APPEAL BEFORE THE CIT(A). THOUGH THE ASSESSEE FILED A PETITION FOR CONDONING THE DELAY, THE CIT(A) NOT BEING SATISFIED WITH REASONABLENESS OF THE CAUSE SHOWN FOR DELAY, DID NO T CONDONE THE DELAY AND DISMISSED THE APPEAL. HAVING DONE SO, TH E CIT(A) PROCEEDED TO CONSIDER THE APPEAL ON MERITS ALSO AND ULTIMATELY DISMISSED THE APPEAL BOTH ON ACCOUNT OF DELAY AS WE LL AS ON MERIT. 5. BEING AGGRIEVED OF THE AFORESAID ORDER OF THE CI T(A), ASSESSEE HAS FILED PRESENT APPEAL BEFORE US RAISING AS MANY AS 12 GROUNDS. 6. THE LEARNED AR SUBMITTED BEFORE US THAT THE CIT( A) WAS NOT JUSTIFIED IN DISMISSING ASSESSEES APPEAL WITHOUT C ONDONING THE DELAY. IT WAS SUBMITTED THAT ASSESSEE HAVING SHOWN A REASO NABLE CAUSE, THE CIT(A) SHOULD HAVE CONSIDERED IT JUDICIOUSLY PERSPE CTIVE AND NOT DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND OF DELAY. IT WAS FURTHER SUBMITTED THAT HAVING DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND OF DELAY, CIT(A) SHOULD NOT HAVE DECIDED THE ISSUES ON MERITS AS THE APPEAL BEING DEFECTIVE CANNOT BE TREA TED TO HAVE BEEN ADMITTED. LEARNED AR, EXPLAINING THE CAUSE FOR NON -APPEARANCE IN ASSESSMENT PROCEEDING SUBMITTED, THOUGH, THE ASSES SEE HAS REQUESTED THE AO TO PROVIDE HIM COPIES OF THE SEIZE D MATERIAL ON MORE THAN ONE OCCASION, TILL DATE THE SEIZED MATERI AL HAVE NOT BEEN PROVIDED TO THE ASSESSEE. HENCE, IN ABSENCE OF SEIZ ED MATERIAL IT IS VERY DIFFICULT FOR ASSESSEE TO EFFECTIVELY REPRESE NT HIS CASE. THE LEARNED AR, THEREFORE, REQUESTED FOR REMITTING THE MATTER BACK TO THE FILE OF THE AO FOR DE NOVO ASSESSMENT ALONG WITH A ISSUING DIRECTION TO THE AO TO PROVIDE SEIZED MATERIALS TO THE ASSESSEE FOR ENABLING HIM PROPERLY REPRESENT HIS CASE. IN THIS CONTEXT, LEAR NED AR PLACED 4 IT(SS)A NOS. 5 & 6/HYD/2013 L. VEERESH & L. MANJULA VANI BEFORE US A LETTER DATED 07/06/14 ISSUED BY DCIT, C IRCLE 3(3) TO THE ASSESSEE. 7. THE LEARNED DR, ON THE OTHER HAND, THOUGH SUBMIT TED THAT THE ASSESSEE HAS FAILED TO FILE THE MATERIAL/INFORMATIO N AS REQUIRED BY THE AO TO SUBSTANTIATE HIS CLAIM, NEVERTHELESS HAS NO S ERIOUS OBJECTION FOR GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE BY REMITTING BACK THE MATTER TO THE FILE OF THE AO. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. ON PERUSAL OF THE CIT(A)S ORDER, IT IS SEEN THAT C IT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT CONDONING THE DE LAY. THERE BEING A DELAY, APPEAL OF THE ASSESSEE IS DEFECTIVE AND HE NCE, CANNOT BE ADMITTED FOR HEARING ON MERIT. THEREFORE, WHEN THE CIT(A) IS DISMISSING THE APPEAL ON THE GROUND OF DELAY HE IS NOT SUPPOSED TO GO INTO THE MERITS OF THE ISSUE. BE THAT AS IT MAY, EV EN THE CIT(A)S ORDER ON THE MERITS OF THE ISSUE IS TOTALLY CONFUSING AND LACKS CLARITY. ON PERUSAL OF THE OBSERVATIONS MADE BY CIT(A) AT PAGES 4 & 5 OF HIS ORDER, IT BECOMES CLEAR THAT HE HAS NOT AT ALL CONS IDERED THE ISSUES RAISED IN THE GROUNDS. BY MERELY OBSERVING THAT GRO UNDS RAISED ARE DEVOID OF MERIT HE HAS DISMISSED THE APPEAL. THE OR DER PASSED BY THE LEARNED CIT(A) IS NOT A SPEAKING ORDER. IN THESE CI RCUMSTANCES, WE ARE OF THE VIEW, IMPUGNED ORDER OF CIT(A) CANNOT BE SUSTAINED. IT IS THE SPECIFIC CONTENTION OF THE LEARNED AR BEFORE US THAT IN SPITE OF REQUEST BY THE ASSESSEE ON SEVERAL OCCASIONS BEFORE THE AO TO PROVIDE HIM WITH COPIES OF SEIZED MATERIAL, IN ABSE NCE OF WHICH ASSESSEE IS SERIOUSLY HANDICAPPED IN REPRESENTING H IS CASE EFFECTIVELY, THE DEPARTMENT HAS NOT PROVIDED THE SE IZED MATERIAL TO THE ASSESSEE. IN THIS CONTEXT, REFERENCE IS MADE TO THE LETTER DATED 17/06/2014 OF THE DCIT, CIRCLE 3(3), HYDERABAD TO THE ASSESSEE, WHICH READS AS UNDER: IN CONTINUATION TO THIS OFFICE LETTER DATED 23/01/ 2014, IT IS INFORMED THAT THOROUGH SEARCH TO TRACE THE RECORDS IN THE ABOVE CASE WAS UNDERTAKEN IN THE RECORD ROOM PERTAINING T O THIS 5 IT(SS)A NOS. 5 & 6/HYD/2013 L. VEERESH & L. MANJULA VANI OFFICE. HOWEVER, NO INTIMATION/LETTER HAS BEEN FOUN D EVIDENCING HANDING OVER OF SEIZED MATERIAL TO THIS OFFICE FROM DCIT, CENTRAL CIRCLE 6, HYDERABAD, WHEN THE CASE WAS DECENTRALI ZED. EVEN THE DECENTRALIZATION ORDER COPY HAS NOT BEEN FORWAR DED TO THIS OFFICE. IN SUCH A SITUATION, THE ASSESSEE IS REQUES TED TO OBTAIN COPIES OF REQUIRED MATERIAL FROM THE CENTRAL CIRCLE . 9. ON GOING THROUGH THE CONTENTS OF THE LETTER, WE FEEL THAT ASSESSEES PLEA THAT HE IS FACING DIFFICULTY IN EFF ECTIVELY REPRESENTING HIS CASE IN ABSENCE OF SEIZED MATERIAL HAS TO BE AP PRECIATED AND CANNOT BE BRUSHED ASIDE LIGHTLY. THEREFORE, CONSIDE RING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT REASONABLE OPPORTUNITY HAS TO BE GIVEN TO THE ASSES SEE TO REPRESENT HIS CASE BEFORE THE AO. IN AFORESAID VIEW OF THE MA TTER, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE MATTER BACK T O THE FILE OF THE AO TO INITIATE ASSESSMENT PROCEEDING DE NOVO. HOWEVER, KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE, WE DIRECT THE AO TO PROVIDE THE ASSESSEE WITH COPIES OF SEIZED MATERIAL OR ANY OTHE R MATERIAL IN HIS POSSESSION, WHICH HE INTENDS TO UTILIZE IN THE ASSE SSMENT PROCEEDING. NEEDLESS TO SAY, AO MUST PROVIDE REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. 10. AS THE FACTS IN IT(SS)A NO. 06/HYD/13 IN CASE O F L. MANJULA VANI ARE MATERIALLY IDENTICAL TO THE ONE DECIDED BY US IN CASE OF L. VEERESH IN IT(SS)A NO. 5/H/13 (SUPRA), FOLLOWING TH E DECISION THEREIN, THIS MATTER IS ALSO REMITTED BACK TO THE FILE OF TH E AO WITH IDENTICAL DIRECTIONS. PRONOUNCED IN THE OPEN COURT ON 30/06/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 30 TH JUNE, 2014 KV 6 IT(SS)A NOS. 5 & 6/HYD/2013 L. VEERESH & L. MANJULA VANI COPY TO:- 1) SHRI L. VEERESH, 2) L. MANJULA VANI, 126, JAYA M ANSION, B. BLOCK, II FLOOR, SD ROAD, SECUNDERABAD 500 003. 3) ACIT, CIRCLE 7(1), HYDERABAD. 4) CIT(A)-18, MUMBAI (CAMP AT HYDERABAD.) 5) THE CIT-, HYDERABAD 6)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.