M/s Inland Merchandise Pvt. Ltd., Kolkata V. ITO, Ward - 9(3), Kolkata, Kolkata

MA 36/KOL/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6475 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: PARNASHREE BANERJEE
• Keywords: Opportunity of being heard; Procedural lapse
• Section: 68; 263; 144

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER (MISC. APPLICATION) M.A. NO.36/KOL/2018 (ARISING OUT ITA NO.139/KOL/2017) / ASSESSMENT YEAR:2009-10 M/S INLAND MERCHANDISE PVT. LTD.5, HARI SARKAR LANE, KOLKATA-007 [ PAN NO.AABCI 9882 N ] V/S . INCOME TAX OFFICER WARD-9(3) AAYAKA BHAWAN, P-7, CHOWRINGHEE SQUARE ,KOLKATA-69 (ORIGINAL APPELLANT) (ORIGINAL R ESPONDENT) (APPLICANT) .. (RESPONDENT) ITA NO. 139/KOL/2017 ASSESSMENT YEAR:2009-10 M/S INLAND MERCHANDISE PVT. LTD., 5, HARI SARKAR LANE, KOLKATA-700 007 [ PAN NO.AABCI 9882 N ] / V/S . INCOME TAX OFFICER, WARD-9(3), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. ! /RESPONDENT ' /BY ASSESSEE PARNASHREE BANERJEE, ADVOCATE & ' /BY REVENUE SHRI S. DASGUPTA, ADDL. CIT-DR ' /DATE OF HEARING 20-04-2018 ' /DATE OF PRONOUNCEMENT 27-04-2018 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- MA NO.36/KOL/2018 & ITA NO.139/KOL/2017 A.Y. 2009-10 INLAND MERCHANDISE PVT. LTD. VS. ITO WD-9(3) KO L. PAGE 2 FIRST WE TAKE UP MA NO. 36/KOL/2018 BY WAY OF THIS MISCELLANEOUS APPLICATION (MA) THE A SSESSEE IS SEEKING TO RECALL OF THE TRIBUNAL ORDER DATED 01-03-2018 PA SSED EX PARTE DISMISSING THE APPEAL OF ASSESSEE BEING ITA NO. 139/KOL/2017 FOR NON-PROSECUTION. 2. THE FACTS OF THE CASE ARE THAT THE CASE WAS FIXE D FOR HEARING ON 28.02.2018 IN D BENCH WHICH WAS TO BEGIN UPON THE COMPLETION OF C BENCH. BUT THE LD. DR SOUGHT ADJOURNMENT AT THE BEG INNING OF HEARING OF C BENCH FOR THE CASE ON HAND AND AT THAT RELEVANT TIM E THE AR WAS ABSENT. HOWEVER, THE COUNCIL FOR THE ASSESSEE ARRIVED TO TH E OFFICE OF TRIBUNAL LATE AS HE WAS UNDER THE IMPRESSION THAT THE D BENCH SHAL L FUNCTION UPON THE COMPLETION OF C BENCH. THUS, THE ABSENCE OF THE C OUNCIL FOR THE ASSESSEE RESULTED THE DISMISSAL OF THE APPEAL EX-PARTE ON ACCOUNT ON NON PROSECUTION OF APPEAL. HOWEVER, THE BENCH IN ITS ORDER PROVIDED LI BERTY TO THE ASSESSEE TO MOVE APPLICATION FOR RECALLING THE ORDER AFTER EXPL AINING THE REASONS FOR NON- COMPLIANCE. 3. NOW THE LD. AR BEFORE US SUBMITTED THAT ASSESSEE FAILED TO APPEAR ON THE DATE OF HEARING AT THE APPROPRIATE TIME UNDER T HE IMPRESSION THAT THE LD. DR HAS SOUGHT THE ADJOURNMENT IN THE INSTANT CASE. AS SUCH, IT WAS PRAYED THAT THE COUNCIL FOR THE ASSESSEE FAILED TO APPEAR INADVERTENTLY AND THUS IT WAS PRAYED TO RECALL THE ORDER. ON THE OTHER HAND, LD. DR DID NOT OPPOSE FOR THE SAME. 4. KEEPING IN VIEW OF THE SUBMISSION MADE ABOVE, WE ARE SATISFIED THAT THERE WAS A SUFFICIENT CAUSE FOR NON APPEARANCE ON BEHALF OF ASSESSEE AT THE TIME OF HEARING FIXED ON 28.02.2018. WE THEREFORE R ECALL EX PARTE ORDER DATED 01.03.2018 PASSED BY THIS TRIBUNAL, KEEPING IN VIEW THE PROVISO TO RULE 24 OF THE APPELLATE TRIBUNAL RULES, 1963 AND RESTORE THE APPEAL OF THE ASSESSEE AT ITS ORIGINAL NUMBER. 5. IN THE RESULT, MA OF ASSESSEE STANDS ALLOWED . NOW COMING TO THE ITA 139/KOL/2017 6. AT THE OUTSET, THE LD AR FURTHER REQUESTED THE B ENCH TO HEAR THE RECALLED ORDER ON MERIT. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE ASSESSING MA NO.36/KOL/2018 & ITA NO.139/KOL/2017 A.Y. 2009-10 INLAND MERCHANDISE PVT. LTD. VS. ITO WD-9(3) KO L. PAGE 3 OFFICER AS WELL AS LD. CIT(A) HAS PASSED THE EX-PARTE ORDER IN THE CASE ON HAND. THE LEARNED DR RAISED NO OBJECTION IF THE REC ALLED ORDER IS HEARD ON MERIT. THEREFORE WE DECIDED TO PROCEED TO HEAR THE CASE ON MERIT. 7. THE RELEVANT GROUNDS OF APPEAL RAISED BY ASSESSE E ARE AS UNDER:- 1) THAT, THE ORDERS PASSED BY THE LD. LOWER AUTHORI TIES TO THE EXTENT THEY ARE PREJUDICIAL TO THE INTERESTS OF THE APPELLANT ARE A RBITRARY, ERRONEOUS, WITHOUT ANY PROPER REASONS, INVALID AND BAD IN LAW. 2) THAT, THE LD. CIT(A) ERRED IN NOT DEALING WITH G ROUND NO.3 IN THE MEMORANDUM OF APPEAL SPECIFICALLY RAISING A LEGAL I SSUE REGARDING MANDATORY REQUIREMENT IN TERMS OF SEC. 143(2) OF THE ACT AND INSTEAD CONSIDERED THE SAME AS A GROUND AGAINST ADDITION U/S 68. 3) THAT, THE LD. CIT(A) OUGHT TO HAVE CONSIDERED TH AT THE IMPUGNED ASSESSMENT ORDER IS A REASSESSMENT ORDER PASSED DE NOVO IN PURSUANCE OF ORDER U/S.263 OF THE ACT AND FAILURE OF THE AO TO I SSUE NOTICE U/S. 143(2) TO THE APPELLANT IS FATAL TO THE REASSESSMENT ORDER AND HE NCE PASSING OF THE IMPUGNED APPELLATE ORDER ON OTHER ISSUES WITHOUT AD JUDICATING THE SAID LEGAL OBJECTION RAISED BY THE APPELLANT IS SIMULTANEOUSLY NOT SUSTAINABLE IN LAW. 4) THAT THE LD. CIT(A) FURTHER ERRED IN NOT CONSIDE RING THAT THE REQUIREMENT TO ISSUE NOTICE U/S. 143(2) IS MANDATORY AND CANNOT BE DISPENSED WITH AND THAT BEING SO, FAILURE OF THE ASSESSING AUTHORITY ON THA T ACCOUNT BEING NOT A PROCEDURAL IRREGULARITY IS NOT CURABLE AND HENCE TH E ADDITION MADE IN SUCH AN INVALID ORDER IS LIABLE TO BE DELETED. 5) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.4,01,50,000/- ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT AS UNEX PLAINED INCOME U/S. 68 OF THE ACT IN SPITE OF THE FACT THAT CONDITIONS PRECED ENT TO INVOKE THE SAID SECTION HAVE NOT BEEN SATISFIED IN THE INSTANT CASE. 6) THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ORDER OF THE LD. CIT(A) SUFFERS FROM ILLEGALITY AND PERVERSITY INASM UCH AS HE HAS FAILED TO APPRECIATE THAT THE TOUCHSTONE POINTS ON THE BASIC ISSUE OF ADDITION U/S 68 OF THE ACT ARE IDENTITY, CREDITWORTHINESS AND GENUINEN ESS OF THE TRANSACTIONS WHICH ARE TOTALLY ESTABLISHED AND HENCE THE ADDITIO N SUSTAINED IN THE GARB OF SEC. 68 ON GENERALIZED BACKGROUND OF SOME CASES IS NOT ONLY ARBITRARY, WHIMSICAL BUT ALSO BAD IN LAW. 7) THAT, THE LD. CIT(A) ERRED IN UPHOLDING THE ADDI TION OF RS.4,01,50,000/- MADE BY THE AO BY INVOKING PROVISIONS OF SEC. 68 OF THE ACT AS UNEXPLAINED INCOME IN THE HANDS OF THE APPELLANT IN SPITE OF TH E FACT THAT SOURCE OF SOURCE OF SHARE APPLICATION MONEY RECEIVED FROM THE SHARE APPLICANTS WAS ALSO ESTABLISHED WITH EVIDENCE AND THE ADDITION WAS ON T HE BASIS OF SUSPICION AND MISNOMER ONLY. 8) THAT THE LD. CIT(A) ERRED AND ACTED IN DEFIANCE OF LAW IN HAVING BASED HIS DECISION ON THE ORDER OF HON'BLE TRIBUNAL IN THE CA SE OF M/S SUBHALAKSHMI VANIJYA P LT. V. CIT ( ITA NO.1104/KOL/2014 ) WHEN ADMITTEDLY, THE CRUX OF THE ISSUE THERE WAS ON THE VALIDITY OF ASSUMPTION OF JU RISDICTION U/S. 263 OF THE ACT BAY THE LD. CIT QUA INTRODUCTION OF SHARE CAPITAL A ND NOT ON THE BASIC ISSUE OF APPLICATION OF SEC. 68 OF THE ACT, AS IN THE PRESEN T CASE. MA NO.36/KOL/2018 & ITA NO.139/KOL/2017 A.Y. 2009-10 INLAND MERCHANDISE PVT. LTD. VS. ITO WD-9(3) KO L. PAGE 4 9) THAT, THEREFORE, AS THE ORDER OF THE LD. CIT(A) WAS BASED ON AN ORDER OF HON'BLE TRIBUNAL ENTIRELY ON A DIFFERENT ISSUE AND PROVISIONS OF THE ACT, THE ADDITION SUSTAINED OF RS.01,50,000/- U/S. 68 OF THE ACT IN THE INSTANT CASE CONSIDERING THE SAID DECISION AS RATIO DECIDENTI IS EX FACIE ERRONEOUS AND UNSUSTAINABLE IN LAW. 10) THAT THE LD. CIT(A) MISGUIDED HIMSELF IN NOT HA VING APPRECIATED THAT THE AO WAS NOT EMPOWERED TO EXAMINE ANY ASPECT OF RAISI NG OF SHARE CAPITAL WITH PREMIUM AND MAKE ANY ADDITION U/S 68 OF THE ACT IN THE HANDS OF THE APPELLANT IN LIGHT OF THE JUDGMENT OF HON'BLE SUPREME COURT I N THE CASE OF CIT VS. LOVELY EXPORTERS PVT. LTD. (2008) 216 CTR 195 (SC) 11) THAT THE LD. CIT(A) WHILE UPHOLDING THE AID U/S . 68 OF THE ACT OUGHT TO HAVE CONSIDERED THE SETTLED POSITION IN LAW THAT ON US WAS ON THE DEPARTMENT TO LINK THE ASSESSEE WITH THE PURPORTED UNACCOUNTED SOURCE AND WHEN THAT LINK WAS MISSING OR HAD NOT BEEN CONCLUSIVELY PROVE D, IT WAS NOT OPEN TO THE DEPARTMENT TO FASTEN THE ASSESSEE WITH SUCH AN UNCA LLED FOR ADDITION UNDER THE GARB OF UNACCOUNTED MONEY MERELY ON SURMISE AND CONJECTURE. 12) THAT AS THE ORDER OF LD. CIT(A) ON THE ABOVE IS SUES SUFFERS FROM ILLEGALITY AND IS DEVOID OF ANY MERIT, THE SAME SHOULD BE QUAS HED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. 13) THAT THE APPELLANT CRAVES LEAVE TO AMEND, ALTER , MODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND/OR RESCIND ANY OR ALL OF THE ABOVE GROU NDS. 8. AT THE OUTSET, IT WAS SEEN THAT ORDER OF AO AND LD. CIT(A) IS EX PARTE WITHOUT HEARING THE ASSESSEE. THE ISSUE ARISES WHET HER LD. CIT(A) CAN PASS EX PARTE ORDER. WE ARE OF THE VIEW THAT SECTION 250(2) OF T HE INCOME TAX ACT, 1961 GRANTS THE ASSESSEE AS WELL AS THE ASSESSING O FFICER CONCERNED A RIGHT OF BEING HEARD BY THE FIRST APPELLATE AUTHORITY. TH E APPELLATE AUTHORITY HAS LEGAL DUTY TO DISPOSE OF THE APPEAL AFTER HEARING. EVEN NO DISMISSAL OF APPEAL FOR DEFAULT OF ASSESSEE CAN BE MADE. THUS THE APPEA L IS TO BE DECIDED ON MERITS. WHERE AN APPEAL IS DISPOSED OF, EVEN THOUGH ON MERITS AFTER TAKING RELEVANT FACTS INTO CONSIDERATION BUT WITHOUT GIVIN G SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, AN APPLICATION OF SETT ING ASIDE OF EX PARTE ORDER IS MAINTAINABLE. IT WAS ALSO OBSERVED THAT THE AO HAS ALSO DECIDED E X PARTE BY PASSING THE ORDER U/S 144 OF THE ACT. ACCORDINGLY, WE ARE OF TH E CONSIDERED VIEW THAT THIS ORDER NEEDS TO BE SET ASIDE AND REMANDED BACK TO TH E FILE OF AO FOR FRESH ADJUDICATION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ON SPECIFIC QUERY FROM THE BENCH FOR REST ORING THE MATTER TO THE FILE AO FOR FRESH ADJUDICATION AS PER THE PROVISIONS OF THE LAW, THE LD. DR RAISED NO MA NO.36/KOL/2018 & ITA NO.139/KOL/2017 A.Y. 2009-10 INLAND MERCHANDISE PVT. LTD. VS. ITO WD-9(3) KO L. PAGE 5 OBJECTION. NEVERTHELESS, IT IS NECESSARY TO MENTION THAT THE ASSESSEE WILL COOPERATE IN THE ASSESSMENT PROCEEDINGS. THE ASSESS EE WILL FILE NECESSARY EVIDENCES ON WHICH HE WANTS TO RELY UPON. IN VIEW O F ABOVE WE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF AO FOR FRESH ADJUD ICATION AS PER THE PROVISIONS OF LAW. HENCE, THIS GROUND OF ASSESSEES APPEAL ST ANDS ALLOWED FOR STATISTICAL PURPOSE IN TERM OF ABOVE PROPOSITION. 9. IN THE RESULT, FOR STATISTICAL PURPOSE, APPEAL O F ASSESSEE IS TREATED AS ALLOWED. 10. TO SUMMARIZE, MA OF ASSESSEES IS ALLOWED AND THAT OF ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSE, ORDER PRONOUNCED IN OPEN COURT ON 27/04/2018 SD/- SD/- ( &) ( &) (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S - - 27/04/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-INLAND MERCHANDISE PVT. LTD., HARI SARKAR LANEA, KOLKATA-007/1 ST FL, DR. TAPAN CHA TTERJEE BUILDING, OPP. HOTEL VINAYAK, HILL CART RD. SILIGURI-734001 2. & /REVENUE-ITO WARD-9(3), AAYAKAR BHAWAN,P-7, CHOWRIN GHEE SQ. KOLKATA-69 3. 0 1 / CONCERNED CIT 4. 1 - / CIT (A) 5. 0 , 0 / DR, ITAT, KOLKATA 6. / GUARD FILE. BY ORD ER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF O FFICE/DDO 0,