M/s.Rajeswari Hospital, Kannur V. The ITO, Kannur

MA 92/COCH/2014

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 2970 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 08-05-2015
• Assessment Year: 1996-1997
• Appeal Filed On: 13-08-2014
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: T M SREEDHARAN
• Keywords: Reasonable cause
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI V.DURGA RAO, JM AND B.R.BASKARAN , AM M.P. NO.92/COCH/2014 (ARSG. OUT OF I.T.A. NO.202 /COCH/2014) ASSESSMENT YEAR : 1996-97 M/S. RAJESWARI HOSPITAL, TALAP, KANNUR. [PAN: AAHER 6820J] VS. THE INCOME TAX OFFICER, WARD-1, KANNUR. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 08/05/2015 DATE OF PRONOUNCEMENT 08/05/2015 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS MISCELLANEOUS PETITION SEEKING RECALL OF EX- PARTE ORDER DATED 04/07/2014 PASSED BY THE CO-ORDIN ATE BENCH IN I.T.A. NO.202/COCH/2014 RELATING TO THE ASSESSMENT YEAR 19 96-97. 2. WE HEARD BOTH THE PARTIES AND PERUSED THE RECORD . WE NOTICE THAT THE ASSESSEE HAS ALSO FILED A WRIT PETITION IN THE HON BLE HIGH COURT OF KERALA AND THE HONBLE HIGH COURT, VIDE ITS ORDER DATED 23-02-2015 PASSED IN WP(C) NO.5681 OF M.P. NO.92/COCH/2014 2 2015(1), HAS DIRECTED THE TRIBUNAL TO CONSIDER THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE AND PASS THE ORDER THEREON WITHIN A PERIOD OF TWO MONTHS FROM THE DATE OF RECEIPT OF A COPY OF THE JUDGMENT. 3. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE-FIRM WAS RUNNING A HOSPITAL AND IT WAS CLOSED DOWN, UPON THE DEATH OF ONE OF TH E PARTNERS ON 03-02-2012. SUBSEQUENTLY THE REMAINING PARTNERS HAVE SHIFTED TH EIR RESIDENCES ALSO. HE FURTHER SUBMITTED THAT THE ASSESSEE DID NOT RECEIVE ANY NOTICE FROM THE TRIBUNAL AND ALSO DID NOT RECEIVE THE COPY OF MEMORANDUM OF APPEAL FILED BY THE REVENUE. HENCE, THE ASSESSEE WAS NOT AWARE OF THE DATE OF HEARING AND HENCE IT COULD NOT MAKE NECESSARY ARRANGEMENTS TO APPEAR BEFORE THE TRIBUNAL ON THE DATE OF HEARING. ACCORDINGLY, HE SUBMITTED THAT TH ERE WAS A REASONABLE CAUSE FOR THE ASSESSEES NON APPEARANCE ON THE DATE OF HE ARING AND PRAYED THAT THE EX-PARTE ORDER MAY BE RECALLED. 4. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE T RIBUNAL HAS PASSED THE SPEAKING ORDER ON MERITS BY CONSIDERING THE RELEVAN T CASE LAW AND THE PROVISIONS OF THE ACT. ACCORDINGLY, HE OPPOSED TO THE PETITIO N FILED BY THE ASSESSEE. 5. HAVING HEARD THE RIVAL SUBMISSIONS, WE ARE OF TH E VIEW THAT THE ASSESSEE HAS SHOWN REASONABLE CAUSE FOR NOT APPEARING BEFORE THE TRIBUNAL ON THE DATE OF HEARING. ACCORDINGLY, BY VIRTUE OF POWER GIVEN TO THE TRIBUNAL UNDER RULE 25 OF M.P. NO.92/COCH/2014 3 THE APPELLATE TRIBUNAL RULES, 1963, WE RECALL THE I MPUGNED ORDER. THE REGISTRY IS DIRECTED TO POST THE APPEAL FOR HEARING IN THE N ORMAL COURSE. 6. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT O N 08-05-2015 SD/- SD/- (DURGA RAO) (B.R. BASKARAN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 8TH MAY, 2015 GJ COPY TO: 1. M/S. RAJESWARI HOSPITAL, TALAP, KANNUR. 2. THE INCOME TAX OFFICER, WARD-1, KANNUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN M.P. NO.92/COCH/2014 4 10. SECTION 263 OF THE INCOME-TAX ACT SEEKS TO REMO VE THE PREJUDICE CAUSED TO THE REVENUE BY THE ERRONEOUS ORDER PASSED BY THE AS SESSING OFFICER. IT EMPOWERS THE COMMISSIONER TO INITIATE SUO MOTO PROC EEDINGS EITHER WHERE THE ASSESSING OFFICER TAKES A WRONG DECISION WITHOUT CO NSIDERING THE MATERIALS AVAILABLE ON RECORD OR HE TAKES A DECISION WITHOUT MAKING AN ENQUIRY INTO THE MATTERS, WHERE SUCH INQUIRY WAS PRIMA FACIE WARRANT ED. THE COMMISSIONER WILL BE WELL WITHIN HIS POWERS TO REGARD AN ORDER AS ERR ONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICE R SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE CLAIM MADE BY THE AS SESSEE IN HIS RETURN. THE REASON IS OBVIOUS. UNLIKE THE CIVIL COURT WHICH IS NEUTRAL IN GIVING A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT, THE ROLE OF AN ASSESSING OFFICER UNDER THE INCOME-TAX ACT IS NOT ONLY THAT OF AN ADJUDICAT OR BUT ALSO OF AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN, W HICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. HE MUST DISCHARGE BO TH THE ROLES EFFECTIVELY. IN OTHER WORDS, HE MUST CARRY OUT INVESTIGATION WHERE THE FACTS OF THE CASE SO REQUIRE AND ALSO DECIDE THE MATTER JUDICIOUSLY ON T HE BASIS OF MATERIALS COLLECTED BY HIM AS ALSO THOSE PRODUCED BY THE ASSESSEE BEFOR E HIM. THE SCHEME OF ASSESSMENT HAS UNDERGONE RADICAL CHANGES IN RECENT YEARS. IT DESERVES TO BE NOTED THAT THE PRESENT ASSESSMENT WAS MADE U/S. 143 (3) OF THE INCOME-TAX ACT. IN OTHER WORDS, THE ASSESSING OFFICER WAS STATUTORI LY REQUIRED TO MAKE THE ASSESSMENT UNDER SECTION 143(3) AFTER SCRUTINY AND NOT IN A SUMMARY MANNER AS CONTEMPLATED BY SUB-SECTION (1) OF SECTION 143. BUL K OF THE RETURNS FILED BY THE ASSESSEES ACROSS THE COUNTRY IS ACCEPTED BY THE DEP ARTMENT UNDER SECTION 143(1) WITHOUT ANY SCRUTINY. ONLY A FEW CASES ARE P ICKED UP FOR SCRUTINY. THE ASSESSING OFFICER IS THEREFORE, REQUIRED TO ACT FAI RLY WHILE ACCEPTING OR REJECTING THE CLAIM OF THE ASSESSEE IN CASES OF SCRUTINY ASSE SSMENTS. HE SHOULD BE FAIR NOT ONLY TO THE ASSESSEE BUT ALSO TO THE PUBLIC EXCHEQUE R. THE ASSESSING OFFICER HAS GOT TO PROTECT, ON ONE HAND, THE INTEREST OF THE AS SESSEE IN THE SENSE THAT HE IS NOT SUBJECTED TO ANY AMOUNT OF TAX IN EXCESS OF THA T IS LEGITIMATELY DUE FROM HIM, AND ON THE OTHER HAND, HE HAS A DUTY TO PROTEC T THE INTERESTS OF THE REVENUE AND TO SEE THAT NO ONE DODGED THE REVENUE AND ESCAP ED WITHOUT PAYING THE LEGITIMATE TAX. THE ASSESSING OFFICER IS NOT EXPECT ED TO PUT BLINKERS ON HIS EYES AND MECHANICALLY ACCEPT WHAT THE ASSESSEE CLAIMS BE FORE HIM. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED AND THE GEN UINENESS OF THE CLAIMS MADE IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE S UCH AS TO PROVOKE INQUIRY. ARBITRARINESS IN EITHER ACCEPTING OR REJECTING THE CLAIM HAS NO PLACE. THE ORDER PASSED BY THE ASSESSING OFFICER BECOMES ERRONEOUS B ECAUSE AN ENQUIRY HAS NOT BEEN MADE OR GENUINENESS OF THE CLAIM HAS NOT BEEN EXAMINED WHERE THE INQUIRIES OUGHT TO HAVE BEEN MADE AND THE GENUINENE SS OF THE CLAIM OUGHT TO HAVE BEEN EXAMINED AND NOT BECAUSE THERE IS ANYTHIN G WRONG WITH HIS ORDER IF ALL THE FACTS STATED OR CLAIM MADE THEREIN ARE ASSU MED TO BE CORRECT. THE COMMISSIONER MAY CONSIDER AN ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS NOT ONLY WHEN IT CONTAINS SOME APPARENT ERROR OF RE ASONING OR OF LAW OR OF FACT M.P. NO.92/COCH/2014 5 ON THE FACE OF IT BUT ALSO WHEN IT IS A STEREO-TYPE D ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN AND FAIL S TO MAKE ENQUIRIES OR EXAMINE THE GENUINENESS OF THE CLAIM WHICH ARE CALL ED FOR IN THE CIRCUMSTANCES OF THE CASE.