M/s Patiala Improvement Trust, Patiala v. ACIT, Patiala

ITA 144/CHANDI/2011 | 2007-2008
Pronouncement Date: 23-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 14421514 RSA 2011
Assessee PAN AAAJI0034L
Bench Chandigarh
Appeal Number ITA 144/CHANDI/2011
Duration Of Justice 1 month(s) 18 day(s)
Appellant M/s Patiala Improvement Trust, Patiala
Respondent ACIT, Patiala
Appeal Type Income Tax Appeal
Pronouncement Date 23-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 23-03-2011
Assessment Year 2007-2008
Appeal Filed On 04-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 144/CHD/2011 ASSESSMENT YEAR: 2007-08 M/S PATIALA IMPROVEMENT TRUST VS. THE ACIT CIRCLE PATIALA PATIALA PAN NO. AAAJI0034L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. GOYAL RESPONDENT BY: SMT.JAISHREE SHARMA ORDER PER SUSHMA CHOWLA JM THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) PATIALA DATED 25.11.2010 RELATING TO ASSESSMENT YEAR 2007-0 8 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS NOT ALLOWED REASONABLE OPPORTUNITY AFTER SO CALLED SHOW CAUSE NOTICE FOR ENHANCEMENT OF INCOME HENCE THE ORDER PASSED WHICH IS AGAINST NATURAL JUSTICE & LAW BE REJECTED OR MODIFIED ACCORDINGLY. 2. THAT THE LD. CIT(A) HAS ERRED IN ENHANCING THE INCO ME WITHOUT PROPER SHOW CAUSE NOTICE. LETTER FOR REMAN D REPORT WAS SENT TO THE ASSESSING OFFICER FOR COMPLI ANCE AFTER GIVING REASONABLE OPPORTUNITY TO THE TRUST WH ICH WAS NEVER GIVEN. FURTHER A COPY OF THE SAME LETTE R 2 WAS ONLY ENDORSED TO US. THAT CIT(A) HAS NOT ALLOW ED REASONABLE OPPORTUNITY AS REQUIRED U/S 251(2) OF TH E INCOME TAX ACT BEFORE ENHANCING THE SAME. 3. THE GRIEVANCE OF THE ASSESSEE IN THE PRESENT APP EAL IS NON ISSUE OF A PROPER SHOW CAUSE NOTICE TO THE ASSESSEE. THE BRIE F FACTS OF THE CASE ARE THAT ASSESSING OFFICER COMPLETED ASSESSMENT U/S 143 (3) OF THE ACT UNDER WHICH ADDITION OF RS. 53 34 000/- AND ANOTHER ADDIT ION OF RS. 10 LACS WAS MADE. THE CIT(A) WAS OF THE VIEW THAT IT WAS A FIT CASE FOR ENHANCEMENT OF INCOME AND THE ADDITION SHOULD NOT BE RESTRICTE D TO TWO DISALLOWANCES MADE. THE CIT(A) VIDE PARA 6 STATES AS UNDER:- 6. ON CONSIDERATION OF THE FACTS AND SUBMISSIONS OF BOTH THE ASSESSING OFFICER IN HIS REMAND REPORT AND THE COUNSEL FOR APPELLANT I AM OF THE CONSIDERED OPINION THAT THIS IS A FIT CASE FOR ENHANCEMENT OF INCOME AND THE ADDITI ONS SHOULD NOT BE RESTRICTED TO THE TWO DISALLOWANCES M ADE. A NOTICE FOR ENHANCEMENT OF INCOME WAS SENT TO THE ASSESSING OFFICER VIDE LETTER NO. 624 DATED 22.9.20 10 ASKING HIM TO GIVE REASONABLE OPPORTUNITY TO THE APPELLANT AND TO SHOW CAUSE WHY THE INCOME SHOULD NOT BE ENHANCED FO R THE YEAR UNDER CONSIDERATION AND FOR THE REASONS GIVEN IN THE SHOW CAUSE NOTICE. THE ASSESSING OFFICER WAS REQUI RED TO SEND HIS REPORT IN THIS REGARD BY 27.9.2010 TO THIS OFFICE. COPIES OF THIS SHOW CAUSE WAS ALSO ENDORSED TO CIT PATIALA AND JCIT PATIALA. SUCH A REPORT HAS NOT BEEN REC EIVED. 4. VIDE PARAS 6.1 & 6.2 THE CIT(A) FURTHER STATES AS UNDER:- 6.1 SUBSEQUENTLY A NOTICE WAS SENT TO THE APPELLA NT VIDE NO.748 DATED 18.11.2010 ASKING FOR HIS REPLY TO THE SAID SHOW CAUSE NOTICE AND FIXING THE CASE FOR 22.11.201 0. A SIMILAR NOTICE WAS ALSO SENT TO THE ASSESSING OFFIC ER ASKING 3 HIM TO AGAIN SUBMIT HIS REMAND REPORT. THE COUNSEL FOR THE APPELLANT APPEARED ON 22.11.2010 AND SOUGHT TIME TI LL 25.11.2010 TO FILE HIS REPLY. ON 25.11.2010 THE C OUNSEL FOR THE APPELLANT FIELD A LETTER FROM THE CHAIRMAN PAT IALA IMPROVEMENT TRUST SEEKING MORE TIME TO FILE REPLY. AGAIN TIME WAS GIVEN FOR 29.11.2010. NO REPLY WAS FILED B Y THE APPELLANT NEITHER ASSESSING OFFICERS REPORT HAS BE EN RECEIVED. I AM THEREFORE CONSTRAINED TO DECIDE T HE CASE ON MERITS. 6.2 THE ASSESSING OFFICER IN HIS REMAND REPORT DAT ED 13.9.2010 VIDE NO. ACIT/CIRCLE/PATIALA/10-11/359 HA S STATED THAT THE STATUS OF THE APPELLANT HAS ATTAINED FINAL ITY AS THE DEPARTMENT HAD ACCEPTED THE ORDER OF THE HON'BLE IT AT REGARDING STATUS OF THE APPELLANT. NOW THE ISSUE IS TO DECIDE THE ENHANCEMENT OF INCOME CASE ON MERITS . 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. UNDER THE PROVISIONS OF SECTION 246A OF THE I.T. ACT AN APPEAL LIES BEFORE THE CIT(A) AGAINST THE ORDER PASSED BY THE ASSESSING OF FICER AS ENLISTED IN CLAUSE (A) TO (R) OF SECTION 246A (1) OF THE I.T. A CT. THE FORM OF APPEAL ALONGWITH REQUISITE APPEAL FEE AND THE PERIOD OF LI MITATION IS PRESCRIBED IN SECTION 249 OF THE ACT. THE PROCEDURE FOR DISPOSING OF THE APPEAL I.E. FIXING THE DATE OF HEARING OF APPEAL AND GIVING NOT ICE TO THE PRESCRIBED PERSON IS PROVIDED U/S 250 OF THE ACT. UNDER SECTI ON 250 (6) OF THE ACT IT IS PROVIDED THAT WHILE DISPOSING OF AN APPEAL THE ORDER OF CIT(A) SHALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINA TION OF THE DECISION THEREON AND THE REASONS FOR THE DECISIONS. UNDER S ECTION 251 OF THE INCOME TAX ACT THE CIT(A) HAS THE POWER IN AN APPE AL FILED AGAINST AN ORDER OF ASSESSMENT TO CONFIRM REDUCE ENHANCE OR ANNUAL THE ASSESSMENT AND SIMILARLY IN AN ORDER IMPOSING PENALTY THE CIT (A) HAS THE POWER TO 4 CONFIRM OR CANCEL SUCH ORDERS AND / OR ENHANCE OR R EDUCE THE QUANTUM OF PENALTY. IN ANY OTHER CASE THE CIT(A) MAY PASS SUC H ORDERS IN THE APPEAL AS HE THINKS FIT. UNDER SECTION 251(2) IT IS PRO VIDED THAT THE CIT(A) SHALL NOT ENHANCE AN ASSESSMENT OR PENALTY OR REDUC E THE AMOUNT OF REFUND UNLESS A REASONABLE OPPORTUNITY OF SHOW CAUSE AGAIN ST SUCH ENHANCEMENT OR REDUCTION OF REFUND HAS BEEN AFFORDED TO THE ASS ESSEE. IT IS FURTHER PROVIDED VIDE EXPLANATION U/S 251 OF THE ACT THAT W HILE DISPOSING OF AN APPEAL THE CIT(A) MAY CONSIDER AND DECIDE ANY MATT ER ARISING OUT OF PROCEEDINGS IN WHICH THE ORDER APPEALED WAS PASSED . THE SAID POWER IS NOT WITHSTANDING THE FACT THAT THE ASSESSEE HAS NOT RAISED ANY SUCH MATTER BEFORE THE CIT(A). 6. THE POWERS ENSHRINED IN THE CIT(A) EMPOWERS HI M WHILE DECIDING AN APPEAL AGAINST THE ORDER OF ASSESSMENT TO EITHER CONFIRM REDUCE ENHANCE OR ANNUL THE ASSESSMENT. HOWEVER IT HAS B EEN FURTHER PROVIDED THAT WHERE THERE IS AN ENHANCEMENTS IN THE ASSESSM ENT ORDER PENALTY OR REDUCTION IN THE AMOUNT OF REFUND THAN THE CIT(A) SHALL SHOW CAUSE THE ASSESSEE TO EXPLAIN HIS CASE AGAINST SUCH ENHANCEME NT OR REDUCTION FOR WHICH A REASONABLE OPPORTUNITY OF HEARING HAS TO BE PROVIDED TO THE ASSESSEE. IN THE FACTS OF THE PRESENT CASE WE FIN D THAT THE ASSESSEE HAD FILED AN APPEAL BEFORE THE CIT(A) WHO VIDE PARA 6 OBSERVED THAT HE WAS OF THE OPINION THAT THE PRESENT CASE WAS FIT CASE F OR ENHANCEMENT OF INCOME. AS REPRODUCED BY US HEREIN ABOVE IN PARA 6 A NOTICE OF ENHANCEMENT WAS SENT TO THE ASSESSING OFFICER VIDE LETTER NO. 624 DATED 22.9.2010 ASKING HIM TO OFFER A REASONABLE OPPORTU NITY OF THE HEARING TO THE ASSESSEE AND SHOW CAUSE WHY THE INCOME SHOULD N OT BE ENHANCED FOR THE YEAR UNDER CONSIDERATION. THE ACTION OF THE CI T(A) IN ASKING THE ASSESSING OFFICER TO SHOW CAUSE THE ASSESSEE AGAINS T THE ENHANCEMENT OF 5 INCOME AND PROVIDING A REASONABLE OPPORTUNITY OF HE ARING TO THE ASSESSEE IS AGAINST THE PROVISIONS OF THE ACT. THE AMBIT OF SECTION 251(2) OF THE ACT IS WITH REGARD TO THE DUTY OF THE CIT(A) AND U NDER THE PROVISION OF THE ACT IT IS INCUMBENT UPON THE CIT(A) BEFORE PAS SING AN ORDER OF ENHANCEMENT OF INCOME TO PROVIDE A REASONABLE OPPOR TUNITY OF HEARING TO THE APPELLANT OR SHOW CAUSE AGAINST SUCH ENHANCEMEN T OF INCOME. IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE THE CI T(A) HAS FAILED TO DISCHARGE HIS DUTY OF ISSUING A SHOW CAUSE NOTICE T O THE ASSESSEE AND ALSO PROVIDING A REASONABLE OPPORTUNITY OF HEARING TO TH E ASSESSEE BEFORE PASSING AN ORDER OF ENHANCEMENT OF INCOME. THE CIT (A) DECIDED THE ISSUE OF ENHANCEMENT OF INCOME ON THE MERITS OF TH E CASE WITHOUT SHOW CAUSING THE ASSESSEE AGAINST SUCH ENHANCEMENT AND W ITHOUT PROVIDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE FIND NO MERIT IN THE ORDER OF THE CIT(A) IN THIS REGARD. 7. FURTHER FROM THE PERUSAL OF THE RECORD WE FIN D THAT THE CIT(A) THOUGH HAD ISSUED A LETTER DATED 22.9.2010 TO THE A SSESSING OFFICER AND THE ASSESSING OFFICER WAS REQUIRED TO SEND HIS REP ORT BY 27.9.2010 TO THE OFFICE OF THE CIT(A) BUT NO SUCH REPORT WAS RECEIVE D FROM THE ASSESSING OFFICER. FURTHER THE OFFICE SUPDT. OF CIT(A ) O FFICE ISSUED A LETTER DATED 18.11.2010 TO THE ASSESSEE TO GIVE A REPLY BY 22.11.2010 WITH REGARD TO THE LETTER ISSUED TO THE ACIT DATED 22.9.2010. THE ASSESSEE SOUGHT TIME BUT NO REPLY WAS FILED BY THE ASSESSEE NOR ANY REPORT WAS RECEIVED FROM THE ASSESSING OFFICER. THE CIT(A) HOWEVER T ALKS OF A REMAND REPORT DATED 30.9.2010 RECEIVED FROM THE ACIT IN WH ICH IT WAS REPORTED THAT THE STATUS OF THE ASSESSEE HAD ATTAINED FINALI TY BUT NO OTHER REPORT WAS SENT BY THE ASSESSING OFFICER IN CONNECTION WITH TH E LETTER OF ENHANCEMENT ISSUED BY CIT(A). THE CIT(A) THEREAFTER DECIDED TH E ISSUE OF 6 ENHANCEMENT OF INCOME ON THE MERITS OF THE CASE AS PER PARA 6.2 OF THE APPELLATE ORDER. WE FIND NO MERIT IN THE ORDER OF CIT(A) IN VIEW OF THE EXPLICIT PROVISIONS OF THE ACT UNDER WHICH IT HAS B EEN MANDATED THAT THE CIT(A) SHALL NOT ENHANCE AN ASSESSMENT UNLESS PROPE R OPPORTUNITY OF SHOW CAUSING AGAINST SUCH ENHANCEMENT HAS BEEN PROV IDED TO THE ASSESSEE. IN THE INTEREST OF JUSTICE WE DEEM IT FIT TO RESTO RE THIS ISSUE BACK TO THE FILE OF THE CIT(A) TO FOLLOW THE PROVISIONS OF THE ACT AND SHOW CAUSE THE ASSESSEE AGAINST SUCH ENHANCEMENT BY PROVIDING A RE ASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THEN DECIDE THE ISSU E ON THE MERITS OF THE CASE. THE GROUND NO. 1 & 2 RAISED BY THE ASSESSEE A RE THUS ALLOWED FOR STATISTICAL PURPOSES. 8. WE ARE NOT ADDRESSING THE ISSUES ON THE MERITS O F THE ADDITION IN VIEW OF OUR SETTING ASIDE THE MATTER BACK TO THE F ILE OF THE CIT(A). 9. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF MARCH 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : MARCH 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 7