Sri Chandan Mishra, Cuttack v. Addl. CIT, Cuttack

ITA 233/CTK/2009 | 2005-2006
Pronouncement Date: 15-02-2011

Appeal Details

RSA Number 23322114 RSA 2009
Assessee PAN AEVPM1843E
Bench Cuttack
Appeal Number ITA 233/CTK/2009
Duration Of Justice 1 year(s) 4 month(s) 9 day(s)
Appellant Sri Chandan Mishra, Cuttack
Respondent Addl. CIT, Cuttack
Appeal Type Income Tax Appeal
Pronouncement Date 15-02-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 15-02-2011
Assessment Year 2005-2006
Appeal Filed On 06-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK ( ) BEFORE . . HONBLE SHRI K.K.GUPTA ACCOUNTANT MEMBER. /AND . . . S HRI K.S.S.PRASAD RAO JUDICIAL MEMBER / I.T.A.NO. 233/CTK/2009 / ASSESSMENT YEAR 2005 - 06 SRI CHANDAN MISHRA AT: ORIYA BAZAR P.O. BUXI BAZAR CUTTRACK 753 001 PAN: AEVPM 1843 E - - - VERSUS - ADDL.COMMISSIONER OF INCOME - T AX RANGE 2 CUTTACK. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.R.MOHANTY/SASWAT ACHARYA ARS / FOR THE RESPONDENT: / SHRI A.K.GAUTAM DR / ORDER . . . SHRI K.S.S.PRASAD RAO JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX PASSED U/S.263 OF THE INCOME - TAX ACT 1961 DT.22.6.2009 DIRECTING THE ASSESSING OFFICER TO DO DE NOVO ASSESSMENT FOR THE ASSESSMENT YEAR 2005 - 06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN THE GROUNDS OF APPEAL. (I) INSPITE OF THE FACT THAT THE ASSESSMENT HAS GONE THROUGH THE ASST. COMMISSIONER ADDITIONAL COMMISSIONER CIT(A) AND ITAT THE CIT ERRED IN REOPENING THE ASSESSMENT U/S.263 OF THE I.T.ACT ACT WHICH IS ILLEGAL AND WITHOUT JURISDICTION. (II) THE LEARNED CIT HAS NOT AFFORDED ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THEREBY VIOLATED THE PRINCIPLES OF NATURAL JUSTICE R ENDERING THE ORDER LIABLE TO BE QUASHED. THE IMPUGNED ORDER SUFFERS FROM INHERENT DEFECTS AND NOT IN CONFORMITY WITH THE STATUTORY PROVISIONS OF LAW APPLICABLE THERETO. I.T.A.NO. 233/CTK/2009 2 3. BOTH PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE IN THIS APPEAL A ND THEIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIALS MADE AVAILABLE TO THE TRIBUNAL THE UNDISPUTED FACTS RELATING TO THE ASSESSEE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SALARY CARGO CLEARING AND TRANSPORT BUSINES S SALARY AND INTEREST FROM DIFFERENT PARTNERSHIP FIRMS AND INTEREST ON DEPOSITS. DURING THE PERIOD UNDER CONSIDERATION THE ASSESSEE HAS RETURNED INCOME DECLARING TOTAL INCOME AT RS. 45 90 380 AND AGRICULTURAL INCOME OF RS.42 000 AND PAID TAX OF RS. 18 8 2 037. THE LEARNED ASSESSING OFFICER COMPLETED THE HEARING AND PASSED THE ASSESSMENT ORDER DT.31.1.2007 AFTER IT WAS APPROVED BY THE ADDL. COMMISSIONER OF INCOME - TAX RANGE II CUTTACK. AGGRIEVED WITH THE SAID ASSESSMENT ORDER THE ASSESSEE WENT IN APPEAL TO THE CIT AND THEREBY GOT A PARTIAL RELIEF. THEREFORE THE ASSESSEE FURTHER FILED SECOND APPEAL BEFORE THE ITAT CUTTACK ON 16.1.2009 AND DISPOSED OF BY THE TRIBUNAL. THE LEARNED CIT IN THE MEANWHILE EXERCISING HIS POWERS U/S.263 FORGETTING FOR A MOMENT THAT THE PROCEEDINGS HAD ALREADY BEEN ADJUDICATED BY THE ADDL.CIT AND CIT(A) AS WELL AS BY ITAT CUTTACK. THE CIT HAS ISSUED NOTICE DT.11/12.5.2009 FIXING THE CASE ON 16.5.2009. THE ASSESSEE RECEIVED THE SAID NOTICE ON 22.5.2009. THE ASSESSEE HAS APPEARED BEFORE THE CIT(A) THROUGH HIS COUNSEL AND SOUGHT FOR ADJOURNMENT FOR THREE WEEKS DUE TO THE SICKNESS OF HIS SPOUSE AND HIS NEWLY BORN CHILD WHOM TO BE TREATED IN APPLO NEW DE LHI. THE LEARNED CIT DID NOT HE E D TO THE ASSESSEES REQUEST REPRESENTED THROUGH A R OF THE ASSESSEE AND COMPLETED THE PROCEEDINGS EX PARTE. WHILE DOING SO THE OBSERVATION MADE BY THE CIT IS THEREFORE THE ASSESSMENT ORDERS DT.31.12.2007 BEING ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF REVENUE IS SENT BACK TO THE FILE OF T HE ASSESSING OFFICER FOR I.T.A.NO. 233/CTK/2009 3 D E NOVO ASSESSMENT. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT THE PRESENT APPEAL IS FILED BY THE ASSESSEE. 5. DURING THE COURSE OF HEARING THE LEARNED AR OF THE ASSESSEE APART FROM REITERATING THE UNDISPUTED FACTUAL ASPECTS ST ATED SUPRA HAS CONTENDED THAT THE CIT HAS NOT GRANTED ANY SINGLE ADJOURNMENT TO THE ASSESSEE THAT TOO ON THE GROUND OF ILLNESS OF HIS SPOUSE AND NEWLY BORN CHILD. HE HAS NOT EVEN GIVEN SUFFICIENT TIME FOR GIVING REPLY TO THE SHOW CAUSE NOTICE ISSUED BY T HE CIT. THEREFORE THE PROCEEDINGS BEFORE THE CIT ARE INFIRMD FOR WANT OF FOLLOWING PRINCIPLES OF NATURAL JUSTICE I.E. AUDI ALTE M PARTEM WHICH THE AUTHORITIES UNDER THE ACT BEING QUASHI - JUDICIAL FUNCTIONARIES ARE EXPECTED TO FOLLOW .THEREFORE PRIMA FAC IE THE IMPUGNED ORDER IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. ON GOING THROUGH THE IMPUGNED ORDER THE LEARNED CIT HAS NOWHERE TAKEN INTO CONSIDERATION THAT THE ASSESSMENT ORDER IN QUESTION PASSED BY THE ASSESSING OFFICER ON 31.12.2007 HAS BEEN PASSED AFTER THOROUGH ENQUIRY AND EXAMINATION OF THE RELEVANT ASPECTS WHICH WAS APPROVED BY THE ADDL.CIT AND THEN ONLY THE ASSESSING OFFICER HAS ISSUED THE ORDER U/S.143(3) DRIVING THE ASSESSEE TO APPROACH THE FIRST APPELLATE AUTHORITY AND SECOND APPELLATE AUTHORITY. INSPITE OF THAT THE LEARNED CIT HAS INVOKED THE JURISDICTION U/S.263 BY SIMPLY OBSERVING THAT THE ASSESSMENT ORDER DT.31.12.2007 BEING ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF REVENUE HAS SENT BACK THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ASSESSMENT. NOWHERE IN THE SAID ORDER THE CIT HAS POINTED OUT AS TO HOW THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND ULTIMATELY UPHELD BY THE SECOND APPELLATE AUTHORITY IS NOT IN ACCORDANCE WITH LAW APPLICABLE THERETO. AS CAN BE SEEN FROM THE IMPUGNED ORDER THE LEARNED CIT HAS NOT FOUND THAT ANY ISSUE WAS LEFT UN - CONSIDERED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER. THE ONLY OBJECTION OF THE LEARNED CIT IS THAT THE ASPECTS INVOLVED IN THE I.T.A.NO. 233/CTK/2009 4 ASSESSMENT ORDER WERE NOT CONSIDERED IN THE WAY IN WHICH HE WANTS. THE LEARNED CIT HAS NO SUCH RIGHT AS HE CAN ONLY SAY THAT THE WAY IN WHICH THE ASPECTS WERE CONSIDERED IN THE ASSESSMENT ORDER ARE NOT ACCORDING TO THE ESTABLISHED PRINCIPLES OF NATURAL JUSTICE. THE OBSERVATION OF THE CIT THA T NO ENQUIRIES HAD BEEN CONDUCTED BY THE ASSESSING OFFICER IN RESPECT OF THE ISSUES DISCUSSED IN THE LETTER ISSUED TO THE ASSESSEE CALLING FOR THE EXPLANATION IS NOT CORRECT. THIS IS VERY MUCH CLEAR FROM THE APPROVAL OF THE DRAFT ORDER OF THE ASSESSING OF FICER BY THE ADDL.CIT. APART FROM THAT THE IMPUGNED ORDER IS SILENT ABOUT HOW THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS RESULTING IN PREJUDICE TO THE INTEREST OF REVENUE WHICH IS IMPORTANT INGREDIENT FOR VALIDITY OF THE ORDER U/S.2 63. HAVING NO FINDING ABOUT THIS ASPECT IN THE IMPUGNED ORDER THE SAME IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND REQUIRES TO BE SET ASIDE. ACCORDINGLY HE PRAYED FOR ALLOWING THE APPEAL OF THE ASSESSEE BY SETTING ASIDE THE ORDER OF THE LEARNED CIT. 6. CON TRARY TO THIS THE LEARNED DR HAS CONTENDED THAT THE IMPUGNED ORDER PASSED BY THE CIT IS WELL REASONED ONE AND SELF EXPLANATORY REGARDING THE MAIN INGREDIENT OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER HAVING BEEN ERRONEOUS RESULTING IN PREJUDI CE TO THE INTEREST OF REVENUE. IN THE LIGHT OF LAW LAID DOWN BY THE VARIOUS JUDICIAL FORUMS MENTIONED IN THE IMPUGNED ORDER THE ASSESSMENT ORDER OF THE LEARNED ASSESSING OFFICER IS LIABLE TO BE SET ASIDE. THEREFORE THE IMPUGNED ORDER IS VERY MUCH IN ACCO RDANCE WITH THE LAW APPLICABLE THERETO. THIS ORDER IS NOT SUFFERING FROM ANY INFIRMITY AND THEREFORE IT DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY THE LEARNED DR PRAYED FOR UPHOLDING THE SAME BY DISMISSING THE APPEAL OF THE ASSESSEE. I.T.A.NO. 233/CTK/2009 5 7. ON CAREFUL AN ALYSIS OF THE UNDISPUTED FACTS STATED SUPRA IN THE LIGHT OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND THE RIVAL SUBMISSIONS OF BOTH THE PARTIES IT IS FOUND THAT THE ASSESSMENT PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER BY ISSUING NOTICE U/S .142(1) ON 28.9.2006 BY WHICH HE CALLED FOR THE FILING OF RETURN OF INCOME BY THE ASSESSEE. THE ASSESSEE HAS FILED THE RETURN ON 12.1.2007 DISCLOSING TOTAL INCOME OF RS.45 19 383.THIS RETURN WAS TAKEN UP FOR CONSIDERATION U/S.143(3) BY ISSUING NOTICE U/S.1 43(2) ON 22.4.2007. IT WAS HEARD FROM TIME TO TIME. IN THE ASSESSMENT ORDER IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS FILED THE RETURN ONLY ON ISSUE OF NOTICE U/S.142(1) AND THE ASSESSEE HAS NOT COMPLIED THE OBLIGATION U/S.44AA OF THE ACT WHICH CLEARLY MANDATES MAINTENANCE OF BOOKS OF ACCOUNTS IN CASE OF INCOME EXCEEDING RS.1 20 000 OR THE TURNOVER OF BUSINESS EXCEEDS RS.10 LAKHS. CONSEQUENTLY THE A O HAS INITIATED PROCEEDINGS U/S.271A FOR NON - MAINTENANCE OF BOOKS OF ACCOUNT BY THE ASS ESSEE AND HE ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT FOR UNDERSTATING THE INCOME FROM TRANSPORT BUSINESS. ACCORDINGLY THE ASSESSING OFFICER HAS ULTIMATELY CAME TO THE CONCLUSION THAT A SUM OF RS.1 86 300 WAS FOUND DUE AS TAX FROM THE AS SESSEE. AGAINST THIS ORDER THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND THE LEARNED CIT(A) AFTER THREAD BARE CONSIDERATION OF THE ISSUES RAISED BEFORE HIM HAS FINALLY OBSERVED THAT THE INCOME RETURNED BY THE ASSESSEE HAVING NOT BEEN SUPPORTED OR SU BSTANTIATED BY ANY EVIDENCE THEY ARE NOT ENTITLED TO BE TREATED AS LEGITIMATE BUSINESS INCOME OF THE ASSESSEE. THEREFORE HE DIRECTED THE DELETION OF ENHANCEMENT MADE TO THE RETURNED INCOME BY THE ASSESSING OFFICER AND DIRECTED TO TREAT THIS INCOME FROM UN DISCLOSED SOURCES THEREBY GAVE PART RELIEF TO THE ASSESSEE. AS CAN BE SEEN FROM THE PAPER BOOK MADE AVAILABLE BY THE ASSESSEE BEFORE THE TRIBUNAL IT DISCLOSED THAT DURING THE I.T.A.NO. 233/CTK/2009 6 ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS ISSUED QUESTIONERS U/S.142 OF THE ACT ON 18.9.2007 AND 18.2.2007 AND THE ASSESSEE HAS GIVEN ELABORATE REPLIES TO THE SAME BY LETTER DT.24.12.2007. CONSIDERING OF THESE THINGS IN DETAIL THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER DT.31.12.2007 WHICH WAS SCRUTINIZED BY THE AD DL.CIT AND SUBJECTED TO REVIEW BY THE CIT(A) AND ITAT. NOW CONSIDERING THE LEGAL ASPECT INVOLVED IN THE CIRCUMSTANCES IT IS ESTABLISHED PRINCIPLE OF LAW THAT FOR INVOKING THE JURISDICTION U/S.263 THE CIT MUST FIND AS TO HOW THE ORDER OF THE ASSESSING O FFICER IS ERRONEOUS AND SUCH AN ORDER RESULTED IN PREJUDICE TO THE INTEREST OF REVENUE. AS CAN BE SEEN FROM THE IMPUGNED ORDER NOWHERE IT IS MENTIONED HOW THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS RESULTING IN PREJUDICE TO THE INTE REST OF REVENUE MORE SO IN THE LIGHT OF THE QUESTIONERS ISSUED BY THE DEPARTMENT AND THE REPLIES GIVEN BY THE ASSESSEE AND THE ASSESSMENT ORDER HAVING BEEN UNDER WENT SCRUTINY BY THE HIGHER OFFICIALS SUCH AS THE ADDL.CIT. APART FROM THAT AS CAN BE SEEN FR OM THE IMPUGNED ORDER ITSELF IT IS NOTICED THAT THE ASSESSEE HAS APPEARED THROUGH REPRESENTATIVE IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED U/S.263 BY THE CIT BUT HE PRAYED FOR ADJOURNMENT ON THE GROUND OF SICKNESS OF HIS WIFE AND HIS NEWLY BORN CHILD AN D THE SAME WAS REJECTED BY THE CIT AND HE PROCEEDED WITH THE PROCEEDINGS AFTER HEARING THE AR OF THE ASSESSEE FORGETTING FOR A MOMENT THAT THE ASSESSEE HAS SOUGHT TIME EVEN FOR GIVING REPLY TO THE SHOW - CAUSE NOTICE ISSUED BY THE CIT. WITHOUT GIVING OPPORTU NITY FOR FILING OF THE REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE CIT THE LEARNED CIT HAS PROCEEDED WITH THE PROCEEDINGS BY SIMPLY DISCUSSING WITH THE ASSESSEES REPRESENTATIVE. THIS ITSELF DISCLOSES THAT THE CIT HAS NOT FOLLOWED THE PRIMARY REQUIREMENT OF PRINCIPLES OF NATURAL JUSTICE BEING AUDI ALTE M PARTEM . HENCE WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED ORDER PASSED BY THE CIT IS I.T.A.NO. 233/CTK/2009 7 NOT SUSTAINABLE FOR LEGAL SCRUTINY FOR WANT OF FINDING AS TO HOW THE ASSESSMENT ORDER IS ERRONEOUS RESULTING IN PR EJUDICE TO THE INTEREST OF REVENUE AND FOR NOT FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. HENCE THE IMPUGNED ORDER OF THE CIT IS HEREBY SET ASIDE BY ALLOWING THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 15.02.2011 S D/ - S D/ - ( . . ) (K.K.GUPTA) ACCOUNTANT MEMBER. ( . . . ) (K.S.S.PRASAD RAO) JUDICIAL MEMBER. ( ) DAT E: 15 TH FEBRUARY 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : SRI CHANDAN MISHRA AT: ORIYA BAZAR P.O. BUXI BA ZAR CUTTRACK 753 001 2 / THE RESPONDENT: ADDL.COMMISSIONER OF INCOME - TAX RANGE 2 CUTTACK. 3 . / THE CIT 4 . ( )/ THE CIT(A) 5 . / DR CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY / BY ORDER [ ] SENIOR PRIVATE SECRETARY ( ) ( H.K.PADHEE ) SENIOR.PRIVATE SECRETARY.