Gateway Coated Papers Pvt. Ltd., New Delhi v. DCIT, New Delhi

ITA 3987/DEL/2011 | 2007-2008
Pronouncement Date: 02-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 398720114 RSA 2011
Assessee PAN AABCG3987A
Bench Delhi
Appeal Number ITA 3987/DEL/2011
Duration Of Justice 2 month(s)
Appellant Gateway Coated Papers Pvt. Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 02-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 02-11-2011
Date Of Final Hearing 02-11-2011
Next Hearing Date 02-11-2011
Assessment Year 2007-2008
Appeal Filed On 02-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI C.L. SETHI JM & SHRI A.N. PAHUJA AM ITA NO.3987/DEL/2011 ASSESSMENT YEAR:2007-08 GATEWAY COATED PAPERS PVT. LTD. A-416/A ROAD NO.6 MAHIPALPUR EXTN. NEW DELHI V/S . DCIT CIRCLE 12(1) NEW DELHI [PAN NO.: AABCG 398 7 A] (APPELLANT) (RESPONDENT) ASSESSEE BY NONE REVENUE BY SHRI H.L. DHIANA DR DATE OF HEARING 02-11-2011 DATE OF PRONOUNCEMENT 02-11-2011 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 2.9.2011 BY THE ASSESSEE AGAIN ST AN ORDER DATED 14.07.2011 OF THE LEARNED CIT(A)-XV NEW DELH I RAISES THE FOLLOWING GROUNDS:- A) THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND W AS ENGAGED IN COATING & TRADING OF PAPER. B) THE ORDER U/S 143(3) PASSED ON 30.10.2009 IS PRE JUDICED PASSED RATHER HURRIEDLY AND NOT BASED ON FACTS. APPELLATE ORDER OF CIT(A)-XV IS ERRONEOUS. C) THE ASSESSEE COMPANY AFTER INCURRING OPERATIONAL LOSSES OVER THE YEARS HAD FINALLY CLOSED IN THE PERIOD PR IOR TO THE YEAR UNDER ASSESSMENT AND DURING THE YEAR UNDER APP EAL THERE WERE NO OPERATIONAL ACTIVITY DURING THE YEAR. D) THE APPEAL AGAINST THE ADDITION OF ` `4 60 20 854/-; BEING SUNDRY CREDITORS & OTHER LIABILITIES OUTSTANDING AS ON 31.3.2006; AS CESSATION OF LIABILITY ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FILE CONFIRMATION FROM THE P ARTIES IS ERRONEOUS NOT BASED ON FACTS AND PREJUDICED. E) THE SUNDRY CREDITORS SERIALLY NUMBERED 1 TO 7 WE RE ADDED BACK IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR TOO; WHICH GOES TO PROVE BEYOND DOUBT THAT THE ASSESSING OFFICERS INTENTION IS JUST TO MAKE A HEF TY ITA N O.3987 /DEL./2011 2 ADDITION IN THE ASSESSMENT ORDER. THIS IS NOT IN T RUE SPIRIT OF THE JUSTICE. F) THE ASSESSMENT HAS BEEN FRAMED WITH A SOLE OBJEC T OF WIPING OFF THE ENTIRE LOSS AND CREATING A HUGE DEMA ND AGAINST THE COMPANY. THE LEARNED ASSESSING OFFICER HAS WILLFULLY IGNORED TO TAKE INTO CONSIDERATION THE FA CT THAT THE COMPANY IS TOTALLY CLOSED AND THERE HAVE BEEN NO OPERATIONS. G) THE COMPANY HAVING CEASED OPERATIONS CONFIRMATI ONS FROM SUNDRY CREDITORS IS JUST NOT FORTHCOMING BUT TREATING THEIR OUTSTANDING BALANCES AS INCOME SIMPLY BECAUSE THEIR CONFIRMATIONS COULD NOT BE FURNISHED IS A BAD ASSESSMENT. H) THE LEARNED CIT(A)-XV HAS OVERLOOKED THAT ALL PA RTIES 1 TO 7 AND NOT ONLY THE ONE MENTIONED AT NO.7 HAVE BE EN ADDED BACK TWICE AND HENCE ELIGIBLE FOR RELIEF. FO R OTHER LIABILITIES AND PROVISIONS AMOUNTING TO ` `3 83 75 665/- PROPER AUTHENTICATED COPIES OF CONFIRMATION CERTIFI CATES WERE FILED BUT LEARNED CIT HAS WILLFULLY IGNORED AN D DENIED LEGITIMATE AND LOGICAL RELIEF TO THE ASSESSE E. I) THAT WE MAY BE ALLOWED TO ADD AMEND OR ALTER TH E FOREGOING GROUNDS OF APPEAL AT THE TIME OF THE HEAR ING. 2. AT THE OUTSET NONE APPEARED ON BEHALF OF THE AS SESSEE DESPITE SERVICE OF NOTICE. CONSIDERING THE NATURE OF ISSUE INVOLVED W E THEREFORE DECIDED TO DISPOSE OF THE APPEAL AFTER HEARING THE LD. DR. 3. ADVERTING FIRST TO GROUND NOS. D) TO H) IN TH E APPEAL FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING LOSS OF ` `29 82 385/- FILED ON 31ST OCTOBER 2007 BY THE ASSESSEE WAS SELECTED FOR SCR UTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE OF THE INCOME-TAX ACT 196 1 (HEREAFTER REFERRED TO AS THE ACT) ISSUED ON 2.9.2008. DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE DID NOT UNDERTAKE ANY BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATI ON AND CLAIMED VARIOUS EXPENSES IN THE PROFIT AND LOSS ACCOUNT. TO A QUER Y BY THE AO THE ASSESSEE DID ITA N O.3987 /DEL./2011 3 NOT REPLY RESULTING IN DISALLOWANCE OF ` `15 48 002/-.THE AO FURTHER NOTICED THAT THE ASSESSEE HAD SHOWN FOLLOWING LIABILITIES IN ITS BALANCE SHEET:- S.N0. . NAME OF THE PARTY AMOUNT (IN ` `) 1 CHEMICAL SALES AGENCY 56 32 780 2 GOYAL BROTHERS 8 30 681 3 BANSAL DYECHEM 1 51 579 4 BANSAL DYECHEM PVT. LTD. 3 10 364 5 KHANNA PAPER MILLS PVT. LTD. 3 17 539 6 LALHJI MILLS PVT. LTD. 2 14 970 7. MAIZE PRODUCTS 1 87 272 8 OTHER LIABILITIES AND PROVISIONS 3 83 75 665 TOTAL 4 60 20 854/- 3.1 TO A QUERY BY THE AO VIDE ORDER SHEET ENTRY DAT ED 14/09/2009 SEEKING CONFIRMATION OF THE CREDITORS AND PARTY WISE DETAIL S THE ASSESSEE DID NOT REPLY. IN ABSENCE OF ANY EVIDENCE THAT THESE LIABILITIES WERE STILL PAYABLE THE AO CONCLUDED THAT THESE LIABILITIES CEASED TO EXIST A ND ACCORDINGLY ADDED THE AMOUNT OF ` `4 60 20 854/- TO THE INCOME OF THE ASSESSEE.. 4. ON APPEAL THE LEARNED CIT(A) UPHELD THE ADDITIO N EXCEPT IN RESPECT OF AN AMOUNT OF ` `1 87 276/- WHICH WAS ADDED BACK IN THE PRECEDING ASSESSMENT YEAR 2005-06 IN THE FOLLOWING TERMS: 9. DURING THE COURSE OF APPELLATE PROCEEDINGS IT HAS BEEN SUBMITTED THAT M/S MAIZE PRODUCTS HAD AN OUTSTANDIN G LIABILITY WHICH WAS ADDED BACK IN ASSESSMENT YEAR 2005-06 FOR A SUM OF `RS.1 87 276/-. THE AO IS DIRECTED TO VERIFY THE S AME FROM THE RECORDS AND IF THE SAID LIABILITY WAS DISALLOWED T HE SAME CANNOT BE ADDED IN THIS YEAR. DURING THE COURSE OF APPELLATE PROCEEDINGS IT HAS BEEN STATED THAT CONFIRMATIONS OF PARTIES ARE E NCLOSED. HOWEVER UPON EXAMINATION IT IS FOUND THAT THESE AR E MERE PHOTOCOPIES OF SOME DOCUMENTS FROM THE ASSESSEES O WN BOOKS OF ACCOUNTS AND ARE OF A GENERAL NATURE AND/AS SUCH NO REASON HAS BEEN GIVEN BY THE ASSESSEE AS TO WHY THE SAME WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER FOR EXAMINATION AND VE RIFICATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AS SUCH NO APPLICATION UNDER RULE 46A HAS BEEN MOVED. HENCE IN THE ABSEN CE OF ANY VERIFIED INFORMATION THE STAND OF THE ASSESSING OF FICER IS UPHELD. ITA N O.3987 /DEL./2011 4 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF LEARNED CIT(A) IN RESPECT OF ADDITION OF ` 4 58 33 578/-. THE LD. LD. DR MERELY SUPPORTED THE FINDINGS OF LEARNED CIT(A). 6. WE HAVE HEARD THE LEARNED DR AND GONE THROUGH TH E FACTS OF THE CASE. INDISPUTABLY THE AO ADDED THE AMOUNT OF ` `4 60 20 854/- FOR WANT OF RELEVANT CONFIRMATIONS AND DETAILS WHILE CONCLUDING THAT THE SE LIABILITIES CEASED TO EXIST. THE LEARNED CIT(A) UPHELD THE ADDITION EXCEPT FOR A N AMOUNT OF ` `1 87 276/- ON ACCOUNT OF OUTSTANDING LIABILITY OF M/S MAIZE PROD UCTS WHICH WAS ADDED BACK IN ASSESSMENT YEAR 2005-06. THE LD. CIT(A) DID NOT A NALYSE THE RELEVANT DETAILS FILED BY THE ASSESSEE FOR WANT OF AN APPLICATION UN DER RULE 46A OF I.T. RULES 1962 NOR RECORDED ANY SPECIFIC FINDINGS AS TO WHET HER OR NOT THESE LIABILITIES ACTUALLY CEASED TO EXIST OR AS TO WHETHER ANY AMOUN T WAS ADDED IN THE PRECEDING YEAR. APPARENTLY THE LD. CIT(A) WHILE UPHOLDING T HE ADDITION MADE BY THE AO DID NOT ANALYSE THE ISSUES NOR ASSIGNED ANY REASONS. A MERE GLANCE AT THE IMPUGNED ORDER REVEALS THAT THE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE NAMELY THAT EVERY JUDICIAL/QUASI-JUDICIAL BODY/AUTHORITY MUST P ASS REASONED ORDER WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEFORE IT. THE APPLICATION OF MIND TO THE MA TERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250( 6) OF THE ACT MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSING OF THE APPEAL S HALL BE IN WRITING AND SHALL STATE THE POINTS FOR DETERMINATION THE DECISION TH EREON AND THE REASON FOR THE DECISION. THE REQUIREMENT OF RECORDING OF REASONS AND COMMUNICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PROCEDURE. THE REQUIREMENT OF RECORDING OF REASONS BY THE QUASI-JU DICIAL AUTHORITIES IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RUL E OF LAW. IT INTRODUCES CLARITY CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE DECISION-MAKING PROCESS. WE MA Y REITERATE THAT A DECISION DOES NOT MERELY MEAN THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS . STATE OF PUNJAB (1995)1SCC ITA N O.3987 /DEL./2011 5 760(SC)]. AS IS APPARENT THE IMPUGNED ORDER SUFFER S FROM LACK OF REASONING AND IS NOT A SPEAKING ORDER. IN VIEW OF THE FOREGOING ESPECIALLY WHEN THE LD. CIT(A) HAS NOT PASSED A SPEAKING ORDER ON VARIOUS ISSUES RAISED IN GROUND NOS. E TO H IN THE APPEAL BEFORE HER WE CONSIDER IT FAIR AND A PPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HER FIL E FOR DECIDING THE ISSUES RAISED IN THE GROUND NOS. D TO H) RAISED BEFORE US IN RE SPECT OF ADDITION OF ` 4 58 33 578/- AFRESH IN ACCORDANCE WITH LAW AND OF COURSE AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. NEEDLES S TO SAY THAT WHILE REDECIDING THE APPEAL THE LEARNED CIT(A) SHALL PASS A SPEAKIN G ORDER KEEPING IN MIND INTER ALIA THE MANDATE OF PROVISIONS OF SEC. 250(6) OF T HE ACT BRINGING OUT CLEARLY AS TO WHETHER OR NOT THE AFORESAID LIABILITIES CEASED TO EXIST IN THE YEAR UNDER CONSIDERATION AND AS TO WHETHER OR NOT THESE AMOUN TS WERE ADDED IN THE PRECEDING YEAR. WITH THESE OBSERVATIONS GROUND NOS . D) TO H) IN THE APPEAL ARE DISPOSED OF. 7.. GROUND NO. GROUND (A) TO (C) IN THE APPEAL BE ING MERE STATEMENT OF FACTS DO NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO A DDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF THE RESIDUARY GROUND N O. I) IN THE APPEAL ACCORDINGLY THESE GROUNDS ARE DISMISSED. 8. IN THE RESULT APPEAL IS PARTLY ALLOWED BUT FOR STATISTICAL PURPOSES. SD/- SD/- (C.L. SETHI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. M/S GRIP BUILDTECH PVT. LTD. 1/18-B ASAF ALI R OAD NEW DELHI. 2. DCIT CIRCLE 12 (1) NEW DELHI. 3. CIT(A)-XV NEW DELHI. 4. CIT CONCERNED. 5. DR ITAT C BENCH NEW DELHI 6. GUARD FILE. ORDER PRONOUNCED IN OPEN COURT ITA N O.3987 /DEL./2011 6 BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT DELHI