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M/s Albroz Industries, Baddi, Distt. Solan Vs The ITO, Parwanoo, H.P.
May, 25th 2012
               IN THE INCOME TAX APPELLATE TRIBUNAL
               CHANDIGARH BENCHES `B' CHANDIGARH


         BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT
          AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER


                             ITA No. 306/Chd/2006
                            Assessment Year: 1998-99

M/s Albroz Industries,                 Vs             The ITO,
Baddi, Distt. Solan                                   Parwanoo, H.P.

PAN No. AAFFA5215N

(Appellant)                                           (Respondent)

                  Appellant By                : Shri S.B.Garg
                  Respondent By               : Shri S.K.Mittal

                  Date of hearing       : 24.5.2012
                  Date of Pronouncement : 24.5.2012


                                    ORDER


PER H.L.KARWA, VP


      This appeal filed by the assessee is directed against the order of

CIT(A), Shimla dated 22.2.2006 relating to assessment year 1998-99.



2.    In this appeal, the assessee has taken the following grounds:-


         1.       Opportunity of hearing by CIT (A)

         1.1      The Id. Commissioner of Income Tax (Appeals) - Shimla, HP (hereafter
                  the CIT (A)) erred in observing that appeal was fixed for hearing on
                  23.01.2006 and 07.02.2006 and the Id. CIT (A) has not even stated
                  that the notices fixing the hearing were served upon the appellant
                  and even there is no mention of mode and manner of service of the
                  notices.
                                                                                   2


1.2      The Id. CIT (A) failed to consider in true perspective the
         adjournment application, which was filed before hand.

1.3      The Id. CIT (A) failed to provide proper, adequate and sufficient
         opportunity of hearing to the appellant and erred in deciding the appeal
         ex-party.


2 Jurisdiction of ITO


2.1      The Id. CIT (A) failed to appreciate provisions of section 124 of the
         Income Tax Act, 1961 (hereafter the Act), and thereby further failed to
         appreciate that the Id. Income Tax Officer, Parwanoo, HP (hereafter the
         ITO) exceeded the jurisdiction in deciding the issue pertaining to his
         (ITO) jurisdiction over the case of the appellant,


2.2      The Id. CIT (A) failed to appreciate that the Id. ITO erred in not referring
         the issue pertaining to his (ITO) jurisdiction, to the Commissioners of
         Income Tax, as provided / required by section 124(4) of the Act,


2.3      The Id. CIT (A) failed to appreciate that the Id. ITO for deciding the
         issue pertaining to his (ITO) jurisdiction relied upon certain orders
         purportedly conferring jurisdiction upon him, without supplying copies
         of the same to the appellant or even mentioning the same during the
         course of assessment proceedings, and therefore such evidence (orders)
         must be excluded from consideration,


2.4      The Id. CIT (A) failed to appreciate provisions of section 120 and 124 of
         the Act, and thereby further failed to appreciate that the ITO and
         Addl. CIT cannot have concurrent jurisdiction,


2.5      Without admitting but assuming that the ITO and Addl. CIT
         have concurrent jurisdiction, the Id. CIT (A) failed to appreciate the
         case should be transferred by competent and superior Authority,


2.6      The Id. CIT (A) erred in holding that the ITO has jurisdiction over the
         case of the appellant and failed to annul the assessment.


3.       Service of notice u/s 148 and 143(2).


3.1      The Id. CIT (A) failed to appreciate the settled law that service of notice
         is to be proved by the ITO and not by the appellant and thereby
                                                                                3


      erred in holding that Nothing has been shown by the appellant to prove
      that notice u/s 148 and 143 (2) of the Act have not been properly served.

3.2   The Id. CTT (A) failed to appreciate that the assessment order does not
      say a single word about the issue of notice u/s 143(2) of the Act and
      much less service thereof.

3.3   The Id. CIT (A) failed to appreciate provisions of section 282 of the Act,

3.4   The Id. CIT (A) erred in upholding the service of notice u/s 148 and 143
      (2) of the Act and failed to annul the assessment.


4     The Id. CIT (A) failed to decide the grounds of appeal inter alia pertaining
      to reopening of the assessment, as under:


(1)   the Id. ITO had no 'reason to believe' to initiate the assessment
      proceedings under section 147 of the Act, the proceedings were
      initiated on highly misconceived grounds, in the nature of pretence and
      without any justification, which is sine qua non for assumption 01 valid
      jurisdiction under that section,


(2)   the Id. ITO did not record the 'reason to believe' to initiate the
      assessment proceedings, as required by section 148(2) of the Act,


(3)   That the Id ITO had made observations which are against the facts and
      do not pertain to the assessment year under consideration and this
      has vitiated the assessment,


(4)   the assessment has been completed by relying upon the findings u/s
      263 of the Act of the Id. CIT for the assessment year 2001-02, without
      independent application of mind,


(5)   the Id ITO failed to appreciate the scope of section 147 of the Act and
      further failed to appreciate that assessment proceedings were not
      initiated for the alleged reasons for which various additions have been
      made.


5.1   The Id. CIT (A) erred in dismissing grounds of appeal No. 8 to
      11, particularly without mentioning the same, facts pertaining to the
      same and reasons for the decision.


5.2   The Id. CIT (A) erred in upholding that the assessment has been
      framed after providing adequate opportunities.
                                                                                            4


             5.3   The Id. CIT (A) erred in upholding :

                   (1)     The disallowance of deduction of Rs. 19,94,794 u/s 80IA of
                          the Act,

                   (2)    That the profits declared are excessive and estimate of the net
                          profit at Rs. 42,837 being 2% of sales, by relying upon the
                          evidence collected ex-parte, which is not comparable, without
                          confronting the same to the appellant and without providing
                          any opportunity to the appellant to rebut the same and
                          therefore such evidence must be excluded from consideration,

                   (3)    That the appellant has manipulated the profits by
                          suppressing the expenses (including the purchases) and also by
                          inflating the expenses, and this is self contradictory and
                          particularly without specifying any such item,

                   (4)    That the wages paid are insufficient to engage ten totally
                          skilled workers, whereas employment of totally skilled
                          workers is not the requirement of law,

                   (5)    Without prejudice, non- exclusion of Rs. 2,20,553 being profit
                          on sale of long term capital asset, from the profits of the business
                          resulting in double taxation of the said amount,

                   (6)    Without prejudice, Rs. 19,51,957 is assessable as income from
                          their sources.

             6     The Id. CIT (A) erred in upholding the disallowance of capital loss of
                   Rs. 1,86,181.

             7.    The Ld. CIT(A) erred in upholding the addition of Rs. 3,40,000 being
                   capital introduced, under section 68 of the Act.

             8.    The Id. CIT (A) erred in upholding the levy of interest under section
                   234A and 234B of the Act and particularly by ignoring section 234B(3)
                   of Act, and without prejudice the interest charged is excessive


3.    Firstly, we will decide ground Nos. 1.1 to 1.3 of the appeal which goes

to the root of matter.






4.    For the assessment year 1998-99, the Assessing Officer f ramed the

assessment u/s 144/ 147 of the Income Tax Act, 1961 (in short 'the Act') on
                                                                                 5


20.11.2005   wherein    the   Assessing   Officer   made   certain   additions   /

disallowances.   The assessee challenged the order of Assessing Officer in

appeal before the CIT(A) and the CIT(A) vide his order dated 22.2.2006

dismissed the appeal of the assessee ex.parte without affording adequate

opportunity of being heard to the assessee, observing as under:-


      "2.    The appeal was fixed for hearing on 23.01.2006. There was
             no response from the appellant. Thereafter, it was fixed for
             hearing on 07.02.2006 and again on 22.02.2006. A letter
             has been received on 21.02.2006 stating that the order for
             A.Y. 2001-02 is under challenge before the Hon'ble ITAT
             and there are high chance of deletion of addition. In view of
             these facts, it is requested " the case may be adjourned till
             the decision of the appeal by the Hon'ble Tribunal, and we
             undertake to inform your honour of outcome of the appeal".



      3.     It is apparent from the above that the appellant is not
             interested in prosecuting the appeal till the decision of
             the Hon'ble Tribunal in earlier year. It is not practicable
             re-accept the reques t of the appellant as in most of the
             other cases also, the issues impending for adjudication
             before the Hon'ble tribunal. The appellant is supposed to
             make submissions on merits in support of the grounds
             raised in appeal. This has not been done. In view of these
             facts, the appeal is disposed of on the basis of the
             material available on record."



5.    We have heard the rival submissions. Shri S.B. Garg, Ld. Counsel for

the assessee submitted that the Ld. CIT(A) has decided the appeal of the

assessee ex.parte. It was submitted that the CIT(A) has not afforded proper,

adequate and sufficient opportunity of hearing to the assessee and erred in
                                                                            6


deciding the appeal ex. parte.   Shri S.B Garg, Ld. Counsel for the assessee

also pointed out that the adjournment application duly moved by the assessee

on 21.2.2006 requesting for adjournment on valid grounds has been rejected

by the CIT(A) without proper appreciation of the reasons which necessitated

the request for adjournment by the assessee.     He therefore, submitted that

order of CIT(A) may be set aside and the matter be remanded to the file of

CIT(A) with a direction     to decide the appeal of the assessee afresh in

accordance with law after affording due and reasonable opportunity of being

heard to the assessee.



6.    On the other hand, Shri S.K. Mittal, Ld. DR submitted that CIT(A) has

already given sufficient opportunity to the assessee to represent his case

before him. However, the assessee did not appear before the CIT(A) without

any valid reason, therefore, no relief should be given to the assessee.



7.    After hearing the Ld. representative of both sides, we find that the

CIT(A) has decided the appeal of the assessee ex.parte. From perusal of the

impugned order, it would be clear that the Ld. CIT(A) has not provided

adequate opportunity of being heard to the assessee       before deciding the

appeal.    In our opinion, the Ld. CIT(A)      should have afforded adequate

opportunity of being heard to the assessee before deciding the appeal. In the

case of Radhika Charan Banerjee Vs.      Sambalpur Municipality, AIR (1979)

Orissa 69, the Hon'ble Orissa High Court held that a right of appeal wherever

conferred includes a right of being afforded an opportunity of being heard,

irrespective of the language conferring such right. That is a part and parcel

of the principle of natural justice. The Hon'ble High Court further observed
                                                                             7


that where an authority is required to act in a quasi-judicial capacity, it is

imperative to give the appellant an adequate opportunity of being heard

before deciding the appeal. Thus, considering the entire facts of the present

case, we think it proper to set aside the order of the Ld. CIT(A) in toto and

restore the matter to his file with a direction to decide the appeal afresh on

merits in accordance with law after affording due and reasonable opportunity

of being heard to the assessee.    We also direct the CIT(A) to decide the

appeal preferably within three months from the date of receipt of a copy of

this order.   At this juncture, we also direct the assessee to cooperate and

attend the hearing before the CIT(A).



8.    In view of the above, no findings are being given on merits.


      Order Pronounced in the Open Court on this 24 t h day of May, 2012


              Sd/-                                       Sd/-

   (MEHAR SINGH)                                     (H.L.KARWA)
ACCOUNTANT MEMBER                                  VI CE PRESIDENT
Dated : 24 t h May, 2012
Rkk
Copy to:
  2.     The Appellant
  3.     The Respondent
  4.     The CIT
  5.     The CIT(A)
  6.     The DR


                         True Copy
                                                  By Order

                                              Assistant Registrar
8



 
 
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