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.
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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
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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.
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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
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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
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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
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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
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