IN THE INCOME TAX APPELLATE TRIBUNAL DELHI `C' BENCH
BEFORE SHRI I.C. SUDHIR , JM & SHRI A.N. PAHUJA, AM
ITA nos.2470 & 2471/Del/2012
AYs : 2002-03 & 2007-08
Ingrain Securities (P) Ltd., V/s . Income-tax Officer,
1/561, G.T. Road, W ard 11(4), C.R. Building,
Shahdara, New Delhi I.P. Estate, New Delhi
[PAN :AAACI 1511 R]
(Appellant) (Respondent)
Appellant by Shri S.C. Singhal, AR
Respondent by Shri Satpal Singh, DR
Date of hearing 24-07-2012
Date of pronouncement 24 -07-2012
ORDER
A.N.Pahuja:- These two appeals filed on 22-05-2012 by the assessee against
two separate orders dated 12-03-2012 of the ld. CIT(A)-XV, New Delhi, raise the
following grounds:-
I.T.A. No.2470/D/2012
"The learned Income tax Officer erred in making additions in
respect of the following and CIT(A) erred in confirming the same:-
1) In initiating proceedings u/s 147/148 of I.T. Act without
sufficient material and enquiry before issue of notice. The
Assessing Officer has disregarded Supreme Court order in
CIT Vs. Lovely Exports (P) Ltd. (2008) 216 CTR 185
(Supreme Court) and 251 ITR 263 (Supreme Court).
Enquiry before initiation is missing.
2. In making addition of ``1,00,000/-, the Assessing Officer has
relied upon a standard write up which is not applicable on
facts in this case.
3. The addition of ``1 lac was made in total disregard to
evidences and facts placed before the Assessing Officer i.e.
2 ITA nos.2470&2471/Del./2012
PAN, cheque transaction proof from bank statements and
confirmation from Mr. Rohit Rana. The appellant is not
expected to explain source of source. The onus laid on the
appellant was duly discharged and for want of any adverse
material on file before Income-tax Officer, such addition is
unwanted, against the facts of the case and law. Person of
transaction in 2002 could not be produced in 2009 and the
Assessing Officer had his address, could have done the
needful himself. The same be kindly deleted.
4. The imagination of commission on the sum of ``1lac
@.025% is purely on guess and estimate.
5. The CIT(A) as per order gave two notices at South Extn.
Address whereas the company after filing of appeal had
shifted from this address to Seelampur, Delhi. As no notices
could be served on the appellant, the hearing could not be
attended and the CIT(A) without ensuring service of notice,
passed an exparte order. The Income-tax Officer file carries
the new address, in return filed before exparte order and/or
assessments made."
I.T.A. No.2471/D/2012
" The learned Income tax Officer erred in making additions in
respect of the following and CIT(A) erred in confirming the same:-
1. "In making 100% disallowances of expenses on salaries,
conveyance, office expenses, legal and professional
expenses, accounting charges on the ground that there was
no activity in the company for this year because:-
There may be long intervals of inactivity.
There was a similar 100% disallowance by the Income-tax
Officer in this case for assessment year 2006-07 and the
CIT(A) had allowed the full amount vide order dated March,
2010 (no further appeals).
CIT Vs. Integrated Technologies Ltd. (Delhi High Court)
order dated 16.12.2011 have allowed normal expenses even
where no sale/purchase or manufacturing is there.
2. The learned Income-tax Officer has not failed to levy tax as
per 115JB and has charged full normal tax.
3. The appellant denies applicability of levy of interest u/s
234A, 234B, 234C and 234D.
4. The CIT(A) as per order gave two notices at South Extn.
Address whereas the company after filing of appeal had
shifted from this address to Seelampur, Delhi. As no notices
could be served on the appellant the hearing could not be
attended and the CIT(A) without ensuring services of notice,
3 ITA nos.2470&2471/Del./2012
passed an exparte order. The Income-tax Officer file carries
the new address, in return filed before exparte order and/or
assessments made."
2. Adverting first to ground no.5 in the appeal for the AY 2002-
03 & ground no.4 in the appeal for the AY 2007-08 ,facts in brief, as per
relevant orders for the AY 2002-03 are that return declaring income of ``2,649/-
was filed on 31.10.2002 by the assessee was processed u/s 143(1) of the
Income-tax Act, 1961[hereinafter referred to as the `Act']. Subsequently, on
information received from DIT(Inv.) that the assessee obtained accommodation
entry of ``1 lac from Shri Rohit Rana, the Assessing Officer (A.O. in short)
reopened the assessment in this case u/s 147 of the Act, after recording reasons
in writing, with the service of notice u/s 148 of the Act ,issued on 25.3.2009. In
response, the assessee submitted vide letter dated 27.4.2009 that the return
already filed on 31st October, 2002 may be treated as return in response to notice
u/s 148 of the Act. Despite the fact that assessee was supplied copy of reasons
recorded, it did not file any objections during the course of reassessment
proceedings. The AO ,inter alia, asked the assessee to produce Shri Rohit Rana.
However, the ld.AR on behalf of the assessee expressed inability to produce shri
Rana.. Accordingly, in the light of information received from DIT(Inv.) and
information collected from the bank u/s 133(6) of the Act, the AO added the
amount of ``1 lac u/s 68 of the Act, relying ,inter alia, on the decision dated 30th
July, 2007 in CIT vs. Himalaya International Ltd. in I.T.A. No.1509 of 2006;
Gujarat State Cooperative Bank Ltd. Vs. CIT (2001) 167 CTR (Guj.) 34 (2001)
250 ITR 229 (Guj.); and CIT Vs. Stellar Investment Ltd. (2001) 251 ITR 263 (SC).
3. On appeal, none appeared before the learned CIT(A) despite notice
dated 21st October, 2011 and 1st December, 2011. In these circumstances, the
ld. CIT(A) upheld the addition of ``1 lacs, there being no evidence in support of
grounds raised before the ld. CIT(A).
4 ITA nos.2470&2471/Del./2012
4.. Similarly in the AY 2007-08, the AO disallowed an amount of
``2,99,518/- on account of expenditure on salary, conveyance, office expenses,
legal and professional charges and accounting charges etc. as detailed below:-
[In `]
Salary : `2,37,668/-
Conveyance : ` 18,669/-
Office Expenses : ` 11,621/-
Legal & Professional charges : ` 19,530/-
Accounting charges. : ` 12,000/-
Total : `2,99,518/-
5. On appeal, none appeared before the ld. CIT(A) despite issue of
notice dated 21st October, 2011 and 1st December, 2011.Accordingly, the ld.
CIT(A) upheld the findings of the AO, for want of any evidence and submissions.
6. The assessee is now in appeal before us against the aforesaid
findings of the ld. CIT(A) in these two assessment years. To a query by the
Bench, the ld. AR on behalf of the assessee admitted that the assessee did not
inform change in their address, having shifted to Seelampur, Delhi after filing the
appeals, wherein address of South Extension Centre, 273, Masjid Moth, NDSE-
II was mentioned. Accordingly, notices issued by the ld. CIT(A) could not be
received by the assessee. Since notices were not served upon the assessee,
accordingly, it was pleaded that in the interest of justice, another opportunity may
be allowed. The ld. DR did not oppose these submissions of the ld. AR.
7. We have heard both the parties and gone through the facts of the
case. Indisputably, the assessee did not communicate change in their addresss
after filing the two appeals before the ld. CIT(A). As a result, notices issued by
the ld. CIT(A) could not be served upon the assessee. Accordingly, the ld.
CIT(A) disposed of these appeals exparte. The approach of the assessee in not
5 ITA nos.2470&2471/Del./2012
communicating change in address is not in accordance with law and apparently,
the assessee did pursue these appeals in right earnest. We may clarify that we
are not condoning the default on the part of the assessee. However, as is
apparent from the observations of the learned CIT(A) in the impugned orders,
the ld CIT(A) dismissed these appeals without even analyzing the issues or
recording his specific findings on the said issues raised in the grounds of
appeal before him . A mere glance at the impugned orders reveals that
the orders 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 pass a 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 material 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 shall be in writing and shall
state the points for determination, the decision thereon and the
reasons for the decision. The requirement of recording of reasons
and communication thereof by the quasi-judicial authorities has
been read as an integral part of the concept of fair procedure and is
an important safeguard to ensure observance of the rule of law. It
introduces clarity, checks the introduction of extraneous or
irrelevant considerations and minimizes arbitrariness in the
decision-making process. Hon'ble jurisdictional High Court in their decision
in Vodafone Essar Ltd. Vs. DRP,196 Taxman423(Delhi) held that when a quasi
judicial authority deals with a lis, it is obligatory on its part to ascribe cogent and
germane reasons as the same is the heart and soul of the matter and further, the
same also facilitates appreciation when the order is called in question before the
superior forum. W e may point out 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 760(SC)].As already observed, the impugned
6 ITA nos.2470&2471/Del./2012
orders suffers from lack of reasoning and are not speaking orders
on any of the issues for which additions were made by the AO. In
view of the foregoing, especially when the ld. CIT(A) have not
passed speaking orders on various issues raised in the appeals
before him, we consider it fair and appropriate to set aside the
orders of the ld. CIT(A) and restore the matter to his file for deciding
the aforesaid issues, afresh in accordance with law, after allowing
sufficient opportunity to both the parties. Needless to say that while
redeciding the appeal, the ld. CIT (A) shall pass a speaking order,
keeping in mind, inter alia, the mandate of provisions of sec. 250(6)
of the Act. The assessee is also directed to approach the ld. CIT(A)
suo motu within a month of receipt of this order, for expeditious
disposal of their appeals. W ith these observations, ground no. 5 in
the appeal for the AY 2002-03 & ground no.4 in the appeal for the
AY 2007-08 are disposed of. As a corollary, ground nos. 1 to 4 in the
appeal for the AY 2002-03 & ground nos. 1 to 3 in the appeal for the
AY 2007-08 do not survive for our adjudication at this stage
8.. No other submission or argument was made before us.
9.. In the result, both these appeals are allowed for statistical purposes.
Order pronounced in open Court
Sd/- Sd/-
(I.C. SUDHIR) (A.N. PAHUJA)
(Judicial Member) (Accountant Member)
Copy of the Order forwarded to:-
1 Assessee
2. Income-tax Officer, ward 11(4), C.R. Building, I.P. Estate,
New Delhi
3. CIT concerned
4. CIT(A)-XV, New Delhi
5. DR, ITAT,'C' Bench, New Delhi
6. Guard File.
7 ITA nos.2470&2471/Del./2012
BY ORDER,
Deputy/Asstt.Registrar
ITAT, Delhi
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