M/S PANCHVATI MOTORS PVT. LTD. vs. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-1 BATHINDA

[1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No.211 of 2012 (O&M)

Decided on: 02.09.2013

M/s Panchvati Motors Pvt. Ltd., Bathinda ..... Appellant

VERSUS The Asstt. Commissioner of Income Tax, Circle-1, Bathinda ..... Respondent

CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA

HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Mr.Sandeep Goyal, Advocate, for the appellant.

******* RAJIVE BHALLA, J. By way of this order, we shall dispose of ITAs No.211, 212, 213, 214, 215, 216, 217 and 218 of 2012 as they involve adjudication of the same questions of fact and law. For the sake of convenience, facts are being taken from ITA No.211 of 2012. The appellant challenges order dated 18.04.2012, passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar. Counsel for the appellant primarily contends that remand of assessment proceedings to the Assessing Authority is not warranted. The additions deleted by the Commissioner of Income Tax (Appeals) Bathinda, should have been affirmed by the Tribunal. The mere violation of principles of natural justice, as discerned by the Income Tax Appellate Tribunal, Amritsar, are not sufficient to remit the matter to the Assessing Officer as no such plea was raised [2] before the Commissioner of Income Tax (Appeals). The following substantial questions of law arise for adjudication: - (i) Whether in the facts and circumstances of the case the Hon'ble ITAT was right in law to hold that the service of notice u/s 148 was invalid and, therefore, it was not correct in quashing the assessment orders on the said grounds? (ii) Whether assessment order can be termed invalid merely by the reason of any mistake or omission in service of notice when Section 292B of I.T.Act, 1961 states that if the proceeding is in substance and effect in conformity with or according to the intent and purpose of I.T.Act, 1961, the assessment proceedings cannot be termed invalid merely by reason of any mistake, defect or omission in the notice?

We have heard counsel for the appellant, perused the substantial questions of law as well as the impugned order and find no reason to entertain the appeals much less hold that any substantial question of law arises for adjudication. A perusal of finding recorded by the Income Tax Appellate Tribunal reveals that additions with respect to sale of spare parts was held to be illegal as it was based upon an order passed by [3] the Sales Tax Authority which was set aside by the Sales Tax Appellate Tribunal. The addition for sale of cars etc., was held to be violative of principles of natural justice as information collected from the manufacturer of cars was not furnished to the assessee and the assessee was not allowed to cross-examine the officer who made the statement relating to sale of cars. The Income Tax Appellate Tribunal, has, therefore, rightly remitted the matter to the Assessing Officer for granting an opportunity to the assessee to cross-examine the officer who made statement relating to sale of cars and to comply with principles of natural justice. A relevant extract from order dated 18.04.2012, passed by the Income Tax Appellate Tribunal, reads as follows: - “18. The findings of the VAT Tribunal order dated 22-8-2006 have been perused by us and the stand of the learned D.R. that at PB 64 being the finding of the VAT Tribunal the entire supply of the spare parts by the Maruti Udyog Limited was never brought/imported in the State of Punjab had been reflected in the books of account. Though in the absence of material on record, the order of the DETC(A) was quashed by the VAT Tribunal on 22-8-2006. The argument of the learned A.R. that when the basis on which the dispute arose had vanished and, therefore, no addition can be made, has been taken into account, the other arguments made by both the parties have also been taken into consideration but the fact remains that the assessee was not allowed to cross-examine the [4] person, who had supplied the information. Since the assessment was being time barred and the A.O. proceeded to complete the assessment on 17-3-2004, the argument of the learned A.R. and the findings of the learned CIT(A) that the assessee was in regular contact with the supplier, Maruti Udyog Limited, the onus lies on the assessee to contradict the information provided by the department, cannot be accepted. It will be against the principle of natural justice to decide any issue firstly without providing the authenticated document to the assessee and without confronting the said authenticated documents and consequently without giving opportunity of cross-examination to the assessee when specifically asked for. The A.O. cannot be permitted to complete the assessment and give the perverse finding without following the principle of natural justice. Therefore, in view of the circumstances and the facts of the case, the matter is set aside to the file of the A.O. who will provide the authenticated information to the assessee and the opportunity of cross examination and complete the assessments accordingly afresh by providing opportunity of being heard to the assessee. Thus all the ground Nos.2 to 4 in the appeals of the assessee and all the grounds of the Revenue in all the years are allowed for statistical purposes.” We find no reason to hold that the Income Tax Appellate Tribunal has committed an error that would give rise to a substantial [5] question of law. It would also be appropriate to point that that with respect to the same assessee, an assessment order relating to a similar dispute but a different year, was set aside by this Court in ITA No.151 of 2011 “The Commissioner of Income Tax, Bathinda V/s M/s Panchvati Motors (P) Ltd., Bathinda, decided on 31.07.2013, by modifying the order passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, and restoring the matter to the Assessing Authority to decide the matter afresh after complying with principles of natural justice. In view of what has been stated hereinabove, the appeals are dismissed.

[ RAJIVE BHALLA ] JUDGE 02.09.2013 [ DR. BHARAT BHUSHAN PARSOON ] shamsher JUDGE

Singh Shemsher 2013.09.09 16:13 I attest to the accuracy and integrity of this document Chandigarh