M/S DRUCHEM INDIA LIMITED,PANCHKULA vs. ITO, CHANDIGARH

Since the appeals relate to the same assessee and were heard together so these are being disposed off by this consolidated order for the sake of convenience and brevity.

First we will deal with the appeal in ITA No. 75/Chd/2015 wherein assessee has raised the following grounds:

During the course of hearing the Ld. Counsel for the Assessee submitted that the additional grounds raised by the Assessee are purely legal grounds and no further investigation is required as the material relevant to these grounds is already available on the record. The reliance was placed on the judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. (NTPC) Vs. CIT (1997) reported in 229 ITR 383.

In his rival submissions the Ld. Sr. DR opposed the admission of the additional grounds.

We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that the additional grounds raised by the Assessee are purely legal grounds and no further investigation is required. These grounds go to the root of the issue, therefore the same are admitted in view of the ratio laid down by the Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. (NTPC) Vs. CIT (1997) reported in 229 ITR 383 wherein it has been held as under:

In the additional grounds the only grievance of the assessee relates to the ex-parte order passed by the Ld. CIT(A) without providing adequate opportunity of being heard.

Facts of the case in brief are that the assessee filed the return of income on 31/03/2006 declaring an income of Rs. 2,54,992/- which was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’). Thereafter a search under section 132 of the Act was conducted at the office premises owned and controlled by Shri Tarun Goyal, C.A at 13/34 WEA, Arya Samaj Road, Karol Bagh, New Delhi by Investigation Wing of the department on 15/09/2008. The AO observed that the circumstantial evidences proved that the companies run, controlled and managed by Shri Tarun Goyal were not genuine and that the assessee received an amount of Rs. 80,00,000/- from the following companies owned and controlled by Shri Tarun Goyal as share application money:

The AO however did not find any merit in the submissions of the assessee and made the addition of Rs. 80,00,000/-, he also added another amount of Rs. 1,92,808/- by observing that the assessee had shown interest income of Rs. 4,47,800/- and debited the expenses of Rs. 1,92,808/- which were not allowable.

Now the assessee is in appeal.

The Ld. Counsel for the Assessee submitted that the Ld. CIT(A) had not given any opportunity of being heard to the assessee and passed the impugned order on 18/11/2014 i.e; the date which was stated to be fixed for hearing by him. It was contended that the order passed by the Ld. CIT(A) is unsustainable as the assessee was prevented by the reasons beyond its control to represent its case. It was further submitted that the AO also without rebutting this contention of the assessee that the statement of Shri Tarun Goyal did not have any evidence, to put on record about the transaction of the assessee with any of the companies in question, made the addition without providing any opportunity of being heard. Therefore neither the AO nor the Ld. CIT(A) had

In his rival submissions the Ld. Sr. DR submitted that the AO had given opportunity of being heard to the assessee and after considering the reply of the assessee made the impugned addition. It was further submitted that the assessee did not cooperate and did not appear before the Ld. CIT(A), therefore he had no alternative except to decide the appeal of the assessee ex-parte.

We have considered the submissions of both the parties and perused the material available on the record. In the present case it is an admitted fact that the Ld. CIT(A) passed the impugned order ex-parte, he simply stated that the notice for hearing was sent through Speed Post, however, it is not clear from the material available on the record as to whether the notice for hearing was served upon the assessee or not. It is also noticed that the AO without rebutting this contention of the Ld. Counsel for the Assessee that he had no link with the companies alleged by the AO from whom the assessee allegedly received the impugned amount as mentioned in the statement of Shri Tarun Goyal, made the addition. In the present case, the AO might have considered the written submissions of the assessee but without providing any opportunity of being heard and without rebutting the contention of the Assessee in the reply dt. 21/03/2013, made the impugned addition. In our opinion the reasonable and appropriate opportunity of being heard was not provided to the assessee either by the AO or by the Ld. CIT(A). It is well settled that nobody should be condemned unheard as per the maxim “audi alteram partem”. We, therefore, by keeping in view the principles of natural justice deem it appropriate to set aside this case back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.

In ITA No. 255/Chd/2019 the grounds raised by the assessee relate to the sustenance of the penalty levied by the AO on the quantum addition which we have remanded back to the file of the AO in the former part of this order. Since the levy of penalty under section 271(1)(c) is directly related to the quantum addition therefore the issue relating to the penalty under section 271(1)(c) of the Act is also restored to the file of the AO to be decided alongwith the issue relating to the quantum addition.

In the result, both the above appeals of the Assessee are allowed for statistical purposes.