SAWHNEY TEA TRADERS,NEW DELHI vs. ITO, WARD- 47(1), NEW DELHI

This appeal has been filed by the Assessee against the order dated 25.6.2018 of the Ld. CIT(A)-16, New Delhi relating to assessment year 2010-11 on the following grounds:-

grossly erred in law as well as on merits in dismissing the appeal as non admitted on the ground of appeal not being signed and verified by the person who is authorized to signed the return U/s.140 of the I.T. Act, although the appeal was signed by the authorized person

U/s.140 being a partner of the assessee firm, till the date of its discontinuance and dissolution on 31.03.1999.

1.1 That without prejudice, Ld. CIT (A), even did not issue a show cause notice before taking factually erroneous view of the appeal not being signed by the person as authorized U/s.140 of the I.T. Act.

1.2 That without prejudice, under the facts and circumstances, the appeal has been wrongly dismissed for alleged technical deficiency without providing a reasonable opportunity to correct the alleged technical curable deficiency, if any, so existed.

2. That under the facts and circumstances, the impugned asstt. is a nullity being unsustainable in law as the assessee being the alleged partnership firm stood

dissolved on 31.03.1999 and consequently discontinued its business w.e.f. 31.03.1999, hence the assessee was not in existence at all in A.Y.2010-11.

U/s.147 / 148 are unsustainable in law as well as on merits, and also mechanical and without application of mind.

A.O. grossly erred in law in determining the assessable income at Rs. 15,11,000/- against Nil as the assessee did not exists in A.Y.2010-11.

A.O. further erred in law as well as on merits in treating the cash deposit of Rs.15,11,000/- in savings bank a/c with HDFC bank, Chandni Chowk Delhi as unexplained and consequently in adding the same as the said bank a/c did not belong to non existence assessee but belonged to M/s Sawhney Tea Traders, a sole proprietary concerned of Sh. Bhushan Kumar Sawhney, who was earlier a partner in assessee firm.

6. That the Order of CIT (Appeals) is so much so erroneous that it has adopted the grounds of Appeal and the figure of income assessed of some other assessee

which shows absolutely no application of mind while adjudicating the impugned Appeal order which makes the CIT (Appeals) Order non-sustainable in law.

3. At the time of hearing, Ld. Counsel of the assessee stated that the appeal of the Assessee was dismissed by the Ld. CIT(A) as not admitted, being defective, because the same was not signed and verified by the persons who is authorized to sig the return u/s. 140 of the I.T. Act, although the appeal was signed by the authorized person U/s.140 being a partner of the assessee firm, till the date of its discontinuance and dissolution on 31.03.1999. It was further submitted that Ld. CIT(A) even did not issue a show cause notice before taking factually erroneous view of the appeal not being signed by the person as authorized U/s.140 of the I.T. Act. It was further submitted that Ld. CIT(A) has not provided a reasonable opportunity to correct the alleged technical curable deficiency, if any. It was further submitted that the impugned asstt. is a nullity being unsustainable in law as the assessee being the alleged partnership firm stood dissolved on 31.03.1999 and consequently discontinued its business w.e.f. 31.03.1999, hence the assessee was not in existence at all in A.Y.2010-11. It was further submitted that, without prejudice, under the facts and circumstances, the initiation of re-asstt. proceedings U/s.147 / 148 are unsustainable in law as well as on merits, and also mechanical and without application of mind. Hence, he requested to remit back the issues in dispute to the file of the Ld. CIT(A) to decide the same afresh on merits of the case, after giving adequate opportunity of being heard to the assessee and undertake that assessee will rectify the defect as pointed out by the Ld. CIT(A).

4. On the other hand, Ld. DR relied upon the orders of the authorities below. But did not raise any serious objection for setting aside the issues in dispute to the file of the Ld. CIT(A), for fresh consideration on merits of the case.

5. I have heard both the parties and perused the records especially the impugned order. I find that Ld. CIT(A) vide his impugned order has observed that as per Form No. 35, appeal is filed in the name of Sawhney Tea Traders, PAN: AAAFS0340R. The exparte assessment u/s. 144/147 is also completed in this name with the same PAN. The appeal is verified and signed by Shri Bhushan Kumar Sawhney having PAN AABS0979D being the proprietor of Sawhney Tea Traders. However, the firm namely Sawhney Tea Traders with PAN AAAFS0340R, is stated to be dissolved in 1999. I further note that Ld. CIT(A) has observed that as per Rule 45 of the Rules, the appeal must be signed and verified by the person who is authorized to sign the return under section 140 of the Act. When the firm is stated to be dissolved and appeal has been filed by the above cited person who is neither partner nor authorized persons to verify and sign the current appeal against the assessment order. Therefore, he held that the appeal filed cannot be considered an appeal filed in and verified in prescribed manner.

In view of this the appeal was treated as invalid and non-est.

Therefore, Ld. CIT(A) dismissed the appeal as not admitted.

However, in my considered opinion, Ld. CIT(A) has not discussed in detail the facts and circumstance of the case and also did not deal the issue on merit and passed a non-speaking order, which in my opinion, is not in accordance with the principles of natural justice and it is an erroneous approach. After reading Section 250(6) of the Act, I am also of the considered view that Assessee’s case should be decided on merits, which the Ld. CIT(A) has not done. However, it is a settled law that even an administrative order has to be speaking one. In this regard, I draw support from Hon’ble Apex Court in the case M/s Sahara India (Farms)

Vs. CIT & Anr. in [2008] 300 ITR 403 wherein it has been held that even “an administrative order has to be consistent with the rules of natural justice”.

5.1 In the background of the aforesaid discussions and in the interest of justice, the Assessee is directed to rectify the defect as pointed out by the Ld. CIT(A) in his impugned order. In the interest of justice, I remit back the issues in dispute to the files of the Ld. Commissioner of Income Tax (Appeals) for hearing with the directions to consider each and every aspects of the issues involved in the Appeal and decide the same afresh, after considering all the evidences/documents and pass a speaking order on the merits of the case and give adequate opportunity of being heard to the assessee, after rectification of the defect by the assessee. The Assessee is also directed to file all necessary evidences / documents before the Ld. CIT(A) to substantiate its case and did not take any unnecessary adjournment in the proceedings before the Ld. CIT(A).