SHRI RAM BINAY SHARMA,GHAZIABAD vs. PR. CIT, NEW DELHI

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ITA 1709/DEL/2017Status: DisposedITAT Delhi20 June 2017AY 2010-114 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the PCIT's action of setting aside the assessment order was done in haste and without proper notice or opportunity of being heard to the assessee, violating principles of natural justice. The case was remanded back to the PCIT for fresh adjudication.

What were the facts?

The assessee's income tax return was processed, and later selected for scrutiny. The Assessing Officer (AO) accepted the returned income after reviewing details. The Principal Commissioner of Income Tax (PCIT) initiated proceedings under Section 263, citing an expenditure of Rs. 5,88,95,362/- on which no TDS was deducted, deeming the AO's order erroneous and prejudicial to revenue.

What were the issues?

Whether the PCIT's order under Section 263 was validly passed without providing the assessee a reasonable opportunity of being heard, and if the AO's assessment order was indeed erroneous and prejudicial to the revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 142(1),Section 44AB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI

For Respondent: Smt. Paramita Tripathy, Sr. DR
Hearing: 20.06.2017Pronounced: 20.06.2017

ORDER

Per N. K. Saini, AM:

1.

This is an appeal by the assessee against the order dated 31.03.2015 passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act) of ld. Pr. CIT, Delhi.

2.

The only ground raised

in this appeal reads as under: “On the facts and in the circumstances of the case and in law the action of the Commissioner in invoking the provisions of section 263 of the Income Tax Act 1961 and in annulling the assessment order passed by the Assessing Officer on the grounds of its being erroneous and prejudicial to the interests of the Revenue is arbitrary, erroneous, unjust and illegal and must be quashed.”

3. Facts of the case in brief are that the assessee filed the return of income on 11.10.2010 declaring an income of Rs.6,12,700/- which was 2 Ram Binay Sharma processed u/s 143(1) of the Act. Later on, the case was selected for scrutiny. The AO issued notice u/s 142(1) of the Act alongwith of questionnaire. In response, the Authorized Representatives of the assessee appeared before the AO and furnished necessary details. The AO after discussing the case, accepted the returned income. Thereafter, the ld. Pr. CIT initiated the proceedings u/s 263 of the Act and observed that; (i) copy of balance sheet profit & loss account (ii) copy of ledger account to Truck Hiring charges and (iii) Tax Audit Report u/s 44AB of the Act, revealed that an expenditure of Rs.5,88,95,362/- had been shown as paid during the assessment year under consideration, on which no TDS was deducted. The AO issued the notice through Speed Post on 26.03.2015 and by affixture on 27.03.2015 for hearing on 27.03.2015 at 5:00 PM. Since there was no compliance from the assessee, the ld. Pr. CIT considered the order passed by the AO u/s 143(3) of the Act as erroneous, so far as it was prejudicial to the interest of the Revenue.

4.

Now the assessee is in appeal. The ld. Counsel for the assessee submitted that the AO passed the assessment order after making the thorough inquiries and considering the various details furnished by the assessee. Therefore, the assessment order passed by the AO was neither erroneous nor prejudicial to the interest of the revenue. It was further submitted that the ld. Pr. CIT had not given any opportunity of being heard and passed the impugned order ex-parte in haste.

3 Ram Binay Sharma 5. In her rival submissions the ld. DR supported the impugned order passed by the ld. Pr. CIT.

6.

We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed that the ld. Pr. CIT while setting aside the assessment order passed by the AO u/s 143(3) of the Act on 31.12.2012, observed as under: “5. Accordingly, Notice u/s 263 of the Income Tax Act, 1961 was issued on following:- Date of notice/serve Date of hearing Remarks 26.03.2015 27.03.2015 27.03.2015 Non-compliance By speed post No. By affixture (at 5:00PM) from assessee ED14920514 91N ED14920513 5IN Since, the assessee has no explanation to offer for expenses, claimed under the head "lorry hire" expenses of Rs.5,88,95,362/-, in view of above facts & documents on record, & discussions held in foregoing paras, it is held that the order passed by AO u/s 143(3) dated 31.12.2012 is erroneous so far as it is prejudicial to the interest of the revenue. Hence the assessment order u/s 143(3) of the IT Act passed by Assessing Officer on 31.12.2012 for the assessment year 2010-11 is cancelled to be framed afresh.”

7.

From the aforesaid observations of the ld. Pr. CIT, it is not clear as to whether the notice for hearing was served upon the assessee. It is also noticed that the ld. Pr. CIT claimed to have issued the notice of hearing by Speed Post on 26.03.2015 and without waiting for the service of that 4 Ram Binay Sharma notice, another notice was claimed to have been served by affixture on 27.03.2015 and the assessee was asked to appear on the same date i.e. on 27.03.2015 at 5:00 PM. In the present case, from the conduct of the ld. Pr. CIT it appears that she was pre-determined to set aside the assessment order because the action has been taken in haste and without bringing cogent material on record that the notice of hearing was served upon the assessee. 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 and considering the facts of the present case, deem it appropriate remand the case back to the file of the ld. Pr. CIT to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.

8.

In the result, the appeal of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 20/06/2017)

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