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Income Tax Appellate Tribunal, DELHI BENCH ‘D’, NEW DELHI
ORDER PER N.K. SAINI, A.M. These appeals by the assessee are directed against the separate orders each dated 10.03.2015 for the assessment years 2010-11 & 2011-12 of the ld. CIT, Haldwani.
Common issues are involved in these appeals which 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 2010-11. Following grounds have been raised in this appeal:
ITA Nos. 2351 & 2352/Del/2015 2 The Nainital Bank Ltd. “1. The ld. CIT, Haldwani erred on facts and in law in rejecting the adjournment application due to illness of the advocate and thereby passing an ex-parte order u/s 263 of I.T. Act, inspite of the fact, that there was a reasonable cause.
2. That on 25.02.2015, the Associate Vice President of Appellant Bank attended the proceedings at Haldwani Office. However Ld. CIT was not at Haldwani on that date and it was explained that no officer has been authorized for this proceeding. Hence request for adjournment with medical reason was submitted on DAK. Accordingly, the Order passed u/s 263 is not a valid order.\ WITHOUT PREJUDICE TO ABOVE 3. The order u/s 263 of I.T. Act was passed on 10.03.2015 rejecting the adjournment prayer being genuine hardship of Appellant’s Counsel for medical reason on 25.02.2015. Thus, there is a denial of natural justice on 25.02.2015 as present order had been passed much after the date of 25.02.2015. WITHOUT PREJUDICE TO ABOVE 4. That notice u/s 263 of I.T. Act dated 20.02.2015 was signed and issued by Ld. CIT, Haldwani on 20.02.2015 at Haldwani, However, on 20.02.2015, the Ld. CIT was not at Haldwani. Hence the said notice does not meet the requirement of Law.
5. That a photocopy of notice dt. 20.02.2015 u/s 263 of I.T. Act was received on 21.02.2015. The said notice was not attested by concerned authorities of Income Tax & 2352/Del/2015 3 The Nainital Bank Ltd. Office, Haldwani, meaning thereby no valid notice is served. The duly signed notice dt. 20.02.2015 was actually served on 27.02.2015 i.e. after the date fixed for hearing.
6. That the Ld. CIT did not appreciated that all the details were examined by Ld. AO with regard to disallowance u/s 14A and the case laws of earlier year decided on this issue in favour of assessee were produced, hence the assessment order could not be said to erroneous or was passed without application of mind.
7. That the present assessment order cannot be termed as erroneous as Ld. AO made necessary enquiries applied his mind to the facts and circumstances of the case and accepted the disallowance under section 14A of I.T. Act as disclosed by Assessee.
8. The initiation of proceeding u/s 263 of I.T. Act and order u/s 263 of I. T. Act is contrary to the facts, law, principle of natural justice and without providing proper opportunity to have its say on the reasons relied upon by him.”
The main grievance of the assessee in this appeal relates to the ex-parte order passed by the ld. CIT by rejecting the application for adjournment due to illness of the counsel for the assessee.
Facts of the case in brief are that the assessee filed electronically the return of income on 30.09.2010 declaring an income of Rs. 61,24,18,940/- which was & 2352/Del/2015 4 The Nainital Bank Ltd. processed u/s 143(1) of Income Tax Act, 1961 (hereinafter referred to as the Act). Later on, the case was selected for scrutiny. The AO framed the assessment u/s 143(3) of the Act at an income of Rs. 61,44,18,940/-. Thereafter the ld. CIT exercised his powers u/s 263 of the Act and considered the order of the AO to be erroneous in so far as it was prejudicial to the interest of the revenue. The ld. CIT in the impugned order mentioned that the assessee was given opportunity of being heard vide letter dated 20.02.2015 and was asked to furnish its submission by 25.02.2015. The ld. CIT also pointed out that the original notice was served on the assessee on 27.02.2015. The assessee sought adjournment, at least for a month on the ground that it needed to consult its counsel, Sh. K. R. Rastogi, FCA, who had been ill. In support of its contention, the assessee also furnished copy of discharge summary from Shekhar Hospital Pvt. Ltd., Lucknow. The ld. CIT did not find merit in the submission of the assessee and set aside the assessment order, he directed the AO to examine the assessee’s estimate of expenditure incurred in relation to the exempt income. & 2352/Del/2015 5 The Nainital Bank Ltd.
Now the assessee is in appeal. The ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the ld. CIT without giving the opportunity of being heard passed the impugned order ex-parte, in spite of the fact that the assessee was not in a position to represent its case due to illness of its Counsel Sh. K. R. Rastogi, who was hospitalized and was not in a position to represent the case on 25.02.2015.
In her rival submissions the ld. CIT DR strongly supported the impugned order passed by the ld. CIT and further submitted that the ld. Counsel for the assessee had been discharged from the Hospital on 08.02.2015 and there was nothing on record to suggest that he was not available for consultation even by 25.02.2015. Therefore, the request for adjournment was rightly rejected by the ld. CIT and the case was decided on merit.
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 an admitted fact that the ld. Counsel for the assessee was ill and could not & 2352/Del/2015 6 The Nainital Bank Ltd. represent the case of the assessee on 25.02.2015 when the ld. CIT asked the assessee to furnish its submission vide letter dated 20.02.2015. It is also noticed that the ld. CIT himself admitted that the original notice of hearing dated 20.02.2015 was served on the assessee on 27.02.2015. Therefore, it is not clear how the ld. CIT fixed the case for hearing on 25.02.2015 when the notice of hearing itself was served on the assessee after two days i.e. on 27.02.2015. It is well settled that nobody should be condemned unheard as per the maxim “Audi Alteram Partem”, we therefore, keeping in view the peculiar facts of the present case, are of the view that a due and reasonable opportunity of being heard was not afforded to the assessee by the ld. CIT. In that view of the matter the impugned order is set aside and the ld. CIT is directed to decide the issue afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
The facts of the case in for the assessment year 2011-12 are identical to the facts involved in 2010-11 which we have already adjudicated. & 2352/Del/2015 7 The Nainital Bank Ltd. Therefore, our findings given in the former part of this order in respect of assessment year 2010-11 shall apply with the same force for the assessment year 2011-12.
In the result, both the appeals of the assessee are allowed for statistical purposes. (Order Pronounced in the Court on 19/10/2015).