Income Tax Appellate Tribunal - Delhi
Fujiya Chinese Food, New Delhi vs Assessee
ITA No. 874Del/2011
A.Y. 2006-07
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'I': NEW DELHI
BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND
SHRI B.K. HALDAR, ACCOUNTANT MEMBER
I.T.A.No. 874/Del/2011
Assessment Year : 2006-07
Fujiya Chinese Food, Vs. ITO,
12, Malcha Marg, Ward 32(2)
New Delhi New Delhi.
AAAFF1551B
(Appellant) (Respondent)
Appellant by : Shri Dharender Kumar
Respondent by : Shri A.K. Monga, Sr. DR
ORDER
PER DIVA SINGH, JUDICIAL MEMBER
This is an appeal filed by the assessee against the order dated 16.11.2010 of CIT (Appeals) XXVI New Delhi pertaining to 2006-07 asstt. year wherein the assessee has raised various grounds on merit. However both the parties were heard on ground No. 2 which reads as under :-
"That the Ld. CIT(A) has grossly erred in not providing proper and meaningful opportunity to the assessee to present its case before her and in passing an ex-parte order".
2. A perusal of the impugned order shows that the assessee's appeal was disposed by the CIT(A) by an ex parte order. It is seen that the assessee sought various adjournments which were granted. However on the last date when the appeal was fixed no adjournment was sought. The appeal was disposed confirming the additions made in the asstt. order since no evidence or arguments in support of the grounds raised were placed before the CIT(A).
23. Ld. AR Mr. Dharender Kumar submitted that the opportunity to be heard may be granted to the assessee as the impugned order has been assessed without hearing the assessee. It was his stand that the assessee shall participate in the proceedings before the CIT(A). As such the appeal may be restored for adjudication on merits.
4. After hearing the Ld. DR who had no objection if the appeal is disposed on merit after hearing the assessee.
5. In the light of the submissions advanced we are of the view that in the peculiar facts and circumstances taking into consideration the undertaking given by the Ld. AR before the Bench it is appropriate to restore the issue back to the file of CIT(A) with the direction to decide the same in accordance with the law after giving the assessee a reasonable opportunity of being heard.
5.1 Before parting we would like to address the principles which have guided us incoming to the above conclusion.
5.2 In the celebrated judgent of the Apex Court in the case of A.K. Kraipak - vs - Union of India (1969) 2 SCC 262, it is observed that the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. The said rules are means to an end and not an end in themselves and though it is not possible to make an exhaustive cataqlogue of such rules however it can be readily said that there was two basic maxims of natural justice namely "audi alteram partem" and "nemo judex" in re sua". In the present facts of the case we are concerned with the maxim audi alteram partem which again may have many facets two of them being (a) notice of the case to be met; and (b) opportunity to explain. Their Lordships have cautioned 3 that these rules cannot be sacrificed at the altar of the administrative convenience or celebrity.
5.3 It may not be out of place to mention that the general view earlier was that the Rules of natural justice would apply only to the judicial and quasi-judicial pronouncements and not to be administrative action. However, in the case of State of Orissa - vs - Dr. Miss Binapani (1967) 2 SCR 625 the distinction between quasi - judicial and administrative decisions was perceptively mitigated and it was held that even administrative order or decisions in matters involving civil consequences have to be made consistently with the Rules of natural justice. Since then the concept of natural justice has made great strides and is invariably read into administrative actions involving civil consequences, unless of course the statue conferring the power excludes its application by express language.
5.4 Reference may be made to the judgment of the Apex Court in the case of Canara Bank - vs - V.K. Avasthi (2005) 6 SCC 321 wherein the concept, scope, history of development and significance of the principles of natural justice have been discussed extensively with reference to earlier cases Their Lordships observed that the principles of natural justice are those which have been laid out by the Courts as being the minimum protection of the rights of an individual against the arbitrary procedure that may be adopted by a judicial, quasi-judicial and administrative authority while making an order affecting those rights.
5.5. Their Lordships of the Apex Court in the case of Swadeshi Cotton Mills - vs - Union of India (1981) 1 SCC 664 have been conscious of examining the general principle as distinguished from the absolute rule of uniform application to hold that where the statue does not in specific 4 terms exclude this rule of prior hearing but contemplates a post decisional hearing amounting to a full review of the original order on merits, then such a statute should be construed as excluding audi alteram partem at the pre-decisional stage. Conversely if the statute conferring the power is silent with regard to the giving of a pre- decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review on merits against the decision is provided the Courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing shorn of all its formal trappings as it would paralyse the administrative process or frustrate the need for promptitude. Their Lordships have cautioned that this rule of fair play must not be jettisoned save in exceptional circumstances where compulsive necessity so demands and the Courts must make every effort to salvage this cardinal rule to the maximum extent possible. They have held that the core of the situational modifications must remain namely that the person must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise.
5.6 We may also mention another judgment of the Apex Court namely the case GB Gautam vs Union of India (1993) 1 SCC 78 where the question arose whether in the absence of the provisions for giving the concerned parties an opportunity of being heard before an order is passed under the provisions of section 269UD of the Act, for purchase by the Central Govt. of an immovable property agreed to be sold on an agreement to sell an opportunity of being heard before such an order would be passed should be given or not. Relying on its earlier decisions in the case of Union of India - vs.- Kamal J N Sinha (1970) 2 SCC 458, and Olga Tels - vs - Mumbai Muncipal Corporation (1985) 3 SCC 545 their Lordships held that although Chapter - XX-C does not contain any 5 express provision for affording the parties being given an opportunity to be heard before an order is made u/s 269 UD not to read the requirement of such an opportunity would be to give too literal and strict interpretation to the provision of Chapter XX-C. Their Lordships while holding so have observed that the observance of the principles of natural justice is the pragmatic requirement of fair play in action. As such the requirement of an opportunity to show cause being given before an order for purchase by the Central Government is made by an appropriate authorities u/s 269UD must be read into the provisions of Chapter XX-C. They have held that there is nothing in the nature u/s 269D or any other provision in the said Chapter which would negate such an opportunity being given. Being conscious of the fact that if such a requirement were not read into the provisions of the said chapter. Their Lordships observed that such an order would be seriously open to challenge on the ground of violation of the provisions of Article 14 of the Constitution of India on the ground of non compliance with the principles of natural justice.
5.7. It is also seen that similarly, while dealing with the question whether the requirement of affording an opportunity of hearing is to be read into Section 142(2A)of the Act in regard to the Special Audit their Lordships of the Apex Court have held in Rajesh Kumar's case - vs- DCIT (2006) 287 ITR 91 (SC) that prejudice to the assessee is apparent on the face of the said Statutory provisions. Referring to judgment of Dr. Miss Binapani Dei cited supra it was observed that an order u/s 142 (2A) the assessee suffers civil consequences and even though no express requirement is mentioned in the provisions, compliance with the principles of natural justice would be implicit. Their Lordships have observed that the assessment proceedings is a part of judicial process. When a statutory process is exercised by the assessing authority in terms of its judicial functions which is detrimental to the assessee it 6 does not and cannot be administrative in nature. The principles of natural justice are based on two principles (i) nobody should be condemned unheard; and (ii) nobody should be judge in his own cause. The duty to assign reasons is the judge made law.
5.8 In this context we may also refer to the judgment of the Hon'ble Apex Court in the case of Tin Box Company-vs-CIT 249 ITR 216 (SC) wherein admittedly an opportunity of being heard had not been granted by the AO. In the facts of that case the assessment order in appeal was confirmed by the CIT(A) and further traveled to the Tribunal. The Tribunal held that the assessee had been afforded an opportunity of being heard by the Commissioner (Appeals) and having done that held that the claim of the assessee did not have any merit and since the address choose not to adduce any additional evidence in terms of the provisions of Rule 46A of the IT Rules, the grievance of the assessee alleging denial of opportunity was held to be without merit. The Tribunal took note of the fact that even before it the assessee could not indicate as to what the assessee had to say by way of explanation to the discrepancies pointed out by the AO. Accordingly they found that no positive evidence in support of the averments made by the assessee were available nor any application under Rule 29 of the Income Tax Appellate Tribunal Rules was filed before the Tribunal to permit the assessee to lead the additional evidence except the bald plea no other evidence was available. In these circumstance the assessee's appeal was dismissed as having been found to be without any merit, which action was confirmed by the Hon'ble High Court. The Hon'ble Apex Court held that the assessment order must be made after the assessee has been given a reasonable opportunity of setting out his case and their Lordships did not agree with the Tribunal and the Hon'ble High Court that it was not necessary to set aside the order of the assessment and remanded the matter to the AO for fresh 7 assessment after giving to the assessee a proper opportunity of being heard.
5.9 A careful perusal of the consistent judgments of the Apex Court would show that it has consistently been held that the Rules of natural justice are not embodied rules and the said phrase is not and cannot be capable of a precise definition. The underlying principle of natural justice evolved under the common law is to check arbitrary exercise of power by the State or its functionaries. Accordingly, the principle by its very nature implies the duty to act fairly i.e. fair play in action must be evident at every stage.
5.10 It is a settled legal proposition that if any order by a judicial or a quasi-judicial authority or for that matter an administrative authority is passed which is adverse to the party, implicitly by reading the rules of natural justice into it a responsibility is cast on the authority passing the order to give a reasonable opportunity of being heard to the person. The importance of the said rule cannot be over-emphasized. 5.11. Thus in the light of the submissions made by the parties and material available on record we are of the view that it is appropriate to restore the issue back to the file of the said authority i.e. the Ld. CIT(A) with the direction to decide the issue in accordance with law by way of a speaking order after giving the assessee a reasonable opportunity of being heard.
6. In the result appeal of the assessee is allowed for statistical purposes as per the pronouncement made in the open court.
Pronounced in the open court on 2nd August, 2011 immediately after the conclusion of the hearing.
Sd/- sd/-
(B.K. HALDAR) (DIVA
(DIVA SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 2nd August, 2011
8
Veena
Copy of the order forwarded to:-
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
By Order
Deputy Registrar, ITAT.