Sh. Surinder Khosla, BATALA V. The Income-tax Officer, BATALA

CO 12/ASR/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9925 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 12-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA KUMAR SINGH
• Assessee Lawyers: SSH S K MAHAJAN; AVISH MAHAJAN CAS
• Keywords: Audit objection; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 51(ASR)/2014 ASSESSMENT YEAR: 2008-09 PAN: AFYPK0774J INCOME TAX OFFICER, VS. SH. SURINDER KHOSLA, WARD 2(4), BATALA 5 FRIENDS COLONY, BATALA (APPELLANT) (RESPONDENT) AND C.O. NO. 12(ASR)/2014 {IN I.T.A. NO. 51(ASR)/2014} ASSESSMENT YEAR: 2008-09 PAN: AFYPK0774J INCOME TAX OFFICER, VS. SH. SURINDER KHOSLA, WARD 2(4), BATALA 5 FRIENDS COLONY, BATALA (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. VIRENDRA KUMAR SINGH, DR ASSESSEE BY: S/SH. S.K. MAHAJAN AND AVISH MAHAJAN, CAS DATE OF HEARING: 26.11.2014 DATE OF PRONOUNCEMENT: 26.11.2014 ORDER PER A.D. JAIN, J.M. 1. THESE ARE THE DEPARTMENTS APPEAL AND THE ASSESSE ES CROSS OBJECTION FOR THE ASSESSMENT YEAR 2008-09 AGAINST T HE ORDER DATED 12.11.2013 PASSED BY LEARNED CIT(A), AMRITSAR. 2 2. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN TAKEN BY THE DEPARTMENT. I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) ERRED IN LAW WHILE HOLDING THA T THE A.O. SHOULD ALLOW CREDIT OF PRE-PAID TAXES OF RS. 1 0 LAC. WITHOUT NECESSARY CHALLANS NOT PRODUCED BY THE ASSE SSEE WHILE CLAIMING SUCH CREDIT. II. WHETHER CIT(A) AMRITSAR WAS RIGHT IN LAW IN ALLOWIN G CREDIT OF SEIZED AMOUNT TO THE ASSESSEE EVEN THROUG H THERE WAS NO ASCERTAINABLE RECORD AVAILABLE WITH TH E A.O. TO ALLOW SUCH CREDIT. 3. THE ASSESSEE HAS TAKEN THE FOLLOWING CROSS OBJEC TIONS: I. THAT THE APPEAL FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE CIT(APPEALS) IS NOT MAINTAINABLE AS ORDER PASSED BY THE LEARNED CIT(APPEALS) IS NEITHER ENHANCING NOR REDUCING ANY TAX/PENALTY AMOUNT RATHER IT IS JUST AN ADMINISTRATIVE INSTRUCT IONS REGARDING ADJUSTMENT OF THE CASH SEIZED FROM THE PREMISES OF THE APPELLANT TOWARDS THE ADJUSTMENT OF ADVANCE-TAX. II. THAT THE LEARNED CIT(APPEALS) CORRECTLY ALLOWED THE CREDIT OF ADVANCE-TAX TO THE TUNE OF RS. 10,00,000/- ADJUSTED FROM THE AMOUNT SEIZED DURING THE SEARCH OPERATION IN THE PR EMISES OF THE APPELLANT AND HIS SONS TOWARDS THE ADVANCE-TAX. III. THAT THE APPELLANT SHOULD NOT BE HELD RESPONSIBLE F OR THE DEFICIENCIES AND WEAKNESSES OF THE DEPARTMENT WITHO UT ANY ERROR OR OMISSION ON HIS PART. IT WOULD BE UNLAWFUL AND A GAINST THE PRINCIPLES OF NATURAL JUSTICE TO HOLD ASSESSEE RESP ONSIBLE FOR THE INTERNAL GAPS/TECHNICAL GLITCHES OF THE DEPARTMENT. IV. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMI NG ADDITIONS MADE OF RS. 3,13,014/- MERELY ON THE BASIS OF AUDIT OBJECTION WITHOUT APPRECIATING THE FACTS THAT NO ADDITION WAS EVER PROPOSED AND DISCUSSED BY THE DCIT CENTRAL CIRCLE, AMRITSAR, BEING RETURNED INCOME WAS ACCEPTED AS INCOME ASSESSED. V. THAT THE APPELLANT PRAYS THAT THE ORDER OF THE WORT HY CIT(APPEALS) WRONGLY CONFIRMING ADDITIONS TO THE TUNE OF RS. 3,1 3,017/- MADE TO THE INCOME OF THE APPELLANT, MERELY ON THE BASIS OF AUDIT OBJECTION, BE QUASHED AND THE ORDER OF WORTHY CIT(APPEALS) ALL OWING CREDIT FOR RS. 10,00,000/- ADJUSTED TOWARDS ADVANCED-TAX D EPOSITED FROM THE CASH SEIZED FROM THE APPELLANT MAY KINDLY BE CO NFIRMED TO MEET THE ENDS OF JUSTICE. 3 4. THE REGISTRY HAS NOTED THAT THE CROSS OBJECTION FILED BY THE ASSESEE IS DELAYED BY THREE DAYS. IN THE APPLICATIO N FOR CONDONATION OF DELAY, THE ASSESSEE HAS CONTENDED THAT HE HAD SHIFT ED HIS ADDRESS FROM BATALA TO PHILLAUR AND ONE OF HIS EMPLOYEES VISITED HIS BATALA RESIDENCE ONCE IN A MONTH, INTER ALIA, TO COLLECT THE MAIL; T HAT THE NOTICE OF THE DEPATMENTS APPEAL WAS RECEIVED BY THE SAID EMPLOYE E IN MARCH, 2014, WHEN HE VISITED BATALA; THAT, HOWEVER, HE FORGOT TO SEND THE SAME TO THE ASSESSEE AND IT WAS ONLY ON 25.04.2014, THE ASSESSE E RECEIVED THE NOTICE; AND THAT IT WAS DUE TO HIS IGNORANCE, THAT THE NOTI CE WAS DELIVERED TO THE ASSESSEE LATE BY HIS EMPLOYEE. 5. WE FIND SUFFICIENT CAUSE FOR CONDONING THE DELAY IN FILING THE CROSS OBJECTION BY THE ASSESSEE, AS PER THE CONTENT S OF THE APPLICATION FOR CONDONATION OF DELAY. THE DELAY IN FILING THE CROSS OBJECTION IS, THEREFORE, CONDONED IN THE INTEREST OF JUSTICE. 6. THE A.O. DID NOT ALLOW THE CREDIT OF PRE-PAID T AX OF RS. 10,00,000/- OBSERVING THAT THE ASSESSEE DID NOT PRO DUCE THE COPY OF CHALLAN WHILE CLAIMING SUCH CREDIT. THE LEARNED CIT (A) DID AWAY WITH THIS DISALLOWANCE. 7. THE LEARNED DR CONTENDED THAT DESPITE THE NECESS ARY CHALLAN NOT HAVING BEEN PRODUCED, THE LEARNED CIT(A) HAS IL LEGALLY HELD THE CREDIT OF PRE-PAID TAX OF RS. 10,00,000/- TO BE ALL OWABLE, PARTICULARLY 4 WHEN THERE WAS NO ASCERTAINABLE RECORD WITH THE A.O . TO ALLOW SUCH CREDIT. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS STRONGLY SUPPORTED THE IMPUGNED ORDER, CONTENDING T HAT AS PER THE LETTER DATED 20.04.2012 (COPY ATTACHED AT APB 20-21), ISSU ED BY CIT-I, AMRITSAR, TO THE COMMISSIONER INCOME TAX (CENTRAL), LUDHIANA, CREDIT OF THE AMOUNT OF RS. 10,00,000/- SEIZED IN THE NAME OF SH. MOHIT KHOSLA, SON OF THE ASSESSEE, HAD BEEN ALLOWED BY THE ACIT, CENTRAL CIRCLE, AMRITSAR AT THE TIME OF SCRUTINY ASSESSMENT UNDER S ECTION 143(3) OF THE INCOME-TAX ACT, 1961 (FOR SHORT, THE ACT). 9. HAVING CONSIDERED THE RIVAL CONTENTIONS IN THE L IGHT OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LETT ER (SUPRA) DATED 20.04.2012 FROM THE CIT-I, AMRITSAR TO THE CIT (CEN TRAL), LUDHIANA, MAKES SPECIFIC MENTION THAT THE CREDIT OF AMOUNT OF RS. 10,00,000/- HAD BEEN ALLOWED BY THE ACIT, CENTRAL CIRCLE, AMRITSAR AT THE TIME OF SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT . FOR READY REFERENCE, THE RELEVANT PORTION OF THIS LETTER IS REPRODUCED H EREUNDER: THE ASSESSEMENT IN THE CASE IS OF SH. SURINDER KHO SLA FOR THE A.Y. 2008- 09 WAS COMPLETED U/S 143(3) BY THE ACIT, CENTRAL CI RCLE, AMRITSAR WHEN CREDIT OF PREPAID TAXES OF RS. 55,93,527/- WAS ALLO WED BY HIM INCLUDING A SUM OF RS. 10 LACS ADJUSTED THROUGH P.D. ACCOUNT AS ADVANCED TAX, AS REPORTED BY THE INCOME TAX OFFICER, WARD- 2(4), BAT ALA. LATER ON, THE AUDIT OBJECTED TO THE CREDIT OF RS. 10 LACS FOR WAN T OF CHALLAN ON THE FILE. THIS AMOUNT OF RS. 10 LACS BELONGED TO SH. MOHIT KH OSLA, CIVIL LINES, PHILLAUR WHO HAPPENS TO BE A SON OF SH. SURINDER KH OSLA. AS PER RECORDS OF THIS OFFICE, NO CHEQUE OF RS. 10 LACS SEIZED IN THE NAME OF SH. MOHIT 5 KHOSLA WAS ISSUED BY THIS OFFICE FROM THE P.D. ACCO UNT OF COMMISSIONER OF INCOME TAX-I, AMRITSAR. SINCE THE CREDIT OF THIS AMOUNT HAS BEEN ALLOWED BY THE ACIT, CENTRAL CIRCLE, AMRITSAR AT TH E TIME OF SCRUTINY ASSESSMENT U/S 143(3), IT IS REQUESTED THAT YOU MAY KINDLY VERIFY FROM THE RECORDS OF THE P.D. ACCOUNT NOW OPERATED BY YOUR OF FICE WHETHER ANY CHEQUE WAS ISSUED IN FAVOUR OF ACIT, CENTRAL CIRCLE , AMRITSAR OR NOT. THE ACIT, CENTRAL CIRCLE MAY ALSO BE ASKED TO ASCER TAIN HOW THE CREDIT HAS BEEN ALLOWED BY HIM. A PHOTOCOPY OF BANK STATEM ENT OF P.D. ACCOUNT WHICH SUGGEST THE DEPOSIT OF RS. 38 LACS IN THIS AC COUNT ON 07.12.2007 IS ALSO ENCLOSED HEREWITH FOR YOUR PERUSAL. 10. IN VIEW OF THE ABOVE, THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS FOUND TO CARRY NO MERIT AND IS REJECT ED AS SUCH. 11. COMING TO THE CROSS OBJECTIONS RAISED BY THE ASS ESSEE, AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE HAS ST ATED AT THE BAR THAT CROSS OBJECTION NOS. 2 AND 3 ARE NOT PRESSED. AS SUCH, TH E SAME ARE REJECTED AS NOT PRESSED. 12. CROSS OBJECTION NOS. 1 AND 5 ARE GENERAL IN NATU RE. 13. APROPOS CROSS OBJECTION NO. 4, THE LEARNED COUNS EL FOR THE ASSESSEE CONTENDS THAT THE ADDITION OF RS. 3,13,017 /- WAS NEVER PROPOSED AND THE SAME WAS MADE ONLY ON THE BASIS OF AUDIT OB JECTION, WHICH IS NOT SUSTAINABLE; AND THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THIS ADDITION. 14. THE LEARNED DR RELIES ON THE ORDER OF LEARNED CI T IN THIS REGARD. 15. HERE, IT IS SEEN, THAT, INDEED, BEFORE MAKING TH E ADDITION OF RS. 3,13,017/-, NOTHING WAS PROPOSED IN THIS REGARD. TH E ASSESSMENT ORDER 6 DOES NOT CONTAIN ANY DISCUSSION THEREON. THE LEARNE D CIT(A) HAS ALSO CONFIRMED THIS ADDITION WITHOUT RECORDING ANY REASO N. THIS ACTION OF THE AUTHORITIES BELOW IS UNSUSTAINABLE, AS UNDER THE LA W, NO ADDITION CAN BE MADE WITHOUT PROVIDING OPPORTUNITIES TO THE ASSESSE E AND WITHOUT ASSIGNING REASONS. EVIDENTLY, THIS ADDITION WAS MAD E MERELY ON THE BASIS OF AN AUDIT OBJECTION, WHICH IS NOT SUSTAINABLE. AC CORDINGLY, THIS ADDITION IS DELETED. 16. THEREFORE, CROSS OBJECTION NO. 4 IS ACCEPTED. 17. FOR THE ABOVE DISCUSSION, THE CROSS OBJECTIONS O F THE ASSESSEE ARE PARTLY ALLOWED. 18. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED WHEREAS THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE PART LY ALLOWED, AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER, 2014 SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 TH NOVEMBER, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SH. SURINDER KHOSLA, 5 FRIENDS COLONY , BATALA 2. INCOME TAX OFFICER, WARD-2(4), BATALA. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER 7 (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.