Shri Jayesh Kumar Shah, Indore V. The ITO - 2(3), Indore

CO 81/IND/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 9162 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 13-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Principle of natural justice; Additional evidence
• Section: 145

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.460/IND/2013 A.Y. 2007-08 ITO-2(3), INDORE :: APPELLANT VS JAYESH KUMAR SHAH, INDORE PAN- AEAPS 5243 R :: RESPONDENT AND, CROSS-OBJECTION NO.81/IND/2013 (ARISING OUT OF ITA NO.460/IND/2013) A.Y. 2007-08 JAYESH KUMAR SHAH, INDORE PAN- AEAPS 5243 R :: OBJECTOR VS ITO-2(3), INDORE :: RESPONDENT REVENUE BY SHRI R.A. VERMA ASSESSEE BY SHRI VIJAY BANSAL DATE OF HEARING 17 . 12 .2013 DATE OF PRONOUNCEMENT 17 . 12 .2013 2 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE HAS PREFERRED THIS APPEAL AGAINST THE IMPUGNED ORDER DATED 21.2.2013 ON THE FOLLOWING GROU NDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. FIRST APPELLATE AUTHORITY HAS ERRED IN DELETING THE ADDITION OF RS.19,95,897/- OUT OF ADDITION OF RS.21,36,738/- MADE BY THE ASSESSING OFFICER AND BEING A CASE OF ADDITION OF UNRECORDED PURCHASES FURTHER ERRED IN DIRECTING TO TAKE GP AT THE RATE OF 8.14% OF RS.19,95,897/- WHEN THE BOOK RESULTS WERE RIGHTLY REJECTED BY ASSESSING OFFICER U/S 145 OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. FIRST APPELLATE AUTHORITY HAS ERRED IN ADMITTING ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE I.T. RULES WITHOUT CALLING FOR A REPORT FROM ASSESSING OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. FIRST APPELLATE AUTHORITY HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSING OFFICER PASSED THE ORDER AFTER GIVING DUE AND DETAILED OPPORTUNITY TO THE ASSESSEE WHICH WAS NOT AT ALL COMPLIED WITH AND IN VIEW OF SAID FACTS IT WAS ALL THE MORE IMPERATIVE FOR THE LD. CIT(A) TO HAVE CONFRONTED THE ASSESSING OFFICER WITH THE ADDITIONAL DOCUMENTARY EVIDENCE AS PRODUCED BY THE APPELLANT BEFORE HIM. 3 WHEREAS, THE ASSESSEE HAS ALSO PREFERRED A CROSS-OBJECTI ON NO.81/IND/2013 IN THIS APPEAL OF THE REVENUE ON THE PLEA THAT THE LD. CIT(A) ERRED IN APPLYING THE G.P. RATE O F 8.14% ON SO CALLED UNRECORDED PURCHASES OF RS.19,95,897/- WITHOUT REJECTING THE BOOKS OF ACCOUNTS U/S 145 OF T HE ACT. FURTHER, RIGHTLY ADMITTED THE EVIDENCE WHICH WAS INDEPENDENTLY GOT VERIFIED. IN CROSS-OBJECTION, IT HAS ALSO BEEN CLAIMED THAT REASONABLE OPPORTUNITY WAS NOT PROVI DED TO THE ASSESSEE BEFORE MAKING THE ADDITION ON UNRECORD ED PURCHASES OF RS.21,36,738/- ON THE BASIS OF INFORMATIO N CALLED FROM JCT LTD., PHAGWARA. 2. DURING HEARING, WE HAVE HEARD SHRI R.A. VERMA, LD. SR. DR AND SHRI VIJAY BANSAL, LEARNED COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVEN UE IS IN SUPPORT TO THE ASSESSMENT ORDER WHEREAS THE LEAR NED COUNSEL FOR THE ASSESSEE SUPPORTED THE IMPUGNED ORDE R. 4 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, A RE THAT, THE ASSESSEE IS IN THE BUSINESS OF TRADING OF CL OTHS, DISCLOSED G.P. AT 8.14% IN COMPARISON TO 8.88% IN EARL IER YEAR. THE ASSESSEE WAS ASKED TO EXPLAIN THE REASONS OF LO W PROFIT. IT WAS NOTICED BY THE ASSESSING OFFICER FROM BOOKS OF ACCOUNTS THAT THE ASSESSEE HAS NOT RECORDED THE SALES F ROM IDENTIFIABLE DETAILS, WHICH HAVE BEEN REPRODUCED IN P ARA 4.2 OF THE ASSESSMENT ORDER. THE MAJOR REASON FOR MAK ING THE ADDITION BY THE ASSESSING OFFICER IS THAT ACTUAL PURCHASES HAVE NOT BEEN SHOWN BY THE ASSESSEE AND CLOSING STOCK WAS LESS BY RS.21,36,738/-, FOR WHICH, PAYMENTS WERE ALSO MADE FROM UNDISCLOSED SOURCES. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION GIVING PAR T RELIEF TO THE ASSESSEE, WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL. WE NOTE THAT THE LD. CIT(A) SUBMITTED THE R EPLY 5 DIRECTLY TO M/S. JCT LTD., PHAGWARA, WHO, VIDE LETTER DATED 2.3.2013, REPLIED AS UNDER: PLEASE REFER TO THE YOUR AFORESAID LETTER, WITH RE FERENCE TO CONFIRMATION OF OUR LETTER DATED 2.2.2010, ISSUED T O M/S. RAHUL KUMAR JAYESH KUMAR, INDORE, PROP. JAYESH KUMA R SHAH. WE HEREBY ONCE AGAIN CONFIRM THAT WHAT AS STA TED IN OUR AFORESAID LETTER IS CORRECT AND AS PER OUR R ECORDS AND GOODS WERE DELIVERED TO OTHER LOCAL PARTIES THROUGH LOCAL AGENT AND NOT TO M/S. RAHUL KUMAR JAYESH KUMAR SHAH . IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, CONCLUSION DRAWN IN THE IMPUGNED ORDER, THE ASSERTIO N MADE BY THE LD. RESPECTIVE COUNSEL AND THE MATERIAL AVAILABLE ON RECORD ARE KEPT IN JUXTAPOSITION, WE NOTE THAT, THE LD. CIT(A) WHILE COMING TO A PARTICULAR CONCLUSION , NEITHER SOUGHT REMAND REPORT FROM THE ASSESSING OFFI CER NOR GRANTED ANY OPPORTUNITY TO REBUT THE CLAIM OF THE ASSESSEE, THUS, IT IS VIOLATION OF RULE 46A OF I.T. R ULES. EVEN OTHERWISE, M/S. JCT LTD., PHAGWARA, VIDE LETTER D ATED 2.3.2013, HAS MENTIONED THAT THE GOODS WERE DELIVERED TO LOCAL PARTIES THROUGH LOCAL AGENTS AND NOT DIRECTLY TO M /S. RAHUL KUMAR JAYESH KUMAR SHAH. THIS FINDING/REPLY ALSO 6 COULD NOT BE EXAMINED BY THE ASSESSING OFFICER. THER EFORE, KEEPING IN VIEW THE PRINCIPLE OF NATURAL JUSTICE AND AL SO TO SAFEGUARD THE INTEREST OF REVENUE AS WELL AS OF THE ASSE SSEE AS NO PREJUDICE IS CAUSED TO EITHER SIDE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THIS FILE TO THE F ILE OF THE ASSESSING OFFICER TO EXAMINE AFRESH THE CLAIM OF THE ASSESSEE. 3.1 SO FAR AS THE CROSS-OBJECTION OF THE ASSESSEE IS CONCERNED IN WHICH APPLICATION OF G.P. RATE OF 8.14% HAS BEEN CHALLENGED AND ALSO IN GROUND NO.4, IT HAS BEEN CLAIMED THAT REASONABLE OPPORTUNITY WAS NOT PROVIDED TO THE ASSESSEE BEFORE MAKING THE ADDITION OF UNRECORDED PURCHASES, HAS BEEN TAKEN, THEREFORE, THE CROSS-OBJECT ION OF THE ASSESSEE IS ALSO REMANDED BACK TO THE FILE OF TH E ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANC E WITH LAW. NEEDLESS TO MENTION HERE THAT DUE OPPORTUNITY O F BEING HEARD BE PROVIDED TO THE ASSESSEE WITH FURTHER LIBERTY 7 TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE THE CLAIM. THUS, THE APPEAL OF THE REVENUE AND CROSS-OBJECTION OF THE ASSESSEE DESERVE TO BE ALLOWED FOR STATISTICAL PURPOSES . FINALLY, THE APPEAL OF THE REVENUE AND THE CROSS- OBJECTION OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES IN THE OPEN COURT AT TH E CONCLUSION OF HEARING ON 17.12.2013. SD/- SD/- (R.C.SHARMA) (JOGINDER S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 .12.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE !VYAS!