Shri Bhupinder Pal Mahajan, Mandi V. Addl. CIT, Mandi

ITA 1091/CHANDI/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5354 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 21-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PML
• Section: 133(6); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER ITA NO. 1091/CHD/2016 ASSESSMEN T YEAR: 2006-07 SHRI BHUPINDER PAL MAHAJAN, VS. THE ADDL.CIT, VPO : RATTI, TEHSIL-SADAR, MANDI RANGE, DISTT. MANDI (HP). MANDI. PAN NO. ABYPM7732L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI MANJIT SINGH, SR.DR DATE OF HEARING : 15.11.2017 DATE OF PRONOUNCEMENT : 08.01.2018 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSA ILING THE CORRECTNESS OF THE ORDER DATED 10.06.2016 OF LD. CIT (APPE ALS)-1 AMRITSAR CAMP AT PALAMPUR PERTAINING TO 2006-07 ASSESSMENT YEA R ON VARIOUS GROUNDS SINCE THE PARTIES WERE HEARD ONLY IN RESPECT O F THE PRAYER FOR REMAND MADE IN TERMS OF GROUND NO. 1 AND 8, ARE THEREFORE REPRODUCED HERE UNDER : GROUND NO. 1 THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE REJECTION OF BOOK S OF ACCOUNT AND THEREAFTER FRAMING OF ASSESSMENT U/S 144 WHICH IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 1. GROUND NO. 8 THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS, ARBI TRARY, OPPOSED TO LAW AND FACTS OF THE CASE AND IS THUS, UNTENABLE. 2. THE LD. AR AT THE TIME OF HEARING SUBMITTED THAT IN VIE W OF PATENT AND APPARENT CONTRADICTIONS IN THE IMPUGNED ORDER, HE WOULD B E CONFINING HIS ARGUMENTS TO GROUND NO. 1 WITH THE PRAYER THAT THE OR DER BE SET ASIDE TO THE CIT(A) FOR A DECISION DE-NOVO. 3. THE FACTS RELATING TO THE SAID ISSUE ARE THAT THE ASS ESSEE DECLARED NET INCOME OF RS. 18,16,836/- AS A CONTRACTOR. THE RETURN FILE D WAS ACCOMPANIED WITH AUDIT REPORT U/S 44AB, BALANCE SHEET, PROFIT & LOSS A CCOUNT ALONGWITH RELEVANT ENCLOSURES. THE CASE WAS SELECTED FOR SCRUTINY WHEREIN THE AO EXAMINED THE BOOKS OF ACCOUNT ALONGWITH BILLS/VOUCHERS, BAN K ACCOUNTS STATEMENTS AND ALSO SOUGHT INFORMATION U/S 133(6) FROM THIR D PARTIES. THE AO NOTED THAT CERTAIN DISCREPANCIES POINTED OUT BY HIM COULD NOT BE RECONCILED. ACCORDINGLY, SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE U/S 145(3) AND THE ASSESSEE WAS ASKED TO EXPLAIN WHY 8% OF NET PROFIT MAY NOT BE APPLIED TO THE CONTRACT RECEIPTS. APART FROM THAT, AS PE R PAGE 2 OF THE ITA 1091/CHD/2016 A.Y 2006-07 PAGE 2 OF 3 ASSESSMENT ORDER, SOME MORE ENQUIRIES AND REPLIES WERE C ONSIDERED AND THE AO ACCEPTED THE PLEA OF THE ASSESSEE THAT THE BOOKS MAY NOT BE REJECTED. HOWEVER, HE PROCEEDED TO MAKE CERTAIN ADDITIONS LEADING T O THE ASSESSMENT BEING CONCLUDED AT AN INCOME OF RS. 38,86,181/-. 4. THE ADDITIONS WERE CHALLENGED IN APPEAL BEFORE THE CIT(A) ON MERITS. APART FROM THAT, THE ASSESSEE HAD ALSO RAISED THE FOLLOWIN G NEAR IDENTICAL GROUND BEFORE THE CIT(A) : THAT THE LD. ADDL. CIT HAS ERRED IN PASSING ORDER UNDER SECTION 144 READ WITH SECTION 145(3) OF THE INCOME TAX ACT,1961. 5. THE ARGUMENTS IN RESPECT THEREOF HAVE BEEN REPRODUC ED BY THE CIT(A) IN HIS ORDER AND HE HAS AFFIRMED THAT THE AO WAS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT IN PARA 6 PAGE 25 AND 26 OF THE IMPUGNED ORD ER. THE SAID CONCLUSION IS IN DIRECT CONTRADICTION TO THE FOLLOWING CONCLUSI ONS DRAWN BY THE AO AS PER PAGE 2 OF THE ASSESSMENT ORDER ON WHICH HE AVY RELIANCE WAS PLACED UPON BY THE LD. AR : DURING THE COURSES OF ASSESSMENT PROCEEDINGS THE B OOKS OF ACCOUNT OF THE ASSESSEE WERE EXAMINED THOROUGHLY IN THE LIGHT OF BILLS/VOUCHERS, BANK ACCOUNT STATEMENTS AND INFORMATION OBTAINED U/S 133(6) FROM THIRD PARTIES. SOME GRAVE DISCREPANCIES WERE NOTICED WHICH WERE POINTED OUT TO THE ASSESSEE FOR HIS EXPL ANATION AND PRODUCTION OF DOCUMENTARY EVIDENCES TO JUSTIFY HIS EXPLANATION. HOWEVER, ASSE SSEE COULD NOT FURNISH ANY SATISFACTORY REPLIES TO THE DISCREPANCIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO, COUNSEL OF THE ASSESSEE COULD NOT RECONCILE THE DISCREPANCIES. ACCORDINGLY, A SHOW CAUSE NOTICE U/S 145(3) READ WITH SECTION 144 OF THE INCOME TAX ACT, 1961 WAS ISSUED TO THE ASSESSEE ON 16.12.2008 INCORPORATING ALL THE ISSUES OF DISCREPA NCIES AND OTHER ISSUES REQUIRING HIS EXPLANATION BECAUSE THE RELIABILITY OF BOOKS OF ACC OUNTS WAS HIGHLY QUESTIONABLE. THE ASSESSEE WAS ASKED TO EXPLAIN WHY 8% OF NET PROFIT MAY NOT BE APPLIED IN HIS CASE AS FAR AS CONTRACT RECEIPTS WERE CONCERNED. SUBSEQUENT REMIN DERS CONTAINING SOME MORE QUESTIONS WERE ISSUED TO THE ASSESSEE VIDE LETTER DATED 22.1 2.2008 AND 24.12.2008. PERUSAL OF REPLY FILED BY THE ASSESSEE REVEALED THAT SAME WERE NOT S ATISFACTORY ENOUGH TO ACCEPT. THE ASSESSEE FURTHER STATED THAT HIS BOOK RESULTS WERE QUITE SATISFACTORY AND HENCE THE QUESTION OF INVOKING THE PROVISIONS OF SECTION 145(3) WERE N OT JUSTIFIED. THE PLEA OF THE ASSESSEE THAT HIS BOOKS MAY NOT BE REJECTED WAS CONSIDERED A ND ACCEPTED. HOWEVER, THERE WERE NUMBER OF DISCREPANCIES WHICH CALLED FOR SPECIFIC A DDITIONS AND DISALLOWANCES. (EMPHASIS SUPPLIED) 6. ACCORDINGLY, IT WAS HIS SUBMISSION THAT THE ADDITION WITHO UT REJECTING THE BOOKS OF ACCOUNT COULD NOT HAVE BEEN MADE WHICH WA S THE SPECIFIC GRIEVANCE OF THE ASSESSEE BEFORE THE CIT(A) WHO HAS THOU GH NOTED THE FACTS AND THE ARGUMENTS, HOWEVER, WHILE ARRIVING AT A CONCLUSION, HE HAS MISDIRECTED HIMSELF BY NOTING CONTRARY FACTS. HENCE, A PRAYER FOR REMAN D. 7. THE LD. SR. DR IN THE FACE OF THIS CLEAR CONTRADICTORY C ONCLUSION OF THE AO, WAS UNABLE TO ADDRESS HOW THE ADDITIONS THEREAFTER C OULD HAVE BEEN MADE AND SUSTAINED. ACCORDINGLY, IN THE LIGHT OF THE SUBM ISSIONS OF THE PARTIES BEFORE THE BENCH AND NOTING THAT THE CONCLUSION ON THE SAID ISSUE IS FUNDAMENTAL TO THE MAINTAINABILITY OF THE ADDITIONS IN THE PRE SENT APPEAL, THE ITA 1091/CHD/2016 A.Y 2006-07 PAGE 3 OF 3 ISSUE IS RESTORED BACK TO THE FILE OF THE CIT(A) WITH THE D IRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW ON THE AFORESAID CO NCLUSION. IT IS NOTED THAT THE ASSESSEE HAD RAISED A SPECIFIC GROUND RE LYING UPON THE AFORESAID CONCLUSION OF THE AO. IN VIEW OF THE FACT THAT TH E FOUNDATIONAL ISSUE ITSELF HAS BEEN SET ASIDE BACK TO THE CIT(A), THE REMAINING ISSUES ARE ALSO SENT BACK. THESE ISSUES SHALL ALSO BE DECIDED BY THE CIT(A) DE- NOVO AS THE ENTIRE ORDER OF THE CIT(A) IS SET ASIDE BACK TO THE FILE OF THE CIT (A) WITH A DIRECTION TO RE-ADJUDICATE UPON THE ISSUES ON THE BASIS OF THE MATER IAL AVAILABLE ON RECORD AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEIN G HEARD. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08.01. 2018. SD/- (DIVA SINGH) JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT/CHANDIGARH