DCIT, Circle - 2, Midnapore, Paschim Medinipur V. Shri Hirak Nath Sounth, Paschim Medinipur

ITA 1105/KOL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0494 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 22-08-2011
• Court: TRIBUNAL
• Assessee Lawyers: V N PUROHIT
• Keywords: Unexplained expenditure; Opportunity of being heard
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM & HON BLE SHRI B.P.JAIN, AM ] I.T.A NO.1105/KOL/2011 ASSESSMENT YEAR: 2008 - 09 D.C.I.T., CIRCLE - 2, . VS. SHRI HIRAK NATH SOUN TH MIDNAPORE MIDNAPORE (APPELLANT) ( RESPONDENT) (PAN: APKPS 6248 B) FOR THE APPELLANT : SHRI NILAY BARAN SOM, JCIT FOR THE RESPONDENT : SHRI V.N.PUROHIT, FCA DATE OF HEARING : 23.04.2015. DATE OF PRONOUNCEMENT: 09.06.2015. ORD ER PER SHRI B.P.JAIN , AM : THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF LD. CIT(A) - XXXVI, KOLKATA DATED 14.06.2011 FOR ASSESSMENT YEAR 2008 - 09. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1 . THE LD.CIT(A) - XXXVI, KOLKATA IS ERR ED IN DELETING THE ADDITIONS OF RS.20,13,063/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB FOR WANT OF SUPPORTING DOCUMENTS AT THE TIME OF ASSESSMENT U/S 143(3) ON 23.12.2010. 2. THE LD. CIT(A) IS ERRED IN DELETING THE ADDITIONS OF RS.7 1,15,688/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER/OR AMEND ANY OF THE GROUNDS OF APPEAL DURING THE COURSE OF HEARING. 3. AS REGARDS GROUND NOS.1 AND 2 THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE ORDER OF AO ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER : - DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A/R OF THE ASSESSEE FILED BANK STATEMENTS, LOAN DETAILS OF DIFFERENCE BANKS WHICH WERE VERIFIED AND DULY PLACED IN THE FOLDER. DURING THE CURRENT YEAR, ASSESSEE CLAIMED DEDUCTION U/S 80IB OF THE I.T.ACT, 1961 TO THE TUNE OF RS.20,13,063/ - . BUT, NO SUPPORTING PROOF OF DOCUMENTARY EVIDENCE SUBSTANTIATING HIS CLAIM FOR DEDUCTION WERE FILED. A SHOW CAUSE LETTER DATED 25 - 11 - 2010 WAS ISSUED TO THE ASSESSEE REQUESTING HIM TO SUBSTANTIATE HIS CLAIM OF DEDUCTION U/S 80IB OF THE I.T.ACT, 1961. IT ALSO TRANSPIRED FORM THE AUDITED BALANCE SHEET FILED WITH THE I.T.RETURN, BILLS RECEIVABLES AMOUNT STANDS AT RS.1,25,90,740.86 AS AGAINST GROSS BILLS FROM CONTRACT ITA NO. 1105/KOL/2011 SHRI HIRAK NATH SOUNTH, MIDNAPORE . A.YR. 2008 - 09 2 BUSINESS AMOUNTING TO RS.1,27,21,796/ - . THE ASSESSEE, VIDE THIS OFFICE SHOW CAUSE LETTER DATED 25 - 11 - 2010, WAS ASKED TO JUSTIFY HIS CLAIM OF EXPENDITURES OF RS.71,15,688/ - (GROSS BILLS OPENING STOCK NET PROFIT) AS DEBITED TO PROFIT & LOSS A/C WITH SUPPORTING PROOF OF EVIDENCE. IT IS EVIDENCED FROM THE WRITTEN SUBMISSION OF THE ASSESSEE DATED 15 - 12 - 2010 ENCLOSING SOME COPIES SUCH PLAN, DEED, BUT WITHOUT ANY SUBSTANTIATING PROOF OF EVIDENCE IN REGARD TO HIS CLAIM OF DEDUCTI ON U/S 80IB OF THE I.T.ACT, 1961 HAS BEEN NOTICED. AS REGARD CLAIM OF EXPENDITURE DEBITED TO PROFIT & LOSS A/C, NO EXPLANATION WITH PROOF OF DOCUMENTS HAS BEEN SEEN FROM HIS ABOVE PETITION. FURTHER, IN COURSE OF HEARING TOO, THE A/R OF THE ASSESSEE IS REPE ATED REQUESTED TO PROVIDE SUFFICIENT PROOF OF EVIDENCE SUBSTANTIATING THE ASSESEE S CLAIM OF 80IB AS WELL AS JUSTIFYING HIS CLAIM OF SOURCE OF ABOVE EXPENDITURE TAKING NOTE OF HUGE BILLS RECEIVABLE AMOUNT HAS BEEN CALLED FOR. HAVING NO SATISFACTORY EXPLANA TION WITH PROOF OF EVIDENCE, THE ASSESSEE S CLAIM OF SECTION 80IB OF THE I.T.ACT, 1961 AND UNEXPLAINED EXPENDITURE CLAIMED IN THE PROFIT & LOSS ACCOUNT ARE ENTIRELY DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T .ACT, 1961 HAVE SEPARATELY BEEN INITIATED. 4. THE LD. CIT(A) DELETED THE ADDITION ON ACCOUNT OF BOTH THE GROUNDS AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. THE LD. CIT(A) WHILE ALLOWING THE APPEAL OF THE ASSESSEE WITH REGARD TO GROUND NO.1 OBSE RVED THAT NO SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE BECAUSE THE SAID SHOW CAUSE WAS NOT HAVING ANY PROOF BUT A LETTER OF SHOW CAUSE WAS INDEED LYING IN THE FILE OF AO AND SUCH LETTER IS OF NO IMPORTANCE AS THE ASSESSEE HAS FILED THE REQUISITE DETAILS ON 15.12.2010. HE REFERRED TO THE CONDITIONS TO QUALIFY FOR DEDUCTION U/S 80IB(10) OF THE ACT. HE OBSERVED THAT THE ASSESSEE HAS FULFILLED ALL THE REQUISITE CONDITIONS AND THEREFORE ACTION OF THE AO IN NOT ALLOWING DEDUCTION IS ARBITRARY, WHIMSICAL AND DE VOID OF REASONING AND DIRECTED THE AO TO ALLOW DEDUCTION OF RS.20,13,063/ - . 5. AS REGARDS DELETION OF ADDITION OF RS.71,15,688/ - . THE LD. CIT(A) ACCEPTED THE VERSION OF THE ASSESSEE THAT NO SHOW CAUSE LETTER DATED 25 TH NOVEMBER, 2010 WAS ISSUED TO THE ASS ESSEE AND LD. CIT(A) OBSERVATIONS WAS THE SAME AS IN THE PRECEDING GROUND. THE LD. CIT(A) ACCEPTED THE SUBMISSION OF THE ASSESSEE AND DIRECTED THE AO TO DELETE ADDITION OF RS.71,15,688/ - . 6. THE LD. DR ARGUED AS REGARDS GROUND NO.1 THAT IT IS CLEARLY MEN TIONED THAT AO HAS ISSUED A SHOW CAUSE NOTICE DATED 25 TH NOVEMBER, 2010 BUT THE LD. CIT(A) CHOSE TO ACCEPT THE VERSION OF THE ASSESSEE THAT THE SAME WAS NOT ISSUED AND THE SAME IS OF NO ITA NO. 1105/KOL/2011 SHRI HIRAK NATH SOUNTH, MIDNAPORE . A.YR. 2008 - 09 3 IMPORTANCE SINCE THE ASSESSEE HAS FILED THE DETAILS VIDE LETTER DATED 15 TH DECEMBER, 2010. THE LD. CIT(A) ALSO ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND REPRODUCED THE CONDITIONS TO QUALIFY FOR DEDUCTION U/S 80IB(10) OF THE ACT BUT HAD NOT EXAMINED THE EVIDENCES OR DID NOT MAKE ANY ENQUIRY IN THIS REGARD WHICH IS WITHIN HIS POWERS. MOREOVER, THE LD. CIT(A) DID NOT EVEN ASK FOR THE REPORT FROM THE AO. IF AT ALL HE WAS OF THE VIEW THAT NO SHOW CAUSE NOTICE HAS BEEN ISSUED, THEN HOW THE ASSESSEE IS QUALIFIED FOR DEDUCTION U/S 80IB(10) OF THE ACT IN THE ABSENCE OF THE EVIDE NCES. BUT THE LD. CIT(A) NEITHER CHOSE TO OBTAIN ANY REPORT FROM THE AO NOR CHOSE TO MAKE ANY ENQUIRY HIMSELF UNDER HIS OWN POWER U/S 251(4) OF THE ACT. 7. SIMILARLY THE LD. CIT(A) CHOSE TO ACCEPT THE WRITTEN SUBMISSIONS MADE BY THE ASSESSEE WHICH IS REPR ODUCED AT PARA 5.1. OF HIS ORDER WHERE THE LD.AR HAS ALLEGED THAT AO HAS DELIBERATELY IGNORED THE CONSOLIDATED PROFIT AND LOSS ACCOUNT, ALLEGATION THAT THE AO HAS SHOWN DISRESPECT OF THE FIGURES GIVEN IN THE I.T. RETURN, THE ALLEGATION THAT AO WAS OF PRE - S ET MIND FOR THE ADDITION OF RS.71,15,688/ - AND WAS NOT INTERESTED TO VERIFY THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE AO WAS NOT INTERESTED TO GO THROUGH THE BOOKS EXTENSIVELY FOR THE REASON NOT KNOWN TO THE ASSESSEE. THE FURTHER ALLEGATION WAS THAT AO HAD NOT EVEN TAKEN ENTRY IN THE OFFICIAL RECORD EVEN AFTER VERIFYING THE BOOKS OF ACCOUNT O F THE ASSESSEE FOR THE REASON THE BEST KNOWN TO AO. AFTER SO MUCH OF THE ALLEGATIONS THE LD.CIT(A) DID NOT THINK PROPER TO REBUT THE SAID SUBMISSIONS OF THE ASSESSE E TO THE AO NOR HE MADE ANY ENQUIRY UNDER HIS OWN POWERS U/S 251(4 ) OF THE ACT AND SIMPLY BY ACCEPTING THE VERSION OF THE ASSESSEE, DELETED THE ADDITION. 8. THE LD.AR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(A) AND SUBMISSIONS MADE BEFORE LD. CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS OF THE CASE. THE UNDISPUTED FACTS WITH REGARD TO GROUND NO.1 IN THE PRESENT CASE ARE THAT AS PER AO S ORDER , AO HAS ISSUED SHOW CAUSE NOTICE DATED 25 TH NOVEMBER, 2010 WHEREAS TH E LD.CIT(A) HAS GIVEN A FINDING THAT IT HAS NOT BEEN ISSUED AND SUCH A LETTER HAS NO ITA NO. 1105/KOL/2011 SHRI HIRAK NATH SOUNTH, MIDNAPORE . A.YR. 2008 - 09 4 IMPORTANCE WHEN THE ASSESSEE HAS SUBMITTED ALL THE DETAILS ON 15 TH DECEMBER, 2010. BUT THE FACT REMAINS THAT THE LD.CIT(A) HAS NOT CALLED FOR ANY REMAND REPORT FROM THE AO WITH REGARD TO SUCH DETAILS SUBMITTED ON 15.12.2010 WHICH IN FACT WERE WITHOUT ANY EVIDENCE. FROM THE PERUSAL OF LD.CIT(A) S ORDER, IT IS EVIDENT THAT NO EVIDENCE HAS BEEN PLACED ON RECORD BY THE ASSESSEE TO PROVE THAT HE QUALIFIES FOR DEDUCTION U/S 80IB( 10) OF THE ACT. THE LD.CIT(A) HAS NOT CONDUCTED ANY ENQUIRY U/S 251(4) OF THE ACT. IN SUCH A SITUATION THE LD.CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIONS SO MADE BY THE AO JUST BY REFERRING TO THE CONDITIONS MENTIONED U/S 80IB(10) OF THE ACT , NOTED F ROM THE STATUTE DOES NOT MEAN THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS. THE ASSESSEE HAS NOT P LACED ON RECORD IN PAPER BOOK ANY EVIDENCE ON RECORD BEFORE US TO PROVE THAT IN FACT SUCH EVIDENCES WERE PLACED BEFORE BOTH/ANY OF THE AUTHORITIES BELO W. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE LD.CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIONS BUT IT WILL BE IN THE INTEREST OF JUSTICE THAT THE MATTER SHOULD BE EXAMINED IN DETAIL WITH THE HELP OF THE EVIDENCES TO BE PRODUCED BY THE ASSESSEE WHIC H HAS NOT BEEN EXAMINED BY ANY OF THE AUTHORITIES BELOW AND ACCORDINGLY THE MATTER IS SET ASIDE TO THE FILE OF AO TO WHOLLY RE - EXAMINE THIS ISSUE WITH THE HELP OF THE EVIDENCES BUT BY AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROU ND NO.1 OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 9.1. AS REGARDS GROUND NO.2 THE SAME ALLEGATION WITH REGARD TO THE SHOW CAUSE DATED 25.11.2010 IS ALSO PRESENT IN THIS GROUND AND THE LD. CIT(A() HAS GIVEN A FINDING THAT SUCH A LETTER IS OF NO I MPORTANCE AS THE ASSESSEE HAS FILED THE REQUISITE DETAILS. BUT WHERE ARE THESE DETAILS. NONE OF THE DETAILS HAS BEEN PLACED ON RECORD FOR OUR PERUSAL IN THE FORM OF ANY PAPER BOOK, IN FACT NO PAPER BOOK HAS BEEN FILED BY ANY OF THE PARTIES APPEARING BEFORE US. A NUMBER OF ALLEGATIONS HAVE BEEN MADE IN THE WRITTEN SUBMISSIONS IN PARA 5.1. OF HIS ORDER AGAINST AO BUT NONE WERE REBUTTED TO THE AO. THE LD. CIT(A) CHOSE TO DELETE THE ADDITION IN TOTO WITHOUT TAKING ANY REMAND REPORT FROM THE AO OR EVEN WITHOUT MAKING ANY ENQUIRY U/S 251(4) OF THE ACT. IN SUCH CIRCUMSTANCES , THE LD.CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION. HOWEVER, THE AO HAS DISALLOWED THE TOTAL SUM OF RS.71,15,688/ - AND THEREFORE THE MATTER REQUIRES RE - EXAMINATION WITH THE HELP OF EVID ENCES AS A PROOF OF THE EXPENSES AND ACCORDINGLY THE ITA NO. 1105/KOL/2011 SHRI HIRAK NATH SOUNTH, MIDNAPORE . A.YR. 2008 - 09 5 MATTER IS SET ASIDE TO THE FILE OF AO, WHO WILL RE - EXAMINE THE ISSUE WITH THE HELP OF EVIDENCES AND DECIDE THE ISSUE DE NOVO BUT AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS GROUND NO.2 OF THE REVENUE IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO.3, BEING GENERAL IN NATURE, DOES NOT REQUIRE ANY ADJUDICATION. 11. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDE R PRONOUNCED IN THE COURT ON 09.06.2015. SD/ - SD/ - [ MAHAVIR SINGH ] [ B.P.JAIN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 09.06.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . SHRI HIRAK NATH SOUNTH, GANAPATI BOSE LANE, KAUSHALLYA, KHARAGPUR, DIS T.PASCHIM MEDINIPUR, PIN:721 301. 2 D.C.I.T., CIRCLE - 2, MIDNAPORE;. 3 . CIT(A) - XXXVI, KOLKATA 4. CIT - KOLKATA. 5. CIT - DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES