Sanjay Kumar, Hyd, Hyderabad V. ITO,Ward-11(3), Hyd, Hyderabad

ITA 1107/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2427 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 01-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 22-08-2016
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: MAHESH KUMAR RATHI; AKSHAY SURANA ARS
• Keywords: Opportunity of being heard
• Section: 142(1); 131; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1107/HYD/2016 ASSESSMENT YEAR: 2008-09 SRI SANJAY KUMAR, HYDERABAD [PAN: ACVPK2975P] VS INCOME TAX OFFICER, WARD-11(3), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI MAHESH KUMAR RATHI, & SHRI AKSHAY SURANA, ARS FOR REVENUE : SMT U. MINICHANDRAN, DR DATE OF HEARING : 01-06-2017 DATE OF PRONOUNCEMENT : 07-06-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABAD, DATED 31-05-2016. ASSESSEE HAS RAISED VARIOUS GROUNDS QU ESTIONING THE ASSESSMENT COMPLETED U/S. 144 OF THE INCOME TAX ACT [A CT] AS WELL AS ESTIMATION OF INCOME AT 5% WITH REFERENCE TO ASSESSE ES LINE OF BUSINESS. 2. BRIEFLY STATED, ASSESSEE IS IN THE BUSINESS OF MANU FACTURING AND TRADING OF WOVEN FABRICS. HE ALSO UNDERTAKES ASS EMBLING OF ELECTRICAL FANS AND RELATED JOB WORKS. ASSESSEE HA S OFFERED INCOME OF RS. 1,61,360/-. ASSESSING OFFICER (AO) BY STATING THAT ASSESSEE HAS NOT RESPONDED TO VARIOUS NOTICES, INVOKED THE PROV ISIONS OF SECTION 144 AND ESTIMATED THE INCOME AT 5% OF THE GROSS SALES TAKEN AT RS. 1,72,63,272/-. IN THE ADDITION, HE ALSO ADDED THE SUNDRY INCOME SHOWN IN THE P&L A/C TO AN EXTENT OF I.T.A. NO. 1107/HYD/2016 SRI SANJAY KUMAR :- 2 - : RS. 10,51,500/-. ASSESSEE TOOK UP THE MATTER BEFORE TH E CIT(A) AND SUBMITTED THAT AO DID NOT ACCEPT THE STATEMENTS, BOOKS OF ACCOUNT AND LIST OF SUNDRY DEBTORS ETC., AND HAS COMPLE TED THE ASSESSMENT EX-PARTE. HE ALSO MADE CERTAIN ALLEGATIONS ABOUT THE CONDUCT OF AO IN THE STATEMENT OF FACTS. LD.CIT(A), HOWE VER, REJECTED ASSESSEES CONTENTIONS FOR INVOKING THE PROVI SIONS OF SECTION 144. WITH REFERENCE TO ESTIMATION OF INCOME AT 5 % ALSO, HE HAS CONFIRMED THE ESTIMATION, BUT EXCLUDED THE SEPARAT E ADDITION OF JOB WORK CHARGES. ASSESSEE IS AGGRIEVED ON ESTIM ATION OF INCOME AT 5% REJECTING THE BOOKS OF ACCOUNT. 3. AT THE OUTSET, LD. COUNSEL SUBMITTED THAT THE ASSESSME NT ORDER WAS PASSED ON 21-12-2010, WHEREAS IN THE BODY OF THE ORDER ITSELF AO ACKNOWLEDGES THAT SUMMONS WERE ISSUED FOR AP PEARANCE ON 22-12-2010. FURTHER, IT WAS SUBMITTED THAT LD.CIT(A) DID NOT CONSIDER ASSESSEES EXPLANATION AND CONFIRMED THE EST IMATION. IT WAS SUBMITTED THAT ASSESSEE HAS MAINTAINED BOOKS OF ACCO UNT AND ESTIMATION OF INCOME WAS NOT WARRANTED. 4. LD.DR, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITI ES. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM OF THE OPINION THAT THE MATTER IS TO BE RESTORED TO THE FILE OF AO FOR F RESH EXAMINATION OF THE ASSESSMENT ITSELF. AS NOTICED FROM TH E ASSESSMENT ORDER, THE AO HAS ISSUED NOTICES ON 07-07- 2010 WHICH WAS SERVED ON 12-07-2010 TO APPEAR ON 19-07-2010. SINCE THERE IS NO RESPONSE AGAINST THAT NOTICES WERE ISSUED ON 20- 08-2010 FOR APPEARANCE ON 09-09-2010. AS THERE SEEMS TO BE NO COM PLIANCE FROM ASSESSEE, AGAIN SUMMONS WERE ISSUED FOR APPEAR ANCE ON 21-09-2010 WHICH WERE COMPLIED WITH. HOWEVER, FOR SEEKING I.T.A. NO. 1107/HYD/2016 SRI SANJAY KUMAR :- 3 - : INFORMATION, THE CASE WAS ADJOURNED TO 25-10-2010. EV EN THOUGH ASSESSEE IN THE STATEMENT OF FACTS BEFORE THE CIT(A) ST ATES THAT HE HAS PRODUCED INFORMATION, AO REFUSED TO ACKNOWLEDGE TH E SAME. AS SEEN FROM THE ORDER, THE AO ACKNOWLEDGES PARTLY TO THE EXTENT OF PRODUCTION OF INVOICES AND BILLS BUT NOT BOOKS OF ACCO UNT. THEREAFTER, AO RECORDS THAT SINCE IT IS A PENDING ASS ESSMENT, ASSESSMENT WILL BE COMPLETED TO THE BEST JUDGMENT U/S. 1 44. LATER, AO NOTES THAT SUMMONS WERE ISSUED ASKING ASSES SEE TO PRODUCE BOOKS OF ACCOUNT [AND ALSO INVOICES, BILLS A ND VOUCHERS WHICH WERE PRODUCED EARLIER] BY 22-12-2010. HOWEVER , ASSESSMENT WAS PASSED ON 21-12-2010. SINCE AO HAS SIGNED ON E ACH PAGE OF THE ORDER DATING 21-12-2010 IN HIS HAND WRITING, THE O RDER SEEMS TO HAVE BEEN PASSED, EVEN BEFORE THE ASSESSEE COULD A VAIL THE OPPORTUNITY GIVEN. 6. FOR INVOKING THE PROVISIONS OF SECTION 144, THERE S HOULD BE NON-COMPLIANCE, AS PROVIDED U/S. 144(1). THERE SHO ULD BE NON- COMPLIANCE TO THE NOTICES U/S. 142(1) OR 143(2) OR FA ILS TO MAKE THE RETURN AS PROVIDED . NON-COMPLIANCE TO SUMMONS U/S. 131 IS NOT ONE OF THE CONDITIONS FOR INVOKING THE BEST JUDGMENT AS SESSMENT. MOREOVER, ASSESSEE WAS NOT GIVEN ANY TIME TO RESPOND AS AO COMPLETED THE ASSESSMENT EVEN BEFORE THE POSTING DATE. IN THESE CIRCUMSTANCES, INVOKING THE PROVISIONS U/S. 144 DOE S NOT ARISE. NOT ONLY THAT, EVEN BEFORE INVOKING THE PROVISIONS U/S . 144, AO SHALL, AFTER GIVING ASSESSEE AN OPPORTUNITY OF BEIN G HEARD, MAKE THE ASSESSMENT. THEREFORE, SECTION MANDATES THAT ASSESSEE S HOULD BE GIVEN AN OPPORTUNITY OF BEING HEARD EVEN TO INVOKE THE PROVISIONS OF SECTION 144. NOTHING WAS DONE BY THE AO SO AS TO CO MPLETE THE ASSESSMENT UNDER THE PROVISIONS OF SECTION 144. LD.CI T(A) IN MY I.T.A. NO. 1107/HYD/2016 SRI SANJAY KUMAR :- 4 - : OPINION HAS NOT CONSIDERED THE PROVISIONS OF SECTION 144, BUT WENT ON TO CONFIRM THE ORDER STATING THAT THERE WAS A NON-CO MPLIANCE TO NOTICE U/S. 142(1). AS SEEN FROM THE ORDER OF THE AO , 142(1) NOTICE WAS ISSUED ON THE VERY FIRST OCCASION BUT LATER ON ASSE SSEE HAS COMPLIED WITH THE NOTICES. THERE SEEMS TO BE NO PENA LTY ALSO LEVIED FOR NON-COMPLIANCE TO VARIOUS NOTICES. IN THESE CIRCUMSTANCES, I AM OF THE OPINION THAT LD.CIT(A) ERR ED IN CONFIRMING THE ORDER U/S. 144. CONSIDERING THE FACTS OF THE CASE AND SUBMISSION THAT ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT AND IS IN A POSITION TO SUBSTANTIATE THE CLAIMS, I AM OF THE OPINION THAT THE ORDERS OF THE AUTHORITIES ARE TO BE SET ASIDE AND THE ASSESSMENT IS TO BE RESTORED TO THE FILE OF AO FOR FRESH EXAMINATION. ASSESSEE ALSO CONTENDS THAT ESTIMATION OF INCOME AT 5% IS NOT CORRECT IN THE LINE OF BUSINESS. AO IS DIRECTED TO C ONSIDER THE PROFIT PERCENTAGE IN THE LINE OF BUSINESS, IN CASE THE PROVI SIONS OF SECTION 144 OR 145 ARE TO BE INVOKED IN THIS CASE. ASSESSEE S HOULD BE GIVEN DUE OPPORTUNITY TO SUBSTANTIATE THE CLAIMS. THE OBSERVA TIONS OF AO AND CIT(A) AND ALLEGATIONS OF ASSESSEE SHOULD NOT PRE JUDICE THE PRESENT OR FUTURE PROCEEDINGS. WITH THESE OBSERVATIONS , GROUNDS ARE CONSIDERED ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JUNE, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 7 TH JUNE, 2017 TNMM I.T.A. NO. 1107/HYD/2016 SRI SANJAY KUMAR :- 5 - : COPY TO : 1. SRI SANJAY KUMAR, HYDERABAD. C/O. M.K. RATHI & C O., CHARTERED ACCOUNTANTS, 15-9-182/1, 1 ST FLOOR, MAHARAJGUNJ, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-11(3), HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-5, HYDERABAD . 4. THE PR. COMMISSIONER OF INCOME TAX-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.