Shri Illa Shanmukh Rao, GANDHIDHAM V. The Income Tax Officer, Ward-1, GANDHIDHAM

ITA 1172/RJT/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56656 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LD BHARTI
• Assessee Lawyers: M P SARDA
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.1172/RJT/2009 (ASSESSMENT YEAR 2006-07) SHRI ILLA SHANMUKH RAO VS ITO, WD.1 SHOP NO.7, GAYATRI COMPLEX GANDHIDHAM OCTROI NAKA, GANDHIDHAM PAN : AALPI9627E (APPELLANT) (RESPONDENT) I.T.A. NO.1192/RJT/2009 (ASSESSMENT YEAR 2006-07) ITO. WD.1 VS SHRI ILLA SHANMUKH RAO GANDHIDHAM GANDHIDHAM (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MP SARDA REVENUE BY : SHRI LD BHARTI DATE OF HEARING : 23-08-2011 DATE OF PRONOUNCEMENT : 26-08-2011 O R D E R PER N.R.S. GANESAN, JM BOTH THE APPEAL OF THE REVENUE AND THE ASSESSEE AR E DIRECTED AGAINST THE ORDER OF CIT(A)-II, RAJKOT DATED 27-10- 2009 AND PERTAIN TO THE ASSESSMENT YEAR 2006-07. SINCE BOTH THE APPEALS OF THE REVENUE AND THAT OF THE ASSESSEE ARISE OUT OF THE VERY SAME ORDER OF THE CIT(A) WE HEARD THEM TOGETHER AND DISPOSE THEM OFF BY THIS COMMON O RDER. ITA NO.1192/RJT/2009 ITA NO.1172/RJT/2009 2 ITA NO.1192/RJT/2009 2. LET US FIRST TAKE THE REVENUES APPEAL. THE ONL Y ISSUE RAISED BY THE REVENUE IS WITH REGARD TO DELETION OF RS.66,18,022 TOWARDS THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NEW ASS ET. 3. SHRI LD BHARTI, THE LD.DR SUBMITTED THAT THE ASS ESSEE HAS INTRODUCED NEW ASSET DURING THE YEAR UNDER CONSIDER ATION. THE CIT(A) WITHOUT VERIFYING THE GENUINENESS FOUND THAT THE AS SESSEE HAD SUFFICIENT FUND TO ACQUIRE THE ASSET DURING THE YEAR UNDER CON SIDERATION. REFERRING TO THE ORDER OF CIT(A), THE LD.DR SUBMITTED THAT MERE BORROWAL OF LOAN FROM THE BANKS WOULD NOT PROVE THAT THE ASSESSEE HAD PUR CHASED THE ASSET BY UTILIZING THE MONEY BORROWED FROM THE BANK. IT IS FOR THE ASSESSEE TO ESTABLISH THE NEXUS BETWEEN THE BORROWED FUNDS AND THE ASSET. THE CIT(A) FOUND FAULT WITH THE ASSESSING OFFICER FOR N OT VERIFYING THE GENUINENESS AND DELETED THE ADDITION WITHOUT MAKING ANY FURTHER INVESTIGATION. ACCORDING TO THE LD.DR, WHEN THE CI T(A) FOUND THAT PROPER ENQUIRIES WERE NOT CONDUCTED IT IS FOR THE CIT(A) T O CONDUCT FURTHER ENQUIRIES BEFORE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. 4. WE HAVE HEARD SHRI MP SARDA, THE LD.REPRESENTATI VE FOR THE ASSESSEE. SHRI MP SARDA SUBMITTED THAT THE ASSESSE E HAD SUFFICIENT ITA NO.1192/RJT/2009 ITA NO.1172/RJT/2009 3 SOURCE FOR ACQUIRING THE NEW ASSET. ACCORDING TO T HE LD.REPRESENTATIVE, THE NEW ASSET WAS TRANSFERRED FROM ONE BOOKS OF ACCOUNT TO ANOTHER BOOKS OF ACCOUNT. REFERRING TO THE ORDER OF CIT(A) AND THE ASSESSMENT THE LD.REPRESENTATIVE SUBMITTED THAT A MERE TRANSFER FR OM THE PERSONAL BOOKS OF ACCOUNT OF THE ASSESSEE TO THE BUSINESS WOULD NOT A MOUNT TO INTRODUCING NEW ASSET. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT SINCE THE ORDER OF ASSESSMENT WAS MADE U/S 144 OF THE INCOME-TAX ACT, HE MAY NOT HAVE ANY OBJECTION TO SEND BACK THE MATTER TO THE FILE O F THE ASSESSING OFFICER FOR RECONSIDERATION. 5. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS RIGHT LY SUBMITTED BY THE LD.DR, THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT MADE ANY PROPER ENQUIRY. THE CIT(A) HAS CO-TERMINUS POWER AS THAT OF THE ASS ESSING OFFICER AND THEREFORE WHEN THE CIT(A) FOUND THAT THE ASSESSING OFFICER HAS NOT MADE PROPER ENQUIRY IT IS FOR THE CIT(A) TO MAKE PROPER ENQUIRY BEFORE DELETING SUCH ADDITION. UNFORTUNATELY SUCH EXERCISE HAS NOT BEEN DONE BY THE CIT(A). MOREOVER, THE ASSESSMENT ORDER WAS PASSED U/S 144 OF THE INCOME-TAX ACT. THEREFORE, IN OUR OPINION, THE MAT TER NEEDS TO BE RECONSIDERED AS RIGHTLY SUBMITTED BY THE LD.REPRESE NTATIVE FOR THE ASSESSEE. ACCORDINGLY, THE ORDERS OF THE LOWER AUT HORITIES ARE SET ASIDE ITA NO.1192/RJT/2009 ITA NO.1172/RJT/2009 4 AND THE ISSUE OF UNACCOUNTED ASSET IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REC ONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE MATERIAL FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABL E OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO.1172/RJT/2009 6. NOW COMING TO THE ASSESSEES APPEAL, THE FIRST I SSUE IS WITH REGARD TO ESTIMATION OF GROSS PROFIT AT 8%. THE NEXT ISSU E IS WITH REGARD TO ADDITION OF RS.7,98,000 TOWARDS UNEXPLAINED CAPITAL . 7. WE HEARD THE LD.REPRESENTATIVE FOR THE ASSESSEE AND THE LD.DR. THE ASSESSING OFFICER PASSED THE ORDER U/S 144 OF THE I NCOME-TAX ACT. THE PROFIT WAS ESTIMATED AT 8% SINCE THE ASSESSEE HAS F AILED TO PRODUCE THE DOCUMENTARY EVIDENCE LIKE BOOKS OF ACCOUNT, VOUCHER S, ETC. THE CIT(A) FOUND THAT THE ASSESSEE HAS NOT PRODUCED ANY COMPAR ATIVE CASES BEFORE THE ASSESSING OFFICER. IN THE ABSENCE OF ANY MATER IAL THE CIT(A) CONFIRMED THE ESTIMATION OF PROFIT AT 8%. AS REGARDS THE UNE XPLAINED CAPITAL THE CONTENTION OF THE ASSESSEE IS THAT THE PERSONAL BAL ANCE-SHEET SHOWS THE CASH BALANCE OF RS.8,28,549 OUT OF WHICH RS.7,98,00 0 WAS TRANSFERRED AS CAPITAL IN THE PROPRIETORY BUSINESS. THE CIT(A) FO UND THAT EXCEPT THE MERE STATEMENT NO MATERIAL IS AVAILABLE TO SUPPORT THE C LAIM OF THE ASSESSEE. ITA NO.1192/RJT/2009 ITA NO.1172/RJT/2009 5 THE FACT REMAINS THAT THE ASSESSMENT ORDER WAS PASS ED U/S 144 WITHOUT HEARING THE ASSESSEE. SINCE THE MAIN ISSUE RAISED IN THE REVENUES APPEAL WAS REMANDED BACK TO THE FILE OF THE ASSESSING OFFI CER, IN OUR OPINION, THE ISSUE OF ESTIMATION OF PROFIT AT 8% AND THE CONFIRM ATION OF ADDITION OF 7.98% ALSO NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFI CER FOR THE SAKE OF CONSISTENCY. ACCORDINGLY WE SET ASIDE THE ORDER OF LOWER AUTHORITY ON THIS ISSUE AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AND DE CIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY TO THE ASSESSEE. 8. IN THE RESULT, BOTH THE APPEAL OF THE ASSESSEE A ND THE APPEAL OF THE REVENUE ARE TREATED AS ALLOWED, FOR STATISTICAL PUR POSE. ORDER PRONOUNCED IN THE OPEN COURT ON 26-08-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 26 TH AUGUST, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-II, RAJKOT 4. THE CIT-I, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT