Income Tax Officer, Ward 1(2)(3), Surat V. M/s. Nityanand Synthetics, Surat

ITA 125/SRT/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8150 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 27-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURESH K KABRA
• Assessee Lawyers: O P VAISHNAV
• Keywords: Opportunity of being heard; Additional evidence; Corroborative evidences; Set aside
• Section: 143(3); 142(1); 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM ./ITA NO.125/SRT/2018 ( [ [ / ASSESSMENT YEAR: (2014-15) (VIRTUAL COURT HEARING) THE INCOME TAX OFFICER, WARD-1(2)(3), SURAT. V S. M/S NITYANAND SYNTHETICS, 518, TRADE CENTRE, B/H ASHOKA TOWER, RING ROAD, SURAT. ./ ./ PAN/GIR NO.: AACFM 6805 A (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI SURESH K.KABRA - CA RESPONDENT BY : SHRI O.P.VAISHNAV CIT(DR) / DATE OF HEARING : 16/06/2021 /DATE OF PRONOUNCEMENT : 24/08/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: CAPTIONED APPEAL FILED BY THE REVENUE, PERTAINING TO ASSESSMENT YEAR (A.Y.) 2014-15, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-2, SURAT, DATED 27.12.2017 WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT], DATED 30.12.2016. 2. GRIEVANCES RAISED BY THE REVENUE ARE AS FOLLOWS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE LD CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 RS.29,92,28,210/- WITHOUT APPRECIATING THE FACTS THAT THE ASSESSING OFFICER REJECTED BOOKS OF ACCOUNTS OF THE ASSESSEE SINCE PURCHASE, SALES CREDITORS AND DEBTORS REMAINED UNVERIFIABLE? PAGE | 2 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE LD CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF RS. 29,92,28,210/- WITHOUT APPRECIATING THE FACTS THAT PURCHASE AND SALES CREDITORS AND DEBTORS REMAINED UNVERIFIABLE AND THE ASSESSEE FAILED TO ESTABLISH THE IDENTITIES OF THE SAME? 3. WHETHER ON THE FACT AND CIRCUMSTANCES OF CASE AND IN LAW, THE LD CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER, ON RELYING BOOKS OF ACCOUNTS SUBMITTED BEFORE HIM AND NOT PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER THEREBY VIOLATING PROVISIONS OF RULE 46A OF THE INCOME TAX RULES? 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE LD CIT(A) IS JUSTIFIED IN DELETING ADDITION MADE BY THE AO OF COMMISSION INCOME OF RS. 1,19,69,128/- WITHOUT APPRECIATING FACTS THAT THE AO RIGHTLY ESTIMATED PROFIT ON THE TURNOVER OF THE ASSESSEE KEEPING IN VIEW OF NATURE OF BUSINESS? 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 6. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT ASSESSING OFFICE MAY BE RESTORED TO THE ABOVE EXTENT. 3.AT THE OUTSET ITSELF, SHRI O.P.VAISHNAV, LEARNED DR FOR THE REVENUE, PLEADS THAT IN ASSESSEE`S CASE, ASSESSIG OFFICER HAS ISSUED SEVERAL NOTICES, THE DETAILS OF THESE NOTICES ARE MENTIONED IN THE ASSESSMENT ORDER, THE ASSESSEE DID NOT SUBMIT THE DETAILS ON TIME. HE FURTHER ARGUES THAT ONLY A CERTAIN INCOMPLETE DETAILS WERE SUBMITTED BEFORE THE ASSESSING OFFICER, AT THE FLAG END, THEREFORE THE ASSESSING OFFICER DID NOT GET SUFFICIENT OPPORTUNITY TO VERIFY DOCUMENTS AND EVIDENCES. HE FURTHER CONTENDS THAT LD CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER, BY ACCEPTING ADDITIONAL EVIDENCE OF NPA DETAILS/LETTER FROM AXIS BANK CANCELLING THE CREDIT FACILITIES, AND NOT PROVIDING OPPORTUNITY TO THE ASSESSING PAGE | 3 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS OFFICER, THEREBY VIOLATING PROVISIONS OF RULE 46A OF THE INCOME TAX RULES. THE ASSESSEE SUBMITTED ( LETTER FROM AXIS BANK CANCELLING THE CREDIT FACILITIES ) AS AN ADDITIONAL EVIDENCE BEFORE THE LD CIT(A), HOWEVER, THIS ADDITIONAL EVIDENCE WAS NOT PROVIDED TO THE ASSESSING OFFICER FOR HIS COMMENTS. THEREFORE, LD DR PRAYED THE BENCH THAT MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION. 4. ON THE OTHER HAND, SHRI S.K.KABRA, LEARNED COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, SUBMITTED THAT DURING THE ASSESSMENT STAGE, THE ASSESSEE HAS SUBMITTED THE REQUIRED DOCUMENTS AND EVIDENCES, THEREFORE MATTER SHOULD NOT BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. SHRI S.K.KABRA, FURTHER SUBMITTED THAT DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS SUBMITTED BEFORE THE LD CIT(A) ONLY A LETTER OF M/S AXIS BANK, WHEREIN M/S AXIS BANK HAS CANCELLED THE CREDIT FACILITIES, SANCTIONED TO ASSESSEE. THIS LETTER SHOULD NOT BE TREATED AS AN ADDITIONAL EVIDENCE. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. FIRST, WE SHALL DEAL WITH THE GRIEVANCES OF LD DR FOR THE REVENUE. THE LD DR FOR THE REVENUE HAS RAISED TWO GRIEVANCES, NAMELY: (1) ASSESSING OFFICER DID NOT GET SUFFICIENT OPPORTUNITY TO VERIFY THE DOCUMENTS AND EVIDENCES SUBMITTED BY THE ASSESSEE. (2) AS PER GROUND NO.3 RAISED BY REVENUE, THE LEARNED CIT(A) HAS ADMITTED ADDITIONAL EVIDENCES, THUS VIOLATED THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES. 6. SO FAR FIRST GRIEVANCE OF LD DR IS CONCERNED, WHEREIN HE STATED THAT ASSESSING OFFICER DID NOT GET SUFFICIENT OPPORTUNITY TO VERIFY THE DOCUMENTS AND EVIDENCES SUBMITTED BY THE ASSESSEE. WE NOTE THAT DURING THE ASSESSMENT STAGE , IN ORDER TO COLLECT THE DOCUMENTS AND EVIDENCES, TO DO THE SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER HAS ISSUED FOLLOWING NOTICES: PAGE | 4 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS (I)NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER ON 19.09.2015 AND DULY SERVED UPON THE ASSESSEE BY RPAD ON 18.09.2015, HOWEVER, NO COMPLIANCE WAS MADE BY ASSESSEE. (II) ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 142(1) OF THE INCOME TAX ACT, 1961, WITH DETAILED QUESTIONNAIRES ON 29.08.2016 AND DULY SERVED UPON THE ASSESSEE. HOWEVER, THE ASSESSEE NEITHER ATTENDED THE OFFICE OF THE ASSESSING OFFICER NOR SUBMITTED ANY REPLY. (III)THEREAFTER, ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 142(1) OF THE ACT ON 03.10.2016, FIXING THE HEARING ON 11.10.2018, BUT THERE WAS NO COMPLIANCE FROM THE ASSESSEE. (IV)THE ASSESSING OFFICER AGAIN ISSUED NOTICE ON 11.11.2016 FIXING THE OUT OF HEARING ON 17.11.2016, BUT THERE WAS NO COMPLIANCE FROM THE ASSESSEE AND SAID NOTICE RETURNED BACK WITH A REMARK BY THE POSTAL DEPARTMENT LEFT. (V)THEN AFTER, ASSESSING OFFICER HAS SENT NOTICE THROUGH EMAIL, I.E. NOTICE WAS SERVED THROUGH EMAIL, ON THE EMAIL ADDRESS PROVIDED IN THE RETURN OF INCOME AND SUCH EMAIL WAS ALSO SERVED ON THE ASSESSEE, BUT THERE WAS NO COMPLIANCE FROM THE ASSESSEE. (VI) THEN AFTER THE ASSESSING OFFICER APPOINTED WARD INSPECTOR TO SERVE NOTICE BY AFFIXTURE, THE NOTICE WAS SERVED BY AFFIXATION BY THE WARD INSPECTOR, VIDE PANCHANAMA DATED 11.11.2016, BUT THERE WAS NO COMPLIANCE FROM THE ASSESSEE. . 7. WE NOTE THAT THIS ATTITUDE OF THE ASSESSEE, NOT TO RESPOND THE NOTICES OF THE ASSESSING OFFICER, CLEARLY SHOWS THAT ASSESSEE DID NOT WANT TO GIVE TIME, TO THE ASSESSING AUTHORITY TO COMPLETE THE ASSESSMENT PROCEEDINGS, ON TIME. THIS ALSO SHOWS THAT ASSESSEE DOES NOT RESPECT THE LAW. PAGE | 5 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS 8. SINCE THE ASSESSEE HAS FAILED TO SUBMIT REQUIRED DETAILS AND EVIDENCES WITHIN TIME SPECIFIED IN THE NOTICES, THEREFORE, ASSESSING OFFICER HAS AGAIN ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE ON 21.11.2016 FIXING THE HEARING ON 05.12.2016. IN RESPONSE TO THE ABOVE NOTICE, THE ASSESSEE THROUGH SHRI S.K.KABRA & CO., SUBMITTED THE REPLY, VIDE LETTER DATED 18.11.2016, RECEIVED BY THE ASSESSING OFFICER ON 22.11.2016, WITHOUT ANY SUPPORTING EVIDENCES. THEREFORE, ASSESSING OFFICER NOTED THAT ASSESSEE HAS NOT EVEN BOTHERED TO FURNISH ANY DETAILS AS CALLED FOR VIDE QUESTIONNAIRE AND NOTICE UNDER SECTION 142(1) OF THE ACT DATED 13.06.2016. 9. LOOKING TO THE INTENTION OF THE ASSESSEE TO AVOID COMPLIANCE OF NOTICES, AGAIN A SHOW CAUSE NOTICE WAS ISSUED ON 09.12.2016 AND SERVED ON THE ASSESSEE THROUGH EMAIL. IN RESPONSE TO THE ABOVE NOTICES, SHRI S.K.KABRA, CA OF THE ASSESSEE ATTENDED AND SUBMITTED INCOMPLETE / INACCURATE DETAILS ON 13.12.2016. THE ASSESSING OFFICER NOTED THAT IN THE SUBMISSION IN POINT NO.7, THE AR STATED AS UNDER: THE COPY OF AUDITED STATEMENTS WITH AUDITORS REPORT AND ITR-V ACKNOWLEDGMENT AND CTI FOR THE F.Y.-2013-14 IN THE CASE OF THE ASSESSEE IN ENCLOSED HEREWITH (ANN-C). THE ASSESSING OFFICER NOTED THAT IN THE ANN-C, DETAILS WERE SUBMITTED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2013-14 NOT RELEVANT TO THE ASSESSMENT YEAR 2014-15, UNDER CONSIDERATION. 10. HOWEVER, THE ASSESSEE HAS SUBMITTED SOME DETAILS FIRST TIME ON 13.12.2016, WHEN 17 DAYS ARE LEFT TO FINALIZE THE ASSESSMENT AND THESE DETAILS, AS PER ASSESSING OFFICER CONTAIN INCORRECT INFORMATION. THEREFORE, ASSESSING OFFICER HAS NOTED THAT ASSESSEE DID NOT WANT TO GIVE TIME TO THE ASSESSING AUTHORITY TO VERIFY AND EXAMINE THE DETAILS FURNISHED BY THE ASSESSE. 11. THE ASSESSING OFFICER THEN PROCEEDED WITH WHATEVER THE DETAILS FURNISHED BY THE ASSESSEE AND NOTED THAT PURCHASE BILLS WERE IN THE SAME PATTERN FONT SIZE AND PAGE | 6 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS THUS, HE NOTED THAT THESE PURCHASE BILLS SEEMS TO BE FABRICATED VIDE ASSESSMENT ORDER PARA NO.4.3, PAGE NO.4 TO 7 OF THE ASSESSMENT ORDER. 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ALSO APPOINTED INSPECTOR TO ENQUIRY THE BUSINESS ACTIVITY OF PURCHASE PARTY IN THEIR BUSINESS ADDRESS UNDER SECTION 142(2) OF THE ACT. THE WARD INSPECTOR VIDE HIS REPORT DATED 26.12.2016 REPORTED THAT NO BUSINESS ACTIVITY IS GOING ON IN THE BUSINESS PREMISES OF THE FOUR (04) PARTIES AS MENTIONED BY THE ASSESSING OFFICER IN HIS ORDER PAGE NO.8. THE LD.ASSESSING OFFICER ALSO QUOTED THE REPORT OF WARD INSPECTOR IN HIS ASSESSMENT ORDER WHICH READS AS FOLLOWS: AS DIRECTED, I HAVE VISITED THE PREMISES OF THE M/S. NITYANAND SYNTHETICS AT 518, TRADE CENTRE, RING ROAD, SURAT. THE PREMISES OF THE ASSESSEE FOUND CLOSED. WHEN ENQUIRED FROM THE NEIGHBOR SHOP/OFFICE AT TRADE CENTRE IT IS GATHERED THAT THE SHOP IS CLOSED SINCE LONG AND NOBODY OPEN THE SHOP. IT IS ALSO GATHERED THAT THE ASSESSEE FIRM WAS ENGAGED IN THE BUSINESS OF SAREES AND DUE TO UNKNOWN REASON HE IS NOT OPENING THE SHOP. 13.THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION, THEREFORE AN OPPORTUNITY OF BEING HEARD WAS AFFORDED TO THE ASSESSEE BY ISSUING THE FINAL SHOW CAUSE NOTICE DATED 27.12.2016 THE GIST OF THE SHOW CAUSE NOTICE IS REPRODUCED BELOW: IN CONNECTION WITH THE ASSESSMENT PROCEEDINGS FOR THE A.Y.2014-15 FOLLOWING NOTICES WERE ISSUED: NOTICE U/S.143(2) OF THE I T ACT DATED 19.09.2015. NOTICE U/S.142(1) OF THE I T ACT DATED 13.06.2016. NOTICE U/S.142(2) OF THE I T ACT DATED 29.08.2016. NOTICE U/S.142(1) OF THE I T ACT DATED 03.10.2016. SHOW CAUSE NOTICE DATED 11/11/2016. HOWEVER, YOU HAVE NOT COMPLIED ANY OF THE NOTICES EXCEPT REPLY (RECEIVED ON 22/11/2016) OF SHOW CAUSE NOTICE DATED 11/11/2016 THAT TO WITHOUT ANY SUPPORTING EVIDENCES. FURTHER NO COMPLIANCE WAS MADE ON SHOW CAUSE NOTICE ISSUED ON 21/11/2016 AND 09/12/2016. THEREAFTER YOUR FIRST SUBMISSION RECEIVED BY THIS OFFICE AT THE LAST MOMENT I.E. ON 13/12/2016, WHEN 17 DAYS ARE LEFT FOR COMPLETION OF SCRUTINY ASSESSMENT. YOUR DELAYED SUBMISSION ONLY CONNOTES NOT GIVING TIME AND OPPORTUNITY TO ENQUIRE AND VERIFY YOUR SUBMISSION. PAGE | 7 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS 3. FURTHER, ON VERIFICATION OF YOUR AUDIT REPORT IT IS SEEN THAT YOU WERE ENGAGED IN THE BUSINESS OF TRADING OF GREY CLOTH AND YARN. HOWEVER, ON GOING THROUGH THE TRADING ACCOUNT IT IS SEEN THAT YOU HAVE MADE TOTAL PURCHASES OF RS.59,90,55,182/-. ON GOING THROUGH THE BILLS OF PURCHASE AS SUBMITTED BY YOU IT IS SEEN THAT IN THE BILLS ONLY RATE AND AMOUNTS WERE MENTIONED BUT QUANTITY WAS NOT MENTIONED. IT IS NOT POSSIBLE THAT BILLS WERE RAISED WITHOUT MENTIONING QUANTITY. YOU HAVE ALSO NOT PROVIDED THE QUANTITATIVE DETAILS OF STOCKS. 4. YOU HAVE ALSO NOT PROVIDED THE MODE OF TRANSPORTATION OF GOODS TRADED. ON BEING ASKED TO PRODUCE TRANSPORTATION BILLS, TRUCK NO. ETC, YOU HAVE STATED THAT SUPPLIER PARTIES HAVE DIRECTLY SUPPLIED THE GOODS TO THE PARTIES TO WHOM GOODS WERE SOLD. YOUR ABOVE SUBMISSION WAS NOT FOUND TO BE NOT SATISFACTORY AS NO EVIDENCES IN THIS REGARD HAS BEEN PRODUCED. 5. ON BEING ASKED ABOUT THE BANK DETAILS IN WHICH PAYMENT FOR PURCHASES WERE MADE AND SALE PROCEEDS WERE RECEIVED. YOU HAVE SUBMITTED THAT THERE IS NO TRANSACTIONS THROUGH BANK, YOU HAVE PURCHASED FROM OUTSTANDING DEBTORS AND SOLD TO THE OUTSTANDING CREDITORS. THIS FACT IS ALSO NOT FOUND TO BE GENUINE AS NO EVIDENCES WERE PRODUCED IN THIS REGARDS. 6. IN VIEW OF THE ABOVE AND MATERIAL AVAILABLE ON RECORD IT IS CLEAR THAT YOU HAVE NOT TRADED AS CLAIMED BY YOU ACTED AS A BROKER AND EARNED COMMISSION INCOME. IN VIEW OF THE ABOVE FACTS/OBSERVATION, YOU ARE REQUESTED TO SUBMIT THE DETAILS TO SUBSTANTIATE YOUR CLAIM. HEARING FOR YOUR CASE IS FIXED ON 29/12/016 AT 04.30 P.M.. IN CASE OF NON-COMPLIANCE, IT SHALL BE PRESUMED THAT YOU ARE NOT IN POSSESSION OF ANY SUPPORTING EVIDENCES; ACCORDINGLY TOTAL INCOME INCLUDING COMMISSION INCOME WILL BE ASSESSED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. PLEASE TREAT THIS LETTER AS FULL & FINAL OPPORTUNITY AND NO FURTHER OPPORTUNITY SHALL BE PROVIDED WHICH MAY PLEASE BE NOTED. 14. IN RESPONSE TO THE ABOVE FINAL SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED REPLY ON 29.12.2016 AT 7 P.M. AND THEREAFTER ON NEXT DAY ON 30.12.2016, THE ASSESSING OFFICER HAS FRAMED THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT. THEREFORE, THE ABOVE EVENTS NARRATED ABOVE CLEARLY SHOW THAT ASSESSING OFFICER DID NOT GET OPPORTUNITY TO VERIFY THE TRANSACTIONS OF THE ASSESSEE. BESIDES, THE ASSESSEE ALSO DID NOT GET PROPER OPPORTUNITY TO DISCHARGE ITS OWNS TO PROVE THE GENUINENESS OF THE TRANSACTIONS. THEREFORE, WE FIND MERIT IN THE SUBMISSIONS OF LD DR THAT ASSESSEE HAS NOT DISCHARGED THE ONUS CASTED UPON HIM BY THE LAW, AND IN FACT, THE ASSESSEE DID NOT GET OPPORTUNITY TO PLEAD HIS CASE SUCCESSFULLY BEFORE THE ASSESSING OFFICER. WE NOTE THAT HONBLE (THREE JUDGE BENCH) OF THE HONBLE SUPREME COURT IN TIN BOX COMPANY VS. CIT (2001) 249 ITR 216 (SC) HAS HELD AS UNDER: IT IS UNNECESSARY TO GO INTO GREAT DETAIL IN THESE MATTERS FOR THERE IS A STATEMENT IN THE ORDER OF THE TRIBUNAL, THE FACT-FINDING AUTHORITY, THAT READS THUS : PAGE | 8 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUBMISSION THAT THE INCOME-TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. THAT THE ASSESSEE COULD HAVE PLACED EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNAL IS REALLY OF NO CONSEQUENCE FOR IT IS THE ASSESSMENT ORDER THAT COUNTS. THAT ORDER MUST BE MADE AFTER THE ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF SETTING OUT HIS CASE. WE, THEREFORE, DO NOT AGREE WITH THE TRIBUNAL AND THE HIGH COURT THAT IT WAS NOT NECESSARY TO SET ASIDE THE ORDER OF ASSESSMENT AND REMAND THE MATTER TO THE ASSESSING AUTHORITY FOR FRESH ASSESSMENT AFTER GIVING TO THE ASSESSEE A PROPER OPPORTUNITY OF BEING HEARD. TWO QUESTIONS WERE PLACED BEFORE THE HIGH COURT, OF WHICH THE SECOND QUESTION IS NOT PRESSED. THE FIRST QUESTION READS THUS : 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN NOT SETTING ASIDE THE ASSESSMENT ORDER IN SPITE OF A FINDING ARRIVED AT BY IT THAT THE INCOME-TAX OFFICER HAD NOT GIVEN A PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE ? IN OUR OPINION, THERE CAN ONLY BE ONE ANSWER TO THIS QUESTION WHICH IS INHERENT IN THE QUESTION ITSELF : IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. THE APPEALS ARE ALLOWED. THE ORDER UNDER CHALLENGE IS SET ASIDE. THE ASSESSMENT ORDER, THAT OF THE COMMISSIONER (APPEALS) AND OF THE TRIBUNAL ARE ALSO SET ASIDE. THE MATTER SHALL NOW BE REMANDED TO THE ASSESSING AUTHORITY FOR FRESH CONSIDERATION, AS AFORESTATED. 15. WE ALSO NOTE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. IN ITA NO. 525/2014 DATED 11.03.2015 WHEREIN AFTER NOTICING INADEQUATE ENQUIRY BY AUTHORITIES BELOW HAVE HELD AS UNDER: 41. WE ARE INCLINED TO AGREE WITH THE CIT(APPEALS), AND CONSEQUENTLY WITH ITAT, TO THE EXTENT OF THEIR CONCLUSION THAT THE ASSESSEE HEREIN HAD COME UP WITH SOME PROOF OF IDENTITY OF SOME OF THE ENTRIES IN QUESTION. BUT, FROM THIS INFERENCE, OR FORM THE FACT THAT THE TRANSACTIONS WERE THROUGH BANKING CHANNELS, IT DOES NOT NECESSARILY FOLLOWING THAT SATISFACTION AS TO THE CREDITWORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIONS IN QUESTION WOULD ALSO HAVE BEEN ESTABLISHED. 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OBLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT(APPEALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACT OF THE ALLEGATIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED PAGE | 9 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION148 ISSUED BY THE AO, AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A 'FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250(4). HIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CIT(APPEALS), CANNOT BE APPROVED OR UPHELD.' 16. IN VIEW OF THE AFORESAID ORDER AND IN THE LIGHT OF THE HONBLE SUPREME COURTS DECISION IN TIN BOX COMPANY (SUPRA) AND TAKING INTO CONSIDERATION THE FACTS OF THE ASSESSEE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AO FOR DE NOVO ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 17. THE SECOND GRIEVANCE OF LD DR IS THAT DURING THE APPELLATE PROCEEDINGS, LD.CIT(A) HAS VIOLATED THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES AND DID NOT PROVIDE OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE STATUS OF NPA BANK (AXIS BANK) ACCOUNT OF THE ASSESSEE. THE ASSESSEE FILED BEFORE THE LD CIT(A) A LETTER SHOWING CANCELLATION OF CREDIT FACILITIES BY THE AXIS BANK, VIDE LETTER NO.AXIS/SA/BR/2013-14/168, DATED 24.01.2014 OF AXIS BANK. THE AXIS BANK HAS RECALLED/CANCELLED THE CREDIT FACILITIES SANCTIONED TO THE ASSESSEE. THIS IS AN ADDITIONAL EVIDENCE, AS THE LD CIT(A) TOOK THE BASE OF SAID LETTER TO ADJUDICATE THE ISSUE, STATING THAT SINCE CREDIT FACILITIES WERE CANCELLED BY THE AXIS BANK AND THEREFORE ASSESSEE HAS SETTLED THE SUNDRY CREDITORS WITH SUNDRY DEBTORS. THE ASSESSING OFFICER HAS NOT BEEN GIVEN OPPORTUNITY TO VERIFY THE CONTENTS OF THE SAID LETTER (AXIS BANK), HENCE THERE IS VIOLATION OF THE PROVISIONS OF RULE 46A OF THE RULES. WE NOTE THAT ASSESSEE HAS PROVIDED THIS NPA DETAILS, FIRST TIME BEFORE THE LD.CIT(A) AND LD.CIT(A) WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE NPA STATUS, HAS ADJUDICATED THE ISSUE INVOLVED IN ASSESSEE`S APPEAL. AS PER THIS LETTER(AXIS BANK), WE NOTE THAT ASSESSEE HAS HYPOTHECATED ENTIRE CURRENT ASSETS OF THE FIRM INCLUDING STOCK-IN -TRADE, SUNDRY DEBTORS AND OTHER CURRENT ASSETS. THE LD COUNSEL FOR THE ASSESSEE INFORMED THE BENCH THAT ASSESSEE HAS SETTLED THE SUNDRY CREDITORS WITH SUNDRY DEBTORS WITHOUT SELLING ANY GOODS. HOWEVER, WE NOTE THAT SUNDRY DEBTORS HAVE BEEN HYPOTHECATED TO THE BANK THEREFORE, HOW THE BANK HAS PAGE | 10 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS ALLOWED THE ASSESSEE TO SETTLE THE SUNDRY CREDITORS ACCOUNT WITH SUNDRY DEBTORS ACCOUNTS. THUS, THESE ASPECTS HAVE NEVER BEEN EXAMINED BY THE ASSESSING OFFICER. HAD THIS NPA INFORMATION BEEN PROVIDED TO THE ASSESSING OFFICER, THE ASSESSING OFFICER WOULD HAVE SUMMONED TO THE AXIS BANK UNDER SECTION 131(1) OF THE ACT TO VERIFY THE STATUS OF THE BANK ACCOUNT AND OTHER INFORMATION LIKE, WHETHER STOCK-IN- TRADE, SUNDRY DEBTORS ETC, WERE HYPOTHECATED TO BANK AND BANK DOES NOT HAVE ANY OBJECTION TO SETTLE THE DEBTORS ACCOUNTS WITH CREDITORS ACCOUNTS. THE ASSESSEE HAS NOT FILED THE LIST OF SUNDRY DEBTORS AND CREDITORS BEFORE ASSESSING OFFICER, FOR HIS EXAMINATION THAT SUNDRY CREDITORS WERE SETTLED WITH SUNDRY DEBTORS, THAT IS, WHEREIN THE TRANSACTION GOT SETTLED. THE PREVIOUS YEARS` DEBTORS AND CREDITORS LIST WERE NOT AVAILABLE BEFORE THE ASSESSING OFFICER TO VERIFY THE GENUINENESS OF TRANSACTIONS BETWEEN THE DEBTORS AND CREDITORS. HENCE, LD.CIT(A) HAS VIOLATED THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, THEREFORE ON THIS COUNT ALSO THE MATTER SHOULD BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE-NOVO ADJUDICATION. 18. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR DE NOVO ASSESSMENT AND TO DECIDE THE MATTER IN ACCORDANCE TO LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 19. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER IS PRONOUNCED IN THE OPEN COURT ON 24/08/2021 BY PLACING THE RESULT ON THE NOTICE BOARD AS PER RULE 34(5) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULE 1963. SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT / / DATE: 24/06/2021 / SGR COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. PR.CIT 5. DR/AR, ITAT, SURAT 6. GUARD FILE PAGE | 11 ITA NO.125/SRT/2018 FOR A.Y. 2014-15 M/S.NITYANAND SYNTHETICS BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR/SR. PS/PS ITAT, SURAT