Shri Govind Gopal Goyal, Surat V. The Income Tax Officer, Ward-3(3), Surat

ITA 1280/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 1912 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 16-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINIVAS T BIDARI
• Keywords: Unexplained expenditure; Business income; Search and seizure; Opportunity of being heard; Period of limitation; Additional evidence; Corroborative evidences; Revised return; Reason to believe; Reassessment proceedings
• Section: 148; 144; 69C; 139; 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCHES, SURAT BEFORE: SHR I AMARJIT SINGH , ACCOUNTANT MEMBER AND MS. MADHUMITA ROY , JUDICIAL MEMBER SHRI GOVIND GOPAL GOYAL, 403, PARTH APARTMENT, CITY LIGHT ROAD, SURAT - 395007 PAN: AQXPG1260B (APPELLANT) VS THE IT O , WARD - 3(3)[NEW WARD - 1(3) (2) ] , SURAT (RESPONDENT) REVENUE BY : S H RI SRINIVAS T. BID ARI , D . R. ASSESSEE BY: SHRI RAMESH MALPANI, A.R. DATE OF HEARING : 19 - 11 - 2 018 DATE OF PRONOUNCEMENT : 20 - 12 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESS EE S APPEAL FOR A. Y. 2011 - 12 , ARI SES FROM ORDER OF THE CIT(A) - II, SURAT DATED 14 - 03 - 2 016 , IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE VALIDITY OF THE PROCEEDINGS INITIATED U/S. 147/148 OF THE I.T. ACT, 1961 (THE ACT) AND THE CONSEQUENT ASSESSMENT ORDER PASSED U/S. 143( 3) R.W.S. 147 OF THE ACT IN THE HANDS OF THE APPELLANT. THE APPELLANT PRAYS FOR QUASHING THESE PROCEEDINGS AND CONSEQUENT ASSESSMENT ORDER PASSED IN HIS CASE AS WRONG AND BAD - IN - LAW AB INITIO. 2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT (A) HAS ERRED IN UPHOLDING THE VALIDITY OF THE ASSESSMENT ORDER PASSED BY ID. AO U/S. 143(3) R.W.S. 147 OF THE ACT IN THE CASE OF THE APPELLANT. THE APPELLANT PRAYS FOR QUASHING THE SAME AS WRONG AND BAD - IN - LAW. 3) A ) WITHOUT PREJUDICE TO OTHER GROUNDS OF APPEAL, THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT (A) HAS ERRED IN UPHOLDING I T A NO . 1280 / A HD/20 16 A SS ESSMENT YEAR 2011 - 12 I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 2 T HE ADDITION OF RS. 13,11,73,783/ - ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S. 69C OF THE AC T, SOLELY ON THE BASIS OF INFORMATION OF UNDERVALUATION OF IMPORTS RECEIVED FROM THE DIRECTORATE OF REVENUE INTELLIGENCE (DRI) WITHOUT ANY INDEPENDENT OR COGENT FINDINGS OF ANY SUCH UNDERVALUATION AND DIFFERENTIAL PAYMENTS BY THE APPELLANT. B) WITHOUT PREJ UDICE TO ABOVE, THAT EVEN IF THE IMPUGNED UNDERVALUATION OF IMPORTS I S ASSUMED FOR A MOMENT, THEN ALSO THE SOURCE OF THE DIFFERENTIAL PAYMENTS FOR SUCH UNDER VALUATION ARE VERY MUCH EVIDENT FROM THE INFORMATION OF DRI AND THE ASSESSMENT ORDER PASSED BY ID. AO I.E.' CORRESPONDING DIFFERENTIAL SALES REALIZATIONS. THUS, WHEN THE SOURCE OF IMPUGNED UNDERVALUATION OF IMPORTS AND CONSEQUENT DIFFERENTIAL PAYMENTS (I.E. CORRESPONDING DIFFERENTIAL SALES REALIZATIONS) HAS BEEN CLEARLY ACCEPTED AND ASSESSED IN THE ASS ESSMENT ORDER ITSEL F, ADDITION OF RS. 13,11,73,783/ - U/S 69C OF THE ACT IS CLEARLY WRONG, INCORRECT AND UNJUSTIFIED. 4) WITHOUT PREJUDICE TO OTHER GROUNDS OF APPEAL, THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ID. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 1,00,69,710/ - BEING PRESUMPTIVE PROFIT FROM ESTIMATED SALES. 5) THAT THE ID. CIT (A) HAS ERRED IN UPHOLDING THE CHARGING OF INTEREST U/S. 234A/234B/234C/234D OF THE ACT. 3. DURING THE COU RSE OF APPELLATE PROCEEDINGS BEFORE ITAT, THE ASSESSEE VIDE LETTER DATED 26 TH MARCH, 2018 HAS ALSO APPLIED FOR ADMITTING ADDITIONAL GROUND OF APPEAL WHICH IS REPRODUCED AS UNDER: - '(7) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW ON TH E SUBJECT, THE INITIATION OF THE PROCEEDINGS U/S 147/148 OF THE ACT IN THIS CASE BY ISSUING THE NOTICE U/S 148 ON 16/01/2013 AND CONSEQUENT ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF THE ACT ARE WRONG, INVALID AND BAD - IN - LAW AB INITO BECAUSE THE ASSE SSMENT PROCEEDING INITIATED U/S 142(1) OF THE ACT BY ID. AO ON 01/12/2011 WAS ALREADY PENDING ON THE DATE OF ISSUANCE OF NOTICE U/S 148 OF THE ACT AND WAS NOT COMPLETED AND CONSEQUENTLY, AS PER SETTLED LAW, THE WHOLE OF THE PROCEEDING U/S 147/148 OF THE AC T INITIATED DURING THE PENDENCY OF THE ASSESSMENT PROCEEDINGS U/S 142(1) R.W.S 143/144 OF THE ACT IS WRONG, INVALID AND BAD IN LAW. APPELLANT PRAYS FOR QUASHING THE SAME.' 4. HOWEVER, DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE HAS OBJECTED TO THE ADDITIONAL GROUND OF APPEAL FILED BY THE ASSESSEE. THE OBJECTION OF THE LD. DEPARTMENTAL REPRESENTATIVE IS REPRODUCED AS UNDER: - MAY IT PLEASE YOUR HONOUR: THESE OBJECTIONS ARE BEING FILED ON BEHALF OF THE REVENUE TO OP POSE THE REQUEST MADE BY THE ASSESSEE SEEKING ADMISSION OF ADDITIONAL GROUND OF APPEAL FOR THE FIRST TIME BEFORE THE HON'BLE ITAT VIDE HIS APPLICATION DATED 26.03.2018. BY WAY OF ADDITIONAL GROUND, THE APPELLANT SEEKS TO CHALLENGE THE ISSUE OF NOTICE U/S. 148 OF THE ACT DURING THE PENDENCY OF ASSESSMENT PROCEEDINGS U/S. 142(1) OF THE ACT AND THEREBY SEEKING TO QUASH THE ASSESSMENT PROCEEDINGS U/S. 148 OF THE ACT. 1. THE CASE OF THE REVENUE BEFORE THE HON'BLE BENCH IS; A) THE ADDITIONAL GROUND WHICH HAS BEEN RAISED BEFORE THE HON'BLE BENCH WITHOUT ADDUCING ANY REASONS OR EXPLAINING THE CAUSES AS TO BY THE AFORESAID GROUND OF APPEAL IS BEING TAKEN FOR THE FIRST TIME BEFORE THE HON'BLE BENCH. I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 3 B) THE ASSESSEE HAS NOT SUPPORTED THE FILING OF ADDITIONAL GROUND OF APPEAL BY FILING AN AFFIDAVIT UNDER RULE 10 OF ITAT RULES AND THE ASSESSEE CANNOT BE ALLOWED TO RAISE SUCH ADDITIONAL GROUND IN MECHANICAL MANNER. C) IN THE APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE APPELLANT HAD CHALLENGED THE VALIDITY OF PROCE EDINGS U/S. 147/148 OF THE ACT WHICH WAS DULY DEALT WITH AND DISMISSED BY THE QT(A). THE ASSESSEE HAS ALREADY CHALLENGED THE SAME IN THE GROUND OF APPEAL NO. 1 & 2 AS PER APPEAL MEMO IN FORM NO. 36. D) THE ADDITIONAL GROUND RAISED BY THE APPELLANT NOW, DOE S NOT ARISE FROM THE FACTS AS FOUND BY THE AUTHORITIES BELOW I.E. AO AND THE CIT(A). HENCE, AS PER DECISION OF HON'BLE SUPREME COURT IN THE CASE OF NTPC VS. CIT 229 ITR 383 (1998), THE HON'BLE BENCH MAY NOT LIKE TO USE ITS DISCRETION TO MAY NOT ALLOW SUCH NEW GROUND WHICH DOES NOT ARISE FROM THE FACTS AVAILABLE WITH THE LOWER AUTHORITIES. (E) 'HE WHO SEEKS EQUITY MUST DO EQUITY.' THIS MAXIM HAS BEEN REITERATED BY THE HON'BLE SUPREME COURT IN NUMEROUS CASES AND ONE SUCH FINDINGS IN THE CASE OF ARUNIMA B ARUAH VS. UOI IN CIVIL APPEAL NO. 2205/2007 DATED 27.04.2007 IS REPRODUCED AS UNDER: ON THE ONE HAND, JUDICIAL REVIEW IS A BASIC FEATURE OF THE CONSTITUTION, ON THE OTHER, IT PROVIDES FOR A DISCRETIONARY REMEDY. ACCESS TO JUSTICE IS A HUMAN RIGHT. [SEE DWA RKA PRASAD AGARWAL (D) BY LRS. AND ANOTHER V B.D. AGARWAL AND OTHERS (2003) 6 SCC 230 AND BHAGUBHAI DHANABHAI KHALASI & ANR. V. THE STATE OF GUIARAT &ORS., 2007 (5) SCALE 357] A PERSON WHO HAS A GRIEVANCE AGAINST A STATE, A FORUM MUST BE PROVIDED FOR REDRE SSAL THEREOF. [SEE HATTON AND OTHERS VS. UNITED KINGDOM 15 BHRC 259. FOR REFERENCE SEE ALSO ZEE TELEFILMS LTD, V. UNION OF INDIA, (2005) 4 SCC 649] THE COURT'S JURISDICTION TO DETERMINE THE IS BETWEEN THE PARTIES, THEREFORE, MAY BE VIEWED FROM THE HUMAN RI GHTS CONCEPT OF ACCESS TO JUSTICE. THE SAME, HOWEVER, WOULD NOT MEAN THAT THE COURT WILL HAVE NO JURISDICTION TO DENY EQUITABLE RELIEF WHEN THE COMPLAINANT DOES NOT APPROACH THE COURT WITH A PAIR OF CLEAN HANDS BUT TO WHAT EXTENT SUCH RELIEF SHOULD BE DENI ED IS THE QUESTION. IT IS TRITE LAW THAT SO AS TO ENABLE THE COURT TO REFUSE TO EXERCISE ITS DISCRETIONARY JURISDICTION SUPPRESSION MUST BE OF MATERIAL FACT. WHAT WOULD BE A MATERIAL FACT, SUPPRESSION WHEREOF WOULD DISENTITLE THE APPELLANT TO OBTAIN A DISC RETIONARY RELIEF, WOULD DEPEND UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. MATERIAL FACT WOULD MEAN MATERIAL FOR THE PURPOSE OF DETERMINATION OF THE LOGICAL COROLLARY WHEREOF WOULD BE THAT WHETHER THE SAME WAS MATERIAL FOR GRANT OR DENIAL OF THE RELIEF. IF THE FACT SUPPRESSED IS NOT MATERIAL FOR DETERMINATION OF THE IS BETWEEN THE PARTIES, THE COURT MAY NOT REFUSE TO EXERCISE ITS DISCRETIONARY JURISDICTION. IT IS ALSO TRITE THAT A PERSON INVOKING THE DISCRETIONARY JURISDICTION OF THE COURT CANNOT BE ALLO WED TO APPROACH IT WITH A PAIR OF DIRTY HANDS. BUT EVEN IF THE SAID DIRT IS REMOVED AND THE HANDS BECOME CLEAN, WHETHER THE RELIEF WOULD STILL BE DENIED IS THE QUESTION. IN THE CURRENT CASE, THE MATERIAL FACTS INDICATE DRI RAID ON APPELLANT AND FINDINGS OF SUPPRESSION OF VALUE OF IMPORTS BY RS. 13,11,73,783/ - AND EVASION OF APPLICABLE CUSTOMS DUTY ON THE SUPPRESSED VALUE OF IMPORT. SHOW CAUSE NOTICE OF DRI DATED 07.02.2011 AND STATEMENT OF FACTS INDICATE VOLUNTARY PAYMENT OF DIFFERENTIAL DUTY OF RS. 1 CRORE ON 12 - 13/08/2010 (CONSEQUENT TO DRI RAID) BY THE APPELLANT. IN SUCH A SITUATION COUPLED WITH NON - COMPLIANCE TO NOTICES ISSUED BY AO, THE HON'BLE BENCH MAY LIKE TO CONSIDER THE 'MAXIM' AND DECISION OF HON'BLE APEX COURT BEFORE ADMITTING THE APPELLANT THE F ILING OF ADDITIONAL GROUND. 2. THOUGH THE HON'BLE ITAT HAS THE DISCRETION TO ADMIT ADDITIONAL GROUNDS, THE DISCRETION CAN BE EXERCISED ONLY IF THE APPELLANT IS IN A POSITION TO SHOW THE CAUSE AS TO WHAT PREVENTED HIM FROM TAKING THIS ADDITIONAL GROUND AT T HE TIME OF FILING OF ORIGINAL APPEAL MEMO. IN THE APPLICATION SUBMITTED BY THE APPELLANT SEEKING ADMISSION OF ADDITIONAL I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 4 GROUND, THE APPELLANT IS NOT IN A POSITION TO SHOW THE AS TO WHAT PREVENTED HIM FROM TAKING THE ADDITIONAL GROUND. IN THE APPLICATION S UBMITTED BY THE APPELLANT SEEKING ADMISSION OF ADDITIONAL GROUNDS, THE APPELLANT HAS SQUARELY FAILED TO SHOW ANY REASON OR CAUSE THAT PREVENTED IT TO RAISE THE ADDITIONAL GROUNDS. THE REQUEST FOR ADMISSION OF NEW GROUNDS AT THE STAGE OF HEARING IS ONLY DUE TO CARELESSNESS AND CALLOUSNESS ON THE PART OF THE ASSESSEE. THE ASSESSEE HAS FAILED TO DEMONSTRATE WHAT WERE THE CHANGE IN THE CIRCUMSTANCES IN RELATION THE FACTS AND THE LAW, WHICH HAS RESULTED IN FILING OF THE ADDITIONAL GROUNDS. ON IS GROUND ALONE, TH E APPLICATION OF THE ASSESSEE IS LIABLE TO BE REJECTED. IN THE ABSENCE OF ANY CONVINCING REASON BEING GIVEN BY THE ASSESSEE FOR NOT TAKING THE ADDITIONAL GROUNDS OF APPEAL THE DISCRETION VESTED IN THE HON'BLE BENCH DESERVES TO BE A EXERCISED BY REJECTING T HE APPLICATION OF THE ASSESSEE. 3. IT IS IMPORTANT HERE TO POINT OUT THAT THE ASSESSEE WHILE TAKING THE ADDITIONAL GROUNDS HAS TO SHOW AS TO WHY SUCH GROUNDS WAS NOT TAKEN WHILE FILLING THE APPEAL BEFORE THE HON'BLE ITAT. THE ADDITIONAL GROUND CAN BE ADMIT TED ONLY UNDER COMPELLING CIRCUMSTANCE AND ON SHOWING THAT THE FACTS AND CIRCUMSTANCE HAVE BEEN CHANGED AFTER FILING OF THE ORIGINAL APPEAL. IN THIS REGARD RELIANCE IS ALSO PLACED ON THE FOLLOWING DECISION: 3.1. WHILE ADMITTING ADDITIONAL GROUNDS, THE TRIB UNAL MUST FIRST RECORD THE REASON FOR ADMITTING THE GROUNDSAND CANNOT SAY THAT THE REASONS WOULD BE INCORPORATED IN ITS FINAL ORDER. POWERS OF THE TRIBUNAL REFERABLE TO RULE 11 OF APPELLATE TRIBUNAL RULES ARE JUDICIAL IN NATURE AND CARMOT BE EXERCISED IN A N ARBITRARY MANNER AT THE PLEASURE OF THE TRIBUNAL. WHETHER THE PERMISSION SHOULD BE GIVEN OR NOT WOULD DEPEND BASICALLY ON THE FACTS OF EACH CASE. THAT IS WHY THE REASONS ARE NECESSARY TO BE RECORDED. REASON IS THE SOUL OF LAW - MARUTI UDYOG LTD., V. ITAT (2000) 244 ITR 303 (DELHI). 3.2. AS HELD BY THE MADRAS HIGH COURT IN 40 ITR 377, THE TRIBUNAL HAS NO POWER TO ENLARGE THE SCOPE OF THE APPEAL BEFORE IT BY PERMITTING TO URGE NEW \ GROUNDS WHICH WOULD HAVE THE EFFECT OF DESTROYING THE FINALITY OF THAT PORT ION OF THE ORDER OF THE ORIGINAL AUTHORITY WHICH HAD NOT BEEN APPEALED AGAINST BY EITHER OF THE PARTIES. 3.3. IT HAS BEEN HELD IN THE CASES OF PREM CHAND V. IAC (1985) 153 ITR 774 (KAR) AND BM MARAPPA V. IAC (1986) 160 ITR 742 (KAR} THAT A CONTENTION RAISE D ON THE REGULARITY OF PROCEEDINGS OR OTHERWISE, CANNOT PROPERLY BE URGED FOR THE FIRST TIME IN AN APPEAL UNLESS SUCH IRREGULARLY IN THE PROCEEDINGS HAS OCCASIONED GRAVE FAILURE OF JUSTICE AND ADDITIONAL GROUND RELATING TO PROCEDURAL MATTERS CANNOT TO RAIS E FOR THE FIRST TIME BEFORE THE TRIBUNAL. 3.4. IT IS OPEN THE TRIBUNAL, EVEN IF IT HAD EARLIER GIVEN PERMISSION TO THE ASSESSEE TO PRODUCE AFFIDAVITS AND CERTIFICATES, NOT TO ACCEPT THEM IF IT DECIDES NOT TO ALLOW THE ASSESSEE TO RAISE THE NEW CONTENTION - MOTI RAM V CIT (1958) 34 ITR 646 (SC) 3.5. THE TRIBUNAL CANNOT BE SAID TO EXERCISE ITS DISCRETION ARBITRARILY IF IT REFUSES TO PERMIT A PARTY TO RAISE AN ENTIRELY NEW POINT INVOLVING ADDITIONAL EVIDENCE OR INVESTIGATION INTO FRESH FACTS, WHICH POINTS WAS WITHIN THE' KNOWLEDGE OF THE PARTY AND COULD HAVE BEEN RAISED AT AN EARLIER STAGE - MANJI DANA V. CIT (1998) 229 ITR 383 (SC) 3.6. IF, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEALS IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON - TAXABLE ITEM IS TAX OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITEM - NATIONAL THER MAL POWER CO. LTD., V. CIT (1998) 229 ITR 383 (SC). 3.7. A QUESTION WHICH OUGHT TO HAVE BEEN ARGUED BEFORE AND DECIDED BY THE FIRST APPELLATE AUTHORITY BUT HAD NOT BEEN DEALT WITH BY IT, COULD BE ALLOWED TO BE TAKEN I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 5 UP BEFORE SUPERIOR AUTHORITIES - CIT V. COMMONWEALTH TRUST (INDIA) LTD., (1996) 87 TAXMAN 393/221 ITR 474 (KER.). 3.8. IN THE CASE OF MOTI RAM V. CIT (1958) 34 ITR 646 (SC) IT HAS BEEN HELD THAT TRIBUNAL MAY REFUSE PERMISSION TO RAISE A NEW GROUND FOR THE FIRST TIME, NECESSITATING FOR ITS DECISI ON THE PRODUCTION OF FRESH EVIDENCE, EVEN THOUGH THE TRIBUNAL, AT AN EARLIER STAGE, HAD GRANTED PERMISSION TO THE APPELLANT TO PRODUCE AFFIDAVITS AND OTHER EVIDENCE, PERTAINING TO THE NEW GROUND. 3.9. IN CIT V/S BEGUM NOOR BANU ALLADIN (1993) 204 ITR 166,2 03 (AP) THE COURT HELD THAT THE JURISDICTION OF THE TRIBUNAL IS NECESSARILY RESTRICTED TO THE SUBJECT MATTER OF THE DISPUTE BEFORE THE FIRST APPELLATE AUTHORITY AND THE TRIBUNAL CANNOT ALLOW THE ASSESSEE OR THE DEPT TO DISPUTE NEW TERMS OR ENTERTAIN NEW CL AIMS FOR DECISION FOR THE FIRST TIME. 3.10. IN INDIAN STEEL & WIRE PRODUCTS LTD, VS, CIT (1994) 208 ITR 740,747(CAL) THE COURT HELD THAT THE TRIBUNAL CAN DECIDE ONLY ISSUES WHICH WERE THE SUBJECT MATTER OF APPEAL BEFORE THE FIRST APPELLATE AUTHORITY.AN ADD ITIONAL PLEA WHICH ALTOGETHER CHANGES THE COMPLEXION OF THE CASE AS. ORIGINALLY BROUGHT BEFORE THE FIRST APPELLATE AUTHORITY AND THE TRIBUNAL IN SECOND APPEAL CANNOT BE PERMITTED TO BE RAISED AT THE STAGE OF HEARING OF THE TRIBUNAL APPEAL. 3.11. IN THE CAS E OF UGAR SUGAR WORKS LTD. VS, CIT (1983)141 ITR 326,334 (BOM) THE COURT HELD THAT THE ASSESSEE ONCE HAVING ACCEPTED THE FINDING OF THE AO BY NOT HAVING APPEALED AGAINST THE SAME TO THE FIRST APPELLATE AUTHORITY THE ASSESSEE'S GRIEVANCE, IF ANY, AGAINST TH E SAND FINDING OF THE AO CANNOT FORM THE SUBJECT MATTER OF AN APPEAL BEFORE THE TRIBUNAL SO AS TO GIVE IT JURISDICTION IN EXERCISE OF ITS POWERS TO PASS SUCH ORDERS IN APPEAL AS IT MAY THINK FIT. 3.12. WHERE IN AN APPEAL TO THE FIRST APPELLATE AUTHORITY BY THE ASSESSEE AGAINST ORDER OF ASSESSMENT, THE ASSESSEE HAS NOT QUESTION THE DECISION OF THE OFFICER ON A POINT DECIDED, AND THE FIRST APPELLATE AUTHORITY HAD NOT IN HIS ORDER CONSIDERED THAT POINT, THE ASSESSEE IS NOT ENTITLED TO QUESTION THE , DECISION O F THE OFFICER ON THE POINT IN AN APPEAL TO THE TRIBUNAL AGAINST THE ORDER OF THE FIRST APPELLATE AUTHORITY AND THE TRIBUNAL IS NOT ENTITLED TO ALLOW THE ASSESSEE TO AGITATE THE QUESTION UNDER RULE 11 OF THE IT. AT RULES (CIT V. KARAM CHAND PREM CHAND (P) L TD., (1969) 74 ITR 254 (GUJARAT), 103 ITR 763 (GUJARAT), 126 ITR 251). IN VIEW OF THIS THERE IS NO CASE FOR EXCISE OF DISCRETION IN FAVOUR OF THE ASSESSEE. 3.13. THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF SUCH A NEW PLEA IN AN APPEAL AND EACH CASE HAS TO BE CONSIDERED IN ITS OWN FACTS. THE AAC MUST BE SATISFIED THAT THE GROUND RAISED WAS BONAFIDE AND THAT THE SAME COULD NOT HAVE BEEN RAISED EARLIER FOR GOOD REASONS. 187 ITR 688 (SC) JUTE CORPORATION OF INDIA LTD. 4. IN VIEW OF THE ABOVE SUBMISS IONS, IT IS REQUESTED THAT THE MATTER MAY BE DECIDED ON MERITS KEEPING IN VIEW THE VARIOUS JUDICIAL PRONOUNCEMENTS WHICH HAVE BEEN ENUMERATED IN THE WRITTEN SUBMISSIONS FILED BY THE DEPARTMENT. 5. HOWEVER IT IS NOTICED THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE DIFFERENT THAN PRETENDED BY THE LD. DR. VIDE ABOVE CITED SUBMISSION. THE LD. DR RAISED THE OBJECTION THAT AS PER THE RULE IT IS REQUIRED TO FILE AN AFFIDAVIT WHEN SOME NEW FACTS ARE BROUGHT ON RECORD HOWEVER ON PERUSAL OF THE ASSESSMENT ORDER PARA - 2 IT IS NOTICED THAT THE AO HAS HIMSELF NOTICED THE ISSUE OF NOTICE UNDER SECTION 142(1), THEREFORE, WE OBSERVE THERE WAS NO NEW FACTS I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 6 CONTEMPLATED BY THE ASSESSEE BY WAY OF THIS APPLICATION. THEREFORE, T HERE IS NO NECESSITY TO FILE AFFIDAVIT IN SUPPORT OF THE APPLICATION. WE HAVE ALSO CONSIDER THAT HON'BLE SUPREME COURT IN THE CASE OF NTPC VS. CIT, 229 ITR 383 OBSERVED THAT IF ANY ISSUE IS GOING TO AFFECT THE TAXABILITY OF AN ASSESSEE, THE ASSESSEE COULD BE PERMITTED TO RAISE THAT PLEA EVEN FOR T HE FIRST TIME BEFORE THE SECOND APPELLATE AUTHORITY. ISSUE AGITATED BY THE ASSESSEE GOES TO THE ROOT OF THE VERY DISPUTE . IN THE LIGHT OF THE ABOVE FACTS AND FINDINGS THE AFORESAID ADDITIONA L GROUND OF APPEAL HAS BEEN ADMITTED VIDE INTERIM ORDER DATED 12 T H NOV, 2018 ITAT HAS ADMITTED THE ADDITIONAL GROUND FILED BY THE ASSESSEE. RELEVANT PART OF THE FINDING OF ITAT IS REPRODUCED AS UNDER: - 12 - 11 - 2018 PRESENT : SHRI PRASANTJI SINGH, CIT - DR SHRI RAMESHKUMAR MALPANI, AR ASSESSEE MOVED AN AP PLICATION PLEADING THEREIN THAT IT BE PERMITTED TO RAISE ADDITIONAL GROUNDS OF APPEAL. IT IS CONTENDED IN THE APPLICATION THAT IN THIS CASE, DIRECTORATE OF REVENUE INTELLIGENCE ('DRI') CONDUCTED A SEARCH. CONSEQUENT UPON THE SEARCH, THE AO HAD ISSUED NOTIC E UNDER SECTION 142(1) ON 1.12.2011 DIRECTING THE ASSESSEE TO FILE HIS RETURN OF INCOME BY 9.12.2011. IN RESPONSE TO THIS NOTICE, THE ASSESSEE CONTENDED THAT HIS BOOKS OF ACCOUNTS AND RECORDS WERE SEIZED BY THE DRI, AND THEREFORE, PRACTICALLY NOT POSSIBLE TO FILE HIS RETURN. HE WOULD DO SO AS AND WHEN COPIES OF BOOKS OF ACCOUNTS AND OTHER RECORDS WOULD BE PROVIDED BY THE DRI. THE ID.AO THEREAFTER DID NOT PURSUE PROCEEDINGS CONSEQUENT UPON THE ISSUE OF NOTICE UNDER SECTION 142(1), BUT ISSUED A NOTICE UNDER S ECTION 148 ON 16.1.2013. BY WAY OF PRESENT APPLICATION, IT IS SUBMITTED THAT THE AO CANNOT ISSUE NOTICE UNDER SECTION 148 DURING THE PENDENCY OF PROCEEDING INITIATED UNDER SECTION 142(1). HE OUGHT TO HAVE FIRST CONCLUDED ASSESSMENT PROCEEDINGS INITIATED UN DER SECTION 142(1). 2. ON THE OTHER HAND, THE REVENUE HAS FILED AN OBJECTION ON THIS APPLICATION. IT HAS BEEN PLEADED THAT THE ASSESSEE FAILED TO FILE AFFIDAVIT AS PROVIDED UNDER RULE 10 OF INCOME TAX (APPELLATE TRIBUNAL) RULES. APART FROM THIS OBJECTION, THE REVENUE HAS MADE REFERENCE TO LARGE NUMBER OF DECISIONS, WHEREIN IT HAS CONTENDED THAT THE ASSESSEE HAS NOT COME WITH CLEAN HAND, THEREFORE, NO INDULGENCE SHOULD BE GIVEN BY PERMITTING HIM TO RAISE ADDITION GROUNDS OF APPEAL. REFERENCE TO THE FOLLOWING DECISIONS IS WORTH TO NOTE: I) MOTI RAM V. CIT, 34 ITR 646 (SC) II) MAJI DANA V. CIT, 229 ITR 383 (SC) III) CIT VS COMMONWEALTH TRUST (INDIA) LTD. (1996) 87 TAXMAN 393/221 ITR 474 (KER.) IV) CIT VS. BEGUM NOOR BANU ALLADIN, 204 ITR 166, 203 (AP); V) INDIA N STEEL & WIRE PRODUCTS LTD.CIT, 208 ITR 740 (CAL); VI) CIT VS. KARAMCHAND PREMCHAND P.LTD. 74 ITR 254 (GUJ) 3. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GONE THROUGH THE RECORD CAREFULLY. AS FAR AS OBJECTION OF THE REVENUE REGARDING NON - FILING OF AFFI DAVIT IS CONCERNED LET US TAKE NOTE OF RULE 10 OF THE IT(APPELLATE TRIBUNAL) RULES, WHICH READS AS UNDER: 'WHERE A FACT WHICH CANNOT BE BORNE OUT BY, OR IS CONTRARY TO, THE RECORD IS ALLEGED, IT SHALL BE STATED CLEARLY AND CONCISELY AND SUPPORTED BY A DULY SWORN AFFIDAVIT.' I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 7 4. A PERUSAL OF THE ABOVE RULE WOULD INDICATE THAT IT CONTEMPLATES FOR FILING OF AFFIDAVIT WHEN SOME NEW FACTS ARE BROUGHT ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER PARA - 2 WOULD INDICATE THAT THE AO HAS HIMSELF NOTICED THE ISSUE OF NO TICE UNDER SECTION 142(1), THEREFORE, THERE IS NO NEW FACTS IS BEING CONTEMPLATED BY THE ASSESSEE BY WAY OF THIS APPLICATION. THERE IS NO NECESSITY TO FILE AFFIDAVIT IN SUPPORT OF THE APPLICATION. IT IS ALSO PERTINENT TO OBSERVE THAT HON'BLE SUPREME COURT IN THE CASE OF NTPC VS. CIT, 229 ITR 383 OBSERVED THAT IF ANY ISSUE IS GOING TO AFFECT THE TAXABILITY OF AN ASSESSEE, THE ASSESSEE COULD BE PERMITTED TO RAISE THAT PLEA EVEN FOR THE FIRST TIME BEFORE THE SECOND APPELLATE AUTHORITY. ISSUE AGITATED BY THE AS SESSEE GOES TO THE ROOT OF THE VERY DISPUTE, AND THEREFORE, WE DO NOT FIND ANY HESITATION IN PERMITTING THE ASSESSEE TO RAISE THE FOLLOWING GROUND OF APPEAL: '7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW ON THE SUBJECT, THE INITIATI ON OF THE PROCEEDINGS U/S.147/148 OF THE ACT IN THIS CASE BY ISSUING THE NOTICE U/S.148 ON 16/01/2013 AND CONSEQUENT ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ARE WRONG, INVALID AND BAD IN LAW AB INITIO BECAUSE THE ASSESSMENT PROCE EDINGS INITIATED U/S.L42(L) OF THE ACT BY ID.AO ON 01/12/2011 WAS ALREADY PENDING ON THE DATE OF ISSUANCE OF NOTICE U/S.148 OF THE ACT AND WAS NOT COMPLETED AND CONSEQUENTLY, AS PER SETTLED LAW, THE WHOLE OF THE PROCEEDINGS U/S.147/148 OF THE ACT INITIATED DURING THE PENDENCY OF THE ASSESSMENT PROCEEDINGS U/S.142(1) R.W.S. 143/144 OF THE ACT IS WRONG, INVALID AND BAD IN LAW. APPELLANT PRAYS FOR QUASHING THE SAME.' 5. THE CASE NOW STANDS LISTED FOR 19 TH NOVEMBER, 2018 FOR REMAINING ARGUMENTS. MEANWHILE, THE ID. CLT - DR WILL CALL FOR REPORT, IF SO DESIRE. COPY OF THIS ORDER BE GIVEN TO BOTH THE PARTIES. SD/ - SD/ - (AMARJIT SINGH) (RAJPAL YADAV) 6. THE BRIEF FACT OF THE CASE IS THAT INFORM ATION WAS RECEIVED FROM DIRECTORATE OF THE REVENUE INTELLIGENCE ZNANL UNIT, AHMEDABAD THAT THE DRI CONDUCTED A SEARCH ON 10 TH AUGUST, 2010 AT THE OFFICE PREMISES OF M/S. R.G. INTERNATIONAL, PROPRIETOR SHRI GOVIND GOPAL, SUART THAT ASSESSE HAS IMPORTED PO L YS TER FILM BY RESTORING TO UNDER VALUATION OF IMPORT PRICE. THE DIFFERENTIAL AMOUNT OVER AND ABOVE THE TRADE VALUE WERE TRANSMITTED BY THEM TO THE OVERSEAS SUPPLIER THROUGH ILLEGAL CHANNELS. IT WAS STATED THAT BY UNDER VALUATION OF POL Y STER FILMS THE ASSESSEE HAS SUPPRESSED THE VALUE OF POL Y STER FILM TO THE TUNE OF RS. 13 , 11 , 73 , 783/ - DURING F.Y. 2010 - 11. THEREFORE, A NOTICE U/S 142(1) OF THE INCOME TAX ACT 1961 WAS ISSUED TO THE ASSESSEE IN THIS REGARD AND ASKED TO FILE THE RETURN OF INCOME FOR THE A SSESSMENT YEAR 2010 - 11 BY 9.12.2012. HOWEVER THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME AND SUBMITTED VIDE LETTER DATED 03.01.2012 THAT HIS BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WERE SEIZED BY THE DRI, AND HE HAS APPLIED TO THE DRI TO PROVIDE HIM TH E COPIES OF THE RECORD SEIZED BY THEM DURING THE COURSE SEARCH. THEREAFTER I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 8 A REMINDER LETTER DATED 11.07.2012 WAS ISSUED TO THE ASSESSEE ON FAILING TO FILE THE RETURN OF INCOME. THEREAFTER THE ASSESSING OFFICER HAS STATED THE ASSESSEE HAS NOT MADE COMPLIAN CE WITH THE NOTICES ISSUED U/S 142(1) OF THE ACT THEREFORE THE CASE WAS REOPENED U/S. 147 OF T HE ACT BY ISSUING OF NOTICE U/S. 148 ON 16 TH JANUARY , 2013 WHICH WAS SERVED UPON THE ASSESSEE ON 17.01.2013. IN RESPONSE TO NOTICE U/S. 148 OF THE I.T. ACT THE ASSESSEE SUBMITTED VIDE LETTER DATED 14 - 02 - 2013 THAT HIS BOOKS OF ACCOUNTS AND OTHER DOCUMENTS WERE SEIZED BY THE DRI, THEREFORE, HE COULD NOT FINALIZE HIS ACCOUNTS AND COMPILED THE RETURN OF INCOME AND REQUESTED TO GRANT FURTHER TIME OF THREE MONTHS. HOWEVER , HIS REQUEST WAS DENIED AND NO FURTHER TIME WAS GIVEN FOR MAKING COMPLIANCE WITH NOTICE U/S. 148 OF THE ACT. THE ASSESSING OFFICER HAS PROCEEDED TO COMPLETE THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT ON THE BASIS OF MATERIAL ON RECORD . T H E ASSESSING OFFICER HAS PREPARED AN ABSTRACT SHOWING THE UNDER VALUATION OF POLESTAR FILM OF M/S. K.G. INTERNATIONAL WHICH IS REPRODUCED AS UNDER: - DESCRIPTION ANN - EXURE TOTAL QUANTITY IMPORTED (IN KGS.) DECLARED ASSESSABLE VALUE (IN RS.) REDETERMIN ED ASSESSABLE VALUE (IN RS.) SUPPRESSED VALUE (IN RS.) DIFFERENTIAL DUTY PAYABLE (IN RS.) SEIZED CONSIGNMENTS AT VARIOUS CFS AT JNPT, NHAVA A 162468.00 9361072 18067663 8706591 2337606 SEIZED CONSIGNMENTS AT KIRN A/1 22040.00 1249365 214890 8 899543 244835 PAST CONSIGNMENTS ALREADY CLEARED B 2366179.70 141554566 263122216 121567650 33070945 TOTAL 2550687.70 152165003 283338787 131173784 35653386 THE ASSESSEE WAS ASKED TO SUBMIT DETAIL OF THE IMPORT AND THE PROFIT DECLA RED BY THEM ON SUCH TRANSACTIONS. THE ASSESSEE RESPONDED THAT COPIES OF IMPOUNDED/SEIZED MATERIAL WERE NOT PROVIDED TO HIM AND IN THE ABSENCE OF HIS BOOKS OF ACCOUNTS/RECORDS IT HAS NOT BEEN POSSIBLE FOR HIM TO FINALIZE HIS ACCOUNTS AND TO PREPARE THE P & L A/C AND BALANCE SHEET. THE ASSESSEE HAS ALSO EXPLAINED T HAT THE PAYMENT O F ALMOST 30 TO 40% OF SALES WERE RECEIVED IN I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 9 CASH AND SAME WERE DEPOSITED IN THE BANK A/C. HE HAS FURTHER STATED THAT GROSS PROFITS MARGIN ON MAIN ITEMS LIKE POL Y STER FILM , PET FILM ETC. WAS AROUND 0 TO 3% AND IN NYLON - 6 M ONO FILAMENT THEY HAVE SUFFERED LOSS .A ND THE GROSS MARGIN WAS BETWEEN 2% TO 3%. IT IS ALSO STATED THAT AFTER DEDUCTING VARIOUS EXPENSES, HE HAS SUFFERED LOSSES IN HIS BUSINESS . THE ASSESSEE HAS ALSO G IVEN T HE WORKING OF GROSS MARGIN OF VARIOUS ITEMS TR ADED BY THEM. THEREAFTER , THE ASSESSING OFFICER STATED THAT ASSESSEE COULD NOT QUANTIFY THE INCOME AND T HAS NOT FILED HIS RETURN OF INCOME, THEREFORE, HE HAS ISSUED SHOW CAS E DATED 18 TH MARCH, 2014 IN ORDER TO COMPLETE THE ASSESSMEMT . T H E CONTENTS O F SHOW CAUSE NOTICE IS REPRODUCED AS U NDER: - 'AS YOU ARE AWARE THAT YOUR CASE WAS RE - OPENED U/S. 147 OF THE I.T.ACT, AND NOTICE U/S. 148 OF THE I.T.ACT WAS ISSUED ON , 16.1.2013 AND SERVED UPON YOU ON 17.1.2013. H OWEVER, NO ROI WAS FILED BY YOU AS REQUIRED U/S. 148 OF THE I.T.ACT. SUBSEQUENTLY, NOTICE U/S.!42(L) OF THE I.T.ACT DATED 17.7.2013 ALONGWITH DETAILED QUESTIONNAIRE WAS ISSUED AND SERVED UPON YOU ON 25.7.2013. IN RESPONSE TO QUESTIONNAIRE ISSUED, YOU HAVE FILED CERTAIN DETAILS. ON VERIFICATION OF THE DETAILS FILED BY YOU, IT IS SEEN THAT YOU HAVE NOT GIVEN QUANTUM OF TOTAL INCOME. THEREFORE, IN ABSENCE OF ANY ROI OR INCOME DECLARED BY YOU, THE UNDERSIGNED HAS NO ALTERNATIVE BUT TO PROCEED WITH THE ASSESSMEN T PROCEEDINGS U/S.144 OF THE I.T.ACT AS PER THE MATERIAL AVAILABLE ON RECORDS AND INTEND TO FINALIZE THE ASSESSMENT AS PER THE FOLLOWING DETAILS : 3.1. THE DRI HAS CONDUCTED A SEARCH ON 10.8.2010 IN YOUR CASE AT YOUR BUSINESS PREMISES, AT M - L, METRO TOWER, NEAR KIN NARY CINEMA, RING ROAD, SURAT. DURING THE COURSE OF SEARCH, IT WAS FOUND THAT YOU HAD IMPORTED POLYESTER FILMS BY RESORTING TO UNDER VALUATION OF PRICE. THE DIFFERENTIAL AMOUNT OVER AND ABOVE THE TRADE VALUE WERE TRANSMITTED BY YOU TO THE OVERSEAS SUPPLIER THROUGH ILLEGAL CHANNELS. IT WAS FOUND THAT YOU HAVE PRESENTED MANIPULATED IMPORT DOCUMENTS BEFORE THE CUSTOM AUTHORITIES AT NHAVA SEVA PORT AT THE TIME OF IMPORT OF IMPUGNED GOODS. THE DRI HAS RECORDED YOUR STATEMENT DURING THE COURSE OF SEARCH. YOUR BOOKS OF ACCOUNTS AND OTHER INCRIMINATED DOCUMENTS WERE IMPOUNDED FROM YOUR BUSINESS PREMISES. AFTER INVESTIGATION, THE IMPOUNDED MATERIAL, THE DRI HAD ISSUED A SHOW CAUSE NOTICE VIDE DRI F NO.DRI/AZU/INV - 24/2010 DATED 7.2.2011 . AS PER THE ABSTRACTS GIVEN BY THE DRI, IT WAS FOUND THAT DURING F.Y.2010 - 11, YOU HAVE UNDERVALUED THE IMPORT OF POLYESTER FILMS TO THE TUNE OF RS.13,11,73,783/ - . THIS AMOUNT OF RS. 13,11,73,783/ - WAS TRANSMITTED BY YOU TO THE OVERSEAS SUPP LIER THROUGH ILLEGAL CHANNEL AND THE SAME HAS NOT BEEN RECORDED IN YOUR REGULAR BOOKS OF ACCOUNTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO, YOU HAVE NOT GIVEN ANY EXPLANATION OR FILED ANY ROI REGARDING YOUR BUSINESS ACTIVITIES. THEREFORE, IT I S PRESUMED THAT AMOUNT OF RS. 13,11,73,783/ - HAS BEEN PAID TO THE OVERSEAS SUPPLIER IS OUT OF BOOKS AND IT IS YOUR UNEXPLAINED EXPENDITURE. YOU ARE, THEREFORE, REQUESTED TO SHOW CAUSE AS TO WHY THE AMOUNT OF RS.13,11,73,783/ - SHOULD NOT BE TREATED AS Y OUR UNEXPLAINED EXPENDITURE U/S.69C OF THE I.T.ACT AND THE AMOUNT NOT BE ADDED TO YOUR TOTAL INCOME. 3.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, YOU HAVE SUBMITTED VIDE YOUR LETTER DATED 10.2.2014 THAT YOUR BOOKS OF ACCOUNTS HAVE BEEN IMPOUNDED BY TH E DRI AND IN ABSENCE OF BOOKS OF ACCOUNTS/RECORDS, IT IS NOT POSSIBLE FOR YOU TO PREPARE THE EXACT PROFIT & LOSS ACCOUNT. AS PER THE SHOW CAUSE NOTICE ISSUED BY THE DRI, DURING 2010 - 11, YOU HAVE IMPORTED 25,50,687.70 KG OF POLYESTER FILMS DECLARING ASSESSA BLE VALUE OF I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 10 RS.15,21,65,003/ - . HOWEVER, AS PER THE ACTUAL ASSESSABLE VALUE, THE TOTAL VALUE OF THE IMPORTED GOODS IS RS.28,33,38,783/ - . ON VERIFICATION OF P&L ACCOUNT FOR F.Y.2009 - 10, IT IS NOTICED THAT YOU HAVE DECLARED GP @7.37%ON TOTAL SALES. THEREFOR E, TAKING A REASONABLE VIEW, AND CONSIDERING THE GP OF 7.37% IN THE LAST PREVIOUS YEAR, THE GP IN THE CURRENT YEAR IS ALSO TAKEN @7.37%. ACCORDINGLY, TOTAL SALES VALUE OF THE IMPORTED GOODS WILL BE INCREASED BY 7.37% AND GP OF RS.2,08,82,068/ - AND THE TOTA L SALE VALUE OF THE GOODS FOR THE YEAR UNDER CONSIDERATION WILL BE RS.30,42,20,851/ - . DURING THE F.Y.2009 - 10, RELEVANT TO A.Y.2010 - 11, YOU HAD DECLARED NET PROFIT @3.31%. THEREFORE, YOU ARE REQUESTED \ TO SHOW CAUSE AS TO WHY THE NET PROFIT F OR THE CURRENT YEAR SHOULD ALSO NOT BE TAKEN @3.31%. HENCE, NET PROFIT FOR THE YEAR UNDER CONSIDERATION @3.31% ON TOTAL SALES OF RS.30,42,20,851/ - IS CALCULATED AT RS.1,00,69,710/ - . THEREFORE, YOU ARE REQUESTED TO EXPLAIN AS TO WHY THE AMOUNT OF RS. 1,00,6 9,710/ - SHOULD NOT BE TREATED AS NET PROFIT FOR THE YEAR UNDER CONSIDERATION. 4. YOU ARE REQUESTED TO SUBMIT YOUR EXPLANATION ON 24.03.2014 AT 3:30 P.M. EITHER IN PERSON OR THROUGH AN AUTHORIZED REPRESENTATIVE, TO PRODUCE OR CAUSE TO BE PRODUCED, BOOK S OF A/CS AND OTHER DETAILS AND SUPPORTING EVIDENCES ON WHICH YOU WANT TO RELY ON THE SAID ADDITION. PLEASE NOTE IF NO REPLY IS RECEIVED ON THE DUE DATE, THE ASSESSMENT WILL BE COMPLETED AS PER THE DETAILS GIVEN IN PARA - 3 ABOVE. IN RESPONSE TO THE SHOW CAUSE NOTICE THE REPLY OF THE ASSESSEE IS REPRODUCED AS UNDER: - WITH REFERENCE TO ABOVE AND AS REQUIRED BY YOUR HONOUR, I HUMBLY BEG TO SUBMIT AS UNDER - 1) SIR, YOU HAVE MENTIONED THAT DURING THE COURSE OF SEARCH OF DRI AT MY PREMISES ON 10/08/2010 IT WAS F OUND THAT I HAD IMPORTED THE GOODS BY RESORTING TO UNDERVALUATION OF PRICE AND TRANSMITTED THE DIFFERENTIAL (UNDERVALUED) AMOUNT TO THE OVERSEAS SUPPLIER THROUGH ILLEGAL CHANNELS. IT IS FURTHER MENTIONED BY YOUR HONOUR THAT AS PER THE SHOW CAUSE NOTICE (SO N) ISSUED BY THE DRI THE AMOUNT OF SUCH UNDERVALUATION WAS RS. 13,11,73,783/ - . YOUR HONOUR HAS ASKED ME TO SHOW CAUSE AS TO WHY THE ABOVE SUM SHOULD NOT BE ADDED AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT IN THIS CONTEXT I HUMBLY BEG TO SUBMIT THAT NO I NCRIMINATING MATERIAL WAS FOUND BY THE DRI AT MY PLACE IN THEIR SEARCH. THERE WAS NO FINDING OF ANY SUCH UNDERVALUATION AT MY PLACE. WHOLE OF THE CASE OF DRI IS BASED ON THE INCRIMINATING MATERIALS FOUND AT THE PLACE OF AND EMAILS OF MR. JAYESH MAMRAWALA O F M/S. JOULE INTERNATIONAL WHO WAS ENGAGED IN THE BUSINESS OF IMPORTS. INVESTIGATIONS CARRIED OUT BY THE DRI ALSO PERTAINED TO MR. JAYESH MAMRAWALA. NOTHING WRONG DONE BY ME WAS FOUND. THESE FACTS ARE VERY MUCH EVIDENT FROM THE SON OF THE DRI. THUS, WHOLE OF THE CASE OF DRI IS BASED ON THE FINDINGS FROM AND IN RESPECT OF MR. JAYESH MAMRAWALA. IN THIS REGARD, I HUMBLY BEG TO SUBMIT THAT I HAVE DONE NOTHING WRONG. THE IMPORTS MADE BY ME WERE AT THE PRICES MENTIONED IN THE BILLS OF ENTRY. THERE IS NO FINDING O F DRI BY CONTEMPORARY PRICING EVIDENCES TO THE EFFECT THAT I HAD UNDERVALUED THE IMPORTS OR THAT THE PRICES AT WHICH OTHER PARTIES HAVE IMPORTED SIMILAR GOODS AT THE SAME WERE MORE THAN THE PRICES AT WHICH I IMPORTED THE SAME. NO PAYMENT WAS MADE OVER AND ABOVE THE AMOUNTS MENTIONED IN THE BILLS OF ENTRY BY ME. THESE GOODS HAVE BEEN SOLD BY ME IN THE DOMESTIC MARKETS. ' NO INCRIMINATING MATERIALS/DOCUMENTS HAVE BEEN FOUND AT MY BUSINESS PREMISES. I HAVE NO KNOWLEDGE OF TRANSACTIONS THAT HAVE BEEN MADE /CARR IED OUT BY MR. JAYESH MAMRAWALA. THE ENTIRE SHOW CAUSE NOTICE OF DRI IS BASED ON EMAILS OF JAYESH MAMRAWALA OR OTHER INCRIMINATING THINGS FOUND FROM HIM IN WHICH THERE IS NO MENTION OF MY NAME. I HAVE ALREADY DISOWNED ALL THESE INCRIMINATING MATERIAL BEFOR E DRI /CUSTOMS AUTHORITIES. THE CUSTOM AUTHORITIES HAVE NOT YET PASSED ANY ADJUDICATION ORDER AGAINST ME. IN VIEW OF ABOVE, I HUMBLY PRAY I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 11 TO YOUR HONOUR TO KINDLY NOT TO MAKE ADDITION OF RS. 13,11,73,783/ - AS UNEXPLAINED EXPENDITURE U/S. 69C IN MY HANDS. 2 ) SIR, WITHOUT PREJUDICE TO MY ABOVE CONTENTION, I HUMBLY BEG TO SUBMIT THAT IF, BY ANY STRETCH OF LOGIC OR REASONING, A VIEW IS TAKEN THAT ABOVE MENTIONED UNDERVALUATION OR ANY PART THEREOF AND CORRESPONDING DIFFERENTIAL ' PAYMENTS WERE MADE FOR O R IN MY NAME THEN ALSO THE SAME ARE NOT UNEXPLAINED EXPENDITURE AS IN THE SCN OF DRI IT IS CLEARLY MENTIONED THAT PAYMENTS OF UNDERVALUATION WERE MADE BY MR. JAYESH MAMRAWALA OUT OF CORRESPONDING OR SIMILAR DIFFERENTIAL SALES REALIZATIONS OF THOSE GOODS. T HE CASE OF THE DRI IS THAT THE GOODS WERE IMPORTED BY UNDERVALUING THE SAME AND WERE SOLD IN DOMESTIC MARKETS BY CORRESPONDINGLY UNDER INVOICING THE SALES AND SUCH DIFFERENTIAL SALES REALIZATIONS (I.E. ACTUAL SALES VALUE AND UNDER INVOICED SALES VALUE) WER E UTILIZED IN MAKING PAYMENTS FOR THE UNDERVALUED PURCHASES. THUS, THE CASE OF THE DRI IS OF DIFFERENTIAL (ON MONEY) IN PURCHASE AND SALES AND OF PAYMENT OF DIFFERENTIAL PURCHASE AMOUNTS BY CORRESPONDING DIFFERENTIAL SALES REALIZATION. THUS, THE SOURCE OF PAYMENT FOR DIFFERENTIAL AMOUNTS OF PURCHASES (IMPORTS) IS CORRESPONDING SALES REALIZATION FROM SALES AND IN THIS WAY THE SOURCE OF PAYMENT OF DIFFERENTIAL PURCHASE AMOUNT.STANDS EXPLAINED. HENCE, EVEN IF A VIEW IS TAKEN THAT THE ABOVE MENTIONED UNDERVALU ATION OR ANY PART THEREOF PERTAINED TO ME THEN ALSO THE SOURCE OF THE SAME IS EXPLAINED I.E. CORRESPONDING DIFFERENTIAL SALES REALIZATION AND THEREFORE THIS CANNOT BE SAID TO BE UNEXPLAINED EXPENDITURE. AT THE MOST THIS CAN BE SAID TO BE THE CASE OF UNACCO UNTED TURNOVER OF PURCHASES AND SALES DURING THE YEAR. SUCH PURCHASES CANNOT BE SAID TO BE UNEXPLAINED EXPENDITURE AS THE SOURCE OF THE SAME IS UNACCOUNTED TURNOVER. THUS, THERE IS NO CASE OF UNEXPLAINED EXPENDITURE. AT THE MOST THIS CAN BE SAID TO BE CASE OF UNACCOUNTED TURNOVER. MY CONTENTION IN THIS PARA IS WITHOUT PREJUDICE TO MY MAIN CONTENTION IN PARA '1' HEREIN ABOVE THAT NOTHING WRONG WAS DONE BY ME. 3) IN THE SHOW CAUSE, YOUR HONOUR HAD ESTIMATED SALES AND NET PROFIT OF MY PROPRIETORSHIP CO NCERN. WHILE ESTIMATING THE SALES, YOUR HONOUR HAS INCLUDED THE UNDERVALUATION OF PURCHASES (IMPORTS) OF RS. 13,11,73,783/~ AS PER SCN OF DRI. IN THIS CONTEXT I RE - ITERATE MY SUBMISSION IN PARA 1 HEREIN ABOVE AND PRAY THAT THE SAME MUST NOT BE INCLUDED WHI LE ESTIMATING MY SALE. AS REGARDS ESTIMATING THE NET PROFIT, I HUMBLY BEG TO SUBMIT THAT DURING THE YEAR UNDER ASSESSMENT I HAVE NOT EARNED ANY PROFIT BUT SUFFERED LOSS FROM THIS BUSINESS WHICH IS EVIDENT FROM THE DETAILS/SAMPLE BILLS OF SOME OF THE PRODUC TS PROVIDED TO YOUR HONOUR IN LAST HEARING. FROM THE SAMPLE WORKINGS SUBMITTED TO YOUR HONOUR IN LAST HEARING IT WAS PROVED THAT I HAVE SUFFERED LOSS FROM THIS BUSINESS DURING THIS YEAR AND IS IN SEVERE FINANCIAL CRISIS. SIR, I HAVE ALREADY BEEN RUINED AND FACING SEVERE FINANCIAL CRISIS AND DIFFICULTIES. I HAVE ALREADY SUFFERED A LOT FOR NO FAULT OF MINE. IN VIEW OF ABOVE, I PRAY YOUR HONOUR TO CONSIDER MY CASE SYMPATHETICALLY AND NOT TO MAKE SUCH A HUGE ADDITION, WHICH DOES NOT REPRESENT ANY INCOME ACTUALL Y EARNED BY ME.' 7. THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSION OF T HE ASSESSEE STAT ING THAT ASSESSEE HAS NOT GIVEN ANY EXPLANATION REGAR D IN G THE AMOUNT OF RS. 13 , 11 , 73 , 783/ - PAID TO OVERSEAS SUPPLIER THROUGH ILLEGAL MEANS. THEREFORE , THE ASS ESSING OFFICER PRESUMED THAT THE AFORESAID AMOUNT PAID TO THE OVERSEAS SUPPLIER WAS OUT OF BOOKS AND IT WAS THE UNEXPLAINED EXPENDITURE OF THE ASSESSEE. HE OBSERVED SINCE THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION REGARDING THE SOURCE OF RS. 13 , 11 , 73 , 7 83/ - THEREFORE THE SAME WAS TREATED AS UNEXPLAINED EXP ENDITURE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S. I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 12 69C OF THE ACT. THE ASSESSING OFFICER HAS ALSO STATED THAT THE TOTAL ASSESSABLE VALUE OF THE IMPORTED GOODS WAS RS. 28,33,38,783 AND AFTE R APPLYING THE GP RATE OF F.Y.2009 - 10 THE TOTAL SALE VALUE OF THE IMPORTED GOODS WILL BE INCREASED BY 7.37% WITH GP OF RS.2,08,82,068/ AND THE TOTAL SALE VALUE OF THE GOODS FOR THE YEAR UNDER CONSIDERATION WILL BE RS.30,42,20,851/. HE HAS STATED THAT DURIN G THE F.Y.2009 - 10,RELEVANT TO A.Y.2010 - 11 THE ASSESSEE HAD DECLARED NET PROFIT @ 3.31% THEREFORE AFTER APPLYING THE NET PROFIT OF 3.31% ON THE TOTAL SALE OF RS.30,42,20,851 HE HAS ESTIMATED NET PROFIT OF THE ASSESSEE ON THE TOTAL SALES FOR THE F.Y. 2010 - 1 1 @ 3.3% TO THE AMOUNT OF RS. 1 , 00 , 69 , 710/ - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). T HE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE A SSESSEE. 9. DURING THE COURSE O F APPELLATE PROCEE DINGS BEFORE US, THE LD. COUNSEL HAS VEHEMENTLY CONTENDED BY REFERRING TO THE ADDITIONAL GROUND OF APPEAL THAT ASSESSMENT ORDER U/S. 143(3) R.W.S. 147 OF T HE ACT WAS WRONG , INVALID AND BAD IN LAW BECAUSE THE ASSESSMENT PROCEEDINGS IN I TI A TED U/S. 142(1) OF THE ACT ON 1 ST DECEMBER, 2011 WAS ALREADY PENDING O N T H E DATE O F ISSUANCE OF NOTICE U/S. 148 OF THE ACT . HE HAS VEHEMENTLY CONTENDED THAT THE WH OLE OF THE PROCEEDINGS U/S. 147/ 148 INITIATED DURING T HE PENDENCY OF T HE ASSESSMENT PROCEEDINGS U/S. 14 2(1) R.W.S. 143/144 OF THE ACT WAS WRONG , INVALID AND BAD IN LAW THEREFORE TH E SAME SHOULD BE QUASHED . ON THE OTHER HAND , LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDER OF LD. CIT (A). LD. COUNSEL HAS ALSO PLACED RELIANCE ON THE FOLLOWING D ECISION S: - (I) ITA NO. 713/AHD/2011 DATED 25 - 11 - 2014 M/S. DRONA & JIGER ENTERPRISES P. LTD. VS. ITO (ITAT AHMEDABAD BENCHES, AHMEDABAD) (II) ITA NO. 252/VIZAG/2013 DATED 18 - 08 - 2017 MEDAPATI VENKAYAMMA VS. ITO (ITAT VISHAKHAPATNAM BENCHES, VISHAKHAPATNAM ) (III) (2017) 79 TAXMANN.COM 337 (GUJARAT) DATED 19 TH JULY, 2016 CIT - IV VS. BABULAL K. DAGA I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 13 10. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD CAREFULLY. AT THE OUTSET, WE ARE CONSIDERING THE ADDITIONAL GROUND FILED BY THE ASSESSEE STATI NG THAT ASSESSMENT ORDER U/S. 143 R.W.S. 147 OF THE ACT WAS WRONG , INVALID AND BAD IN LAW BECAUSE T H E ASSESSMENT PROCEEDINGS INITIATED U/S. 142(1) OF THE ACT BY THE ASSESSING OFFICER WAS ALREADY PENDING ON DATE OF ISSUING NOTICE U/S. 148. IN T H IS CONNECT ION , WE OBSERVE THAT IT WAS UNDISPUTED FACT THAT ASSESSMENT PROCEEDINGS INITIATED U/S. 142(1) OF THE ACT BY THE ASSESSING OFFICER WAS ALREADY PENDING ON DATE OF ISSUING OF NOTICE U/S. 148 AND THE LD DR HAS FAILED TO CONTROVERT THE UNDISPUTED FACT WITH ANY RELEVANT MATERIAL. THE LD. COUNSEL HAS PLACED RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF THE MEDAPATI VENKAYAMMA VS. ITO VIDE ITA NO. 252/VIZAG/2013. THE RELEVANT PART OF THE DECISION IS REPRODUCED AS UNDER: - 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSING OFFICER HAS PASSED THE ORDER IN THIS CASE U/S 143(3) OF I.T. ACT. IN THIS CASE, THE ASSESSEE DID NOT FILE THE RETURN OF INCOME HENCE THE ASSESSING OFFICER ISSUED NOTICE U /S 142(1). THERE WAS NO RETURN OF INCOME FILED BY THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED U/S 142(1). THE ASSESSING OFFICER IS EMPOWERED TO ISSUE NOTICE U/S 142(1) FOR THE PURPOSE OF MAKING ASSESSMENT UNDER I.T. ACT AND CALLING FOR INFORMATION IN THE FOLLOWING CIRCUMSTANCES. (A) FOR THE PURPOSE OF MAKING THE ASSESSMENT, WHERE THE RETURN IS FURNISHED U/S 139 OF I.T. ACT. (B) WHERE THE ASSESSEE HAS NOT FURNISHED RETURN OF INCOME DIRECTING THE ASSESSEE TO FURNISH THE RETURN OF INCOME IN RESPECT OF HIS IN COME OR THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHOM HE IS ASSESSABLE UNDER THIS ACT. 5.1. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER IS AUTHORIZED TO CALL FOR THE RETURN OF INCOME AND ALSO COLLECT INFORMATION FOR THE PURPOSE OF MAKING ASS ESSMENT U/S 142(1). IN CASE, IF THE ASSESSEE FAILS TO FURNISH THE RETURN OF INCOME, PROVISIONS OF SECTION 144 OF THE ACT APPLIES AND THE ASSESSING OFFICER IS REQUIRED TO COMPLETE THE ASSESSMENT AS PER T HE PROCEDURE LAID DOWN U/S 143(2) / 144 OF I.T.ACT. THE TIME LIMIT FOR COMPLETION OF ASSESSMENT IS WITHIN TWO YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN CASE, THE ASSESSEE DID NOT RESPOND TO THE NOTICE ISSUED U/S 142(1) AND THE ASSESSING OFFICE R IS DUTY BOUND TO MAKE ASSESSMENT U/S 144 BY ISSUE OF SHOW CAUSE NOTICE. FOR READY REFERENCE, WE EXTRACT RELEVANT PROVISIONS OF SECTION 142(1) AND 1 44 OF I.T. ACT. SECTION 142(1) READS AS UNDER : INQUIRY BEFORE ASSESSMENT. I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 14 142. (1) FOR THE PURPOSE OF MAKING AN ASSESSMENT UNDER THIS ACT, THE 82[ASSESSING] OFFICER MAY SERVE ON ANY PERSON WHO HAS MAD E A RETURN 83[UNDER SECTION 115WD OR SECTION 139 84 [OR IN WHOSE CASE THE TIME ALLOWED UNDER SUB - SECTION (1) OF SECTION 139 ] FOR FURNISHING THE RETURN HAS EXPIRED] A NOTICE REQUIRING HIM, ON A DATE TO BE THEREIN SPECIFIED, -- [(I) WHERE SUCH PERSON HAS NOT MADE A RETURN 86[WITHIN THE TIME ALLOWED UND ER SUB - SECTION (1) OF SECTION 139 ] 87[OR BEFORE THE END OF THE RELEVANT ASSESSMENT YEAR], TO FURNISH A RETURN OF HIS INCOME OR THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER TH IS ACT, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER88 AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED, OR :] NOTICE U/S 142(1) IS ISSUED IN CASE OF NON FILER CALLING FOR THE RETURN OF INCOME. IN THE INSTANT CASE, THE AO HAS ISSUED THE NOTICE CALLING FOR RETURN OF INCOME. SECTION 144 BEST JUDGMENT ASSESSMENT. 144. 31[(1)] IF ANY PERSON -- (A) FAILS TO MAKE THE RETURN REQUIRED 32[UNDER SUB - SECTION (1) OF SECTION 139 ] AND HAS NOT MADE A RETURN OR A REVISED RETURN UNDER SUB - SECTION (4) OR SUB - SECTION (5) OF THAT SECTION, OR (B) FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB - SECTION (1) OF SECTION 142 33 [OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB - SECTION (2A) OF THAT SECTION], OR (C) HAVING MADE A RETURN, FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB - SECTION (2) OF SECTION 143 , THE 34[ASSESSING] OFFICER, AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH THE 34[ASSESSING] OFFICER HAS GATHERED, 35[SHALL, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE ASSESSME NT36] OF THE TOTAL INCOME OR LOSS TO THE BEST OF HIS JUDGMENT AND DETERMINE THE SUM PAYABLE BY THE ASSESSEE 37[* * *] ON THE BASIS OF SUCH ASSESSMENT : [PROVIDED THAT SUCH OPPORTUNITY SHALL BE GIVEN BY THE ASSESSING OFFICER BY SERVING A NOTICE CALLING UPO N THE ASSESSEE TO SHOW CAUSE, ON A DATE AND TIME TO BE SPECIFIED IN THE NOTICE, WHY THE ASSESSMENT SHOULD NOT BE COMPLETED TO THE BEST OF HIS JUDGMENT : PROVIDED FURTHER THAT IT SHALL NOT BE NECESSARY TO GIVE SUCH OPPORTUNITY IN A CASE WHERE A NOTICE UNDE R SUB - SECTION (1) OF SECTION 142 HAS BEEN ISSUED PRIOR TO THE MAKING OF AN ASSESSMENT UNDER THIS SECTION.] [(2) THE PROVISIONS OF THIS SECTION AS THEY STOOD IMMEDIATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 (4 OF 1988), SHALL APPLY TO AND IN RELATION TO ANY ASSESSMENT FOR THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSMENT YEAR AND REFERENCES IN THIS SECTION TO THE OTHER PROVISIONS OF THIS ACT SHALL BE CONSTRUED AS REFERENCES TO THOSE PROVIS IONS AS FOR THE TIME BEING IN FORCE AND APPLICABLE TO THE RELEVANT ASSESSMENT YEAR.] I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 15 5.2. IN THIS CASE, THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 142(1) WITHIN TIME LIMIT ALLOWED FOR FILING RETURN OF INCOME UNDER SECTION 139 OF I.T.ACT. SINCE THE ASSESSEE FAILED TO RESPOND TO THE NOTICE U/S 142(1), THE ASSESSING OFFICER SHOULD INVOKE THE PROVISIONS OF SECTION 144 AND COMPLETE THE ASSESSMENT AS PER SECTION 144 ON OR BEFORE 31.03.2011. SINCE THE ASSESSMENT IS ALREADY INITIATED, DURING PENDENCY OF ASSESSMENT PROCEEDINGS, THERE IS NO CASE FOR INVOKING THE PROVISIONS OF REASSESSMENT U/S 148 OF I.T.ACT AND REOPENING OF THE ASSESSMENT. 5.3. THE PROCEDURE FOR REASSESSMENT IS ALSO ENSHRINED IN SECTION 147 , 148 AND 143 OF I.T.ACT. WHERE THE ASSESSEE IS HAVING TAXABLE INCOME BUT NOT FILED THE RETURN OF INCOME, THE ASSESSING OFFICER IS EMPOWERED TO ISSUE NOTICE U/S 148 AFTER RECORDING THE REASONS. SIMILARLY, WHERE THE ASSESSEE HAS FURNISHED RETURN OF I NCOME, BUT THE ASSESSING OFFICER HAS A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, AFTER RECORDING THE REASONS, THE ASSESSING OFFICER HAS TO TAKE ACTION U/S 148 AND ISSUE NOTICE U/S 148. IN BOTH THE INSTANCES, NOTICE U/S 148 IS ISSUED CALLING FOR THE RETURN OF INCOME FROM THE ASSESSEE WITHIN A SPECIFIED PERIOD. FOR READY REFERENCE, WE EXTRACT THE RELEVANT PROVISIONS OF I.T.ACT. [ISSUE OF NOTICE WHERE INCOME HAS ESCAPED ASSESSMENT. 148. 62[(1)] BEFORE MAKING THE ASSESSMENT, REASS ESSMENT OR RECOMPUTATION UNDER SECTION 147 , THE ASSESSING OFFICER SHALL SERVE63 ON THE ASSESSEE A NOTICE REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, 64[* * *] AS MAY BE SPECIFIED IN THE NOTICE, A RETUR N OF HIS INCOME OR THE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR CORRESPONDING TO THE RELEVANT ASSESSMENT YEAR, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUC H OTHER PARTICULARS AS MAY BE PRES - CRIBED; AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE65, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139 :] 5.4. ON FURNISHING THE RETURN OF INCOME U/S 148, THE ASSESSING OFFICER CAN CHOOSE TO DROP THE PROCEEDINGS AND PROCEED WITH THE REASSESSMENT PROCEEDINGS BY ISSUE OF NOTICE U/S 143(2) OF I.T.ACT AND IN CASE THE ASSESSEE DO NOT RESPOND TO NOTICE U/S 148, THE ASSES SING OFFICER CAN PROCEED TO COMPLETE THE ASSESSMENT U/S 144, BEST JUDGEMENT . ONCE THE RETURN IS FILED IN RESPONSE TO NOTICE U/S 148, PROVISIONS OF SECTION 139, 143 AND 144 APPLIES IN CASE OF 148 ALSO. THEREFORE, PROVISIONS OF SECTION 142(1) , 148 ARE PARA MATERIA FOR FURNISHING THE RETURN OF INCOME EXCEPT RECORDING THE REASONS IN THE CASE OF SECTION 148 . ONCE THE ASSESSING OFFICER HAS INITIATED ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CANNOT RESORT TO REASSESSMENT UNLESS THE ASSESSMENT PROCEEDINGS ARE CONCLUDED. IN THIS CASE, THE ASSESSMENT PROCEEDINGS WERE INITIATED BY ISSUE OF NOTICE U/S 142( 1) AND BEFORE CONCLUDING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 148 FOR REASSESSMENT. SINCE THE NOTICE U/S 148 IS ISSUED WITHOUT CONCLUDING THE ASSESSMENT PROCEEDINGS, THE NOTICE ISSUED U/S 148 IS BAD IN LAW AND CANNOT BE S USTAINED. THE ASSESSING OFFICER IS NOT PERMITTED TO CARRY ON THE ASSESSMENT PROCEEDINGS AND REASSESSMENT PROCEEDINGS SIMULTANEOUSLY. HON'BLE ITAT DELHI BENCH SMC' IN THE CASE OF SUNIL KUMAR JAIN VS. ACIT 71 TAXMAN.COM 136 HELD THAT TWO PARALLEL PROCEEDINGS ON SIMILAR SUBJECT MATTER CANNOT BE SUSTAINED. PROCEEDINGS U/S 147 CANNOT STAND DURING CON TINUATION OF PROCEEDINGS U/S 154. SIMILARLY, THE HON'BLE DELHI HIGH COURT IN THE CASE OF MASTECH TECHNOLOGIES LTD. VS. DCIT 84 TAXMAN.COM 20 (2017), DELHI, HELD THAT WHERE THE REASSESSMENT INITIATED VIDE TWO NOTICES AND SECOND NOTICE WAS BEYOND PRESCRIBED PERIOD AND FIRST NOTICE PROCEEDING WERE NOT CONTINUED AND NOWHERE IT WAS STATED THAT SECOND NOTICE WAS IN CONTINUATION OF FIRST ONE, REASSESSMENT WAS INVALID. IN THE INSTANT CASE, THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 142(1) AND I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 16 INITIATED ASSESSMENT PROCEEDINGS. THE ASSESSMENT PROCEEDINGS U/S 143(3)/144 SHOULD BE COMPLETED WITHIN THE PERIOD OF LIMITATION ALLOWED TO THE ASSESSING OFFICER I.E 31.03.2011 AND THE ASSESSING OFFICER ALLOWED TO GET THE ASSESSMENT BARRED BY LIMITATION AND PASSED THE ASSESSME NT ORDER U/S 143 ON 29.12.2011 WHICH WAS BARRED BY LIMITATION. THEREFORE, THE ASSESSMENT PASSED U/S 143(3) ON 29.12.2011 BARRED BY LIMITATION AND THE SAME IS ANNULLED. 5.5. THE ASSESSING OFFICER ISSUED NOTICE U/S 148 FOR REASSESSMENT, DURING THE PENDENCY O F ASSESSMENT PROCEEDINGS BY ISSUE OF NOTICE U/S 148 WHICH IS BAD IN LAW AND CANNOT BE SUSTAINED AS PER THE DETAILED DISCUSSION MADE IN THE EARLIER PARAGRAPHS OF THIS ORDER. ACCORDINGLY, THE NOTICE ISSUED U/S 148 IS QUASHED. WE CONSIDER THAT ON IDENTICAL I SSUE VIDE THE ABOVE CITED ORDER OF THE ITAT VISAKHAPATNAM BENCH, THE NOTICE U/S. 148 WAS QUASHED. IN THE CASE OF THE ASSESSEE , IT IS NOTICED THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME THEREFORE THE ASSESSING OFFICER ISSUED A NOTICE U/S. 1 42 (1) OF TH E ACT ON 01 - 12 - 2011 ASKING THE ASSESSEE TO FILE THE RETURN OF INCOME ON OR BEFORE 09 - 12 - 2011. THE COPY OF THE AFORESAID NOTICE ISSUED U/S. 1 4 2(1) IS REPRODUCED AS UNDER: - NOTICE UNDER SECTION 142(1) OF THE INCOME - TAX ACT, 1961 PA NO. AQXPG1260 B OFF ICE OF THE INCOME - TAX OFFICER, WARD 3(3), ROOM NO.209, 2 ND FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT DATE: 01.12.2011 TO, SHRI GOVINDGOPAL S. GOYAL, C/O: - R. G. INTERNATIONAL, M - L, METRO TOWER, NR.: KINNARY CINEMA, RING ROAD, SURAT SIR/MADAM, IN CONNECTI ON WITH THE ASSESSMENT FOR THE ASSESSMENT YEAR 2011 - 12, YOU ARE REQUIRED TO: (A) PREPARE A TRUE AND CORRECT RETURN OF YOUR INCOME/ THE FIRM'S INCOME/FAMILY'S INCOME /THE LOCAL AUTHORITY'S INCOME / THE COMPANY'S INCOME / INCOME OF THE A.O.P. / INCOME OF THE BODY OF INDIVIDUAL'S INCOME OF SAID ASSESSMENT YEAR IN RESPECT OF WHICH YOU ARE ASSESSABLE UNDER THE INCOME - TAX ACT, 1961,DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR MENTIONED ABOVE. THE RETURN SHOULD BE IN THE APPROPRIATE FORM AS PRESC RIBED IN RULE 12 OF THE INCOME - TAX RULES, 1962. A BLANK RETURN FORM IS ENCLOSED. IT SHOULD BE DULY VERIFIED AND SIGNED IN ACCORDANCE WITH THE PROVISION ON OR SECTION 140 OF THE SAID ACT, AND DELIVERED AT MY OFFICE ON OR BEFORE 9.12.2011. (B) PRODUCE O R CAUSE TO BE PRODUCED BEFORE ME AT MY OFFICE AT ROOM NO.209 - 2 ND FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT ON O9.12.2011 AT 11:30 A.M. THE ACCOUNTS AND/OR DOCUMENTS SPECIFIED OVERLEAF [AS PER ANNEXURE ENCLOSED] (C) FURNISH IN WRITING AND VERIFIED IN TH E PRESCRIBED MANNER INFORMATION CALLED FOR AS PER ANNEXURE AND ON THE POINTS OR MATTERS SPECIFIED THEREIN BEFORE ME AT MY OFFICE AT ROOM NO.209, AAYAKAR BHAVAN, MAJURA GATE, SURAT ON 09.12.2011 AT 11:30 A.M. I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 17 YOURS FAITHFULLY, SD/ - [R.S.MEENA] INCOME TAX OFFICER WARD.3 (3), SURAT HOWEVER, THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME. IT IS NOTICED THAT NOTICE U/S. 142(1) WAS ISSUED ON 01 - 12 - 2011 DIRECTING THE ASSESSEE TO FILE THE RETURN OF INCOME AS THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME, THEREFORE, THE ASSESSING OFFICER SHOUL D HAVE COMPLETED THE ASSESSMENT U/S. 144 ON OR BEFORE 31 - 03 - 2014. IT IS OBSERVED THAT WITHOUT COMPLETING THE ASSESSMENT PROCEEDINGS INITIATED U/S. 142(1), THE ASSESSING OFFICER HAS ISSUED NOTICE U/S. 148 OF THE ACT ON 16 - 01 - 2013 CALLED FOR FILING RETURN OF INCOME TO ASSESS/RE - ASSESS THE INCOME FOR ASSESSMENT YEAR 2011 - 12. IT IS OBSERVED THAT WHEN THE ASSESSMENT PROCEEDINGS ARE ALREADY INITIATED BY ISSUING OF NOTICE U/S. 142(1) AND CALLED FOR THE RETURN OF INCOME, NO NO TICE U/S. 148 IS TO BE ISSUED AND THE ASSESSMENT IS REQUIRED TO BE COMPLETED WITHIN THE TIME LIMIT ALLOWED U/S. 143(3) OR 144. IN THIS CASE, THE ASSESSMENT YEAR INVOLVED IS ASSESSMENT YEAR 2011 - 12 AND THE TIME LIMIT FOR COMPLETION OF ASSESSMENT ALREADY IN ITIATED BY ISSUING OF NOTICE U/S. 142(1) IS 31 - 03 - 2014, THEREFORE, ISSUING OF NOTICE U/S. 148 OF THE ACT DURING THE PENDENCY OF ASSESSMENT PROCEEDINGS ON 16 - 01 - 2013 IS BAD IN LAW AND INVALID. THE EXISTENCE OF THIS FACT IS VERY CLEARLY DEMONSTRATED FROM T HE FINDINGS OF THE ASSESSING OFFICER MENTIONED IN HIS ORDER PASSED U/S. 143(3) R.W.S 147 OF THE ACT ON 27 TH MARCH, THAT A NOTICE U/S. 142(1) OF THE AC T WAS ISSUED TO THE ASSESSEE ON 1 ST DECEMBER, 2011 AND ASKED THE A SSESSEE TO FILE RETURN OF INCOME FOR T HE ASSESSMENT YEAR 2011 - 12 BY 9 TH DECEMBER, 2011 AND I N RESPONSE TO THE NOTICE U/S. 142(2) OF THE ACT THE ASSESSEE HA S NOT FILED RETURN OF INCOME THEREFORE THE ASSESSING OFFICER SHOULD HAVE COMPLETED THE ASSESSMENT ON OR BEFORE 31 ST MARCH, 201 4 HOWEVER TH E CASE WAS REOPENED U/S. 147 OF THE ACT BY ISSUING OF NOTICE U/S. 148 ON 16 TH JANUARY, 2013 WHICH WAS SERVED UPON THE ASSESSEE ON 17.01.2013. I.T. A NO. 1280 /AHD/20 16 A.Y. 2011 - 12 PAGE NO SHRI GOVIND GOPAL GOYAL VS. IT O 18 IN THE LIGHT OF THE ABOVE FACTS AND LEGAL FINDINGS AND THE DECISION OF THE COORDINATE BENCH ON THE IDENTICAL ISS UE AS SUPRA IN THE CASE OF MEDAPATI VENKAYAMMA VS. ITO VIDE ITA NO. 252/VIZAG/2013 AS SUPRA W E CONSIDE R THAT THE ASSESSING OFFICER HAS ISSUED NOTICE U/S 148 FOR REASSES S MENT DURING THE PENDENCY OF ASSESSME NT PROCEEDINGS INITIATED BY ISSUING OF NOTICE U/ S 142(1) OF THE ACT THEREFORE , THE ASSESSMENT MADE U/S. 143(3) R.W.S. 147 WAS BAD IN LAW AND CANNOT BE SUSTAIN ED . ACCORDINGLY , ASSESSMENT MADE U/S. 143(3) R.W.S. 147 BY ISSUING OF NOTICE U /S. 148 IS QUASHED . S INCE THE ASSESSMENT MADE U/S. 143(3) R. W . S. 147 OF THE ACT HAS BEEN QUASHED , THEREFORE , THERE IS NO NEED TO ADJUDICATE THE OTHER GROUN DS OF THE ASSESSEE ON MERIT. 11. IN THE RESULT, THE APPEAL OF T HE ASSESSEE IS ALLOWED AS PER THE TERMS AND CONDITIONS MENTIONED ABOVE. ORDER PR ONO UNCED IN THE OPEN C OURT ON 20 - 12 - 201 8 SD/ - SD/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 20 /12 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,