Social Promoters (India), Panchkula V. DCIT, Panchkula

ITA 1299/CHANDI/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8283 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 17-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: K P BAJAJ
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Reasonable cause; Revised return
• Section: 142(1); 139(5); 148; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1299 /CHD/2012 (ASSESSMENT YEAR : 2007-08) AND ITA NO.1300 /CHD/2012 (ASSESSMENT YEAR : 2007-08) SOCIAL PROMOTERS (INDIA), VS. THE D.C.I.T., SCO 193, 2 ND FLOOR, PANCHKULA CIRCLE, PANCHKULA (HARYANA). PANCHKULA. PAN: AARFS0422K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.P. BAJAJ RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 08.02.2017 DATE OF PRONOUNCEMENT : 16.02.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : BOTH THE ABOVE APPEALS HAVE BEEN FILED BY THE SAME ASSESSEE AGAINST SEPARATE ORDERS OF COMMISSIO NER OF INCOME TAX (APPEALS), PANCHKULA, DT.01-10-12, RE LATING TO ASSESSMENT YEAR 2007-08. THE APPEAL IN ITA NO.1299/CHD/2012 HAS BEEN FILED AGAINST THE ORDER O F THE CIT(A) PASSED IN QUANTUM PROCEEDINGS AGAINST ORDER PASSED U/S 144 OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT) AND THE APPEAL IN ITA NO.1300/CHD/2012 IS AGA INST 2 THE ORDER PASSED BY THE CIT(A) UPHOLDING THE LEVY O F PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 2. SINCE THE ISSUE INVOLVED IN BOTH THE APPEALS IS RELATED, THE APPEALS WERE HEARD TOGETHER AND ARE BE ING DISPOSED OFF BY THIS COMMON ORDER. WE SHALL FIRST BE DEALING WITH THE APPEAL, FILED AGAINST THE ORDER P ASSED IN QUANTUM PROCEEDINGS, IN ITA NO.1299/CHD/2012. ITA NO.1299/CHD/2012 : 3. BRIEF FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP CONCERN. RETURN FOR THE IMPUGNED YEAR, DECLARING INCOME OF RS.15,47,989/- WAS FILED BY THE ASSESSEE ON 31.10.2007. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS SERVED ON TH E ASSESSEE. THEREAFTER NOTICE U/S 142(1) ALONG WITH DETAILED QUESTIONNAIRE WAS SERVED ON THE ASSESSEE AND SEVERAL OPPORTUNITIES GIVEN TO RESPOND TO THE SAME ,BUT THE ASSESSEE DID NOT COMPLY. THE ASSESSING OFFICER THEREFORE PROCEEDED TO FRAME AN EX-PARTE ASSESSMENT U/S 144 OF THE INCOME TAX ACT, AND GAVE A SHOW CAUSE NO TICE TO THE ASSESSEE WHICH ALSO REMAINED UNRESPONDED. WH ILE FRAMING THE ASSESSMENT THE AO FOUND THAT THE ASSESS EE HAD FILED ITS RETURN IN THE WRONG FORM I.E. IN ITR- 6, WHICH RELATED TO COMPANY ASSESSEES. ANOTHER OPPORTUNITY W AS GIVEN TO THE ASSESSEE TO FILE ITS RETURN IN THE COR RECT FORM, WHICH ALSO WENT UNRESPONDED. THE ASSESSING OFFICER 3 THEREAFTER IGNORED THE RETURN FILED BY THE ASSESSE E AND DEEMED THAT THE ASSESSEE HAD FAILED TO FURNISH ANY RETURN FOR THE YEAR UNDER CONSIDERATION. HOWEVER, HE UTIL IZED THE INFORMATION AND DATA GIVEN IN THE RETURN FILED FOR THE PURPOSE OF MAKING THE ASSESSMENT U/S 144 OF THE ACT AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 93,90,05 0/-, AFTER MAKING ADDITIONS AMOUNTING TO RS.78,42,061/- TO THE RETURNED INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEA L BEFORE THE LD. CIT (APPEALS) WHEREIN THE ASSESSEE S OUGHT PERMISSION TO ADDUCE ADDITIONAL EVIDENCE. THE WRIT TEN SUBMISSIONS FILED BY THE ASSESSEE WERE SENT TO THE ASSESSING OFFICER FOR HIS REMAND REPORT, WHO OBJECT ED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE ON THE GRO UND THAT THE ASSESSEE HAD FAILED TO FULFILL ANY OF THE CONDITIONS LAID DOWN UNDER RULE 46A OF THE INCOME TAX RULES, W HICH DEALT WITH THE CONDITIONS IN WHICH THE ADDITIONAL EVIDENCES COULD BE ADMITTED BY THE CIT(A). IN REJO INDER TO THE SAME, THE ASSESSEE SUBMITTED THAT THOUGH ADMIT TEDLY THE ASSESSING OFFICER HAD GIVEN AMPLE OPPORTUNITY B UT DUE TO DISPUTE AMONGST THE PARTNERS ON ACCOUNT OF EGO C LASH AMONG THEM, THE ASSESSEE WAS UNABLE TO PARTICIPATE IN THE ASSESSMENT PROCEEDINGS. THE LD. CIT (APPEALS) AFTE R CONSIDERING THE RIVAL SUBMISSIONS HELD THAT THE ASS ESSEES CASE DID NOT QUALIFY FOR ADMISSION OF FRESH EVIDENC E UNDER RULE 46A OF THE INCOME TAX RULES. THE LD. CIT (APP EALS) HELD THAT THE DISPUTE AMONGST THE PARTNERS WAS NO R EASON 4 FOR NON-COMPLIANCE AND THE SAME HAD NOT BEEN BROUGH T TO THE NOTICE OF THE ASSESSING OFFICER ALSO. THE LD. CIT (APPEALS) HELD THAT THE ASSESSING OFFICER HAD FOLLO WED THE PRINCIPLE OF NATURAL JUSTICE BEFORE PASSING THE ORD ER U/S 144 OF THE ACT AND, THEREFORE, HE FOUND NO REASON T O INTERFERE WITH THE SAME. THE APPEAL OF THE ASSESSE E WAS, THEREFORE, DISMISSED BY THE LD. CIT (APPEALS). 5. AGGRIEVED BY THE SAME, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US RAISING THE FOLLOWING GROU NDS : 1. BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN DISMISSING THE APPEA L FILED AND NOT ADMITTING THE ADDITIONAL EVIDENCES. ON THE ONE HAND, THE LEARNED CIT (APPEALS) HAS ASKED THE LEARNED AO FOR REMAND REPORT/DETAILED COMMENT ON ADDITIONAL EVIDEN CES FILED AND LEARNED AO WAS IN PROCESS OF THE SAME (COPY OF THE LETTER RECEIVED FROM LEARNED AO DT. 17.08.2012 AND ASSESSEE'S RESPONSE TO THE SAME ARE ENCLOSED HEREWI TH) AND ON THE OTHER HAND THE LEARNED CIT (APPEALS) HAS DIS MISSED THE APPEAL FILED. 2. BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN DISMISSING THE APPEA L FILED, WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD AFTER ASKING THE LEARNED AO FOR FRESH COMMENTS ON ADDITIONAL EVIDENC ES FILED. 3. BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN DISMISSING THE APPEA L FILED WHEN THE ORIGINAL ASSESSMENT WAS MADE U/S 144 OF TH E INCOME TAX ACT, 1961 AND ASSESSEE OFFERED ALL THE ADDITIONAL EVIDENCES WITH SUPPORTING PROOFS. KEEPING THE ABOVE FACTS, I REQUEST YOUR GOODSELF TO ADMIT MY PLEA AND ACCEPT T HE APPEAL AND GRANT ME RELIEFS AS DEEMED FIT. 5 ASSESSEE MAY BE PERMITTED TO ALTER, ADD OR DELETE A NY GROUNDS OF APPEAL TILL THE APPEAL IS HEARD. 6. DURING THE COURSE OF HEARING BEFORE US THE ASSESSEE FILED AN APPLICATION, DATED 10.9.2013, SEE KING LEAVE TO ENTERTAIN THE FOLLOWING ADDITIONAL GROUNDS : 1. THAT THE ASSESSMENT IS BAD IN LAW AS IT IS BASE D ON THE RETURN OF INCOME HELD TO BE INVALID BY THE LD. A.O . 2. THAT HAVING HELD THAT THE RETURN OF INCOME WAS I NVALID, NO ASSESSMENT COULD BE MADE WITHOUT CALLING FOR A RETU RN BY THE LD. A.O. OR HAVING BEEN FILED BY THE ASSESSEE. 7. THE ASSESSEE FURTHER FILED SUBMISSIONS IN WRITING FOR ENTERTAINING THE ADDITIONAL GROUNDS, ON 26.11.2014 AND ALSO PLEADED BEFORE US THAT THE ABO VE GROUNDS BEING PURELY LEGAL IN NATURE AND NO FRESH F ACTS BEING REQUIRED TO BE BROUGHT ON RECORD FOR ADJUDICA TING THE SAME, THE ADDITIONAL GROUNDS OUGHT TO BE ADMITT ED. 8. WE SHALL FIRST BE DEALING WITH THE ISSUE OF ADMITTANCE OF ADDITIONAL GROUNDS RAISED BEFORE US. 9. THE ASSESSEE IN THE ADDITIONAL GROUNDS RAISED BEFORE US HAS CHALLENGED THE VALIDITY OF THE ORDER PASSED BY THE AO U/S 144 OF THE ACT, WITHOUT CALLING FOR A RETURN OF INCOME. THE GROUND RAISED IS CLEARLY LEGAL IN N ATURE AND CAN BE ADJUDICATED ON THE BASIS OF MATERIAL AVA ILABLE ON RECORD. WE THEREFORE ADMIT THE SAME FOR ADJUDIC ATION IN VIEW OF THE DECISION OF THE APEX COURT IN NATION AL THERMAL PLANT CO. VS. CIT (1998) 229 ITR 383. 6 10. AS REGARDS THE ISSUE RAISED IN THE ADDITIONAL GROUND, LD.COUNSEL FOR THE ASSESSEE ARGUED THAT SI NCE THE AO HAD DEEMED THAT NO RETURN HAD BEEN FILED BY THE ASSESSEE, HE COULD HAVE FRAMED THE ASSESSMENT U/S 1 44 OF THE ACT, ONLY AFTER CALLING THE ASSESSEE TO FILE A RETURN OF INCOME. AS PER THE LD. COUNSEL, SINCE THE AO HAD FA ILED TO DO SO, THE ASSESSMENT FRAMED WAS INVALID. LD COUNSE L FOR THE ASSESSEE DREW SUPPORT FROM THE JUDGEMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. BAKE FOOD PRODUCTS (P) LTD.(2012) 28 TAXMANN.COM 186, IN SUPPORT OF ITS CONTENTION. 11. PER CONTRA, THE LD. DR VEHEMENTLY CONTESTED THE ADDITIONAL GROUND, STATING THAT THE CASE LAW RE LIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, WAS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE SINCE I T WAS RENDERED IN THE CONTEXT OF THE LAW PREVAILING AT TH AT TIME, WHEN THE PROVISIONS OF SECTION 139(2) OF THE ACT WE RE ON THE STATUTE AND THE SAID SECTION HAD SINCE THEN BE EN ABOLISHED. THE LD.DR RELIED UPON THE DECISION OF T HE HON'BLE APEX COURT IN THE CASE OF PADMASUNDARA RAO (DECD.) V. STATE OF TAMIL NADU, (2002) 255 ITR 147 AND STATED THAT DECISIONS RENDERED BY COURTS ARE MADE ON SETTING OF FACTS OF EACH CASE AND RELIANCE THEREON CAN BE BASED ONLY ON FITTING THE FACTUAL SITUATION. 12. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES AND HAVE ALSO GONE THROUGH THE CASE LAW REL IED ON BY THE ASSESSEE, IN THE CASE OF BAKE FOOD PRODUCTS (P) 7 LTD. (SUPRA).WE FIND NO MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ORDER PASSED U/S 144 OF THE ACT WAS INVALID SINCE THE ASSESSING OFFICER HAD NOT CALLED FOR A RETURN OF INCOME FROM THE ASSESSEE BEF ORE PASSING THE SAID ORDER. WE FIND NO SUCH REQUIREMENT IN THE PROVISIONS OF SECTION 144. FOR A BETTER UNDERST ANDING SECTION 144 OF THE ACT IS REPRODUCED HEREUNDER: 144. BEST JUDGMENT ASSESSMENT (1) ] IF ANY PERSON- (A) FAILS TO MAKE THE RETURN REQUIRED UNDER SUB- SECTION (1) OF SECTION 139] AND HAS NOT MADE A RETURN OR A REVISED RETURN UNDER SUBSECTION (4) OR SUB- SECTION (5) OF THAT SECTION,] OR (B) FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISS UED UNDER SUBSECTION (1) OF SECTION 142 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER S UB- 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 ASSESSING OFFICER, AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH THE ASSESSING OFFICER HAS GATHERED, SHALL, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE ASSESSMENT OF THE TOTAL INCOME OR LOSS TO THE BEST OF HIS JUDGMENT AND DETERMINE THE SUM PAYABLE BY THE ASSESSEE ON TH E BASIS OF SUCH ASSESSMENT: PROVIDED THAT SUCH OPPORTUNITY SHALL BE GIVEN BY THE ASSESSING OFFICER BY SERVING A NOTICE CALLING UPON THE ASSESSEE TO SHOW CAUSE, ON A DATE AND TIME TO BE SPECIFIED IN THE NO TICE, 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 UNDER SUB- SECTION (1) OF SECTION 142 HAS BEEN ISSU ED PRIOR TO THE MAKING OF AN ASSESSMENT UNDER THIS SECTION. (2) THE PROVISIONS OF THIS SECTION AS THEY STOOD IMMED IATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1 987 (4 OF 1988 ), SHALL APPLY TO AND IN RELATION TO ANY ASSESSMENT FO R THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1988 , OR ANY E ARLIER ASSESSMENT YEAR AND REFERENCES IN THIS SECTION TO THE OTHER PROVISI ONS OF THIS ACT SHALL BE CONSTRUED AS REFERENCES TO THOSE PROVISIONS AS FOR THE TIME BEING IN FORCE AND APPLICABLE TO THE RELEVANT ASSESSMENT YEAR. 13. INTERPRETING THE SAID SECTION LITERALLY, WE FI ND THAT THE ASSESSING OFFICER IS EMPOWERED TO PASS AN EX PARTE ORDER, IF A PERSON FAILS ON THE FOLLOWING COU NTS: 8 I)TO FILE RETURN OF INCOME AT ALL, WITHIN THE STIPULATED TIME U/S 139(1), OR BELATEDLY U/S 139(4) OR EVEN REVISED RETURN U/S 139(5) OF THE INCOME TAX ACT. OR II)TO COMPLY WITH NOTICES ISSUED U/S 142(1) OR 143( 2) OF THE ACT. 14. THE SECTION ALSO PROVIDES THAT THE ASSESSING OFFICER SHOULD GIVE A SHOW CAUSE NOTICE TO THE ASSE SSEE BEFORE FRAMING THE ASSESSMENT, WHICH IS NOT REQUIRE D IN CASE NOTICE U/S 142(1) HAS BEEN SERVED ON THE ASSE SSEE. 15. THE FACTS OF THE PRESENT CASE SHOW THAT THE ASSESSING OFFICER WAS WELL WITHIN HIS POWERS IN FRA MING THE ASSESSMENT U/S 144 OF THE ACT. IT IS NOT DISPUT ED THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME IN THE WRONG FORM WHICH WAS THEREFORE TREATED AND DEEMED AS NO R ETURN FILED BY THE ASSESSING OFFICER. THUS IN THE ABSENC E OF ANY RETURN FILED, THE CONDITION STIPULATED U/S 144(1) ( A) STOOD SATISFIED AND THE ASSESSING OFFICER WAS LEGALLY COR RECT IN PASSING THE EX-PARTE ORDER U/S 144 OF THE ACT. FURT HER IT IS AN UNDISPUTED FACT THAT THE ASSESSEE WAS SERVED WITH NOTICES BOTH U/S 143(2) AND 142(1) OF THE ACT, WHIC H HAD NOT BEEN COMPLIED WITH BY THE ASSESSEE. THEREFORE I N THE BACKDROP OF THE SAID FACTS, THE CONDITION STIPULATE D U/S 144(1) (B) & (C) ALSO STOOD SATISFIED. THUS VIEWED FROM ANY ANGLE, THE ASSESSING OFFICER, IN THE PRESENT CASE W AS WELL WITHIN HIS POWERS TO FRAME THE ASSESSMENT U/S 144 O F THE ACT, THE ASSESSEE NEITHER HAVING FILED HIS RETURN O F INCOME NOR HAVING COMPLIED WITH THE NOTICES ISSUED TO IT. 9 16. THE ARGUMENT OF THE LD COUNSEL FOR THE ASSESSE E THAT THE ASSESSING OFFICER SHOULD HAVE CALLED FOR R ETURN OF INCOME BEFORE FRAMING THE ASSESSMENT ,WE FIND IS BA SED ON THE JUDGEMENT OF THE ANDHRA PRADESH HIGH COURT IN T HE CASE OF CIT VS. BAKE FOOD PRODUCTS (P) LTD.(2012) 2 8 TAXMAN.COM 186, WHICH, WE AGREE WITH THE LD.DR DOES NOT APPLY TO THE PRESENT CASE, HAVING BEEN RENDERED IN THE MATRIX OF THE LEGAL PROVISION PREVAILING THEN. ON GOING THROUGH THE SAID JUDGEMENT WE FIND THAT THE SAID CA SE RELATED TO ASSESSMENT YEAR 1986-87. IN THE SAID CA SE, THE ASSESSING OFFICER HAD FRAMED AN EX-PARTE ASSESSMENT UNDER SECTION 144 OF THE ACT DUE TO NON-COMPLIANCE BY THE ASSESSEE OF VARIOUS NOTICES ISSUED TO IT. FURTHER IT WAS ALSO FOUND THAT THERE WAS A DEFECT IN THE RETURN F ILED SINCE IT WAS NOT ACCOMPANIED BY AUDITED BALANCE SHE ET AND PROFIT AND LOSS ACCOUNT, WHICH WAS NOTIFIED TO THE ASSESSEE BUT WAS NOT RECTIFIED BY IT. IN THIS FACT UAL BACKGROUND, THE HON'BLE HIGH COURT ANALYZED THE PREVAILING PROVISIONS OF SECTION 144 OF THE ACT AND STATED THAT AS PER SECTION 144(1)(A) BEST JUDGMENT ASSESSM ENT COULD BE MADE BY THE ASSESSING OFFICER IF AN ASSESS EE FAILED TO MAKE THE RETURN REQUIRED BY ANY NOTICE GI VEN UNDER SUB-SECTION (2) OF SECTION 139 OF THE ACT AND HAD NOT MADE A RETURN OR REVISED RETURN UNDER SUB-SECTI ON (4) OR SUB-SECTION (5) OF SECTION 139 OF THE ACT. REFE RRING TO SECTION 139 (2) OF THE ACT THE HON'BLE HIGH COURT P OINTED OUT THAT THE SAID SECTION STATED THAT IN CASE OF AN Y PERSON WHO IN THE INCOME TAX OFFICERS OPINION WAS ASSESSA BLE 10 UNDER THE ACT WHETHER ON HIS OWN TOTAL INCOME OR ON THE TOTAL INCOME OF ANY OTHER PERSON DURING THE PREVIOU S YEAR, HE MAY SERVE A NOTICE UPON HIM REQUIRING HIM TO FUR NISH SUCH RETURN IN THE PRESCRIBED FORM. READING THE TW O TOGETHER THE HON'BLE HIGH COURT HELD THAT THE BEST JUDGMENT ASSESSMENT UNDER SECTION 144(1)(A) COULD B E MADE ONLY IF THE ASSESSEE FAILED TO MAKE THE RETURN REQUIRED BY ANY NOTICE GIVEN UNDER SUB-SECTION (2) OF SECTION 139 OR HAD NOT MADE A RETURN OR REVISED RET URN UNDER SUB-SECTION (4) OR (5) OF THAT SECTION. THE RELEVANT PORTION OF THE ORDER AT PARAS 7 AND 8 IS REPRODUCED HEREUNDER : 7. THE ASSESSMENT WHICH IS SUBJECT MATTER OF THIS A PPEAL IS FOR THE ASSESSMENT YEAR1986-87. SECTION 139 (1) OF T HE ACT PROVIDES FOR FILING OF A RETURN BY AN ASSESSEE IF HIS TOTAL INCOME DURING THE PREVIOUS YEAR EXCEEDS T HE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME TAX. AT THAT RELEVANT TIME (I.E. IN 1986-87), THERE WAS SUB-SECTI ON (2) IN SECTION 139 WHICH PROVIDED AS FOLLOWS: 'SECTION 139(2) : IN THE CASE OF ANY PERSON WHO, IN TH E INCOME TAX OFFICER'S OPINION IS ASSESSABLE UNDER THIS ACT, W HETHER ON HIS OWN TOTAL INCOME OR ON THE TOTAL INCOME OF ANY O THER PERSON DURING THE PREVIOUS YEAR, THE INCOME TAX OFF ICER MAY, BEFORE THE END OF THE RELEVANT ASSESSMENT YEAR, SER VE A NOTICE UPON HIM REQUIRING HIM TO FURNISH, WITHIN THIRTY DAYS FROM THE DATE OF SERVICE OF THE NOTICE, A RETURN OF HIS INCOME OR THE INCOME OF SUCH OTHER PERSON DURING THE PREVIOUS YEAR, IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIB ED ..' 11 THIS SUB-SECTION (2) IN SECTION 139 WAS OMITTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 WITH EFFECT FROM 01- 04-1989. BUT SINCE THE SUBJECT MATTER OF THE PRESENT CASE IS THE ASSESSMENT MADE ON 20.3.1989 FOR ASSESSMENT YEAR 198 6-87, WE HAVE TO CONSIDER THE EFFECT OF SUB-SECTION (2) OF SECTION 139 AND IT CANNOT BE IGNORED. 8. SECTION 144 OF THE ACT PROVIDES FOR BEST JUDGMEN T ASSESSMENT OF TAX BY AN ASSESSING OFFICER. FOR THE SUBJECT ASSESSMENTYEAR1986-87,SECTION144(L)(A)PROVIDED FOR A BEST JUDGMENT ASSESSMENT BEING MADE BY THE ASSESSIN G OFFICER IF AN ASSESSEE FAILED TO MAKE THE RETURN RE QUIRED 'BY ANY NOTICE GIVEN UNDER SUB-SECTION (2) OF SECTION 13 9' AND HAS NOT MADE A RETURN OR REVISED RETURN UNDER SUB-S ECTION (4) OF SUB-SECTION (5) OF SECTION 139. BY THE DIRECT TAX LAWS (AMENDMENT) ACT,1987, W.E.F. 1.4.1989, THE WORDS 'B Y ANY NOTICE GIVEN UNDER SUB-SECTION (2) OF SECTION 139' IN SECTION 144(L)(A) WERE SUBSTITUTED BY THE WORDS 'UNDER SUB-SEC TION (1) OF S. 139'. BUT SINCE THIS AMENDMENT CAME INTO FORC E ONLY WITHEFFECTFROM01-04-1989, THE PRE-AMENDED PROVISION APPLIED TO THE PRESENT CASE (AS THE SUBJECT ASSESSMENT YEAR IS 1986-87). THEREFORE BEST JUDGMEN T ASSESSMENT CAN ONLY BE MADE UNDER SECTION 144(L)(A) IF AN ASSESSEE FAILS TO MAKE THE RETURN REQUIRED BY ANY NOT ICE GIVEN UNDER SUB-SECTION (2) OF SECTION 139 AND HAS NO T MADE A RETURN OR REVISED RETURN UNDER SUB-SECTION (4) OR SUB- SECTION (5) OF THAT SECTION. 17. THE HON'BLE HIGH COURT THEREAFTER HELD THAT TH IS INTERPRETATION WAS IN CONSONANCE WITH CBDT CIRCULAR NO.281 DATED 22.9.1980 PARA 27-4(VI), SUB-CLAUSE (V I) OF WHICH PROVIDED AS UNDER : & QUOT; WHERE THERE IS A DEFAULT IN RECTIFYING THE D EFECT INTIMATED BY THE ITO., THE RETURN OF INCOME HAS TO B E TREATED AS AN INVALID RETURN AND FURTHER PROCEEDINGS SHALL HAVE TO B E TAKEN 12 ON THE FOOTING THAT THE ASSESSEE HAD FAILED TO FURN ISH THE RETURN. THUS IN A CASE WHERE THE RETURN IS FURNISHED VOLUNT ARILY UNDER SECTION 139 (1), THE ITO CANNOT-PROCEED TO MAKE EX- PARTE ASSESSMENT UNDER SECTION 144 WITHOUT SERVING A NOTIC E UNDER SECTION 139 (2) OR AS THE CASE MAY BE, UNDER SECTION 148. WHERE, HOWEVER, A DEFECTIVE RETURN WAS FILED IN RES PONSE TO A NOTICE UNDER SECTION 139 (2) OR SECTION 148, THE IT O, MAY STRAIGHTAWAY PROCEED TO COMPLETE THE ASSESSMENT EX- PARTE UNDER SECTION 144 OR ISSUE A NOTICE UNDER SECTION 1 42 (L). & QUOT; 18. THE HON'BLE HIGH COURT HELD THAT THE CBDT CIRCULAR WAS IN THE NATURE OF CLARIFICATION TO THE ASSESSING AUTHORITIES, THAT WHERE THERE WAS A DEFAULT IN REC TIFYING THE DEFECT IN THE RETURN, AS INTIMATED BY THE ITO TO THE ASSESSEE, THE RETURN WAS TO BE TREATED AS INVALID RETURN AND FURTHER PROCEEDINGS TO BE TAKEN ON THE FOOTING THAT THE ASSESSEE HAD FAILED TO FILE THE RETURN . THE H ON'BLE HIGH COURT HELD THAT CBDT HAD RIGHTLY DIRECTED THAT THE ITO CANNOT PROCEED TO MAKE EX-PARTE ASSESSMENT U/S 144 WITHOUT SERVING NOTICE U/S 139(2) OR THE CASE MAY B E U/S 148 AND THAT THE CIRCULAR WAS BINDING ON THE ASSESS ING OFFICER. THE RELEVANT FINDING OF THE HIGH COURT AT PARAS 13 AND 14 OF THE ORDER ARE AS FOLLOWS: 13. HAVING CONSIDERED THE SAME, WE ARE OF THE VIEW THAT THE C.B.D.T. CIRCULAR IS IN THE NATURE OF A CLARIFICATIO N TO THE ASSESSING AUTHORITIES THAT WHEN THERE IS A D EFAULT IN RECTIFYING A DEFECT IN THE RETURN AS INTIMATED BY TH E I.T.O. BY THE ASSESSEE, THE RETURN OF INCOME HAS TO BE TREATED AS AN INVALID RETURN AND FURTHER PROCEEDINGS WILL HAVE TO BE TAKEN ON THE FOOTING THAT THE ASSESSEE H AD FAILED TO FILE THE RETURN. THE C.B.D.T. HAS RIGHTLY DIRECTED 13 THAT IN CASE WHERE THE RETURN IS FURNISHED VOLUNTAR ILY UNDER SECTION 139 (1), THE I.T.O. CANNOT PROCEED TO MAKE EX PARTE ASSESSMENT UNDER SECTION 144 WITHOUT SERVI NG NOTICE UNDER SECTION 139 (2) OR AS THE CASE MAY BE UNDER SECTION 148. THIS CIRCULAR IS BINDING ON THE A SSESSING OFFICER. 14. ON THE FACTS OF THE PRESENT CASE, WHEN THE ASSE SSEE FILED A DEFECTIVE RETURN, AND DID NOT RECTIFY THE DEFECTS WHICH WERE POINTED OUT BY THE I.T.O., THE ASSESSING OFFICER WAS BOUND TO TREAT THE RETURN OF INCOME AS INVALID AND TAKE FURTHER PROCEEDINGS ON THE FOOTING THAT THE ASSESSEE HAD FAILED TO FURNISH THE RETURN. THE ASSESSING AUTHORITY COULD NOT HAVE PROCEEDED TO MAKE EX PARTE ASSESSMENT UNDER SECTION 144 WITHOUT SERVING NOTICE UNDER SECTION 139 (2) OR AS THE CASE MAY BE UNDER SEC TION 148. 19. IT IS EVIDENT FROM THE ABOVE THAT THE AFORESAI D JUDGMENT WAS RENDERED IN THE CONTEXT OF THE LAW PRE VAILING AT THAT TIME WHEN THE PROVISIONS OF SECTION 139(2) WAS ON THE STATUTE AS ALSO PROVISIONS OF SECTION 144(1)(A) AS OUTLINED ABOVE. THE SAID TWO SECTIONS, WE FIND, HA VE SINCE UNDERGONE AMENDMENT, WITH SECTION 139(2) HAVING BEE N ABOLISHED AND SECTION 144(1)(A) HAVING BEEN AMENDED BY DELETING SECTION 139(2) AND SUBSTITUTING WITH SECTI ON 139(1). IN SUCH CIRCUMSTANCES WE ARE IN COMPLETE AGREEMENT WITH THE LD. DR THAT THE SAID CASE LAW IS NOT APPLICABLE TO THE PRESENT CASE BEFORE US, WHICH REL ATES TO THE POST AMENDMENT PERIOD. 20. WE MAY ADD THAT THE LD. COUNSEL FOR THE ASSESSEE REBUTTED THIS ARGUMENT OF THE LD. DR BY ST ATING THAT POST AMENDMENT THE ASSESSING OFFICER OUGHT TO HAVE 14 ISSUED NOTICE U/S 142(1) BEFORE FRAMING THE ASSESSM ENT U/S 144 OF THE ACT. WE DO NOT CONCUR WITH THIS CONT ENTION OF THE LD COUNSEL FOR THE ASSESSEE ALSO. A PERUSAL OF SECTION 144 SHOWS THAT ON FULFILLMENT OF ANY OF TH E CIRCUMSTANCES SPECIFIED THEREIN AN EX PARTE ORDER CAN BE PASSED BY THE AO, SINCE THE CONDITIONS ARE SEPARATE D BY THE USE OF THE WORD OR BETWEEN THEM. IN THE PRES ENT CASE THE ASSESSEE HAVING FAILED TO FILE ITS RETURN OF INCOME, THE CONDITION SPECIFIED U/S 144(1)(A) STOOD SATISFIED AND THE AO WAS WELL WITHIN HIS POWERS TO PASS THE SAID ORDER U/S 144 OF THE ACT. THERE WAS NO REQUIREMENT TO SATISFY THE CONDITION OF NON-COMPLIA NCE WITH THE NOTICE ISSUED U/S 142(1) ALSO, ASKING THE ASSESSEE TO FILE RETURN OF INCOME OR FURNISH INFORM ATION RELATING TO THE RETURN FILED, BEFORE FRAMING THE SA ID ASSESSMENT. 21. IN VIEW OF THE ABOVE WE FIND NO MERIT IN THE L EGAL GROUND RAISED BY THE ASSESSEE AND, THEREFORE, DISMI SS THE SAME. 22. THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE THEREFORE DISMISSED. 23. WE SHALL NOW PROCEED TO DEAL WITH THE OTHER GROUNDS RAISED BY THE ASSESSEE. 24. THE SOLE ARGUMENT MADE BEFORE US BY THE LD. COUNSEL FOR THE ASSESSEE ON THE ORIGINAL GROUNDS RA ISED, IS 15 AGAINST THE REFUSAL OF THE LD. CIT (APPEALS) TO ADM IT THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. 25. THE FACTS NECESSARY FOR ADJUDICATING THE ABOVE GROUNDS HAVE ALREADY BEEN NARRATED ABOVE, THAT EX PARTE ASSESSMENT U/S 144 OF THE ACT, WAS FRAMED IN THE P RESENT CASE SINCE THE ASSESSEE FAILED TO COOPERATE AND DID NOT ATTEND THE PROCEEDINGS AT ALL DESPITE REPEATED NOT ICES SENT TO IT. THEREAFTER WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (APPEALS) THE ASSESSEE SO UGHT TO ADMIT ADDITIONAL EVIDENCES, TO WHICH THE ASSESSING OFFICER OBJECTED BY STATING THAT THE ASSESSEE HAD BEEN GIVE N ENOUGH OPPORTUNITY DURING ASSESSMENT PROCEEDINGS IT SELF AND SINCE THE ASSESSEE HAD FAILED TO DEMONSTRATE WH AT PREVENTED IT FROM PRODUCING THE EVIDENCES BEFORE TH E ASSESSING OFFICER, THE SAME OUGHT NOT TO BE ADMITTE D BY THE LD. CIT (APPEALS). THE LD. CIT (APPEALS) AGREE D WITH THE CONTENTIONS OF THE ASSESSING OFFICER AND REFUSE D TO ADMIT THE ADDITIONAL EVIDENCES. 26. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE ADDITIONAL EVIDENCES ADDUCED BEFORE THE LD. CIT (APPEALS) OUGHT TO HAVE BEEN ADMITTED BY HI M SINCE THERE WAS SUFFICIENT CAUSE WITH THE ASSESSEE FOR NOT HAVING ADDUCED THE SAME BEFORE THE ASSESSING OFFICE R. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THERE WAS AN ONGOING DISPUTE BETWEEN THE PARTNERS ON ACCOUNT OF WHICH THE ASSESSEE FIRM COULD NOT BE REPRESENTED AND COUL D NOT PARTICIPATE IN THE ASSESSMENT PROCEEDINGS BEFORE TH E 16 ASSESSING OFFICER. AS EVIDENCE OF THE DISPUTE, LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO COPIES OF LE TTERS ADDRESSED TO THE BANKERS WITH WHOM THE FIRM WAS MAINTAINING ACCOUNTS, BY THE PARTNERS, FOR NON OPER ATION OF THE ACCOUNTS SEVERALLY BY THE PARTNERS AND INSTR UCTING THEM TO OPERATE THE ACCOUNTS JOINTLY. THE SAID DOCU MENT WAS PLACED AT PAPER BOOK PAGE NOS.84 AND 85. THE L D. COUNSEL FOR THE ASSESSEE ALSO DREW OUR ATTENTION TO A COPY OF FIR FILED BY SHRI ASHOK KUMAR MANUJA, ONE OF THE PARTNERS OF THE ASSESSEE FIRM, AGAINST SHRI ABHINAV SABHARWAL, THE OTHER PARTNER AND SH.ASHOK KUMAR SABHARWAL IN PANCHKULA TO THE DCP, PANCHKULA WHICH MENTIONED THE DISPUTE BETWEEN THE PARTNERS. 27. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD. CIT (APPEALS) AND STATED THAT THE ASSESSEE HAD FAILED TO DEMONSTRATE THE EXISTENCE OF ANY DISP UTE AT THE TIME THE ASSESSMENT PROCEEDINGS WERE TAKING PLA CE BETWEEN THE PARTNERS, WHICH PREVENTED IT FROM PARTICIPATING IN THE ASSESSMENT PROCEEDINGS. THE L D. DR FURTHER POINTED OUT THAT THE EVIDENCES NOW BEING FI LED BY THE ASSESSEE ARE NOT RELEVANT FOR THE ADJUDICATION OF THE ISSUE AT HAND AND, THEREFORE, ALSO THERE WAS NO REA SON TO ADMIT THE SAME AS HAD BEEN RIGHTLY DONE BY THE LD. CIT (APPEALS). 28. A THIS JUNCTURE, THE LD. COUNSEL FOR THE ASSES SEE WAS ASKED TO SHOW WHAT WERE THE DOCUMENTS PRODUCED BEFORE THE LD. CIT (APPEALS) AS ADDITIONAL EVIDENCE . THE 17 LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE DOCUME NTS LISTED IN THE ORDER OF THE CIT (APPEALS) AS ADDITIO NAL EVIDENCE. 29. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES AND PERUSED ALL THE DOCUMENTS REFERRED TO B EFORE US BY BOTH THE PARTIES. THE SHORT ISSUE BEFORE US IS RELATING TO THE ADMISSION OF ADDITIONAL EVIDENCES B EFORE THE LD. CIT (APPEALS) WHICH UNDENIABLY HAD TO BE IN COMPLIANCE WITH THE CONDITIONS AND CIRCUMSTANCES ST ATED IN RULE 46A OF THE INCOME TAX RULES, 1962, WHICH DE ALS WITH THE CIRCUMSTANCES IN WHICH ADDITIONAL EVIDENC ES CAN BE ADMITTED BY THE CIT (APPEALS). AS PER THE CONDI TIONS SET OUT UNDER RULE 46A OF THE RULES, THE EVIDENCES CAN BE ADMITTED IF IT IS DEMONSTRATED THAT THE ASSESSING O FFICER HAD REFUSED TO ADMIT THE SAME OR HAD NOT GIVEN SUFF ICIENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE THE EVIDENCES OR THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRO DUCING THE SAME BEFORE THE ASSESSING OFFICER. IN THE PRE SENT CASE, IT IS NOT DISPUTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT IT WAS GIVEN SUFFICIENT OPPORTUNITY BY THE ASS ESSING OFFICER TO PRODUCE THE ADDITIONAL EVIDENCES AND WAS ALSO NOT PREVENTED BY THE ASSESSING OFFICER FROM PRODUCI NG THE SAME. THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT ON ACCOUNT OF DISPUTE BETWEEN THE PARTNERS THE ASSE SSEE FIRM WAS UNABLE TO PRODUCE THE EVIDENCES BEFORE THE ASSESSING OFFICER AND THIS CONSTITUTED SUFFICIENT C AUSE PREVENTING IT FROM ADDUCING THE EVIDENCE BEFORE THE 18 ASSESSING OFFICER. AS EVIDENCE OF THE SAME THE LD. COUNSEL FOR THE ASSESSEE HAS PRODUCED COPIES OF CORRESPONDENCES WITH BANK WHICH STATED THAT THE ACC OUNTS WHICH WERE BEING OPERATED BY EITHER OF THE PARTNERS ARE HENCEFORTH TO BE OPERATED BY BOTH THE PARTNERS SINC E ONE OF THE PARTNERS HAS EXPRESSED HIS DESIRE TO WITHDRA W FROM THE PARTNERSHIP FIRM. THE SAID LETTER ADDRESSED TO THE MANAGER OF HDFC BANK IS DATED 10.2.2009. THE ASSESSMENT PROCEEDINGS WERE INITIATED IN THE CASE O F THE ASSESSEE ON 30.9.2008 WHEN FIRST NOTICE U/S 143(2) WAS SERVED AND ASSESSMENT WAS COMPLETED ON 17.12.2009. THUS CLEARLY THE LETTER PERTAINS TO THE PERIOD WHEN THE ASSESSMENT PROCEEDINGS OF THE ASSESSEE WERE TAKING PLACE BUT THEY DO NOT THROW ANY LIGHT ON ANY SORT OF DISP UTE BETWEEN THE PARTNERS DURING THIS PERIOD SINCE WHAT THE LETTER ONLY STATES IS THAT ONE OF THE PARTNERS HAD EXPRESSED HIS DESIRE TO WITHDRAW FROM THE PARTNERSH IP FIRM. THEREFORE, WE CANNOT AGREE WITH THE LD. COUN SEL FOR THE ASSESSEE THAT THESE DOCUMENTS PROVE THE EXISTEN CE OF ANY DISPUTE BETWEEN THE PARTNERS WHEN THE ASSESSMEN T PROCEEDINGS WERE TAKING PLACE. AS FAR AS FIR FILED BY ONE OF THE PARTNERS SHRI ASHOK KUMAR AGAINST THE OTHER PARTNER SHRI ABHINAV KUMAR SABHARWAL IS CONCERNED, WE FIND THAT THE SAME IS DATED 13.4.2013. A PERUSAL OF THE SAME SHOWS THAT IN THE FIR THE COMPLAINANT HAS STAT ED THAT IN APRIL, 2009 THE OTHER PARTNER SHRI ABHINAV KUMAR SABHARWAL, WITH AN INTENTION TO CHEAT THE COMPLAINA NT I.E. SHRI ASHOK KUMAR, HAD OPENED AN INDIVIDUAL ACCOUNT IN 19 HIS NAME AND THE FIRM INTRODUCING HIMSELF AS PROPRI ETOR OF THE FIRM WITH THE INTENTION TO GRAB ALL THE PAYMENT S RECEIVED BY THE ASSESSEE FIRM. THESE EVENTS NARRAT ED IN THE FIR DO SHOW THE EXISTENCE OF DISPUTE BETWEEN TH E PARTNERS DURING THE PENDENCY OF THE ASSESSMENT PROCEEDINGS. BUT AT THE SAME TIME, WE FIND THAT T HE ADDITIONAL EVIDENCES WHICH THE ASSESSEE HAD SOUGHT TO ADMIT DO NOT HELP OR PROVIDE ASSISTANCE IN PROVING THE ASSESSEES CASE AGAINST THE ADDITIONS MADE. NEITHE R HAS THE SAME BEEN DEMONSTRATED BEFORE US BY THE LD. COU NSEL FOR THE ASSESSEE WHEN THE QUESTION WAS PUT BEFORE I T AT BAR. THE ADDITIONS MADE IN THE PRESENT CASE RELATE TO ; (I) ON ACCOUNT OF ACCRETION IN LOAN AMOUNT AS COMPARED TO PREVIOUS YEAR, WHICH REMAINED UNSUBSTANTIATED; (II) ON ACCOUNT OF ABNORMAL INCREASE IN ADVERTISEME NT EXPENSES AS COMPARED TO PREVIOUS YEAR, WHICH REMAINED UNSUBSTANTIATED; (III) ON ACCOUNT OF UNSUBSTANTIATED OTHER EXPENSES; AND (IV) ON ACCOUNT OF DISALLOWANCE OF SALARY AND INTER EST PAID TO PARTNERS, SINCE THE ASSESSMENT WAS FRAMED EX-PARTE U/S SECTION 144 THEREBY ATTRACTING THE PROVISIONS OF SECTION 184(5) WHICH PROVIDE FOR DISALLOWANCE OF INTEREST AND SALARY PAID TO PARTNER S IN THE CASE OF EX-PARTE ASSESSMENTS. 20 30. THE ADDITIONAL EVIDENCES WHICH THE ASSESSEE HA D SOUGHT TO PRODUCE ARE AS FOLLOWS, AS REPRODUCED AT PAGE 6 OF THE CIT (APPEALS)S ORDER : SR. NO. PARTICULARS OF DOCUMENTS ANNEXURE 1. REPAYMENT SCHEDULE OF SECURED LOANS A 2. COPY OF ACCOUNT OF ADVERTISEMENT EXPENSES(RS.25,73,820/-) ALONGWITH COPIES OF BILLS B 3. COPY OF RETURN OF VARIOUS EXPENSES I.E. ADVERTISEMENT EXP. OTHER EXP. C 4. DETAILS OF OTHER EXP. (RS.37,94,619/-) ALONGWITH COPIES OF ACCOUNTS THEREOF D 5. COPIES OF PARTNERSHIP DEED E 6. DETAIL OF INTEREST PAID (RS.3,11,213/-) ALONGWITH COPIES OF ACCOUNTS THEREOF F 7. COPY OF TAX AUDIT REPORT DT.29.10.07 ALONGWITH FINAL ACCOUNTS G 31. A PERUSAL OF THE ABOVE SHOWS THAT THE ASSESSEE HAS ONLY SOUGHT TO PRODUCE DETAILS OF THE EXPENSES DISALLOWED OR THE REPAYMENT SCHEDULE OF LOANS WHICH WE ARE UNABLE TO UNDERSTAND HOW THEY ASSIST IN PROVIN G THAT THE ADDITIONS/DISALLOWANCES MADE WERE INCORRECT OR FOR THAT MATTER GO TO THE ROOT OF THE CASE, UNEQUIVOCAL LY PROVING THAT THE DISALLOWANCES MADE WERE INCORRECT. THE VERACITY OF THE EXPENSES CLAIMED CANNOT BE PROVED B Y MERELY FURNISHING DETAILS OF THE SAME. THE GENUINE NESS OF LOAN CANNOT BE PROVED BY MERE REPAYMENT SCHEDULE. MOREOVER, DISALLOWANCE OF INTEREST AND SALARY PAID TO PARTNERS U/S 184(5) IS AUTOMATIC IN THE CASE OF EX -PARTE ASSESSMENTS AND FURNISHING OF PARTNERSHIP DEED OR F OR 21 THAT MATTER DETAIL OF INTEREST PAID TO PARTNERS DOE S NOT HELP THE ASSESSEES CASE AT ALL IN CLAIMING THE AFO RESAID EXPENSES. THEREFORE, NONE OF THE ADDITIONAL EVIDEN CES WHICH THE ASSESSEE HAS SOUGHT TO ADDUCE BEFORE THE LD. CIT (APPEALS), WE FIND, ARE ENOUGH TO PROVE THE ASS ESSEES CASE AND FOR THIS REASON ALSO, NO PURPOSE, WE FIND WOULD BE SERVED BY ADMITTING THE ADDITIONAL EVIDENCES. I N VIEW OF THE SAME, WE FIND NO INFIRMITY IN THE ORDER OF T HE LD. CIT (APPEALS) REFUSING TO ADMIT THE ADDITIONAL EVID ENCES ADDUCED BY THE ASSESSEE SINCE AS STATED ABOVE, THE ASSESSEE HAS NOT BEEN ABLE TO SUFFICIENTLY DEMONSTR ATE THE EXISTENCE OF REASONABLE CAUSE FOR NOT ADDUCING THE SAME BEFORE THE ASSESSING OFFICER AS PRESCRIBED UNDER RU LE 46A OF THE RULES, NOR DO THE ADDITIONAL EVIDENCES ASSIS T IN PROVING THE ASSESSEES CASE. IN VIEW OF THE ABOVE, GROUNDS NOS.1, 2 AND 3 RAISED BY THE ASSESSEE ARE DISMISSED . 32. THE APPEAL OF THE ASSESSEE IS, THEREFORE, DISMISSED. ITA NO.1300/CHD/2012 : 33. THE SAID APPEAL IS AGAINST THE ORDER OF THE CI T(A) CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) ON THE ADDITIONS MADE IN THE QUANTUM PROCEEDINGS U/S 144 O F THE ACT. 34. AS PER THE FACTS OUTLINED IN THE APPEAL RELATI NG TO QUANTUM PROCEEDINGS HEREIN ABOVE, THE ASSESSING 22 OFFICER PASSED AN EX PARTE ASSESSMENT ORDER AFTER T HE ASSESSEE FAILED TO COMPLY WITH NOTICES SERVED ON IT AND MADE ADDITIONS TO THE TUNE OF RS.78,42,061/- ON VA RIOUS COUNTS AS BELOW; A) UNSUBSTANTIATED INCREASE IN LOAN RS.12,43,690/- B) UNSUBSTANTIATED INCREASE IN ADVERTISEMENT EXPENSES RS.22,69,703/- C) UNSUBSTANTIATED OTHER EXPENSES RS.37,94,619/- D) INTEREST AND SALARY PAID TO PARTNERS DISALLOWED U/S 184(5) OF THE ACT RS.5,34,047/- 35. THEREAFTER PENALTY AMOUNTING TO RS. 26,39,636/ - WAS IMPOSED ON THE ADDITIONS MADE ON ACCOUNT OF INACCURATE PARTICULARS FURNISHED BY THE ASSESSEE. 36. BEFORE THE LD CIT(A) THE ASSESSEE CONTENDED TH AT THE ADDITIONS HAVING BEEN MADE ON ESTIMATE BASIS ,N O PENALTY WAS LEVIABLE. LD CIT(A) REJECTED THE ASSESS EES CONTENTION AND UPHELD THE LEVY OF PENALTY BY HOLDI NG AS FOLLOWS: 5.1 THE APPELLANT'S CLAIM IS THAT THE PENALTY U/S 271(L)(C) IS NOT LEVIABLE SINCE THE ADDITION MADE ON ESTIMATE BASIS. THE APPELLANT'S PLEA IS NOT ACCEPTABLE IN VI EW OF THE FINDINGS OF THE JURISDICTIONAL HIGH COURT IN VIDYAWATI OSWAL'S CASE 108 ITR 861 (PAH) WHEREAS IT WAS HELD THAT PENALTY CAN BE IMPOSED ON ESTIMATED INCOME . 5.2 IN CIT VS. KRISHNASWATNV & SONS 219 ITR 157 (MOD.) HON'BLE MADRAS HIGH COURT HELD THAT PENALTY CON BE LEVIED EVEN IF ASSESSMENT IS BASED ON ESTIMATE. PENALTY PROVISIONS U/S 271(L)(C) INDICATE THE 23 ELEMENT OF STRICT LIABILITY ON THE APPELLANT FOR CON CEALMENT OR FOR GIVING INACCURATE PARTICULARS OF INCOME SECTION 271(L)(C) HAS BEEN INACTED TO PROVIDE FOR A REMEDY F OR THE LOSS OF REVENUE. PENALTY UNDER THIS PROVISION IS A CIVIL LIABILITY AND WILLFUL CONCEALMENT IS NOT AN ESSENTI AL INGREDIENT FOR ATTRACTING THE CIVIL LIABILITY IN VI EW OF THE FINDINGS OF THE APEX COURT IN UNION OF INDIA VS. DHARMENDPA TEXTILE PROCESSORS AND OTHERS 306 ITR 277 (SC). 37. BEFORE US LD. COUNSEL FOR THE ASSESSEE RELIED ON SUBMISSIONS MADE BEFORE THE CIT(A) WHILE LD DR RELI ED ON THE ORDER OF THE CIT(A). 38. HAVING HEARD BOTH THE PARTIES WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) UPHOLDING THE LEVY OF PENALTY. WITH THE ASSESSEE NOT RESPONDING TO NOTICE S AND NOT CO-OPERATING DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER RIGHTLY FRAMED THE ASSESSMENT U/S 144 OF THE ACT ON THE BASIS OF INFORMATION AVAILABLE WI TH HIM, WHICH IN THE PRESENT CASE WAS THE INFORMATION FURN ISHED IN THE RETURN FILED BY THE ASSESSEE IN A WRONG FORM . IT HAS NEVER BEEN THE CONTENTION OF THE LD COUNSEL FOR THE ASSESSEE THAT THE INFORMATION FURNISHED BY THE ASSE SSEE IN THE RETURN FILED WAS INCORRECT. THE SAID ASSESSMEN T HAS BEEN UPHELD BY US, CONFIRMING THE ADDITIONS MADE, I N THE ORDER PASSED AGAINST THE APPEAL FILED BY THE ASSESS EE IN ITA NO. 1299/CHD/12 ABOVE. FURTHER WE FIND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE AMOUNTS DISALLOWED OR OFFER ANY EXPLANATION OR DETAIL RELAT ING TO 24 THE SAME EVEN DURING PENALTY PROCEEDINGS OR BEFORE US. THEREFORE IT STANDS ESTABLISHED BEYOND DOUBT THAT, TO THE EXTENT OF ADDITIONS/DISALLOWANCES MADE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, THUS BE COMING LIABLE TO PENALTY U/S 271(1)(C) OF THE ACT. WE CON CUR WITH THE LD CIT(A) THAT PENALTY U/S 271(1)(C) IS A STRIC T LIABILITY FOR CONCEALING OR FURNISHING INACCURATE PARTICULARS OF INCOME AND WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING THE SAME. IN VIEW OF THE ABOVE WE UPHOLD THE PENALTY LEVIED U/S 271(1)(C) OF THE A CT AMOUNTING TO RS. 26,39,636/- 39. THE APPEAL OF THE ASSESSEE IS THEREFORE DISMISSED 40. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH FEBRUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH