Meenaxi Gems Pvt Ltd, Mumbai V. ITO, Ward-1(1)(4), Surat, Surat

ITA 13/SRT/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1925 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-06-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Opportunity of cross examination; Period of limitation; Reason to believe
• Section: 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 13/Srt/2021 (Assessment Year: 2007-08) Meenaxi Gems Pvt. Ltd., 320, A, Panchratna, Opera House, Mumbai-400004. PAN No. AADCM 4645 B Vs. I.T.O., Ward-1(1)(4), Surat. Appellant/ assessee Respondent/ revenue Appellant represented by Shri Prakash Jhunjhunwala, CA with Shri Anand Chaurasia, CA Respondent represented by Shri Vinod Kumar, Sr.DR Date of hearing 01/07/2022 Date of pronouncement 01/07/2022 Order under section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-3, Surat (in short, the ld. CIT(A) dated 11/07/2017 for the Assessment year 2007-08. The assessee has raised following grounds of appeal: “1. The appellant prefers an appeal against an order dated 11/07/2017 passed by Ld. Commissioner of Income Tax (Appeal) 3, Surat on following amongst other grounds each of which are without prejudice to any other 1.0 A humble prayer is made to condone the delay of 1270 days in filing of the 2 nd appeal being caused under the bonafide reasons and compelling circumstances beyond control of the appellant; ITA No.13/Srt/2021 Meenaxi Gems Pvt. Ltd. Vs ITO 2 2.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in passing the 1 st appeal order exparte and confirming the entire additions/disallowances without considering the merits of the case; 3.0 On facts and circumstances of the case and in law, the notice u/s 148 is invalid and consequential reassessment order passed u/s 147 is bad in law since had been issued in absence of fresh tangible material, without independent application of judicial mind and without having valid reason to believe of escapement of income; 4.0 On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition of entire alleged non-genuine purchase [@ 100%] of Rs.38,83,253/- of traded goods (diamonds) made from supplier M/s. Moulimani Impex Pvt Ltd; 5.0 The Ld. CIT(A), before confirming the disallowance of purchase of Rs.38,83,253/- @ 100% of disputed purchase erred in ignoring the understated vital facts, being; a) The disputed purchase of diamonds is supported with purchase bills, delivery challan, confirmation of account, stock tally and bank statements; b) The entire payments had been made through banking channel by A/c payee cheques; c) The statement of 3 rd party recorded at back of the appellant without providing a copy for rebuttal and without allowing an opportunity of cross examination is erroneous; d) The rejection of books of accounts u/s 145(3), without pointing a specific defect, is not justified; 6.0 Without prejudice, a prayer is made to adopt the concept of real income and restrict the addition @ 2% of alleged non-genuine purchase at Rs 77,665/- (2% of Rs ITA No.13/Srt/2021 Meenaxi Gems Pvt. Ltd. Vs ITO 3 38,83,253/-) since regular profits corresponding to disputed purchase had already been offered to tax. The appellant craves leave to add, amend, alter, and/or withdraw any of the grounds of appeal at the time of hearing.” 2. Perusal of record shows that the impugned order was passed by the ld. CIT(A) on 11/07/2017. However, the present appeal is filed by assessee on 19/02/2021. In column 3C of Form No. 36, the assessee has written service of communication of order as “28/12/2020”. The assessee company filed an affidavit of Shri Kailash Chand Sancheti, who is Director of Assessee Company for condonation of delay. In the affidavit, it has contended that the impugned order dated 11/07/2017 was served upon the assessee on 28/12/2020 and the appeal was filed on 19/02/2021 i.e. well within the period of limitation. It is stated that there is no delay in fling the present appeal from the date of receipt of order. In the application, it is further contended that if the service of order is considered as 11/07/2017, there is delay of 920 days in filing the appeal before the Tribunal. Even such delay was beyond the control as due to bonafide and compelling circumstances. 3. The ld. AR of the assessee submits that the order passed by the ld. CIT(A) was not served upon the assessee. The ld. AR invited our attention on the contents of order of ld. CIT(A) wherein there is no paragraph 1 to 5 in the ITA No.13/Srt/2021 Meenaxi Gems Pvt. Ltd. Vs ITO 4 impugned order and straightway there is conclusion part in para-6, wherein the ld. CIT(A) dismissed the appeal of assessee due to non- appearance of assessee without adjudicating the grounds of appeal raised by assessee. There is no reference of statement of fact and points of determination (grounds of appeal) in the order. The ld. AR further submits that even after allegedly passing the order on 11/07/2017, a fresh notice of hearing for fixing the date on for fixing hearing on 27/08/2019, 15/09/2019, 05/11/2-019, 30/12/2019 and 16/03/2020 as evident from the notices, copies of which are placed on record, which were sent to the assessee and ultimately final notice dated 22/07/2020, was sent. When such repeated notices were sent to the assesse, the assesse made further enquiry, on which it was revealed that the appeal of assessee was dismissed long back. The ld. AR submits that due to issuance of number of notices it can be easily inferred that in fact order dated 11/07/2017 was not served upon the assessee as the revenue was sending notice over the notice. The ld AR for the assessee submits that Director of Assessee Company was under mental stress and depression as his that son namely Naresh K Sancheti, who was 28 years of age, committed suicide on 02/06/2014. Copy of death certificate is placed on record. ITA No.13/Srt/2021 Meenaxi Gems Pvt. Ltd. Vs ITO 5 4. The ld. AR of the assessee further prayed that even before the Assessing Officer could not make proper compliance due to death of his son in April, 2014 and the Assessing Officer passed the order under Section 144 of the Income Tax Act, 1961 (in short, the Act) and made addition of 100% of bogus purchases allegedly made from M/s Moulimani Impex Pvt. Ltd. which was manged by Rajendra Jain group. who was declared as Hawala trader by the Income tax department. The ld. AR prayed that either appeal may be restored to the file of Assessing officer or the assessee may be given opportunity to file evidence before the ld. CIT(A) to substantiate his purchases and to decide the appeal on merit. 5. On the other hand, the ld. Senior departmental representative (Sr. DR) for the revenue submits that the order was passed by the ld. CIT(A) on 11/07/2017 as clearly mentioned in the order itself. However, subsequent various notices may have been issued due to fault in the system as the appeal may not have been closed in the system. The ld. Sr. DR of revenue submits that the assessee has not even made compliance before the Assessing Officer as well as before the ld. CIT(A) against the various notices. Thus the lower authorities have no option except to decide the appeal on the basis of material available on record. ITA No.13/Srt/2021 Meenaxi Gems Pvt. Ltd. Vs ITO 6 6. On confronting the contents of order, which clearly shows that it is incomplete order, which is uploaded on the system. The ld. Sr. DR submits that it is a matter of record that the Bench may take decision in accordance with law. 7. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. We find that the ld. CIT(A) dismissed the appeal of assessee for non-appearance of assessee by recording that four opportunities were given to the assessee. We find that the order of ld. CIT(A) is not a complete order as the statement of fact and grounds of appeal for consideration are totally missing. Moreover, the ld. CIT(A) has not adjudicated the appeal as per the mandate of Section 250(6) of the Income Tax Act, 1961 (in short, the Act). Section 250(6) of the Act provides that the order of the Commissioner (Appeals) must facts of the case, point of determination, decision thereon and reasons for such decision. The order of ld. CIT(A) was allegedly passed on 11/07/2017, however after passing the order, the assessee was served with a number of show cause notices for appearance i.e. 15/09/2019, 05/11/2019, 30/12/2019 and 16/03/2020, which creates doubt about the passing of impugned order on 11.07.2017. Considering the overall facts and circumstances of the case and keeping in view that and the facts ITA No.13/Srt/2021 Meenaxi Gems Pvt. Ltd. Vs ITO 7 explained by the ld. AR for the assessee, we condone the delay if any in filing the appeal before this Tribunal. Since we have condoned the delay, the appeal is admitted for hearing. Further considering the fact that as recorded above, the ld. CIT(A) has not adjudicated the various grounds of appeal on merit and the order of ld. CIT(A) is incomplete one, therefore, the grounds of appeal raised by assessee are restored back to the file of ld. CIT(A) to adjudicate all the issues on merit afresh in accordance with law. 8. We further noted that the Assessing Officer passed the impugned order under Section 144 of the Act for the want of evidence, therefore, keeping in view the facts and circumstances of the case explained by the ld. AR of the assessee that own son of director of assessee company committed suicide in April, 2014 when the assessment was going on and the assessee could not make proper compliance of various notices issued by Assessing Officer. Therefore, we deem it appropriate to allow the assessee to file all the necessary evidence before the ld. CIT(A). On filing such evidences, the ld. CIT(A) shall be at liberty either to admit those evidences or seek remand report from the Assessing officer in accordance with law, if so desire. Finding the fact that present appeal relates to A.Y. 2007-08, therefore, we further direct the ld. CIT(A) to expedite the disposal of ITA No.13/Srt/2021 Meenaxi Gems Pvt. Ltd. Vs ITO 8 appeal as far as possible within one year from the date of receipt of this order. 9. In the result, this appeal of the assessee is allowed for statistical purposes only. Order pronounced in the open court on 1 st July, 2022 at the time of hearing of this appeal. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 01/07/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr.Private Secretary, ITAT, Surat