M/S SUPER EMIRATES EXPORTS, MUMBAI V. ITO-WARD 28(3)(3), MUMBAI

ITA 1312/MUM/2023

AI Insights

The case involves appeals by M/s Super Emirates Exports against the orders of the ld. CIT(A) for the assessment years 2011-12 and 2012-13. The appeals were consolidated due to identical facts and issues. The primary contention was the rejection of the assessee's books of accounts and the subsequent estimation of income by the Assessing Officer (AO) at 2% of the total sales, which was challenged as arbitrary and without basis. The ITAT found merit in the assessee's arguments regarding the non-consideration of specific details provided during the assessment and the lack of clarity on the deficiencies pointed out by the AO. Consequently, the ITAT restored the matter to the ld. CIT(A) for a fresh examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130090 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 11-07-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 17-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURESH D. GAIKWAD
• Keywords: Principle of natural justice; Reassessment proceedings
• Section: 147; 44AB; 145(3)

Judgement Text

P a g e | 1 ITA No. 1312 & 1314/Mum/2023 M/s Super Emirates Export Vs. ITO, Ward 28(3)(3) IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA Nos.1312 & 1314/Mum/2023 (A.Ys. 2011-12 to 2012-13) M/s Super Emirates Exports C/o Pradeep Kisan Nikam B-301, Ganesh Krupa Society Sector 9, Near New English School, Kamothe Navi Mumbai-410206 Vs. ITO, Ward 28(3)(3) Tower 6, 3 rd Floor, Vashi Railway Station Commercial Complex, Vashi, Navi Mumbai - 400703 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: ABQFS9866D Appellant .. Respondent Appellant by : Dinkle Haria Respondent by : Suresh D. Gaikwad Date of Hearing 12.07.2023 Date of Pronouncement 18.07.2023 आदेश / O R D E R Per Amarjit Singh (AM): These 2 appeals filed by the assesse are directed against the different order of ld. CIT(A) for the assessment year 2011-12 & 2012- 13. Since both these appeals are based on identical facts on similar issue, therefore, for the sake convenience both these appeals are adjudicated together by taking ITA No.1312/Mum/2023 as a lead case and its finding will be applied mutatis mutandis to the other appeal of the assessee. P a g e | 2 ITA No. 1312 & 1314/Mum/2023 M/s Super Emirates Export Vs. ITO, Ward 28(3)(3) 2. There was a delay in filing of both these appeal by 57 days. The assesse has filed application for condonation of delay in filing these appeals. The assessee submitted that order of the ld. CIT(A) was received by them on 21.12.2022 and the due date for filing the appeal before the ITAT was 20.02.2023. The assessee explained that out of the two partners one of the partner has migrated to Lucknow, therefore, only single person was left in Mumbai to manage the affairs of the assessee firm. The mother of the partner Mr. Pradeep K. Nikam passed away on 14.01.2023 and health of his father was also no in good condition who was staying at Satara. Therefore, the said partner remained at his native place to provide required attention to his father which resulted delay in filing these appeal by 57 days. 3. Heard both the sides and perused the material on record. Considering the submission made by the ld. Counsel as discussed supra we observe that prima facie there appear to be bonafide reason for delay in filing these appeals by 57 days because of expiry of the mother of the active partner and because of ill health of his father, therefore, we condone the delay of 57 days in filing these appeals. ITA No. 1312/Mum/2023 “1. THE ORDER BAD, ILLEGAL AND WITHOUT JURISDICTION 1.1 In the facts and the circumstances of the case, and in law, the appellate order framed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi ("NFAC") [Ld. CIT (A)'] be held as bad and illegal, as: (i) The same is framed in breach of the statutory provisions and the scheme; (ii) The same is perverse and passed without any application of mind to the facts on record; and (iii) The same is passed in flagrant breach of the principle of natural justice. WITHOUT PREJUDICE TO THE ABOVE 2. EX-PARTE ORDER 2.1 The Ld. CIT (A) erred in passing the order ex-parte. P a g e | 3 ITA No. 1312 & 1314/Mum/2023 M/s Super Emirates Export Vs. ITO, Ward 28(3)(3) 2.2 While doing so, the Ld. CIT (A) failed to appreciate that the non- attendance / non-reply was for the reasons not attributable to the Appellant / beyond the control of the Appellant and not deliberate or intentional. 2.3 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. WITHOUT PREJUDICE TO THE ABOVE 3. REASSESSMENT 3.1 The Ld. CIT (A) erred in confirming the action of the AO. in initiating reassessment proceedings and framing the assessment of the Appellant by invoking the provisions of section 147 r.ws 148 of the Income tax Act, 1961 "the Act"]. 3.2 While doing so, the Ld. CIT (A) failed to appreciate that: (i) The case of the appellant did not fall within the parameters laid down by section 147 r.ws. 148 of the Act, (ii) The necessary preconditions for initiating and completion thereof were not satisfied. 3.3 It is submitted that in the facts and the circumstances of the case, and in law, the reassessment framed was bad, illegal and void. WITHOUT PREJUDICE TO THE ABOVE 4. REJECTION OF BOOK RESULT 4.1 The Ld. CIT (A) erred in confirming the action of the Appellant in rejecting the book results of the Appellant by invoking the provisions of section 145 (2) of the Act. 4.2 While doing so, the Ld. CIT (A) failed to appreciate that the necessary pre- conditions for invoking the section were absent in the Appellant's case. 4.3 It is submitted that in the facts and the circumstances of the case, and in law, no such action was called for. WITHOUT PREJUDICE TO THE ABOVE 5.1 ESTIMATION OF TAXABLE INCOME 5.1 The Ld. CIT (A) erred in confirming the action of the A.O. in making addition of Rs.53,59,278/- to the income of the Appellant, being 2% of the alleged turnover of Rs.26,79,88,914/-, and disallowing the loss of Rs. 19,50.166/- as claimed in the return of income. 5.2 While doing so, the Ld. CIT (A) erred in: P a g e | 4 ITA No. 1312 & 1314/Mum/2023 M/s Super Emirates Export Vs. ITO, Ward 28(3)(3) (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations, and (iii) Ignoring relevant material and considerations as submitted by the Appellant 5.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for. 5.4 Without prejudice to the above, assuming but not admitting that some addition was called for, it is submitted that the computation of the addition made by the A.O. is arbitrary, excessive and not in accordance with the law.” 4. Fact in brief is that assessee has filed return of income on 30.09.2011 for assessment year 2011-12 declaring total income at Rs.nil. Subsequently, the case of the assessee was reopened by issuing of notice u/s 148 of Act on 28.03.2018. During the course of assessment the assessing officer asked the assessee to explain the claim of export sales and the consideration received on account of such exports. To substantiate the export sale the assesse had made submission and furnish the print out of sale register along with details of buyers, quantity, rate value etc. as under: “2. In the reference of above show cause notice, we have to submit as under: (i) It appears that while issuing the above show cause notice, your honour has not taken in to considerations the details filed so far on various dates and duly receipted either in tapal or in person by your honour in person. We are again enclosing the copies of all those letters submitted with your honour to substantiate our clients exports. (ii) During the year under scrutiny, our client was liable for Tax audit and Tax audit was carried out and return of income and tax audit report was submitted record. (iii) To substantiate the Exports sales, our clients have submitted the followings: (a) A detailed Flow chart of activities to be undertaken during the exports of onions. (b) Printout of sales register of complete year is submitted on record gung details of buyer, quantity, rate, value etc. (c) Copies of freight Balls giving reference of invoices, quantity with number of bags, vehicle numbers used for transportation P a g e | 5 ITA No. 1312 & 1314/Mum/2023 M/s Super Emirates Export Vs. ITO, Ward 28(3)(3) of Goods from our client's location to Loading port, details of Sea Vessel details of destination Port etc. (d) We had also produced sample set of export documents containing Export Invoices, Certificate of origin issued by Raigad Chamber of Commerce & Industry, Pytho Certificate, Stamping by Excise Inspector, bill of lading, Custom documentation Freight bill Bank Realization certificate and also explained our honour how exports are undertaken and how many different agencies are involved. (e) We had also submitted copies of ledger accounts of all parties to whom exports are done during the year under scrutiny giving details of exports tills read on that party and payment received against those bills in that year. (f) We had also submitted bank book of our client where all the entries of deposits and withdrawals are explained and on sample basis matched with the bank statements held record which were submitted by banks on notice given by your. honour (g) In addition to above. We had submitted ledger accounts of all major expenses accounts giving details of expenses and mode of that payment. (h) We are submitting along with this letter, Copies of all sale bills including exports and local and also stock ledgers giving details of inward and outward movement of stocks. (iv) From the above details submitted by us, the entire cycle of exports can be traced night from purchase of goods till realization of proceeds through bank. (v) During the course of our discussions, we had shown you the sample comes f entire export documentation including Export invoice. Ell of lading, Bank Realization certificate, Freight bills giving details of vehicles used to move the containers and vessels used to transport the containers etc. (vi) The assesse has shown GPG 13.39% which is at par with the industry (vii) In view of the above, our client have tried to submit all the relevant details to substantiate its exports sales and its realization. 3. ON INVOCATION OF SEC 145/3) AND REJECTION OF BOOKS OF ACCOUNTS: 1. In the above referred show cause notice, your honour had asked why the books of accounts should not be rejected and income be calculated on estimated basis. 2. In this connections, we have to submit as under: (a) Our client has maintained regular books of accounts correctly and completely and same were audited u's 44AB and based on that return of income was filed. P a g e | 6 ITA No. 1312 & 1314/Mum/2023 M/s Super Emirates Export Vs. ITO, Ward 28(3)(3) (b) The books of accounts have been maintained regularly (c) Income has been computed in accordance with accounting standards applicable in India. 3. In view of the above, the invocation of sec 145(3) is not warranted.” However, the AO has not agreed with the submission of the assesse. The assessing officer was of the view that detail submitted by the assessee was incomplete and insufficient. Therefore, AO has rejected the books of account of the assessee and computed the net profit of the assessee @ 2% of the sale. Accordingly, the assessing officer has made addition of Rs.53,59,778/- to the total income of the assessee. 5. Aggrieved, the assesse filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 6. Heard both the sides and perused the matter on record. The ld. Counsel at the outset submitted that because of close down of business and shifting of one of the partner to Lucknow, the required compliance could not be made before the ld. CIT(A). The ld. Counsel also submitted that AO had not considered the relevant specific details given by the assessee during the course of assessment proceedings and made addition on estimated basis as 2% of total sale of the assessee without any basis. We find that assessing office has made the impugned addition as 2% of the sale amount on estimated basis without specifying the deficiencies in the details submitted by the assessee. The AO has also not pointed out which are the other details particularly required to be furnished by the assessee. Therefore, in view of the above facts and circumstances we consider that it is appropriate to restore this case to the file of the ld. CIT(A) for adjudicating on merit after affording other opportunity to the assessee. Accordingly, both these appeals are restored to the file of the ld. CIT(A) for deciding de novo on merit after affording adequate opportunity to the assessee to adjudicate the P a g e | 7 ITA No. 1312 & 1314/Mum/2023 M/s Super Emirates Export Vs. ITO, Ward 28(3)(3) appeals as contemplates under Sec. 250(6) of the Act. Therefore, both these appeals of the assessee are allowed for statistical purposes. 7. In the result, both the appeal of the assessee are allowed for statistical purposes. Order pronounced in the open court on 18.07.2023 Sd/- Sd/- (Aby T Varkey) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 18.07.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.