Sunrise Indus.Equipments Pvt. Ltd., Baroda V. The Income tax Officer, Ward-4(3), Baroda

ITA 1489/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8944 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-09-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 25-05-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U S RAINA
• Keywords: Reopening of assessment; Reassessment proceedings; Set aside
• Section: 143(3); 234B; 147; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH C CC C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI T.K.SHARMA T.K.SHARMA T.K.SHARMA T.K.SHARMA, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER AND AND AND AND SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:23.09.09 DRAFTED ON:23.09.09 ITA NO.1489/AHD/2005 ASSESSMENT YEAR : 1998-99 SUNRISE INDUSTRIES EQUIPMENTS PVT. LTD. 860/3, G.I.D.C., MAKARPURA, BARODA. VS. I.T.O., WARD -4(3) BARODA. (APPELLANT) .. (RESPONDENT) ITA NO.1663/AHD/2005 ASSESSMENT YEAR : 1998-99 I.T.O., WARD -4(3) BARODA. VS. SUNRISE INDUSTRIES EQUIPMENTS PVT. LTD. 860/3, G.I.D.C., MAKARPURA, BARODA. PAN/GIR NO. : AACCS 9801 J (APPELLANT) .. (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: SHRI U.S.RAINA, SR. D.R. ITA NO.1489/AHD/2005 & ITA/AHD/2005 M/S.SURISE INDISTRIES EQUIPMENTS P. LTD. ASST.YEAR -1998-99 - 2 - O R D E R O R D E R O R D E R O R D E R PER PER PER PER N.S.SAINI N.S.SAINI N.S.SAINI N.S.SAINI , ACCOUNTANT MEMBER : , ACCOUNTANT MEMBER : , ACCOUNTANT MEMBER : , ACCOUNTANT MEMBER :- -- - THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II, BARODA, DATED 12.04.2005 BY TAKING THE FOLLOWING GROUNDS OF APPEALS. ITA NO.1489/AHD/2005(ASSESSEES APPEAL) ITA NO.1489/AHD/2005(ASSESSEES APPEAL) ITA NO.1489/AHD/2005(ASSESSEES APPEAL) ITA NO.1489/AHD/2005(ASSESSEES APPEAL) 2. THE LD. CIT(A) ERRED IN CONFIRMING THE ASSESSEE OFFICERS ACTION UNDER SECTION 147 OF THE ACT. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OUGHT TO HAVE HELD THAT ASSESSMENT MADE UNDER SECTION 147 R.W.S. 143(3) IS ILLEGAL AND INVALID, AND THEREFORE, OUGHT TO HAVE CANCELLED THE SAME. 4. THE LD. CIT(A) ERRED IN REJECTING THE BOOK RESULT OF YOUR APPELLANT. 5. THE LD. CIT(A) FURTHER ERRED IN CONFIRMING THE GROSS PROFIT R ATE AT 48.28% ADOPTED BY THE ASSESSING OFFICER AND THEREBY FURTHER ERRED IN CONFIRMING THE ADDITION OF RS.5,03,080/- MADE ON ACCOUNT OF GP. ITA NO.1489/AHD/2005 & ITA/AHD/2005 M/S.SURISE INDISTRIES EQUIPMENTS P. LTD. ASST.YEAR -1998-99 - 3 - 6. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITIONS MADE ON ACCOUNT OF FOLLOWING DISALLOWANCE A) OUT OF EMPLOYERS CONTRIBUTIONS TO PF & ESI RS.30,892/- B) OUT OF EMPLOYEES CONTRIBUTIONS PF & ESI RS.21,797/- C) OUT OF INTEREST TO I) GSFC RS.1,73,419 II) CANARA BANK RS. 59,404 III) OTHERS RS.3,06,634 TOTAL RS. 5,39,457/- D) OUT OF TRAVELLING EXPENSES RS. 19,976/- E) MEMBERSHIP FEES RS. 12,000/- 7. THE LD. CIT(A) ERRED IN CONFIRMING THE INTEREST CHARGED UNDER SECTION 234A & 234B ON THE TAX RELATED TO THE ADDITION MADE. 8. THE ABOVE GROUNDS OF APPEAL ARE ALTERNATIVE AND WITHOUT PREJUDICE TO EACH OTHER. 9. YOUR APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE, MODIFY OR WITHDRAW ALL OR ANY OF THE GROUNDS MENTIONED ABOVE. ITA NO.1663/AHD/2005(REVENUES APPEAL) ITA NO.1663/AHD/2005(REVENUES APPEAL) ITA NO.1663/AHD/2005(REVENUES APPEAL) ITA NO.1663/AHD/2005(REVENUES APPEAL) 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)ERRED: ITA NO.1489/AHD/2005 & ITA/AHD/2005 M/S.SURISE INDISTRIES EQUIPMENTS P. LTD. ASST.YEAR -1998-99 - 4 - (I) IN DELETING THE ADDITION OF RS.55,48,583/- MADE ON ACCOUNT OF DIFFERENCE IN STOCK AS PER THE STATEMENTS SUBMITTED BY THE ASSESSEE TO THE BANK AS COMPARED TO STOCK AS PER BOOKS OF ACCOUNTS. HE HAS IGNORED THE DECISION OF ITAT, AHMEDABAD IN THE CASE OF ACIT V/S. VIKAS AGENCY (85 ITD 536) WHEREIN IT HAS BEEN HELD THAT ADDITION MADE ON THE BASIS OF STOCK HYPOTHECATION STATEMENT IS TO BE SUSTAINED WHEN THE ASSESSEE FURNISHES NO EVIDENCE TO SHOW THAT THE STOCK STATEMENT WAS INFLATED. IN THE CASE, ASSESSEE WAS NOT ABLE TO ESTABLISH CORRECTNESS OF ITS BOOKS OF ACCOUNTS. (II) IN FURTHER HOLDING THAT ADDITION MADE BY THE A.O. INVOKING THE PROVISIONS OF SECTION 69 IS NOT JUSTIFIED WHERE THERE IS HARDLY ANY POSSIBILITY OF EARNING PROFIT EQUIVALENT TO THE TURNOVER DISCLOSED DURING THE YEAR IGNORING THE FACTS THAT THE BOOKS RESULTS AS PER THE BOOKS OF ACCOUNTS HAS BEEN REJECTED BY INVOKING PROVISIONS OF SECTION 145(3) OF THE I.T.ACT AND HAS BEEN CONFIRMED BY LEARNED COMMISSIONER OF INCOME TAX(APPEALS) VIDE ORDER UNDER CONSIDERATION. (III) IN DELETING ADDITION OF RS.12,589/- MADE ON ACCOUNT OF ELECTRICITY EXPENSES PAID TOWARDS THE ELECTRICITY BILL OF RESIDENTIAL PREMISES OF THE DIRECTOR SINCE THERE WAS NO RESOLUTION OF BOARD OF DIRECTORS AND THE SAME WAS ITA NO.1489/AHD/2005 & ITA/AHD/2005 M/S.SURISE INDISTRIES EQUIPMENTS P. LTD. ASST.YEAR -1998-99 - 5 - CONFIRMED IN EARLIER YEARS BY LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN ASSESSEES OWN CASE. 11. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 12. IT IS, THEREFORE, PRAYED THAT THE ORDER OF LD. CIT(A) BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 13. NOTICE OF HEARING WAS SENT TO THE ASSESSEE BY REGISTERED POST A.D. ON 25.08.2009 AND THE SAME WAS SERVED ON THE ASSESSEE ON 29.08.2009 AS EVIDENCED BY THE ACKNOWLEDGEMENT CARD OF POST OFFICE PLACED ON RECORD. NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE CASE WAS CALLED FOR HEARING AND NEITHER ANY ADJOURNMENT APPLICATION WAS FILED. THE APPEAL WAS HEARD AND DECIDED AFTER CONSIDERING THE SUBMISSIONS OF LEARNED DEPARTMENTAL REPRESENTATIVE AND MATERIALS AVAILABLE ON RECORD. 14. THE FIRST GROUND OF APPEAL TAKEN BY THE ASSESSEE IS DIRECTED AGAINST THE VALIDITY OF REOPENING OF ASSESSMENT AND CONSEQUENTLY THE VALIDITY OF ORDERS PASSED IN PURSUANCE TO SUCH REOPENING. 15. AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT ASSESSEE ITA NO.1489/AHD/2005 & ITA/AHD/2005 M/S.SURISE INDISTRIES EQUIPMENTS P. LTD. ASST.YEAR -1998-99 - 6 - SUBMITTED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THAT COPY OF REASONS RECORDED UNDER SECTION 148(2) WAS NOT SUPPLIED TO IT AND THEREBY, HE WAS NOT ALLOWED THE OPPORTUNITY TO RAISE OBJECTIONS AGAINST THE REOPENING OF ASSESSMENT. WE FIND THAT IN THE REASSESSMENT ORDER PASSED ALSO THE REASONS RECORDED UNDER SECTION 148(2) HAVE NOT BEEN STATED. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS ALSO NOT STATED THE RECORDED REASONS. IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER & OTHERS (2003) 259 ITR 19 (SC), THE ASSESSEE IS ENTITLED TO COPY OF RECORDED REASONS AND AFTER THAT TO FILE OBJECTION AGAINST INITIATION OF REASSESSMENT PROCEEDINGS, IF ANY. THE LEARNED ASSESSING OFFICER SHALL BEFORE PROCEEDING WITH THE REASSESSMENT SHALL DISPOSE OFF THE OBJECTIONS OF THE ASSESSEE BY PASSING A SPEAKING ORDER. IN THE INSTANT CASE, AS AFORESAID PROCEDURE HAS NOT BEEN FOLLOWED IN OUR CONSIDERED OPINION, IT SHALL BE IN THE INTEREST OF THE JUSTICE TO RESTORE THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER WITH THE DIRECTION TO ISSUE A COPY OF RECORDED REASONS TO THE ASSESSEE AND THEREAFTER, TO ALLOW REASONABLE OPPORTUNITY TO THE ASSESSEE TO FILE ITS OBJECTION, IF ANY, AND THEREAFTER TO PROCEED WITH THE REASSESSMENT PROCEEDING AS STATED ABOVE AS PER LAW. WE THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES WITH THE DIRECTIONS AS STATED ABOVE. THUS, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1489/AHD/2005 & ITA/AHD/2005 M/S.SURISE INDISTRIES EQUIPMENTS P. LTD. ASST.YEAR -1998-99 - 7 - 16. IN VIEW OF OUR ABOVE DECISION IN RESPECT OF GROUND NO.1 OF APPEAL OF THE ASSESSEE, THE OTHER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE IN ITS APPEAL AND THE APPEAL OF THE REVENUE ALL HAVE BECOME INFRUCTUOUS AND THEREFORE NEED NOT BE ADJUDICATED BY US AT THIS STAGE. ACCORDINGLY, ALL OF THEM ARE DISPOSED OF. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THAT OF THE REVENUE IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 25.09.2009. SD/- SD/- ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 25/09/2009 PARAS # COPY OF THE ORDER FORWARDED TO COPY OF THE ORDER FORWARDED TO COPY OF THE ORDER FORWARDED TO COPY OF THE ORDER FORWARDED TO : :: : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD