M/s. Sudarshan Petroleum, Ahmedabad V. The Income tax Officer,Ward-2(5), Baroda

ITA 149/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85821 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 20-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL R SHAH
• Keywords: Peak credit
• Section: 142(1); 68; 144

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.149/AHD/2011 / ASSTT. YEAR: 2005-06 M/S.SUDARSHAN PETROLEUM N.H. NO.8, ALAMGIR BARODA. PAN : AAWFS 6836 J VS ITO, WARD-2(5) BARODA. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI ANIL. R. SHAH REVENUE BY : SHRI NIMESH YADAV, SR.DR / DATE OF HEARING : 05/03/2015 / DATE OF PRONOUNCEMENT: 13/03/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS AN APPEAL FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A)-II, AHMEDA BAD DATED 8.0.2010 FOR ASSTT.YEAR 2005-06 BY RAISING THE FOLLOWING GRO UNDS OF APPEAL: I. EX-PARTY ASSESSMENT ORDER. 1. THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER EX-PARTY U/S.44 OF THE ACT. ON FACTS OF THE CASE IT IS SUBMITTED THAT YOUR APPE LLANT HAD APPEARED AND COMPLIED WITH ALL THE NOTICES SUPPORTE D WITH FULL DETAILS AND INFORMATION IN COMPLIANCE OF THE NOTICE U/S. 142(1) OF THE ACT AS WELL AS OTHER NOTICES OF ASSESSING OFFIC ER. 2. THE ASSESSING OFFICER HAS NOT ADHERED TO THE REQUIREMENT OF LAW IN PASSING EX-PARTY ORDER U/S. 144 INCLUDING SE RVICE OF NOTICE BY AFFIXTURE AND THAT HE HAS ACTED HIGH HANDED BY I N PASSING ORDER ON 20-12-07. IT)A NO149/AHD/2011 2 3. IT IS ALSO SUBMITTED THAT WHILE PASSING EX PAR TY ORDER U/S. 144 THE ASSESSING OFFICER WAS DUTY BOUND TO COMPLETE TO TAL INCOME JUDICIOUSLY AND BASED ON RECORD AND NOT ARBITRARY. THE A.O MAKING ABOVE ORDER IS ON PRESUMPTION AND GUESS WORK WHICH IS STRONGLY OBJECTED BY YOUR APPELLANT AND IT IS SUBMI TTED THAT VARIOUS ADDITION MADE BY HIM BE DELETED. II. ON ADDITION U/S.68 RS.39,96,198 1. THE CIT(A) HAS ERRED BOTH IN LAW AND IN F ACT IN CONFIRMING ADDITION OF RS.39,96.198 OUT OF ADDITION U/S.68 OF RS.51,96,198 MADE BY THE ASSESSING OFFICER AND THEREBY GIVING ON LY PARTIAL AND HALFHEARTED RELIEF OF RS. 12,00,000. 2. IT IS SUBMITTED BY YOUR APPELLANT THAT ALL THE DEPOSITORS ARE KNOWN ACKNOWLEDGED AND ASSESSABLE UNITS WHO HAVE GI VEN CONFIRMATION, PROVED THAT CREDITWORTHINESS AND PROV ED GENUINEOUS OF TRANSACTION AND IT IS THEREFORE SUBMITTED SEC.68 DOES NOT APPLY TO THE FACTS OF THE CASE AND NO ADDITION IS NOT CAL LED FOR IN THE FOLLOWING ACCOUNTS, (A) SANJAYBHAI V. SHAH RS. 8,00,000 (B)KHUSHBU (SHROFF A/C.) RS.25,96,198 (C) PRANAVBHAI B. SHAH RS. 6,00,000 TOTAL RS. 39,96,198 3. WITHOUT PREJUDICE TO ABOVE IT IS SUBMITTED THA T EACH OF THE ABOVE REFERRED ACCOUNT THERE IS AN OPENING BALANCE WHICH CANNOT BE CALLED CASH CREDIT OF THE YEAR AND IS NOT LIABLE TO BE ADDED TO THE TOTAL INCOME. IT IS THEREFORE SUBMITTED THAT TH E ADDITION OF RS.39,96,198 CONFIRMED BY THE CIT(A) BE DELETED. 4. IT IS ALSO SUBMITTED THAT THE ASSESSING O FFICER AND CIT(A) HAS ERRED IN NOT WORKING OUT ADDITION ON THE PRINCI PLE OF 'PEAK CREDIT' AS ACCEPTED UNDER ACCOUNTANCY PRINCIPLE AND VARIOUS JUDGEMENT OF APPELLATE AUTHORITIES. II. SUNDRY CREDITORS RS. 13.13,940 1. THE CIT(A) ALSO ERRED BOTH IN LAW AND FACTS OF T HE LAW IN CONFIRMING ADDITION OF RS.13,13,940 BEING 'OUTSTAND ING CREDITORS' AT THE END OF THE ASSESSMENT YEAR APPEARING IN THE BALANCE SHEET OF THE APPELLANT. 2. IT IS SUBMITTED BY YOUR APPELLANT THAT THE SUN DRY CREDITORS ARE GOODS ACCOUNT AND ACCOUNTS OF BUSINESS AND THE AMOUNT IT)A NO149/AHD/2011 3 WHICH REMAIN OUTSTANDING AT THE END OF THE YEAR IN APPEAL HAS BEEN SUBSEQUENTLY PAID OFF SETTLED BY ACCOUNT PAYEE CHEQUE AND THEREFORE IT CANNOT BE SAID TO BE NON VERIFIABLE CR EDITORS. IV. INFLATED EXPENSES RS.94,550 1. THE CIT(A) IS ALSO ERRED IN CONFIRMING DISALLOW ANCE OF RS.94,550 MADE BY THE ASSESSING OFFICER ON 'ADHOC A ND ESTIMATE' BASIS ALLEGED AS 'INFLATION OF EXPENSES.' 2. YOUR APPELLANT SUBMITS THAT THE ENTIRE AMOUNT OF EXPENSE OF RS.4,72,747 IS IN DIRECT EXPENSES DULY VOUCHED AND SUPPORTED BY EVIDENCE OF PAYMENT AND AS PER THE BOOKS OF ACCOUNT S OF THE APPELLANT WHICH ARE WHOLLY VERIFIABLE. THE DISALLOW ANCE AT 20% ON ADHOC AND ESTIMATE BASIS IS UNWARRANTED ON FACTS OF THE CASE AND NOT SUPPORTED BY PROVISIONS OF LAW. 3. YOUR APPELLANT SUBMITS THAT IN VIEW OF FACTS OF THE CASE AND AS PER PROVISIONS OF LAW AND SINCE THE APPELLANT IS MA INTAINING REGULAR AND PROPER BOOKS OF ACCOUNTS AND ASSESSING OFFICER HAVING ACCEPTED THE BOOKS OF ACCOUNTS AND NOT SPECI FICALLY POINTED OUT ANY LACUNA IN BOOKS OR EXPENSES NOT SUP PORTED BY VOUCHERS & PROOF PAYMENT OF THE DISALLOWANCE IS NOT CALLED FOR. V. TELESCOPING OF VARIOUS ADDITION. 1. IT IS SUBMITTED BY YOUR APPELLANT THAT VARI OUS ADDITIONS REFERRED ABOVE CONFIRMED IN APPEAL BY CIT(A) RESULT S INTO DOUBLE AND MULTIPLE ADDITION WHICH AGAINST LAW, EQUITY AND JUSTICE. 2. IT IS SUBMITTED THAT THE PRINCIPLE OF TELESC OPING OF VARIOUS ADDITION BE SUITABLY DONE AS PER PROVISION OF LAW A ND VARIOUS AUTHORITIES OF AND JUDGEMENTS OF APPELLATE AUTHORIT IES. 2. AT THE TIME OF HEARING, AR OF THE ASSESSEE ADMIT TED THAT THE ASSESSMENT OF INCOME WAS MADE BY THE AO VIDE ITS OR DER DATED 20.12.2007 PASSED UNDER SECTION 144 OF THE ACT, AS THE ASSESSEE FAILED TO APPEAR BEFORE HIM AND FILE THE DETAILS REQUIRED FOR MAKING THE ASSESSMENT. HE SUBMITTED THAT BEFORE THE CIT(A) AS SESSEE HAD FILED A PAPER BOOK OF 27 PAGES TOGETHER WITH THE WRITTEN SU BMISSIONS FOR ADDITION OF CASH CREDIT UNDER SECTION 68 OF THE ACT AND ADDITION OF SUNDRY CREDITORS. THE CIT(A) DID NOT ACCEPT THE PA PER BOOK FILED BY THE ASSESSEE ON THE GROUND THAT BEFORE THE AO THE ASSES SEE FAILED TO FILE IT)A NO149/AHD/2011 4 ANY PAPER IN SUPPORT OF HIS RETURN OF INCOME AND TH E AO HAS ALLOWED SUFFICIENT OPPORTUNITY TO THE ASSESSEE. HE SUBMITT ED THAT THE ASSESSEES BUSINESS WAS CLOSED AND THERE WAS DISPUTE AMONG THE PARTNERS, AND THEREFORE, THE REQUIRED PAPERS COULD NOT BE SUBMITT ED TO THE AO DURING THE COURSE OF HEARING. HE SUBMITTED THAT IN THE IN TEREST OF JUSTICE THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE C IT(A) FOR RE- ADJUDICATING THE APPEAL OF THE ASSESSEE AFRESH, AFT ER CONSIDERING THE PAPERS FILED BY WAY OF PAPER BOOK BEFORE HIM. 3. THE DR VEHEMENTLY OPPOSED THE SUBMISSIONS OF THE ASSESSEE AND SUBMITTED THAT NO LENIENCY SHOULD BE SHOWN TO THE A SSESSEE, WHO FAILED TO AVAIL OPPORTUNITY OF HEARING PROVIDED BY THE AO AND HAS NOT GIVEN ANY SUFFICIENT REASON TO EXPLAIN ITS CONDUCT BEFORE THE CIT(A). 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE MATERIAL ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THE A SSESSEE HAS FAILED TO APPEAR BEFORE THE AO AND FILE REQUIRED DETAILS IN S UPPORT OF ITS RETURN OF INCOME AND THE AO HAS ALLOWED SUFFICIENT OPPORTUNIT Y TO THE ASSESSEE. THE ASSESSEE FILED THE PAPER BOOK ONLY BEFORE THE C IT(A) FOR THE FIRST TIME, WHO HAS NOT ADMITTED THE SAME, ON THE GROUND THAT THE ASSESSEE HAS NOT FILED THE SAME BEFORE THE AO. IN THE ABOVE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, TO SERVE IN THE INTEREST OF SU BSTANTIAL JUSTICE, THE MATTER SHOULD BE REMANDED BACK TO THE FILE OF THE C IT(A) TO DECIDE THE APPEAL OF THE ASSESSEE AFRESH AFTER TAKING INTO CON SIDERATION THE PAPERS FILED IN THE PAPER BOOK BY THE ASSESSEE. HOWEVER, KEEPING IN VIEW THE CONDUCT OF THE ASSESSEE BEFORE THE AO, WE IMPOSE A PENALTY OF RS.5,000/- ON THE ASSESSEE, WHO IS DIRECTED TO DEPO SIT THE SAME BEFORE THE END OF THIS MONTH I.E. MARCH, 2015. THE CIT(A) IS DIRECTED TO DISPOSE OF THE APPEAL OF THE ASSESSEE EXPEDITIOUSLY AFTER CONSIDERING THE PAPERS FILED BY THE ASSESSEE BEFORE HIM BY WAY OF P APER BOOK. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE WITH THE CIT (A) IN DISPOSING OF IT)A NO149/AHD/2011 5 THE APPEAL. WITH THESE DIRECTIONS, THE APPEAL OF T HE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 13 TH MARCH, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER