Sri Ebby Issac, Kollam V. ITO, Kollam

ITA 152/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58190 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 23-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T M SREEDHARAN SR MS VIJA
• Keywords: Reasonable cause
• Section: 133A; 6

Judgement Text

1 ITA 144 TO 155/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) & SHRI B.R. BASKARA N (AM) ITA NO.144/COCH/2010 - ASSESSMENT YEAR 2004-05 ITA NO.145/COCH/2010 - ASSESSMENT YEAR 2005-06 ITA NO.146/COCH/2010 - ASSESSMENT YEAR 2006-07 ITA NO.147/COCH/2010 - ASSESSMENT YEAR 2004-05 ITA NO.148/COCH/2010 - ASSESSMENT YEAR 2005-06 ITA NO.149/COCH/2010 - ASSESSMENT YEAR 2006-07 ALEX V ISSAC VS ITO, WD.1 VARROR HOUSE, PERUNGALLOR KOLLAM PO AYOOR, KOLLAM PAN : AAJPI4197F (APPELLANT) (RESPONDENT) ITA NO.150/COCH/2010 - ASSESSMENT YEAR 2005-06 ITA NO.151/COCH/2010 - ASSESSMENT YEAR 2006-07 ITA NO.152/COCH/2010 - ASSESSMENT YEAR 2005-06 ITA NO.153/COCH/2010 - ASSESSMENT YEAR 2006-07 ITA NO.154/COCH/2010 - ASSESSMENT YEAR 2005-06 ITA NO.155/COCH/2010 - ASSESSMENT YEAR 2006-07 EBBY ISSAC VS ITO, WD.1 VARROR HOUSE, PERUNGALLOR KOLLAM PO AYOOR, KOLLAM PAN : AAJPI4197F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.M. SREEDHARAN, SR.COUNSEL RESPONDENT BY: MS. VIJAYAPRABHA DATE OF HEARING : 05-01-2012 DATE OF PRONOUNCEMENT : 06-01-2012 2 ITA 144 TO 155/COCH/2010 O R D E R PER N.R.S. GANESAN (JM) ALL THESE APPEALS OF TWO INDEPENDENT ASSESSES ARE DIRECTED AGAINST VARIOUS ORDERS OF COMMISSIONER OF INCOME-TAX(A). SINCE COM MON ISSUE ARISES FOR CONSIDERATION, WE HEARD ALL THE APPEALS TOGETHER AN D DISPOSE OF THE SAME BY THIS COMMON ORDER. 2. LET US FIRST TAKE ITAS NO.144 TO 146/COCH/2010 F OR THE ASSESSMENT YEARS 2004-05, 2005-06 AND 2006-07. 3. THE ONLY ISSUE ARISES FOR CONSIDERATION IS ESTIM ATION OF PROFIT. SHRI TM SREEDHARAN, THE LD.SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A WHOLESALE DEALER IN RICE , CEMENT, ACC SHEET AND PROVISIONS. THERE WAS SURVEY U/S 133A OF THE ACT ON 06-12-2006 AND THE DEPARTMEN T HAS IMPOUNDED BOOKS OF ACCOUNT AND OTHER RELATED MATERIAL. REFERRING TO T HE ASSESSMENT ORDER, THE LD.REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFI CER ESTIMATED THE NET PROFIT AT 2% WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSMENT WAS FRAMED U/S 14 4 OF THE INCOME-TAX ACT. WHEN THE ASSESSMENT WAS FRAMED U/S 144 OF THE INCOM E-TAX ACT EX PARTE, THE ASSESSING OFFICER HAS TO GIVE A PRE-ASSESSMENT NOTI CE. ACCORDING TO THE LD.SENIOR COUNSEL, THE ASSESSING OFFICER HAS NOT ISSUED ANY P RE-ASSESSMENT NOTICE EVEN THOUGH THE ASSESSMENT WAS FRAMED U/S 144 OF THE INC OME-TAX ACT. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE SH ALL BE GIVEN ANOTHER OPPORTUNITY TO EXPLAIN THE MATTER BEFORE THE ASSESS ING OFFICER. 3 ITA 144 TO 155/COCH/2010 4. ON THE CONTRARY, MS VIJAYAPRABHA, THE LD.DR SUBMI TTED THAT THE ASSESSEE HAS NOT COMPLIED WITH NOTICES ISSUED BY THE DEPARTM ENT. THEREFORE, AT THIS STAGE, THE ASSESSEE CANNOT BLAME THAT NO OPPORTUNITY WAS G IVEN TO THE ASSESSEE. THE ASSESSEE HAS NOT COMPLIED WITH NOTICE ISSUED U/S 14 3(2). THEREFORE, THE ASSESSING OFFICER WAS FORCED TO ESTIMATE THE INCOME. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE INCOME WAS ESTIMATED AT 2% OF THE TOTAL TURNOVER. THE ASSESSMENT WAS FRAMED U/S 144 OF THE INCOME-TAX ACT. THE ASSESSING OFFICER ESTIMATED THE PROFIT WITHOUT ANY BASIS. THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERATION THE COMPARABLE CAS ES. THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERATION THE PROFIT RATIOS OF T HE SIMILARLY PLACED TRADERS IN THAT LOCALITY. WHEN THE ASSESSING OFFICER ESTIMATED THE PROFIT IT HAS TO BE MADE ON THE BASIS OF SOME MATERIAL. FROM THE MATERIAL AVAILABL E ON RECORD, IT APPEARS THAT THE BOOKS OF ACCOUNT AND OTHER MATERIALS WERE IMPOUNDED . THEREFORE, IT IS NOT KNOWN ON WHAT BASIS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACCOUNT WHEN THE BOOKS OF ACC OUNT WERE ADMITTEDLY IMPOUNDED BY THE ASSESSING OFFICER. THE FACT REMAI NS IS THAT THE ASSESSEE HAD NO OCCASION TO PUTFORTH HIS CASE BEFORE THE ASSESSING OFFICER, THEREFORE, GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE MAY NOT PREJUDICE T HE INTEREST OF THE REVENUE IN ANY WAY. IN OUR OPINION, GIVING ONE MORE OPPORT UNITY TO THE ASSESSEE WOULD DEFINITELY PROMOTE THE CAUSE OF JUSTICE. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE ASSESSING OFFICER HAS TO GIVE ONE MORE OPP ORTUNITY TO THE ASSESSEE BEFORE FRAMING THE ASSESSMENT. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE 4 ITA 144 TO 155/COCH/2010 ASSESSING OFFICER SHALL GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE AND THEN DECIDE THE SAME IN ACCORDANCE WITH LAW WITHOUT BEIN G INFLUENCED BY ANY OF THE OBSERVATIONS MADE BY THIS TRIBUNAL. 6. NOW COMING TO ITAS N.147 TO 149/COCH/2010, THE A SSESSING OFFICER LEVIED PENALTY U/S 271(1) OF THE ACT. SINCE THE QUANTUM APPEALS ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION, THIS TRIBUNAL IS OF THE OPINION THAT THE ASSESSING OFFIC ER HAS TO RECONSIDER THE LEVY OF PENALTY AFTER COMPLETING THE ASSESSMENTS. ACCORDIN GLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF LEVY OF PENALTY IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFIC ER SHALL EXAMINE THE LEVY OF PENALTY AFTER COMPLETING THE ASSESSMENTS AND DECIDE THE SAM E IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO T HE ASSESSEE. 7. NOW COMING TO THE APPEALS IN ITAS NO.152 & 153/C OCH/2010, HERE ALSO, THE ISSUE IS WITH REGARD TO ESTIMATION OF PROFIT. THE ASSESSING OFFICER ESTIMATED THE PROFIT AT 2% WITHOUT REFERRING TO ANY OF THE COMPAR ATIVE CASES OR THE PROFIT RATIO OF THE SIMILARLY PLACED TRADERS IN THAT LOCALITY. THEREFORE, IN OUR OPINION, THE MATTER NEEDS TO BE RECONSIDERED AFTER GIVING REASON ABLE OPPORTUNITY TO THE ASSESSEE. ACCORDINGLY, THE ORDERS OF THE LOWER AUT HORITIES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE A ND THEN DECIDE THE SAME IN ACCORDANCE WITH LAW WITHOUT BEING INFLUENCED BY ANY OF THE OBSERVATIONS MADE BY THIS TRIBUNAL. 5 ITA 144 TO 155/COCH/2010 8. NOW COMING TO THE APPEALS IN ITA NO.150 & 151/CO CH/2010, THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1) OF THE ACT. SIN CE THE QUANTUM APPEALS ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION, THIS TRIBUNAL IS OF THE OPINION TH AT THE ASSESSING OFFICER HAS TO RECONSIDER THE LEVY OF PENALTY AFTER COMPLETING THE ASSESSMENT. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND T HE ISSUE OF LEVY OF PENALTY IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE LEVY OF PENALTY AFTER COMPLETING THE AS SESSMENTS AND DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. NOW COMING TO THE APPEALS IN 154 & 155/COCH/2010 , THE ASSESSEE, FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 COULD NOT GET THE ACCOUNTS AUDITED AS REQUIRED U/S 44AB OF THE ACT. THE EXPLANATION OF T HE ASSESSEE BEFORE THE LOWER AUTHORITY WAS THAT THE ASSESSEE COULD NOT GET THE A CCOUNTS AUDITED IN TIME AND FILE THE RETURN OF INCOME. FROM THE EXPLANATION FI LED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES, IT APPEARS THAT THERE WAS A DELA Y IN GETTING THE AUDIT REPORT. HOWEVER, FROM THE ORDER OF THE COMMISSIONER OF INCO ME-TAX(A) IT APPEARS THAT THE ASSESSEE COULD NOT GET THE AUDIT REPORT BECAUSE OF HEAVY SET BACK IN THE BUSINESS. THEREFORE, IT HAS TO BE FOUND OUT WHETHE R THERE WAS DELAY IN GETTING THE AUDIT REPORT OR WHETHER THE ASSESSEE COULD NOT GET THE AUDIT REPORT AT ALL. IF THE ASSESSEE COULD NOT GET THE AUDIT REPORT IN TIME , THEN IT IS FOR THE ASSESSEE TO EXPLAIN THE REASONABLE CAUSE FOR THE DELAY IN NOT G ETTING THE AUDIT REPORT. THEREFORE, IN OUR OPINION, THE MATTER NEEDS TO BE F ACTUALLY VERIFIED BY THE ASSESSING OFFICER. MOREOVER, THE QUANTUM ADDITION AND THE LEVY OF PENALTY U/S 6 ITA 144 TO 155/COCH/2010 271(1)(C) WERE ALSO REMITTED BACK TO THE FILE OF TH E ASSESSING OFFICER WITH A DIRECTION TO CONSIDER THEM AFRESH. THEREFORE, FOR THE SAKE OF CONSISTENCY, THE ORDERS OF LOWER AUTHORITY ARE SET ASIDE AND THE ISS UE OF LEVY OF PENALTY U/S 271B IS ALSO SET ASIDE. THE ASSESSING OFFICER SHALL GIVE R EASONABLE OPPORTUNITY TO THE ASSESSEE AND THEN DECIDE THE SAME IN ACCORDANCE WIT H LAW WITHOUT BEING INFLUENCED BY ANY OF THE OBSERVATIONS MADE BY THIS TRIBUNAL. 10. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06 TH DAY OF JANUARY, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 06 TH JANUARY, 2012 PK/- COPY TO: 1. EBBY ISSAC / ALEX V ISSAC, VAROOR HOUSE, PERUNGALLO OR PO, AYOOR, KOLLAM 2. ITO, WD.1, KOLLAM 3. THE COMMISSIONER OF INCOME-TAX-I, TRIVANDRUM 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, C OCHIN BENCH