Shri Rakeshbhai B.Gandhi,HUF, Ahmedabad V. The ACIT., Circle-10, Ahmedabad

ITA 1692/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9160 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-07-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 29-06-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.1692/AHD/2005 ASSESSMENT YEAR:2001-02 DATE OF HEARING:24.7.09 DRAFTED:27.7.09 RAKESHBHAI B GANDHI, 404, AKANSHA, OPP: VADILAL HOUSE, NAVRANGPURA, AHMEDABAD PAN NO.AADHR2726R V/S. ACIT, CIRCLE-10, AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- NONE RESPONDENT BY:- SHRI M.K.PANDIT, SR. DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS)-XVI, AHMEDABAD IN APPEAL NO. CIT(A)- XVI/CIR.10/90/04-05 DATED 01-03-2005. THE ASSESSMEN T WAS FRAMED BY THE ACIT, CIRCLE-10 AHMEDABAD U/S.143(3) OF THE INCOME- TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORD ER DATED 30-03-2004 FOR THE ASSESSMENT YEAR 2000-01. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY THE ASSESSIN G OFFICER IN RESPECT OF DISCREPANCY IN THE PANELS PAINTED AS PER PAINTERS B ILL AND THE NUMBER SHOWN ITA NO.1692/AHD/2005 A.Y. 2001-02 RAKESHBHAI B GANDHI V. ACIT CIR-10 ABD PAGE 2 IN THE CORRESPONDING SALE BILLS RECORDED BY THE ASS ESSEE IN RESPECT OF PAINTING BILLS AND DI NOTES FOUND NOT RECORDED IN THE AMTS R EGISTER. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING FIVE EFFECTIVE GR OUNDS:- (1) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) XVI, AHMEDABAD HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ALLEGED SUPPRESSED SALES MADE BY THE ASSESSING OFFI CER AT RS.108,000/- IN RESPECT OF PANELS RELATING TO SHAKT I BHOG ATA BRAND. (2) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) XVI, HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ALLEGED SUPPRESSED SALES MADE BY THE ASSESSING OFFICER AT R S.3,18,080/- IN RESPECT OF PIDANASHAK IN SIDE PANELS. (3) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) XVI, HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN ENHANCING T HE ASSESSMENT AND MAKING FURTHER ADDITION OF RS.23500/- AND RS.176720 /- IN RESPECT OF PAINTING CHARGES FOR INSIDE PANELS AND DISPLAY CHAR GES FOR INSIDE PANELS RESPECTIVELY. (4) THAT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) XVI, HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ALLEGED SUPPRESSED SALES MADE BY THE ASSESSING OFFICER AT R S.205625/- IN RESPECT OF SUPER ONE TAB PANELS. (5) BOTH THE LOWER AUTHORITIES HAVE GRIEVOUSLY ERRE D IN NOT APPRECIATING THAT ONUS IS ADEQUATELY DISCHARGED BY THE APPELLANT BY EXPLANATION AND EVIDENCE WITH SPECIAL REFERENCE TO REPLY DATED 29.3 .2004 AND WRITTEN SUBMISSIONS, WHERE AS THE REVENUE IN REBUTTAL HAS F AILED TO ADDUCE ANY SUBSTANTIAL EVIDENCE TO MAKE AND CONFIRM ALLEGED AD DITION FOR SUPPRESS SALE. 3. DESPITE SERVICE OF NOTICE ON EARLIER OCCASIONS A LSO AND NOW ON HEARING, I.E. ON 27-07-2009, THE NOTICE WAS SERVED THROUGH R EGISTERED A/D AND ACKNOWLEDGMENT IS PLACED ON RECORD. ACCORDINGLY, W E FIND THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THIS APPEAL, BUT A S THE APPEAL IS FILED, WE WILL DECIDE THIS APPEAL ON MERITS AFTER HEARING LD. DEPA RTMENTAL REPRESENTATIVE. 4. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESS EE IS ENGAGED IN BUSINESS OF ADVERTISEMENT IN THE NAME OF M/S.KRISHNA COMMUNI CATION (OUTDOOR) AND HE SOLE CONTRACTOR OF ADVERTISING OF AHMEDABAD MUNICIP AL TRANSPORT SERVICE ITA NO.1692/AHD/2005 A.Y. 2001-02 RAKESHBHAI B GANDHI V. ACIT CIR-10 ABD PAGE 3 (AMTS IN SHORT) BUSES DURING THE PREVIOUS YEAR RELE VANT TO ASSESSMENT YEAR 2001-02. DURING THE COURSE OF ASSESSMENT PROCEEDING S THE ASSESSING OFFICER NOTED THE BUSINESS PROCEDURE OF THE ASSESSEE IN HIS ASSESSMENT ORDER, THAT ONCE THE ORDER FOR ADVERTISEMENT WAS RECEIVED BY TH E ASSESSEE, CERTAIN PAINTERS, WHO BASICALLY WORKED FOR THE ASSESSEE WER E ASKED TO MAKE THE PANELS. THERE WERE SEVERAL KINDS OF PANELS FOR DISP LAY ON BUSES, SUCH AS, INSIDE PANELS, BACK PANELS, SIDE PANEL / CENTRAL PA NEL, ETC. IF A CUSTOMER PLACED ORDER FOR THE DISPLAY OF ITS ADVERTISEMENT O N THE WHOLE BUS, IT WAS CALLED FULL BUS IN THE TERMINOLOGY USED BY THE AS SESSEE AND THE PAINTERS. THE PAINTERS CHARGED THE ASSESSEE ON THE BASIS OF TYPE AND NUMBERS OF PANEL PAINTED BY THEM. THE SALES BILL RAISED BY THE ASSES SEE HAD TWO COMPONENTS FIRST COMPONENT WAS PAINTING CHARGES WHICH DEPENDED ON THE NUMBER AND TYPE OF THE PANELS PREPARED BY THE PAINTERS FOR ADV ERTISEMENT, AND THE SECOND COMPONENT WAS DISPLAY CHARGES, WHICH WERE COMPUTED ON PER PANEL BASIS FOR EACH MONTH OF DISPLAY. FURTHER, DISCUSSING THE MET HOD OF WORKING USED BY THE ASSESSEE, THE AO HAS NOTED THAT AS SOON AS A PARTY PLACED ORDER FOR CERTAIN NUMBER OF PANELS, THE ASSESSEE ISSUED THE DISPLAY I NFORMATION NOTES (DI NOTES IN SHORT). AFTER RECEIVING THE DI NOTES, THE PAINTER WOULD PAINT THE REQUIRED NUMBER AND TYPE OF PANELS. DI NOTE GAVE TH E PAINTER THE AUTHORITY TO ENTER THE BUS DEPOT AND REPLACE THE EXISTING PANELS WITH THE NEW ONES. THE ASSESSEE HAD ALSO DEPUTED ONE EMPLOYEE, SHRI SHANTI LAL TO MANAGE THE ACTIVITIES RELATING TO PAINTING AND PLACEMENT OF TH E PANELS ON THE BUSES AT THE DEPOT. THE AMTSS SUPERVISOR ALSO MADE NECESSARY EN TRY IN ITS REGISTER MENTIONING THE REGISTRATION NUMBER OF THE BUS AND T HE NAME OF THE ADVERTISEMENT PLACED ON IT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND ALL THE DI NOTES ISSUED BY THE ASSESSEE TO TH E PAINTERS WERE NOT PRODUCED AND ALSO NOT ENTERED INTO THE REGISTER OF AMTS. THE AO ALSO GONE THROUGH CERTAIN PANELS PAINTED BY THE PAINTERS AND BILL RAISED BY THEM, DO NOT MATCH WITH THE DI NOTES ISSUED AS PER AMTS REGISTER . THE AO HAVE BEEN ITA NO.1692/AHD/2005 A.Y. 2001-02 RAKESHBHAI B GANDHI V. ACIT CIR-10 ABD PAGE 4 REQUIRED THE SOLE PAINTER OF THE ASSESSEE, I.E. M/S NISHIT ART TO PRODUCE THE BILLS FOR THE PENAL PAINTED BY IT. THE AO ASKED TH E ASSESSEE TO PRODUCE THE COPIES OF DI NOTES CORRESPONDING TO SAID BILLS. THE AO NOTED SEVERAL DISCREPANCIES AFTER COMPARING THE DI NOTES. AMTS R EGISTER WITH THE PAINTING BILLS AND FOUND THAT A NUMBER OF CASE AMTS BUSES PE NAL PAINTED BY PAINTERS FOR THE ADVERTISING OF A PARTICULAR LOT TO KNOW COR RESPONDING OF DI NOTES WERE AVAILABLE IN THE RECORD. THEREFORE THE AO APPEARED A LIST OF ALL SUCH PANELS AND CONFRONTED TO THE ASSESSEE TO EXPLAIN THE DISCR EPANCIES WITH EVIDENCES. THE ASSESSEE PRODUCED COMPLETE SALE BILLS FOR THE P ANELS AND IT WAS NOTED FROM THE SALE BILLS THAT THE BILLS FOR THE PANELS F OR WHICH THE PAINTER HAD RAISED THE BILL, THE CORRESPONDING DI NOTES WERE AVAILABLE AND EVEN NO ENTRY WAS MADE IN THE AMTS REGISTER. ACCORDINGLY, AO ISSUED SHOW CAUSE NOTICE DATED 26-03-2004, REQUIRED THE ASSESSEE TO EXPLAIN REGARD ING THOSE PANELS WHICH WERE SHOWN PAINTED BY THE PAINTERS, BUT FOR WHICH S ALE BILLS WERE NOT PRODUCED. IN THIS NOTICE, THE AO LISTED THE DISCRE PANCIES FOUND IN A TABLE FORM, GIVING THE NAME OF THE ADVERTISER, TYPE OF PANELS, NUMBER OF PANELS AS PER PAINTERS BILL, NUMBER SHOWN IN THE SALE BILL AND T HE DIFFERENCE BETWEEN THE FIGURES IN TWO PRECEDING COLUMNS. THE ASSESSEE WAS GIVEN OPPORTUNITY TO SOW CAUSE AS TO WHY THE INCOME EARNED ON SUCH PANELS SH OULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE AO AFTER CONS IDERING THE REPLY CAME TO THE CONCLUSION THAT THE DISCREPANCIES CONSIDERED FI NALLY AS NOT EXPLAINED AMOUNT TO SUPPRESS SALE OF RS.11,44,074/- WHICH WAS REQUIRED TO BE ADDED TO THE TOTAL INCOME. THE AO ACCORDINGLY MADE ADDITION IN RESPECT OF FOLLOWING:- DISPLAY RATE/PERIOD TOTAL DISPLAY CHARGES PAINTING RATE @ RS. TOTAL PAINTING CHARGES SHAKTIBHOG ATA 10 CENTRAL PANEL RS.1150/- (P.P/P.M) X 9 MONTHS 1,03,500 450/- PER CENTRAL PANEL 4,500/- PIDANASHAK 710 INSIDE PANEL RS.47 (P.P/P.M) X 9 MONTHS 3,00,330 25/- PER INSIDE PANEL 17,750/- SUPER ONE 25 BACK RS.900 2,02,500 125/- PER 3,125/- ITA NO.1692/AHD/2005 A.Y. 2001-02 RAKESHBHAI B GANDHI V. ACIT CIR-10 ABD PAGE 5 TAB PANEL (P.P./P.M. X 9 MONTHS BACK PANEL ON THESE THREE ITEMS, THE CIT(A) HAS CONFIRMED THE ADDITION AND WHICH IS BEFORE US. 6. THE CIT(A) CONFIRMED THE ABOVEMENTIONED ADDITION BY STATING THAT IN RESPECT OF THESE BILLS DISCREPANCY IN THE NUMBER OF PANELS PAINTED AS PER THE PAINTERS BILL AND THE NUMBER SHOWN IN THE CORRESPO NDING BILLS DO NOT MATCH. HE CONFIRMED THE FINDING OF THE AO STATING THAT WHE N THE PENAL WAS PREPARED BY THE PAINTER AS PER THE ORDER OF THE ASSESSEE AND THE SAME HAS NOT REFLECTED IN THE SALE BILLS AMOUNTED TO SUPPRESSION OF SALE T O THAT EXTENT AND ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CO NTENTION THAT THE ORDERS WERE CANCELLED. AGGRIEVED AGAINST THE ACTION OF TH E CIT(A) CONFIRMING THE ADDITION ON THE ABOVE PARTIES AND ASSESSEE CAME IN SECOND APPEAL BEFORE US. 7. AFTER HEARING THE LD. DR AND GOING THROUGH THE F ACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE CONTROVERSY BEFORE US IS THAT THERE IS DISCREPANCY IN THE NUMBER OF PANELS PAINTED AS PER THE PAINTER S BILLS AND THE CORRESPONDING SALE BILLS AS REGISTERED IN THE AMTS REGISTER. WE FIND THAT THE ENTIRE PRESUMPTION OF THE REVENUE FOR MAKING ADDITI ON IS THAT ALL THE DI NOTES ISSUED BY THE ASSESSEE WERE NOT ENTERED INTO IN THE REGISTER OF AMTS AND ON THE BASIS OF THE SAME LOWER AUTHORITIES CAME TO THE CONCLUSION THAT CERTAIN PANELS PAINTED BY THE PAINTERS AND THE BILLS RECORD ED IN THE REGISTER BY THEM DO NOT FIND RECORDED IN THE REGISTER OF AMTS AND TH ERE IS NO MENTION OF DI NOTES ABOUT THESE BILLS IN RESPECT OF THE ABOVE PAR TIES. THE MAIN CONTENTION OF THE ASSESSEE WAS THAT THE ORDERS WERE CANCELLED VERBALLY AND THE CONFIRMATION OF CANCELLATION FROM THE ABOVE PARTIES IS NOT POSSIBLE. WE FIND THAT ONCE THE ORDER OF ADVERTISING WERE RECEIVED BY THE ASSESSEE, THE PAINTER WAS ASKED TO PAINT THE PANELS, THE PAINTER CHARGED THE ASSESSEE ON THE BASIS OF TYPE AND NUMBER OF PANELS PAINTED BY THEM AND TH E SALE BILL RAISED BY THE ASSESSEE CONSISTING OF TWO COMPONENTS PAINTING CHAR GES AND TYPE OF PANELS ITA NO.1692/AHD/2005 A.Y. 2001-02 RAKESHBHAI B GANDHI V. ACIT CIR-10 ABD PAGE 6 PREPARED FOR ADVERTISING AND COMPONENT OF DISPLAY C HARGES. AFTER THE PARTY PLACED AN ORDER, A DI NOTES NO. IS ISSUED AND AFTER RECEIVING THE DI NOTES THE PAINTER PAINT THE BUSES. IT IS A FACT THAT THE AMT S SUPERVISOR HAS A REGISTERED, WHICH A GOVERNMENT BODY, AND FOR NECESS ARY ENTRY IN ITS REGISTER MENTIONING A BUS TO BE PAINTED, AND THE PANEL NAME OF THE ADVERTISING PLACED BY MENTIONING THE DI NOTES NO IS THE DUTY OF THE AM TS. WE FIND THAT THE DISCREPANCY AROSE ON ACCOUNT OF CANCELLATION BUT TH E ASSESSEE COULD NOT ADDUCE EVIDENCE BEFORE THE LOWER AUTHORITIES AND IN VIEW OF THIS, THE ADDITION WAS CONFIRMED. IN THE INTEREST OF NATURAL JUSTICE, WE WANT TO PROVIDE ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE CANCELLA TION ORDER OR GOT IT CONFIRM FROM THE CONCERNED PARTY THAT THE ORDER WAS CANCELL ED. ACCORDINGLY, THE ASSESSING OFFICER WILL PROVIDE REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE AND DECIDE THE ISSUE. ACCORDINGLY, THIS IS SUE OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 04/09 /2009 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 04/09/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- XVI, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD