United Steels Traders, Jagatsinghpur V. ITO, Ward-1, Paradeep, Paradeep

ITA 192/CTK/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81462 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI S.V.MEHROTRA (AM) AND GEORGE MATHAN (JM) I.T.A. NO. 192/CTK/2013 ASSESSMENT YEAR: 2009-2010 UNITED STEEL TRADERS, ATHARBANKI, PARADEEP. PA NO.AABFU 2528 A VS. ITO, WARD - 1, PARADEEP. APPELLANT RESPONDENT FOR THE APPELLANT: SHRI SUNIL MISHRA FOR THE RESPONDENT: SHRI ANIL SHARMA DATE OF HEARING: 16/10/.2014 DATE OF PRONOUNCEMENT: 22 /10/2014 ORDER PER S.V.MEHROTRA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER DATED 18.2.2013 OF LD CIT(A), CUTTACK FOR THE ASSESSMENT YEAR 2009-2010. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 1. FOR THAT, THE ORDERS OF THE FORUMS BELOW ARE I LLEGAL, ARBITRARY AND EXCESSIVE EXERCISE OF JURISDICTION AS WELL AS PASSED WITHOUT AFFORDING REASONABLE OPPORTUNITY TO ADDUCE THE SUPPORTING EVIDENCES AND AS SUCH ARE NOT SUSTAINABL E IN THE EYE OF LAW AND LIABLE TO BE QUASHED. 2. FOR THAT, THE ORDER PASSED BY THE LEARNED CIT(APPEA L) IS OUT AND OUT ILLEGAL, SINCE, ALL THE EVIDENCES (PRODUCED AND NOT PRODUCED BEFORE THE AO) HAVE BEEN PRODUCED BEFORE THE CIT(APPEAL) AND REQUEST MADE FOR A REMAN D REPORT FOR FRESH INQUIRY WITH DUE ADHERENCE OF NATURAL JUSTICE, BUT THE LEARNED C IT(APPEAL) WITHOUT DOING SO, CONFIRMED THE ORDER OF ASSESSMENT IN A MECHANICAL M ANNER AND AS SUCH LIABLE TO BE QUASHED/ SET-A-SIDE FOR THE INTEREST OF JUSTICE. 3. FOR THAT, ADDITION OF RS.47,89,949/- UNDER THE HEAD OF STOCK DISCREPANCY IS UNCALLED AND BASELESS SINCE THE LEARNED AO FAILED TO RING IN TO THE FOLD OF ASSESSMENT ANY COGENT MATERIALS OTHER THAN ROUGH AND HALF HAZARD V ALUATION OF STOCK MADE LATE IN 2 I.T.A. NO. 192/CTK/2013 ASSESSMENT YEAR: 2009-2010 THE NIGHT OF SURVEY DAY WHEN IT WAS NOT PRACTICALLY POSSIBLE TO ARRIVE AT THE QUANTITATIVE DETAILS ON THE FACE OF SIZE AND VOLUME OF GOODS AND THE DISCLOSURE OF CLOSING STOCK WAS BASED ON PURCHASE, SALES AND STOC K REGISTER DULY MAINTAINED MEETING THE PROVISIONS OF THE OVAT ACT. 4. FOR THAT, ADDITION OF RS.25,99,700/- UNDER THE HEAD OF UNSECURED LOAN IS ARBITRARY SINCE THE ADDITION WAS MADE WITHOUT AFF ORDING ADEQUATE OPPORTUNITY TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CRED ITORS AND MORE PARTICULARLY BY THE EVIDENCES PRODUCED BEFORE THE LD CIT(A) HAS NOT BEE N CONSIDERED ON ITS TRUE PROSPECTIVE AND AS SUCH THE ADDITIONS DESERVES TO B E DELETED OR AT BEST DESERVES TO SET ASIDE FOR FRESH APPLICATION OF MIND IN THE INTE REST OF NATURAL JUSTICE. 5. FOR THAT, THE ADDITION OF RS.20,54,634/- ON THE HEA D OF ADVANCE OF PARTY IS ILLEGAL AND IS VIOLATIVE OF PRINCIPLE OF NATURAL JUSTICE SINCE THE APPELLANT PROVIDED THE NAME AND ADDRESS AND DETAILS OF MATERIALS SUPPLIED BY THE PA RTIES DURING THE NEXT FINANCIAL YEAR BUT THE LEARNED ASSESSING OFFICER MADE ADDITIONS WI THOUT AFFORDING ADEQUATE OPPORTUNITY TO PRODUCE THE CONFIRMATIONS AND COMPLE TE ADDRESS AND THE LEARNED CIT(A) FAILED TO CONSIDER THE SAME EVEN THOUGH THE SAME WERE PRODUCED BEFORE HIM. 6. FOR THAT, ADDITION OF RS.55,54,107/- ON THE HEAD OF SUNDRY CREDITORS IS BAD IN LAW WHEN THE APPELLANT PRODUCED THE NAME AND ADDRESS OF CREDITORS AS PER THEIR BILLS AS A TOKEN OF SHIFTING OF ITS ONUS AND THE LD AO MADE THE ADDITION SIMPLY AS THE NOTICE ADDRESSED RETURNED DUE TO RETURN OF LETTER BEING UN SERVED, WITHOUT DEMANDING ANY CONFIRMATION FROM THE APPELLANT TO THIS EFFECT AS T HE SUPPLIERS ADDRESS WERE GIVEN AS APPEARED IN THEIR BILLS. THE LEARNED CIT(A) SIMILAR LY CONFIRMED THE ADDITION IN MECHANICAL MANNER WITHOUT CONSIDERING THE MATERIAL PRODUCED BEFORE HIM AND AS SUCH THE ORDERS OF THE FORUM BELOW ARE LIABLE TO BE QUASHED OF THE SET ASIDE FOR THE INTEREST OF JUSTICE. 7. FOR THAT ADDITION OF RS.5,00,000 ON THE HAND OF UND ISCLOSED INCOME IS COMPLETELY BASELESS AS THE SAME WAS MADE SIMPLY BASED ON THE S TATEMENT OF THE MANAGING PARTNER MADE UNDER FRUSTRATION AND THAT THE FORUM B ELOW FAILED TO BRING INTO THE FOLD OF ASSESSMENT ANY POSITIVE EVIDENCE TO THE ABOVE EF FECT. 3. FACTS IN BRIEF ARE THAT, IN THE RELEVANT ASSESSM ENT YEAR, THE ASSESSEE DERIVED INCOME FROM SALE OF STEEL SCRAP, ANGLES AND TRUCK PLYING. IT FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR SHOWING TOTAL INCOME OF RS.2,25,976 /-. A SURVEY ACTION U/S.133A WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY, BOOKS OF ACCOUNT WERE FOUND. THE ASSESSING OFFICER COMPLETED THE ASSESSM ENT UNDER SECTION 143(3) OF THE ACT DETERMINING TOTAL INCOME AT RS.1,57,24,366/-, INTER ALIA, MAKING THE FOLLOWING DISALLOWANCE/ADDITIONS: 3 I.T.A. NO. 192/CTK/2013 ASSESSMENT YEAR: 2009-2010 I) DISCREPANCY IN CLOSING STOCK : RS.47,89,949/- II) UNSECURED LOAN : RS.25,99,700/- III) ADVANCE FROM PARTY : RS. 20,54,634/- IV) SUNDRY CREDITORS : RS.55,54,107 V) UNDISCLOSED INCOME : RS. 5,00,000/- 4. LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. BEING AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE SUBM ITTED THAT ALTHOUGH THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APPEAL, BUT THE MAIN GRIEV ANCE IS THAT LD CIT (A) PASSED THE ORDER WITHOUT AFFORDING REASONABLE OPPORTUNITY TO THE ASS ESSEE. HE SUBMITTED THAT THE ASSESSEE WAS SUFFICIENTLY DEPRIVED FROM REASONABLE OPPORTUNITY O F BEING HEARD BY THE AO AS ALSO BY LD CIT(A). HE SUBMITTED THAT ASSESSEE COULD NOT FURNISH SOME O F THE EVIDENCES WHICH IT HAD IN HIS POSSESSION AND SOME MORE MATERIAL WHICH HE COULD NO T COLLECT CONSIDERING THE TIME CONSTRAINT. AT THE TIME OF FIRST APPELLATE STAGE, ASSESSEE REQU ESTED TO REMAND THE MATTER BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION/ADJUDICATION. HE SU BMITTED THAT BEFORE LD CIT(A), A REQUEST WAS MADE THAT SINCE DURING THE COURSE OF SURVEY, PURCHA SE, SALE AND STOCK BOOKS WERE SEIZED, DIRECTION BE GIVEN TO THE AO TO RELEASE THE SAME SO THAT ASSESSEE COULD EXPLAIN SUPPRESSION OF STOCK AS NOTED BY LD CIT (A) IN PARA 5.1. HOWEVER, LD CIT(A) DID NOT ISSUE THE DIRECTION. HE SUBMITTED THAT LD CIT(A) CONFIRMED THE ACTION OF TH E AO IN A MECHANICAL MANNER WITHOUT CONSIDERING THE ASSESSEES SUBMISSION. IN VIEW OF THIS LD COUNSEL REQUESTED TO REMAND THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION . THE WRITTEN SUBMISSIONS FILED BY THE ASSESEE ARE PLACED ON RECORD. 6. LD D.R. SUPPORTED THE ORDERS OF REVENUE AUTHORIT IES. 7. HAVING HEARD BOTH THE PARTIES, WE ARE INCLINED T O ACCEPT THE PLEA OF THE ASSESSEE IN VIEW OF THE FACT THAT THE REQUEST OF THE ASSESSEE WAS NO T CONSIDERED BY LD CIT(A) TO REMAND THE MATTER BACK TO THE FILE OF THE AO SO THAT ASSESSEE COULD PRODUCE THE BALANCE DOCUMENTS WHICH 4 I.T.A. NO. 192/CTK/2013 ASSESSMENT YEAR: 2009-2010 WERE NOT FURNISHED AT THE TIME OF ASSESSMENT STAGE. WE FURTHER FIND THAT LD CIT(A) AT PAGE 6.1, INTER ALIA, HAS OBSERVED AS UNDER: PRODUCTION OF BOOKS OF ACCOUNT, RECEIPTS AND VOUCH ERS COULD HAVE CLARIFIED THE ISSUE. CASE LAWS WOULD NOT SOLVE THE PROBLEM. I REFER HER E TO PARA 7 OF PAGE 623 IN J SUMMERMAL (HUF) VS. ACIT (2012) 344 ITR 618 (KAR). WE ALSO FIND THAT AT THE TIME OF SURVEY OPERATIONS , PURCHASE, SALE AND STOCK BOOKS WERE SEIZED AND IMPOUNDED . IT WAS THE CONTENTION OF THE ASSESS EE BEFORE LD CIT(A) TO DIRECT THE AO RELEASE THE SAME SO THAT THE ASSESSEE COULD SUBSTAN TIATE SUPPRESSION OF STOCK CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE CONSIDERED OPINION THAT IT WOULD MEET THE ENDS OF JUSTICE IF THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND MATTER RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR MAKING ASSESSMENT DENOVO. WE, ACCORDINGLY, SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE MA TTER BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION. THE AO IS DIRECTED TO AFFORD REASONAB LE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO COOPERATE WI TH THE AO AND FURNISH THE RELEVANT DOCUMENTS. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 22 ND OCTOBER, 2014. SD/- SD/- ( GEORGE MATHAN) (S.V.MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, CUTTACK 22 /10/2014 B.K.PARIDA, SR. PS 5 I.T.A. NO. 192/CTK/2013 ASSESSMENT YEAR: 2009-2010 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT: UNITED STEEL TRADERS, ATHARBANKI, PARADEEP. 2. THE RESPONDENT: ITO, WARD-1, PARADEEP. 3. THE CIT,CUTTACK 4. THE CIT(A), CUTTACK 5. DR, CUTTACK BENCH 6. GUARD FILE. TRUE COPY// BY ORDER