Maruti Cycle Private Ltd., Meerut V. CIT, Meerut

ITA 2079/DEL/2011

• Counselvise Citation: 207920114 RSA 2011
• Duration Of Justice: 2 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 26-11-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GUNJAN P RASAD
• Assessee Lawyers: H G MALIK; SANJAY MALIK S
• Keywords: Opportunity of being heard
• Section: 143(3); 115JB; 263

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 DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NOS SS S. .. .2502/DEL/2012 & 2079/DEL/2011 2502/DEL/2012 & 2079/DEL/2011 2502/DEL/2012 & 2079/DEL/2011 2502/DEL/2012 & 2079/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2006 2006 2006 2006- -- -07 0707 07 M/S MARUTI CYCLES (P) LTD., M/S MARUTI CYCLES (P) LTD., M/S MARUTI CYCLES (P) LTD., M/S MARUTI CYCLES (P) LTD., S SS S- -- -24, INDUSTRIAL 24, INDUSTRIAL 24, INDUSTRIAL 24, INDUSTRIAL AREA, AREA, AREA, AREA, PARTAPUR, PARTAPUR, PARTAPUR, PARTAPUR, MEERUT. MEERUT. MEERUT. MEERUT. PAN : PAN : PAN : PAN : AACDM3316P. AACDM3316P. AACDM3316P. AACDM3316P. VS. VS. VS. VS. COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, COMMISSIONER OF INCOME TAX, MEERUT. MEERUT. MEERUT. MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.G. MALIK AND SHRI SANJAY MALIK, ADVOCATES. RESPONDENT BY : SHRI GUNJAN PRASAD, CIT-DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRA D.AGRA D.AGRA D.AGRAWAL, WAL, WAL, WAL, VP VPVP VP : : : : THESE TWO APPEALS BY THE ASSESSEE ARE AGAINST THE ORDER P ASSED UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES IN COME FROM MANUFACTURING OF TYRES AND TUBES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED THE RETURN DISCLOSING THE TOTAL INCOME AT NIL AND BOOK PROFIT UNDER SECTION 115JB AT ` 2,405/-. REGULAR ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 26.12.2008 AT THE TO TAL INCOME OF ` 57,500/-. LEARNED CIT TREATED THE ASSESSMENT ORDER TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEREFORE, ON 23.03.2011, SHE PASSED THE ORDER UNDER SECTION 263 DIR ECTING THE ENHANCEMENT OF THE INCOME BY ` 31,70,730/-. FURTHER, VIDE ORDER DATED 26 TH APRIL, 2012, THE CIT ALSO LEVIED PENALTY UNDER SECT ION 271(1)(C) ITA-2502/D/2012 & 2079/D/2011 2 AMOUNTING TO ` 11,71,646/-. THE ASSESSEE, AGGRIEVED WITH THE ORDERS O F THE CIT, IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US, THE LEARNED COU NSEL FOR THE ASSESSEE ARGUED AT LENGTH. HE REFERRED TO THE NOTICE U NDER SECTION 263 COPY OF WHICH IS PLACED AT PAGE 43 OF THE ASSESSEES PAPER BOOK AND POINTED OUT THAT THE MAIN REASON FOR INITIATING PROCEEDINGS UNDER SECTION 263 WAS THE LACK OF PROPER ENQUIRY BY THE ASSE SSING OFFICER. HE REFERRED TO THE ASSESSEES REPLY WHICH IS PLACED AT PA GES 44 TO 46 OF THE ASSESSEES PAPER BOOK AND POINTED OUT THAT IN THE WRITTEN REPLY, THE ASSESSEE HAS GIVEN COMPLETE DETAILS SO AS TO ESTABLISH TH AT PROPER ENQUIRIES WERE MADE. HE ALSO GAVE THE DETAILS OF THE GP AND NP POSITION OF THE PRECEDING THREE YEARS AND ALSO POINTE D OUT THAT THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT ALONGWI TH COMPLETE QUANTITATIVE DETAILS AND, ACCORDINGLY, REQUESTED FOR DROPPING THE PROCEEDINGS INITIATED UNDER SECTION 263. HOWEVER, T HE CIT DID NOT PROPERLY CONSIDER THE ASSESSEES WRITTEN SUBMISSION AND ON T HE BASIS OF SOME IMAGINATION WORKED OUT THE SUPPRESSION OF SALES O F ` 31,70,730/-. IN THIS REGARD, THE LEARNED COUNSEL REF ERRED TO PAGES 4 & 5 OF THE CITS ORDER AND STATED THAT THE ENTIRE WORKI NG IS BASED UPON PRESUMPTION AND ASSUMPTION OF THE CIT. HE ALSO STATED THAT IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, NO DEFECTS HAVE BEEN POINTED OUT. UNLESS THE DEFECT IS POINTED OUT AN D BOOKS OF ACCOUNT ARE REJECTED, THERE IS NO QUESTION OF ESTIMATI ON OF ANY PRODUCTION AND SALES. HE FURTHER SUBMITTED THAT NOT AN IOTA OF EVIDENCE WAS FOUND OR POINTED OUT BY THE LEARNED CIT OF THE PRESUMPTION OF THE SUPPRESSION OF SALES TO THE EXTENT OF ` 31,70,730/-. HE STATED THAT THE ASSESSING OFFICER PASSED THE ORDER UNDE R SECTION 143(3) AFTER PROPER VERIFICATION AND BEING FULLY SAT ISFIED ABOUT THE TRADING RESULT OF THE ASSESSEE. IN THE FIRST PARAGRAPH O F THE ASSESSMENT ORDER, IT IS DULY RECORDED THAT THE BOOKS OF ACCOUNT WERE PRODUCED ITA-2502/D/2012 & 2079/D/2011 3 WHICH WERE TEST CHECKED. HE, THEREFORE, SUBMITTED TH AT THE ORDER OF THE CIT PASSED UNDER SECTION 263 ENHANCING THE INCOME OF THE ASSESSEE SHOULD BE QUASHED AND CONSEQUENTLY, THE PENALTY L EVIED UNDER SECTION 271(1)(C) BY HER SHOULD ALSO BE QUASHE D. ALTERNATIVELY, HE SUBMITTED THAT THE CIT PASSED THE ORDER IN A HURRIE D MANNER. THAT THE NOTICE UNDER SECTION 263 WAS ISSUED FOR THE FIRST T IME ON 9 TH MARCH, 2011 FOR WHICH THE REPLY WAS DULY FURNISHED BY THE ASSE SSEE ON 22 ND MARCH, 2011. THE CIT PASSED THE ORDER ON 23 RD MARCH, 2011 WITHOUT APPRECIATING THE ASSESSEES REPLY AND WITHOUT CONFRONTI NG THE ASSESSEE WITH THE WORKING OF THE SUPPRESSION OF SALES MADE BY HER ON THE BASIS OF PRESUMPTION AND INCORRECT FACTS AND FIGURES. THER EFORE, HE SUBMITTED THAT IF THE MAIN PLEA OF THE ASSESSEE REGARDIN G THE QUASHING OF THE ORDER BY THE CIT UNDER SECTION 263 IS NOT ACC EPTED, THEN THE ORDER OF LEARNED CIT SHOULD BE SET ASIDE AND MATTER RE STORED TO HIS FILE FOR EXAMINING ALL THE ISSUES AFRESH AFTER ALLOWING ADEQ UATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF LEARNED CIT PASSED UNDER SECTION 263. HE STATED THAT FROM A P ERUSAL OF THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE ASSESSING OFFICER P ASSED A CRYPTIC ORDER IN WHICH HE CONSIDERED ONLY ONE ASPECT I.E. CASH DEPOSIT IN THE BOOKS OF ACCOUNT AND MADE THE ADDITION OF ` 57,500/- IN RESPECT OF UNEXPLAINED CASH DEPOSIT. HOWEVER, THE ASSESSING OFF ICER HAS NOT AT ALL EXAMINED THE QUANTITATIVE DETAILS AND WHETHER PROPER PRODUCTION HAS BEEN SHOWN ON THE BASIS OF RAW MATERIAL CONSUMED. H E, THEREFORE, SUBMITTED THAT ON LACK OF ENQUIRY ITSELF, THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS. IN THIS REGARD, THE MATTER IS C OVERED IN FAVOUR OF THE REVENUE BY THE DECISION OF GEE VEE ENTERPRISES VS. ADDL.CIT 99 ITR 375 (DELHI). HE FURTHER SUBMITTED THAT IF THE O RDER OF THE ASSESSING OFFICER IS HELD TO BE ERRONEOUS ON THE GROUND OF INAD EQUATE ENQUIRY BUT THE BENCH IS OF THE VIEW THAT THE CIT HAS NOT EXAMINE D IN DETAIL THE ITA-2502/D/2012 & 2079/D/2011 4 FACTS AND THE BOOKS OF ACCOUNT, THEN, THE BENCH, AS IT DEEMS FIT, CAN SEND THE MATTER TO THE FILE OF THE CIT OR EVEN TO TH E ASSESSING OFFICER FOR FURTHER EXAMINATION. 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. AFTER CON SIDERING THE ARGUMENTS OF BOTH THE SIDES, WE ARE OF THE OPINION THA T THE ASSESSING OFFICER DID NOT MAKE PROPER ENQUIRY WHICH WAS EXPECT ED FROM HIM CONSIDERING THE FACTS OF THE CASE. HE HAS SIMPLY EXAMIN ED THE CASH DEPOSIT IN THE BOOKS OF ACCOUNT WITHOUT EXAMINING ANY ASPECT OF MANUFACTURING AND TRADING ACCOUNT. THEREFORE, WE H OLD THE ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS. HOWEVER, AT THE SAME TIME, WE DO NOT FIND ANY SOUND BASIS FOR THE WORKING OF THE CIT DETERMINING THE SUPPRESSION OF SALES AT ` 31,70,730/-. IN VIEW OF THE TOTALITY OF ABOVE FACTUAL POSITION, IN OUR OPINION, IT WOULD MEET THE ENDS OF JUSTICE IF THE ORDER OF THE CIT PASSED UNDER SECTION 263 IS PARTLY MO DIFIED. ACCORDINGLY, WE UPHOLD THE ORDER OF THE LEARNED CIT TO THE EXTENT HE HELD THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE, BUT, WE SET ASIDE THE ENHANCE MENT MADE BY HIM. ON THE OTHER HAND, WE DIRECT THAT THE MATTER WOULD GO BACK TO THE ASSESSING OFFICER AND HE SHOULD MAKE THE ASSESSMENT AFR ESH IN ACCORDANCE WITH LAW AFTER EXAMINING THE MANUFACTURI NG AND TRADING ACCOUNT, WITHOUT BEING INFLUENCED BY THE OBSERVATION OF THE CIT IN THE ORDER UNDER SECTION 263. NEEDLESS TO MENTION THAT HE WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHI LE MAKING THE ASSESSMENT AFRESH. 6. SINCE WE HAVE ALREADY SET ASIDE THE ADDITION MADE BY THE ASSESSING OFFICER, THE PENALTY BASED UPON SUCH ADDITION CANNOT BE SUSTAINED. THEREFORE, THE PENALTY LEVIED UNDER SECTI ON 271(1)(C) BY THE LEARNED CIT IS CANCELLED FOR THE TIME BEING WITH THE OBSERVATION ITA-2502/D/2012 & 2079/D/2011 5 THAT THE ASSESSING OFFICER WILL BE AT LIBERTY TO REINIT IATE THE PENALTY PROCEEDINGS AFTER MAKING THE ASSESSMENT AFRESH IF THE F ACTS OF THE CASE SO WARRANT. 7. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.2079/DEL/2 011 IS PARTLY ALLOWED WHILE ASSESSEES APPEAL IN ITA NO.2502/DEL/2012 IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON THE CONCLUS ION OF HEARING ON 26 TH NOVEMBER, 2013. SD/- SD/- ( (( (A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 26.11.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : M/S MARUTI CYCLES (P) LTD., M/S MARUTI CYCLES (P) LTD., M/S MARUTI CYCLES (P) LTD., M/S MARUTI CYCLES (P) LTD., S SS S- -- -24, INDUSTRIAL AREA, 24, INDUSTRIAL AREA, 24, INDUSTRIAL AREA, 24, INDUSTRIAL AREA, PARTAPUR, MEERUT. PARTAPUR, MEERUT. PARTAPUR, MEERUT. PARTAPUR, MEERUT. 2. RESPONDENT : COMMISSIONER OF INCOME TAX, MEERU COMMISSIONER OF INCOME TAX, MEERU COMMISSIONER OF INCOME TAX, MEERU COMMISSIONER OF INCOME TAX, MEERUT. T.T. T. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR