M/s. Archana Synthetics, Ahmedabad V. The Income tax Officer,Ward-2, Mehsana

ITA 225/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89430 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-05-2015
• Assessment Year: 1989-1990
• Appeal Filed On: 25-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M J PAUL
• Keywords: Gross profit estimation; Principle of natural justice
• Section: 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO. 225/AHD/2012 / ASSESSMENT YEAR: 1989-90 ARCHANA SYNTHETICS, C/O. MAHAVIR PRASAD TODI, AURA VILLA, BLOCK-F, NEAR OMKAR BUNGALOWS, THALTEJ, AHMEDABAD . APPELLANT PAN : AAOFA 2333 G VS. ITO, WARD-2, MEHSANA . RESPONDENT ASSESSEE(S) BY : SHRI S AKAR SHARMA, AR REVENUE BY : SHRI M.J. PAUL, SR. DR. / DATE OF HEARING : 07/05/2015 ! /DATE OF PRONOUNCEMENT: 14/05/2015 '# '# '# '#/ // / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), GANDHI NAGAR, AHMEDABAD DATED 26.12.2011 FOR ASSESSMENT YEAR 1989 -90, ON THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN HOLDING THAT THE SERVICE OF ASSESSMENT ORDER ON 07/05/1992 WAS WITHIN REASONABLE TIME AND THEREFORE, ORDER PASSED BY THE ASSESSING OFFICER WAS NOT BARRED BY LIMITATION AND WAS A VALID ASSESSMENT ORDER. ITA NO.225/AHD/ 2012 ARCHANA SYNTHETICS VS. ITO AY 1989-90 - 2 - 2. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN NOT ADJUDICATING THE APPELLANT'S CONTENTION THAT THE OR DER PASSED BY THE ASSESSING OFFICER WAS BARRED BY LIMIT ATION IN AS MUCH AS THE NOTICE OF DEMAND ITSELF WAS PREPA RED AFTER THE TIME BARRING DATE I.E. 10/04/1992. 3. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS VALID EVEN THOUGH THE SAME WAS NOT COMMUNICATED TO THE APPELLANT ON OR BEFORE THE TIME BARRING DATE AS HEL D BY KERALA HIGH COURT IN 257 ITR 198 (KER) AND 81 ITR 7 59 (SC). 4. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW I N NOT ADJUDICATING THE OTHER GROUNDS OF APPEAL CHALLENGIN G PASSING OF EX-PARTE ORDER U/S 144 IN AS MUCH AS TH E ORDER WAS PASSED WITHOUT GIVING REASONABLE OPPORTUN ITY OF BEING HEARD TO THE APPELLANT AND, THEREFORE, EX-PAR TE ASSESSMENT WAS MADE VIOLATING PRINCIPLES OF NATURAL JUSTICE. 5. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW I N NOT ADJUDICATING THE APPEAL ON MERITS IN RELATION TO TH E FOLLOWING QUANTUM ADDITIONS/DISALLOWANCES: (I) ADDITION ON ACCOUNT OF LOW GROSS PROFIT RS .18,636/- (II) ADDITION ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK RS. 2,03,656/- (III) DISALLOWANCE OF INTEREST PAID RS. 1,20,42 7/- (IV) DISALLOWANCE OF RENT PAID RS. 41,250/- (V) DISALLOWANCE OF BROKERAGE PAID RS. 13,780 /- (VI) ADDITION ON ACCOUNT OF BALANCE SHEET DIFFERENCE RS. 1,055/- (VII) DISALLOWANCE OF INTEREST PAID TO PARTNERS RS. 4,320/- ITA NO.225/AHD/ 2012 ARCHANA SYNTHETICS VS. ITO AY 1989-90 - 3 - 6. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN UPH OLDING THE ORDER OF THE ASSESSING OFFICER TREATING THE FIR M TO BE ASSESSABLE AS URF DESPITE THE FACT THAT THE ASSESSI NG OFFICER HIMSELF HAD GRANTED REGISTRATION AS RF INTI MATION U/S 143(1) AND THERE WAS NO CONSCIOUS DEFAULT ON TH E PART OF THE APPELLANT IN NOT COMPLYING WITH THE REQUIREM ENTS OF THE ASSESSING OFFICER FOR MAKING JUDICIOUS ASSESSME NT. 2. THE APPEAL BEFORE US WAS ARISING OUT OF THE SET- ASIDE ORDER OF THE CIT(A) DATED 02.02.2000 BY THE ITAT, A BENCH, AHMEDABAD VIDE ORDER DATED 11.07.2008. THE APPEAL ORIGINALLY AROSE FROM THE ASSESSMENT FRAMED BY THE ITO, WARD-2 , MEHSANA DATED 31.03.1992 U/S 144 OF THE ACT. THE A SSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO DISMISSED TH E APPEAL VIDE ORDER DATED 02.02.200. THEREAFTER, THE APPEAL WAS C ARRIED TO THE ITAT WHICH SET ASIDE THE SPECIFIC ISSUE ARISING OUT OF ADDITIONAL GROUND TAKEN BY THE ASSESSEE BEFORE THE ITAT FOR THE FIRST TIME. IN THE SET ASIDE PROCEEDINGS, THE CIT(A ) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER TO FIND OU T THE FACTS OF THE CASE AND IT WAS FOUND THAT THE PRIMARY RECOR D OF DISPATCH OF ASSESSMENT ORDER AND SERVICE, ETC. WERE NOT AVAILABLE WITH THE ASSESSING OFFICER; HOWEVER, THE ASSESSEE FILED 154 APPLICATION DATED 27.05.1992 WHEREIN IT WAS STA TED BY THE ASSESSEE THAT THE ASSESSMENT ORDER HAS BEEN RECEIVE D. FURTHER, FORM NO.35 WAS SUBMITTED IN THE OFFICER OF THE CONC ERNED CIT(A) ON 28.05.1992 AND IN THE COLUMN OF DATA OF S ERVICE OF DEMAND NOTICE WAS MENTIONED AS 07.05.1992. ITA NO.225/AHD/ 2012 ARCHANA SYNTHETICS VS. ITO AY 1989-90 - 4 - 2.1 THE STAND OF THE ASSESSEE HAS BEEN THAT THE ORD ER PASSED U/S 144 ITSELF HAS BEEN BARRED BY LIMITATION. THE C IT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE ASSESSMENT ORDER AS WELL AS DEMAND NOTICE WERE SERV ED ON THE ASSESSEE WITHIN THE REASONABLE TIME. 3. BEFORE US, THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSMENT ORDER WAS PASSED ON 31.03.1992 U/S 144 O F THE ACT AND NOTICE OF DEMAND U/S 156 OF THE ACT WAS ALS O PASSED ON 10.04.1992 WHICH IS PLACED AT PAGE NO.19 OF THE APPEAL FILE. WE FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PURSHOTTAMDAS T. PATEL, REPORTED IN [1994] 209 ITR 52 (GUJ.) HAS HELD THAT ASSESSMENT IS AN INTEGRATED PR OCESS INVOLVING NOT ONLY ASSESSMENT OF TOTAL INCOME BUT A LSO DETERMINATION OF TAX, AND UNLESS TOTAL INCOME IS DE TERMINED AND DETERMINATION OF TAX IS ALSO DONE, IT CANNOT BE SAID THAT PROCESS OF ASSESSMENT IS COMPLETE. IN THE SAID CAS E, TOTAL INCOME WAS DETERMINED AND ASSESSMENT ORDER WAS MADE WITHIN THE PRESCRIBED TIME LIMIT BUT DETERMINATION OF TAX WAS DONE AFTER THE PRESCRIBED PERIOD WAS OVER, IN SUCH SITUATION IT WAS HELD BY THE HONBLE GUJARAT HIGH COURT THAT THE ASSESSMENT COULD BE SAID TO BE BARRED BY LIMITATION . 4. APPLYING THE RATIO LAID DOWN BY THE HONBLE GUJA RAT HIGH COURT IN THE CASE OF PURSHOTTAMDAS T. PATEL (SUPRA) TO THE FACTS OF THE PRESENT CASE OF THE ASSESSEE, WE FIND THAT T HOUGH THE ASSESSMENT ORDER WAS PASSED WITHIN THE PRESCRIBED T IME LIMIT I.E. ON 31.03.1992 BUT DETERMINATION OF TAX WAS DON E AFTER THE ITA NO.225/AHD/ 2012 ARCHANA SYNTHETICS VS. ITO AY 1989-90 - 5 - PRESCRIBED PERIOD I.E. ON 10.04.1992. IN SUCH SITU ATION, THE ASSESSMENT ORDER IS BARRED BY LIMITATION AS PER THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PURSHOTTAMDAS T. PATEL (SURPA) BECAUSE ASSESSMENT O RDER INCLUDES ASSESSMENT OF TOTAL INCOME AS WELL AS DETE RMINATION OF TAX THEREON. SINCE WE ARE ALLOWING ASSESSEES APPE AL ON PRELIMINARY ISSUE OF LIMITATION, WE ARE REFRAINING TO COMMENT ON MERIT OF ISSUE AT HAND AND SAME MAY BE AGITATED AS AND WHEN SITUATION ARISES FOR THE SAME. THUS, THE APP EAL OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 14 TH OF MAY, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 14/05/2015 *BIJU T, PS '# &' ('' '# &' ('' '# &' ('' '# &' (''/ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. &+)* / THE RESPONDENT. 3. , / CONCERNED CIT 4. , ( ) / THE CIT(A), 5. '/0 & , , / DR, ITAT, AHMEDABAD 6. 02 3 / GUARD FILE. '# '# '# '# / BY ORDER, //TRUE COPY// 4 44 4/ // / 5 5 5 5 (DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD