M/s. Maruti Polyplast, Ahmedabad V. The Income Tax Officer, Ward-3(3)(8), Ahmedabad

ITA 259/AHD/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4705 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-11-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Set aside
• Section: 148; 144; 142(1); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member M/s. Maruti Polyplast 192/204-A, G.V.M.M. Industrial Estate Odhav Odhav, Ahmedabad-382415 PAN: AARFM5213A (Appellant) Vs The ITO, Ward-3(3)(8), Ahmedabad (Respondent) Assessee Represented: Shri Dhinal Shah, A.R. & Shri Bhadresh Gandhakwala, A.R. Revenue Represented: Ms. Saumya Pandey Jain, Sr.D.R. Date of hearing : 22-11-2023 Date of pronouncement : 13-12-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against exparte appellate order dated 08.03.2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the exparte assessment order passed under section 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2012-13. ITA No. 259/Ahd/2023 Assessment Year 2012-13 I.T.A No. 259/Ahd/2023 A.Y. 2012-13 Page No M/s. Maruti Polyplast vs. ITO 2 2. For the Assessment Year 2012-13, the assessee filed its original Return of Income on 30.09.212 declaring total income of Rs.6,97,718/-. The same was processed u/s. 143(1) of the Act. Based on the search conducted by Central Excise Department, Preventive Wing on 23.02.212 that the assesse maintained a separate account name as Jay Shree Krishna for illicit clearances of goods valued at Rs. 73,12,672/- for the period from 01.04.2011 to 11.02.2012 for which no invoices were being raised. The same is treated as unaccounted sales by the assessee, who admitted the same by one of the partner namely Shri Hiralal Patel in his statement recorded during the search action. Therefore the assessment was reopened by issuing a notice u/s. 148 of the Act dated 20.03.2019. The assessee has not responded to the above notice. Therefore statutory notice u/s. 142(1) were issued on 21.08.2019, 26.09.2019, 12.10.2019 and final show cause notice on 11.11.2019. Despite the service of notices, the assessee failed to respond any of the above notices, therefore the Assessing Officer passed a Best Judgment assessment order u/s. 144 of the Act, relying upon the statement dated 28.01.2014 of Shri Hiralal Patel, wherein he categorically confessed that folder “7777” contains all details of illicit clearances and also accepted that all the goods detailed in the folder “7777” were sold in cash at factory gate. The same were treated as unaccounted sales of Rs. 73,12,672/- and added as the income of the assessee. The Assessing Officer also initiated penalty proceedings under the Act. 3. Aggrieved against the same, the assessee filed an appeal before Commissioner of Income Tax (Appeals)/NFAC. During the appellate I.T.A No. 259/Ahd/2023 A.Y. 2012-13 Page No M/s. Maruti Polyplast vs. ITO 3 proceedings, the assessee were issued with notices on 24.12.2020, 14.07.2021, 30.1.2023 & 20.2.2023. Again the assessee has not complied with the above notices nor filed any submissions or documents before the Appellate Authority. Therefore the Ld. CIT(A) also decided the appeal exparte by observing as follows: “..... 8. Ground No. 1: Ground No. 1 is general in nature and will be disposed off while disposing other grounds of appeal. Therefore, this ground does not need any separate adjudication and is dismissed for statistical purpose. 9. Ground No. 2: In ground No. 2, the appellant has mainly contested the addition of Rs. 73,12,672/- on account of unaccounted sales. I have considered the assessment order and the statement of facts filed by the appellant. It is seen that except for stating the ground the appellant has not given any documentary evidence or any submission explaining its case that the addition is factually and legally incorrect. Even otherwise in the absence of any submission or plausible evidence there remains no alternative with the AO but to make an addition. The A.O. has elaborately discussed the Modus operandi adopted by the appellant and has clearly brought out the issue in his additions. I, therefore, do not find any reasons to disagree with the findings of the AO. Accordingly, I confirm the action of the AO. This addition is therefore confirmed. Ground of Appeal No. 2 is therefore dismissed.” 4. Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal: 1. The learned CIT(A) has erred in confirming the addition of Rs. 73,12,672/- on the ground that it is unaccounted sales. 2. Alternatively, the learned CIT(A) has erred in confirming the addition of Rs. 73,12,672/- being gross unaccounted sales in as much as the gross sales/receipts cannot be treated as income and that only profit margin could be treated as income. 3. Your Appellant reserves the right to add, alter, amend and withdraw any of the above grounds of appeal. I.T.A No. 259/Ahd/2023 A.Y. 2012-13 Page No M/s. Maruti Polyplast vs. ITO 4 5. During the appellate proceedings, the assessee filed a notarized Affidavit the contents of the same are as follows: AFFIDAVIT I Hiralal Arjanbhai Patel, aged about 57 years a Partner of M/s. Maruti Polyplast having office at 192/204-A, G.V.M.M. Industrial Estate Odhav, Odhav, Ahmedabad 382415, Gujarat, India, do hereby solemnly affirm that: 01. The Income Tax Return for A.Y. 2012-2013 was filed on 30-09-2012 declaring total income of Rs. 6,97,718 [Rupees Six Lakh Ninety-Seven Thousand Seven Hundred Eighteen] 02. Subsequently a notice under Section 148 was issued by the Assessing Officer dated 20-03-2019 proposing to reopen income tax assessment in relation to unaccounted sales of goods to the tune of Rs. 73,12,672/- should not be added to your total income. 03. Thereafter, the Assessing Officer passed an Order under Section 144 read with Section 147 dated 26-11-2019 on the ground that no information has been submitted making an addition of Rs. 73,12,672/- as unaccounted sales of goods. 04. Subsequently, an Appeal was filed on 13-12-2019 before CIT(Appeals). 05. My Consultant did not submit any details or information to Assessing Officer and CIT(Appeals) hence both Authorities has passed ex-party order confirming addition. 05. Thus, due to my Consultant's non-cooperation before the Assessing Officer and also before CIT (Appeals), I could not furnish the details in relation to unaccounted sales of goods. 06. Now, I have changed by Consultant for appropriate compliance with Tax Department. 6. Ld. Counsel Mr. Dhinal Shah appearing for the assessee submitted that as stated in the Affidavit by the assessee, the earlier Tax Consultant did not submit any details or information to the Assessing Officer and Ld. CIT(A). Hence both the Authorities passed exparte orders confirming the addition. However Ld. Counsel alternatively submitted that the entire unaccounted sales cannot be treated as income of the assessee and only profit margin thereon I.T.A No. 259/Ahd/2023 A.Y. 2012-13 Page No M/s. Maruti Polyplast vs. ITO 5 to be treated as the income of the assessee as held by Jurisdictional High Court in various judgments. To this extent, the appeal be allowed by setting aside the matter back to the file of Assessing Officer. The assessee undertake to file all the required details of unaccounted sales made by the assessee before the A.O. 7. Per contra Ld. Sr. D.R. Ms. Saumya Pandey Jain appearing for the Revenue submitted four opportunities were given by the Assessing Officer before passing the exparte order. Similarly four opportunities of hearing were given by Ld. CIT(A), as there was no reply or cooperation from the assessee, thereby an exparte order was passed by Ld. CIT(A). Even in the Affidavit filed by the assessee before this Tribunal, there is no mention about the earlier Tax Consultant and his non-cooperation with the A.O. and Ld. CIT(A). Thus the Affidavit itself is vague in nature, therefore the order passed by the Lower Authorities does not require any interference and assessee appeal liable to be dismissed. 8. We have given our thoughtful consideration and perused the materials available on record. It is seen from assessment order four opportunities of hearing were given by the Assessing Officer. The assessee has not even responded to the statutory notices issued u/s. 142(1) as well as show cause notice issued by the Assessing Officer, which has resulted in passing an exparte assessment order, treating the entire unaccounted sales of Rs. 73,12,672/- as the income of the assessee. No doubt, the Assessing Officer has relied upon the statement recorded during the search proceedings by the Central Excise Authorities on the Partner of the assessee firm I.T.A No. 259/Ahd/2023 A.Y. 2012-13 Page No M/s. Maruti Polyplast vs. ITO 6 namely Shri Hiralal Patel who has admitted the unaccounted sales made by the assessee firm. Due to assessee’s non-cooperation to the statutory notices and no other materials available on record, it is clear the Assessing Officer made the entire addition of unaccounted sales as the income of the assessee. 8.1. Similar is the case before Ld. CIT(A), four hearing opportunities were given to the assessee. The assessee failed to appear which has resulted in passing exparte order by the Ld. CIT(A) also. It is surprising to see that the assessee has not responded to the statutory notices issued by the Ld. A.O. and the hearing notices given by Ld. CIT(A) which were properly served on the assessee, however very diligently, the assessee filed appeals both before the Ld. CIT(A) and before this Tribunal within the statutory time limit. Further the above notices were served only on the assessee, who knows every next date of hearing of the case, but in the Affidavit, the Partner put the blame on his previous Tax Consultant, which cannot be accepted. This clearly proves the malafide intention of the assessee in not responding and filing details before the statutory authorities, thereby wasting the precious time of the Authorities and also not made use of the hearing opportunities given under the Principle of Natural Justice. This is to be viewed very seriously, at the same time, the addition made by the A.O. cannot be allowed to sustain, since it is against the law laid by the Hon’ble Jurisdictional High Court in the case of CIT v. President Industries (2002) 124 Taxmann.com 654 (Guj.) as follows: “Section 69B, read with section 256, of the Income-tax Act, 1961 - Undisclosed 4 investments - Assessment year 1994-95 - Whether amount of sales by itself cannot represent the income of the assessee who has not I.T.A No. 259/Ahd/2023 A.Y. 2012-13 Page No M/s. Maruti Polyplast vs. ITO 7 disclosed the sales - Held, yes -During survey it was found that assessee had not disclosed certain sales in books of account - Whether Tribunal was justified in holding that unless there was a finding that investment by way of incurring cost in acquiring goods which had been sold, had been made by assessee and that had also not been disclosed, only net profits embedded in sales, and not wholesale proceeds itself, would be treated as undisclosed income of assessee - Held, yes” 9. In order to meet the ends of justice, we deem it fit to set aside the orders passed by the Lower Authorities for the limited purpose that the entire unaccounted sales/receipts cannot be treated as income of the assessee and only profit margin is to be taxed. Further we impose a cost of Rs. 10,000/- (Rupees Ten Thousand only) payable by the assessee to the Prime Minister National Relief Fund within a period of two weeks from the date of receipt of copy of this order, for its willful non-cooperation before the Lower Authorities. 10. Thus the appeal filed by the assessee is allowed with the above direction. Needless to say, the assessee should cooperate with the Jurisdictional Assessing Officer to pass fresh assessment order. 11. In the result, the appeal filed by the Assessee is allowed for statistical purpose. Order pronounced in the open court on 13-12-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 13/12/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT I.T.A No. 259/Ahd/2023 A.Y. 2012-13 Page No M/s. Maruti Polyplast vs. ITO 8 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद