ACIT CIR 2 THANE, MUMBAI V. KOSMOFOX KOSMETICS P. LTD, THANE

ITA 2615/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62306 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 05-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Keywords: Principle of natural justice
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SHRI S.S. GODARA (JM ) ITA NO.2615/M/2011 ASSESSMENT YEAR: 2007-08 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE-2, 1 ST FLOOR, QURESHI MANSION, GOKHALE ROAD, NAUPADA, THANE (W)- 400 062. VS. M/S. KOSMOFOX KOSMETIC PVT. LTD., 314, MHESH INDUSTRIAL ESTATE, KASHIMIRA ROAD, MIRA ROAD, THANE 401 104. PAN: AAHFK9718J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.V. SHASTRI RESPONDENT BY: SHRI VIMAL PUNMIYA DATE OF HEARING: 24.4.2012 DATE OF PRONOUNCEMENT:4.5.2012 O R D E R PER S.S. GODARA, J.M: THE REVENUE HAS PREFERRED THE INSTANT APPEAL IMPUGN ING THE ORDER DATED 30.11.2010 PASSED BY THE LD. CIT (A)-II, THANE ACCEPTING THE A SSESSEES APPEAL OF THE ORDER AGAINST THE ASSESSMENT ORDERS PASSED BY U/S 144 OF THE INCOME T AX ACT, 1961 (HEREINAFTER TO BE REFERRED AS THE ACT). 2. BRIEF FACTS OF THE INSTANT CASE ARE THAT THE ASS ESSEE FILED ITS E-RETURN ON 28.11.2007 DECLARING TOTAL INCOME AS RS. NIL. THEREAFTER, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT AS MOST OF THE COLUMNS OF RETURN HAVE FILLED U P WITH TERMS ZERO WHICH GAVE RISE TO SUSPICION REGARDING THE ASSESSEES BOOKS OF ACCOUNT S. THE ASSESSING OFFICER IS ALSO ALLEGED TO HAVE ISSUED MANY NOTICES TO THE ASSESSEE U/S 143 (2) DATED 19.9.2008 SAID TO HAVE BEEN RECEIVED BY THE ASSESSEE ON 22.9.2008. ANOTHER NOT ICE WAS ISSUED ON 18.2.2009 ALONG WITH A QUESTIONNAIRE WHICH HAS SAID TO HAVE BEEN RETURNE D UNSERVED. THEREAFTER, THE ASSESSING 2 ITA NO.2615/M/2011 OFFICER AGAIN ISSUED NOTICE ON 5.11.2009 THROUGH RP AD, WHICH WAS RETURNED BY THE POSTAL AUTHORITIES AS UNCLAIMED. 3. THE ASSESSING OFFICER CONTINUED MAKING ATTEMPTS TO SERVE THE ASSESSEE. U/S 271(1)(B) OF THE ACT, AGAIN A NOTICE WAS ISSUED ON 4.12.2009. THE SAME WAS NOT RESPONDED. IN VIEW OF THE LIMITATION PROVISIONS, T HE ASSESSING OFFICER PROCEEDED EX-PARTE BY RESORTING TO THE BEST JUDGMENT METHOD U/S 144 OF TH E ACT. ACCORDINGLY, COMPUTED THE INCOME AFTER EXAMINING ASSESSEES PROFIT & LOSS ACC OUNT AS WELL AS OTHER MATERIAL AVAILABLE ON RECORD. COMPUTED TOTAL INCOME AS RS. 28,16,302/ - BY DISALLOWING THE ENTIRE EXPENSES OF RS. 7,64,577/- (FREIGHT, CONSUMPTION OF STORES / SP ARE PARTS, POWER & FUEL, RENTS, REPAIRS TO BUILDING AND MACHINERY). 4. THE ASSESSEE PREFERRED APPEAL AGAINST THE BEST J UDGMENT METHOD PASSED BY THE ASSESSING OFFICER. VIDE IMPUGNED ORDER, THE LD. CI T (A) HAS ALLOWED THE APPEAL AFTER SETTING ASIDE THE DISALLOWANCE MADE BY THE ASSESSING OFFICE R QUA THE EXPENSES AS WELL AS ADDITION OF RS. 27,94,950/- PERTAINING TO THE UNEXPLAINED SO URCE OF DEPOSITS. 5. HENCE, REVENUE HAS FILED THE INSTANT APPEAL BEFO RE US. 6. THE REVENUE HAS RAISED TWO GROUNDS IN THE APPEAL . GROUND NO.1 PERTAINS TO EXPENSES. GROUND NO.2 IS REGARDING UNEXPLAINED SOU RCE OF DEPOSITS CLAIMED BY THE ASSESSEE. 7. THE LEARNED DR APPEARING FOR THE REVENUE HAS VEH EMENTLY CONTENDED THAT SINCE IT WAS A CASE OF BEST JUDGMENT U/S 144 OF THE ACT, THE REFORE, THE LD. CIT (A) HAS ERRED IN ALLOWING THE ASSESSEES APPEAL VIDE IMPUGNED ORDER, THAT TOO WITHOUT EVEN SEEKING REMAND REPORT FROM THE ASSESSING OFFICER QUA THE ASSESSEE S CONTENTIONS. HENCE, HE PRAYED THAT THE GROUNDS IN QUESTION BE SET ASIDE TO THE ASSESSING O FFICER FOR FRESH ADJUDICATION AS THE 3 ITA NO.2615/M/2011 ASSESSING OFFICER HAD APPLIED SEC. 144 TO PROCEED U NDER SAID PROVISION, IN THE ABSENCE OF ANY COOPERATION BY THE ASSESSEE. 8. ON THE OTHER HAND, THE LEARNED AR HAS SUPPORTED THE IMPUGNED ORDER OF LD. CIT (A) AS WELL AS FINDINGS ARRIVED AT THEREIN. PRAYED FOR REJECTION OF THE GROUNDS. 9. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES. ALSO PERUSED THE RECORD AVAILABLE BEFORE US. IN OUR CONSIDERED OPINION, THE ASSESSIN G OFFICER AS PER THE ASSESSMENT ORDER HAD MADE ALL EFFORTS TO ASSOCIATE THE ASSESSEE IN FINAL IZING THE ASSESSMENT PROCEEDINGS. BUT, SINCE THE ASSESSEE WAS NOT PRESENT ON THE ONE HAND AND ON THE OTHER HAND, LIMITATION WAS APPROACHING, THE ASSESSING OFFICER RESORTED TO PROC EEDINGS U/S 144 OF THE ACT IN PASSING THE ASSESSMENT ORDER. 10. IN APPEAL, THE LD. CIT (A) HAS ACCEPTED THE ASS ESSEES CONTENTION WITHOUT EVEN SEEKING ANY REMAND REPORT FROM THE ASSESSING OFFICE R QUA THE CONTENTIONS OF THE ASSESSEE IN APPEAL. THAT, IN OUR OPINION, IS VIOLATION OF B ASIC PRINCIPLES OF NATURAL JUSTICE AS THE LD. CIT (A) HAS NOT EVEN ASSOCIATED THE ASSESSING OFFIC ER WHILE PASSING THE IMPUGNED ORDER WHICH HAS LEAD TO ACCEPTANCE OF THE ASSESSEES APPE AL. 11. AT THE SAME TIME, WE ARE ALSO VERY MUCH CONSCIO US OF THE FACT THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE WAS NOT PRESENT AS W ELL. HENCE, IN ORDER TO BALANCE THE EQUITIES, WE DEEM IT APPROPRIATE THAT INSTEAD OF DE CIDING THE GROUNDS IN HAND, THE CASE BE RESTORED BACK TO THE ASSESSING OFFICER TO REDECIDE THE ASSESSEES ASSESSMENT IN QUESTION. 12. WE ORDER ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MAY, 2012. SD/- SD/- (R.S. SYAL) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER 4 ITA NO.2615/M/2011 DATE : 4/5/2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CONCERNED 5. THE DR A BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI.