M/S ASHOK KUMAR & SONS HUF, Kota V. CIT, Kota

ITA 265/JPR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4891 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 20-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Keywords: Opportunity of being heard
• Section: 143(3); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT) ITA NO. 265/JP/2012 ASSESSMENT YEAR : 2007-08 PAN: AAFHA 1526 A M/S. ASHOK KUMAR & SONS (HUF ) VS. THE CIT B-22, IPIA, ROAD NO. 1 KOTA ANANTPURA, KOTA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHENDRA GARGIEYA DEPARTMENT BY: SHRI A.K. KHANDELWAL DATE OF HEARING: 21-08-2013 DATE OF PRONOUNCEMENT: 22-08-2013 ORDER PER KUL BHARAT, JM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT, KOTA DATED 07-02-2012 FOR THE ASSESSMENT YEAR 2007-08 WH EREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS. ALL THE GROUNDS OF APPEAL IN THIS APPEAL ARE MUTUAL LY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. 1. THE LEARNED COMMISSIONER OF INCOME TAX, KOTA ( 'THE CIT') ERRED IN FACT AND IN LAW IN REVISING THE ASSESSMENT BY INVOKING POWERS U/S. 263 OF THE INCOME TAX ACT, 1961 ('THE ACT'), W HICH WAS COMPLETED BY WAY OF ASSESSMENT MADE U/S. 143(3) OF THE ACT BY THE INCOME TAX OFFICER, WARD - 1(2), KOTA ('THE AO') DE SPITE THE FACT THAT THE CONDITIONS STIPULATED FOR INVOKING SUCH EXTRA-O RDINARY JURISDICTION WERE NOT SATISFIED. 2. THE LEARNED CIT ERRED IN FACT AND IN LAW IN SE TTING ASIDE THE ASSESSMENT FRAMED BY THE AO DESPITE THE FACT THAT T HE AO HAS CONSIDERED EACH AND EVERY ASPECT OF THE CASE AND HA S FRAMED THE 2 ASSESSMENT ONLY AFTER MAKING PROPER INQUIRES AND AF TER CONSIDERING THE SUBMISSIONS MADE BY THE APPELLANT. 3. THE LEARNED CIT ERRED IN FACT AND IN LAW IN DIRE CTING THE AO TO:- A) TO VERIFY THE GENUINENESS OF THE OUTSTANDING SUNDRY CREDITORS AMOUNTING TORS. 39,35J37/-; B) TO VERIFY THE GENUINENESS OF PURCHASES AMOUNTING TO RS. 49,45,602/- C) TO VERIFY THE GENUINENESS OF DEPOSITS IN BANK ACCOU NTS. THE LEARNED CIT FAILED TO APPRECIATE THE FACT THAT ALL THE DETAILS RELATING TO THE ABOVE ISSUES WERE FILED BEFORE THE AO AT THE TIME OF REGULAR ASSESSMENT AND IT IS ONLY AFTER PROPER VERIFICATION OF THE DOCUMENTS FILED / EXPLANATIONS .GIVEN THE ASSESSMENT WAS FINALIZED. 4. YOUR APPELLANT CRAVES THE RIGHT TO ADD TO OR ALT ER, AMEND, SUBSTITUTE, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 2.1 BRIEFLY, THE FACTS STATED ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) WAS FRAMED BY THE AO VIDE ORDER DATED 04-12-2009 ASSESSING AN INCOME AT RS. 7,54,800/-.. SUBSEQUENTLY, THE LD. CI T ISSUED NOTICE ON 25-01-2012 TO THE ASSESSEE U/S 263 OF THE ACT, GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE LD. AR OF THE ASSESSEE APPE ARED BEFORE THE LD. CIT AND FILED THE WRITTEN SUBMISSION. THE WRITTEN SUBMISSION SO FILED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE LD. CIT AND THE ASSESSMENT MADE U /S 143(3) OF THE ACT WAS SET ASIDE TO BE MADE AFRESH. 2.2 FEELING AGGRIEVED BY THE ORDER OF THE LD. CIT, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2.3 DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF THE AO WAS REVISED BY THE LD. CIT ON THE B ASIS OF THREE POINTS. HE SUBMITTED THAT 3 THE ORDER OF THE LD. CIT WAS NOT JUSTIFIED AS THE A SSESSEE FILED THE REQUISITE DETAILS AS ASKED FOR BY THE AO. HE FURTHER SUBMITTED THAT THE AO HAD CARRIED OUT PROPER ENQUIRY AND HAS MADE DETAILED QUESTIONNAIRE VIDE LETTER DATED 2 8-11-2008 AND THE AO HAD REQUIRED THE ASSESSEE VIDE POINT NO. 2, 7,9,10 AND 13 TO FU RNISH THE INFORMATION ON PURCHASE/ SALES, TRADE CREDITORS AND OTHER LIABILITIES OUTSTANDING. THIS QUESTIONNAIRE IS PLACED AT PAGE NOS. 21 AND 22 OF THE ASSESSEE'S PAPER BOOK. IN RESPONSE TO QUESTIONNAIRE, THE ASSESSEE FILED THE PARAWISE REPLY ON 17-04-2009 AND COPY OF WHICH IS PLACED AT PAGE 24 OF THE ASSESSEE'S PAPER BOOK WHEREIN DETAILED INFORMATION AS SOUGHT H AD BEEN FURNISHED. THE AO AFTER CONSIDERING ALL THE FACTS AND REPLY FILED BY THE AS SESSEE BEFORE HIM PROCEEDED TO REJECT THE BOOKS OF ACCOUNT PARTICULARLY WHEN THE PURCHASES WE RE NOT FULLY VERIFIABLE. HE THEREFORE, ESTIMATED THE INCOME. THIS IN ITSELF SHOWS THAT THE RE HAS BEEN A DUE AND PROPER ENQUIRY IN PURCHASES AS WELL AS SUNDRY CREDITORS ARISING THERE FROM THE ORDER OF THE AO. THEREFORE, IT CANNOT BE TERMED TO BE ERRONEOUS ON THAT POINT. 2.4 IN SO FAR AS THE DEPOSITS IN BANK ACCOUNT ARE C ONCERNED, THE AO HAS ALSO CALLED FOR THE COPY OF THE BANK ACCOUNT WHICH WAS DULY FURNISH ED BEFORE HIM. THIS WAS DULY CONSIDERED BY THE AO BEFORE MAKING THE ASSESSMENT. IN THIS VIEW OF THE MATTER, THE LD. CIT IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSMENT ORDER DATED 4-12-2009 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2.5 ON THE OTHER HAND, THE LD. DR RELIED UPON THE F INDINGS AND CONCLUSION REACHED BY THE LD. CIT. THE DETAILS FURNISHED BY THE ASSESSEE IN ASSESSMENT PROCEEDINGS WITH RESPECT TO THE SUPPLIERS AND TRADE CREDITORS HAD NOT BEEN G IVEN WITH THEIR ADDRESSES. IT THEREFORE, CANNOT BE SAID THAT THERE HAS BEEN ENQUIRY MADE BY THE AO ON THE TRADE CREDITORS OR THE PURCHASES. AS REGARDS THE DEPOSITS IN THE BANK ACCO UNT, THERE IS NO WHISPER IN ASSESSMENT ORDER OR ANY REQUEST HAS BEEN MADE TO EXPLAIN THE SOURCE OF THE DEPOSITS IN THE BANK 4 ACCOUNT IN RESPONSE TO QUERY RAISED BY THE AO. THE AO HAS TOTALLY FAILED IN EMBARKING ANY ENQUIRY THEREON. THE LD. CIT THEREFORE, WAS FUL LY JUSTIFIED IN SETTING ASIDE THE ORDER AND REMIT THE MATTER BACK FOR FRESH ENQUIRY BY WHIC H NO PREJUDICE CAUSED TO THE ASSESSEE. 2.6 WE HAVE HEARD REPRESENTATIVES OF THE RESPECTIVE PARTIES WITH REFERENCE TO MATERIAL ON RECORD. THE QUESTIONNAIRE DATED 28-11-2008 REVEA LS THAT THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE ASSES SEE TO FILE THE COPY OF BANK ACCOUNT. THE SAME WAS FURNISHED BY THE ASSESSEE VIDE REPLY DATED 17-04-2009. THE ASSESSING AUTHORITY DID NOT EMBARK ANY ENQUIRY AS REGARDS THE SOURCE OF DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE. HE THUS FAILED TO MAKE DUE AND PROPER ENQUIRY WITH RESPECT TO SUCH DEPOSITS. IN THE ABSENCE OF ANY SUCH ENQUIRY, THE ORDER ON THIS POINT IS TERMED AS ERRONEOUS AS HAS ALSO BEEN HELD BY HON'BLE DELHI H IGH COURT IN THE CASE OF GEE VEE ENTERPRISES VS. ADDL. CIT (1975), 99 ITR 375 (DEL) AND BY THE HON'BLE RAJASTHAN HIGH COURT ALSO IN THE CASE OF SMT. RENU GUPTA VS. CIT, (2008) 301 ITR 45 (RAJ.). SUCH AN ERRONEOUS ORDER HAS CAUSED PREJUDICE TO THE INTERES T OF REVENUE. THE LD. CIT HAS RECORDED A FINDING IN THIS REGARD. WE THEREFORE, FIND MERIT IN THE ORDER OF THE LD. CIT IN SETTING ASIDE THE ISSUE TO THE FILE OF THE AO FOR FRESH ENQ UIRY AND TAKING DECISION IN ACCORDANCE WITH LAW ON THE ISSUE OF THE DEPOSITS IN BANK. THER EFORE, THE ORDER OF THE LD. CIT IS UPHELD. 2.7 IN SO FAR AS THE ISSUE OF PURCHASES AND TRADE C REDITORS IS CONCERNED, THE ASSESSING AUTHORITY VIDE SHOW CAUSE DATED 28-11-2008 AT SERIA L NO. 2, 7, 9, 10, AND 13 REQUIRED THE ASSESSEE TO FURNISH THE DETAILS WITH RESPECT TO PUR CHASE / SALE OF GOODS AND TRADE CREDITORS LIABILITY OUTSTANDING AND ALSO SOUGHT COPY OF PURCH ASE BILLS WHICH WERE FURNISHED TO HIM BY WAY OF PARAWISE REPLY THROUGH ASSESSEE'S LETTER DATED 17-04-2009. THE AO BEING NOT SATISFIED ABOUT THE IDENTITY, CORRECTNESS AND COMPL ETENESS OF SUCH DETAILS, PROCEEDED TO 5 REJECT THE ACCOUNTS AND ESTIMATED THE INCOME. IT TH EREFORE, STANDS CONCLUSIVELY PROVED THAT THERE IS DUE AND PROPER APPLICATION OF MIND TO THE PECULIAR FACTS ON THE ISSUE OF PURCHASE / SALE OF GOODS AND TRADE CREDITORS. SINCE THE AO PAS SED THE ORDER AFTER CONDUCTING PROPER ENQUIRY AND THE APPLICATION OF MIND, THE LD. CIT CA NNOT ASSUME THE JURISDICTION MERELY BECAUSE THE ENQUIRY NEEDS TO BE CONDUCTED. THIS VIE W HAS ALSO BEEN ENTERTAINED BY THE HON'BLE APEX COURT IN THE CASE OF MALABAR INDUSTRIA L CO. LTD. VS. CIT 243 ITR 83 (SC) AND ALSO BY THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. GANPAT RAM BISHNOI (2006), 152 TAXMAN 242 (RAJ.). IN THIS VIEW OF THE MATTER, THE ASSESSMENT ON THE ISSUE OF PURCHASE AND TRADE CREDITORS CANNOT BE TER MED TO BE ERRONEOUS AND NO PREJUDICE CAUSED TO THE REVENUE. WE THEREFORE, SET ASIDE THE FINDINGS REACHED BY THE LD. CIT IN THAT REGARD AND ALSO SET ASIDE THE ORDER AS WELL AS DIRE CTIONS THEREON. 3.0 IN THE RESULT, THE ASSESSEES APPEAL STANDS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22-08-2013. SD/- SD/- (B.R. JAIN) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 22 ND AUG, 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. SHRI ASHOK KUMAR & SONS (HUF ) 2. THE LD. CIT, AJMER 3. THE LD. CIT 4. THE LD. DR 5. THE GUARD FILE (IT NO.265/JP/12 ) A.R. ITAT: JAIPUR 6 7