M/s. Darshan Industrial Corporation, Surat V. The Income tax Officer,Ward-2(4), Surat

ITA 2653/AHD/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0283 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 01-10-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 23-07-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained cash credit; Depreciation; Opportunity of being heard; Additional evidence; Set aside
• Section: 143(3); 143(2); 68; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI T. K. SHARMA, JM AND D. C. AGARWAL, AM) ITA NO. 2653/AHD/2008 A. Y.: 2005-06 M/S. DARSHAN INDUSTRIAL CORPORATION, PLOT NO.4223, ROAD NO.42, GIDC SACHIN, SURAT VS THE INCOME TAX OFFICER, WARD-2(4), SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RASESH SHAH, AR RESPONDENT BY SHRI SHELLEY JINDAL, DR O R D E R PER T. K. SHARMA: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-II, SURAT DATED 27-6-2008 RELAT ING TO THE ASSESSMENT YEARS 2005-06. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT FO R THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE FILED RETURN OF INCOME ON 30-10-2005 DECLARING THEREIN INCOME OF AT LOSS OF RS.1,40,023/ -. ALONG WITH AUDIT REPORT U/S 44AB OF THE ACT IN FORM NO.3CB & 3 CD AN D BALANCE SHEET, PROFIT & LOSS ACCOUNT ETC. WERE ALSO FILED. THE AO SELECTED THE CASE FOR SCRUTINY BY ISSUING NOTICE DATED 20-10-2006 U/S 1 43(2) OF THE ACT, WHICH ACCORDING TO THE AO SERVED ON 29-10-2006 FIXI NG THE HEARING ON 15-11-2006. IN RESPONSE TO THE SAID NOTICE NONE ATT ENDED. THEREAFTER ALSO THERE WAS NO COMPLIANCE ON THE PART OF THE ASS ESSEE RESULTING IN EX- PARTE ORDER U/S 144 READ WITH SECTION 143 (3) OF TH E IT ACT. IN THE EX- PARTE ORDER THE AO ASSESSED THE TOTAL INCOME AT RS. 1,30,42,106/- WHEREIN INTER ALIA HE MADE THE FOLLOWING ADDITIONS: ITA NO.2653/AHD/2008 DARSHAN INDUSTRIAL CORPORATION 2 (I) UNEXPLAINED CASH CREDIT U/S PER PARA 6 RS.25,15 ,077/- (II) UNEXPLAINED CAPITAL U/S 68 AS PER PARA 7 RS.34 ,60,297/- (III) UNEXPLAINED CREDITS U/S 68 AS PER PARA 8 RS.7 0,40,094/- (IV) DISALLOWANCE OF EXPENSES AS PER PARA 9 RS. 1, 58,903/- (V) DEPRECIATION ON MOTOR CAR AS PER PARA 10 RS. 7,758/- 3. AGAINST THE AFORESAID ORDER APPEAL WAS FILED AND ONE OF THE GROUNDS RAISED WAS THAT NO NOTICE OF HEARING U/S 143(2) WAS SERVED WITHIN THE PRESCRIBED TIME. APART FROM THIS ON MERIT ALSO THE ASSESSEE CHALLENGED VARIOUS ADDITIONS. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES THE LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE . AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) THE ASSESSEE IS IN APPE AL BEFORE US ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE VALIDITY OF THE ASSESSMENT MADE U/S 144 OF THE ACT, ALTHOUGH NO NOT ICE U/S 143(2) WAS SERVED WITHIN PRESCRIBED TIME. 2. EVEN OTHERWISE ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSI ONER OF INCOME-AX (APPEALS) HAS ERRED IN CONFIRMING THE ACT ION OF THE ASSESSING OFFICER IN PASSING ORDER U/S. 144 OF THE ACT WITHOUT GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.25,15,077/- AS UNE XPLAINED CASH CREDIT U/S. 68 OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TREATING CAPITAL INTRODUCTION BY THE PAR TNERS AMOUNTING TO RS.34,60,297/- AS UNEXPLAINED CASH CRE DIT U/S. 68 OF THE ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TREATING TRADE CREDITORS OF RS.70,40,094 /- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. ITA NO.2653/AHD/2008 DARSHAN INDUSTRIAL CORPORATION 3 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING RS. 1,58,903/- BEING 20% OF VARIOUS EXPENSES. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING RS.7,758/- BEING 20% OF DEPR ECIATION ON MOTOR CAR. 4. AT THE TIME OF HEARING SHRI RASESH SHAH, LEARNED AR APPEARING ON BEHALF OF THE ASSESSEE AND STATED THAT GROUND NO.1 IS NOT PRESSED. IN VIEW OF THIS, WE DISMISS THE SAME AS NOT PRESSED. 5. WITH REGARD TO REMAINING GROUNDS, THE LEARNED CO UNSEL OF THE ASSESSEE SUBMITTED THAT THE AO FRAMED EX-PARTE ASSE SSMENT BECAUSE DUE TO CHANGE OF ADDRESS NO NOTICE OF HEARING WAS RECEI VED BY THE ASSESSEE. ON APPEAL BEFORE THE LEARNED CIT(A) , THE ASSESSEE FURNISHED VARIOUS ADDITIONAL EVIDENCES. SINCE THE ASSESSMENT WAS FRAM ED U/S 144 OF THE ACT, THE CIT(A) WAS REQUIRED TO CALL FOR REMAND REP ORT. INSTEAD OF CALLING FOR REMAND REPORT, THE LEARNED CIT(A) HELD THAT DOC UMENT NOW FILED ARE NOT ADMISSIBLE IN TERMS OF RULES 46 OF I.T. RULES S INCE ASSESSEE IS NOT COVERED BY ANY EXCEPTIONS. HE ACCORDINGLY DECIDED V ARIOUS GROUNDS OF APPEAL AGAINST THE ASSESSEE. IN VIEW OF THIS, THE L EARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSMENT BE SET ASIDE AND THE AO BE DIRECTED TO REFRAME THE ASSESSMENT AFTER GIVING PROPER OPPOR TUNITY AND AFTER EXAMINATION OF VARIOUS DOCUMENTS AND OTHER DETAILS WHICH THE AO MADE REQUIRED TO COMPLETE THE ASSESSMENT. THE LEARNED CO UNSEL OF THE ASSESSEE ALSO ASSURED THAT HE WILL CO-OPERATE WITH THE AO IN COMPLETING THE ASSESSMENT AND SHALL FURNISH ALL THE DETAILS AN D DOCUMENTS, CONFIRMATION OF LOAN ETC. AS REQUIRED BY THE AO. ITA NO.2653/AHD/2008 DARSHAN INDUSTRIAL CORPORATION 4 6. SHRI SHELLEY JINDAL, LEARNED DR VEHEMENTLY OBJEC TED TO THE AFORESAID PLEA OF THE LEARNED COUNSEL OF THE ASSESS EE. THE ASSESSEE POINTED OUT THAT THE ASSESSEE WAS NOT CO-OPERATIVE BEFORE THE AO WHICH IS EVIDENT FROM THE ASSESSMENT ORDER. IN THESE CIRC UMSTANCES, THE AO WAS HAVING NO OPTION BUT TO PASS ASSESSMENT ORDER U /S 144 READ WITH SECTION 143(3) OF THE ACT. 7. IN REPLY, THE LEARNED COUNSEL OF THE ASSESSEE AS SURED THAT THERE WAS NO INTENTION OF THE ASSESSEE NOT TO CO-OPERATE WITH THE DEPARTMENT. SINCE, NO NOTICE OF HEARING WAS RECEIVE D BY THE ASSESSEE THOUGH THE DEPARTMENT INSISTED THAT IT WAS SERVED O N SOME RELATIVE OF THE ASSESSEE WHICH RESULTED IN EX-PARTE ORDER U/S 1 44 READ WITH SECOND SECTION 143(3) THE ACT. 8. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND PERUSED THE MATERIALS PLACED BEFORE US. IT IS PERTINENT TO MENTION THAT BEFORE LEARNED CIT(A) THE ASSESSEE FUR NISHED VARIOUS DETAILS, WAS WILLING TO PRODUCE BOOKS OF ACCOUNT AN D OTHER DOCUMENTS. AS A MATTER OF FACT, IN THE INTEREST OF JUSTICE, TH E LEARNED CIT(A) OUGHT TO HAVE FORWARDED THE VARIOUS DETAILS AND DOCUMENTS TO THE AO FOR HIS COMMENTS/REMAND REPORT. ADMITTEDLY, THIS WAS NOT DO NE BY THE LEARNED CIT(A). FROM PERUSAL OF THE ORDER OF BOTH THE DEPAR TMENTAL AUTHORITIES BELOW IT APPEARS THAT ONE OCCASION, NOTICE OF HEARI NG WAS RETURNED BY POSTAL AUTHORITY WITH THE REMARK REFUSED. IT IS NOT CLEAR THAT IT IS REFUSED BY THE ASSESSEE OR SOMEBODY ELSE. KEEPING I N VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, NATURE OF THE ADDITION MADE, IN OUR OPINION, IT WILL MEET THE END OF JUSTICE IF THE ASSESSMENT ORDER IS SET ASIDE WITH THE DIRECTION THAT THE ASSESSEE WILL CO- OPERATE WITH THE AO. FOR THIS PURPOSE THE ASSESSEE, WITHIN THREE MONTHS FROM THE DATE OF THIS ORDER, ASSESSEE WILL APPEAR BEFORE THE AO, OBTAIN THE NOTICE OF HEARING, COPY OF QUESTIONNAIRE ISSUED, FURNISH COMPLETE DETA ILS AND DOCUMENTS, ITA NO.2653/AHD/2008 DARSHAN INDUSTRIAL CORPORATION 5 PRODUCE BOOKS OF ACCOUNT AND CONFIRMATION ETC, WHIC H MAY BE REQUIRED BY THE AO. THE AO AFTER SCRUTINIZING VARIOUS DETAIL S, BOOKS OF ACCOUNT ETC. WILL REFRAME THE ASSESSMENT IN ACCORDANCE WITH LAW. NEEDLESS TO ADD THAT IN THE CASE THE ASSESSEE FAILS TO CO-OPERATE B EFORE THE AO, THE AO SHALL BE AT LIBERTY TO REPEAT VARIOUS ADDITIONS AND PASS APPROPRIATE ORDER AS HE MAY DEEM FIT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16-10-09 SD/- SD/- (D. C. AGARWAL) ACCOUNTANT MEMBER (T. K. SHARMA) JUDICIAL MEMBER DATE : 16-10-09 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD