M/s Sreenivasa Sree Kaleswari Lorry Service., Visakhapatnam V. The ITO, Ward-5(2)., Visakhapatnam

ITA 282/VIZ/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7139 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2002-2003
• Appeal Filed On: 19-05-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Keywords: Reopening of assessment; Peak credit; Revised return
• Section: 147; 148; 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SRI B.R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO.282/VIZAG/2008 ASSESSMENT YEAR : 2002-03 SREENIVASA SREE KALESWARI LORRY SERVICE, VISAKHAPATNAM VS. ITO, WARD-5(2) VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AATFS 3902J APPELLANT BY : SHRI I. KAMASASTRY, CA RESPONDENT BY : SHRI G.S.S. GOPINATH, DR O R D E R PER B..R. BASKARAN, ACCOUNTANT MEMBER : 1. THE APPEAL OF THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 27.3.2008 PASSED BY LD CIT(A) AND IT RELATES TO THE ASSESSMEN T YEAR 2002-03. 2. THE ORIGINAL GROUNDS RAISED BY THE ASSESSE E READ AS UNDER: A. NOTICE U/S 148 WAS ISSUED IN THE STATUS OF THE FIRM WHERE AS THE ASSESSMENT ORDER WAS PASSED IN THE STATUS OF INDIVI DUAL. HENCE THE ENTIRE ASSESSMENT IS VITIATED AND THEREFORE VOID AB INITIO . B. THE ASSESSMENT ORDER IS PASSED U/S 144 R.W.S. 148. SINCE SECTION 148 DOES NOT CONFER ANY POWER OF ASSESSMENT, EXCEPT TO ISSUE NOTICE FOR REOPENING OF ASSESSMENT, THIS FACT ALSO MAKES THE ENTIRE ASSESSM ENT VOID AB INITIO. C. THE ASSESSING OFFICER IS NOT CORRECT IN PASS ING AN EXPARTE ORDER UNDER SECTION 144 WHEN THE BOOKS OF ACCOUNT WERE IMPOUNDE D ON 01.11.2002 AD RELEASED ONLY AFTER PASSING THE ASSESSMENT ORDER. D. THE CIT(APPEALS) IS NOT CORRECT IN CONFIRMING THE ADDITION OF RS.4,71,473/- ON ACCOUNT OF DEFICIT PEAK CREDIT OF CASH. E. THE CIT(APPEALS) IS NOT CORRECT IN CONFIRM ING THE ADDITION OF RS.5 LAKHS FOR WANT OF/NON-PRODUCTION OF BILLS/VOUCHERS. 2 3. THE ASSESSEE HAS RAISED FOLLOWING ADDITIONAL GROUND AND HAS FILED A PETITION FOR ADMISSION OF THE SAME, BY PLACING RELIANCE ON T HE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION LTD. V CIT (1998) 229 ITR 383. THE ASSESSING OFFICER IS NOT AT ALL CORRECT IN MAK ING ADDITIONS ON ISSUES UNCONNECTED WITH THE ISSUE FOR WHICH THE REOPENING OF THE ASSESSMENT WAS MADE. SINCE THE ASSESSEE HAS RAISED A LEGAL ISSUE WHICH D OES NOT REQUIRE FRESH FACTS, WE ADMIT THE SAME. 4. THE FACTS ARE STATED IN BRIEF. THE ASSESSEE HERE-IN FILED ITS RETURN OF INCOME UNDER THE STATUS PARTNERSHIP FIRM FOR THE ASSESSM ENT YEAR 2002-03 DISCLOSING AN INCOME OF RS.1,60,000/-. CONSEQUENT TO THE SURV EY OPERATION, THE ASSESSEE FILED A REVISED RETURN OF INCOME ADMITTING A TOTAL INCOME OF RS.12,43,754/-. THE AO COMPLETED THE ASSESSMENT U/S 144 OF THE ACT TO T HE BEST OF HIS JUDGMENT BY DETERMINING THE TOTAL INCOME AT RS.30,74,710/-, SIN CE THE ASSESSEE FAILED TO ANY OF THE NOTICES ISSUED BY HIM. THE APPEAL PREFERRED BY THE ASSESSEE BEFORE LD CIT(A) WAS PARTLY ALLOWED. STILL AGGRIEVED, THE AS SESSEE IS IN APPEAL BEFORE US WITH THE ABOVE GROUNDS. 5. WE HAVE HEARD THE PARTIES AND CAREFULLY PERU SED THE RECORD. IN THE FIRST GROUND, THE ASSESSEE ALLEGES THAT THE ASSESSMENT HA S BEEN FRAMED IN THE STATUS OF INDIVIDUAL:, WHILE THE STATUS OF THE ASSESSEE IS FIRM AND HENCE THE ASSESSMENT IS VOID AB INITIO. HOWEVER, AS CAN BE S EEN FROM THE ASSESSMENT ORDER, THE AO HAS MENTIONED PERMANENT ACCOUNT NO. OF THE FIRM AND FURTHER IN THE BODY OF THE ASSESSMENT ORDER, THE AO REFERS THE ASSESSEE AS ASSESSEE FIRM ONLY. THE AO HAS APPLIED THE RATES APPLICABLE TO T HE FIRM ONLY FOR CALCULATING THE INCOME TAX ON THE INCOME DETERMINED BY IT. IN THE SECOND GROUND OF APPEAL, THE ASSESSEE CLAIMS THAT THE ASSESSMENT HAS BEEN MADE U /S 144 R.W.S. 148 AND HENCE THE ASSESSMENT IS VOID AB INITIO. WE DO NOT FIND ANY MERIT IN THESE TWO GROUNDS, SINCE FROM THE PERUSAL OF RECORD, IT CAN B E INFERRED THAT THEY ARE ONLY TYPOGRAPHICAL MISTAKES. AS POINTED OUT BY LD CIT(A ), SECTION 292B OF THE ACT IS 3 APPLICABLE TO THE FACTS OF THIS CASE AND HENCE THE ASSESSMENT CANNOT BE SAID TO BE VITIATED DUE TO THE TYPOGRAPHICAL MISTAKES. ACC ORDINGLY THESE TWO GROUNDS ARE DISMISSED. 5.1 IN THE THIRD GROUND, THE ASSESSEE QUESTIONS THE VALIDITY OF INVOKING THE PROVISIONS OF SECTION 144, WHEN THE BOOKS OF ACCOUN T ARE IMPOUNDED AND WERE AVAILABLE WITH THE ASSESSING OFFICER. IN THIS REGA RD, THE LD CIT(A) HAS NOTICED THAT THE AO HAS OBTAINED REQUISITE APPROVAL FROM THE CIT FOR RETAINING THE BOOKS BEYOND THE STATUTORY PERIOD. IT WAS POINTED OUT BY LD DR THAT THE AO HAS IMPOUNDED ONLY THE BOOKS OF ACCOUNT AND NOT BILLS A ND VOUCHERS. SINCE THE ASSESSEE HAS FAILED TO PRODUCE THE BILLS AND VOUCHE RS IN SUPPORT OF THE BOOKS OF ACCOUNT AND SINCE THE ASSESSEE FAILED TO RESPOND TO THE NOTICES ISSUED BY THE AO, THE ASSESSING OFFICER WAS CONSTRAINED TO COMPL ETE THE ASSESSMENT TO THE BEST OF HIS JUDGMENT U/S 144 OF THE ACT. WE FIND M ERIT IN THE SUBMISSIONS OF LD DR. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AS NARRATED ABOVE, THE AO HAD NO OTHER OPTION, BUT TO COMPLETE THE ASSESSMENT TO THE BEST OF HIS JUDGMENT. ACCORDINGLY, WE DISMISS THIS GROUND OF THE ASSESSEE . 5.2 IN THE ADDITIONAL GROUND, THE ASSESSEE IS Q UESTIONING THE ADDITIONS MADE ON ISSUES WHICH WERE NOT CONNECTED WITH THE ISSUE F OR WHICH THE REOPENING OF THE ASSESSMENT WAS MADE. IN THIS REGARD, LD AR PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF JAY BHARAT MARUTI LTD. VS. CIT (2009) 223 CTR (DEL) 269. HOWEVER, AS POINTED OUT BY LD DR, THE SECTION 147 HAS BEEN AMENDED BY FINANCE (NO.2) ACT, 2009 WITH RETROSPECT IVE EFFECT FROM 1.4.1989 BY INSERTING EXPLANATION 3. ACCORDINGLY TO THIS NEW E XPLANATION, THE AO IS EMPOWERED TO ASSESS THE INCOME IN RESPECT OF ANY IS SUE WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF ASSESSMENT PRO CEEDINGS, NOT WITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLU DED IN THE REASONS RECORDED U/S 148(2). IN VIEW OF THIS AMENDMENT, WHICH HAS R ETROSPECTIVE EFFECT FROM 1.4.89, THIS GROUND OF THE ASSESSEE ALSO FAILS. 4 6. THE NEXT GROUND RELATES TO THE CONFIRMATION OF ADDITION OF RS.4,71,473/- RELATING TO THE DEFICIT PEAK CREDIT OF CASH. ON EX AMINATION OF CASH BOOK FOR THE YEAR UNDER CONSIDERATION, THE AO OBSERVED DEFICIT C ASH BALANCE ON DIFFERENT DATES STARTING FROM 07-01-2002 TO 30-03-2002. THE PEAK OF SUCH DEFICIT CASH BALANCE AMOUNTING TO RS.4,71,473/- WAS APPEARING ON 12-02-2002 AND THE SAME WAS ADDED. BEFORE THE LD CIT(A), THE ASSESSEE CLAI MED THAT IT WITHDREW A SUM OF RS.5.00 LAKHS FROM THE BANK ON 13.02.2002 AND TH EY WERE HANDED OVER TO ITS BRANCHES ONLY ON 13.2.2002. HOWEVER IN THE BOOKS O F ACCOUNT, IT WAS WRONGLY RECORDED AS IF THE CASH WERE HANDED OVER TO THE BRA NCHES ON 12.02.2002 AND HENCE THE BOOKS SHOWED DEFICIT CASH BALANCE ON 12.2 .2002. HOWEVER, LD CIT(A) DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND CONFIRMED THE ADDITION WITH THE FOLLOWING OBSERVATIONS: .. HOWEVER, ON VERIFICATION OF THE RECORDS, IT IS NOTICED THAT THE DEFICIT CASH BALANCE WAS NOT ONLY APPEARING ON 12-02-2002 B UT THE SAME WAS APPEARING ON DIFFERENT DATES FROM 07-01-2002 TO 30-03-2002. THE APPELLANT HAS NOT OFFERED ANY EXPLANATION REGARDING SUCH DEFICIT CASH BALANCE APPEARING IN DIFFERENT DATES. THE WITHDRAWAL MADE FROM THE BANK ON 13-02-2002 WAS SOUGHT TO BE EXPLAINED WITH REFERENCE TO THE DEFICIT CASH BALANCE APPEARIN G ON 12-02-2002. THE SAME APPEARS TO BE AN AFTER THOUGHT ONLY. THERE IS NO P LAUSIBLE EXPLANATION FOR THE DEFICIT CASH BALANCES APPEARING IN DIFFERENT DATES AS STATED EARLIER. IN THE ABSENCE OF ANY SUCH EXPLANATION AND IN THE ABSENCE OF ANY NEXUS BETWEEN THE CASH WITHDRAWAL MADE ON 13/02/2002 AND THE DEFICIT CASH BALANCE APPEARING ON 12/02/2002, THE ADDITION OF RS.4,71,473/- IS HEREBY CONFIRMED BEFORE US ALSO, LD AR RAISED SAME CONTENTIONS WHICH WERE RAISED BEFORE THE LD CIT(A). WHEN A SPECIFIC QUERY WAS ASKED WHETHER TH E ASSESSEE IS HAVING ANY OTHER EVIDENCE WITH IT TO SUBSTANTIATE ITS CONTENTI ONS, LD AR WAS POLITE ENOUGH TO SUBMIT THAT THERE WAS NO EVIDENCE WITH THE ASSESSEE . IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DEC ISION OF LD CIT(A) AND ACCORDINGLY WE UPHOLD THE SAME. 6.1 THE NEXT GROUND RELATES TO ESTIMATED DISALL OWANCE OF RS.5.00 LAKHS OUT OF VARIOUS EXPENSES DUE TO NON PRODUCTION OF BILLS/VOU CHERS. OUT OF THE EXPENDITURE CLAIM OF RS.2,79,04,726/- RELATING TO HIRE CHARGES, SALARIES, STAFF WELFARE, TRAVELLING, VEHICLE MAINTENANCE, EMBESSLEMENT AND S HORTAGE AND CLAIMS, THE AO DISALLOWED A ROUND SUM OF RS.5.00 LAKHS. THE LD CIT(A) NOTICED THAT THE 5 ASSESSEE DID NOT FURNISH ANY EVIDENCE ABOUT THE NON -REALISATION OF AMOUNT OF RS.1,09,861/- CLAIMED AS EMBEZZLEMENT EXPENSES. LD CIT(A) ALSO NOTICED THAT MANY OF THE EXPENDITURE DESCRIBED ABOVE ARE NORMALL Y SUPPORTED BY SELF MADE VOUCHERS WHICH ARE NOT SUSCEPTIBLE FOR VERIFICATION . ACCORDINGLY LD CIT(A) HAS OBSERVED THAT INFLATION OF EXPENDITURE CANNOT BE RU LED OUT. LD CIT(A) ALSO NOTICED THAT THE ROUND SUM DISALLOWANCE OF RS.5.00 LAKHS WO RKS OUT TO LESS THAN 2% OF THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE. ACC ORDINGLY LD CIT(A) HAS CONFIRMED THE ADDITION. BEFORE US, THE ASSESSEE CO ULD NOT FILE ANY MATERIAL TO CONTROVERT THE FINDING OF LD CIT(A). IN THESE CIRC UMSTANCES, WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS DECISION ON THIS ISSUE ALSO AND ACCORDINGLY UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 09/02/2010 SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM DATE : 09 TH FEBRUARY, 2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 M/S. SREENIVASA SREE KALESWARI LORRY SERVICE, C/ O K. AMBIKA PRASAD, CHARTERED ACCOUNTANT, AMBIKA-ISHA, CHARTERED ACCOUN TANTS, G-3, SATYA RESIDENCY, 30-7-33, DABAGARDENS, VISAKHAPATNAM-530 020. 02 ITO, WARD-5(2),. VISAKHAPATNAM 03 CIT (A)-I, VISAKHAPATNAM 04 CIT-1, VISAKHAPATNAM 05 DR, ITAT, VISAKHAPAATNAM 06 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT, VISAKHAPATNAM BENCH