M/s Parvati Paddy Products, Bolangir V. ITO, Bolangir

ITA 295/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4493 (ITAT-CUTTACK)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 02-08-2010
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: J P AGARWALLAAR
• Keywords: Principle of natural justice
• Section: 145; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 295/CTK/2010 / ASSESSMENT YEAR 2007 - 08 M/S.PARVATI PADDY PRODUCTS,AT: URLLE,POST: BINKA, DIST.SAMBALPUR PAN : AAHFP 5256 C - - - VERSUS - INCOME - TAX OFFICER, BOLANGIR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI J.P.AGARWALLA,AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / ORDER . . . , , SHRI K.S.S.PRASAD RAO , JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.29.4.2010 FOR THE ASSESSMENT YEAR 2007 - 08 IN CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS OF APPEAL. 1 . THAT, THE LEARNED C.I.T.(APPEAL) HAS FAILED TO APPRECIATE THE CORRECT LEGAL PROVISION REGARDING SERVICE OF NOTICE WITHIN TIME AS PRESCRIBED U/S 143(2) OF THE INCOME TAX ACT 1961 . 2 . THE LEARNED C.I.T. (APPEAL) SHOULD HAVE HELD THE ORDER PASSED U/S 144 OF THE INCOME TAX ACT TO BE BAD IN LAW IN VIEW OF THE FACT THAT THE NOTICE U/S 143(2) HAS BEEN SERVED ON THE ASSESSEE BEYOND THE PRESCRIBED TIME LIMIT. 3 . THAT, THE LEARNED C.LT.(APPEALS) HAS ALSO FAILED TO APPRECIATE THE PARA 42 EXPLAINING/CLARIFYI NG VARIOUS ASPECT OF THE SERVICE OF NOTICE U/S 143(2) OF I.T. ACT OF THE CIRCULAR NO.1 OF 2009 (DT.27.03.2009) ISSUED BY C.B.D.T. I.T.A.NO. 295/CTK/2010 2 AS EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCIAL ACT 2008. 4 . THAT, THE LEARNED C.I.T. (APPEAL) HAS FAILED TO APPRECIATE THE FACT THAT NET PROFIT AT (0.61%) AS SHOWN BY ASSESSEE IS IN LINE WITH THE SAME SHOWN BY THE OTHER ASSESSEE IN THE SAME LINE OF BUSINESS AS WELL AS OF THE SAME AREA. THE DIRECTION TO ESTIMATE THE NET PROFIT AT 2% BY THE LEARNED C.I.T.(APPEAL) IS HIGHLY E XCESSIVE AND IS NEITHER IN LINE WITH THE SAME SHOWN IN THE COMPARABLE CASES NOR ANY COMPARABLE CASE HAS BEEN CITED BY HIM JUSTIFYING ADOPTION OF NET PROFIT OF 2%. 5 . THAT, THE APPELLANT BE ALLOWED TO ADD AMEND OR ALTER THE GROUND IF ANY AT THE TIME OF APPEAL HEARING AND THE APPEAL BE ALLOWED. 3. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, FILED ITS RETURN ON 28.10.2007 FOR THE PERIOD UNDER CONSIDERATION DECLARING INCOME AT NIL. ORIGINALLY THE SAID RETURN WAS PROCESSED U/S.143(1). LATER ON IT WAS TAKEN UP FOR SCRUTINY ASSESSMENT. RETURN WAS FILED BY THE ASSESSEE THROUGH ON - LINE BUT THE A O HAS ISSUED NOTICE BY REGISTERED POST IGNORING ON - LINE FACILITY AVAILABLE TO THE ASSESSEE REQUIRING THE ASSESSEE TO PRODUCE AUDITED ACCOUNTS, BANK ACCOU NTS ETC., AND PAPER RETURNS. LATER ON THE ASSESSING OFFICER ISSUED SUMMONS/S.131 OF THE ACT , IN RESPONSE TO WHICH THE ASSESSEE APPEARED AND FILED A PETITION STATING THAT THE NOTICE U/S.143(2) WAS SERVED ON IT ON 6.10.2008,WHICH IS BEYOND THE PERIOD SPECIF IED IN THE STATUTE FOR ISSUING THE SAID NOTICE. THEREFORE, THE PROCEEDINGS HAVING BEEN STARTED BEYOND THE TIME LIMIT PRESCRIBED IN THE STATUTES , RENDERS THE PROCEEDINGS INFRUCTUOUS. IGNORING THIS CONTENTION OF THE ASSESSEE, THE AOP COMPLETED THE ASSESSMENT U/S.143(3)/144 OF THE ACT AND PASSED THE ASSESSMENT ORDER DT.29.12.2009 ESTIMATING THE NET PROFIT AT 10% OF THE GROSS TURNOVER OF RS.2,07,41,788,OBSERVING THAT IN THE ABSENCE OF BOOKS OF ACCOUNTS AND AUDIT REPORT, THE EXPENSES AND DEDUCTIONS UNDER CHAPTER VI - A ARE NOT ALLOWED. THE I.T.A.NO. 295/CTK/2010 3 ASSESSING OFFICER HAS ALSO OBSERVED IN THE ASSESSMENT ORDER THAT PENALTY U/S.271(1)(B), 271(1)(C) AND 271B ARE INITIATED SEPARATELY FOR FAILURE TO AUDIT THE ACCOUNTS AND NON - PRODUCTION OF SUCH AUDITED REPORT. AGGRIEVED BY THIS OR DER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) WHO GAVE PART RELIEF. STILL AGGRIEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 4. DURING THE COURSE OF HEARING , THE LEARNED AR FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS APPARENTLY BARRED BY LIMITATION AS THE NOTICE U/S.143(2) WAS ISSUED BEYOND THE STATUTORY LIMIT PRESCRIBED IN THAT SECTION. THEREFORE, THE CONSEQUENTIAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS VOID AB I NITIO. BESIDES THAT HE ARGUED ON MERITS OF THE ISSUES RAISED IN THE APPEAL ALSO. 5. CONTRARY TO THIS, THE LEARNED DR HAS SUPPORTED THE IMPUGNED ORDER PASSED BY THE AUTHORITIES BELOW CONTENDING INTERALIA THAT IT IS SUFFICIENT THAT THE NOTICE U/S.143(2) IS WITHIN THE PERIOD STIPULATED IN THE PROVISIONS AND IT IS NO CONCERN OVER THE DATE OF SERVICE OF SUCH NOTICE ON THE ASSESSEE. IN THAT VIEW OF THE MATTER, AS THE RETURN IS FILED ON 28.10.2007 AND THE NOTICE IS SERVED ON 6.10.2008 WHICH IS BEYOND THE PERIOD O F SIX MONTHS FROM THE YEAR ENDING IN WHICH THE RETURN WAS FILED, BUT THE NOTICE IS DATED 23.9.2008 AND ISSUED THEN AND THERE ITSELF BY THE ASSESSING OFFICER TO THE ASSESSEE. THEREFORE, THE PROVISIONS OF SECTION 143(2) IS ABSOLUTELY COMPLIED WITH AS THE NOT ICE U/S.143(2) WAS ISSUED ON 23.9.2008. HE FURTHER CONTENDED THAT CBDT CIRCULAR NO.1 OF 2009 DT.27.3.2009 CLEARLY INDICATES IN PARA 42, SL.NO.42.8 AND 42.9 THAT A NOTICE U/S.143(2) DT.23.9.2008 WHICH WAS SENT BY REGISTERED POST IS DEEMED TO HAVE BEEN SERVE D ON THE ASSESSEE IN THE REGULAR COURSE OF I.T.A.NO. 295/CTK/2010 4 BUSINESS WHICH IS WITHIN SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN WAS FILED BY THE ASSESSEE. THEREFORE, IN THAT VIEW OF THE MATTER, THE AOS ACTION IN INVOKING SECTION144 HAVING HELD NO RE SPONSE FROM THE ASSESSEE TO THE NOTICE ISSUED U/S.143(2), IS VERY MUCH CORRECT AND THERE IS NO CONTRAVENTION OF ANY PROVISIONS WHATSOEVER BY THE AO. THEREFORE, THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN UPHOLDING THE ORDER PASSED BY THE AO IS VERY MUCH RI GHT AND IT IS PERFECTLY VALID ONE. THE LEARNED DR, THEREFORE , SOUGHT TO UPHOLD THE SAME AND DISMISS THE APPEAL OF THE ASSESSEE. 6. ON CAREFUL ANALYSIS OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND THE ORDERS PASSED BY THE LOWER AUTHORITIES, IT IS FOUND THAT CLAUSE (II) OF THE PROVISO OF SECTION 143(2) CLEARLY MANDATES THAT NO NOTICE SHALL BE SERVED ON THE ISSUE AFTER EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED. IN THE PRESENT CASE ON HAND, AS THE RETURN WAS FILED ON 28.10.2007 IN THE FINANCIAL YEAR ENDING ON 31.3.2008 AND THE NOTICE ISSUED BY THE AO ON 23.9.2008 WAS SERVED ON THE ASSESSEE ON 6.10.2008, IS CLEARLY BEYOND THE PERIOD OF SIX MONTHS STIPUL ATED UNDER CLAUSE (II) OF THE PROVISO TO SECTION 143(2) OF THE I.T.ACT. THEREFORE, IT IS NOT A VALID NOTICE UNDER LAW. HOWEVER, AS THE ASSESSEE HAS ADMITTEDLY NOT PRODUCED AUDITED BOOKS OF ACCOUNT AND BANK ACCOUNTS, THE ASSESSING OFFICER HAS INVOKED THE PR OVISIONS OF SECTION 1 45 AND ESTIMATED THE NET PROFIT TO BE TAXED IN THE HANDS OF THE ASSESSEE PASSING THE ASSESSMENT ORDER IN DISPUTE. HOWEVER, CONSIDERING THE TOTALITY OF THE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THIS IS A FIT CASE TO RESTORE TO THE F ILE OF THE ASSESSING OFFICER FOR DE NOVO ASSESSMENT STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, THE ASSESSMENT IS RESTORED TO THE FILE OF THE AO WITH THE DIRECTION TO COMPLETE THE ASSESSMENT PROCEEDINGS DE NOVO STRICTLY I.T.A.NO. 295/CTK/2010 5 FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. THE ASSESSEE IS ALSO HEREBY DIRECTED TO CO - OPERATE THE AO IN EARLY DISPOSAL OF THE CASE BY FURNISHING ALL THE INFORMATION, DOCUMENTS AS REQUIRED BY THE AO. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 4 TH APRIL, 2011 SD/ - SD/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDI CIAL MEMBER. ( ) DATE: 4 TH APRIL, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.PARV ATI PADDY PRODUCTS,AT: URLLE,POST: BINKA, DIST.SAMBALPUR. 2 / THE RESPONDENT: INCOME - TAX OFFICER, BOLANGIR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.