M/s Modrn Builders, Bhubaneswar V. ITO, Bhubaneswar

ITA 308/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65139 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 01-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 03-05-2012
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: P K PATTNAIK
• Keywords: Opportunity of being heard
• Section: 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 308/CTK/2012 / ASSESSMENT YEAR 2005 - 06 M/S.MODERN BUILDERS, C/O. SHRI P.K.BHUYAN, PLOT NO.890, PALASUNI, RASULGARH, BHUBANESWAR 751 010 - - - VERSUS - INCOME - TAX OF FICER, WARD 1(), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.K.PATTNAIK, AR / FOR THE RESPONDENT: / SHRI N.K.NEB, DR / DATE OF HEARING: 01.11.2012 / DATE OF PRONOUNCEMENT: 02.11.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS ON THE ISSUE THAT THE ASSESSMENT HAVING BEEN COMPLETED INVOKING THE PROVISIONS OF SECTIONS 147/14 8 W AS PASSED U/S.144 WHEN SALARY AND INTEREST TO THE PARTNERS WERE DISALLOWED ALONG WITH THE ESTIMATION OF INCOME THE ASSESSEE BEING A CONTRACTOR , AT 12% WHEN THE MANDATORY GUIDANCE U/S.44AD IS 8% AS THE BOOKS OF ACCOUNT MAINTAINED WERE NOT PRODUCED FOR PURPO SE OF MAKING A BEST JUDGMENT ASSESSMENT. 2. THE ASSESSEE FILED ITS RETURN OF INCOME AT 5,32,930 ON THE GROSS CONTRACT RECEIPTS OF 2.08 CRORES. THE ASSESSEE GOT EMBROILED IN THE FACT THAT THE ASSESSING OFFICER OUGHT NOT TO HAVE ISSUED NOTICE U/S.143(2 ALONG WITH THE NOTICE U/S.147 ON THE BASIS OF THE RETURN BEING PROCESSED U/S.143(1). NO CO OPERATION FROM THE ASSESSEE CAME FORTH WHICH LED THE ASSESSING OFFICER TO ESTIMATE INCOME AT 12% OF THE GROSS RECEIPTS ALONG WITH THE I.T.A.NO. 308/CTK/2012 2 STATUTORY REQUIREMENT OF THE PROVISIONS OF LAW FOR INVOKI NG THE PROVISIONS OF SECTION 144 BUT FOR DISALLOWING SALARY TO TH E PARTNERS WHICH WAS ENHANCED FOR DISALLOWANCE BY THE LEARNED CIT(A) INCLUDING INTEREST TO PARTNERS AS WELL. THE ASSESSEE HAD MOVED A PETITION U/S.154 BEFORE MOVING A N APPEAL BEFORE THE LEARNED CIT(A) INDICATING THE RECTIFICATION TO BE CARRIED OUT INSOFAR AS THE ASSESSING OFFICER HAD DISALLOWED A PORTION OF SALARY TO THE PARTNERS EXCEEDING THE LIMITS PROVIDED UNDER SECTION 40(B). THE LEARNED CIT(A) DID NOT CONSIDER THE ASSESSEE APPELLANTS SUBMISSIONS ON REDUCING THE ESTIMATE FROM 12% TO 8% AND ALSO BY COMP LYING TO SECTION 184(5) INCLUDED THE INTEREST TO BE DISALLOWED ALONG WITH THE SALARY CLAIMED BUT PARTLY DISALLOWED BY THE ASSESSING OFFICER. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. ON CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS NOT CONVERSANT WITH THE LEGAL ASPECTS OF VALIDITY OF RE - ASSESSMENT WHICH RESULTED IN FILING THE PETITION U/S.154. THE LEARNED CIT(A) FURTHER N APPEAL OF THE ASS ESSEE APPELLANT CONFIRMED THE ESTIMATE OF 12% INSPITE OF THE ASSESSEE APPELLANTS SUBMISSION THAT THE BOOKS OF ACCOUNT ARE BEING MAINTAINED AND THE ASSESSEES PREROGATIVE WAS TO DISCLOSE LESS PROFIT THAN 8% OF THE GROSS RECEIPT WAS TO BE CONSIDERED WHEN A REASONABLE ESTIMATE OF 8% COULD HAVE BEEN MADE IN VIEW OF THE ASSESSEE NOT APPEARING BEFORE THE ASSESSING OFFICER TO BE SUBJECTED TO ASSESSMENT U/S.144. IT WAS NOT THE CASE OF THE ASSESSING OFFICER TO DISALLOW SALARY AND INTEREST TO THE PARTNERS ON HAVING PASSED THE ORDER U/S.144 WHICH REQUIRE D INVOKING THE PROVISIONS OF SECTION 184(5) INSOFAR AS THE ASSESSMENT WAS PASSED TO THE BEST OF THE ASSESSING OFFICERS JUDGMENT U/S.144 ON AN ESTIMATE WHICH ESTIMATE BASIS HAS NOT BEEN DESCRIBED EITHER BY THE ASSESSIN G OFFICER OR THE LEARNED CIT(A). THE LEARNED I.T.A.NO. 308/CTK/2012 3 CIT(A) THEREFORE, ERRED IN ENHANCING THE ASSESSMENT ON THE FACTS AND CIRCUMSTANCES AS BROUGHT ON RECORD BY THE ASSESSING OFFI CER WITHOUT ISSUING NOTICE U/S.2 51(4). 4. IN VIEW OF THE ABOVE FACTUAL MATRIX WE ARE O F THE CONSIDERED VIEW THAT THE ASSESSMENT HAVING BEEN COMPLETED U/S.144 IT WAS NOT THE CASE OF THE ASSESSEE TO BE SUBJECTED TO A HIGHER ESTIMATE OF 12% ALONG WITH THE DISALLOWANCE OF SALARY AND INTEREST TO THE PARTNERS WHICH HAS BEEN CONSIDERED OTHERWISE B Y THE ASSESSING OFFICER AND THE LEARNED CIT(A) RESPECTIVELY. IN THE INTEREST OF JUSTICE, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR PASSING ASSESSMENT DE NOVO AFTER AFFORDING REASONA BLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AS THE MATTER RELATES TO ASSESSMENT YEAR 2005 - 06 WE SET A TIME FRAME FOR THE ASSESSING OFFICER TO DISPOSE OF THE ISSUE WITHIN A PERIOD OF SIX MONTHS HENCE AND THE ASSESSEE IS DIRECTED TO COOPERATE IN COMPLETI ON OF THE ASSESSMENT AFRESH, TO WHICH BOTH PARTIES AGREED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 02.11.2012 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 308/CTK/2012 4 - COPY OF THE ORDER FORWARDED TO: 1 . / THE AP PELLANT : M/S.MODERN BUILDERS, C/O. SHRI P.K.BHUYAN, PLOT NO.890, PALASUNI, RASULGARH, BHUBANESWAR 751 010 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1(), BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SH EET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 01.11.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.11.212 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P .S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 02.11.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..