JIGAR INDUSTRIES, JAMWADI V. ITO WARD 1(2)(1), RAJKOT

ITA 311/RJT/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1125 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-06-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 04-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH KUMAR PANDEY
• Section: 148; 143(3); 250; 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER And SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./I TA No.311 /RJT/2023 (Asse ssme nt Year: 2 011-12) (H yb rid H ea rin g ) J ig ar In d u s t ri es , G IDC -2 , Plo t No . 1 64 /5 , J i mwa d i, Go nd al , Gu j ar at-3 6 03 11 Vs. IT O, Wa rd -1 (2 )(1 ), R aj ko t थायीलेखासं./जीआइआरसं./P AN/G I R No . : AABFJ5914B (अपीलाथ /Appellant) ( यथ /Respondent) नधा रतीक ओरसे / Assessee by : Shri R. B. Shah, AR राज वक ओरसे/Revenue by : Shri Ashish Kumar Pandey, Sr. DR स ु नवाईक तार ख/ Date of Hearing : 04/06/2024 घोषणाक तार ख/Date of Pronouncement : 05/07/2024 आदेश/ORDER PER SHRI DINESH MOHAN SINHA, JM: Captioned appeal filed by the Assessee for A.Y. 2011-12 is directed against the order passed by the Ld.CIT(A), National Faceless Appeal Centre, (in short ‘the NFAC’), Delhi dated 17.08.2023 under section 250 of the Income Tax Act, 1961 (in short, ‘the Act’). 2. The Grounds of appeal raised by the assessee are as follows:- “1. The Ld. CIT(A) has erred both in law and on the facts of the case in confirming the action of Assessing Officer in reopening the assessment u/s.147 of the Act. In the facts and circumstances of the case, learned CIT(A) ought to have held that the action of reopening is without jurisdiction and not permissible either in law or on facts. I.T.A No. 311/Rjt/2023 A.Y. 2011-12 Jigar Industries vs. ITO 2 2. The Ld. CIT(A), has erred in law and on facts in upholding the action of Assessing Officer that the appellant has clandestinely removed goods amounting to Rs.5,40,43,572/- on relying upon the Show Cause Notice and materials supplied by excise department without finding any defect in books of accounts and without any new tangible material. 3. The Ld. CIT(A) has erred in confirming the action of the AO for estimating Gross Profit Rs.92,92,646/- on relying upon the material supplied by excise department without finding any defect in books of account. The addition needs to be deleted in toto. 4. The CIT(A) as well as Learned AO has erred in not appreciating that NO excess/Shortage stock was found by the Excise Department during the course of search proceedings held at the premises of Appellant Firm. 5. The Ld. CIT(A) has erred in passing the order without appreciating that the finality of the proceedings by the Excise Department is pending before CESTAT AHMEDEBAD. The Order passed by the CIT(A) needs to be held as bad in law.” 3. The brief facts of the case are that the appellant is a partnership firm, manufacturing electric cable and wires. For the A.Y. 2011-12, the appellant had filed its return of income on 06.09.2011 declaring a total income of Rs. 31,560/-. The AO has received information from the Preventive Unit of the Excise Department along with SCN dated 30.10.2014 issued by the Excise & Customs; contending that the assessee have avoided excise duty amounting to Rs. 85,65,315/- on clandestine removal of finished goods having excisable value amounting to Rs. 8,31,58,400/- (unaccounted purchase plus overhead expenses and profit) and related unaccounted production and subsequent unaccounted sales. On the basis of the borrowed information and without further inquiry the AO has formed opinion that the assessee has purchased a huge quantity of copper wires from M/s. High Cop Manufacturing Company, Rajkot without bills, used the same to manufacture electric cable and wire and cleared the manufacturing goods without preparing invoices with the payment for the same being received in cash. Thereafter, the Notice under Section 148 of the Act was issued on 10.03.2017. The Appellant, in response to notice under section 148 of the I.T.A No. 311/Rjt/2023 A.Y. 2011-12 Jigar Industries vs. ITO 3 Act dated 10.03.2017 filed reply on 02.05.2017 to consider the original return of income filed on 06.09.2011 as return of income filed in response to notice and also requested to supply reasons recorded for reopening the assessment under section 148 of the Act. Subsequently, in response to show cause notice dated 29.11.2017, the appellant, through AR, filed reply vide letter dated 11.12.2017 explaining the facts that the Appellant has filed an appeal before Custom, Excise and service tax appellant Tribunal against the impugned demand which is pending for hearing and therefore, the matter is under sub-judies and not finalized. Hence, the proposed addition cannot be made till the decision of CESTAT, Ahmedabad. However, Ld. AO, without rejecting the audited books of accounts and relying up on the material statement supplied by Excise Department, made an addition of Rs. 92,92,646/- in the assessment order under section 143 r.w.s. 147 of the Act on account of not disclosing actual gross profit out of unaccounted sales. The assessee has not stated anything in respect of show cause notice proposing the addition on account of low Gross Profit which comes to Rs.92,92,646/- (Actual G.P as discussed in the show cause notice of Rs.1,27,30,009/- less Shown in the Books of Rs.34,37,363/-) to the total income of the assessee. It is presumed that the assessee has nothing to say in the matter. Accordingly, an addition of Rs.92,92,646/- is made to the total income of the assessee on account of not disclosing the actual gross profit. Subject to the above remarks and on the basis of material available on records, the total income of the assessee is computed as under: Total income as per return income filed =Rs. 31,560/- Add under head income from other sources (i) As per para 8.2 =Rs.92,92,646/- I.T.A No. 311/Rjt/2023 A.Y. 2011-12 Jigar Industries vs. ITO 4 Total =Rs. 93,24,206/- i.e. Total Income =Rs. 93,24,200/- 4. That the assessee filed an appeal against order dated 20.12.2017 of the Ld. ITO by moving an appeal before Ld. CIT(A). Ld. CIT(A) had issued four notices to the assessee for hearing of the case but no response to the notice has been received by the Ld. CIT(A). Adequate opportunity has been provided to the assessee for hearing of the case and submission of documents. Ld. CIT(A) has disposed of appeal with following remarks: “1. The appellant has challenged the addition made of Rs.92,92,646/- without submitting sufficient evidences or counter arguments in support of her claim. Mere claiming that the AO erred in making the additions does not give an edge to the appellant. Further, during appellate proceedings, no response received from the appellant to substantiate its claim in support of grounds of appeal though enough opportunities of being heard were given to it, as tabulated in Para 4 above. Hence, keeping in view all the stated facts and discussions, I find no reason in altering the additions made by the AO. In view of this, the grounds raised by the appellant are dismissed.” 5. Feeling aggrieve with the order of the Ld. CIT(A) the assessee is in appeal before us. 6. That the Ld. A.R. of the assessee on the date fixed for hearing i.e. on 04.06.2024 has moved an application for adjournment of hearing which was not considered. The A.R. submitted that in this case re-opening of the assessment was based on show-cause notices issued by the Excise and Customs Department. The Ld. A.O. made addition of Rs. 92,92,646/-. We note that findings of the CIT(A) that assessee not responded to the notice by written statement meaning thereby assessee not interest in adjudicating the appeal. I.T.A No. 311/Rjt/2023 A.Y. 2011-12 Jigar Industries vs. ITO 5 7. On the other hand, Ld. Sr. D.R. has submitted that four opportunities were given of the assessee by issuing notices of hearing by the Ld. CIT(A). But the assessee had not responded to any notice. Ld. D.R. relied on the order of the CIT(A). 8. We have heard both the parties and perused the documents available on record. It is noted that the notices issued by the ld. CIT(A) for hearing of the case but the order is silent on service of notice for the assessee. The order passed by AO is under Section 143(3) r.w.s 147 of the Act, therefore, assessee made the compliance during assessment proceedings. During the appellate proceedings, the Ld. CIT(A) issued four notices of hearing, however, assessee did not make compliance to notice. The Ld. CIT(A) discussed the issue on merit also. Therefore, we are of the view that one more opportunity should be given to the assessee to present his case before Ld. CIT(A), hence, we set-aside the order of Ld. CIT(A) and remit the matter back to the file of Ld. CIT(A) for fresh adjudication on merits. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 05-07-2024 Sd/- Sd/- (DR. A. L. SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot; TRUE COPY Dated: 05/07/2024 I.T.A No. 311/Rjt/2023 A.Y. 2011-12 Jigar Industries vs. ITO 6 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Rajkot. 6. Guard file. By order/आदेश से, Assistant Registrar/Sr. P.S./P.S. ITAT, Rajkot