The ITO, Ward-9(1), Ahmedabad V. M/s. Prism Construction, Ahmedabad

ITA 3155/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6875 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 25-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Loose papers; Principle of natural justice
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AH MEDABAD. ( BEFORE SHRI BHAVNESH SAINI,JM AND SHRI A.N. PAHU JA,AM) I.T.A. NO. 3155/AHD/2009 (ASSESSMENT YEAR: 2004- 2005) INCOME TAX OFFICER,WARD 9(1),INCOME TAX OFFICE,NEAR PANJARA POLE, AMBAWADI,AHMEDABAD. [PAN: AAGFP 2129 P] (APPELLANT) VS. M/S. PRISM CONSTRUCTION, 242, OPP. MALAV TALAV, OPP.AMBAJI MATA MANDIR, ,VEJALPUR GAM,AHMEDABAD. (RESPONDENT) ( )/ ORDER A.N. PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 17-9-2009 OF THE LD. C.I.T.(A)-XV, AHMEDABAD, RAISES THE FOLLOWI NG GROUNDS:- 1. THE LD. CIT(A) XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.8,47,945/- MADE ON ACCO UNT OF UNEXPLAINED EXPENDITURE U/S.69C. 2. ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A)-XV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASS ESSING OFFICER 3. IT IS, THEREFORE, PRAYED THAT THE OR DER OF THE LD. CIT(A)-XV, AHMEDABAD MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED 2. FACTS, IN BRIEF, AS PER THE RELEVANT OR DERS ARE THAT A NOTICE U/S. 148 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS SERVED UPON THE ASSESSEE ON 11-1-2008 SINCE THE ASSESSEE DID NOT FI LE ANY RETURN FOR THE YEAR UNDER CONSIDERATION. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT WHILE CONDUCTING SURVEY PROCEEDINGS IN THE PREMISES OF SHRI RINKAL G. PATEL , CERTAIN E VIDENCES REGARDING EXPENSES OF RS.8,47,945/- RELATING TO THE ASSESSEE WERE FOUND. THE PARTNER OF THE ASSESSEE FIRM SHRI PANKAJ C. PATEL ADMITTED THAT THE SAID EX PENDITURE WAS INCURRED BY THE FIRM. HOWEVER, THE FIRM DID NOT FILE ANY RETURN. IN RESPONSE TO A SHOW CAUSE NOTICE REVENUE BY : SHRI R.K. DHANESTA, D.R. ASSESSEE BY : NONE. ITA. NO. 3155/ AHD/2009 ASSESSMENT YEAR 2004-05 2 DATED 21-11-2008, THE ASSESSEE REPLIED THAT THEY HA VE FILED THE RETURN FOR THE YEAR UNDER CONSIDERATION ON 23-12-2008. SINCE THE A SSESSEE FAILED TO ESTABLISH THAT THE EXPENDITURE OF RS.8,47,945/- WAS ACCOUNTED FOR IN THEIR BOOKS, THE A.O. ADDED THE AMOUNT U/S. 69C OF THE ACT. 3. ON APPEAL, THE LD. C.I.T. (A) DELETED THE ADDITION IN THE FOLLOWING TERMS:- 4. DURING THE COURSE OF APPE LLATE PROCEEDINGS SHRI LATESH K. PARIKH C.A. APPEARED AND FILED WRITTEN SUBMISSION S TATING THAT DURING THE COURSE OF SURVEY A DIARY CONTAINING PAPERS AND INFO RMATION OF MANY PARTIES WAS FOUND AND SOME LOOSE PAPERS OF THE DIAR Y BELONGED TO THE APPELLANT FIRM PRISM CONSTRUCTION. SHRI PANKAJ PA TEL PARTNER OF PRISM CONSTRUCTION WAS CALLED TO THE OFFICE OF THE ADIT A ND HIS STATEMENT WAS RECORDED ON 6-1-2005. IT WAS ARGUED THAT NOWHERE IN THE STATEMENT SHRI PANKAJ PATEL STATED THAT THE EXPENSES WERE UNACCOUN TED. IT WAS ALSO ARGUED THAT THE A.O. IGNORED THAT THE APPELLANT FIR M MAINTAINED BANK ACCOUNT AND THERE HAD BEEN WITHDRAWALS FROM THE BAN K ACCOUNT FOR INCURRING VARIOUS EXPENSES. THE A.O. ALSO IGNORED I NCOME OF RS. 10,20,211/- OF THE FIRM AND CONSIDERED ONLY THE EXP ENDITURE. IT WAS ALSO EXPLAINED THAT NO RETURN WAS FILED BECAUSE THE FIRM INCURRED HEAVY LOSS IN THE VERY FIRST YEAR OF BUSINESS. 5. AFTER GOING THROUGH THE RIVAL SU BMISSION, I AM OF THE VIEW THAT THE ADDITION MADE BY THE A.O. IS NOT WELL REASONED AND NEITHER WELL ESTABLISHED. THE A.O. IS DIRECTED TO DELETE THE ADD ITION. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAI NST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DEPARTMENTAL REPRESENTATIV E WHILE CARRYING US THROUGH THE IMPUGNED ORDER CONTENDED THAT THE ORDER OF THE C.I.T.(A) IS NOT A SPEAKING ONE. ON BEHALF OF THE ASSESSEE NONE APPEARED BEFOR E US. 5. WE HAVE HEARD THE LD. DR AND GONE THROU GH THE FACTS OF THE CASE. AS IS APPARENT FROM THE IMPUGNED ORDER, THE LD. CIT(A) HAS NOWHERE RECORDED HER FINDING THAT THE EXPENDITURE OF RS.8,47,945/- MENTIONED IN SOME LOOSE PAPERS FOUND DURING THE SUR VEY AND ADMITTED BY THE PARTNER SHRI PANKAJ PATEL AS BELON GING TO THE FIRM, WAS ACCOUNTED FOR IN THE BOOKS OF THE FIRM NOR EXAM INED THE ITA. NO. 3155/ AHD/2009 ASSESSMENT YEAR 2004-05 3 APPLICABILITY OF PROVISIONS OF SEC. 69C OF THE ACT . A MERE GLANCE AT THE IMPUGNED ORDER REVEALS THAT THE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI-JUDICIAL BODY/AUT HORITY MUST PASS REASONED ORDER, WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEFORE IT. THE APPLICATION OF MIND TO THE MATERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF THE INCOME TAX ACT ,1961 MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSING OF THE APPEAL SHALL BE IN WRITING AND SHALL STATE THE POIN TS FOR DETERMINATION, THE DECISION THEREON AND THE REASON FOR THE DECISION. THE REQUI REMENT OF RECORDING OF REASONS AND COMMUNICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAIR PROCEDURE. THE REQUIREMENT OF RECOR DING OF REASONS BY THE QUASI- JUDICIAL AUTHORITIES IS AN IMPORTANT SAFEGUARD TO E NSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINESS IN THE D ECISION-MAKING PROCESS. WE MAY REITERATE THAT A DECISION DOES NOT MERELY MEA N THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS. STATE OF PUNJAB,(1995)1SCC 760(SC)]. AS I S APPARENT, THE IMPUGNED ORDER SUFFERS FROM LACK OF REASONING AND IS NOT A SPEAKING ORDER. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN THE LD. CIT(A) HAS NOT P ASSED A SPEAKING ORDER ON THE ISSUES RAISED IN THIS APPEAL, WE CONSIDER IT F AIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HER FILE FOR DECIDING THESE ISSUES AFRESH IN ACCORDANCE WITH LAW, AFTER ALLOWI NG SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF THE ACT AND. WITH THES E OBSERVATIONS, GROUND NO. 1 IN THE APPEAL IS DISPOSED OF. 6. GROUND NOS. 2 & 3 BEING MERE PRAYER AND GENERAL IN NATURE, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THER EFORE ,DISMISSED. ITA. NO. 3155/ AHD/2009 ASSESSMENT YEAR 2004-05 4 7. IN THE RESULT, APPEAL IS ALLOWED ,BUT FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 8 -4-2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 8-4-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S. PRISM CONSTRUCTION, 242, OPP.AMBAJI MATA MA NDIR, OPP. MALAV TALAV,VEJALPUR GAM, AHMEDABAD. 2. ITO, WARD-9(1), AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XV, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-A, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD .