DCIT, Ludhiana V. M/s Self Knitting Works, Ludhiana

ITA 318/CHANDI/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68414 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-07-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 25-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: J S BHASIN
• Keywords: Reopening of assessment; Unexplained investment; Gift; Business income; Depreciation; Income from undisclosed sources; Application of stay; Question of law; Revised return; Reason to believe
• Section: 143(3); 142(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHESA, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.318/CHD/2011 (ASSESSMENT YEAR : 2005-06) THE DCIT, VS M/S SELF KNITTING WORKS CENTRAL CIRCLE II, 1108/09, FARID NAGAR, LUDHIANA. BASTI JODHEWAL, LUDHIANA. PAN: AAEFS-9960K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI RESPONDENT BY : SHRI J.S.BHASIN DATE OF HEARING : 12.07.2013 DATE OF PRONOUNCEMENT : 30.08.2013 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS), CHANDIGARH DA TED 01.01.2010 RELATING TO ASSESSMENT YEAR 2005-06 AGAI NST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE EFFECTIVE GROUND OF APPEAL RAISED BY THE ASS ESSEE READ AS UNDER: 1. THE LD. CIT(APPEALS) HAS ERRED BOTH IN LAW AN D ON FACTS OF THE CASE IN DELETING AN ADDITION OF RS.37,30,300/- WITHOUT APPRECIATING THAT THE A.O. H AD RIGHTLY TREATED THE INGENUINE SALES OF THE ASSESSEE AS ITS INCOME FROM UNDISCLOSED SOURCES BY GIVING SPECIFIC FINDINGS IN THE ASSESSMENT ORDER. 2 3. THE ASSESSEE HAS ALSO MOVED AN APPLICATION UNDER RULE 27 OF THE INCOME TAX APPELLATE RULES, 1963 WHICH READS AS UNDER : 1. THAT THE ASSESSEE RESPONDENT HEREIN, CRAVES LEAV E TO SUPPORT THE ORDER OF CIT(A), ON FOLLOWING GROUNDS DECIDED A GAINST THE ASSESSEE, IN TERMS OF RULE 27 OF ITAT RULES, 19 63. A) THAT DISALLOWANCE OF EXPENDITURE AMOUNTING TO RS.6,90,462/- U/S 40(A)(IA) WAS NOT SUSTAINABLE ONC E THE ESTIMATION OF INCOME BY APPLICATION OF FLAT GP RATE WAS UPHELD BY THE LD.CIT(A). THE DISALLOWANCE WAS OTHERWISE ALSO, CONTRARY TO LAW. B) THAT FURTHER DISALLOWANCE OF RS.100005/- AND RS.57561/- OUT OF CAR EXPENSES/DEPRECIATION AND TELEPHONE EXPENSES WERE ALSO NOT SUSTAINABLE EVEN PARTLY, ONCE ESTIMATION OF INCOME BY APPLICATION OF FLAT GP RATE WAS UPHELD WHICH RUNS CONTRARY TO TWO DECISIONS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V SMT. SANTOSH JAIN (2008) 296 ITR 324(P&H) AND CIT V AGGARWAL ENGG. CO. (2008) 302 ITR 246 (P&H). 2. THAT THE ASSESSEE PRAYS HIS APPLICATION TO BE AD MITTED AND ALLOWED FOR ARGUMENTS ON THE ISSUES RAISED HEREINAB OVE, WHICH HAVE BEEN DISCUSSED AND DECIDED AGAINST THE A SSESSEE BY THE LD.CIT(A) IN HER ORDER UNDER APPEAL BY THE R EVENUE. THE CLAIM OF THE ASSESSEE IN RESPECT OF THE ABOVESA ID APPLICATION WOULD BE ADJUDICATED IN THE PARAS BELOW AFTER ADJUD ICATING THE APPEAL OF THE REVENUE. 4. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER AT RS. 37 ,30,300/- BY TREATING THE SALES AS INGENUINE. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FAILED TO FURNISH THE RETURN OF INCOME FOR THE YEAR UNDER CON SIDERATION. THE ASSESSING OFFICER ALSO ISSUED VARIOUS NOTICES U NDER SECTION 142(1) OF THE ACT WHICH REMAINED UN-COMPLIED WITH. THE ASSESSEE FAILED TO FILE THE RETURN OF INCOME BEFORE THE ASSE SSING OFFICER DESPITE VARIOUS NOTICES, SUMMONS AND THE MATTER WAS ADJOURNED FROM DATE TO DATE AS PER THE DETAILS LISTED AT PAGE S 1 TO 3 OF THE ASSESSMENT ORDER. THE ASSESSEE FILED RETURN OF INC OME DECLARING 3 LOSS OF RS.22,06,350/- ON 16.11.2007 AND NOTICE UND ER SECTION 143(2) ALONGWITH QUESTIONNAIRE WAS ISSUED TO THE AS SESSEE BY THE ASSESSING OFFICER. THE ASSESSEE FURNISHED INFORMAT ION IN PART ON THE NEXT DATE OF HEARING. ON 12.12.2007, THE BOOKS OF ACCOUNT I.E. CASH BOOK AND LEDGER AND ALSO WORKERS RECORD ALONGWITH VOUCHERS WERE PRODUCED BY THE ASSESSEE. THE ASSESS ING OFFICER IN THE ASSESSMENT ORDER HAD OBSERVED THAT THE COOPE RATION FROM THE ASSESSEE IN COMPLETING THE ASSESSMENT PROCEEDIN GS WAS VERY LESS AND ONLY AT THE FAG END OF THE PROCEEDINGS, DE TAILS WERE FURNISHED BY THE ASSESSEE. THE ASSESSEE WAS ENGAGE D IN THE MANUFACTURING AND SALE OF KNITTED CLOTH. DURING TH E YEAR UNDER CONSIDERATION, THERE WAS FALL IN GP RATE OVER THE G P RATE SHOWN IN THE PRECEDING YEARS. THE ASSESSING OFFICER FURTHER NOTED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD MADE TOTAL SALES OF RS.2,78,69,229/- DURING THE YEAR UNDER CON SIDERATION AND THE BREAK-UP OF THE SALES WERE AS UNDER : SR. NO. CATEGORY AMOUNT (I) CASH SALES IN LOTS WITHOUT MENTION OF ANY QUANTITY SOLD AND NAME(S) OF PARTY(IES) TO WHOM SOLD AS PER THE FOLLOWING CASH MEMOS: (A) CASH MEMO. NO. 1- LOT SALE DATED 1.4.2004 AFTER CONSIDERING GOODS RETURNS WITH NET OF SUCH SALES(1035000-802000) (B) CASH MEMO. NO. 2- LOT SALE DATED 15.4.2004 (C)CASH MEMO NO. 3-LO SALE DEED 20.4.2004 2,33,000/- 10,72,500/- 24,24,800/- TOTAL 37,30,300/- (II) SALE MADE WITHOUT MENTION OF ANY QUANTITY OF GOODS SOLD BUT WITH NAME(S) OF PARTY(IES) TO WHOM MADE AS PER BILLS NO. 4-LOT SALE TO 14- LOT SALE EFFECTED IN APRIL, 2004 ITSELF. 63,95,994/- (III) CASH SALE WITH MENTION OF QUANTITY OF GOODS SOLD BUT WITHOUT MENTION OF NAME(S) OF PARTY(IES) TO WHOM SOLD AS PER CASH MEMO. NOS. 2-L TO 10- L, 13-L TO 15-L, 32-L AND 33- L EFFECTED IN APRIL &. MAY, 2004. 16,16,850/- 4 (IV) OTHER SALE THAN MENTIONED AT (I) TO (III) ABOVE, WITH QUANTITY OF GOODS SOLD AND NAME(S) OF PARTY(IES) TO WHOM MADE MENTIONED THEREIN AS PER BILLS NO. 11-L, 12-L, 16L TO 31- L, 34L AND 1-C TO 4-C EF FECTED IN MAY & JUNE, 2004. 1,61,24,085/- TOTAL 2,78,67,929/- 6. THE ASSESSING OFFICER HAD ALSO SOUGHT INFORMATIO N FROM THE STATE EXCISE & TAXATION DEPARTMENT AND AS PER THE S AID INFORMATION, THE ASSESSEE HAD DECLARED SALES OF RS. 1,96,07,007/-. THE SAID INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER PRIOR TO THE FILING OF THE RETURN OF INCOME BY THE ASSESS EE. THE ASSESSING OFFICER NOTED THAT IN THE TRADING ACCOUNT ACCOMPANYING THE RETURN OF INCOME, THE ASSESSEE HAD DECLARED SAL ES OF RS.2.78 CRORES THOUGH IN THE SALES TAX RETURN, TOTAL SALES DECLARED WERE RS.1.96 CRORES. THE EXPLANATION OF THE ASSESSEE TO THE SHOW CAUSE NOTICE WAS THAT THE DIFFERENCE IN SALES WAS ATTRIBU TABLE TO THE SALES MADE IN LOTS VIDE 14 LOT SALE BILL NOS. 1-LOT SALE TO 14-LOT SALE IN APRIL,2004, AMOUNTING TO RS.101,26,294/-, M AJORITY OF WHICH WERE NOT DECLARED IN THE ORIGINAL SALES TAX R ETURN THROUGH OVER-SIGHT. THE ASSESSING OFFICER SCRUTINIZED EACH OF THE SALE BILLS AND CAME TO THE CONCLUSION THAT THERE WERE FO UR CATEGORIES OF SALES MADE BY THE ASSESSEE AS TABULATED IN THE CHAR T. THE ASSESSING OFFICER HAS ACCEPTED THE CATEGORY OF SALE S UNDER SR.NO. (II) TO (IV). HOWEVER, IN RESPECT OF SR.NO. (I) IT WAS OBSERVED THAT THE CASH SALES OF RS.37,30,300/- WERE IN RESPECT OF LOT SALES MADE IN CASH WITHOUT MENTION OF ANY QUANTITY OF GOODS SO LD NOR THE NAME/S OF THE PARTY/S TO WHOM SOLD AS PER CASH MEMO NOS. 1-LOT, TO NO.3-LOT SALE, IN THE MONTH OF APRIL,2004. THE ASSESSING OFFICER NOTED THAT THERE WAS NO MENTION OF QUANTITY OF GOODS SOLD WHICH REFLECT THAT NO ACTUAL SALE OF GOODS AS PER T HE SAID THREE 5 CASH MEMOS HAD BEEN MADE BY THE ASSESSEE. ANOTHER SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE THAT WHY SAID REC EIPT IN CASH BE NOT TREATED AS INCOME FROM UNDISCLOSED SOURCES INTR ODUCED IN THE GARB OF CASH SALES IN-GENUINELY MADE. THE REPLY OF THE ASSESSEE WAS THAT THE SAID SALES WERE MADE WITH THE INTENTIO N TO LIQUIDATE THE STOCKS WHICH WERE PILED UP DUE TO NON-PROCUREME NT OF EXPORT ORDERS AND AS THE QUALITY OF THE GOODS HAD STARTED DETERIORATING, THE SALES WERE MADE TO REALIZE THE FUNDS FROM SUCH STOCKS. THE ASSESSEE CLAIMED THAT IT HAD STOCK OF RS.3,07,48,10 0/- BROUGHT FORWARD FROM LAST YEAR IN ADDITION TO PURCHASES OF RS.158,66,097/- MADE DURING THE YEAR. THE SALES WERE CLAIMED TO BE MADE IN DISTRESS. THE ASSESSING OFFICER FOUND NO MERIT IN THE EXPLANATION FILED BY THE ASSESSEE IN RESPECT OF CASH SALE OF RS .37,30,300/- ALLEGEDLY MADE IN LOTS BUT WITHOUT MENTION OF ANY Q UANTITY OF GOODS SOLD. AS PER VARIOUS REASONS TABULATED AT PA GE 7 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER TREATED THE SAID SUM OF RS.37,30,300/- AS INCOME FROM UNDISCLOSED SOURCE. THE ASSESSING OFFICER FURTHER EXCLUDED THE SAID AMOUNT OF 37,30,3 00/- FROM THE SALES ACCOUNT AND ADOPTED THE SALE OF THE ASSESSEE AT RS.241,36,929/- (RS.2,78,67,229/- - RS.37,30,300/- ), ON WHICH GP RATE WAS APPLIED BY THE ASSESSING OFFICER TO COM PUTE THE ESTIMATED PROFITS IN THE HANDS OF THE ASSESSEE. 7. THE CIT(APPEALS) ACCEPTED THE CLAIM OF THE ASSES SEE IN VIEW OF THE OPENING STOCK OF RS.3.07 CRORES AND PURCHASE S OF RS.1.58 CRORES BEING MADE BY THE ASSESSEE. THE CIT(APPEALS ) WAS OF THE VIEW THAT THE CASH SALES OF RS.37,30,300/- WAS CRED ITED TO THE TRADING AND PROFIT & LOSS ACCOUNT AND THE SAME WAS NOT SHOWN AS CASH INTRODUCED IN THE NAME OF ANY PERSON WITH CORR ESPONDING LIABILITY APPEARING IN THE BALANCE-SHEET. THE CIT( APPEALS) 6 FURTHER OBSERVED THAT IN CASE THE SALE OF THE ASSES SEE WAS REJECTED, THAN THE OTHER FACT WOULD BE AN INCREASE IN CLOSING STOCK, AS THE ASSESSING OFFICER HAD NOT PROVED THAT THE SAID SALE S WERE OUTSIDE THE BOOKS OR WERE UNACCOUNTED. THE CIT(APPEALS) FU RTHER NOTED THAT THE ASSESSEE HAD NOT DISPUTED THE PURCHASES AN D ONLY THE SALES WERE DISALLOWED. THE ASSESSING OFFICER WAS H ELD TO HAVE DEFAULTED IN NOT CO-RELATING THE PURCHASES OF STOCK AVAILABLE WITH THE ASSESSEE TO THE SALES MADE BY THE ASSESSEE. FU RTHER RELIANCE WAS PLACED ON DIFFERENT CASE-LAWS AND THE ADDITION OF RS.37,30,300/- WAS DELETED BY THE CIT(APPEALS). 8. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT(APPEALS). 9. THE LD. DR FOR THE REVENUE FILED A PAPER BOOK CO MPRISING OF THE VARIOUS DOCUMENTS. OUR ATTENTION WAS DRAWN TO THE BILLS ISSUED BY THE ASSESSEE PLACED AT PAGES 19, 20 AND 21 OF THE PAPER BOOK IN RESPECT OF SALE OF KNITTED CLOTH AND IT WAS POINTED OUT THAT THE PERUSAL OF THE SAID BILLS WOULD REFLECT TH AT THERE WERE CALCULATION ERRORS IN THE SAID BILL. OUR ATTENTION WAS DRAWN TO BILL DATED 01.04.2004 BEARING NO. 1-LOT SALE PLACED AT P AGE 19 OF THE PAPER BOOK UNDER WHICH THE ASSESSEE RECEIVED CERTA IN GOODS BACK. THE BILL REFLECTS TOTAL OF RS. 11,38,500/- W HICH IN-FACT TOTALS TO RS. 11,17,800/-. SIMILARLY, THE BILL NO. 2-LOT SALE DATED 15.04.2004 PLACED AT PAGE 20 OF THE PAPER BOOK SHOW S TOTAL OF RS. 11,79,750/- WHEREAS ACTUALLY IT TOTALS TO RS.11,58, 300/- AND BILL NO.3-LOT SALE SHOWN TOTAL OF RS. 26,67,280/- WHICH IN-FACT TOTALS TO RS. 26,18,784/-. AGAINST BILL PLACED AT PAGE 19 OF THE PAPER BOOK, GOODS WORTH RS. 8.02,000/- HAVE BEEN SHOWN TO BE RETURNED. AS PER THE COPY OF ACCOUNT OF TAX FREE SALES, THE S AID RETURN IS ON 7 15.04.2004 WHEREAS IN THE BILL, IT HAS BEEN SHOWN O N 01.04.2004 ITSELF. THE ASSESSEE CLAIMS THAT THE GOODS HAVE BE EN RETURNED BY THE PARTY AGAINST CASH SALES MADE BY THE ASSESSEE BUT NO DETAILS OF THE SAID PARTY ARE AVAILABLE WITH THE ASSESSEE . THE LD. DR FOR THE REVENUE DRAWN OUR ATTENTION TO THE ACCOUNT OF S ALE TAX FREE SALES PLACED AT PAGE 12 OF THE PAPER BOOK WHICH REF LECTS THE GOODS BEING RECEIVED BACK ON 01.04.2004. 10. THE NEXT CONTENTION OF THE LD. DR FOR THE REVEN UE WAS THAT IN THE AFORESAID BILLS, NO QUANTITATIVE DETAILS OF THE ITEMS SOLD BY THE ASSESSEE WERE FURNISHED AND THE TOTAL EXERCISE WAS CARRIED OUT TO REDUCE THE STOCK VALUE-WISE. THE LD. DR FURTHER POINTED OUT THAT IN THE ORIGINAL SALES TAX RETURN FILED BY THE ASSESSEE , THE SAID SALES WERE NOT DECLARED, THE DETAILS OF WHICH ARE A VAILABLE AT PAGE 96 OF THE PAPER BOOK. THE NEXT PLEA OF THE LD. DR FOR THE REVENUE WAS THAT THE ASSESSEE HAD MADE OTHER CASH SALES ALSO IN WHICH THE QUANTITY OF THE GOODS SOLD IS MENTIONED A ND EVEN THE NAMES OF THE PARTIES WERE FURNISHED BY THE ASSESSEE BUT IN RESPECT OF THESE THREE BILLS, NO NAME OF THE PARTY, NO DETAILS OF MODE OF TRANSPORTATION AND NO MENTION OF THE QUANTI TY SOLD WAS EVER FURNISHED AND IS ALSO NOT AVAILABLE WITH THE A SSESSEE TILL DATE. THE ASSESSEE IN THE BILLS TALKS OF SALE OF KNITTED CLOTH BUT STOCK OF FINISHED CLOTH WAS REDUCED BY THE ASSESSEE BY THE AFORESAID AMOUNT. RELIANCE WAS PLACED UPON CIT VS OM PARKASH & SONS 55 DTR 254 (P&H) AND CIT VS. SANJAY CHHABRA [336 ITR 71 (P&H)]. 11. THE LD. AR FOR THE ASSESSEE STRESSED THAT ALL THE FACTS WERE BEFORE THE ASSESSING OFFICER INCLUDING THE SALE TAX RETURN IN WHICH THE SAID CASH SALES WERE NOT INCLUDED. THE S AID SALES WERE 8 DECLARED TO THE DEPARTMENT IN THE REVISED RETURN AN D THE ONLY ISSUE RAISED IN THE PRESENT APPEAL WAS IN RESPECT O F THE CASH SALES TOTALING RS. 37,30,300/-. THE LD. AR SUBMITTED THA T AGAINST ONE OF THE CASH SALES, THERE WAS RETURN OF GOODS AND IF THE TRANSACTION WAS NOT GENUINE, THE ASSESSEE COULD HAVE OMITTED TO SHOW THE RETURN OF CASH. IT WAS FURTHER STRESSED BY THE LD. AR FOR THE ASSESSEE THAT IT WAS NOT NECESSARY TO MAINTAIN DET AILS OF CASH SALES. RELIANCE WAS PLACED ON R.B.JASSARAM FATEH C HAND VS. CIT [75 ITR 33 (BOM)]. THE LD. AR FURTHER POINTED OUT THAT ORIGINALLY BEFORE THE SALES TAX AUTHORITY, THE ASSESSEE HAD D ECLARED SALES OF RS. 1.96 CRORE AND IN THE REVISED SALES TAX RETURN, SALES WERE DECLARED AT RS. 2.78 CRORES, COPY OF WHICH IS FILED AT PAGE 62 OF THE PAPER BOOK. IT WAS FAIRLY ADMITTED BY THE LD. AR FOR THE ASSESSEE THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE INITIALLY AFTER SEARCH OPERATION AND THE RETURN OF INCOME WAS FILED LATER AFTER AUDIT OF THE ACCOUNTS IN WHICH THE SALE S WERE DECLARED AT RS. 2.78 CRORES. THE SALES TAX RETURNS WERE REV ISED AFTER THE FILING OF THE RETURN OF INCOME ON 10.11.2007. THE LD. AR FOR THE ASSESSEE PLACING RELIANCE ON THE ORDER OF THE CIT( APPEALS), POINTED OUT THAT THE SALES WERE PART OF THE TRADING /PROFIT & LOSS ACCOUNT AND NO SALES WERE OUTSIDE THE BOOKS OF ACCO UNT. RELIANCE WAS PLACED ON ADDL.CIT VS. GURSHANT ROTARY COMPRESS ORS LTD. [116 ITD 131 (DEL)(TM)] AND ALSO RAJINDER SINGH VS ITO, FARIDABAD ITA NO. 2789/DEL/2011. 12. THE LD. DR IN REJOINDER, POINTED OUT THAT WHILE ESTIMATING THE INCOME OF THE ASSESSEE, THE ASSESSING OFFICER E XCLUDED RS. 37,30,300/- FROM THE TOTAL SALE OF RS. 2.78 CRORE A ND APPLIED GP RATE ON THE BALANCE SALES FOR DETERMINING THE INCOM E OF THE ASSESSEE. 9 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND SA LE OF KNITTED CLOTH. THE ASSESSEE FAILED TO FURNISH THE RETURN OF INCOME IN TIME AND THEREAFTER, NOTICE U/S 142(1) OF THE ACT WAS IS SUED TO THE ASSESSEE TIME AND AGAIN AND THERE WAS TOTAL NON COM PLIANCE BY THE ASSESSEE . THE ASSESSEE FURNISHED RETURN OF INCOM E DECLARING LOSS OF RS. 22,06,350/-. THE SEQUENCE OF EVENTS DUR ING THE ASSESSMENT PROCEEDINGS ARE REFERRED TO BY THE ASSES SING OFFICER AT PAGES 1 & 2 OF THE ASSESSMENT ORDER. THE ASSESSEE DID FURNISH SOME INFORMATION DURING THE COURSE OF ASSESSMENT PR OCEEDINGS. THE ASSESSING OFFICER NOTED THAT DURING THE YEAR UN DER CONSIDERATION, THE ASSESSEE HAD DECLARED SALES OF RS. 2.78 CRORES OUT OF WHICH, CASH SALES IN LOTS WITHOUT MENTIONING THE QUANTITY SOLD AND/OR NAMES AND ADDRESSES OF THE PARTIES TO W HOM SOLD, TOTALING RS. 37,30,300/- WAS MADE BY THE ASSESSEE . AFTER PICKING UP THE CASE FOR SCRUTINY AND BEFORE THE ASSESSEE F URNISHED THE RETURN OF INCOME, THE ASSESSING OFFICER SOUGHT INFO RMATION OF THE SALES MADE DURING THE YEAR FROM STATE EXCISE & TAXA TION DEPARTMENT. VIDE THE SAID INFORMATION, THE ASSESSE E WAS FOUND TO HAVE DECLARED SALES OF RS. 1.96 CRORE INCLUDING FABRICATION RECEIPT OF RS. 7 LACS, WHILE AS PER TRADING ACCOUNT , LATER FILED ALONG WITH THE RETURN OF INCOME, THE SALES WERE DEC LARED AT RS. 2.78 CRORE. THE ASSESSEE CLAIMS TO HAVE FILED REV ISED SALES TAX RETURN ON 12.11.2007 IN WHICH THE SALES OF RS. 2.78 CRORE WERE DECLARED TO THE STATE EXCISE & TAXATION DEPARTMENT. THE DIFFERENCE IN THE SALES AS ORIGINALLY DECLARED TO T HE SALES TAX DEPARTMENT AND AS IN THE REVISED RETURN OF INCOME, WAS CLAIMED TO BE ON ACCOUNT OF SALES MADE IN LOTS VIDE 14 LOT SAL E BILLS NO. 1-LOT SALE TO 14-LOT SALES IN APRIL,2004 AMOUNTING TO RS. 101,26,294/- 10 WHICH THE ASSESSEE CLAIMS THAT BY OMISSION WAS NOT DECLARED IN THE ORIGINAL SALES TAX RETURN. SALES TOTALING RS. 63,95,994/- WERE SUPPORTED BY BILLS WITHOUT MENTIONING OF ANY Q UANTITY OF GOODS SOLD BUT WITH NAMES OF PARTIES TO WHOM SALES WERE EFFECTED IN APRIL,2004 ITSELF AND THE SAME WERE ACCEPTED BY THE ASSESSING OFFICER. THE DISPUTE IS IN RELATION TO THE THREE S ALES BILLS TOTALING RS. 37,30,300/- UNDER WHICH CASH SALES WERE MADE IN LOTS WITHOUT MENTION OF ANY QUANTITY SOLD AND/OR NAMES OF THE PA RTIES TO WHOM SOLD. DETAILS OF THE SALES MADE BY THE ASSESSEE V IDE THREE BILLS ARE AS UNDER : SR. NO. CATEGORY AMOUNT (I) CASH SALES IN LOTS WITHOUT MENTION OF ANY QUANTITY SOLD AND NAME(S) OF PARTY(IES) TO WHOM SOLD AS PER THE FOLLOWING CASH MEMOS: (A) CASH MEMO. NO. 1- LOT SALE DATED 1.4.2004 AFTER CONSIDERING GOODS RETURNS WITH NET OF SUCH SALES(1035000-802000) (B) CASH MEMO. NO. 2- LOT SALE DATED 15.4.2004 (C)CASH MEMO NO. 3- LO SALE DEED 20.4.2004 2,33,000/- 10,72,500/- 24,24,800/- TOTAL 37,30,300/- 14. THE LOT SALES MADE BY THE ASSESSEE TOTALING RS . 37,30,300/- WERE MADE IN CASH AND IN THE MONTH OF APRIL,2004, W ITHOUT MENTIONING ANY QUANTITY OF GOODS SOLD IN THE RELEVA NT CASH MEMOS. THE ASSESSEE HAS DECLARED CLOSING STOCK OF RS. 2.17 CRORE AS ON 31.3.2005. THE OPENING STOCK DECLARED BY THE ASSESSEE WAS RS.3.07 CRORES AND THE TOTAL PURCHASE S MADE DURING THE YEAR WERE RS.1.58 CRORES. THE PLEA OF THE ASSE SSEE BEFORE THE ASSESSING OFFICER WAS THAT IT HAD AMPLE STOCKS AVAI LABLE WITH IT AND OUT OF THE SAID AVAILABLE STOCK, THE AFORESAID CASH SALES WERE MADE. THE ASSESSING OFFICER OBSERVED THAT IF OLD S TOCKS WERE AVAILABLE WITH THE ASSESSEE, WHERE WAS THE NEED TO MAKE FRESH 11 PURCHASES TO THE TUNE OF RS.1.58 CRORES AND FURTHER STOCK OF RS.2.17 CRORES HAS BEEN SHOWN AT THE CLOSE OF THE Y EAR. THE ASSESSING OFFICER THUS QUESTIONED THE GENUINENESS O F THE CASH SALES MADE IN LOTS AMOUNTING TO RS.37,30,300/-. THE CIT(APPEALS), ACCEPTING SAID PLEA OF THE ASSESSEE HAD DELETED THE ADDITION. WE FIND NO MERIT IN THE ORDER OF THE CIT (APPEALS) IN THIS REGARD. THE ONUS IS UPON THE ASSESSEE TO PRO VE AND ESTABLISH THE SALES MADE BY IT DURING THE YEAR UNDER CONSIDER ATION. PERUSAL OF THE SALES BILLS PLACED AT PAGES 19 TO 21 OF THE PAPER BOOK REFLECT THE ASSESSEE TO HAVE SOLD KNITTED CLOTH IN CASH TO UNKNOWN PARTIES AND EACH BILL PREPARED BY THE ASSESSEE REF LECTS TOTALING ERRORS WHICH COULD NOT BE EXPLAINED BY THE LD. AR F OR THE ASSESSEE, THOUGH THE SAME WAS PUT TO HIM DURING TH E COURSE OF HEARING. THE BILL NO. 1-LOT SALE FOR RS. 11,38,500 /- IN FACT TOTALS TO RS.11,17,000/-, THE BILL NO. 2-LOT SALE OF RS. 1 1,79,750/- TOTALS TO RS. 11,58,300/- AND THE BILL NO. 3-LOT SALE TOTA LS TO RS. 26,67,280/- WHEREAS THE CORRECT TOTAL WAS RS. 26,18 ,784/-. THE ASSESSEE HAD SHOWN GROSS VALUE OF THE GOODS SOLD A ND HAD ADDED THE EXCISE DUTY TO THE SAID VALUE BUT THE CALCULATI ON ERROR HAS BEEN MADE WHILE TOTALING THE TWO FIGURES IN EACH OF THE THREE FIGURES. IN THE ABSENCE OF ANY EXPLANATION BEING G IVEN BY THE LD. AR FOR THE ASSESSEE, ADVERSE INFERENCE IS TO BE DRA WN AGAINST THE ASSESSEE. FURTHER, THE ASSESSEE HAS FAILED TO PRODU CE ANY EVIDENCE AS TO HOW THE SAID GOODS WERE TRANSPORTED AND EVEN THE BILLS DO NOT TALK OF THE REQUISITE DETAILS OF GR NUMBERS. 15. THE PAPER BOOK REFLECTS ANOTHER BILL NO. 07-LOT DATED 16.04.2004 WHICH IS PLACED AT PAGE 37 OF THE PAPER BOOK IN WHICH THE QUANTITY IS MENTIONED AT 12810 @ RS. 10/- SOLD FOR RS. 128,300/-. OTHER LOT SALES MADE BY THE ASSESSEE H AVE BEEN 12 ACCEPTED IN VIEW OF THE NAAMES OF THE PARTIES BEING AVAILABLE AND THE SAME ARE NOT IN DISPUTE. HOWEVER, IN RESPECT O F FIRST THREE BILLS I.E. 1 TO 3 LOT SALES, NO SUCH DETAILS HAVE B EEN FILED BY THE ASSESSEE. FURTHER, THE ASSESSEE HAD FAILED TO DEC LARE THE SAID SALES IN THE RETURN OF INCOME FILED BY IT BEFORE TH E SALES TAX AUTHORITY AND ONLY AFTER THE INFORMATION WAS RECEIV ED BY THE ASSESSING OFFICER, REVISED RETURNS WERE FILED BEFOR E THE SALES TAX AUTHORITY INCLUDING THE SAID CASH LOT SALE AS ITS T URNOVER. THE ASSESSEE AGAINST BILL NO.1-LOT SALE CLAIMS TO HAVE RECEIVED RETURN OF GOODS AND ALSO CASH TRANSACTION IN THIS REGARD. WHERE BASIC DETAILS I.E. NAME OF THE PARTY IS NOT AVAILABLE WIT H THE ASSESSEE, THE SAID RETURN OF GOODS CANNOT BE ACCEPTED. IN VI EW THEREOF, NO RELIANCE CAN BE PLACED ON THE SALE TAX RETURN FILED BY THE ASSESSEE. THE ONUS WAS UPON THE ASSESSEE TO EXPLAIN THE CREDI T OF RS. 37,30,300/- WHICH THE ASSESSEE HAS FAILED TO DISCH ARGE AND IN THE ABSENCE OF HAVING ESTABLISHED THAT THE SAID AMOUNT RELATES TO SALE OF GOODS, MERE RELIANCE ON THE THREE SALE BILLS DOE S NOT ABSOLVE THE ASSESSEE FROM ITS ONUS AND WE FIND NO MERIT IN THE STAND OF THE ASSESSEE IN THIS REGARD. 16. FURTHER, WE FIND THAT THE HON'BLE PUNJAB & HARY ANA HIGH COURT IN CIT VS SANJAY CHHABRA (SUPRA) IN A CASE OF COMMISSION AGENT WHO WAS FOUND TO HAVE MADE SALES OF APPLES TO THE TUNE OF RS. 5,75,654/- AND WHERE THE ASSESSEE WAS UNABLE TO EXPLAIN THE SOURCE OF PURCHASE OF THE SAID APPLES, TREATED THE TOTAL SALE PRICE AS INCOME OF THE ASSESSEE OBSERVING AS UNDER : A PERUSAL OF THE ORDER PASSED BY THE ASSESSING OFFI CER CLEARLY ESTABLISHES THAT THE ASSESSEE HAD MADE UNEXPLAINED INVESTMENT IN THE PURCHASE OF APPLES WHICH HE HAD SOLD TO JAGDISH CHA WLA AND IN SUCH CIRCUMSTANCES, IT WAS NOT JUSTIFIED THAT ONLY 5 PER CENT, PROFIT ON SALE 13 CONSIDERATION WAS TAXED IN THE HANDS OF THE ASSESSE E. THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUN AL HAD REVERSED THE ORDER OF THE ASSESSING OFFICER HOLDING THAT THE COMMISSION ON THE SALES MADE TO JAGDISH CHAWLA COULD BE ADDED. THE CO MMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL HAD NOWHERE, AFTER APPRECIATION OF MATERIAL ON RECORD, CONCLUDED THAT THE INVESTMENT IN THE PURCHASE OF APPLES WAS ACCOUNTED FOR IN THE BOO KS OF ACCOUNT OF THE ASSESSEE. LEARNED COUNSEL FOR THE ASSESSEE WAS ASKE D TO SHOW WHETHER THE AMOUNT WHICH WAS INVOLVED IN THE VALUE OF THE A PPLIES, I.E., RS. 5,75,654, WAS ENTERED IN THE BOOKS OF ACCOUNT OR WH ETHER THE FATHER OF THE ASSESSEE, SHRI MANGAL SAIN HAD MADE SALES OF AP PLES DURING THE FINANCIAL YEARS 1997-98 AND 1998-99 TO JAGDISH CHAW LA AND HAD SURRENDERED THE INCOME EARNED BY MEANS OF THOSE TRA NSACTIONS, IN HIS RETURN OF INCOME FILED WITH THE INCOME-TAX DEPARTME NT. THE LEARNED COUNSEL WAS UNABLE TO SUBSTANTIATE HIS CLAIM AND TO SHOW THAT THE AMOUNT WAS EITHER ENTERED IN THE BOOKS OF ACCOUNT O R WAS EVER SURRENDERED BY SHRI MANGAL SAIN AS CLAIMED BY HIM. ACCORDINGLY, THE FINDINGS RECORDED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL ARE VITIATED AND ARE SET ASIDE. REFERENCE IS NOW MADE TO THE JUDGMENT REPORTED AS P RESIDENT INDUSTRIES' CASE [2002] 258 ITR 654 (GUJ). IN THAT CASE, THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUN AL HAD FOUND AS A FACT THAT THERE WAS NO MATERIAL ON RECORD TO INDI CATE THAT ANY INVESTMENT WAS MADE OUTSIDE THE BOOKS OF ACCOUNT TO MAKE THE SALES AND IN SUCH CIRCUMSTANCES THE ENTIRE SALE PROCEEDS COUL D NOT BE ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE BUT THE ADDITION COULD BE ONLY OF THE PROFITS EMBEDDED IN THE SALES. THE HIGH COURT I N THE LIGHT OF THE AFORESAID FINDING OF FACT WHILE DISMISSING THE REFE RENCE APPLICATION UNDER SECTION 256(2) OF THE ACT FILED BY THE REVENU E HAD HELD THAT NO QUESTION OF LAW AROSE FOR CONSIDERATION. IN THE PRE SENT CASE, IN THE ABSENCE OF ANY CLEAR CUT AND UNAMBIGUOUS FINDING RE CORDED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUN AL ON THE BASIS OF THE MATERIAL ON RECORD, THAT THE INVESTMENT IN T HE APPLES WAS ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESS EE, NO ADVANTAGE OR SUPPORT CAN BE GATHERED BY THE ASSESSEE FROM THE SA ID DECISION. 17. FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE PU NJAB & HARYANA HIGH COURT IN CIT VS SANJAY CHHABRA (SUPRA) , WE REVERSE 14 THE FINDING OF THE CIT(APPEALS) IN THIS REGARD AND CONFIRM THE ADDITION OF RS. 37,30,300/-. THE GROUND NO. 1 RAIS ED BY THE REVENUE IS THUS, ALLOWED. 18. THE ASSESSEE HAS FILED AN APPLICATION UNDER RUL E 27 OF INCOME TAX APPELLATE RULES UNDER WHICH IT HAS RAISE D TWO GROUNDS OF APPEAL I.E. ONE AGAINST DISALLOWANCE OF AN EXPENDITURE AMOUNTING TO RS. 690,462/- UNDER SECTION 40(A)(IA) OF THE ACT AND SECOND AGAINST PART DISALLOWANCE OUT OF CAR EXPENSE S, CAR DEPRECIATION AND TELEPHONE EXPENSES. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE ISSUE STANDS COVERED BY THE DE CISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN ACIT VS. INDIA CEM ENT LTD. [124 ITD 343 (CHENNAI)] AND BY THE DECISION OF HON' BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. DEHATI CO-OPERATIVE M ARKETING- CUM-PROCESSING SOCIETY [130 ITR 505 (P&H)]. THE LD . DR FOR THE REVENUE POINTED OUT THAT THE GROUNDS OF APPEAL RAIS ED BY THE ASSESSEE VIDE THE SAID APPLICATION UNDER RULE 27 OF INCOME TAX RULES WERE ABSOLUTELY DIFFERENT FROM THE ISSUE RAIS ED BY THE REVENUE IN ITS APPEAL AND THE PRESENT APPLICATION W AS NOT MAINTAINABLE. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. UNDER THE PROVISIONS OF SECTION 253 OF THE INCOME T AX ACT, THE PROCEDURE OF APPEALS TO THE APPELLATE TRIBUNAL ARE PROVIDED. BOTH THE ASSESSEE AND THE COMMISSIONER ARE EMPOWERE D TO APPEAL AGAINST THE ORDERS PASSED BY THE LOWER AUTHORITIES UNDER VARIOUS PROVISIONS OF THE ACT AS ENUMERATED IN SUB-SECTION (1) AND SUB- SECTION (2) OF SECTION 253 OF THE ACT. UNDER SUB-S ECTION (3), TIME LIMIT FOR FILING THE APPEAL BEFORE THE TRIBUNAL IS PROVIDED. UNDER SUB-SECTION 4 TO SECTION 253 OF THE ACT, THE PROVIS IONS LAY DOWN 15 THE PROCEDURE OF FILING MEMORANDUM OF CROSS-OBJECTI ONS BY THE ASSESSING OFFICER OR THE ASSESSEE, AS THE CASE MAY BE, ON THE RECEIPT OF THE NOTICE THAT AN APPEAL AGAINST THE OR DER OF THE DY. COMMISSIONER OF INCOME TAX OR CIT(APPEALS) HAD BEEN PREFERRED UNDER SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 253 OF THE ACT. IT IS FURTHER PROVIDED UNDER SUB-SECTION (4) THAT T HE SAID MEMORANDUM OF CROSS-OBJECTION CAN BE TREATED AS AN APPEAL PRESENTED WITHIN THE TIME SPECIFIED IN SUB-SECTION AND WOULD BE DISPOSED OF BY THE TRIBUNAL ACCORDINGLY. UNDER SUB -SECTION (6) TO SECTION 253 OF THE ACT, THE APPEAL IS TO BE FILED I N PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNERS AND IS TO BE ACCOMPANIED WITH TRIBUNAL FEE, WHERE THE APPEAL IS FILED BY THE ASSESSEE. HOWEVER, WHERE THE APPEAL IS FILED BY THE REVENUE, THEN NO APPEAL FEE IS PAYABLE. FURTHER, ALONGWITH AN APPLICATION F OR STAY OF DEMAND, FEE OF RS.500/- IS PRESCRIBED UNDER SUB-SEC TION (7) TO SECTION 253 OF THE ACT. 20. THE APPELLATE TRIBUNAL, IN ORDER TO REGULATE IT S POWERS AND FUNCTIONS HAVE FORMULATED THE INCOME TAX APPELLATE RULES, 1963. RULE 27 OF INCOME TAX APPELLATE TRIBUNAL RULES READ AS UNDER : THE RESPONDENT THOUGH HE MAY NOT HAVE APPEALED, MA Y SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GR OUNDS DECIDED AGAINST HIM. THE SAID RULE 27 PROVIDES REMEDY TO THE RESPONDENT TO SUPPORT AN ORDER PASSED ON ANY OF THE GROUNDS DECID ED AGAINST HIM. 21. THE RESPONDENT BY WAY OF THE SAID RULE 27 IS EM POWERED TO SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GR OUNDS DECIDED AGAINST HIM. RULE 27 OF THE INCOME TAX APPELLATE T RIBUNAL RULES LAYS DOWN THAT WHERE NO APPEAL HAS BEEN FILED BY AN Y RESPONDENT 16 HE MAY SUPPORT THE ORDER APPEALED AGAINST I.E. THE ORDER OF THE CIT (APPEALS) ON ANY OF THE GROUNDS DECIDED AGAINST HIM. THE PROPOSITION PROPOSED UNDER RULE 27 OF THE INCOME TA X APPELLATE TRIBUNAL RULES IS THAT THE RESPONDENT CAN RAISE DEF ENCE AGAINST THE APPEAL FILED BY THE APPELLANT ON ANY OF THE GRO UNDS WHICH HAVE BEEN DECIDED AGAINST HIM BUT UNDER THE SAID PR OVISIONS OF THE ACT, IT IS NOT OPEN TO THE RESPONDENT TO CLAIM ANY FRESH RELIEF WHICH WAS DENIED TO HIM BY THE CIT (APPEALS) AND WH ICH IS NOT PART OF THE GROUNDS OF APPEAL RAISED BY THE REVENUE . 22. THE DELHI BENCH OF THE TRIBUNAL IN ITO VS. SMT. GURINDER KAUR [102 ITD 189(DEL) HAD APPLIED THE PROVISIONS O F RULE 27 OF THE INCOME TAX APPELLATE TRIBUNAL RULES AND CONSIDE RED THE CLAIM OF THE ASSESSEE VIS--VIS THE INVOKING OF JUR ISDICTION BY THE ASSESSING OFFICER UNDER SECTION 147/148 OF THE ACT AND NON RECORDING OF REASONS FOR REOPENING THE ASSESSMENT P RIOR TO ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT AND ALSO NON SERVICE OF THE SAID NOTICE UPON THE ASSESSEE. ANOTHER ISSUE RAISE D BY THE ASSESSEE BEFORE THE TRIBUNAL WAS NON-RECEIPT OF APP ROVAL OF JCIT BEFORE ISSUING NOTICE UNDER SECTION 148 OF THE ACT AS REQUIRED UNDER SECTION 151(1) OF THE ACT. THE TRIBUNAL NOTI NG THE ISSUE RAISED BY THE RESPONDENT-ASSESSEE AND THE OBJECTION S OF THE APPELLANT NOTED AS UNDER: 6. ON BEHALF OF THE ASSESSEE, THE FOLLOWING POINTS WERE SOUGHT TO BE RAISED IN DEFENCE OF THE ORDER OF THE CIT(A): (A) NO REASONS WERE RECORDED FOR REOPENING THE ASSE SSMENT AS REQUIRED BY SECTION 148(2). (B) THE REASONS RECORDED, IF ANY, WERE NOT SUPPLIED TO THE ASSESSEE DESPITE REPEATED REQUESTS. (C) THE NOTICE UNDER SECTION 148 HAS NOT BEEN SERVE D ON THE ASSESSEE AND NON-SERVICE OF THE NOTICE IS FATAL TO THE VALID ITY OF THE RE- ASSESSMENT. 17 (D) THE ASSESSING OFFICER HAS NOT TAKEN THE APPROVA L OF THE JT. CIT BEFORE ISSUING THE NOTICE UNDER SECTION 148 AS REQU IRED BY SECTION 151(1) OF THE ACT. (E) SECTION 148 CANNOT BE USED FOR MAKING A FISHING OR ROVING ENQUIRY. IN THIS CASE, THE ASSESSING OFFICER WAS MERELY CALL ED UPON BY THE DCIT TO EXAMINE AND INVESTIGATE THE MATTER WHEREAS THE A SSESSING OFFICER CHOSE TO SHORTCUT THE PROCEEDINGS AND PROCEEDED TO ISSUE THE NOTICE BEFORE FORMATION OF THE BELIEF. (F) THE MERE ALLEGATION MADE BY THE CIB THAT THE AS SESSEE PURCHASED THE GIFT FROM KOCHHAR IS NOT RELEVANT FOR THE FORMA TION OF THE BELIEF AND BEFORE ISSUING THE NOTICE UNDER SECTION 148, THE AS SESSING OFFICER FAILED TO CARRY OUT THE NECESSARY ENQUIRY WHICH ALO NE COULD HAVE GIVEN HIM THE MATERIAL FOR THE FORMATION OF THE REQUISITE BELIEF. SINCE NO SUCH INVESTIGATION WAS CARRIED OUT, THE NOTICE UNDER SEC TION 148 WAS BASED MERELY ON THE ALLEGATION OF THE CIB AND, WAS BASED ONLY ON REASON TO SUSPECT. 7. THE LD. SR. DR, MR. SHANTANU DHAMIJA, AT THIS JU NCTURE RAISED A PRIMARY OBJECTION TO THE EFFECT THAT THE ASSESSEE CANNOT GO BEYOND THE ORDER OF THE CIT(A) AND RAISE THE POINTS SUCH AS NON-RECORDING O R NON-DISCLOSURE OF THE REASONS FOR REOPENING THE ASSESSMENT, NON-SERVICE O F THE NOTICE UNDER SECTION 148 AND THE QUESTION OF APPROVAL OF THE JCIT UNDER SECTION 151(1). HE POINTED OUT THAT THESE ARE TOTALLY NEW POINTS WHICH ARE BEY OND THE SCOPE OF THE APPEAL WHICH IS LIMITED TO THE QUESTION WHETHER THE CIT(A) WAS RIGHT IN SAYING THAT THE NOTICE UNDER SECTION 148 BASED ON REASON TO SUSPECT AND NOT REASON TO BELIEF. IT IS POINTED OUT THAT THE ASSESSEE HAS NOT FILED A NY APPEAL OR CROSS-OBJECTION AGAINST THE ORDER OF THE CIT(A) AND, THEREFORE, HE CANNOT RAISE THESE NEW POINTS WHICH WOULD ALSO REQUIRE INVESTIGATION OF FA CTS. 8. THE LD. COUNSEL FOR THE ASSESSEE SOUGHT TO MEET THE AFORESAID OBJECTION OF THE LD. SR. DR BY RELYING ON RULE 27 OF THE APPELLA TE TRIBUNAL RULES, AS WELL AS THE FOLLOWING JUDGMENTS: 1. B.R. BAMASI V. CIT , 2. MAROLIA AND SONS V. CIT , 3. ASSAM CO. (INDIA) LTD. V. CIT , 4. DAHOD SAHAKARI KHARID VECHAN SANGH LTD. V. CIT [2005] 149 TAXMAN 456 (GUJ.); AND 5. CIT V. COCHIN REFINERIES LTD. .220 ITR 398 (KER. ) 9. THE LD. COUNSEL FOR THE ASSESSEE ALSO POINTED OU T THAT THESE OBJECTIONS HAVE BEEN TAKEN BY THE ASSESSEE RIGHT FROM THE BEGINNING OF THE HEARING BEFORE THE TRIBUNAL ON 30-9-2004 ON WHICH DATE THE TRIBUNAL DI RECTED THE DEPARTMENT TO OBTAIN THE RECORDS AND PRODUCE THEM BEFORE IT, BUT DESPITE REPEATED ADJOURNMENTS AND OPPORTUNITIES, THE DEPARTMENT HAS NOT BEEN ABLE TO PRODUCE THE RECORD TO SHOW THAT REASONS WERE RECORDED AND D ISCLOSED TO THE ASSESSEE AND THAT THE NOTICE UNDER SECTION 148 WAS ALSO SERV ED ON THE ASSESSEE. ALMOST TWO YEARS HAVE PASSED AND SINCE THE DEPARTMENT HAS NOT BEEN ABLE TO PRODUCE THE RECORDS, IT CANNOT NOW BE CONTENDED THAT THESE POINTS CANNOT BE TAKEN BEFORE THE TRIBUNAL. IT WAS ALSO VEHEMENTLY DENIED THAT THE NEW POINTS RAISED BY THE ASSESSEE IN DEFENCE OF THE ULTIMATE DECISION OF THE CIT(A) WOULD INVOLVE INVESTIGATION INTO THE FACTS. A DISTINCTION WAS SOU GHT TO BE MADE BETWEEN INVESTIGATION INTO THE FACTS AND INVESTIGATION INTO THE RECORD AND IT WAS 18 SUBMITTED THAT THE POINTS RAISED BY THE ASSESSEE IN VOLVE MERE EXAMINATION OF THE RECORD AND DO NOT INVOLVE INVESTIGATION INTO FA CTS NOT ALREADY ON RECORD. OUR ATTENTION WAS ALSO DRAWN TO SEVERAL LETTERS WRI TTEN BY THE ASSESSEE TO THE ASSESSING OFFICER INFORMING HIM THAT THE NOTICE HAD NOT BEEN SERVED ON HER AND THAT SHE WAS COMPLYING WITH THE SAME AND PARTICIPAT ING IN THE PROCEEDINGS WITHOUT PREJUDICE AND IN A SPIRIT OF CO-OPERATION W HICH CANNOT AMOUNT TO WAIVER OF HER RIGHTS. IT WAS THUS PLEADED THAT THE ASSESSEE WAS ENTITLED TO RAISE THESE POINTS BEFORE THE TRIBUNAL AND THAT THE PRELI MINARY OBJECTIONS OF THE LD. SR. DR HAVE NO MERIT. 23. THE TRIBUNAL VIDE PARA 10 HELD AS UNDER: 10. BEFORE WE PROCEED FURTHER, IT IS NECESSARY TO CLEAR THIS POINT, NAMELY, WHETHER THE ASSESSEE CAN RAISE THESE POINTS BEFORE THE TRIBUNAL FOR THE FIRST TIME AS A RESPONDENT DEFENDING THE ORDER OF THE CIT (A) WHICH WAS BASED ON THE ONLY QUESTION WHETHER THE REASONS RECORDED BY THE A SSESSING OFFICER AMOUNTED TO REASON TO BELIEVE OR REASON TO SUSPECT. THE MATT ER IS NOT RES INTEGRA. RULE 27 OF THE APPELLATE TRIBUNAL RULES, SAYS THAT THE RESP ONDENT IN AN APPEAL CAN SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GR OUNDS DECIDED AGAINST HIM EVEN THOUGH HE MAY NOT HAVE FILED AN INDEPENDENT AP PEAL OR CROSS-OBJECTION. THIS RULE CLEARLY SUPPORTS THE ASSESSEE. IN THE PRE SENT CASE, THE ASSESSEE HAS RAISED THE POINT OF NON-RECORDING OF REASON IN GROU ND NO. 2 BEFORE THE CIT(A) THOUGH THIS GROUND IS NOT SO CATEGORICAL AS THE LD. COUNSEL FOR THE ASSESSEE WANTS US TO READ. EVEN SO, SUCH GROUND CAN BE INFER RED FROM THE FACT THAT THE ASSESSEE HAS BEEN REPEATEDLY ASKING FOR THE REASONS RECORDED WHICH WERE NOT SUPPLIED TO HER. EVEN BEFORE THE TRIBUNAL RIGHT FRO M SEPTEMBER, 2004, THE ASSESSEE HAS BEEN REQUESTING FOR PRODUCTION OF THE DEPARTMENT'S RECORDS OBVIOUSLY CALLING UPON THE DEPARTMENT TO SHOW THAT REASONS FOR REOPENING HAVE BEEN RECORDED, BUT DUE TO SOME DIFFICULTY OR THE OT HER, THE DEPARTMENT HAS NOT BEEN ABLE TO PRODUCE THE RECORDS. THE CIT(A) HAS NO T RECORDED ANY FINDING ON THE QUESTION WHETHER THE REASONS WERE RECORDED OR N OT, BUT HAVING REGARD TO THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN ROHTAK AND HISSAR DISTRICTS ELECTRIC SUPPLY CO. (P.) LTD, V. CIT , IT IS POSSIBLE TO HOLD THAT HE FOUND AGAINST THE ASSESSEE ON THIS POINT. ON THIS REASONING, IT I S OPEN TO THE ASSESSEE TO RAISE THE QUESTION OF NON-RECORDING OF REASONS FOR REOPEN ING THE ASSESSMENT BEFORE THE TRIBUNAL FOR THE FIRST TIME AND SEEK TO SUPPORT THE ULTIMATE DECISION OF THE CIT(A). EVEN THE NON-DISCLOSURE OF THE REASONS CAN BE SAID TO BE COVERED BY GROUND NO. 2 TAKEN BEFORE THE CIT(A) AND IN THE ABS ENCE OF ANY DEFINITE DECISION BY THE CIT(A), THE SAME CONCLUSION WOULD F OLLOW NAMELY, THAT IT IS OPEN TO THE ASSESSEE TO INVOKE RULE 27 EVEN IN RESP ECT OF THIS POINT. AS REGARDS THE APPROVAL OF THE JCIT UNDER SECTION 151(1), IT I S FAIRLY ADMITTED ON BEHALF OF THE ASSESSEE THAT THIS WAS NOT SPECIFICALLY TAKEN E ITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A) AND, THEREFORE, WE HOL D THAT RULE 27 MAY NOT BE STRICTLY SPEAKING AVAILABLE TO THE ASSESSEE. 24. THE DELHI BENCH OF THE TRIBUNAL IN ITO VS. SMT. GURINDER KAUR (SUPRA) HELD THAT THE RESPONDENT-ASSESSEE CAN INVOKE THE PROVISIONS OF RULE 27 IN RESPECT OF JURISDICTIONAL ISSUE OF RECORDING OF REASONS FOR REOPENING THE ASSESSMENT A ND ALSO IN RESPECT OF ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT AND ITS 19 SERVICE BUT THE SAME COULD NOT BE UTILIZED AS REGAR DS THE APPROVAL OF JCIT UNDER SECTION 15(1) OF THE ACT. 25. THE LEARNED A.R. FOR THE ASSESSEE PLACED RELIAN CE IN ACIT VS. INDIA CEMENTS LTD. (SUPRA) WHEREIN RELIEF HAD B EEN ALLOWED TO THE RESPONDENT-ASSESSEE FOR CONTESTING THE ISSUE OF REOPENING OF ASSESSMENT UNDER SECTION 147, WHICH WAS NOT ADJUDIC ATED UPON BY THE CIT (APPEALS). THE TRIBUNAL WHILE DECIDING THE APPEAL FILED BY THE REVENUE ON THE MERITS OF THE ADDITION DELETE D BY THE CIT (APPEALS) ALLOWED THE ASSESSEE TO RAISE JURISDICTIO NAL ISSUE OF VALIDITY OF RE-ASSESSMENT PROCEEDINGS INITIATED UND ER SECTION 147 OF THE ACT BY WAY OF APPLICATION FILED UNDER RULE 2 7 OF THE INCOME TAX APPELLATE TRIBUNAL RULES. 26. THE ASSESSEE IN THE PRESENT CASE, BY WAY OF AN APPLICATION UNDER RULE 27 OF INCOME TAX APPELLATE TRIBUNAL RULE S HAS SOUGHT ADJUDICATION OF TWO ISSUES I.E. DISALLOWANCE OF AN EXPENDITURE UNDER SECTION 40(A)(IA) OF THE ACT AND FURTHER DISA LLOWANCE OF EXPENDITURE ON ACCOUNT OF EXPENDITURE OF CAR EXPENSES/DEPRECIATION AND TELEPHONE EXPENSES. THE APPEAL FILED BY THE REVENUE IS AGAINST THE SALES HELD TO BE INGE NUINE BY THE ASSESSING OFFICER, WHICH WERE TREATED AS INCOME FRO M UNDISCLOSED SOURCES AND THE SAID ADDITION WAS DELETED BY CIT (A PPEALS). WE FIND NO MERIT IN THE PRESENT APPLICATION MOVED BY T HE ASSESSEE UNDER RULE 27 OF INCOME TAX APPELLATE TRIBUNAL RULE S AND THE SAME IS DISMISSED. EVEN OTHERWISE BOTH THE ISSUES RAISED BY WAY OF THE PRESENT APPLICATION ARE FACTUAL AND THE SAME CANNOT BE 20 RAISED UNDER THE GARB OF APPLICATION UNDER RULE 27 OF INCOME TAX APPELLATE TRIBUNAL RULES. 27. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH AUGUST,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH