M/s. Cantus Auto Industries P.Ltd., Jalandhar V. ACIT, Jalandhar

ITA 332/ASR/2010

• Counselvise Citation: 33220914 RSA 2010
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 26-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Additional evidence
• Section: 142(1); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.332(ASR)/2010 ASSESSMENT YEAR:2004-05 PAN :AAVCC2298Q M/S. CANTUS AUTO INDUSTRIES LTD. VS. THE ASSTT. COM MR. OF INCOME-TAX, JANDIALA ROAD, JALANDHAR. RANGE-V, JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NO.347(ASR)/2010 ASSESSMENT YEAR:2004-05 PAN : THE ASSTT. COMMR. OF INCOME-TAX, VS. M/S. CANTUS AU TO INDUSTRIES LTD. RANGE-V, JALANDHAR. JANDIALA ROAD, JALANDHAR. (APPELLANT) (RESPONDENT) ASSESSEE BY: NONE DEPARTMENT BY:SH.TARSEM LAL, DR DATE OF HEARING:10/09/2012 DATE OF PRONOUNCEMENT:12/09/2012 ORDER PER BENCH ; THESE CROSS APPEALS ONE BY THE ASSESSEE AND ANOT HER BY THE REVENUE ARE DIRECTED AGAINST THE IMPUGNED ORDER OF THE CIT( A), JALANDHAR, DATED 14.05.2010 RELATING TO ASSESSMENT YEAR 2004-05. ITA NOS.332 & 347(ASR)/2010 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL IN ITA NO.332(ASR)/2010: 1. THE ORDER PASSED BY THE CIT(A) IS AGAINST THE P RINCIPLES OF LAW OF NATURAL JUSTICE, WITHOUT APPRECIATION OF ALL THE FACTS ON RECORD AND WRONG INTERPRETATION OF THE INCOME TAX ACT, 196 1. THE ASSESSMENT FRAMED BY THE ACIT, RANGE IV, JALANDHAR MUST BE SET ASIDE. THE LD. AO DID NOT COMPLY WITH THE PROVI SIONS OF SECTION 144 OF THE ACT. NO FINAL STATUTORY OPPORTUN ITY WAS GIVEN U/S 144(1) OF THE ACT. RELIANCE IS PLACED ON THE RATIO OF THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT, IN TH E CASE OF CIT VS. AGRO ENGINEERS IN 2003( TAXMAN 0830). THE H ONBLE CIT(A) MADE THE WRONG INTERPRETATION OF THE LAW. 2. THE LD. CIT(A) IS WRONG BY NOT PROVIDING RELIEF OF ADDITIONS MADE U/S 68 OF THE ACT. THE ASSESSEE RECEIVED CERTA IN DEPOSITS FROM THE DIRECTORS AND THEIR RELATIVES IN THE YEAR UNDER CONSIDERATION. THE PRELIMINARY INFORMATION EXCEPT T HE CONFIRMATIONS WERE SUBMITTED AT THE TIME OF ASSESSM ENT PROCEEDINGS. THE ASSESSEE IS A COMPANY THAT WAS RUN NING IN LOSSES. THE OLD MANAGEMENT (BELONGED TO DELHI) LEF T THE COMPANY AND NEW TEAM OF DIRECTORS ENTERED ON 1.3.20 05. THE OLD DIRECTORS WERE EVASIVE AND NON COOPERATIVE. THE NEW DIRECTORS HAD STRAINED RELATIONS WITH THE BANKERS A LSO. THE AO AND LD. CIT(A) MADE LITTLE EFFORTS TO TRACE THE OLD TEAM OF DIRECTORS AND INSTEAD PENALIZED THE COMPANY. THE AD DITIONS MADE ON ACCOUNT OF ADDITIONS U/S 68 OF THE ACT, NEE DS TO BE DELETED. 3. IN ITA NO.347(ASR)/2010, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.10, 84,135/- MADE IN THE TRADING ACCOUNT BY DIRECTING THE AO TO APPLY GP RATE OF 10% AS AGAINST 15.17% APPLIED BY THE AO. ITA NOS.332 & 347(ASR)/2010 3 1A. WHILE DELETING THE ABOVE ADDITION THE LD. CIT(A ) HAS NOT APPRECIATED THE FACT THAT THE AO HAD APPLIED THE GP RATE OF 15.17% WHICH WAS SHOWN BY THE ASSESSEE HIMSELF IN T HE PREVIOUS YEAR. THE AO HAS APPLIED THE G.P. RATE OF PREVIOUS YEAR AS THE ASSESSEE COULD NOT FURNISH ANY DETAILS OF CLOSING STOCK ETC; AS CALLED FOR FROM HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS, VIDE ORDER SHEET ENTRY DATE D 26.11.2006, BUT OPTED TO REMAIN AWAY FROM THE ASSES SMENT PROCEEDINGS AND THE ASSESSMENT WAS COMPLETED U/S 14 4 OF THE ACT, IN THE ABSENCE OF INFORMATION REQUIRED FROM TH E ASSESSEE. 2. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET-ASIDE AND THAT OF THE A.O. RESTORED. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY AND FILED ITS RETURN OF INCOME ON 27.10.2004 DECLARING LOSS O F RS.23,01,535/-. THE AO PROCESSED THE SAME U/S 143(1) OF THE INCOME TAX ACT , 1961 ON 24.01.2005 AND SUBSEQUENTLY THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY AND AO ISSUED NOTICE U/S 143(2) DATED 28.7.2005, WHICH WAS SERVED UPON THE ASSESSEE FIXING THE DATE FOR 18.8.2005. THE AO ALSO ISSUED QUESTIONNAIRE DATED 19.5.2006 ALONGWITH NOTICE U/S 142(1) FIXING THE CASE FOR 7.6.2006. NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTAT IVE APPEARED NOR FILED ANY APPLICATION FOR ADJOURNMENT AND THE AO ISSUED NOTIC E U/S 274 DATED 8.6.2006 FIXING THE CASE FOR 22.6.2006 BUT AGAIN NONE ATTEND ED. HOWEVER, ON 26.6.2006 ONE SH. JATINDER MALIK CA ATTENDED THE PR OCEEDINGS AND SUBMITTED A POWER OF ATTORNEY AND PARTIALLY REPLIED AND REQUESTED FOR ADJOURNMENT FOR FILING FURTHER DOCUMENTARY EVIDENCE . THE AO FIXED THE CASE ITA NOS.332 & 347(ASR)/2010 4 FOR HEARING ON VARIOUS DATES BUT MOST OF THE TIME, THE ASSESSEE REMAINED NON- COOPERATIVE BEFORE THE AO. BUT FINALLY ON 28.08.200 6 SH. AMRINDER SINGH S/O SH. TARSEM SINGH ATTENDED THE PROCEEDINGS AND R EQUESTED THAT HIS FATHER MAY BE EXEMPTED FROM ATTENDING THE PROCEEDINGS AS H E IS HAVING SERIOUS HEALTH DISORDER AND THE AO ADJOURNED THE MATTER WIT H CLEAR UNDERSTANDING THAT IF NONE APPEARED ON THE NEXT DATE OF HEARING I .E. 12.09.2006 THEN THE CASE OF THE ASSESSEE WILL BE DECIDED EX-PARTE AND P ENALTY AS PER LAW WILL BE INITIATED. ON 12.9.2006 AGAIN SH. JATINDER MALIK AT TENDED WITH AN EMPLOYEE OF THE COMPANY SH. AMIT AND FILED A LETTER GIVING DETAILS OF THE SHAREHOLDERS OF THE COMPANY BUT HE DID NOT PRODUCE ANY BOOKS OF ACCOUNT AS REQUIRED BY THE A.O. THEREAFTER, THE AO ADJOURNED THE MATTER F OR VARIOUS TIMES BUT LASTLY THE AO COMPLETED THE ASSESSMENT IN DISPUTE U NDER SECTION 144 OF THE ACT ON 05.12.2006. 5. THE ASSESSEE FILED THE APPEAL BEFORE THE LD. CIT (A), WHO VIDE ORDER DATED 14.05.2010 PARTLY ALLOWED THE APPEAL OF THE A SSESSEE GIVING PARTIAL RELIEF TO THE ASSESSEE AGAINST WHICH THE REVENUE HA S FILED THE PRESENT APPEAL AND THE ADDITIONS SUSTAINED BY THE LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL. 6. NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE ON VARIOUS DATES BUT MOST OF THE TIME, THE ASSESSEE NOR HIS AUTHORIZED REPRES ENTATIVE APPEARED AND THIS ITA NOS.332 & 347(ASR)/2010 5 BENCH ADJOURNED THE MATTER. ON 11.07.2012, SH. JATI NDER MALIK, CA ATTENDED THE PROCEEDINGS AND REQUESTED FOR ADJOURNM ENT FOR 10.09.2012 AND ALSO NOTED THE DATE. INSPITE OF THE SAME, NEITHER SH. JATINDER MALIK, CA NOR THE ASSESSEE APPEARED NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE PAST HISTORY OF THE ASSESSEE BEFORE THE AO AS WELL AS BEFORE THE LD. FIRST APPELLATE AUTHORITY, WE ARE NOT INCLINED TO A DJOURN THE MATTER AND PROCEED TO DECIDE THE ISSUE IN DISPUTE AFTER HEARIN G THE LD. DR AS WELL AS ON THE BASIS OF RECORD AVAILABLE BEFORE US. 7. AT THE TIME OF HEARING, THE LD. DR RELIED UPON T HE ORDER PASSED BY THE ASSESSING OFFICER AND STATED THAT THE AO HAS RIGHTL Y APPLIED SECTION 144 OF THE ACT IN THE CASE OF THE ASSESSEE BECAUSE THE ASS ESSEE REMAINED NON- COOPERATIVE BEFORE THE AO. HE STATED THAT THE AO HA S RIGHTLY APPLIED THE G.P. RATE AT 15.17% AS AGAINST THE G.P. RATE DECLAR ED BY THE ASSESSEE AT 5.72%. HE STATED THAT THE LD. FIRST APPELLATE AUTHO RITY HAS REDUCED THE G.P. RATE @ 10% WHICH IS CONTRARY TO THE LAW AND FACTS. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US ESPECIALLY THE IMPUGNED ORDERS PA SSED BY THE REVENUE AUTHORIES. WE ARE OF THE VIEW THAT THE AO HAS COMPL ETED ASSESSMENT U/S 144 OF THE ACT ON 05.12.2006 BECAUSE THE ASSESSEE REMAI NED NON-COOPERATIVE IN THE ASSESSMENT PROCEEDINGS. BUT THE LD. FIRST APPEL LATE AUTHORITY HAS REDUCED ITA NOS.332 & 347(ASR)/2010 6 THE GP RATE AT 10% AS AGAINST THE RATE OF 15.17% AP PLIED BY THE VIEW IN VIEW OF THE FALL IN SALES OVER THE PRECEDING YEARS AS WE LL AS THE FALL IN THE BUSINESS OF THE ASSESSEE. 8.1. AFTER GOING THROUGH THE IMPUGNED ORDER, WE ARE OF THE VIEW THAT THE ASSESSEE HAS NOT SUPPLIED THE DOCUMENTARY EVIDENCE SUPPORTING ITS CLAIM BEFORE THE AO, BUT THE ASSESSEE HAS FILED WRITTEN S UBMISSIONS ALONGWITH VARIOUS DOCUMENTARY EVIDENCE SUPPORTING ITS CLAIM BEFORE THE LD. FIRST APPELLATE AUTHORITY. ALTHOUGH THE LD. FIRST APPELLA TE AUTHORITY HAS REJECTED THE ADDITIONAL EVIDENCE FILED BEFORE HIM BUT LASTLY IND IRECTLY BELIEVED THE SAME AND REDUCED THE GP RATE TO 10% FROM 15.17% APPLIED BY THE AO BY MENTIONING VARIOUS REASONS IN THE IMPUGNED ORDER. W E ARE OF THE VIEW THAT THE LD. FIRST APPELLATE AUTHORITY SHOULD HAVE GIVEN AN OPPORTUNITY TO THE AO ABOUT THE ADDITIONAL EVIDENCE AND PASSED THE IMPUGN ED ORDER AFTER HEARING THE AO ON THE ADDITIONAL EVIDENCE. NO DOUBT, THE AO HAS ALSO ESTIMATED THE G.P. RATE AT 15.17% ON ESTIMATION BASIS BUT THE LD . CIT(A) HAS REDUCED THE SAME AND ESTIMATED AT 10% AS AGAINST RATE OF 15.17% APPLIED BY THE AO IN VIEW OF FALL IN SALES OVER THE PRECEDING YEARS AND FALL IN BUSINESS OF MOULDS AND DIES WHICH IS AGAINST RULE 46A OF THE INCOME-TA X RULES, 1961. EVEN OTHERWISE, KEEPING IN VIEW THE CONDUCT OF THE ASSES SEE EVEN BEFORE THIS BENCH, WE ARE OF THE VIEW THAT THE LENIENT VIEW IS NOT POSSIBLE FOR SUCH ITA NOS.332 & 347(ASR)/2010 7 ASSESSEE. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE ISSUE IN DISPUTE IS REQUIRED TO BE EXAMINED AT THE LEVEL OF THE LD. FIRST APPELLATE AU THORITY AGAIN AND WE DIRECT THE LD. CIT(A) TO DECIDE THE ISSUE AFRESH AFTER GIV ING OPPORTUNITY TO BOTH THE PARTIES. ACCORDINGLY, THE APPEALS OF THE ASSSESSEE AS WELL AS THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AS WELL REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH SEPTEMBER, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12TH SEPTEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. CANTUS AUTO INDUSTRIES LTD; JALAN DHAR. 2. THE ACIT, RANGE-IV, JALANDHAR. 3. THE CIT(A), ASR. 4. THE CIT, ASR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.