M/s. Asmi Dyeing & Printing Works, Surat V. The Income tax Officer,Ward-9(1), Surat

ITA 3370/AHD/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2061 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 10-02-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAWANSI
• Assessee Lawyers: S N SOPARKAR
• Keywords: Rejection of books of accounts; Unexplained expenditure; Principle of natural justice; Set aside
• Section: 271(1)(c); 69C; 43B; 234B; 260A; 133(6); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH D DD D BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI BHAVNESH BHAVNESH BHAVNESH BHAVNESH SAINI SAINI SAINI SAINI, , , , JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI N.S.SAINI SHRI N.S.SAINI SHRI N.S.SAINI SHRI N.S.SAINI, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING :11 2-2011 DRAFTED ON: 11 -2-2011 ITA NO. 3370 /AHD/ 2008 ASSESSMENT YEAR :205-06 AS MI DYEING & PRINTING WORKS, RAMBAUG ROAD, ASHWINI KUMAR ROAD, SURAT. VS. INCOME TAX OFFICER, WARD 9(1), AAYAKAR BHAVAN, MAJURA GATE, SURAT. PAN/GIR NO. : AAEFA 2731N (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S.N.SOPARKAR, SR. ADV. RESPOND ENT BY: SHRI G.S. SOURYAWANSI, SR.D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-V, SURAT, DATE D 14-8-2008. 2. GROUND NO.1 IS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANC E OF `.3,63,916/- UNDER SECTION 43B OF THE ACT. 3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE LEARNED ASSESSING OFFICER DISALLOWED DEDUCTION FOR `.3,22,746/- FOR P.F. AND `.41,170/- FOR ESI AS THE ASSESSEE HAD DEPOSITED EM PLOYEES CONTRIBUTION AFTER THE DUE DATES SPECIFIED UNDER SECTION 2(24) (X) R.W .S. 36(1)(VA). IN APPEAL THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIR MED THE ACTION OF THE LEARNED ASSESSING OFFICER. AT THE TIME OF THE HEARI NG BOTH THE PARTIES AGREED THAT THE ISSUE IS NOW COVERED IN FAVOR OF THE ASSES SEE AND AGAINST THE REVENUE - 2 - BY THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF COMMISSIONER OF INCOME-TAX V. ALOM EXTRUSIONS LTD. (2009) 319 ITR 3 06 (SC). WE FIND THAT THE HONBLE DELHI HIGH COURT AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME- TAX VS. SPL INDUSTRIES LTD. [2011] 9 TAXMANN.COM 195 (DELHI) HELD AS UNDER:- IN THIS APPEAL PREFERRED UNDER SECTION 260A OF THE INCOME-TAX ACT, 1961 (FOR BREVITY THE ACT) THE ASSAIL IS TO THE ORDER DATED 5-11-2009 PASSED B Y THE INCOME-TAX APPELLATE TRIBUNAL, DELHI (FOR SHORT THE TRIBUNAL) IN ITA NO. 3817/DELHI/20 09 PERTAINING TO THE ASSESSMENT YEAR 2005- 06. 2. THE FACTS WHICH ARE ESSENTIAL TO BE STATED ARE THA T THE RESPONDENT-ASSESSEE, WHICH IS ENGAGED IN THE BUSINESS OF TEXTILES PROCESSING, AND MANUFAC TURE AND EXPORT OF GARMENTS, FILED ITS RETURN FOR THE ASSESSMENT YEAR 2005-06 DECLARING A TOTAL I NCOME OF RS. 8,84,23,982. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED. IN COURSE OF ASSESSMENT, THE ASSESSING OFFICER FOUND THAT IN FOR M NO. 3CD THE TAX AUDITOR HAD GIVEN AND CERTIFIED THE DETAILS OF CONTRIBUTION DEDUCTED FROM THE EMPLOYEES SALARY TOWARDS THE PROVIDENT FUND (PF) AND THE CONTRIBUTION UNDER THE EMPLOYEES STATE INSURANCE (ESI). THE ASSESSEE HAD NOT FULFILLED ITS OBLIGATION OF DEPOSITING THE PROV IDENT FUND CONTRIBUTION DEDUCTED FROM THE EMPLOYEES SALARY AS WELL AS ITS OWN CONTRIBUTION W ITHIN THE DUE DATE AS STIPULATED UNDER THE STATUTE. THE TOTAL OF LATE DEPOSIT OF PF AND ESI CO NTRIBUTION IN RESPECT OF EMPLOYEE SHARE WAS FOUND TO BE TO THE TUNE OF RS. 75,21,624. CONSIDERI NG THE SUBMISSIONS PUT FORTH BEFORE THE ASSESSING OFFICER, THE SAID AUTHORITY REPELLED THE STAND OF THE ASSESSEE THAT THE PAYMENTS WERE MADE WITHIN THE GRACE PERIOD. HE REFERRED TO SECTIO NS 43B, 36(1)( VA ) AND 2(24)( X ) OF THE INCOME-TAX ACT AND SECTION 14B OF THE EMPLOYEES PR OVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1952 AND EXPRESSED THE VIEW THAT TH ERE HAD BEEN LATE PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI ON TOTAL ADDITION O F RS. 75,21,824 AND ACCORDINGLY BY ORDER DATED 26-12-2007 ADDED THE SAME TO THE TAXABLE INCO ME. THAT APART CHARGED INTEREST UNDER SECTIONS 234B AND 234D OF THE ACT AND INITIATED A P ROCEEDING FOR PENALTY UNDER SECTION 271(1)( C ) OF THE ACT. 3. BEING DISSATISFIED WITH THE AFORESAID ORDER, THE A SSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE APPEAL OF THE ASSESSEE IN PA RT HOLDING, INTER ALIA, THAT THE ADDITION OF RS. 31,97,525 HAS PAID DURING THE GRACE PERIOD AS R EGARDS THE PROVIDENT FUND DUES AND A SUM OF RS. 27,18,354 HAS PERTAINING TO THE CONTRIBUTION OF THE EMPLOYEES STATE INSURANCE HAD BEEN PAID WITHIN THE PERIOD INCLUDING THE GRACE PERIOD A ND HENCE, THE SAME DESERVED TO BE DELETED. 4. BEING AGGRIEVED BY THE SAID ORDER, THE REVENUE PRE FERRED AN APPEAL BEFORE THE TRIBUNAL ON THE GROUND THAT THE FIRST APPELLATE AUTHORITY HAS DELET ED THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE PROVISIONS CONTAINED IN SE CTION 2(24)( X ) READ WITH SECTION 36(1)( VA ) OF THE ACT. THE TRIBUNAL CONCURRED WITH THE ORDER PASS ED BY THE CIT(A) AND EXPRESSED THE VIEW AS FOLLOWS: 4. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF LD. DR. A FINDING HAS BEEN RECORDED BY LD. CIT(A) AT PAGE 4 THAT THE CONTENTIONS OF THE AS SESSEE HAVE BEEN EXAMINED WITH DOCUMENTARY EVIDENCE AND PROVISIONS OF THE ACT. SHE HAS FURTHER RECORDED OUT OF ADDITION OF RS. 75,21,824 A SUM OF RS. 72,46,570 HAS BEEN PAID WITHIN DUE DATE AMBIT. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THESE FINDINGS OF LD. CIT(A) ARE INCORRECT RATHER TABLE REPRODUCED IN THE ASSESSMENT ORDER CLEARLY SHOWS TH AT ALL THE PAYMENTS HAVE BEEN MADE BEFORE THE DUE DATE OF FILING THE RETURN. HONBLE D ELHI HIGH COURT IN THE CASE OF CIT V. P.M. ELECTRONICS LTD., 313 ITR 161 (DEL.) HAS HELD THAT IF THE PAYMENTS A RE MADE BEFORE THE DUE - 3 - DATE OF FILING THE RETURN, NO SUCH DISALLOWANCE CAN BE MADE UNDER SECTION 43B. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) VIDE WHICH THE RELIEF HAS BEEN GIVEN TO ASSESSEE. WE DECLINE TO INTERFERE. 5. MS. SURUCHI AGGARWAL, LEARNED COUNSEL FOR THE REVE NUE SUBMITTED THAT THE TRIBUNAL HAS FALLEN INTO ERROR BY PLACING RELIANCE ON THE DECISION REND ERED IN CIT V. P.M. ELECTRONICS LTD. [2009] 313 ITR 161 1 (DELHI) WHEREIN IT HAS HELD THAT IF THE PAYMENTS A RE MADE BEFORE THE DUE DATE OF FILING THE RETURN, NO SUCH DISALLOWANCE CAN BE MADE UNDER SECTION 43B OF THE ACT IS NOT APPLICABLE TO THE CASE AT HAND INASMUCH AS THE SAID DECISION HAD PLACED RELIANCE ON THE DECISION OF THE APEX COURT IN THE CASE OF CIT V. VINAY CEMENT LTD. [2007] 213 CTR (SC) 268 WHICH ONLY RELATES TO THE CONTRIBUTION MADE BY THE EMPLOY ER AND WOULD NOT COVER THE CONTRIBUTION MADE BY THE EMPLOYEES. IN THIS CONTEXT, WE MAY PROF ITABLY REFERRED TO THE DECISION IN CIT V. AIMIL LTD. [2010] 188 TAXMAN 265 WHEREBY A DIVISION BENCH OF THIS COURT WAS DEALING WITH THE ISSUE WHETHER THE TRIBUNAL WAS COR RECT IN LAW DELETING THE ADDITION RELATING TO EMPLOYEES CONTRIBUTION TOWARDS THE PROVIDENT FUND AND THE EMPLOYEES STATE INSURANCE CONTRIBUTION MADE BY THE ASSESSING OFFICER UNDER SE CTION 36(1)( VA ) OF THE ACT. THE DIVISION BENCH, AS IS EVIDENT FROM THE ORDER, REFERRED TO TH E CLAUSE ( V ) OF SUB-SECTION (1) OF SECTION 36 AND THEREAFTER TO CLAUSE ( VA ) OF THE SAME AND SCANNED THE ANATOMY OF SECTION 43 B AND REFERRED TO THE DECISION IN VINAY CEMENT LTD.S CASE ( SUPRA ) AND RELIED ON THE DECISION IN P.M. ELECTRONICS LTD.S CASE ( SUPRA ) WHEREIN THE SUBSTANTIAL QUESTIONS OF LAW WERE FRA MED, INTER ALIA, WHETHER THE AMOUNTS PAID ON ACCOUNT OF PF/ESI AFTE R DUE DATE ARE ALLOWABLE IN VIEW OF SECTION 43B READ WITH SECTION 36(1)( VA ) OF THE ACT AND PROCEEDED TO HOLD AS FOLLOWS: WE MAY ONLY ADD THAT IF THE EMPLOYEES CONTRIBUTIO N IS NOT DEPOSITED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPOSITED LATE, THE EMPLOYER NOT ONLY PAYS INTEREST ON DELAYED PAYMENT BUT CAN INCUR PENALTIES ALSO, FO R WHICH SPECIFIC PROVISIONS ARE MADE IN THE PROVIDENT FUND ACT AS WELL AS THE ESI ACT. THER EFORE, THE ACT PERMITS THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS, SUBJECT TO THE A FORESAID CONSEQUENCES. INSOFAR AS THE INCOME-TAX ACT IS CONCERNED, THE ASSESSEE CAN GET T HE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RETURN IS FILED, AS PER THE PRINCIPLES L AID DOWN BY THE SUPREME COURT IN VINAY CEMENT ( SUPRA ). 6. BE IT NOTED, THE DECISION RENDERED BY THE GAUHATI HIGH COURT WAS ASSAILED BEFORE THE APEX COURT IN VINAY CEMENT LTD.S CASE ( SUPRA ). IN THE SAID CASE, THEIR LORDSHIPS HAVE HELD THUS : IN THE PRESENT CASE WE ARE CONCERNED WITH THE LAW AS IT STOOD PRIOR TO THE AMENDMENT OF SECTION 43B. IN THE CIRCUMSTANCES THE ASSESSEE WAS ENTITLED TO CLAIM THE BENEFIT IN SECTION 43B FOR THAT PERIOD PARTICULARLY IN VIEW OF THE FAC T THAT HE HAS CONTRIBUTED TO PROVIDENT FUND BEFORE FILING OF THE RETURN. THE SPECIAL LEAVE PETITION IS DISMISSED. 7. IT IS APT TO NOTE THAT THE DIVISION BENCH HAS TAKE N NOTE OF THE SUBMISSION ADVANCED BY THE REVENUE THAT THE DISTINCTION BETWEEN EMPLOYERS CON TRIBUTION ON THE ONE HAND AND THE EMPLOYEES CONTRIBUTION ON THE OTHER. ON THE FOUNDA TION THAT WHEN EMPLOYEES CONTRIBUTION WAS RECOVERED FROM THEIR SALARIES/WAGES THAT IS THE TRU ST MONEY IN THE HANDS OF THE ASSESSEE AND, THEREFORE, RECOURSE OF LAW PROVIDING FOR TREATING T HE SAME AS INCOME THAT THE ASSESSEE RECEIVED AS THE EMPLOYEES CONTRIBUTION WOULD ONLY ENABLE TH E ASSESSEE TO CLAIM DEDUCTION ONLY ON ACTUAL PAYMENT MADE BY DUE DATE SPECIFIED UNDER THE PROVISIONS OF THE ACT. THE BENCH WHILE DEALING WITH THE SAME HAS OPINED THUS: 11. BEFORE WE DELVE INTO THIS DISCUSSION, WE MAY T AKE NOTE OF SOME MORE PROVISIONS OF THE ACT. SECTION 2(24) OF THE ACT ENUMERATES DIFFERENT COMPONENTS OF INCOME. IT, INTER ALIA, STIPULATES THAT INCOME INCLUDES ANY SUM RECEIVED B Y THE ASSESSEE FROM HIS EMPLOYEES AS CONTRIBUTIONS TO ANY PROVIDENT FUND OR SUPERANNU ATION FUND OR ANY FUND SET UP UNDER THE PROVISIONS OF THE EMPLOYEES STATE INSURANCE ACT, 1 948 (34 OF 1948), OR ANY OTHER FUND FOR - 4 - THE WELFARE OF SUCH EMPLOYEES. IT IS CLEAR FROM THE ABOVE THAT AS SOON AS EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND OR ESI IS RECEI VED BY THE ASSESSEE BY WAY OF DEDUCTION OR OTHERWISE FROM THE SALARY/WAGES OF THE EMPLOYEES , IT WILL BE TREATED AS INCOME AT THE HANDS OF THE ASSESSEE. IT CLEARLY FOLLOWS THEREFROM THAT IF THE ASSESSEE DOES NOT DEPOSIT THIS CONTRIBUTION WITH PROVIDENT FUND/ESI AUTHORITIES, I T WILL BE TAXED AS INCOME AT THE HANDS OF THE ASSESSEE. HOWEVER, ON MAKING DEPOSIT WITH THE C ONCERNED AUTHORITIES, THE ASSESSEE BECOMES ENTITLED TO DEDUCTION UNDER THE PROVISIONS OF SECTION 36(1)( VA ) OF THE ACT. SECTION 43B( B ), HOWEVER, STIPULATES THAT SUCH DEDUCTION WOULD BE PERMISSIBLE ONLY ON ACTUAL PAYMENT. THIS IS THE SCHEME OF THE ACT FOR MAKING A N ASSESSEE ENTITLED TO GET DEDUCTION FROM INCOME INSOFAR AS EMPLOYEES CONTRIBUTION IS C ONCERNED. IT IS IN THIS BACKDROP WE HAVE TO DETERMINE AS TO AT WHAT POINT OF TIME THIS PAYME NT IS TO BE ACTUALLY MADE. 8. UPON PERUSAL OF THE AFORESAID, WE ARE OF THE CONSI DERED OPINION THAT THE DECISIONS RENDERED IN P.M. ELECTRONICS LTD.S CASE ( SUPRA ) AND AIMIL LTD.S CASE ( SUPRA ) HAVE CORRECTLY LAID DOWN THE LAW AND THERE IS NO JUSTIFICATION OR REASON TO DIFFER WITH THE SAME. IN THE RESULT, WE DO NOT PERCEIVE ANY MERIT IN THIS APPEAL AND ACCORDINGLY T HE SAME STANDS DISMISSED. 4. RESPECTFULLY FOLLOWING THE ABOVE QUOTED DECISION WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 5. GROUND NO.2 IS AS UNDER:- 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND ON THE FACTS IN CONFIRMING ADDITION OF `.5, 72,838/- UNDER SECTION 69C OF THE ACT. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER OBSERVED FROM LEDGER ACCOUNT OBTAINED FROM GMDC BY ISSUE OF NOTICE UNDER SECTION 133(6) OF THE ACT THAT CERTAIN PURCHASES DU RING THE MONTH OF APRIL TO OCTOBER WERE MADE AND PAYMENTS IN RESPECT THEREOF W ERE SHOWN TO HAVE BEEN RECEIVED BY GMDC FROM, THE ASSESSEE FIRM WERE NOT R ECORDED IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE. THE ASSESSEE SUBMITTED TH AT THE PURCHASES MADE WERE PAID BY DEMAND DRAFT OBTAINED BY DEBITING THE CURRENT ACCOUNT WHEREAS THE PURCHASED ALLEGED TO HAVE BEEN MADE IN THE INST ANT CASE WERE NOT PAID THROUGH DEMAND DRAFT MADE FROM THE BANK ACCOUNT OF THE ASSESSEE FIR AND THEREFORE, THERE WAS NO QUESTION OF PURCHASES MADE BY THE ASSESSEE FIRM. NOT BEING SATISFIED WITH THE EXPLANATION THE LEARNED AS SESSING OFFICER OBSERVING THAT NO EVIDENCE WAS PRODUCED TO SHOW THAT BILLS NO T RECORDED IN THE ACCOUNTS PERTAINED TO SOMEONE ELSE MADE ADDITION OF `.5,72,8 38/- AS UNEXPLAINED EXPENDITURE. 7. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) OBSERVED THAT THE ASSESSEE HAS EXPLAINED THAT GMDC IS A GOVE RNMENT COMPANY AND WAS - 5 - SELLING ITS PRODUCT TO THE ASSESSEE IN ACCORDANCE W ITH ALLOTTED QUOTA. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OBSERV ED THAT SINCE THE PURCHASES ARE MADE OUT OF THE AFORESAID QUOTA AND T HE AGENT IS ACTING AS AN AGENT BETWEEN THE ASSESSEE FIRM AND GMDC THE PURCHA SES AND THEIR SALES SHOULD HAVE BEEN INCLUDED IN THE BOOKS OF ACCOUNT S INCE THE PURCHASES BY AGENT WAS ON BEHALF OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT THE ASSESSEE HA S STATED THAT HE HAD SUBMITTED A LETTER FROM THE AGENT ON 31-12-2007 BUT BY THAT TIME THE ORDER WAS ALREADY PASSED AND THE LEARNED ASSESSING OFFIC ER WAS NOT AFFORDED ANY OPPORTUNITY TO EXAMINE THE SAME. BUT THE ASSESSEE H AS NOT FILED COPY OF SUCH LETTER BEFORE HIM WHICH WAS DULY ACKNOWLEDGED BY TH E DEPARTMENT AND IN ABSENCE OF SUCH MATERIAL HE WAS NOT INCLINED TO ACC EPT THE ARGUMENT OF THE ASSESSEE. HE THEREFORE, CONFIRMED THE ORDER OF THE LEARNED ASSESSING OFFICER. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DYEING AND P RINTING OF CLOTH. THE ASSESSEE FOR ITS BUSINESS PURCHASED LIGNITE COAL FR OM GMDC. ON VERIFICATION OF THE LEDGER ACCOUNT OF ASSESSEE AS APPEARING IN THE BOOKS OF GMDC THE LEARNED ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD SHOWN PURCHASE LESSER THAN THAT RECORDED IN THE BOOKS OF GMDC IN THE NAME OF THE AS SESSEE BY `.5,72,838/- AND THE ASSESSEE HAS ALSO NOT RECORDED THE PAYMENTS MAD E THERE AGAINST WHICH WAS SHOWN BY THE GMDC AS RECEIVED FROM THE ASSESSEE . THE ASSESSEE EXPLAINED BEFORE THE LEARNED ASSESSING OFFICER THAT IT RECEIVED QUOTA OF PURCHASE OF LIGNITE COAL FROM GMDC. THE ASSESSEE PU RCHASED ONLY PART THEREOF WHICH WAS ACTUALLY REQUIRED FOR ITS BUSINESS. THE R EMAINING PART OF ITS QUOTA WAS PERHAPS SOLD BY THE GDMC TO OTHERS AND AS THE S ALES WERE MADE OUT OF QUOTA OF THE ASSESSEE THE GMDC MIGHT HAVE ENTERED I NTO THE LEDGER OF THE ASSESSEE. IN OTHER WORDS THE ASSESSEE CLAIMED TO H AVE NOT PURCHASED THESE EXCESS GOODS AND ALSO CLAIMED TO HAVE NOT MADE THOS E PAYMENTS. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSE E HAS BROUGHT NO MATERIAL TO SHOW THAT THE PURCHASES WERE MADE BY SOME OTHER PERSONS AND THEREFORE ADDED THE AMOUNT OF `.5,72,838/- AS UNEXPLAINED EXP ENDITURE TO THE INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT. ON APPEAL, - 6 - LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIR MED THE ACTION OF THE LEARNED ASSESSING OFFICER. 9. BEFORE US THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE SAME SUBMISSIONS WHICH WERE MADE BEF ORE THE LEARNED ASSESSING OFFICER AND ALSO RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE M/S. KRISHNA TEXTILES VS. CIT IT REFERENCE NO.43 OF 1999 ORDER DATED 18-7-2008. 10 ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPRE SENTATIVE SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 11. WE FIND THAT THE ASSESSEE HAS CATEGORICALLY DEN IED TO HAVE PURCHASED LIGNITE COAL OTHER THAN WHICH WERE ENTERED IN ITS B OOKS OF ACCOUNTS. THE ASSESSEE HAS ALSO CATEGORICALLY DENIED TO HAVE MADE ANY PAYMENT TO THE GMDC OTHER THAN THOSE RECORDED IN THE BOOKS OF ACCO UNT. THE LEARNED ASSESSING OFFICER SIMPLY ON THE BASIS OF THE COPY O F LEDGER ACCOUNT RECEIVED FROM GMDC IN PURSUANCE TO NOTICE UNDER SECTION. 133 (6) OF THE ACT MADE THE ADDITION WITHOUT MAKING ANY INQUIRY TO ASCERTAIN TH E CORRECT POSITION AND TO VERIFY THE TRUTHFULNESS IN THE EXPLANATION OF THE A SSESSEE. WE ALSO FIND THAT THE ASSESSEE HAS ALSO BROUGHT NO MATERIAL TO SHOW THAT ANY OTHER PERSON HAD MADE THE TRANSACTION WITH GMDC IN ITS NAME. THE ASSESSE E CLAIMED THAT THE PURCHASE TRANSACTIONS MADE FROM GDMC THROUGH AN AGE NT AND THAT NO INQUIRY WAS MADE FROM THAT AGENT. WE FIND THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE BY MAKING INQUIRY THROUGH GMDC TO SHOW THAT THE MATERIALS WERE IN FACT DISPATCHED BY THE GDMC TO THE ESTABLISHMENT OF THE ASSESSEE ONLY AND THE PAYMENTS WERE MADE BY THE ASSESSEE ONLY. IN THE ABOVE FACTS AND CIRCUMSTANCES IN OUR CONSIDERED OPINION IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE THIS ISSUE BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR PROPER INQUIRY AND VERIFICATION. THE LEARNED ASSESSING OFF ICER IS DIRECTED TO READJUDICATE THE ISSUE AFTER MAKING PROPER INQUIRY IN LINE OF THE DISCUSSION MADE HEREINABOVE AND AFTER ALLOWING REASONABLE OPPO RTUNITY OF HEARING TO THE ASSESSEE. THUS, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE ON THIS ISSUE AND THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. GROUND NO.3 IS AS UNDER:- - 7 - 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ESTIMATED ADDITION O F `.13,23,338/- MADE ON ACCOUNT OF UNACCOUNTED SUPPRESSED JOB RECEIPTS. 14. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL AS ADDITIONAL GROUND OF APPEAL. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING REJECTION OF BOOKS O F ACCOUNTS BY LEARNED ASSESSING OFFICER UNDER SECTION 145(3) OF THE ACT. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAVING NOTED THE SUBMISSION S AND CLARIFICATIONS OF THE APPELLANT ON THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS DID NOT GIVE ANY REASON IN NOT ACCEPTING THE SAME. THIS ACT ION OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS BAD, ILLEGA L AND AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND THEREFORE REQUIRES TO BE QUASHED. 15. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT HAVE ANY OBJECTION IN ADMITTING THE ABOVE ADDITIONAL GROUND OF APPEAL OF THE ASSESSEE. THEREFORE, THE ADDITIONAL GROUND OF APPEAL OF THE ASSESSEE WAS ADMITTED AND BOTH THE PARTIES WERE ALLOWED TO MAKE THEIR SUBMISSION ON TH E SAME. 16. SINCE GROUND NO.3 OF THE APPEAL AND THE ADDITIO NAL GROUND OF APPEAL OF THE ASSESSEE INVOLVE COMMON ISSUES AND FACTS THEY A RE BEING DISPOSED OF TOGETHER FOR THE SAKE OF CONVENIENCE. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. THE LEARNED ASSESSING OFFICER OBSERVED THAT THE JOB CHARGES RECEIPTS OF T HE ASSESSEE ARE 2.399 TIMES OF THE POWER AND FUEL EXPENDITURE. THE LEARNED ASSE SSING OFFICER FINDING FROM THAT THE UNRECORDED PURCHASES OF COAL OF `.5,51,621 /- ESTIMATED UNRECORDED JOB CHARGES OF `.13,23,338/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE WHICH WAS CONFIRMED BY LEARNED COMMISSIONER OF INC OME TAX (APPEALS) IN APPEAL FILED BY THE ASSESSEE. 18. AS WE HAVE SET ASIDE THE ADDITION OF `.5,72,838 /- BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR FRESH ADJUDICATION AF TER VERIFICATION THIS ISSUE IS ALSO ACCORDINGLY RESTORED TO THE FILE OF THE LEARNE D ASSESSING OFFICER FOR FRESH ADJUDICATION IN LIGHT OF THE FINDING IN RESPECT OF GROUND NO.2 OF THE APPEAL. THE - 8 - LEARNED ASSESSING OFFICER SHALL ALLOW REASONABLE OP PORTUNITY OF HEARING TO THE ASSESSEE BEFORE READJUDICATING THE ISSUE AND THE AS SESSEE SHALL HAVE LIBERTY TO ADVANCE ALL THE ARGUMENTS AND MATERIAL WHICH IT WIS HES TO RELY UPON. THUS, THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 19. GROUND NO.4 READS AS UNDER:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF `.20,000/-OU T OF TOTAL `.40,150/- CLAIMED AS TELEPHONE EXPENSES. 20. GROUND NO.5 READS AS UNDER:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND ON FACTS IN CONFIRMING LEVY OF INTEREST UNDER S ECTION 234B AND 234C OF THE ACT. 21. GROUND NO.6 READS AS UNDER:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW AND ON FACTS IN CONFIRMING INITIATION OF PENALTY PR OCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 22. AT THE TIME OF HEARING THE LEARNED AUTHORISED R EPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THE ABOV E GROUNDS OF APPEAL. HENCE THEY ARE DISMISSED FOR WANT OF PROSECUTION 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED IN THE MANNER INDICATED ABOVE. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON THIS 15 TH DAY OF FEBRUARY, 2011. SD/- SD/- (BHAVNESH SAINI) ( N.S. SA INI ) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: AHMEDABAD, 15 TH DAY OF FEBRUARY, 2011. COMPILED AND COMPARED BY: PATKI - 9 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-V, SURAT. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY/ DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 10-2-2011 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 14-2-2011 ----- -------------- 3. DRAFT PROPOSED & PLACED 14-2-2011 ------------ ------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 14-2-2011 ---------- --------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- --- ----------------- 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------