The Income-tax Officer, Amritsar. V. Sh. Jagir Singh, Amritsar.

ITA 340/ASR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8842 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWANI KUMARCA
• Keywords: Principle of natural justice
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.339(ASR)/2014 ASSESSMENT YEAR:2008-09 PAN: AAGFR8796J M/S. RISHABH RICE MILLS, VS. INCOME TAX OFFICER, MUKTSAR. WARD-II(2), MUKTSAR (APPELLANT) (RESPONDENT) APPELLANT BY:SH. ASHWANI KUMAR,CA RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING:16/09/2015 DATE OF PRONOUNCEMENT:13/11/2015 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2008-09 AGAINST THE ORDER DATED 08.01.2014, PASSED BY THE L D. CIT(A), BATHINDA. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS THE LD. CIT(A), BATHINDA WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD TH AT THE LD. AO HAD ASSUMED VALID JURISDICTION BY RECOURSE TO PROVISIONS OF SECTION 148 OF THE INCOME TAX ACT, 19 61. 2. THAT THE LD. CIT(A), BATHINDA WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCO UNT OF THE APPELLANT. 3. THAT THE LD. CIT(A), BATHINDA WAS NOT JUSTIFIED IN ISSUING DIRECTIONS TO THE AO TO SUPPLY TO COPIES OF PHYSICA L VERIFICATION REPORT PREPARED BY THE MARKET COMMITTE E STAFF WHICH HAS BEEN CONSIDERED THE BASIS FOR DETECTION O F UNACCOUNTED STOCK AMOUNTING RS.2,50,000/- AT THE BU SINESS ITA NO.339(ASR)/2014 2 PREMISES OF THE APPELLANT AND THE COPIES OF THE STA TEMENT DELIVERED BY THEIR (MARKET COMMITTEE) STAFF BEFORE THE AO. 4. THAT THE LD. CIT(A), BATHINDA WAS NOT JUSTIFIED TO PASS AN ORDER WITHOUT ALLOWING THE APPELLANT AN OPPORTUNITY TO CROSS EXAMINE THE STAFF OF THE MARKET COMMITTEE, MUKTSAR WHO HAVE CONDUCTED INSPECTION AT THE BUSINESS PREMISES OF THE ASSESSEE AND ON THE BASIS OF THE STATEMENT OF WHOM THE IMPUGNED ORDER OF ASSESSMENT HAS BEEN FRAMED. 5. THAT THE LD. CIT(A), BATHINDA WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE AO FOR REJECTION OF THE LETTER IS SUED BY THE SECRETAY, MARKET COMMITTEE, MUKTSAR VIDE DATED 16.08.2010, WHERE IN IT HAS BEEN CLARIFIED THAT THE PENALTY LEVIED TO THE APPELLANT WAS NOT ON ACCOUNT OF EXCES S UNACCOUNTED STOCK DETECTED BY THE STAFF OF MARKET COMMITTEE AT THE PREMISES OF THE APPELLANT AND WAS ONLY NON MAINTENANCE OF SOME RECORD. 6. THAT ORDER PASSED U/S 250(6) OF THE INCOME-TAX A CT, 1961 IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS THE LD. CIT(A), BATHINDA WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD T HE FOLLOWING ADDITIONS: I) RS.2,50,000/- ON ACCOUNT OF ALLEGED UNACCOUNTED PURCHASE OF PADDY. II) RS.45,075/- ON ACCOUNT OF ESTIMATION OF PROFIT ON SALE OF ALLEGED UNACCOUNTED STOCK. III) RS.15000/- ON ACCOUNT OF PENALTY, RURAL DEVEL OPMENT FUND AND MARKET FEES LEVIED BY THE MARKET COMMITTEE MUKTSAR. 2. APROPOS GROUND NO.1, AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAD RAISED SPECIFI C OBJECTIONS BEFORE THE AO AGAINST THE REASONS RECORDED BY THE AO FOR I SSUANCE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT ); THAT HOWEVER, THE AO FAILED TO REPLY TO/DISPOSE OF THE OBJECTIONS O F THE ASSESSEE; THAT IN THIS REGARD, A SPECIFIC GROUND, I.E., GROUND NO.3, WAS TAKEN BY THE ASSESSEE BEFORE THE LD. CIT(A), WHICH IS TO THE FOL LOWING EFFECT: 3. THAT THE LD. ASSESSING OFFICER FAILED TO REPLYI NG TO THE OBJECTIONS RAISED BY THE APPELLANT FIRM AGAINST THE REASONS RECORDED BY HIM FOR ISSUING NOTICE U/S 148. ITA NO.339(ASR)/2014 3 3. THE LD. COUNSEL FOR THE ASSESSEE HAS CONT ENDED THAT THE INITIATION OF REOPENING OF PROCEEDINGS HAVE WRONGLY BEEN UPHEL D BY THE LD. CIT(A), OBSERVING THAT THESE PROCEEDINGS WERE INITIATED BY THE AO BY ISSUING NOTICE U/S 148 OF THE ACT, ON RECORDING REASONS AND THAT SUCH ACTION WAS TAKEN BY THE AO ON THE BASIS OF INFORMATION IN HIS POSSESSION REGARDING ESCAPEMENT OF INCOME. IT HAS BEEN CONTENDED THAT IT IS ONLY BY MAKING THESE OBSERVATIONS THAT GROUND NO.3, AS ABOVE, RAIS ED BY THE ASSESSEE BEFORE THE LD. CIT(A), WAS DISMISSED. IT HAS BEEN S UBMITTED THAT THIS ACTION OF THE LD. CIT(A) IS UNSUSTAINABLE IN LAW, B EING ILLEGAL, AS THE LD. CIT(A) FAILED TO CONSIDER AND DISPOSE OF THE SPEC IFIC GROUND NO.3 PER SE AND THAT THE LD. CIT(A) DID NOT RECORD ANY FINDING THEREON. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANC E ON ORDER DATED 06.05.2014, PASSED BY THE ITAT, AMRITSAR BENCH, IN ITA NO.169(ASR)/2014, FOR THE ASSESSMENT YEAR 2008-09, IN THE CASE OF BAHI LEHNA JI RICE MILLS, MUKTSAR VS. ITO, WARD II(2), M UKTSAR, WHEREIN THE AO HAVING NOT ALLOWED ANY OPPORTUNITY TO THE ASSESS EE TO CROSS EXAMINE THE CONCERNED OFFICIAL OF THE MARKET COMMITTEE, MUK TSAR WHO HAD CONDUCTED INSPECTION AT THE BUSINESS PREMISES OF TH E ASSESSEE AND ON THE BASIS OF WHOSE STATEMENTS, THE ASSESSMENT HAD B EEN FRAMED, THEREBY RESULTING IN VIOLATION OF PRINCIPLES OF NATURAL JU STICE AND THE ORDER OF THE LD. CIT(A) IS LIABLE TO BE CANCELLED. 5. THE LD. DR, ON THE OTHER HAND, PLACED STRON G RELIANCE ON THE IMPUGNED ORDER. 6. IN THIS REGARD, IT IS SEEN THAT THE ASS ESSEE IS CORRECT IN CONTENDING THAT THE LD. CIT(A) HAS NOT DECIDED GRO UND NO.3, RAISED BEFORE HER BY THE ASSESSEE, I.E., THAT THE AO HAD F AILED IN REPLYING TO THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE REASONS FOR ISSUING NOTICE U/S 148 OF THE ACT. A COPY OF THE ASSESSEE S WRITTEN SUBMISSIONS DATED 31.12.2013, FILED BEFORE THE LD. CIT(A), HAS ALSO ITA NO.339(ASR)/2014 4 BEEN PLACED BEFORE ME (APB 1 TO 16). THEREIN ALSO, THE GROUNDS RAISED BEFORE THE LD. CIT(A), INCLUDING THE ABOVE GROUND NO.3 HAS BEEN REPRODUCED. THE RELEVANT PORTION OF THE ASSESSEES WRITTEN SUBMISSIONS BEFORE THE LD. CIT(A) READ AS FOLLOWS: THE APPELLANT FILED OBJECTIONS AGAINST THE ALLEGATI ON AND CATEGORICALLY DENIED ALLEGATION AND STATED THAT THE WHOLE OF THE PADDY PURCHASED BY IT, DURING THE YEAR UNDER CONSIDERATION, HAS BEEN RECORDED IN THE BOOKS OF AC COUNT. IT WAS ALSO POINTED OUT THAT NO PHYSICAL VERIFICATION OF STOCK WAS CARRIED OUT BY THE MARKET COMMITTEE OFFICIAL. IN TH IS REGARD THE APPELLANT FIRM FILED A COPY OF LETTER DATED 16. 08.2010 ISSUED BY THE SECRETARY, MARKET COMMITTEE, MUKTSAR WHEREIN HE HAS CLARIFIED THAT THERE WAS NO EXCESS STOCK TRA CED AT THE MILL PREMISES OF THE APPELLANT FIRM OVER AND ABOVE AS SHOWN IN THE BOOKS OF ACCOUNT OF THE APPELLANT ON THE DAT E OF INSPECTION. HE FURTHER CLARIFIED THAT THE PENALTY O F RS.5000/- HAS LEVIED DUE TO INCOMPLETION OF CERTAIN RECORDS P RESCRIBED UNDER THE PUNJAB MARKET COMMITTEE ACT. THE APPELLAN T REQUESTED TO THE LD. AO TO FILE THE NOTICE ISSUE U/ S 148 AS THE APPELLANT HAS DECLARED THE WHOLE OF THE PADDY PURCH ASED IN THE BOOKS OF ACCOUNT. THAT THE LD. AO DID NOT CONSI DER THE OBJECTIONS/REQUEST OF THE APPELLANT FIRM AND START ED DOING FISHING ENQUIRIES AND ISSUED A DETAILED QUESTIONNAI RE DATED 30.07.2010 FOR SUPPLY OF DOCUMENTS AND THE INFORMAT ION OF GENERAL NATURE AND WHICH WAS EVEN NOT RELEVANT TO T HE REASONS RECORDED BY HIM FOR INVOCATION OF THE PROVI SIONS OF SECTION 147 READ WITH SECTION 148. 7. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESS EE HAD CATEGORICALLY SUBMITTED BEFORE THE LD. CIT(A) REGARDING THE OBJEC TIONS RAISED BY IT AGAINST THE REASONS RECORDED BY THE AO FOR INITIATI ON OF THE REOPENING PROCEEDINGS. HOWEVER, THE LD. CIT(A) HAS NOT DISPOS ED OF THIS ISSUE. FURTHER, BEFORE ME, NOTHING HAS BEEN BROUGHT ON REC ORD TO SHOW THAT THE OBJECTIONS RAISED BY THE ASSESSEE BEFORE THE AO HAD , IN FACT, BEEN DISPOSED OF BY HIM. 8. THEREFORE, THE ASSESSEE HAS BEEN VISITED W ITH VIOLATION OF PRINCIPLES OF NATURAL JUSTICE IN ASMUCH AS IN KEEPING WITH THE DECISION OF THE ITA NO.339(ASR)/2014 5 HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAF TS (INDIA) LTD. VS. ITO, 259 ITR 19 (SC), IT IS OBLIGATORY ON THE AO TO FIRST DISPOSE OF THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE REASO NS RECORDED FOR REOPENING THE COMPLETED ASSESSMENT PROCEEDINGS AND ONLY THEREAFTER TO EMBARK UPON AND DECIDE THE MERITS, IF NEED BE. 9. IN VIEW OF THE ABOVE, I REMIT THIS MATT ER TO THE FILE OF THE AO. THE AO SHALL FIRST DECIDE THE ASSESSEES OBJECTIONS A GAINST THE REASONS RECORDED FOR INITIATING THE REOPENING OF THE COMPLE TED ASSESSMENT AND THEREAFTER GO INTO THE MERITS, IN THE LIGHT OF THE DECISION TO BE TAKEN ON THE ASSESSEES OBJECTIONS. 10. AS SUCH, NOTHING ELSE SURVIVES FOR ADJUDI CATION AT THIS STAGE. 11. IN THE RESULT, FOR STATISTICAL PURPOSES, THE ASSESSEES APPEAL IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13TH NOVE MBER,2015. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 13/11/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. RISHABH RICE MILLS, MUKTSAR 2. THE ITO, WARD II(2), MUKTSAR 3. THE CIT(A), BATHINDA. 4. THE CIT, BATHINDA. 5. THE SR. DR, ITAT, ASR. TRUE COPY, BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL