INCOME TAX OFFICER, WARD 2(2), JAMMU V. SH. NEERAJ AGGARWAL , JAMMU

ITA 349/ASR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4103 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-05-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 01-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S KRISHNAN
• Keywords: Business income; Search and seizure; Opportunity of being heard; Additional evidence; Set aside
• Section: 143(3); 142(1); 80IB; 133(6); 250; 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 349/(ASR)/2017 AS SESSMENT YEAR: 2010-11 INCOME TAX OFFICER WARD-2(2), JAMMU VS. NEERAJ AGGARWAL, KHASRA NO. 69/3, VILLAGE-SINGHOLA, 656, GALI NO. 11, SARDAR BAZAR, DELHI-6 [PRESENT AT 545, PATOLI MAGOTRIAN, JAMMU] [PAN: ACZPA 1726C] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. ALOK KUMAR, CIT-DR RESPONDENT BY: SH. S. KRISHNAN (ADV.) DATE OF HEARING: 21.05.2018 DATE OF PRONOUNCEMENT: 09.08.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS), J & K, JAMMU ('CIT(A)' FOR SHORT) DATED 31.01.2017, PARTLY ALLOWING THE ASSESSEES APPEAL C ONTESTING HIS ASSESSMENT U/S. 144 OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAF TER) DATED 08.03.2013 FOR THE ASSESSMENT YEAR (AY) 2010-11. 2. THE APPEAL RAISES THE FOLLOWING GROUNDS: WHETHER THE LD. CIT(A) WAS RIGHT IN LAW AND FACT I N ALLOWING THE APPEAL OF THE ASSESSEE BY RELYING ON THE ADDITIONAL EVIDENCE, SUBMITTED BEFOR E HIM DURING APPELLATE PROCEEDINGS WHICH WERE NOT REMANDED BACK FROM THE (TO) THE ASSESSING OFFICER. ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 2 THE APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY ONE OR MORE ROUNDS OF APPEAL. 3. THE THRUST OF THE ARGUMENTS BEFORE US BY EITHER SIDE WAS QUA ADDITIONAL EVIDENCES, I.E., THAT ADDITIONAL EVIDENCES HAD/HAD NOT IN FACT BEEN FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(A), AND THAT THEREFORE THERE WAS NO BREACH OF RULE 46A OF THE INCOME TAX RULES, 1962, (THE RULES HEREINA FTER), WHICH IS MANDATORY IN ITS APPLICATION. THE LD. AUTHORIZED REPRESENTATIVE (AR) , THE ASSESSEES COUNSEL, SH. S. KRISHNAN, ADVOCATE, WOULD TOWARD THIS TAKE US THROU GH THE DIFFERENT PAGES OF THE ASSESSEES PAPER-BOOK (PB), CLAIMING THEM TO HAVE B EEN FURNISHED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. HE WOULD THOU GH ADMIT OF THE DRAWING OF THE TRANSFORMER, SUBMITTED IN FIRST APPELLATE PROCE EDINGS (VIDE PAGES 76-79 OF THE ASSESSEES PAPER-BOOK BEFORE THE LD. CIT(A)), AS BE ING AN ADDITIONAL EVIDENCE FURNISHED BEFORE THE FIRST APPELLATE AUTHORITY, AND FOR WHICH REFERENCE WAS MADE BY HIM TO THE INDEX OF THE PAPER-BOOK BEFORE THE LD. C IT(A) (AT PB PG. 388), ALSO CONCEDING DURING HEARING THAT THE EXPLANATION QUA PROCESS DETAILS (FOR ELECTRIC LAMINATION) WAS ALSO FURNISHED IN APPELLATE PROCEED INGS (REFER PGS. 38-39, 45-47, 114-115 OF THE IMPUGNED ORDER). THE LD. CIT-DR, SH. ALOK KUMAR, WAS, ON THE OTHER HAND, AT PAINS TO EMPHASIZE THAT THE VARIOUS EXPLANATIONS FURNISHED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS WERE NOT BEFORE THE ASSESSING OFFICER (AO), WHO THUS HAD VALID, IF NOT ALSO STRONG, BASIS TO HOLD THAT THE ASSESSEES ACCOUNTS WERE MANIPULATED AND DID NOT REVEAL THE AC TUAL OR TRUE STATE OF AFFAIRS. MOST OF HIS QUERIES REMAINED UNANSWERED, AND WHICH POSITION CONTINUES TO OBTAIN EVEN AT THE FIRST APPELLATE STAGE. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 OUR FIRST OBSERVATION IN THE MATTER IS THAT THE LD. CIT(A) HAS PER THE IMPUGNED ORDER ISSUED THREE FINDINGS, AS UNDER: ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 3 (A) THAT THERE IS A VALID ASSUMPTION OF JURISDICTIO N TO FRAME AN ASSESSMENT U/S. 143(3) BY ISSUE AND SERVICE OF NOTICE/S U/S. 143(2) ; (B) THAT THE REJECTION OF ACCOUNTS BY THE AO U/S. 1 45(3) OF THE ACT AND, CONSEQUENTLY, THE INVOCATION OF SECTION 144 BY HIM, IS INVALID; AND (C) THAT THE DISALLOWANCE U/S. 80-IB AS WELL AS OF THE INDIRECT EXPENDITURE (AS DEBITED TO THE PROFIT AND LOSS ACCOUNT), MADE AT 50 % THEREOF, BY THE AO, IS LIABLE TO BE DELETED. QUA THE FIRST, THE SAME IS OF LITTLE CONSEQUENCE IN TH E INSTANT PROCEEDINGS AS THE ASSESSEE IS NOT IN APPEAL CHALLENGING THE SAID FIND ING. AS REGARDS THE SECOND FINDING, WE FIND NO BASIS FOR THE SAME IN-AS-MUCH A S THE BOOKS OF ACCOUNT WERE NEVER PRODUCED BEFORE THE AO. HOW COULD THEN, THE SAME BE REJECTED ? THE NON- PRODUCTION OF THE BOOKS OF ACCOUNT, DESPITE BEING C ALLED FOR TO BE PRODUCED BY THE AO, IS PATENT FROM THE ASSESSMENT ORDER. FURTHER, T HE DISALLOWANCE OF THE P&L EXPENSES (AT RS.13,85,090/-), AT PARAS 6 & 23 OF TH E ASSESSMENT ORDER, CLEARLY REFERS TO THE NON-PRODUCTION OF THE BOOKS OF ACCOUNT AS BE ING THE REASON FOR THE SAID DISALLOWANCE. IN FACT, WE OBSERVE NO BASIS FOR CONT RADICTING THE SAID FINDING BY THE AO, WHO MAKES THIS ABUNDANTLY CLEAR PER THE SHOW CA USE NOTICE DATED 12/2/2013. THERE IS, THUS, NO REASON OR BASIS WITH THE LD. CIT (A) TO HOLD THAT THE ASSESSEE HAD IN FACT PRODUCED THE BOOKS OF ACCOUNT BEFORE THE AO , AS HE DOES AT PAGE 129 OF HIS ORDER. WITHOUT DOUBT, THERE CAN BE, AS OBSERVED EAR LIER, NO REJECTION OF ACCOUNTS WITHOUT EXAMINING THE SAME, INCLUDING THE VOUCHERS ON WHICH THEY ARE BASED, ALSO CALLED FOR PER THE SHOW CAUSE AFORE-REFERRED. CONCO MITANTLY, AND CORRESPONDINGLY, THERE CAN BE NO ACCEPTANCE THEREOF (ACCOUNTS) EITHE R. THIS IS PARTICULARLY SO, AS IN THE PRESENT CASE, WHEN THE SAME HAVE BEEN CALLED FO R, I.E., GENERALLY, ALONG WITH THE RELEVANT BILLS AND VOUCHERS, THROUGHOUT THE ASSESSM ENT PROCEEDINGS, AND SPECIFICALLY VIDE SHOW CAUSE NOTICE DATED 12.02.201 3, READING AS UNDER, WHICH WAS ACCOMPANIED BY A NOTICE U/S. 142(1): ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 4 IN VIEW OF THE ABOVE, IT IS ESTABLISHED BEYOND DOU BT THAT YOU ARE INTENTIONALLY, DELIBERATELY AND WILLFULLY AVOIDING THE ASSESSMENT PROCEEDINGS FOR A.Y. 2010-11 BY NOT FURNISHING THE REMAINING DETAILS OF QUESTION NAIRE DATED 11.12.2012 AND BY NOT PRODUCING THE BOOKS OF ACCOUNT ALONG WITH SUPPO RTING BILLS & VOUCHERS FOR VERIFICATION FOR THE REASONS BEST KNOWN TO YOU. (P G. 26 OF THE ASSESSMENT ORDER) THAT IS, THE AO IS CATEGORICAL IN THE SAME HAVING N OT BEEN PRODUCED AT ANY STAGE AND, FURTHER, THAT IN THE ABSENCE OF NON-PRODUCTION, AND CONSEQUE NT NON- VERIFICATION, THE ASSESSMENT WOULD BE COMPLETED ON THE BASIS OF THE MATERIAL ON RECORD (REPRODUCED AT PGS. 26-28 OF THE ASSESSMENT ORDER) . THE STOCK REGISTER FOR THE RELEVANT YEAR (AS WELL AS THAT FOR THE PRECEDIN G AND SUCCEEDING YEAR), WAS ALSO CALLED FOR VERIFICATION VIDE SUMMONS U/S. 131 DATED 01.11.2012 AND, AGAIN, VIDE SHOW CAUSE DATED 12.02.2013, WHICH WAS ALSO ACCOMPA NIED BY SUMMONS OF EVEN DATE. THE AOS FINDING AS TO THE APPLICABILITY OF S. 145( 3), WHICH READS AS UNDER, AND, THUS, OF S. 144, HOWEVER, IS NOT BASED ONLY ON THE NON-PRODUCTION OF THE BOOKS OF ACCOUNT, INDEED ESSENTIAL FOR HIM TO COMPLETE TH E VERIFICATION, BEFORE HIM: METHOD OF ACCOUNTING. 145. (1) (2) (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED AB OUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD OF AC COUNTING PROVIDED IN SUB-SECTION (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-SECTION (2), HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE ASSESSING OFFICER MAY MAKE AN ASS ESSMENT IN THE MANNER PROVIDED U/S. 144. WHY, IN A PARTICULAR CASE THE AO MAY BE SATISFIED W ITH THE ASSESSES ACCOUNTS EVEN WITHOUT THE PRODUCTION OF ACCOUNT BOOKS, SO THAT NO THING TURNS THEREON PER SE , BUT ON THE REASON/S WHY HE FINDS THE ASSESSEES ACCOUNT S AS NOT CORRECT OR COMPLETE, I.E., THE BASIS FOR HIS SO STATING, ON WHICH WE OBS ERVE NO FINDING BY THE LD. CIT(A). THE DETAILS OF PURCHASE AND SALES, I.E., THEIR PRIC ES, ITEM-WISE AND PARTY-WISE, WERE ALSO CALLED FOR PER QUESTIONNAIRE DATED 04.10.2012, ALSO SEEKING THE COST BREAK-UP ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 5 OF THE OUTPUT/S (WITH REFERENCE TO THE INPUTS), I.E ., TO JUSTIFY THE VALUATION OF INVENTORY, ALONG WITH THE SUPPORTING BILLS. THIS, E VEN OTHERWISE VITAL, ASSUMES ADDED SIGNIFICANCE AS ADMITTEDLY THE SAME, I.E., TH E QUANTITATIVE DETAILS AND THE VALUATION ADOPTED, HAD BEEN TAKEN AS STATED BY THE PROPRIETOR (REFER NOTE 3 TO SCHEDULE 2 OF THE NOTES, ADVERTED TO BY THE ASSESSE E IN HIS REPLY DATED 02.11.2012), PROMPTING A REQUISITION OF THE DOCUMENT/S PROVIDED BY THE PROPRIETOR (TO THE AUDITORS) FOR VERIFICATION, WHICH BECAME ESSENTIAL IN-AS-MUCH AS THE AUDITORS HAD THUS IN EFFECT ISSUED A DISCLAIMER TO THAT EXTENT. THE ASSESSEE HAVING CLAIMED DEDUCTION U/S. 80-IB AT RS.852.06 LACS , I.E., ON ALMOST THE ENTIRETY OF HIS GROSS INCOME, RETURNING A NET INCOME OF RS.16,982, THE AO WAS FROM THE BEGINNING EARNEST IN EXAMINING THE VERACITY OF THE SAID CLAIM , ALSO ENQUIRING ABOUT THE GENUINENESS AND COMPETITIVENESS OF THE MARKET RATE/ S OF THE ASSESSEES FINAL PRODUCT/S, I.E., WITH REFERENCE TO THAT PREVAILING IN THE MARKET, AND ALSO IF THE BUYERS AND SELLERS WERE CONNECTED IN ANY WAY, BESIDES OF H OW THE ASSESSEES GROSS PROFIT (GP) RATE COMPARED WITH THAT OF OTHER CONCERNS/COMP ANIES IN THE SAME BUSINESS, AS WELL AS, OF COURSE, INTERNALLY, I.E., WITH REFERENC E TO THE PRECEDING AND SUCCEEDING YEAR (REFER POINTS 8, 14, 26-31 OF THE QUESTIONNAIR E DATED 04.10.2012/REFER PGS. 3-5 OF THE ASSESSMENT ORDER). NEEDLESS TO ADD, NONE OF THIS WAS FURNISHED AT ANY STAGE OF THE ASSESSMENT PROCEEDINGS . OF EQUAL CONCERN AND, THEREFORE, REQUISITIONED, A ND ON MORE THAN ONE OCCASION, ARE THE PROCESS DETAILS, I.E., FOR EACH OF THE THREE ITEMS STATED TO HAVE BEEN MANUFACTURED DURING THE RELEVAN T YEAR, I.E., ELECTRICAL LAMINATION /TRANSFORMER CORE, STATED TO BEING MANUF ACTURED SINCE F.Y. 2005-06; HT/LT COILS (OF ALUMINUM AND COPPER), AND TRANSFORM ER TANK (MANUFACTURE OF BOTH OF WHICH IS STATED TO HAVE COMMENCED FROM THE RELEV ANT PREVIOUS YEAR), I.E., WITH REFERENCE TO THE AVAILABLE MACHINERY, STATING ITS CAPACITY ALONG WITH, AS WELL AS THE POWER CONSUMPTION, ALSO SEEKING EXPLANATION QUA THE EXPENDITURE ON POWER AND FUEL, I.E., VIS--VIS SALES, ACROSS DIFFERENT YEARS . THE SAME, AGAIN, REMAINED TO BE ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 6 FURNISHED. IT IS PERTINENT HERE TO ADD THAT MACHINE RY WORTH RS.3.16 LACS, BESIDES LABORATORY EQUIPMENT FOR RS.8,000/-, WAS ACQUIRED D URING THE CURRENT YEAR, WITH NO SALE OF PLANT AND MACHINERY HAVING BEEN REPORTED SI NCE INCEPTION. NOTICES U/S. 133(6) DATED 14.12.2012 WERE SENT TO DIFFERENT TRAD E PARTIES, I.E., WITH WHOM THE ASSESSEE HAD PURCHASE/SALE TRANSACTIONS, ON THE BAS IS OF THE INFORMATION, INCLUDING ADDRESSES, PROVIDED BY THE ASSESSEE ON 14.12.2012. THE SAME WERE RETURNED BACK BY SOME (4 PARTIES). NO REPLY WAS RECEIVED FROM SEV ERAL (20) OF THEM, WHILE SOME (4) STATED OF NOT HAVING ANY TRANSACTION WITH THE A SSESSEE. THERE WAS NO IMPROVEMENT IN THIS REGARD UP TO THE LAST DATE OF H EARING IN THE ASSESSMENT PROCEEDINGS, I.E., 25.02.2013. THIS, DESPITE THESE FACTS BEING BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE VIDE SHOW CAUSE LETTER DA TED 12.02.2013 . ALL THIS LED TO AO TO CONCLUDE AS UNDER: (AT PGS. 30-31OF THE ASSES SMENT ORDER) 21.23 (3) DURING THE COURSE OF ASSESSMENT PROCEEDIN GS, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS REGARDING PURCHASE AND SALES PARTIES GIVING THEIR NAME, LATEST ADDRESS, PAN NO. AND AMOUNT OF PURCHASE OR SALE. THIS DETAIL WAS FILED B Y THE ASSESSEE ON 14.12.2012. ACCORDINGLY, INFORMATION U/S 133(6) WAS SOUGHT FROM ALL THESE PURCHASE AND SALES PARTIES VIDE NOTICE DATED 14.12.2012 THEREIN DIRECTING THEM TO FURNISH THESE DETAILS BY 31.12.2012. HOWEVER, IT WAS NOTICED THAT NOTICES U/S 133(6) OF I.TAX ACT RETURNED BACK IN THE CASE OF M/S NUMRO UNO CORPORATION (PURCHASE PARTY) AND M/S B.R. INDUSTRIES LTD, M/S DAUSA TRANSFORMERS UDYOG P LTD, M/S NUCON SWITCHGEARS PVT . LTD. (SALES PARTIES). FURTHER, INSPITE OF BEING MADE AWARE TO THE ASSESSEE VIDE SHOW CAUSE DATED 12.02.2013, NO REPLY HAS BEEN RECEIVED TILL DATE FROM THE FOLLOWING PURCHASE AND SALES PARTIES:- PURCHASE PARTIES: M/S B.R. INDUSTRIES, M/S RAVI IRON TRADERS, M/S HIND STEEL SALES, M/S ESS ELL CABLE CO, M/S BANWARI LAI VIJAY KUMAR, M/S H.V. ENTERPRISES, M/S AGGARWAL STEEL, M/S SENAPATHY SYMONS INSULATION PVT. LTD., M/S WOND ER TAPE INDUSTRIES, M/S NAVEEN STEEL, M/S MAHA SHAKTI CONDUCTORS. SALES PARTIES : M/S S.K TRANSFORMERS, M/S ECE INDUSTRIES LTD., ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 7 M/S HARIT TRANSFORMERS PVT. LTD., M/S ACCURATE TRANSFORMERS LTD., M/S TECHNICAL ASSOCIATION LTD, M/S B. ROY ELECTRONICS, M/S SWASTIK COPPER PVT LTD., M/S VALLEY ELECTRICALS LTD., M/S PME TRANSFORMERS (INDIA) LTD, BESIDES ABOVE, ON PERUSAL OF THE REPLIES FURNISHED BY THE RELEVANT PURCHASE AND SALES PARTIES, IT IS NOTICED THAT THE FOLLOWING PARTIES HAVE DENIE D OF HAVING MADE ANY PURCHASES OR HAVING MAKING SALES TO THE ASSESSEE:- PURCHASE PARTIES: M/S SHALIMAR INDUSTRIES, AWANTIPORE DISTT. PULWAMA, J & K SALES PARTIES : M/S SA AUTO ENGINEERS, STREET NO. 3, MUKAND SINGH N AGAR, DABA ROAD, LUDHIANA M/S KUMAR AND KUMAR, 1544, KUCHA KACHA BAGH, SP MUK ERJEE MARG, DELHI-06 M/S S.K. INDUSTRIES PROP. SUNIL KUMAR, C-2./120, KE SHAV PURAM, NEW DELHI. THUS, IT CAN BE SEEN THAT INSPITE OF BEING MADE AWA RE, THE REPLIES FROM THE RELEVANT PURCHASE AND SALES PARTIES COULD NOT BE OBTAINED. THEREFORE, THE GENUINENESS OF SALES AND PURCHASES MADE TO THE PARTIES WHOSE CONFIRMATIONS ALONGWITH O THER DETAILS HAVE NOT BEEN RECEIVED ALONG WITH OTHER DOCUMENTS CALLED FOR BY THIS OFFIC E, COULD NOT BE VERIFIED. SINCE THE ABOVE THREE PARTIES HAVE ALREADY DENIED OF HAVING MADE AN Y SALE OR PURCHASES TO THE ASSESSEE AND IN MOST OF THE CASES THE CONFIRMATION ALONG WITH OTHER DETAILS ARE STILL AWAITED, THEREFORE, THE SALES AND PURCHASES MADE BY THE ASSESSEE CANNOT BE HELD TO BE THE GENUINE SALES AND PURCHASES . (EM PHASIS, SUPPLIED) WE MAY HERE CLARIFY THAT OUR STATING THAT NO EXPLAN ATIONS WERE FURNISHED BY THE ASSESSEE IN RESPECT OF THE FORE-GOING, IS BASED ON OUR EXAMINATION OF THE ASSESSEES REPLIES SUBMITTED DURING THE ASSESSMENT PROCEEDINGS (FORMING PART OF THE ASSESSEES PAPER-BOOK), BESIDES FINDING A REFLECTIO N AND DISCUSSION WITH REFERENCE THERETO AT PARA 21.23 (PGS. 28-37) OF THE ASSESSMEN T ORDER. IN FACT, ON THE BASIS OF THE FINDINGS BY THE AO, BASED ON THE MATERIAL ON RE CORD; THE ASSESSEES REPLIES; AND THE REPORT DATED 29.10.2012 PURSUANT TO PHYSICAL VE RIFICATION OF THE ASSESSEES UNIT ON 27.10.2012, THE AO CONCLUDED THAT THE PURCHASES AND SALES WERE BOGUS , AND THE PRODUCTION FIGURES MANIPULATED, WITH THE UNIT MANUF ACTURING ONLY ELECTRICAL ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 8 LAMINATION. IT IS THIS THAT LED TO HIS REJECTION OF THE ASSES SEES ACCOUNTS AS NOT RELIABLE . THE AOS STATING OF THE REJECTION OF THE ASSESSEE S ACCOUNTS HAS TO BE THEREFORE UNDERSTOOD IN THIS CONTEXT, I.E., OF THE SAME HAVING BEEN FOUND AS NOT REPRESENTING THE ACTUAL STATE OF AFFAIRS DURING AND AS AT THE END OF THE RELEVANT YEAR, INCLUDING THE OPERATING RESULTS OF ITS BUSINESS, MUCH LESS AS TO WHAT THAT BUSINESS WAS , FOR THE YEAR. THE SAME CAN BE DISTURBED OR CANCEL LED ONLY BY ISSUING CONTRARY FINDINGS, FURTHER STATING AS TO HOW THE SAME ARE IN FIRM. 4.2 APART FROM THE FORE-GOING, THE FOLLOWING OBSERV ATIONS/FINDINGS BY THE AO, BEING RELEVANT, MERIT CONSIDERATION: (A) THE ASSESSEE WAS, ON THE BASIS OF THE INFORMAT ION GATHERED DURING PHYSICAL VERIFICATION (PV) DATED 27.10.2012, FOUND TO BE UND ERTAKING ONLY PRODUCTION OF ELECTRICAL LAMINATION, AND NO ACTIVITY RELATING TO HT/LT COIL OR TRANSFORMER TANK/ BOXES, WAS CARRIED OUT AT ANY TIME. THE ASPECT WHET HER THEREFORE THE PRODUCTION OF THE LATTER TWO ITEMS COULD BE WITH THE AVAILABLE MA CHINERY IS TO BE ASCERTAINED, AND WHICH COULD ONLY BE WITH REFERENCE TO THE PROCESS D ETAILS (WITH REFERENCE TO THE MACHINERY), CALLED FOR (THOUGH NOT SUPPLIED) DURING ASSESSMENT PROCEEDINGS. (B) THE PRODUCTION, ON THE BASIS OF THE RATED CAPAC ITY OF THE AVAILABLE MACHINERY, EVEN CONSIDERING THAT ALL THE THREE ITEMS COULD BE PRODUCED, IS AT 400 KG. TO 500 KG. PER DAY, I.E., AT RS.1.20 TO RS.1.50 LAC KG. PER AN NUM , AS AGAINST THE STATED PRODUCTION OF 12.88 LACS KG . JUXTAPOSE THIS WITH THE NON-CONFIRMATION AND, IN FACT, IN SOME CASES DENIAL OF HAVING ANY TRANSACTION WITH THE ASSESSEE, BY SO ME PARTIES, AND THE MATTER ASSUMES SERIOUS PROPORTIONS. ALSO, T HE MACHINERY, ON PHYSICAL VERIFICATION (ON 27.10.2012), WAS FOUND TO BE VERY OLD , EVEN AS THE ASSESSEE HAD ADMITTEDLY PURCHASED MACHINERY WORTH RS.18.94 LACS DURING THE PREVIOUS YEAR RELEVANT TO AY 2008-09. IN FACT, OF THIS, THAT FOR RS.15.86 LACS WAS FROM ONE SUPPLIER ALONE (M/S. A.S. ENTERPRISES, KUNJWANI, JA MMU), WHICH WOULD THEREFORE NEED TO BE VERIFIED . (C) BILLS OF M/S. R.R. INDUSTRIES, JAMMU, WERE FOUN D AT THE ASSESSEES FACTORY PREMISES (39A, BIRPUR INDUSTRIAL STATE, BARI BRAHMA NA, JAMMU). ON THE BASIS THEREOF, AS WELL AS THE SECOND HAND RAW MATERIAL (C RGO/CRNGO) (ROUGH) SHEETS, FOUND DURING PV, AS WELL AS THE ENQUIRIES WITH THE WORKERS AND SH. RAKESH GOYAL, PROPRIETOR, M/S. R.R. INDUSTRIES, IT WAS GATHERED T HAT THE ASSESSEE WAS IN FACT NOT ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 9 UNDERTAKING ANY MANUFACTURING ACTIVITY FOR ITSELF, BUT ONLY JOB WORK FOR M/S. R.R. INDUSTRIES. THE MATTER, THEREFORE, NEEDED TO BE PROBED AND EXAM INED . (D) THE ASSESSEES FINAL ACCOUNTS (BALANCE-SHEET AS ON 31.03.2010) DISCLOSE A CREDIT OF RS.295.05 LACS IN FAVOUR OF M/S. R.R. INDUSTRIES, WHICH REQUIRES TO BE CONFIRMED AND EXPLAINED. FURTHER, THE ASSESSEE HAD ITSELF ADV ANCED RS.571.37 LACS TO DIFFERENT PARTIES, WHICH AGAIN REQUIRED BEING CONFIRMED. NO INFORMATION REGARDING THE SAME, CALLED FOR VIDE QUESTIONNAIRE DATED 04.10.2012 (REF ER POINT 17), AS WELL AS OTHER INFORMATION SOUGHT UNDER THE SAID PARA, WAS PROVIDE D . (E) INFORMATION WAS SOUGHT DURING ASSESSMENT PROCEE DINGS IN RESPECT OF THE ASSESSEES BANK ACCOUNTS, I.E., THE DETAILS, INCLUD ING NARRATION THERETO, OF THE TRANSACTIONS DEBIT OR CREDIT, IN THE SUM OF RS.50 ,000/- OR MORE THEREIN; THE ASSESSEE MAINTAINING 5 BANK ACCOUNTS. NO NARRATIONS WERE PROVIDED, WITH THE TRANSACTIONS RAISING DOUBTS AS TO THE GENUINENESS O F THE SAID TRANSACTION AS THE REPRESENTING GENUINE BUSINESS TRANSACTIONS. SAMPLE THIS: CASH DEPOSITS WITH PNB WERE FOLLOWED BY WITHDRAWALS, WHICH WERE NOT EXPLAI NED. CASH DEPOSITS IN BANK OF RAJASTHAN ACCOUNT WERE FOLLOWED BY CHEQUES TO M/ S. R.R. INDUSTRIES; B.R. INDUSTRIES; AND S.K. INDUSTRIES, WHICH REQUIRED EXPLANATION/JUSTIFICATION, NOT FURNISHED . CHEQUES RECEIVED FROM M/S. YAMUNA ALLOYS LTD. IN ACCOUNT WITH J&K BANK LTD. WERE FOLLOWED BY SELF WITHDRAWAL OR CHEQU ES FAVOURING R.R. INDUSTRIES AND J.K. TRANSPORT CORPORATION. THIS GOES ON FOR ALL BANK ACCOUNTS, EMPHASIZING THE NEED FOR EXAMINATION/VERIFICATION, WHICH BECOME S MORE PERTINENT IN VIEW OF NO NARRATION/EXPLANATION HAVING BEEN, AS CALLED FOR, P ROVIDED . (F) THE ASSESSEE HIMSELF CONFIRMS THE NEED FOR LABO RATORY EQUIPMENTS FOR TESTING/ CHECKING OF QUALITY, WHILE NO LABORATORY EQUIPMENTS WERE FOUND ON PHYSICAL VERIFICATION ON 27.10.2012, EVEN AS THE W.D.V. OF T HE LABORATORY EQUIPMENTS (AS ON 31.03.2010) IS STATED AT RS.1,68,663/-, INCLUDING F RESH PURCHASE FOR RS.2.15 LACS DURING AY 2008-09. THIS NEEDS TO BE EXPLAINED, WHICH WAS NOT . (G) THE ASSESSEES TURNOVER, AT RS.2733.91 LACS FOR THE CURRENT YEAR, UP FROM A RANGE OF RS.8-10 CR. FOR THE PRECEDING 3 YEARS, FALLS TO RS.1.36 CR. FOR THE FOLLOWING YEAR, WHICH IN FACT IS FOUND TO BE THE SALE OF THE CLOSIN G STOCK AS AT THE YEAR-END. JUXTAPOSE THIS WITH THE FACT THAT THE CURRENT YEAR IS THE 5 TH YEAR OF THE OPERATIONS (OF THE UNIT), I.E., THE LAST YEAR FOR WHICH IT ENJOYS 100% EXEMPTION (U/S. 80-IB) ON ITS PROFIT, WHICH WOULD, W.E.F. THE 6 TH YEAR (AY 2011-12 ONWARDS), STANDS TO REDUCE TO 25% (OF THE PROFIT). THAT IS, THE SUBSTANTIAL REDUC TION IN THE TAX CONCESSION COINCIDES WITH THE SUDDEN VANISHING OF THE ASSESSEES BUSINE SS, BURGEONING HEREINBEFORE. THE MATTER IS FACTUAL, THOUGH BEGS FOR FURTHER EXAM INATION AND ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 10 PROBE, PARTICULARLY IN LIGHT OF AND COUPLED WITH THE OTHE R INFORMATION OR FACTS FOUND/SURFACED. (H) THE ASSESSEE IS FOUND TO HAVE INVESTED RS.427.9 2 LACS IN SHARES IN ADHUNIK NIRYAT ISPAT LTD., A LITTLE KNOWN COMPANY, DURING M ARCH, 2012, AT A PREMIUM OF RS.295 PER SHARE, I.E., AT 29.5 TIMES THE FACE VALU E OF RS.10. THE INVESTMENT DECISION, WHICH THUS REPRESENTS THE DESTINATION OF THE PROFITS EARNED BY THE ASSESSEE OVER THE PAST YEARS, NEEDS TO BE VERIFIED FOR ITS G ENUINENESS, AS ARE THE OTHER SHARE TRANSACTIONS ENTERED INTO BY THE ASSESSEE (LISTED A T PG. 36 OF THE ASSESSMENT ORDER). NEEDLESS TO ADD, NO REPLY WAS RECEIVED FROM THE ASS ESSEE QUA THE SAME. NOT ONLY THE FORE-GOING TRANSACTIONS/FACETS OF THE ASSESSEES BUSINESS BROUGHT OUT IN SUFFICIENT DETAIL IN THE ASSESSMENT ORDER, WHICH SERIOUSLY JEOPARDIZE THE RELIABILITY OF THE STATED STATE OF AFFAIRS, REMAIN UNEXPLAINED AND UNEXAMINED IN THE LEAST DURING THE ASSESSMENT PROCEEDINGS, THEY CONTI NUE TO BE SO FOR MOST PART, WE ARE AFRAID TO SAY, EVEN DURING THE FIRST APPELLATE PROCEEDINGS. TRUE, EXPLANATIONS WERE FURNISHED QUA CERTAIN ASPECTS OF ASSESSMENT IN APPELLATE PROCEED INGS. THE SAME, HOWEVER, FOR SATISFACTORY CONCLUSION, WOULD, REQUIRE FURTHER VERIFICATION. 4.3 THERE IS, IN VIEW OF THE FORE-GOING, SUBSTANTIA L BASIS FOR THE AO TO REGARD THE ASSESSEES ACCOUNTS AS UNRELIABLE, FOR WHICH HE REL IES ON THE DECISIONS IN CIT V. S.N. NAMASIVAYAM CHETTIAR [1960] 38 ITR 579 (SC); BHAI SUNDAR DASS, SARDAR SINGH (P.) LTD . [1972] 86 ITR 106 (DEL); AWADHESH PRATAP SINGH ABDUL REHMAN & BROS. V. CIT [1994] 210 ITR 406 (ALL). THE LD. CIT(A) HAS, WITH OUT MEETING THESE OBJECTIONS BY THE AO, SUMMARILY STATED THAT IN-AS-M UCH AS ACCOUNT BOOKS WERE PRODUCED - WHICH WE HAVE FOUND AS NOT, HELD THE REJ ECTION OF ACCOUNTS AS NOT VALID, AND THAT THEREFORE THE AO COULD NOT HAVE PROCEEDED U/S. 144. THE FURNISHING OF EXPLANATIONS BEFORE THE LD. CIT(A) ITSELF VALIDATES THE EXISTENCE OF GROUNDS FOR THE AO TO REGARD THE ASSESSEES BOOKS AS NOT RELIABLE. THE RELEVANT PART OF THE IMPUGNED ORDER READS AS UNDER: ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 11 I HAVE CONSIDERED THE ABOVE SUBMISSIONS AND FOUND T HAT THIS IS NOT A FIT CASE WHERE BOOKS OF ACCOUNT WAS OUGHT TO BE REJECTED U/S. 145(3) OF THE ACT ON THE GROUND THAT THE AO WAS NOT SATISFIED ABOUT THE CORRECTNESS OF THE ACCOUNTS OF THE ASSESSEE. THE ASSESSEE HAS SUBMITTED AUDITED BOOKS OF ACCOUNT ALONG WITH BANK ACCOUNTS, LEDGER ACCOUNTS AND OTHER DETAILS AS AND WHEN REQUIRED FROM THE AO. IT IS EVIDENT FROM THE A SSESSMENT RECORDS THAT THE ASSESSEE ALSO TRIED TO SATISFY THE AO BY FURNISHING ALL DOCUMENTS /EVIDENCE IN SUPPORT OF ITS CLAIM OF DEDUCTION U/S. 80IB OF THE ACT. IT IS NOT MATERIAL WHETHER THE AO WAS CONVINCED WITH THOSE DETAILS AND HAS TAKEN A DIFFERENT VIEW . IN FACT, HIS ORDER DOES NOT INDICATE IF HE CONSIDER S THE STOCK RECORD, MAINTENANCE OF WHICH ITSELF IS DOUBTFUL, GIVEN ITS NON-FURNISHING AND, BESIDES, THE INVENTORY AND ITS COST BEING ADMITTEDLY ONLY AS PER THE PROPRIETOR, T O BE A PART OF THE BOOKS OF ACCOUNT. THE SAID FINDING BY THE LD. CIT(A) IS, IN ANY CASE, AS WOULD ALSO BE APPARENT FROM THE FOREGOING, PATENTLY INCORRECT; TH E NON-PRODUCTION OF ACCOUNTS ALSO FORMING THE BASIS FOR THE DISALLOWANCE OF INDI RECT EXPENDITURE AT RS. 13.85 LACS AND THERE BEING NO CONTENTION AS TO PRODUCTION OF S TOCK RECORD, WHICH IS AN INTEGRAL PART OF THE BOOKS OF ACCOUNT, EVEN AS WE HAVE CLARI FIED THAT IT IS THE FINDING OF THE SAME AS NOT REFLECTING THE TRUE OR ACTUAL STATE OF AFFAIRS FOR WHICH WE OBSERVE SUFFICIENT BASIS WITH THE AO, WHICH WOULD REQUIRE C OGENT MATERIAL FOR REBUTTAL, BESIDES BEING NOT DETERMINED BY THE LD. CIT(A), THA T IS RELEVANT AND NOT THEIR PRODUCTION PER SE . THE RELIANCE ON THE CITED CASE LAW BY THE AO IS A PPOSITE. 4.4 THAT APART, THE INVOCATION OF SECTION 144 BY TH E AO IN THE PRESENT CASE IS NOT ONLY FOR THE REASON OF THE APPLICABILITY OF SECTION 145(3), BUT ALSO, WHICH IN FACT CONSTITUTES THE PRIMARY REASON FOR THE BEST JUDGMEN T ASSESSMENT, DUE TO THE NON- COMPLIANCE OF NOTICE U/S. 142(1); THE ASSESSEE IN F ACT FAILING TO COMPLY WITH THE SEVERAL OPPORTUNITIES EXTENDED TO HIM FOR COMPLYING THE REQUISITIONS OR THE ANSWERS SOUGHT. RATHER, THE ASSESSEE FAILING TO RESPOND EVE N TO THE SUMMONS U/S. 131, ISSUED TWICE DURING ASSESSMENT PROCEEDINGS, THE AO TAKES PAINS TO CLARIFY AS TO WHY THE PRESENCE OF THE ASSESSEE (I.E., IN PERSON) WAS NECESSARY (REFER PARA 21.23(1), PGS. 28-29 OF THE ASSESSMENT ORDER). WHY, IT IS EVEN OTHERWISE EVIDENT ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 12 THAT THE ANSWERS TO THE VARIOUS FACTS, SOME OF WHIC H BORDER ON BEING TERMED ANOMALIES, OBSERVED (VIZ. THE PRODUCTION PROCESS AN D CAPACITY WITH REFERENCE TO THE MACHINES; THE MACHINERY BEING VERY OLD; THE ABSENCE OF THE TESTING EQUIPMENT, ADMITTEDLY NECESSARY FOR THE TESTING THE INPUTS AS WELL AS THE PRODUCTION, ON PHYSICAL VERIFICATION; THE ABSENCE OF BOOKS OF ACCO UNT FOR THE RELEVANT YEAR AT THE ASSESSEES PREMISES WITH NO ANSWER AS TO WHERE TH EY WERE, AND, ON THE CONTRARY, THE PRESENCE OF THE BOOKS OF ANOTHER (R.R. INDUSTRI ES); THE DISCLAIMER (OR NOT RESPONDING) BY THE SEVERAL PARTIES WITH WHOM THE AS SESSEE CLAIMS TO BE HAVING TRADE (PURCHASE/SALE) TRANSACTIONS; THE COMPLETE EX TINGUISHMENT OF BUSINESS, RUNNING PROSPEROUSLY AND, IN FACT, GROWING FOR THE LAST 5 YEARS, IN THE 6 TH YEAR, IN WHICH THE TAX HOLIDAY GETS SUBSTANTIALLY REDUCED; T HE INVESTMENT IN SHARES OF LITTLE KNOWN COMPANIES AND, AT A HUGE PREMIUM; THE BANK EN TRIES, ETC., COULD ONLY BE, ASSUMING SO, SATISFACTORILY ANSWERED OR INFORMATION FURNISHED BY THE ASSESSEE HIMSELF. WHERE, FOR EXAMPLE, AS STATED, WAS THE TES TING EQUIPMENT PLACED? WHO CONDUCTED THE TESTS THE WORKERS BEING ADMITTEDLY UNSKILLED AND UNEDUCATED; THE TEST REPORTS EVIDENCING THE SAME. BESIDES, VERIFICA TION OF ITS SALE, STATED TO HAVE BEEN SINCE SOLD (IN THE APPELLATE PROCEEDINGS), WOU LD BE REQUIRED. THE ASSESSEES CONDUCT ITSELF RAISES SERIOUS QUESTIONS . EVEN GRANTING THAT HE WAS FACING TRYING CIRCUMSTANCES ON ACCOUNT OF THE SERIOUS ILLNESS OF HIS MOTHER, IT IS CLEAR THAT HE WAS EVADING ATTENDANCE THE OPPORTUNITIES GRANTED EXTE NDING OVER A FEW MONTHS, GOING TO THE EXTENT OF EVEN NOT COMPLYING WITH THE SUMMON S AND IN FACT TWICE. ALL THESE IN FACT FIND MENTION IN THE SHOW CAUSE NOTICE DATED 12.02.2013, ISSUED ALONG WITH THE NOTICE U/S. 142(1) FOR 18.02.2013, MAKING IS ABUNDANTLY CLEAR THAT IN THE EVENT OF FAILURE TO COMPLY THEREWITH, IT SHALL BE P RESUMED THAT THE ASSESSEE HAS NOTHING TO SAY IN THE MATTER, AND THE ASSESSMENT FI NALIZED ON THE BASIS OF THE MATERIAL ON RECORD, TREATING THE ASPECT ON WHICH NO DETAILS/DOCUMENTS ARE FILED, AS UNEXPLAINED. NEEDLESS TO ADD, THERE WAS NO COMPLIAN CE ON 18.02.2013, OR EVEN ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 13 THEREAFTER; THE AO, DESPITE CLEARLY STATING IT TO B E THE FINAL OPPORTUNITY AND THAT NO FURTHER OPPORTUNITY WOULD BE ALLOWED, GRACIOUSLY AL LOWING FURTHER TIME ON THE ASSESSEE SEEKING THE SAME, WHICH FINDS REFERENCE AT PARA 21.21 OF HIS ORDER, REPRODUCED AS UNDER: 21.21. THOUGH THE ASSESSEE HAD ALREADY BEEN ALLOWE D AMPLE OPPORTUNITIES OF BEING HEARD AND IT WAS NOTICED THAT AFTER 07.01.2013, THE ASSES SEE IS NEITHER ATTENDING NOR RESPONDING TO THIS OFFICES LETTERS/SHOW CAUSE/SUMMONS AND SEEKIN G ADJOURNMENTS ON ONE GROUND OR OTHER, HOWEVER, IN ORDER TO ALLOW ONE MORE FINAL OPPORTUNI TY, THE ASSESSEE WAS TELEPHONICALLY INFORMED THAT HIS NEXT DATE OF HEARING IS 25.02.201 3, WHICH IS FINAL HEARING AND IN CASE OF HIS NON ATTENDANCE ON THIS DATE, ASSESSMENT SHALL BE FI NALIZED EX-PARTY. AGAIN NEITHER ANYBODY APPEARED ON 25.02.2013 OR THEREAFTER, TILL THE DATE OF PASSING OF THIS ASSESSMENT ORDER NOR THE REMAINING DETAILS/DOCUMENTS AS QUANTIFIED IN SHOW C AUSE DATED 12.02.2013 WERE FURNISHED. NOT ONLY IS THEREFORE SECTION 145(3) ATTRACTED IN T HE FACTS OF THE CASE, THE ASSESSEES CONDUCT AND THE FACTS AND CIRCUMSTANCES OF THE CASE IMPELLED THE AO TO RESORT TO A SECTION 144 ASSESSMENT. THOUGH HE, HAVING ISSUED NO TICE U/S. 142(1), WAS IN LAW NOT OBLIGED TO ISSUE A SHOW-CAUSE NOTICE, HE DOES S O, SEEKING TO BRING ON THE TABLE THE RELEVANT ASPECTS OF THE ASSESSMENT WHICH NEEDED TO BE EXPLAINED AND, ACCORDINGLY, DETERMINED, I.E., ON THE BASIS OF HIS EXAMINATION OF THE ASSESSEES RETURN (AND THE ACCOMPANYING DOCUMENTS) AS WELL AS THE DEVELOPMENTS THAT TOOK PLACE DURING THE COURSE OF THE ASSESSMENT PROCEEDIN GS, INFORMATION ON WHICH IN FACT HAD BEEN ALREADY SOUGHT DURING THE ASSESSMENT PROCEEDINGS, TO THOUGH NO AVAIL. THEREFORE, TO SAY OR SUGGEST OR CONSTRUE, AS DOES THE LD. CIT(A) THE RELEVANT PART OF HIS ORDER HAVING BEEN REPRODUCED SUPRA, THA T SEC. 145(3) IS THE SOLE BASIS FOR THE BEST JUDGMENT ASSESSMENT IN THE PRESENT CASE, I S WHOLLY INCORRECT; S. 144(1)(B), READING AS UNDER, BEING CLEARLY ATTRACTED IN THE FA CTS AND CIRCUMSTANCES OF THE CASE: BEST JUDGMENT ASSESSMENT 144. (1) IF ANY PERSON (A) . (B) FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISS UED UNDER SUB-SECTION (1) OF SECTION 142 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SU B-SECTION (2A) OF THAT SECTION, OR ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 14 (C) .. THE ASSESSING OFFICER, AFTER TAKING INTO ACCOUNT ALL RE LEVANT MATERIAL WHICH THE ASSESSING OFFICER HAS GATHERED, SHALL, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE ASSESSMENT OF THE TOTAL INCOME OR LOSS TO THE BEST OF HIS JUDGMENT AND DETERMINE THE SUM PAYABLE BY THE ASSESSEE ON THE BASIS OF SUCH ASSESSMENT: THE FINDING BY THE LD. CIT(A) HOLDING THE INVOCATIO N OF S. 144 BY THE AO AS INVALID, CANNOT, THEREFORE, BE COUNTENANCED. 4.5 THE NEXT QUESTION BEFORE US IS IF THEREFORE THE INSTANT ASSESSMENT COULD BE SAID TO BE A SECTION 143(3) ASSESSMENT, AS HELD BY THE LD. CIT(A), OR IS A SECTION 144 ASSESSMENT. WE HAVE, AS SHALL BE APPARENT FROM THE FORE-GOING, CLARIFIED THAT NO GROUNDS, IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, FOR NOT UPHOLDING THE INVOCATION OF SECTION 144, EXIST. WHILE FINDING SUF FICIENT BASIS FOR THE APPLICABILITY OF SECTION 145(3), SO THAT IT CONSTITUTES A VALID B ASIS FOR MAKING AN ASSESSMENT U/S. 144, WE HAVE FURTHER FOUND THE CONDITION SPECIFIED U/S. 144(1)(B) TO BE SATISFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TO, THEREF ORE, THE SAME EFFECT, I.E., THE VALIDITY IN LAW OF THE RESORT TO SECTION 144 BY THE AO AND MAKING AN ASSESSMENT TO THE BEST OF HIS JUDGMENT. THOUGH, IT WOULD UNDER RE GULAR CIRCUMSTANCES WARRANT A SET ASIDE BACK TO HIS FILE TO DECIDE ON AN ASPECT, DEEMED RELEVANT, WHICH HAS THOUGH BEEN OMITTED TO, THIS MAY NOT BE NECESSARY IN THE P RESENT CASE AS THE INVOCATION OF SECTION 144 GETS EVEN OTHERWISE UPHELD, I.E., ON TH E BASIS OF OUR FINDING OF THE APPLICABILITY OF SECTION 145(3), SO THAT NO PREJUDI CE IS CAUSED TO THE ASSESSEE. CONTINUING FURTHER, DECIDING ON THE STATUS OF IMPUG NED ASSESSMENT, I.E., WHETHER IT IS THE SECTION 143(3) OR U/S. 144, ASSUMES RELEVANC E AND IS SIGNIFICANT IN THAT THE ADMISSION OF ADDITIONAL EVIDENCE AND, CONSEQUENTLY, THE APPLICABILITY OF RULE 46A (OF THE INCOME TAX RULES, 1962, - THE RULES HEREI NAFTER), THE BONE OF CONTENTION BETWEEN THE ASSESSEE AND THE REVENUE, WOULD COME IN TO PLAY ONLY IN THE CASE OF S. 143(3) ASSESSMENT. AS EXPLAINED IN CIT V. RAYALA CORPORATION PVT. LTD. [1995] ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 15 215 ITR 883 (MAD.), THE BEST JUDGMENT ASSESSMENT IS OF THE AO AND NOT OF ANY OTHER, IMPLYING AN APPELLATE AUTHORITY. ADMITTING F URTHER MATERIALS AND EXPLANATIONS WOULD, UNDER THE CIRCUMSTANCES, OPERAT E TO CONVERT A SECTION 144 ASSESSMENT INTO A SECTION 143(3) ASSESSMENT, WHICH IS NOT PERMISSIBLE IN LAW. THE PURVIEW OF AN APPELLATE AUTHORITY IN SUCH A CASE WO ULD THEREFORE BE TO EXAMINE THE REASONABLENESS OF THE CONCLUSION/S DRAWN BY THE ASS ESSING AUTHORITY, I.E., ON THE BASIS OF THE MATERIALS BEFORE HIM. THE SAME STANDS SUCCINCTLY STATED BY IT IN THE FOLLOWING WORDS: IN A BEST JUDGMENT ASSESSMENT SO LONG AS THE ESTIMA TE MADE BY THE ASSESSING AUTHORITY IS NOT ARBITRARY AND HAS A NEXUS WITH THE FACTS DISCOVERED , THE SAME CANNOT BE QUESTIONED. IN THE VERY NATURE OF THINGS, THE ESTIMATE MADE MAY BE AN OVER-ESTIMATE OR AN UNDER-ESTIMATE. BUT, THAT IS NO GROUND FOR INTERFERING WITH HIS BEST JUD GMENT. THE ASSESSEE CANNOT BE PERMITTED TO TAKE ADVANTAGE OF HIS OWN ILLEGAL ACTS AND IT IS HI S DUTY TO PLACE ALL FACTS TRUTHFULLY BEFORE THE ASSESSING AUTHORITY. IF HE FAILS TO DO HIS DUTY, HE CANNOT BE ALLOWED TO CALL UPON THE ASSESSING AUTHORITY TO PROVE CONCLUSIVELY WHAT TURNOVER HE HA D SUPPRESSED. THAT FACT MUST BE WITHIN HIS PERSONAL KNOWLEDGE. HENCE, THE BURDEN OF PROVIN G THAT FACT IS ON HIM. IF THE ESTIMATE MADE BY THE ASSESSING AUTHORITY IS A BONA FIDE ESTI MATE AND IS MADE ON A RATIONAL BASIS, THE FACT THAT THERE IS NO GOOD PROOF IN SUPPORT OF THAT ESTIMATE IS IMMATERIAL. PRIMA FACIE, THE ASSESSING AUTHORITY IS THE BEST JUDGE OF THE SITUAT ION. IT IS HIS BEST JUDGMENT AND NOT OF ANY ONE ELSE. THE QUESTION WHETHER THE INCOME-TAX OFFIC ER HAS COMMITTED ANY ERROR IN HIS JUDGMENT UNDER SECTION 144 OF THE ACT CAN BE DECIDE D ONLY ON THE BASIS OF THE MATERIALS GATHERED BY HIM AND NOT ON THE BASIS OF ANY MATERIA LS THAT ARE LATER PRODUCED BY THE ASSESSEE. THERE CANNOT BE A PROCEDURE WHEREIN THE BEST JUDGME NT OF THE INCOME-TAX OFFICER IS SUBJECTED TO THE DISCRETION OF THE ASSESSEE TO PROD UCE EVIDENCE/MATERIAL AT THE APPELLATE STAGE AND THUS CONVERT THE PROCEEDING OF THE BEST JUDGMEN T ASSESSMENT INTO A PROCEEDING FOR REGULAR ASSESSMENT IN WHICH THE ASSESSEE IS SERVED WITH A NOTICE UNDER SECTION 139(2) OF THE ACT. THE TRIBUNAL CANNOT ENTER INTO A REAPPRAISAL O F EVIDENCE AFTER TAKING INTO CONSIDERATION THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BE FORE IT IN A PROCEEDING ARISING OUT OF A BEST JUDGMENT ASSESSMENT . IN OTHER WORDS, THERE IS NO SCOPE FOR ADMISSION OF ADDITIONAL EVIDENCE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, MAKING IT UNNECESSAR Y FOR US TO DELVE INTO WHETHER THERE IS, IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, A BREACH OF R. 46A OF THE RULES. IT IS THIS CONSIDERATION THAT IMPELLED US TO EXAMIN E THIS ASPECT OF THE MATTER, I.E., BESIDES PLACING THE REVENUES GD. BEFORE US IN CONTE XT. ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 16 4.6 AS AFORE-EXPLAINED, THE ONLY PURVIEW OF AN APPELLAT E AUTHORITY IN A BEST JUDGMENT ASSESSMENT IS TO EXAMINE THE REASONABLENES S OF THE CONCLUSIONS DRAWN OR ARRIVED AT BY THE ASSESSING AUTHORITY, I.E., ON THE BASIS OF THE MATERIAL ON RECORD, WHETHER SO BROUGHT BY THE ASSESSEE OR THE REVENUE. IT MAY THEREFORE BE, NEXT, NECESSARY FOR US TO EXAMINE THE FACTS OF THE CASE I N PERSPECTIVE, AS THE VALIDITY OF THE IMPUGNED ORDER, INASMUCH AS IT DELETES THE DISA LLOWANCE OF DEDUCTION U/S. 80- IB AS WELL AS OF THE INDIRECT EXPENDITURE, I.E., TH E TWO ADJUSTMENTS TO THE RETURNED INCOME MADE BY THE AO IN ASSESSMENT. WE MAY BEGIN W ITH REVIEWING THE POWERS OF THE FIRST APPELLATE AUTHORITY AND, CONSEQUENTLY, THE OBLIGATION CAST BY LAW UPON HIM. IT IS TRITE LAW THAT THE POWERS OF THE FIRST A PPELLATE AUTHORITY ARE CO-TERMINUS WITH THAT OF THE ASSESSING AUTHORITY ( JUTE CORPORATION OF INDIA VS. CIT [1991] 187 ITR 688 (SC)). SUB-SEC (6) OF SEC. 250 OBLIGES THE COMMISSIONER APPEALS TO, WHILE DISPOSING AN APPEAL, STATE THE POINTS FOR DET ERMINATION, DECISION THEREON, AND THE REASON FOR THE DECISION. CLAUSE (A) OF SEC. 251 , WHICH STATES THE POWERS OF THE COMMISSIONER APPEALS, PROVIDES THAT IN DISPOSING AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNU L THE ASSESSMENT. IN THE INSTANT CASE, WE OBSERVE A COMPLETE ABSENCE OF DETE RMINATION OF THE SEVERAL ISSUES RAISED BY THE ASSESSING AUTHORITY, VITAL TO THE ASS ESSMENT, BY THE LD. CIT(A) WHILE DECIDING THE ASSESSEES APPEAL. HOW, FOR EXAMPLE, T HE ASSESSMENT UNDER APPEAL BE SAID TO BE A S. 143(3) ASSESSMENT, I.E., GIVEN THE CLEAR POSITION OF LAW IN THE MATTER AND, FURTHER, WITHOUT DISTURBING THE FINDING IMPUGN ING THE BASIS OF THE BEST JUDGMENT ASSESSMENT, I.E., THE APPLICABILITY OF THE PROVISION OF S.144(1)(B), I.E., ON A FAILURE THE COMPLY WITH ALL THE TERMS OF THE NOTI CE ISSUED U/S 142(1). THIS IS AS, CLEARLY, AS HELD BY THE HONBLE COURT IN RAYALA CORPORATION PVT. LTD . (SUPRA), THE APPELLATE AUTHORITY CANNOT CHANGE THE STATUS OF ASS ESSMENT - WITHOUT OF COURSE IMPUGNING THE VERY BASIS THEREOF, AND PROCEED TO DE CIDE THE APPEAL ON MERITS BY REAPPRAISING THE EVIDENCE IN THE LIGHT OF THE EXPLA NATIONS FURNISHED BEFORE HIM. HE, ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 17 NO DOUBT, CAN REVERSE OR MODIFY THE FINDING/S BY TH E ASSESSING AUTHORITY, GUIDED ONLY BY THE MATERIAL ON RECORD, SO BROUGHT BY EITHE R SIDE, AND THE EXPLANATIONS FURNISHED BEFORE THE ASSESSING AUTHORITY, AND OF CO URSE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES BEFORE HIM . WE MAY HASTEN TO ADD THAT ADJUDICATION ON MERITS (OF THE QUANTUM ADJUSTMENTS) IS NOT, AND WE MAY NOT BE CONSTRUED AS SUGGESTING IT AS, PRECLUDED IN CASE OF A BEST JUDGMENT ASSESSMENT, WHICH IN THE PRESENT CASE IS WITH REGARD TO THE DEN IAL OF DEDUCTION U/S. 80-IB AS WELL AS THE PART DISALLOWANCE OF THE INDIRECT EXPEN DITURE. THE SAME, HOWEVER, CANNOT BE WITHOUT ADDRESSING THE ISSUES ON WHICH TH E ASSESSMENT IS PREMISED. THE IMPUGNED ORDER DOES NOT BEAR ANY COMMENT, MUCH LESS DEFINITE FINDINGS IN THE MATTER, WHICH ARE ESSENTIALLY MATTERS OF FACT, BEIN G, IN SUM, AS TO THE GENUINENESS OF THE ASSESSEES ACTIVITIES. COULD, FOR EXAMPLE, T HE PURCHASE AND SALE BE HELD AS GENUINE ON THE EXISTING SET OF MATERIALS, WHICH EXH IBIT A DENIAL/NON-CONFIRMATION BY THE TRADE PARTIES, WITH THE CORRESPONDING TRANSA CTIONS IN THE BANK BEING UNEXPLAINED, SO THAT THERE IS NO DEFINITENESS OF TH E SOURCE AND DESTINATION OF FUNDS. A DEDUCTION U/S. 80-IB POSITS A GENUINE BUSINESS AC TIVITY, RESULTING IN BUSINESS PROFITS DERIVED FROM AN INDUSTRIAL UNDERTAKING, WHI LE IN THE PRESENT CASE THE PURCHASE AND SALE ITSELF HAS BEEN HELD AS BOGUS, AN D WHICH FINDING REMAINS UN- DISTURBED. THERE IS NO JUSTIFICATION FOR THE COST O R THE GROSS MARGIN, ON RECORD. WE COULD IN FACT GO ON. MAINTENANCE OF ACCOUNTS AND TH EIR AUDIT IS A PREREQUISITE FOR DEDUCTION U/S. 80-IB. COULD THE ASSESSEE, WITHOUT T HE DISTURBING THE FINDING OF THE PURCHASES AND SALES, AS RECORDED IN ITS BOOKS, BEIN G NOT GENUINE, BE SAID TO HAVE COMPLIED WITH THE SAID REQUIREMENT, SO AS TO ENTITL E THE PROFITS STATED TO BE GENERATED THERE-FROM AS ELIGIBLE FOR DEDUCTION U/S. 80-IB? LIKEWISE, FOR THE PRODUCTION DETAILS; THE INVENTORY DETAILS, ALL OF W HICH REMAIN UN-EXPLAINED. IN FACT, THE NATURE OF THE RELATIONSHIP WITH SOME SPECIFIED PARTIES, AS WELL AS THE SPECIFIED BANK TRANSACTIONS, ARE UNEXPLAINED. IN SHORT, WITHOUT ARRIVING AT A POSITIVE FINDING ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 18 OF THE BOOKS OF ACCOUNT AS REPRESENTING THE TRUE ST ATE OF AFFAIRS, WHICH IS THE VERY BASIS OF THE REQUIREMENT OF THE MAINTAINING ACCOUNT S AND THEIR AUDIT . RATHER, THE AO HIMSELF HAS ERRED, AND WHICH THE LD. CIT(A) OUGH T TO HAVE AMENDED, IN ASSESSING THE INCOME RETURNED AS BUSINESS INCOME, I .E., GIVEN HIS FINDING WITH REGARD TO THE COMPLETE UNRELIABILITY OF THE ASSESSE ES ACCOUNTS IN REPRESENTING THE ACTUAL STATE OF AFFAIRS. RATHER, EVEN IF, FOR THE S AKE OF ARGUMENT, IF IT WERE TO BE A SEC. 143(3) ASSESSMENT, AS APPARENT, THE MATERIALS OR EXPLANATIONS FURNISHED WOULD ITSELF REQUIRE VERIFICATION, IF NOT ALSO GATHERING MATERIAL BY THE ASSESSING AUTHORITY IN VERIFICATION AND/OR REBUTTAL OF THE ASSESSEES C LAIM/S, AS CONTEMPLATED UNDER RULE 46A(3), WHICH EXPLAINS THE REVENUES GROUND. THE QU ESTION OF DEDUCTION U/S. 80- IB, WITHOUT FIRST ENTERING A FINDING AS TO THE INCO ME EARNED BEING DERIVED FROM THE BUSINESS OF THE ASSESSEES INDUSTRIAL UNDERTAKING , DOES NOT ARISE. THE LD. CIT(A) HAS COMPLETELY OMITTED TO FRAME THE POINTS FOR DETE RMINATION, INTEGRAL AND NECESSARY IN DECIDING THE ISSUES ON MERITS IN-AS-MU CH AS THE SAME HAVE NEITHER BEEN DRAWN NOR, THEREFORE, ADDRESSED. THERE IS ACCO RDINGLY A CLEAR FAILURE TO MEET THE REQUIREMENT OF SEC. 250(6), DISQUALIFYING THE O RDER AS ONE CONTEMPLATED BY LAW. THE IMPUGNED ORDER IS NOT MAINTAINABLE, LOOKING THEREAT FROM ANOTHER STAND- POINT, FOR ANOTHER REASON. UNLESS A FINDING/S BY TH E AO IS DISTURBED BY HIM, BEING EITHER CANCELED OR REVERSED OR CONFIRMED, NO DECISI ON - RIGHT OR WRONG, CAN FOLLOW. AS AFORE-NOTED, THE LD. CIT(A) HAS NOT RENDERED ANY FINDING ON THE ASSESSEES PURCHASES AND SALES, HELD BY THE AO AS BOGUS, AND W HICH IS A GROUND FOR THE DENIAL OF DEDUCTION U/S. 80-IB. COULD, THEREFORE, ITS REV ERSAL BE GIVEN EFFECT TO WITHOUT REVERSING THE FINDING QUA THE SAME BY THE AO, WHICH IS, BESIDES OTHER SURROU NDING FACTS, IN TURN, BASED ON THE DENIAL/NON-CONFIRMATIO N OF TRANSACTIONS, WHICH REMAINS UNDISTURBED, RESULTING IN AN ANOMALOUS SITUATION. S URELY, NOT. SIMILARLY, FOR THE PRODUCTION OF DETAILS - BOTH WITH REGARD TO THE NAT URE AND QUANTITY OF THE GOODS PRODUCED AND SOLD, THE INVENTORY DETAILS, ETC. ALL OF WHICH THOUGH AGAIN LEAD TO THE ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 19 SAME CONCLUSION OF THE IMPUGNED ORDER BEING NOT A V ALID ORDER U/S. 251(1)(A) R/W S. 250(6) OF THE ACT. IN FACT, THERE COULD POSSIBLY BE UNDER THE GIVEN FACTS AND CIRCUMSTANCES NO SUCH ORDER WITHOUT ADMITTING MATER IALS ADDRESSING THE VARIOUS ISSUES RAISED IN ASSESSMENT, EVEN AS NO DOUBT THE L D. CIT(A) HAS ADMITTED EXPLANATIONS. IT WAS INCUMBENT ON THE LD. CITA), HA VING HELD THE IMPUGNED ASSESSMENT TO BE A SEC. 143(3) ASSESSMENT, TO ADMIT THE ADDITIONAL EVIDENCES, ALLOWING THE AO TO COMPLETE THE VERIFICATION PROCES S AS WELL AS THE ASSESSEE TO ANSWER HIM. IT IS THIS ANOMALY THAT THE REVENUES G ROUND BEFORE US SEEKS TO CAPTURE. FURTHER STILL, THE FINDING OF DEDUCTIBILIT Y OF SEC. 80IB, IN-AS-MUCH AS IT FAILS TO ADDRESS THE BASIC ISSUES ON WHICH THE DEDUCTION THERE-UNDER IS PREMISED, I.E., PROFITS AND GAINS OF BUSINESS OF AN ELIGIBLE UNDERT AKING, WHICH STANDS IMPUGNED IN ASSESSMENT, CANNOT HOLD. LIKEWISE, FOR THE DISALLOW ANCE OF INDIRECT EXPENDITURE. WE ARE CONSCIOUS THAT THE ASSESSEE STANDS ALLOWED D EDUCTION U/S. 80-IB FOR THE PRECEDING YEARS, AND WHICH IS THE PRINCIPAL ISS UE, I.E., ON MERITS OF THE QUANTUM ADJUSTMENT, IN THE INSTANT APPEAL. WE CONSIDER IT R ELEVANT TO DISCUSS THIS ASPECT OF THE MATTER EVEN AS EACH YEAR IS AN INDEPENDENT AND SEPARATE UNIT OF ASSESSMENT, FOR WHICH REFERENCE, AMONG OTHERS, MAY BE MADE TO NEW JEHANGIR VAKIL MILLS CO. LTD . V. CIT [1963] 49 ITR 137 (SC), EXPLAINING THAT THERE IS N O RES JUDICATA IN MATTERS OF TAXATION. THIS IS AS THE SAME HAS WEIGHED WITH T HE LD. CIT(A), AND WITHOUT DOUBT, WOULD HAVE TO BE THEREFORE HELD IN VIEW AS W ELL AS IN PROPER PROSPECTIVE. BEING ESSENTIALLY A MATTER OF FACT, THE SAME WOULD REQUIRE BEING DETERMINED WITH REFERENCE TO THE OBTAINING FACTS FOR THE RELEVANT Y EAR. FOR EXAMPLE, THERE COULD BE A MANUFACTURE IN A PARTICULAR YEAR WHILE NOT IN THE O THER YEAR, THE QUANTUM OF WHICH ITSELF, OR THE PROFITS DERIVED THERE-FROM, WOULD VA RY FROM YEAR TO YEAR. IN FACT, PRODUCTION OF TWO (OF THE THREE) ITEMS STATED TO HA VE BEEN MANUFACTURED, ARE STATED TO HAVE COMMENCED DURING THE CURRENT YEAR ITSELF, O N WHICH THE AO HAS RAISED CONSIDERABLE DOUBTS, SEEKING PROCESS DETAILS FOR AL L THREE, WITH REFERENCE TO THE ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 20 EXISTING PLANT & MACHINERY THE FUNCTIONALITY OF W HICH WOULD ALSO, IN VIEW OF THE REPORT ON PHYSICAL VERIFICATION, BE REQUIRED TO BE LOOKED INTO, AS WELL AS ITS CAPACITY, AND WHICH HAS NOT BEEN FURNISHED. IN SUM, THE GENUINENESS OF THE ACTIVITIES IS IN SERIOUS DOUBT FOR THE DETAILED REA SONS IN THE ASSESSMENT ORDER, DELINEATED HEREINBEFORE. WHY, THE NATURE OF THE BUS INESS ITSELF IS IN DOUBT. FURTHER, THE ACCOUNTS FOR THE CURRENT YEAR HAVE ITSELF BEEN FOUND AS NOT REFLECTING THE TRUE STATE OF AFFAIRS AND, ACCORDINGLY, REJECTED, WITH T HAT BEING ALSO THE BASIS FOR THE DISALLOWANCE OF INDIRECT EXPENDITURE. THERE IS, AGA IN, NO REFERENCE TO ANY FINDING ISSUED FOR THE OTHER YEARS, WHICH MAY HAVE NOT BEEN SUBJECT TO EXAMINATION, OR, IN ANY CASE, ON THE ASPECTS UNDER VERIFICATION. THE MA TTER IN ISSUE IS FACTUAL, AND WOULD THEREFORE NEED TO BE DETERMINED ON THE BASIS THE FACTS AS FOUND FOR THE CURRENT YEAR. CONCLUSION 5.1 LOOKED AT FROM ANY ANGLE, THEREFORE, THE IMPUGN ED ORDER IS NOT MAINTAINABLE IN LAW. THAT WE ALSO UNDERSTAND TO BE, IN SUBSTANCE , THE REVENUES GRIEVANCE AS WELL, WHO THOUGH, NO DOUBT, HAS BEEN RECKLESS/NOT E XQUISITE IN DRAFTING THE GROUNDS OF APPEAL, EVEN AS THE LD. CIT-DR, TO BE FAIR, WHIL E ARGUING THE APPEAL, DID TOUCH UPON ISSUES IMPINGING THEREON. THE SAME CANNOT, HOW EVER, CONSTRAIN US FROM CULLING OUT/FORMULATING ISSUES ARISING FOR DETERMIN ATION IN THE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY GIVEN THE L AW IN THE MATTER, WHICH STANDS ALSO DELINEATED IN THE ENSUING PART OF THIS ORDER. IN FACT, WHILE AN OMISSION TO OBSERVE RULE 46A, BEING MANDATORY, WOULD ALSO RENDE R THE IMPUGNED ORDER AS NOT MAINTAINABLE, AND LIABLE TO BE SET ASIDE WITH A VIE W TO RENDER OPPORTUNITY TO THE AO, WE HAVE FOUND BASIC STRUCTURAL DEFECTS IN THE I MPUGNED ORDER IN-AS-MUCH AS IT IS SUB SILENTIO ON VARIOUS ASPECTS FUNDAMENTAL AND BASIC TO THE AS SESSMENT, SERIOUSLY IMPUGNED, OR, IN ANY CASE, FOUND AS FACTU ALLY INDETERMINATE BY THE AO, ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 21 WHO WAS IN THE ABSENCE OF THE RELEVANT MATERIALS/EX PLANATIONS UNABLE TO CARRY OUT VERIFICATION ON SEVERAL ASPECTS OF THE ASSESSMENT. UNDER THE CIRCUMSTANCES, WE ONLY CONSIDER IT PROPER TO RESTORE THE ASSESSMENT BACK T O THE FILE OF THE LD. CIT(A) FOR ADJUDICATION AFRESH IN ACCORDANCE WITH LAW - BOTH P ROCEDURAL AND SUBSTANTIVE, AFTER HEARING BOTH THE PARTIES BEFORE HIM. FURTHER, SHOUL D THE ASSESSEE PLEAD FOR OPPORTUNITY FOR FURNISHING MATERIALS/EXPLANATIONS W ITH REGARD THERETO, THE LD. CIT(A) SHALL CONSIDER AND FIRST DECIDE IF IT PERMIS SIBLE IN LAW TO DO SO, I.E., GIVEN IT TO BE A CASE OF A BEST JUDGMENT ASSESSMENT. NEEDLES S TO ADD, HIS FINDING AS TO THE VALIDITY OF THE ASSUMPTION OF JURISDICTION BY ISSUE AND SERVICE OF A VALID NOTICE U/S. 143(2), NOT CHALLENGED, SHALL OBTAIN. WE DECIDE ACC ORDINGLY. 5.2 QUESTIONS MAY ARISE ON OUR COMPETENCE TO DIRECT IN THE MANNER AFORE-SAID, AS WELL AS PROCEED TO EXAMINE THE FACTS AND DELINEATE THE ISSUE/S ARISING, I.E., GIVEN THE GROUND RAISED BEFORE THE TRIBUNAL BY THE REVENUE, W HICH, WE ARE AFRAID TO SAY, WAS ALSO NOT REQUESTED FOR BEING SUITABLY CHANGED O R MODIFIED, BY IT, SO AS TO CAPTURE THE ISSUE/S ARISING IN APPEAL. THAT IS, IN VIEW OF THE NON-CHALLENGE, AT LEAST EX FACIE , OF THE COMPLETE OVERLOOKING OF THE VITAL ASPECTS OF THE ASSESSMENT BY THE LD. CIT(A) IN ADJUDICATING THE ASSESSEES APPEAL. T HE QUESTION, HOWEVER, IS, IF THAT WOULD BE DECISIVE OF THE MATTER. IN OUR CLEAR VIEW, SURELY NOT. TO BEGIN WITH, IT IS THE CORRECT LEGAL POSITION THAT IS RELEVANT, AND NO T THE VIEW THAT THE PARTIES MAY TAKE OF THEIR RIGHTS IN THE MATTER ( CIT V. C. PARAKH & CO. (INDIA ) LTD . [1956] 29 ITR 661 (SC); KEDARNATH JUTE MFG. CO. LTD. V. CIT [1971] 82 ITR 363 (SC)), AND WHICH HAS A DIRECT BEARING ON THEIR UNDERSTANDING O F AND, THUS, THE DELINEATION OR ASCERTAINMENT OF THE ISSUE/S THAT NEEDS TO BE DETER MINED, DIRECTLY IMPACTING OF THE RAISING OF SUCH ISSUE/S, PER THEIR APPEAL. FURTHER, IT IS TRITE LAW THAT APPELLATE PROCEEDINGS ARE A CONTINUATION OF THE ASSESSMENT PR OCEEDINGS. THAT, THEREFORE, THE BASIC PURPOSE OF AN APPEAL IN AN INCOME-TAX MATTER IS TO ASCERTAIN THE CORRECT TAX ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 22 LIABILITY OF THE ASSESSEE IN ACCORDANCE WITH LAW, O BSERVING THE PROCEDURE LAID DOWN THEREBY. THEREFORE, AT BOTH THE STAGES, EITHER BEFO RE THE APPELLATE COMMISSIONER OR BEFORE THE APPELLATE TRIBUNAL, THE APPELLATE AUTHOR ITY CAN CONSIDER THE PROCEEDINGS BEFORE IT AND THE MATERIAL ON RECORD BEFORE IT FOR THE PURPOSE OF DETERMINING THE CORRECT TAX LIABILITY OF THE ASSESSEE. THE ONLY LIM ITATION ON THE POWER OF AN APPELLATE AUTHORITY IS THAT IT CANNOT TRAVEL BEYOND THE PROCEEDINGS AND EXAMINE A NEW SOURCE OF INCOME, FOR WHICH THERE ARE SEPARATE REMEDIES AVAILABLE TO THE REVENUE UNDER THE ACT. SPEAKING SPECIFICALLY IN CON TEXT OF THE POWERS OF THE APPELLATE TRIBUNAL, IT WAS HELD IN AHMEDABAD ELECTRICITY CO. V. CIT [1993] 199 ITR 351 (BOM)(FB) THAT THE SUBJECT MATTER OF AN APPEAL IS THE ENTIRE TAX PROCEEDINGS OF THE ASSESSEE WHICH IS BEFORE THE TRIBUNAL FOR CONSI DERATION, WHICH WOULD COVER THE PROCEEDINGS BEFORE THE AO; BEFORE THE FIRST APPELLA TE AUTHORITY; AS WELL AS THAT BEFORE THE TRIBUNAL ITSELF. IN CIT V. INDIAN EXPRESS (MADURAI) PVT. LTD. [1983] 140 ITR 705 (MAD), IT STANDS EXPLAINED THAT THE AUTHORI TIES SITTING IN APPEAL IN A TAX CASE CANNOT BE REGARDED AS DECIDING A LIS , BEING ONLY ENGAGED IN AN ADMINISTRATIVE ACT OF ADJUSTING THE TAXPAYERS LIABILITY. THE REVE NUE BEING A PARTY, AND AT THE SAME TIME AN AUTHORITY VESTED WITH THE RESPONSIBILITIES OF DRAWING UP OF THE ASSESSMENT AND DETERMINING THE CORRECT TAX LIABILITY, IT WOULD NOT BE IN ACCORD WITH THE SCHEME OF THE ACT TO IMPOSE RESTRICTIONS ON THE AMBIT AND POWER OF THE TRIBUNAL BY NOTIONS SUCH AS FINALITY; SUBJECT MATTER OF APPEAL, ETC. TH E APEX COURT IN KAPURCHAND SHRIMAL V. CIT [1981] 131 ITR 451 (SC) HELD THAT AN APPELLATE AUT HORITY HAS THE JURISDICTION AS WELL AS THE DUTY TO CORRECT ALL ERR ORS IN THE PROCEEDINGS UNDER APPEAL AND TO ISSUE, IF NECESSARY, APPROPRIATE DIRECTIONS (TO THE AUTHORITY AGAINST WHOSE DECISION THE APPEAL IS PREFERRED) TO DISPOSE OF THE WHOLE OR ANY PART OF THE MATTER AFRESH UNLESS FORBIDDEN FOR DOING SO BY THE STATUTE . FURTHER STILL, RULE 11 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 READS A S UNDER: ITA NO. 349/ASR/2017 (AY 2010-11) ITO V. NEERAJ AGGARWAL 23 GROUNDS WHICH MAY BE TAKEN IN APPEAL. 11. THE APPELLANT SHALL NOT, EXCEPT BY LEAVE OF THE TRI BUNAL, URGE OR BE HEARD IN SUPPORT OF ANY GROUND NOT SET FORTH IN THE MEMORANDUM OF APPEA L, BUT THE TRIBUNAL, IN DECIDING THE APPEAL, SHALL NOT BE CONFINED TO THE GROUNDS SET FO RTH IN THE MEMORANDUM OF APPEAL OR TAKEN BY LEAVE OF THE TRIBUNAL UNDER THIS RULE: PROVIDED THAT THE TRIBUNAL SHALL NOT REST ITS DECISION ON A NY OTHER GROUND UNLESS THE PARTY WHO MAY BE AFFECTED THEREBY HAS HAD A SUFFICIENT OP PORTUNITY OF BEING HEARD ON THAT GROUND. THE APEX COURT IN HUKUMCHAND MILLS LTD. V. CIT [1967] 63 ITR 232 (SC), REFERRED TO BOTH IN INDIAN EXPRESS (MADURAI) PVT. LTD . (SUPRA) AND AHEMDABAD ELECTRICITY CO. (SUPRA), HELD THAT RULES 11 AND 27 OF THE APPELLAT E TRIBUNAL RULES ARE NOT EXHAUSTIVE OF THE POWERS OF THE APPELLATE T RIBUNAL. THEY ARE MERELY PROCEDURAL IN CHARACTER, AND DO NOT, IN ANY WAY, CI RCUMSCRIBE OR CONTROL THE POWER OF THE TRIBUNAL. IN OUR CLEAR VIEW, THEREFORE, THER E IS NO EXCESS OF JURISDICTION IN OUR THE FINAL FACT FINDING BODY, DECIDING AND DIRECTI NG IN THE MANNER WE HAVE IN THE INSTANT CASE. 6. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 09, 20 18 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 09.08.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: INCOME TAX OFFICER, WARD- 2(2), JAMMU (2) THE RESPONDENT: NEERAJ AGGARWAL KHASRA NO. 69/3,VILLAGE-SINGHOLA, 656, GALI NO. 11, SARDAR BAZAR, DELHI-6 PRESENT AT 545, PATOLI MAGOTRIAN, JAMMU (3) THE CIT(APPEALS), J & K, JAMMU (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER