VISION JEWELLERS, Jaipur V. ACIT(OSD), Jaipur

ITA 360/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5237 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J R PAREEK JCIT DHK
• Keywords: Business income; Principle of natural justice; Additional evidence; Assessment record
• Section: 142(1); 234B; 148; 144; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI T.R.MEENA, AM VK;DJ VIHY LA -@ ITA NO. 360/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 M/S VISION JEWELLERS, KISTURI PALACE, 1 ST CROSSING, 4312, 1 ST FLOOR, K.G.B. KA RASTA, JOHARI BAZAAR, JAIPUR. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX (OSD), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AACFV 4559 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.R. PAREEK (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07/06/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 17/06/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 18/02/2014 PASSED BY THE LD. CIT(A)-I, JAIPUR FOR TH E ASSESSMENT YEAR 2008-09, WHEREIN THE ASSESSEE RAISED FOLLOWING GROUN DS AS UNDER: 1. THE IMPUGNED ORDER U/S 144 OF THE ACT DATED 14.12.2010 IS BAD IN LAW AND ON FACTS OF THE CASE, F OR WANT OF JURISDICTION AND FOR VARIOUS OTHER REASONS A ND HENCE THE SAME MAY KINDLY BE QUASHED OR IN THE ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 2 ALTERNATIVE, SUCH ORDER BE HELD AND TREATED AS AN O RDER PASSED U/S 143(3). 2. THE ID. AO ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN WRONGLY ALLEGING THAT NOTICE/S U/S 142(1)/14 3(2) WAS SERVED UPON THE ASSESSEE WHICH REMAINED UN- COMPLIED. HOWEVER, SUCH ALLEGATION/S, IS TOTALLY CON TRARY TO THE FACTS INASMUCH AS NO SUCH NOTICE WAS EVER SERVED UPON THE ASSESSEE OR ANYONE ELSE DULY AUTHORIZED BY THE APPELLANT, IN THIS BEHALF. HENCE, SUCH FINDINGS ADVERSE TO THE APPELLANT KINDLY BE DELETED . 3. RS.2,77,532/- & RS.5,03,509/-: THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCES ON ACCOUNT OF INTEREST ON PARTNERS CAP ITAL OF RS.2,77,532/- AND ON ACCOUNT OF REMUNERATION PAI D TO THE PARTNERS OF RS.5,03,509/- IN VIEW OF THE ALLE GED NON-COMPLIANCE OF THE STATUTORY NOTICES AND BECAUSE OF THE PASSING OF THE ORDER U/S 144 R/W 184(5) OF THE A CT AND IGNORING THAT THE VERY PASSING OF THE ORDER U/S 144 OF THE ACT WAS UNLAWFUL/UNJUSTIFIED AND ALSO IGNORIN G THE FACT THAT ALL THE ADDITIONAL EVIDENCES SUBMITTE D BEFORE HIM WERE DULY ADMITTED AND EVEN THE AO GOT THE OPPORTUNITY IN THE REMAND REPORT. THE DISALLOWANC E SO MADE BY THE AO AND PARTLY CONFIRMED BY THE ID. CIT(A), ARE CONTRARY TO THE PROVISIONS OF LAW AND FAC TS OF THE CASE. HENCE, THE SAME KINDLY BE DELETED IN F ULL. 4. THE ID. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING CHARGING INTEREST U/S 234B & 234C OF THE ACT. THE APPELLANT TOTALLY DENIES IT LIA BILITY OF CHARGING OF ANY SUCH INTEREST. THE INTEREST SO CHARGED, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 3 2. THE ASSESSEE FIRM FILED RETURN FOR A.Y. 2008-09 O N 30/09/2008 DECLARING TOTAL TAXABLE INCOME OF RS. 6,24,010/-. TH E JURISDICTION OVER THIS CASE HAD BEEN TRANSFERRED FROM ACIT, CIRCLE-2, JAIPU R AND ASSIGNED TO ACIT (OSD), JAIPUR UNDER THE ADMINISTRATIVE CONTROL OF ADDITIONAL CIT-2, JAIPUR BY THE CIT, JAIPUR IN EXERCISE OF POWER CONFER RED ON HIM UNDER SUB-SECTION (1) OF SECTION 127 OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT) VIDE ORDER DATED 15/10/2010. NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 19/9/2009 BY FIXING THE DATE OF HEARING O N 30/09/2009. THE LD ASSESSING OFFICER OBSERVED THAT THE NOTICE WAS SERVE D THROUGH REGISTERED POST AS PER ACKNOWLEDGEMENT SLIP PLACED ON FILE. NON E ATTENDED IN RESPONSE TO THE NOTICE. FRESH OPPORTUNITY HAD BEEN GIVEN BY THE ASSESSING OFFICER VIDE NOTICE U/S 143(2)/142(1) OF THE ACT VIDE LETTERS STATED AS UNDER:- DATE OF NOTICE DATE OF HEARING FIXED 25/5/2010 24/06/2010 22/10/2010 08/11/2010 18/11/2010 02/12/2010 THE ASSESSEE DID NOT RESPOND AGAINST THE NOTICE ISSU ED BY THE LD ASSESSING OFFICER. HE FURTHER SENT NOTICE ON 18/11/ 2010 THROUGH REGISTERED POST AT THE ADDRESS OF ASSESSEE FIRM. CO PY OF THE NOTICES WERE ALSO SENT THROUGH REGISTERED POST AT THE ADDRESSES OF THE PARTNERS SHRI ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 4 SANJAY DHANDIA & SMT. SUNITA DHANDIA. ALL THE THREE NOTICES WERE RECEIVED BACK FROM THE POSTAL AUTHORITIES WITH REMAR K RECIPIENT LEFT. THEREAFTER NOTICE WAS SERVED THROUGH INSPECTOR BY FI XING AT THE LAST KNOWN ADDRESS OF THE ASSESSEE FIRM IN THE PRESENCE O F THE INDEPENDENT WITNESSES, WHOSE SIGNATURES WERE ALSO OBTAINED BY THE INSPECTOR SHRI PURSHOTTAM SHARMA ON THE REPORT OF SERVICE BY AFFIX TURE DATED 19/11/2010. COPY OF SERVICE OF NOTICE HAD BEEN PLAC ED ON THE ASSESSMENT RECORD. HOWEVER, NO COMPLIANCE WAS MADE EV EN TO THE NOTICES AND SHOW CAUSE NOTICES SERVED THROUGH AFFIX TURE. THE LD ASSESSING OFFICER FURTHER HELD THAT SINCE THIS IS A TIME BARRING ASSESSMENT AND IN VIEW OF THE NON-COOPERATION FROM THE ASSESSEE , HE DECIDED THE CASE U/S 144 OF THE ACT EX PARTE. THE ASSESSEE IS A MANUFACTURER, EXPORTER, DEALER AND IMPORTER OF PRECIOUS AND SEMI- PRECIOUS STONES AND GEMS STONES STUDDED JEWELLERY. ALL THE GROUNDS RAISE D BY THE ASSESSEE AGAINST ASSESSING THE CASE U/S 144 OF THE ACT AND A PPLYING THE PROVISIONS OF SECTION 184(5) OF THE ACT AND NOT ALLOWING THE RE MUNERATION AND INTEREST OF THE PARTNERS. THE LD ASSESSING OFFICER M ADE VARIOUS ADDITIONS IN TOTAL RS. 73,61,643/- AND DECIDED TOTAL TAXABLE INCOME OF RS. 84,88,925/- AS AGAINST THE RETURN OF INCOME OF RS. 6,24,010/-. HE FURTHER OBSERVED THAT SINCE THE ASSESSEE FIRM HAS COMMITTED THE FAILURE AS WAS ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 5 MENTIONED IN SUB-SECTION (1) OF SECTION 144 OF THE ACT, NO DEDUCTION BY WAY OF PAYMENT OF ANY INTEREST, SALARY, BONUS, COMMI SSION OR REMUNERATION MADE BY THE FIRM TO ANY PARTNER, WAS AL LOWED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 184/185 OF THE ACT. THE LD ASSESSING OFFICER ASSESSED THE STATUS OF ASSESSEE A S A FIRM VIDE ORDER DATED 24/12/2010. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A). THE LD CIT(A) HELD EXPARTE ORDER AS WELL AS ALSO CONFIRMED THE ADDITION MADE BY THE A SSESSING OFFICER BY OBSERVING AS UNDER:- 4. I HAVE CONSIDERED FACTS OF THE CASE. IT IS SEEN THAT THE ORDER U/S 144 HAS BEEN PASSED BY THE A.O. AS THE NOTICES ISSUED BY HIM U/S 143(2)/142(1) ISSUED ON 25/5/2010, 22/10 /2000 AND 18/11/2010 REMAINED UN-COMPLIED WITH. LATER ON, THE A.O. SERVICED THE NOTICE BY AFFIXTURE AT THE LAST K NOWN ADDRESS OF THE APPELLANTS FIRM IN THE PRESENCE OF INDEPENDENT WITNESSES WHOSE SIGNATURE WERE OBTAINED BY THE INSPECTOR SHRI PURUSHOTTAM SHARMA. HOWEVER, NO COMPLIANCE WITH THE NOTICES WAS MADE EVEN AFTER THAT. IN CASE THERE WAS ANY CHANGE IN THE ADDRESS OR THERE WAS ANY OTHER PROBLEM WITH THE APPELLANT, THE SAME COULD HAV E BEEN CONVEYED TO THE A.O. BY THE AR OF THE APPELLANT WHIC H WAS ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 6 NOT DONE. IN SUCH A SITUATION, THE A.O. HAD NO OPTI ON BUT TO COMPLETE THE ASSESSMENT U/S 144. HENCE, IT IS HELD THAT THE A.O. WAS JUSTIFIED IN PASSING THE ORDER U/S 144. 14. I HAVE CONSIDERED FACTS OF THE CASE. IT IS SEEN THAT THE ASSESSMENT ORDER WAS PASSED BY THE AO U/S 144 ON TH E GROUND THAT VARIOUS NOTICES ISSUED U/S 142(1)/143 ( 2) HAD REMAINED UN-COMPLIED WITH. AS DISCUSSED IN PARA 4 AB OVE, IT WAS THE DUTY OF THE AR/APPELLANT TO INTIMATE THE CHA NGE OF ADDRESS ETC. TO THE AO. IN CASE THE APPELLANT WAS NO T THERE, THE AR SHOULD HAVE SUO MOTO INFORMED THE AO. SINCE THE AO WAS NOT AWARE OF THE WHEREABOUTS OF THE APPELLANT, HE SERVED THE NOTICE BY REGISTERED POST/AFFIXTURE. THE ONUS WAS ON THE APPELLANT/AR TO INTIMATE THE AO ANY CHANGE I N ADDRESS ETC. SINCE THE NOTICE U/S 142(1) HAD BEEN I SSUED, THERE WAS NO NEED TO SERVE ANY SHOW CAUSE NOTICE BEFO RE PASSING THE ORDER U/S 144. HENCE, THE ORDER PASSED BY THE AO U/S 144 IS HELD TO BE VALID. 14.1 SO FAR AS THE CLAIM OF DEDUCTION OF INTEREST AND REMUNERATION IS CONCERNED, IT IS SEEN THAT ONCE THE ORDER IS PAS SED U/S 144 AFTER FOLLOWING DUE PROCESS, THE PROVISIONS OF SEC. 184(5) AUTOMATICALLY KICK IN. THE PROHIBITION PROVIDED U/S 184(5) IS ABSOLUTE. THE OBJECT OF SEC. 184(5) IS THAT ONLY THE ASSESSEES WHO COMPLY WITH THE STATUTORY PROVISIONS WHICH INCLUDE FILING OF RETURN TIMELY AND COOPERATING WITH THE DEPARTMENT BY COMPLYING WITH THE NOTICES ISSUED U/S 142(1) AND 143 (2) ARE ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 7 ENTITLED TO THE DEDUCTIONS. THIS HAS BEEN SO HELD B Y THE HONBLE KERALA HIGH COURT IN THE CASE OF RADHA PICT URE PALACE (344 ITR 275). THEREFORE, THE MERE FACT THAT T HE APPEAL ORDER WAS PASSED AFTER OBTAINING REMAND REPOR T WITH RESPECT TO THE ADDITIONAL EVIDENCES PRODUCED AT THE APPELLATE STAGE WOULD NOT NULLIFY THE EFFECT OF THE ORDER PASS ED U/S 144. IN SUCH A SITUATION THE DISALLOWANCE OF INTERES T AND REMUNERATION MADE BY THE AO IS UPHELD. THE APPEAL ON THIS GROUND, THEREFORE, FAILS. HOWEVER, AD HOC ADDITION OF RS. 10.00 LACS UNDER THE HEAD TRADING, ADDITION UNDER HEAD UNSECURED LOAN AT RS. 58,72,312 /- U/S 68 AND DISALLOWANCE U/S 40(A)(IA) OF THE ACT AT RS.2,67,931 /- HAVE BEEN DELETED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE AR O F THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE BEFORE THE LD CIT (A) AND FURTHER ARGUED THAT THE FIRM WAS CONSTITUTED BY THE TWO PARTN ERS NAMELY LATE SHRI SANJAY DHANDIA AND SMT SUNITA DHANDIA. SMT. SUNITA DHANDIA RETIRED W.E.F 31.07.2009 AND THE FIRM BECAME PROPRIETORSHIP OF LATE SHRI SANJAY DHANDIA. UNFORTUNATELY SHRI SANJAY DHANDIA SUDDENLY DIED ON 28.08.2009 AT THE AGE OF 44 YEARS. THEREAFTER NO ONE WAS TO LOOK AFTER HIS OFFICE AS HE ALONE WAS DOING BUSINESS AND HIS WIF E WAS ONLY SLEEPING PARTNER. HE HAS A SON WHO WAS MINOR AN D A DAUGHTER ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 8 JUST JOINED INFOSYS AS TRAINEE AT MYSORE. THE BUSINE SS WAS CLOSED AUTOMATICALLY AFTER HIS DEATH AND THE OFFICE WAS VAC ATED. AS PER ORDER OF THE LD ASSESSING OFFICER, FIRST NOTICE WAS ISSUED ON 19.09.2009 FOR HEARING AND CASE WAS FIXED FOR 30.09.2009. FURTHER THREE NOT ICES WERE ISSUED BY THE ASSESSING OFFICER AT THE SAME ADDRESS OF THE AS SESSEE. FIRST NOTICE ISSUED ON 19/9/2009 IS NOT SURE WHETHER THE ASSESSE E HAD RECEIVED NOTICE OR NOT? ALL THE HEARINGS FIXED WAS AFTER THE DEATH OF LATE SHRI SANJAY DHANDIA AND AFTER THE CLOSURE OF HIS OFFICE AND BUSINESS HENCE, NO ONE COULD ATTEND THE PROCEEDINGS. HIS WIFE WAS NOT IN KNOWLEDGE ABOUT ANY SUCH INCOME TAX NOTICES FOR HEARING WAS GOING ON . THE INSPECTOR AFFIXED THE NOTICE ON OFFICE ADDRESS AT 4312 K G B KA RASTA JOHARI BAZAR JAIPUR, BUT IN FACT THAT OFFICE PLACE WAS VACATED AF TER THE DEATH OF LATE SHRI SANJAY DHANDIA AND THIS OFFICE WAS ON RENT SO I T WAS HANDED BACK TO THE LANDLORD, WHO HAD GIVEN THIS OFFICE ON RENT TO S OME OTHER PARTY IN THE MONTH NOVEMBER 2009 ITSELF. THEREFORE THE FIXATION OF NOTICE WAS AT WRONG PLACE AND NOT IN ACCORDANCE WITH THE LAW PRESCRI BED. THEREFORE, AT THE TIME OF ISSUING OF FURTHER NOTICES AND FIXATION OF THE ABOVE NOTICE THE ABOVE OFFICE WAS NOT IN ASSESSEES POSSESSION AND US E. HE RELIED ON THE DECISION IN THE CASE OF CIT VS RAMENDRA NATH GHOSH, 82 ITR 888 (SC). THE INSPECTOR OF THE INCOME TAX, WHO HAS SERVED THE N OTICE BY AFFIXTURE ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 9 ON THE ASSESSEE PLACE OF BUSINESS, BUT IN HIS REPOR T DID NOT MENTION THE NAMES AND ADDRESS OF THE PERSONS WHO IDENTIFIED THE PLACE OF BUSINESS OF THE ASSESSEE NOR DID HE MENTIONED IN HIS REPORT OR IN THE AFFIDAVIT FILED BY HIM THAT HE PERSONALLY KNEW THE PLACE OF BUSINESS OF THE ASSESSEE. ACCORDINGLY AS PER RULE 17 OF ORDER V OF CPC, THAT THE SERVICE OF NOTICE WAS NOT IN ACCORDANCE WITH THE LAW. THE FACTS OF HON'B LE SUPREME COURT DECISION IS IDENTICAL TO THE ASSESSEE AS NOWHERE IN THE ORDER THE LD ASSESSING OFFICER HAD MENTIONED THAT THE INSPECTOR HAD IDENTIFIED THE OFFICE AND THE OFFICE OF THE ASSESSEE WAS WORKING THE RE. THE INSPECTOR DID NOT ENQUIRE EVEN WHOSE OFFICE IS WORKING AT THE ABOVE ADDRESS. AS PER SECTION 282 OF THE ACT, IN WHICH PROCEDURE FOR SERVICE OF NOTICE HAS BEEN PRESCRIBED BY THE LAW UNDER THIS SECTION, THE N OTICE CAN BE SERVED ON THE PERSON THEREIN NAMED EITHER BY POST OR AS IF IT WAS A SUMMON ISSUED BY A COURT UNDER THE CODE OF CIVIL PROCEDURE , 1908 ( THE CPC). SECTION 283 DEALS WITH SERVICE OF NOTICE WHEN A FAMIL Y IS DISRUPTED OR A FIRM ETC IS DISSOLVED AND SECTION 284 DEALS WITH SER VICE OF NOTICE IN CASE OF DISCONTINUED BUSINESS. THUS THE AFFIXTURE OF NOT ICE WAS ALSO NOT IN ACCORDANCE WITH THE LEGAL PROCESS. THESE FACTS HAVE N OT BEEN DENIED BY THE LD AO AND THE LD CIT(A). THE LD AO COULD HAVE IN FORMED AND ISSUED NOTICE AT THE ADDRESS OF THE TAX AUDITOR WHOSE ADDRES S WAS AVAILABLE ON ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 10 RECORD IN AUDIT REPORT. THE CA OF THE ASSESSEE ALSO INFORMED ABOUT THE DEATH OF THE SHRI SANJAY DHANDIA TO THE DY. COMMISS IONER OF INCOME TAX CIRCLE 2, ON 01.09.2009 AND FILED A LETTER ON 01.09 .2009 AS THE LD CA HAD APPLIED FOR STAY AGAINST THE RECOVERY OF THE OUTSTA NDING IN CASE OF FIRM. THE APPEAL EFFECT ORDER FOR AY 06-07 DATED WAS GIVEN 30.10.2010 WITH REFUND WAS DISPATCHED AND DULY DELIVERED AT THE ADDR ESS OF R K DHANDIA & CO, CHARTERED ACCOUNTANT, 22 MOTI DOONGRI CIRCLE JAIPUR 302004 ON 01/11/2010. THE LD AR HAS DRAWN OUR ATTENTION ON COP Y OF ORDER AND ENVELOP OF REFUND ON WHICH DATE BY THE POSTAL AUTHOR ITY HAS BEEN GIVEN ON 30/10/2010. IT IS FACT THAT THE LD C.A. HAD INF ORMED THIS INCIDENT TO THE CONCERNED ASSESSING OFFICER. THE INSPECTOR HAS A LSO NOT MADE ANY EFFORTS TO IDENTIFY THE RESIDENCE OF SMT SUNITA DHA NDIA, THEREFORE SERVICE OF NOTICE WAS NOT AS PER LAW. THE LD CIT(A) IS ALSO NO T RIGHT IN HOLDING THAT THE ASSESSEE COULD HAVE CONVEYED THE CHANGE OF ADDRESS AS THE CA OF THE ASSESSEE HAD ALREADY INFORMED THE ASSESSING OFFICER AND ADDRESS IS OF THE CONCERNED CA WAS ON RECORD. AFTER DEATH OF SHRI SANJAY DHANDIA NUMBER OF LITIGATIONS GOT STARTED BY THE VARIUS PAR TIES, WHO ARE THE CREDITORS OF THE FIRM PARTICULARLY STANDARD CHARTER ED BANK WHO HAD GIVEN LOAN TO ASSESSEE FIRM AGAINST THE MORTGAGE OF RESID ENTIAL HOUSE. NUMBER OF CASES UNDER SECTION 138 OF NEGOTIABLE INSTRUMENT ACT FOR RECOVERY WAS ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 11 FILED. IN THESE CIRCUMSTANCES SHE HAD TO PART WITH H ER ONLY RESIDENTIAL HOUSE FOR REPAYMENT OF THE BANK LOANS. SHE WAS NOT H AVING ANY KNOWLEDGE ABOUT ANY PROCEEDING OR ANY NOTICE OF INCO ME TAX AS SHE WAS NOT WORKING PARTNER AND RETIRED FROM THE FIRM ALSO O N 31.07.2009. THESE CIRCUMSTANCES WERE BEYOND THE CONTROL OF THE ASSESSE E. THAT THE NOTICES SENT THEREAFTER RETURNED WITH REMARK: RECIPIENT LEF T WHICH PROVED THAT THE OFFICE WAS VACATED DUE TO DEATH OF SHRI SANJAY D HANDIA. EVEN AFTER THE LD ASSESSING OFFICER SENT FURTHER NOTICE ON THE VERY SAME ADDRESS. THE ASSESSEE WAS PASSING THROUGH VERY TIGHT FINANCIAL POSITION. A DEMAND FOR AY 06-07 WAS RAISED FOR WHICH ASSESSEE HAD ALREAD Y REQUESTED FOR STAY AND AGAIN REQUESTED VIDE LETTER DATED 13.08.20 09 TO KEEP IN ABEYANCE THE DEMAND TILL THE APPEAL IS DECIDED BY H ONBLE CIT (A)-I JAIPUR BECAUSE IN THE SIMILAR ISSUE IN THE AY 05-0 6 ASSESSEE HAD RECEIVED FULL RELIEF. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 2 DID NOT ACCEPT THE REQUEST AND REJECTED THE STAY APPLICATIO N ON 19.08.2009 WHICH WAS RECEIVED BY THE ASSESSEE ON 24.08.2009. THE LD AR FURTHER ARGUED THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSE E AS HAS BEEN ALLEGED BY THE LD. ASSESSING OFFICER. THE QUESTION OF NON AT TENDING OF HEARING ARISEN WHEN THE NOTICES COULD HAVE BEEN SERVED. THE N OTICES DATED 25.05.10, 22.10.2010, AND 18.11.2010 WERE ISSUED AF TER THE DEATH OF SHRI ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 12 SANJAY DHANDIA. THE INFORMATION ABOUT THE DEATH OF T HE ASSESSEE WAS IN THE KNOWLEDGE WITH THE CIRCLE- 2. THESE FACTS SHOWS TH AT THE LD AO HAS MADE THE BEST ASSESSMENT ORDER UNDER SECTION 144 IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND IS BAD IN LAW. THE B EST ASSESSMENT WAS ALSO MADE ON THE BASIS OF AUDIT REPORT AVAILABLE AL ONGWITH THE RETURN AND ON THE BASIS OF COMPUTATION OF INCOME. THE LD. AO H AD NOT ALLOWED RS.2,77,532 BEING PAYMENT OF INTEREST ON PARTNERS C APITAL AND RS 5,03,509 PAYMENT OF REMUNERATION TO WORKING PARTNER LATE SHRI SANJAY DHANDIA. THERE WAS NO CHANGE IN THE PARTNERSHIP DEED DURING THE PREVIOUS YEAR. THE INTEREST PAYMENT ON CAPITAL IS AS PER PROVISION OF THE INCOME TAX ACT AND AS PER RATE PERMISSIBLE AND THE R EMUNERATION IS ALSO AS PER PROVISION OF ACT AND DEED OF PARTNERSHIP. THE SE FIGURES OF DISALLOWANCE WERE TAKEN BY THE ASSESSING OFFICER FROM THE COMPUTATION OF INCOME ITSELF AND AUDITED BALANCE SHEET. IN ABSE NCE OF THIS INFORMATION, THE FIGURES CANNOT BE ASCERTAINED BY T HE ASSESSING OFFICER AND NO ADDITION CAN BE MADE BY THE ASSESSING OFFICE R IN ABSENCE OF FIGURES GIVEN IN THE AUDIT REPORT. HE FURTHER ARGUE D THAT THE ASSESSEE MADE APPLICATION UNDER RULE 46A BEFORE THE LD CIT(A) TO ADMIT THE EVIDENCES BUT THE SAME HAS NOT BEEN CONSIDERED BY T HE LD CIT(A) AND HELD THAT INTEREST AND REMUNERATION PAID TO THE PAR TNERS ARE RIGHTLY BE ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 13 DISALLOWED BY THE LD ASSESSING OFFICER U/S 144 OF T HE ACT. AS PER SECTION 184(5) THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE AS MENTIONED IN SECTION 144 AS NOTICES WERE NOT SENT ON PROPER AD DRESS AND NOT SERVED ON THE RETIRED PARTNER SMT. SUNITA DHANDIA. THE AS SESSEE APPEARED BEFORE THE LD CIT(A) AND PRODUCED BOOKS OF ACCOUNT A ND OTHER REQUIRED EVIDENCES BEFORE HIM, WHICH WAS ADMITTED BY HIM AS EV IDENT FROM THE ADDITION DELETED BY HIM. THE LD CIT(A) REMANDED THE M ATTER TO THE ASSESSING OFFICER, THE LD ASSESSING OFFICER IN TURN REQUIRED THE ASSESSEE VIDE HIS NOTICE U/S 142 DATED 12/11/2013 TO PRODUCE ALL THE BOOKS OF ACCOUNT AND OTHER RECORDS, WHICH WAS DULY COMPLIED WIT H AS EVIDENTLY ADMITTED BY THE ASSESSING OFFICER. THE FOLLOWING EXTR ACT FROM THE REMAND REPORT SUBMITTED BY LETTER DATED 2421 DATED 10/1/20 14, WHICH IS AS UNDER:- IN ORDER TO COMPLETE THE REMAND REPORT PROCEEDING NOTICE U/S 142 WAS ISSUED TO ASSESSEE ON 12.11.2013 --- IN RESPONSE THERETO SH R K DHANDIA CA AND A/R OF TH E ASSESSEE APPEARED AND FILED REQUISITE DETAILS AND P RODUCED BOOKS OF ACCOUNTS WHICH WERE EXAMINED ON TEST CHECKED BASIS. ON THE BASIS OF HEARING DURING REMAND PROCEE DINGS AND DETAILS FURNISHED IT IS SUBMITTED THAT ------- ONE OF THE PARTNER OF THE ASSESSEE FIRM DIED ON 28.09.2009 AND OTHER PARTNER SMT. SUNITA DHANDIA ALSO RETIRED FROM FIRM ON ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 14 31.07.2009. THE CHILDREN OF SH. DHANDIA WERE NOT IN A POSITION TO HANDLE THE BUSINESS, HENCE THE BUSINESS OF THE FIRM WAS CLOSED AND OFFICE WAS VACATED. DEATH CERTIFI CATE OF SH. SANJAY DHANDIA IS SUBMITTED BY THE A/R WHICH IS ANNEXED AT PAGE NO. 17 TO 20 OF THIS PAPER BOOK. IN THESE CIRCUMSTANCES, UNDERSIGNED HAS NO OBJECTION IF YOUR GOODSELF ADMITS THE ADDITIONAL EVIDENCE SUBMITTED FIRST TIME BEFORE YOUR GOODSELF. THUS, THERE WAS ADMITTEDLY SUFFICIENT COMPLIANCE MADE BY THE ASSESSEE AND THE LD. CIT(A) ALSO ADMITTED ALL THE EVIDENCES, BOOKS OF ACCOUNTS, ETC. HENCE, THE DEFAULT AS ALLEGED BY THE AO ORIGIN ALLY U/S 144 REMAINED NO MORE IN EXISTENCE AND THE VERY CONDITION TO INVO KE SEC. 184(5) REMAINED NO MORE. HENCE NO DISALLOWANCE COULD HAVE BEEN MADE/ CONFIRMED. HE FURTHER RELIED ON THE DECISION IN THE CASE OF J EE ENN ENGINEERS VS. ITO (2010) 29 CCH 0462 ASR TRIB/131 TTJ 0082 (UO) /42 DTR 0166 WHEREIN THE ASSESSING OFFICER MADE ASSESSMENT U/S 14 4. THE ASSESSEE REMAINED ABSENT FROM THE ASSESSMENT PROCEEDINGS THE N THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 184(5) AN D DISALLOWED THE INTEREST AND SALARY. THE LD CIT(A) REMANDED THE MATTE R BACK TO THE ASSESSING OFFICER, THEREFORE, THE HONBLE BENCH HEL D THAT THE ORIGINAL ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 15 DEFAULT COMMITTED U/S 142 IS WASHED OFF BUT IN ASSES SEES CASE, EVEN AFTER REMAND REPORT AND PRODUCTION OF BOOKS OF ACCO UNT BEFORE THE LD ASSESSING OFFICER, THE LD CIT(A) HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER U/S 184(5) OF THE ACT. HE FURTHE R RELIED ON THE FOLLOWING CASE LAWS:- (I) SURENDRA PRASAD MISRA VS. ITO (2005) 24 CCH 06 10 (LUCKNOW TRIB)/104 TTJ 0292/7 SOT 0457. (II) ITO VS. RESHI CONSTRUCTION CO. (ITA NOS. 462 A ND 478/ASR/2008, DT. 22ND JULY, 2008). THE CASE LAW CITED BY THE LD CIT(A) I.E. RADHA PICTUR E PALACE (SUPRA) IS DISTINGUISHABLE AS IN THAT CASE NO RETURN WAS FILED U/S 139 OF THE ACT BUT FILED U/S 148 OF THE ACT ONLY. IN ASSESSEES CASE, RETURN FOR A.Y. 2008-09 WAS FILED ON 30/09/2008 WITHIN TIME PRESCRIBED U/S 13 9(1) OF THE ACT. THE ASSESSEE MADE COMPLIANCE OF NOTICE U/S 142 DATED 1`2/11/2013 AND ALSO FILED EVIDENCES AND PRODUCED BOOKS OF ACCOUNT BEFORE THE LD ASSESSING OFFICER IN REMAND PROCEEDINGS, THEREFORE, THE ASSESSEE HAS NOT CONTRAVENED ANY CONDITION U/S 144 OF THE ACT. IT IS FURTHER ARGUED THAT IF THESE ADDITIONS GET CONFIRMED IN THE FIRM, THE RECI PIENT PARTNERS HAVE ALREADY DECLARED THE INCOME FROM INTEREST AND SALAR Y AS THEIR BUSINESS INCOME AND IN THEIR RESPECTIVE RETURNS OF INCOME. H E HAS DRAWN OUR ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 16 ATTENTION ON COMPUTATION OF INCOME OF BOTH THE PART NERS AND FILED RETURN ON 17/1/2009 FOR A.Y. 2008-09. AS PER SECTION 28(V) , THIS INCOME IN THE HANDS OF PARTNER HAS BEEN ASSESSED AS INCOME FROM B USINESS AND PROFESSION. THUS, DOUBLE TAXATION UNDER THE LAW IS N OT PERMITTED, THEREFORE, HE PRAYED TO ALLOW THE ASSESSEES APPEAL. 5. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LD ASSESSING OFFICER AS WELL AS LD CIT(A) AND ARGUED THAT THE LD ASSESSING OFFICER HAS SERVED THE NOTICE BY AFFIXTURE THROUGH WARD INSPECTOR AND SUBMITTED THE REPORT OF SERVICE OF NOTICE BY HIM, T HEREFORE, ORDER OF THE LD CIT(A) MAY PLEASE BE CONFIRMED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS UNDISPUTED FACT THAT THE RETURN FOR A.Y. 2008-09 WAS FILED ON 30/09/2008. THE ASSESSEES CASE WAS AUDITABLE U/S 40(AB) OF THE ACT. THE RETURNS OF P ARTNERS WERE FILED ON 17/1/2009. THE FIRST NOTICE U/S 143(2) WAS ISSUED ON 19/9/2009 AND DATE OF HEARING WAS FIXED BY THE ASSESSING OFFICER F OR 30/09/2009. THE LD ASSESSING OFFICER CLAIMED THAT THIS NOTICE WAS SERVE D ON THE ASSESSEE AND PLACED THE ACKNOWLEDGMENT SLIP IN THE ASSESSMENT ORD ER. WHEN THE WORKING PARTNER LATE SHRI SANJAY DHANDIA DIED ON 28/ 8/2009, IT IS NOT ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 17 CLEAR THAT ON WHICH PERSON, THE NOTICE DATED 19/9/2 009 WAS SERVED. IT IS NOT POSSIBLE BY LATE SHRI SANJAY DHANDIA TO ATTEND THE ASSESSMENT PROCEEDINGS AFTER HIS DEATH ON 28/8/2009 AS ALL THE NOTICES WERE ISSUED AFTER HIS DEATH. HIS WIFE ALSO RETIRED FROM THE FIRM AS ON 31/7/2009 AND FIRM BECAME PROPRIETORSHIP OF LATE SHRI SANJAY DHAN DIA. THE FINAL NOTICE WAS SERVED BY THE LD ASSESSING OFFICER BY AFFIXTURE THROUGH WARD INSPECTOR IN THE PRESENCE OF INDEPENDENT WITNESSES O N 19/11/2010. WHEN ALL THE OTHER PROCEEDINGS WERE GOING ON BEFORE THE SAME ASSESSING OFFICER, WHO HAS GIVING THE APPEAL EFFECT AND SENT T HE REFUND AT THE ADDRESS OF THE C.A. I.E. R K DHANDIA & CO., CHARTER ED ACCOUNTANT, 22 MOTI DOONGRI CIRCLE JAIPUR 302004. IT IS EVIDENT FR OM THE FILE THAT THIS ADDRESS WAS KNOWN TO THE ASSESSING OFFICER AND WAS AV AILABLE ON ASSESSMENT RECORD, EVEN AFTER THE NOTICE U/S 142/14 3(2) OF THE ACT HAD BEEN SENT ON THE ADDRESS AT 4312, 1 ST FLOOR, K.G.B. KA RASTA, JOHARI BAZAAR, JAIPUR, THEREFORE, WE HELD THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN SERVING THE NOTICE ON PROPER PL ACE AND PROPER PERSON, WHICH IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THE APPLICATION OF SECTION 184(5) GOT WASHED OFF WHEN THE ASSESSEE PRO DUCED THE REQUIRED DETAILS AS WELL AS COMPLETE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER, WHO HAD ALSO GIVEN POSITIVE REPORT IN FAVOUR OF THE ASSESSEE, WHICH HAS ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 18 BEEN REPRODUCED IN PRECEDING PARAS. THE LD ASSESSING OFFICER IN REMAND REPORT HAS RECOMMENDED THAT THE DEFAULT AS ALLEGED BY THE ASSESSING OFFICER ORIGINALLY U/S 144 OF THE ACT REMAINED NO M ORE IN EXISTENCE AND THE VERY CONDITION TO REVOKE SECTION 184(5). HENCE NO DISALLOWANCE COULD HAVE BEEN MADE/ CONFIRMED. THE LD AR PLACED RELIANCE ON THE DECISION IN THE CASES OF JEE ENN ENGINEERS VS. ITO AND SURENDRA PRASAD MISRA VS. ITO (SUPRA) ARE SQUARELY APPLICABLE, THEREFORE, WE RE VERSE THE ORDER OF THE LD CIT(A) AND DIRECTED TO THE ASSESSING OFFICER TO ASSESS THE ASSESSEE AS SUCH, DISALLOWANCE MADE U/S 184(5) OF THE ACT IS HEREBY DELETED. 7. GROUND OF THE 4 OF THE ASSESSEES APPEAL IS CONS EQUENTIAL IN ABOVE FINDINGS, THEREFORE THE LD ASSESSING OFFICER TAKE D ECISION AS PER LAW. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/06/2016. SD/- SD/- DQYHKKJR VH-VKJ-EHUK (KUL BHARAT) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17 TH JUNE, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S VISION JEWELLERS, JAIPUR. ITA NO. 360/JP/2014 M/S VISION JEWELLERS VS ACIT 19 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT (OSD), JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 360/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR