SHRI MEHFOOZ ALI, Jaipur V. ITO, Jaipur

ITA 405/JPR/2012

• Counselvise Citation: 40523114 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 27-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: MAHENDRA GARGIYEA
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Condonation of delay
• Section: 234B; 144; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR ( BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAINI ) ITA NO. 405/JP/2012 ASSESSMENT YEAR: 2005-06 PAN: ACNPA 1346 C SHRI MEHFOOZ ALI VS. THE ITO PROP. M/S. MAZHAR INTERNATIONAL WARD 2(1) 4302, PAHARGANJ, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHENDRA GARGIYEA DEPARTMENT BY : SHRI D.C. SHARMA DATE OF HEARING : 17.01.2014. DATE OF PRONOUNCEMENT : 11.03.2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD CIT(A) I, JAIPUR DATED 03.01.2011 FOR THE A.Y. 20 05-06. 2.0 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. THE IMPUGNED ADDITIONS AND DISALLOWANCES MADE I N THE ORDER U/S 144 OF THE ACT DATED 10.12.2007 ARE BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHER RE ASONS AND HENCE THE SAME KINDLY BE DELETED. 2 2.1 THE LD. AO ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN FRAMING THE ASST. U/S 144 WITHOUT AFFORDING ADEQUAT E AND REASONABLE OPPORTUNITY AND EVEN WITHOUT COMPLYING WITH THE MAN DATORY STATUTORY REQUIREMENT OF LAW. THE IMPUGNED ORDER HAVING BEEN FRAMED IN GROSS BREACH OF NATURAL JUSTICE, KINDLY BE QUASHED. 2.1 RS.1,54,254/-: THE LD. CIT(A) ERRED IN LAW AS W ELL AS ON THE FACTS OF THE CASE IN INVOKING SEC.145(3) OF THE ACT. THE PROVISION SO INVOKED BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, THE SAME KINDLY BE QUASHED. CONSEQUENTLY THE TRADING ADDITIO N OF RS.1,54,254/- KINDLY BE DELETED IN FULL. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE 2.2 THE LD. CIT(A) FURTHER ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE GP RATE OF 22% (APPLIED BY T HE AO) AS AGAINST 19.38% DECLARED BY THE ASSESSEE. HENCE THE GP RATE SO APPLIED AND THEREBY SUSTAINING ADDITION OF RS.1,54,254/- IS TOT ALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND HEN CE, THE ADDITION KINDLY BE DELETED IN FULL. 3. RS.6,77,000/-: THE LD. CIT(A) ERRED IN LAW AS WE LL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.6 ,77,000/- MADE U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED INCOME IN T HE FORM OF UNSECURED LOANS. THE DISALLOWANCE SO MADE AND CONFI RMED BY THE LD. CIT(A) IS TOTALLY CONTRARY TO THE PROVISIONS OF L AW AND FACTS ON THE RECORD AND HENCE, THE SAME KINDLY BE DELETED IN FU LL. 4. RS.81,882/-: THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.81,8 82/- OF THE HOUSING LOAN INTEREST CLAIMED U/S 24(B) OF THE ACT. THE DIS ALLOWANCE SO MADE AND CONFIRMED BY THE LD. CIT(A) IS TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND HENCE, THE SA ME KINDLY BE DELETED IN FULL. 5. RS.1,00,000/-: THE LD. CIT(A) ERRED IN LAW AS WE LL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF RS.1 ,00,000/- OUT OF RS.8,38,738/- CLAIMED BY THE ASSESSEE ON ACCOUNT OF EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT. THE DISALLOWANCE SO MADE AND CONFIRMED BY THE LD. CIT(A) IS TOTALLY CONTRARY TO THE PROVISIONS OF 3 LAW AND FACTS ON THE RECORD AND HENCE, THE SAME K INDLY BE DELETED IN FULL. 6. THE LD. AO FURTHER ERRED IN LAW AS WELL AS ON TH E FACTS OF THE CASE IN CHARGING INTEREST U/S 234B OF THE ACT. THE APPELLAN T TOTALLY DENIES ITS LIABILITY OF CHARGING OF ANY SUCH INTEREST. THE INT EREST SO CHARGED, BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. 3.1 AT THE TIME OF HEARING, THE LD. AR DREW OUR ATT ENTION TOWARDS A PRAYER FILED FOR CONDONATION OF DELAY U/S 5 OF THE LIMITAT ION ACT. HE STATED THAT THE ORDER OF THE LD. CIT(A) WAS PASSED ON 03.01.2011. H OWEVER, A CERTIFIED COPY OF THE ORDER WAS RECEIVED ON 18.04.2012 AND APPEAL WAS TO BE FILED BEFORE ITAT ON 17.06.2012 WHEREAS THE SAME HAS ALREADY BEE N FILED ON 27.04.2012, AND AS SUCH THERE IS NO DELAY. AS A MATTER OF PRECA UTION, HE FURTHER SUBMITTED THAT EVEN ASSUMING THERE MAY BE SOME DELAY, THERE W AS SUFFICIENT CAUSE BEHIND THE DELAY BECAUSE THE TAX AFFAIRS OF THE ASS ESSEE WERE EARLIER HANDLED BY SHRI Z.A. KHAN ADVOCATE. SINCE THE ASSESSEE FREQ UENTLY TRAVELLED ABROAD AND MOSTLY REMAINS OUTSIDE INDIA FOR A SUBSTANTIAL PERIOD IN CONNECTION WITH HIS EXPORT BUSINESS, HENCE, HE WAS TOTALLY DEPENDEN T UPON HIS TAX CONSULTANT. EVEN THE FIRST APPEAL WAS FILED BY THE SAME COUNSEL AND HE WAS SUPPOSED TO KEEP A TRACK OVER THE DEVELOPMENTS THEREIN. HE SUBM ITTED THAT HOWEVER, THE SAID LD. COUNSEL WAS NOT ABLE TO PROPERLY HANDLE HI S TAX AFFAIRS AND THE ASSESSEE FEELING DISSATISFIED, DECIDED TO TAKE BACK HIS FILES FROM THE SAID 4 COUNSEL. IN THIS CONNECTION, HE MET HIM SOMETIMES I N THE MONTH OF APRIL, 2012 AND WHEN ENQUIRED AS TO THE FATE OF THE APPEAL FILED, HE EXPRESSED HIS IGNORANCE. EVEN IN THE PAPERS AND FILES TAKEN BACK FROM THE SAID COUNSEL ALSO, NO APPELLATE ORDER COULD BE TRACED. WHEN THE ASSESSEE ENGAGED NEW COUNSEL NAMELY SH. AZIZUDDIN ADVOCATE AND WHEN FROM THE OFFICE OF THE LD. CIT(A)-I JAIPUR ENQUIRIES WERE MADE, IT WAS TOLD T HAT AN ORDER HAD ALREADY BEEN PASSED ON 03.01.2011 AND IN THEIR RECORD NO DOCUMENT EVIDENCING SERVICE OF THE IMPUGNED ORDER WAS AVAILABLE. IT IS UNDER THESE CIRCUMSTANCES, THE ASSESSEE APPLIED FOR A CERTIFIED COPY WHICH WAS RECEIVED ONLY ON 18.04.2012, AND IMMEDIATELY THEREAFTER, APPEAL WAS FILED ON 27.04.2012, I.E., WITHIN THE LIMITATION OF 60 DAYS AND HENCE, OTHERWI SE THERE WAS A SUFFICIENT CAUSE, IF SOME DELAY IS ASSUMED. WHEN ASKED, THE L D. DR WAS FAIR ENOUGH TO RAISE NO OBJECTION ON THIS ACCOUNT. 3.2 AFTER HEARING THE PARTIES, WE ARE CONVINCED THA T THERE IS NO DELAY IN FILING OF THE APPEAL IN AS MUCH AS AFTER THE RECEIP T OF THE CERTIFIED COPY OF THE ORDER OF THE LD. CIT(A) ON 18.04.2012, APPEAL WAS F ILED ON 27.04.2012 WITHIN THE PRESCRIBED LIMITATION. THERE APPEARS NO OTHER DATE OF SERVICE. HENCE, THE APPEAL IS TREATED AS HAVING BEEN FILED W ITHIN THE PERIOD OF LIMITATION. NOW WE PROCEED TO ADJUDICATE UPON THE G ROUNDS TAKEN BY THE ASSESSEE. 5 4.1 WE HAVE HEARD THE PARTIES ON THE MERITS OF THI S CASE. IN GROUNDS OF APPEAL NO. 1 & 2.1, THE ASSESSEE HAS CHALLENGED THE PASSING OF THE ORDER U/S 144 OF THE ACT, WITHOUT AFFORDING ADEQUATE AND REAS ONABLE OPPORTUNITY AND EVEN WITHOUT COMPLYING WITH THE MANDATORY AND STATU TORY REQUIREMENT OF LAW HENCE, IT IS PRAYED THAT THE IMPUGNED ORDER BE QUASHED. 4.2 BRIEFLY STATED, THE RELEVANT FACTS ARE THAT TH E APPELLANT IS ENGAGED IN THE BUSINESS OF MANUFACTURING, EXPORTING AND DEALI NG IN THE PRECIOUS AND SEMI PRECIOUS STONES. HE FILED HIS RETURN OF INCOM E [ROI]} ON 31.10.2005 DECLARING TOTAL INCOME OF RS.2,25,750/-. THE A.O. H AS ALLEGED THAT THERE WAS NO RESPONSE TO THE SHOW-CAUSE NOTICES DATED 03.10.2 007 & 12.11.2007 FROM ASSESSEES SIDE. HENCE, THE AO ISSUED THE FINAL SHO W CAUSE NOTICE DATED 30.11.2007 FIXING THE HEARING ON DATED 07.12.2007. HOWEVER, THERE WAS NO RESPONSE TO THAT NOTICE ALSO. THEREFORE, THE AO PAS SED THE ASSESSMENT ORDER U/S 144 OF THE ACT AT A TOTAL INCOME OF RS.12,38,8 90/-. FEELING AGGRIEVED, WHEN THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A ),HE HAS ALSO CONFIRMED THE ACTION TAKEN BY THE A.O. U/S 144 OF THE ACT O N THE GROUND THAT FROM THE ASSESSMENT ORDER ITSELF IT IS VERY CLEAR THAT VARIO US OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE AND BEFORE MAKING ADDITION, SHOW CA USE NOTICES WERE ISSUED. HE HAS STATED THAT EVEN THE LD. AR REMAINED NON CO OPERATIVE DURING THE 6 ASSESSMENT PROCEEDINGS AS WELL AS AT THE APPELLATE PROCEEDINGS AND HENCE, PASSING OF ORDER U/S 144 IS JUSTIFIED. 4.3 FEELING AGGRIEVED, THE ASSESSEE HAS CHALLENGE D THE ORDER PASSED EX-PARTE VIDE GROUNDS OF APPEAL NO.1 AND 2.1 REPROD UCED ABOVE. 4.4 THE LD. AR VEHEMENTLY ARGUED THAT EX-PARTE AS SESSMENT ORDER, IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, IS N OT AT ALL JUSTIFIED. HE HAS SUBMITTED THAT IT WAS NOT A CASE OF COMPLETE NON-CO MPLIANCE IN AS MUCH AS THE AO HIMSELF AT PAGE 1 PARA 1 HAS ADMITTED THAT THE ASSESSE ATTENDED HIS OFFICE FROM TIME TO TIME AND HAD FILED WRITTEN RE PLY. FURTHER, THE COOPERATION FROM ASSESSEE'S SIDE IS EVIDENT FROM L ETTER NO.1496 DATED 12.11.2007 ISSUED BY THE AO (REPRODUCED AT PAGE 6 O F THE ASSESSMENT ORDER) THAT ON 15.09.2006 THE LD. AR ATTENDED IN COMPLIAN CE TO NOTICE U/S 143(2). IN REPLY TO THE NOTICE DATED 22.01.2007 ISSUED U/S 142(1), THE APPELLANT FILED REPLY VIDE LETTER DATED 21.02.2007 AND THEREAFTER, CASE WAS ADJOURNED TO 07.03.2007 ON THE APPLICATION OF THE ASSESSEE. AGA IN ON 11.07.2007, THE LD AR WAS PRESENT AND PRODUCED BOOKS OF ACCOUNT WHICH WERE EVEN EXAMINED BY THE AO. ON 18.07.2007 THE LD. AR WAS AGAIN PRESE NT (AS NOTED BY THE AO AT PAGE 4). HOWEVER AFTER A LAPSE OF 2 YEARS FROM T HE FILING OF RETURN OF INCOME ON 31.10.2005, THE AO VIDE LETTER DATED 03.1 0.2007 ASKED FOR PRODUCING AS MANY AS 40 PERSONS (AO PAGE 5). IN COM PLIANCE, THE ASSESSEE 7 COULD ,ADMITTEDLY, FILE CONFIRMATION OF 9 PERSONS, 4 PERSONS WERE PRODUCED FOR VERIFICATION AND EVEN THEIR STATEMENTS WERE REC ORDED, THERE APART, ONE PERSON NAMELY SALMUDDIN WAS ALSO PRESENT FOR VERIFI CATION AND HIS STATEMENT WAS ALSO RECORDED. THUS, THE MATTER WAS DULY ATTEN DED EITHER FOR FILING OF THE DETAILS OR FOR SEEKING TIME. FURTHER, THE A.O. HAS HIMSELF NOTED THAT THERE WERE OPENING BALANCES IN SOME CASES OF THE CASH CRE DITORS, HENCE, IT IS EVIDENT THAT THE ISSUE REQUIRED A PATIENT HEARING A ND EXAMINATION. HOWEVER, IMMEDIATELY THEREAFTER, ON 10.12.2007, THE AO COMP LETED THE ASSESSMENT HURRIEDLY WITHIN A SHORT PERIOD OF TWO MONTHS (I.E. 03.10.2007 TO 10.12.2007). HE FURTHER SUBMITTED THAT IF THE ASSES SMENT WAS GETTING TIME BARRED ON 31.12.2007, THE AO SHOULD NOT HAVE KEPT A SILENCE FOR ALMOST 2 YEARS AND TO ASK THE ASSESSEE TO ADDUCE EVIDENCE T O BE COMPLIED WITH AT THE FAG END. HE SUBMITTED THAT THE LEGISLATURE HAS PUR PORTEDLY ALLOWED A REASONABLE PERIOD OF AROUND MORE THAN 2 YEARS FOR T HE AO TO COMPLETE THE ASSESSMENT AFTER FILING OF THE RETURN. THUS, EVEN THOUGH SOME OPPORTUNITY MIGHT HAVE BEEN GIVEN BY THE AO BUT WERE ILLUSORY A ND WERE NOT EFFECTIVE AND ADEQUATE. HE RELIED UPON THE DECISION OF THE C ASE OF HARENDRA SINGH DHILLON, NAAGAON V/S ITO (2012) 32 CCH 103 (DEL). I N ADDITION, THE LD. A/R HAS ALSO MADE SUBMISSION ON MERITS WITH A VIEW TO B RING HOME THE POINT THAT EVEN APART FROM THE ISSUE OF PROPER OPPORTUNITY NO T GIVEN, OTHERWISE, SUCH 8 ASSESSMENT CANNOT BE SAID TO BE A BEST JUDGMENT ASS ESSMENT AS HAS BEEN CONTEMPLATED BY SEC.144 OF THE ACT. HE SUBMITTED TH AT U/S 144 THE AO DOES NOT HAVE ARBITRARY POWERS. THE LAW ENJOINS UPON HI M A MORE ONEROUS DUTY TO TAKE A BEST JUDGMENT AND TO MAKE AN HONEST ESTIM ATION. THE LD. AR FURTHER SUBMITTED THAT THE TRADING ADDITION WAS MADE WITHOU T PROPERLY APPRECIATING THE FACTS THAT THERE WAS COMPLETE CHANGE IN THE BUS INESS BECAUSE THE ASSESSEE HAD SHIFTED FROM EXPORT BUSINESS TO SALE IN THE LO CAL MARKET. FURTHER, ADDITION U/S 68 OF RS.6,77,000/- WAS MADE BUT WITH A VIEW TO MAKE A BEST JUDGMENT ASSESSMENT, THE AO WAS SUPPOSED TO HAVE AL LOWED ON HIS OWN THE BENEFIT OF SET OFF OF THE TRADING ADDITION ALREADY MADE BY HIM AS HAS BEEN HELD IN THE CASE OF CIT V/S G.K. CONTRACTOR (2009) 19 DTR 305 (RAJ). HE FURTHER SUBMITTED THAT AN ADHOC DISALLOWANCE OF RS. 1,00,000/- WAS MADE WITHOUT PROVIDING ANY JUSTIFIABLE REASON OR ANY VAL ID BASIS. THUS, EVEN ON MERITS THE AO HAS NOT COMPLIED WITH THE MANDATE OF MAKING THE BEST JUDGMENT ASSESSMENT AND THE ADDITIONS WERE MADE MER ELY TO PENALIZE THE ASSESSEE. IN SUPPORT, HE RELIED UPON THE COMMENTARY BY THE LD. AUTHORS CHATURVEDI PETHISARIA VOL. 3 ADDITION V AT PAGE 493 2 AND ALSO ON CERTAIN DECISIONS IN THE CASES OF CIT V/S LAXMINARAIN BADRI DAS (1937) 5 ITR 170, 180 (PC) AND K.T. THOMAS V/S AG ITO, (1990) 184 ITR 561, 565 (KER.), JOT RAM SHER SINGH V/S CIT (1934) 2 ITR 129 (ALL.), BRI JBHUSHANLAL PARDUMAN 9 KUMAR V/S CIT (1978) 115 ITR 524 (SC) AND SRI SHANK AR KHANDASARI SUGAR MILLS V/S CIT (1992) 193 ITR 669 (KAR.). 4.5 PER CONTRA, THE LD. D/R HAS HEAVILY RELIED UP ON THE FINDINGS OF THE AO AND ON THE ORDER OF THE LD. CIT(A) WHO HAS CON FIRMED THE ACTION OF THE AO IN PASSING ORDER U/S 144 OF THE ACT. 4.6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND HAVE PERUSED THE ENTIRE MATERIAL ON RECORD. WE HAVE ALSO CAREFULLY CONSIDER ED THE FINDINGS RECORDED BY THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS . IT IS NOTICED THAT THE RETURN OF INCOME WAS FILED ON 31.10.2005 AND THE AO OF COURSE, RAISED QUERIES AND ASKED THE ASSESSEE TO FILE CERTAIN. THE AO HAS NOTED THAT THERE WERE AS MANY AS 40 PERSONS FROM WHOM UNSECURED LOAN S OF RS.8,00,000/- WERE OBTAINED BY THE ASSESSEE. TILL JANUARY, 2007 T HE ASSESSEE WAS ONLY ASKED TO FILE CONFIRMATIONS, FULL ADDRESSES, COPY O F BANK STATEMENT ETC. OF ALL THESE PERSONS VIDE LETTER DATED 22.01.2007. IT APP EARS THAT THEREAFTER, VIDE LETTER DATED 07.06.2007 THE ASSESSEE WAS ASKED TO P RODUCE THESE PERSONS. THEREAFTER, VIDE HIS LETTER DATED 03.10.2007, AS H AS BEEN MENTIONED AT PAGE 5 OF THE ASSESSMENT ORDER, THE AO PROPOSED TO TREAT THE UNSECURED LOANS OF THESE 40 PERSONS SHOWN IN THE BALANCE SHEET, AS U NEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND THE MATTER WAS FIXED FOR HEARING ON 17.10.2007 INVITING 10 ASSESSEES OBJECTION, IF ANY THERETO. THEREAFTER, A LLEGING NON-COMPLIANCE ON 12.11.2007, A SHOW-CAUSE WAS GIVEN FOLLOWED BY FIN AL SHOW-CAUSE NOTICE ISSUED VIDE LETTER DATED 30.11.2007. THEREAFTER, ON 10.12.2007, THE IMPUGNED ASSESSMENT WAS COMPLETED. IT IS NOT DENIED THAT THE ASSESSEE FILED CONFIRMATIONS OF 9 PERSONS AND 4 PERSONS WERE ALSO PRODUCED WHOSE STATEMENTS WERE RECORDED. THE ASSESSEE THUS, DID TR Y TO COMPLY WITH THE REQUIREMENT THOUGH PARTLY. HOWEVER, ON 10.12.2007 I TSELF WHICH IS WITHIN A SHORT SPAN OF 2 MONTHS ONLY, THE ASSESSMENT WAS COM PLETED. THE REQUIREMENT TO PRODUCE CREDITORS WAS MADE LONG AFTE R FILING OF THE RETURN OF INCOME. WHEN THE AO KNEW OF THE FACT THAT THE VOLUM INOUS REQUIREMENTS WOULD HAVE BEEN MADE BY HIM WHICH ALSO INCLUDED EXA MINATION OF SO MANY PERSONS, HE WAS EXPECTED OF MAKING THE REQUIREMENT TO PRODUCE THE PERSONS AT AN EARLY AND SUITABLE TIME. IT HAS TO BE KEPT IN MIND THAT THE CREDITORS ARE THIRD PARTIES AND ARE NOT UNDER THE DICTATING TERM OF THE ASSESSEE. COMING TO THE LEGAL POSITION, IN THE CASE OF JOT RAM SHER SIN GH (SUPRA) IT IS HELD THAT AN EX-PARTE ASSESSMENT SHOULD NOT BE INFLUENCED BY A D ESIRE TO PUNISH THE ASSESSEE FOR NON-COMPLIANCE WITH A NOTICE. SIMILARL Y IN BRIJ BHUSHANLAL PARDUMAN KUMAR (SUPRA) IT IS HELD THAT THE AUTHORIT Y MAKING A BEST JUDGMENT ASSESSMENT MUST MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME OF THE ASSESSEE AND THOUGH ARBITRARINESS CANNOT BE AVOIDED IN SUCH ESTIMATE, THE 11 SAME MUST NOT BE CAPRICIOUS BUT SHOULD HAVE A REASO NABLE NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF THE CAS E. FURTHER IN SRI SHANKAR KHANDASARI SUGAR MILLS (SUPRA) IT IS HELD THAT BEST JUDGMENT ASSESSMENT OUGHT TO BE BASED ON A FAIR AND PROPER ESTIMATE OF ASSESSEES INCOME AND INFERENCES TO BE DRAWN FROM AVAILABLE MATERIAL SHOU LD BE PROPERLY INFERABLE INFERENCE. APPLYING THE RATIO LAID IN THESE CASES, WE ARE CONVINCED THAT THE AO ACTED IN A HASTE WHILE DEALING WITH THE ISSUE RE LATING TO THE CASH CREDITORS. WE ARE ALSO CONVINCED THAT THE AO HAS NO T COMPLIED WITH THE MANDATORY TERMS OF SEC.144 OF THE ACT IN MAKING THE BEST JUDGMENT ASSESSMENT AS POINTED OUT BY THE LD. AR THOUGH WE A RE NOT MAKING ANY COMMENTS ON MERITS OF THE VARIOUS ADDITIONS AND DIS ALLOWANCES UNDER CHALLENGE. HENCE, WE SET-ASIDE THE IMPUGNED ASSESSM ENT AND DIRECT THE AO TO PASS AFRESH ASSESSMENT ORDER AFTER GIVING EFFE CTIVE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5.1 IN GROUNDS OF APPEAL NO. 2.2 TO 6 THE APPELLANT HAS CHALLENGED THE VARIOUS ADDITIONS AND DISALLOWANCES AS ALSO CHALLEN GED THE VERY CHARGING OF INTEREST. HOWEVER, SINCE WE HAVE ALREADY SET ASIDE THE IMPUGNED ASSESSMENT TO THE AO TO BE MADE AFRESH, WE DONT CONSIDER IT N ECESSARY TO ADJUDICATE UPON THE OTHER GROUNDS TAKEN BY THE ASSESSEE ON MER IT. HOWEVER, THE AO SHALL BE FREE TO TAKE A DECISION AS PER LAW IN THE LIGHT OF THE ENTIRE MATERIAL 12 AVAILABLE ON RECORD WITHOUT FEELING INFLUENCED BY T HE CONFIRMATION OF THE ADDITION AND DISALLOWANCES, IF ANY BY THE LD. CIT(A ) IN THE EARLIER ROUND. 6.0. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.0 3.2014 SD/- SD/- ( N.K. SAINI ) (HARI OM MARATHA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11-03-2014 *MISHRA COPY FORWARDED TO :- 1. SHRI MEHFOOZ ALI, JAIPUR 2. THE ITO,, WARD 2(1) , JAIPUR 3. THE LD.CIT(A) 3. THE LD CIT 4. THE D/R 5. GUARD FILE (ITA NO.405/JP/2012) BY ORDER, AR ITAT, JAIPUR 13 14 15