The DCIT, Circle-5, Ahmedabad V. Relogistics (Ahmedabad) Pvt.Ltd., Ahmedabad

ITA 4233/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0285 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 30-11-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S N SOPARKAR
• Assessee Lawyers: K M MAHESH
• Keywords: Rejection of books of accounts; Opportunity of being heard; Principle of natural justice; Question of law; Set aside
• Section: 142(1); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABA D (BEFORE HON'BLE SHRI G.D. AGRAWAL, V.P.(AZ) & HON BLE SHRI T.K. SHARMA, J.M. ) I.T.A. NO. 4233/AHD./2007 ASSESSMENT YEAR : 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- RELOGISTICS (AHMEDABAD) PVT. LTD., CIRCLE-5, AHMEDABAD AHMEDABAD (PAN : AACCR 3224 Q) (APPELLANT) (RESPONDENT) & I.T.A. NO. 4339/AHD/2007 ASSESSMENT YEAR : 2004-2005 RELOGISTICS (AHMEDABAD) PVT. LTD., - VS.- ASSISTANT COMMISSIONER OF INCOME TAX, AHMEDABAD CIRCLE-5, AHMEDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR RESPONDENT BY : SHRI K.M. MAHESH, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS CROSS APPEALS ARE AGAINST THE ORDER DATED 17. 09.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XI, AHMEDABAD FOR THE ASSESSMEN T YEAR 2004-05. 2. THE ONLY GROUND RAISED BY THE REVENUE IN ITS APP EAL IS AS UNDER :- THE LD. CIT(A.)-XI, AHMEDABAD HAS ERRED IN LAW AN D ON FACTS IN DIRECTING TO ADOPT NET PROFIT RATE OF 1.5% INSTEAD OF 2.93% OF THE TOTAL TURNOVER AS ADOPTED BY THE ASSESSING OFFICER. 2.1. THE ASSESSEE IN ITS APPEAL RAISED THE FOLLOWIN G GROUNDS :- (1) THE LEARNED COMMISSIONER (APPEAL) FAILED TO UND ERSTAND THE FACTS AND CIRCUMSTANCES OF THE CASE. (2) THE LEARNED COMMISSIONER (APPEAL) ERRED IN FIND ING THAT THE ASSESSING OFFICER JUSTIFIED TO COMPLETE THE ASSESSM ENT WITHOUT WAITING FURTHER. (3) THE LEARNED COMMISSIONER (APPEAL) ERRED IN JUST IFYING THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ESTIMATION OF P ROFIT. (4) THE LEARNED COMMISSIONER (APPEAL) ERRED IN NOT GIVING THE FINDINGS ON THE ISSUE OF NATURAL JUSTICE. THE APPELLANT CONT ENTS THAT THE ASSESSING 2 ITA NOS . 4233 & 4339/AHD/2007 OFFICER HAS MADE THE ESTIMATION OF PROFIT ON THE BA SIS OF COMPARABLE CASE WITHOUT DISCLOSING THE SAME TO THE APPELLANT. SINCE THREE IS LACK OF NATURAL JUSTICE IN THE ASSES SMENT PROCEEDINGS, THE ASSESSMENT ORDER FRAMED IS BAD IN LAW AND REQUIRES TO BE QUASHED. 3. ON THE DATE OF HEARING, VIDE SUBMISSIONS DATED 2 1.07.2010, THE ASSESSEE RAISED THE FOLLOWING ADDITIONAL GROUND :- THE LEARNED CIT(A.) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION REJECTION OF BOOKS OF ACCOUNTS BY LD. A.O. U/S. 145 (3) OF THE ACT. THE CIT(A.) HAVING NOTED THE SUBMISSIONS AND CLARIFICAT IONS OF THE APPELLANT ON THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS DID NOT GIVE ANY REASON IN NOT ACCEPTING THE SAME. THIS ACTION OF CIT(A.) IS B AD, ILLEGAL AND AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND, THEREFORE, RE QUIRES TO BE QUASHED. 3.1. AT THE TIME OF HEARING, ON BEHALF OF ASSESSEE SHRI S.N. SOPARKAR, LD. COUNSEL APPEARED AND CONTENDED THAT THE ADDITIONAL GROUND NOW RAISED BE ADMITTED BECAUSE IT INVOLVES PURE QUESTION OF LAW. ALL THE FACTS ARE AVAILABLE ON RECORD, THEREFO RE, SAME BE ADMITTED AS PER THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERM AL POWER REPORTED IN 229 ITR 383 (SC). 4. ON THE OTHER HAND, SHRI K.M. MAHESH, LD. SR. D.R . APPEARING ON BEHALF OF THE REVENUE COULD NOT CONTROVERT THE CONTENTION OF THE ASSESSEE REGARDING ADMISSION OF ADDITIONAL GROUND. HOWEVER, HE SUBMITTED THAT THE BOOKS OF ACCOUNTS WE RE NEVER PRODUCED BEFORE ANY OF THE DEPARTMENTAL AUTHORITIES BELOW. THEREFORE, THE ASSE SSEE CANNOT PLEAD THAT THE ASSESSING OFFICER OUGHT TO HAVE ACCEPTED THE BOOK RESULTS. HE ACCORDI NGLY CONTENDED THAT EVEN IF ADDITIONAL GROUND IS ADMITTED, THE REJECTION OF BOOKS OF ACCOUNTS SHO ULD BE UPHELD. THE LD. D.R. FURTHER POINTED OUT THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS POINTED OUT CERTAIN ANOMALIES AND REJECTED THE BOOKS OF ACCOUNTS BY INVOKING PROVISIONS OF SEC TION 145(3) OF THE INCOME TAX ACT, 1961. IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) APPROVED THE ACTION OF ASSESSING OFFICER REJECTING THE BOOKS OF ACCOUNTS. ONCE THE BOOKS OF ACCOUNTS ARE REJECTED, THE ASSESSING OFFICER HAS NO OPTION BUT TO ESTIMATE THE INCOME. FOR THIS PURPOSE, ASSESSING OFFICER HAS COMPARED THE ASSESSEES CASE WITH M/S. NIRAJ CA RGO MOTORS, WHO ALSO DEALS LIKE APPELLANT IN PROVIDING TRANSPORT FACILITIES FOR CLIENTS. HOWEVE R, KEEPING IN VIEW THE FACT THAT THE ASSESSMENT YEAR UNDER CONSIDERATION IS ONLY SECOND YEAR OF ASS ESSEES BUSINESS OPERATION AND THE CASE COMPARED BY THE ASSESSING OFFICER BEING ESTABLISHED ONE IN THE SAID LINE OF BUSINESS, THE LEARNED 3 ITA NOS . 4233 & 4339/AHD/2007 COMMISSIONER OF INCOME TAX(APPEALS) ACCEPTED THE PL EA OF THE ASSESSEE THAT M/S. NIRAJ CARGO MOTORS CANNOT BE A CASE FOR COMPARISON AND RATE OF PROFIT CANNOT BE OF APPELLANT RATE OF PROFIT. ON THIS BASIS, THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) IN THE IMPUGNED ORDER DIRECTED THE ASSESSING OFFICER TO FIX PROFIT @ 1.5% INSTEAD OF 2.93% AS ADOPTED BY THE ASSESSING OFFICER AND RE-COMPUTE THE TAXABLE INCOME. THE LD. D.R. POINTED OUT THAT PROFIT RATE OF 2.93% APPLIED BY THE ASSESSING OFFICER WAS FAIR AND REASO NABLE BECAUSE IN THIS LINE OF BUSINESS, WHETHER THE BUSINESS IS ESTABLISHED OR NOT MAKE NO DIFFERENCE. HE ACCORDINGLY CONTENDED THAT IT MAY BE HELD THAT BOOKS OF ACCOUNTS WERE RIGHTLY REJ ECTED BY THE ASSESSING OFFICER AND APPLICATION OF NET PROFIT RATE AT 2.93%, KEEPING IN VIEW THE VARIOUS REASONS GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, IS FAIR AND REASONABLE. 5. ON THE OTHER HAND, SHRI S.N. SOPARKAR, LD. COUNS EL APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY OBJECTED TO THE SUBMISSIONS MADE BY THE LD. D.R. THE LD. COUNSEL EXPLAINED THAT NOTICES DATED 26.07.2006 UNDER SECTION 142(1) AND 1 43(2) WERE ISSUED ALONG WITH LETTER FIXING THE HEARING ON 10.08.2006. THE LD. COUNSEL SUBMITTED TH AT IT IS NOT POSSIBLE TO SUBMIT ALL THE DETAILS ON 10.08.2006. THE ASSESSEE ASKED FOR SOMETIME AND THE CASE WAS FIXED FOR HEARING ON 20.09.2006. ON 20.09.2006, THE ASSESSEE HAS SUBMITT ED THE DETAILS AS PER LETTER DATED 05.09.2006 AND THEREAFTER THE ASSESSING OFFICER CALLED OTHER D ETAILS ON THE NEXT DATE OF HEARING. ON THE NEXT DATE OF HEARING, I.E. ON 27.09.2006, THE ASSESSEE H AS ATTENDED THE OFFICE OF THE ASSESSING OFFICER ALONG WITH THE DETAILS CALLED FOR BUT HEARING COULD NOT BE TAKEN. ACCORDINGLY, THE ASSESSING OFFICER TOLD THAT NEXT DATE OF HEARING WOULD BE INT IMATED ON TELEPHONE. THEREAFTER, HEARING TOOK PLACE ON 10.11.2006. THE ASSESSEE SUBMITTED THE DET AILS AS PER LETTER DATED 25.09.2006. THE ASSESSING OFFICER CALLED THE OTHER DETAILS AND ASKE D TO PRODUCE THE BUSINESS CONTROL REGISTER FOR VERIFICATION. THE HEARING WAS ADJOURNED TO 17.11.20 06. ON 14.11.2006, THE ASSESSEE HAS PRODUCED THE BUSINESS CONTROL REGISTER OF NAROL BRA NCH FOR VERIFICATION. ON 17.11.2006, THE CASE WAS DISCUSSED AND NEXT HEARING TOOK PLACE ON 28.11. 2006. THEREAFTER, THE ASSESSING OFFICER ASKED TO PRODUCE THE BUSINESS CONTROL REGISTER IN R ESPECT OF JAMNAGAR BRANCH FOR VERIFICATION ON 07.12.2006. ON 07.12.2006, THE ASSESSEE PRODUCED TH E BUSINESS CONTROL REGISTER OF JAMNAGAR BRANCH FOR VERIFICATION. THE SAID REGISTER WAS KEPT BY THE ASSESSING OFFICER FOR DETAILED VERIFICATION. SUBSEQUENTLY, THE ASSESSING OFFICER T ELEPHONICALLY ASKED TO PRODUCE ALL THE REMAINING BUSINESS CONTROL REGISTERS. THESE WERE PR ODUCED ON 12.12.2006 AND 13.12.2006. ON 4 ITA NOS . 4233 & 4339/AHD/2007 13.12.2006, ALL BUSINESS CONTROL REGISTERS WERE IMP OUNDED VIDE ORDER DATED 13.12.2006 UNDER SECTION 131(3) OF THE INCOME TAX ACT, 1961. ON 19.1 2.2006, THE ASSESSING OFFICER HA ASKED TO PRODUCE ALL BOOKS OF ACCOUNTS ON 20.12.2006. ON THA T DATE, THE ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE BOOKS O ACCOUNTS AS THE SAME ARE SENT TO BO MBAY FOR THE PURPOSE OF VERIFICATION BY THE TOP MANAGEMENT OF THE GROUP. THE ASSESSING OFFICER PERMITTED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS ON 26.12.2006. ON 26.12.2006, THE ASSES SEE VISITED THE OFFICE OF THE ASSESSING OFFICER WITH ALL BOOKS OF ACCOUNTS BUT IT WAS INFOR MED THAT THE ORDER HAS BEEN PASSED AND REQUESTED TO COLLECT THE ASSESSMENT ORDER ON NEXT D AY. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THOUGH THE ASSESSING OFFICER HAS ALLOWED THE T IME UPTO 26.12.2006, THE ASSESSMENT ORDER WAS PASSED ON 22.12.2006. AFTER NARRATING ALL THESE FACTS, THE LD. COUNSEL OF THE ASSESSEE ARGUED AT LENGTH THAT BOOK RESULTS SHOULD BE ACCEPTED. 6. AS AGAINST THIS, THE LD. D.R. APPEARING ON BEHAL F OF THE REVENUE REITERATED THE SUBMISSIONS MADE EARLIER AND CONTENDED THAT UNLESS THE BOOKS OF ACCOUNTS ARE PRODUCED AS WELL AS VERIFIED BY THE ASSESSING OFFICER, IT CANNOT BE SAID THAT BOOKS OF ACCOUNTS ARE COMPLETE IN ALL RESPECTS. TO SUM UP, HE SUBMITTED THAT UNLESS THE B OOKS OF ACCOUNTS ARE PRODUCED AND VERIFIED BY ASSESSING OFFICER, THE ASSESSEE CANNOT CLAIM THAT B OOK RESULTS SHOULD BE ACCEPTED. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY, BOOKS OF ACCOUNTS WERE NEVER VER IFIED BY THE ASSESSING OFFICER. IT IS NOT KNOWN KNOW THE ASSESSING OFFICER COMPLETED THE ASSE SSMENT ON 22.12.2006 WHEN HE FIXED THE DATE FOR PRODUCTION OF BOOKS OF ACCOUNTS ON 26.12.2 006. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS AND APPLIED NET PROFIT RATE OF 2.93%. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DIRECTED THE ASSESSING OFFICER TO APPLY NET PROFIT RATE OF 1.5% INSTEAD OF 2.93%. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), BOTH PARTIES ARE IN APPEALS BEFORE THE TRIBUNAL. SINCE BOOKS OF ACCOUNTS WERE NEVER PRODUCED, WE ARE OF TH E VIEW THAT IT WILL MEET THE END OF JUSTICE IF THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APP EALS) IS SET ASIDE AND THE ASSESSEE BE DIRECTED TO PRODUCE THE BOOKS OF ACCOUNTS BEFORE TH E ASSESSING OFFICER. THE ASSESSING OFFICER WILL VERIFY THE SAME, MAY CALL FURTHER DETAILS AND RE-DECIDE WHETHER THE BOOKS OF ACCOUNTS SHOULD 5 ITA NOS . 4233 & 4339/AHD/2007 BE REJECTED OR NOT. TO SUM UP, HE WILL RE-FRAME THE ASSESSMENT IN ACCORDANCE WITH LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, FOR STATISTICAL PURPOSES, BOTH TH E APPEALS ARE TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 13.08.20 10 SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 13 / 08 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.