M/s. M.K. Trading Co., JAMNAGAR V. The Income Tax Officer, Ward-1(1), JAMNAGAR

ITA 443/RJT/2011

• Counselvise Citation: 44324914 RSA 2011
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-05-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 14-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: GB PARIKH
• Keywords: Period of limitation; Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 443 /RJ T/2011 ASSESSMENT YEAR : 200 7 - 0 8 M/S M K TRADING CO GRAIN MARKET, JAMNAGAR PAN: AAIFM 0893 K V. ITO, WARD 1(1), JAMNAGAR DATE OF HEARING : 28.05 .2013 DATE OF PRONOUNCEMENT : 21 .0 6 .2013 ASSESSEE BY : SHRI G B PARIKH REVENUE BY : SHRI K C MATHEWS, DR ORDER D. K. SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) , JAMNAGAR ON 16 . 0 9 .20 11 . THE ASSESSEE IS A PARTNERSHIP FIRM. IT IS ENGAGED IN THE BUSINESS AS GRAIN MERCHANT AND COMMISSION AGENT. IT FILED ITS RETURN OF INCOME ON 07.08.2007 RETURNING TOTAL INCOME AT RS.14,9 80/ - AS AGAINST WHICH TOTAL INCOME HAS BEEN ASSESSED AT RS.7,72,150/ - IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME - TAX ACT ON 30.12.2009 AFTER DISALLOWING , INTER - ALIA , A SUM OF RS.6,31,500/ - CLAIMED BY THE ASSESSEE AS LOSS ON SALE OF GARLIC. ON APPEAL, THE LD CIT(A) HAS ENDORSED THE ORDER OF THE ASSESSING OFFICER IN THIS BEHALF. AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 2 . GROUND NO.1 TAKEN BY THE ASSESSEE READS AS UNDER: - THAT THE LEA RNED CIT(A), JAMNAGAR OUGHT TO HAVE HELD THAT JURISDICTIONAL ASSESSING OFFICER WARD 3(2), JAMNAGAR HAS NOT ISSUED NOTICE U/S 143(2) OF THE I.T. ACT WITHIN TIME ALLOWED U/S 143(2) OF THE ACT, 1961 FOR SELECTING THE CASE FOR SCRUTINY, AS WEL L AS THE RETURN O F INCOME HAS NOT BEEN PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 BEFORE SELECTING THE CASE FOR SCRUTINY U/S 143(2) OF THE ACT OR PASSING ORDER U/S 143(3) OF THE I.T. ACT, 1961, HENCE ASSESSMENT ORDER PASSED BY HIM IS BAD - IN - LAW AND VOID AB - INTIO ON THE FAC TS AND CIRCUMSTANCES OF THE CASE. 3 . THE ISSUE HAS BEEN DEALT WITH IN PARAGRAPH 6 OF THE APPELLATE ORDER PASSED BY THE LD CIT(A) AS UNDER: - 2 ITA 443 /RJT/201 1 I HAVE CAREFULLY CONSIDERED SUBMISSION OF THE APPELLANT. IN GROUND NO.1 APPELLANT HAS CHALLENGED THAT ASSESSMEN T ORDER PASSED BY THE ASSESSING OFFICER IS WITHOUT JURISDICTION, IS BAD IN LAW AND VOID AB INITIO. IT IS NOTICED THAT APPELLANT HAS ASKED AO TO SUPPLY THE NOTICES ISSUED BY HIM AND APPELLANT HAS ALSO OBJECTED TO THE ASSESSMENT PROCEEDINGS THAT NO NOTICES H AVE BEEN SERVED BY THE AO IN TIME. ACCORDING TO THE PROVISIONS OF THE ACT OF SECTION 143(2) OF THE ACT, NO NOTICE U/S 143(2) SHALL BE SERVED UP ON THE ASSESSEE AFTER SIX MONTHS OF THE FINANCIAL YEAR IN WHICH THE RETURN OF INCOME IS FILED. IN THIS CASE APPE LLANT HAS FILED THE RETURN OF INCOME ON 29.10.2007. THEREFORE THE NOTICE U/S 143(2) SHOULD HAVE BEEN SERVED ON THE APPELLANT ON OR BEFORE 30.9.2008. IN THIS CASE APPELLANT WAS SERVED NOTICE U/S 143(2) BY THE ASSESSING OFFICER ON 25.9.2008. FROM THE ABOVE F ACTS IT IS APPARENT THAT THE NOTICE U/S 143(2) OF THE ACT HAS BEEN ISSUED BY ASSESSING OFFICER WITHIN THE TIME AS PROVIDED U/S 143(2) OF THE ACT. IT IS ALSO FOUND THAT THE GROUND OF APPEAL RAISED BY THE APPELLANT IN THIS REGARD IS FACTUALLY INCORRECT. THE GROUND RAISED IS AS UNDER: THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS WITHOUT JURISDICTION AS NO NOTICE U/S 143(2) HAVE BEEN ISSUED BY HIM WITHIN TIME ALLOWED AS PER SECTION 143(2) OF THE ACT OR ISSUED BY HIM IS TIME BARRED AND CONSEQUE NTLY ASSESSMENT ORDER PASSED BY HIM IS BAD - IN - LAW AND VOID - AB - INTIO ON THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS MENTIONED IN THE ABOVE GROUND BY THE APPELLANT THAT NO NOTICE U/S 143(3) HAVE BEEN ISSUE. IT IS VERY MUCH CLEAR FROM THE PROVISIONS OF THE ACT THAT THIS IS A WRONG MENTIONING OF THE SECTION, AS NO NOTICE IS REQUIRED TO BE ISSUED U/S 143(3). NOTICE IS REQUIRED TO BE ISSUED U/S 143(2) OF THE ACT. AS THE GROUND DRAFTED IS INCORRECT, IT BECOMES INFRUCTUOUS. NO REVISED GROUND HAS BEEN FILED AN D HENCE ABOVE GROUND STANDS DISMISSED BEING INFRUCTUOUS AS WELL AS ON MERIT AS DISCUSSED EARLIER. 3 ITA 443 /RJT/201 1 4 . IN SUPPORT OF APPEAL, THE LD . C OUNSEL FOR THE ASSESSEE SUBMITTED THAT NOTICE ISSUED BY THE ASSESSING OFFICER U/S 143(2) WAS RECEIVED BY THE ASSESSEE WELL WITHIN THE PERIOD OF LIMITATION LAID DOWN IN S ECTION 143(2) OF INCOME - TAX ACT . H E HOWEVER SUBMITTED THAT THE SAID ASSESSING OFFICER HAD NO JURISDICTION OVER THE CASE OF THE ASSESSEE AND THEREFORE NOTICE ISSUED BY HIM U/S 143(2) WAS BAD AND NON - EST IN LAW. HIS CASE IS THAT THERE WAS NO SERVICE OF NOTICE U/S 143(2) WITHIN THE PERIOD OF LIMITATION BY THE JURISDICTIONAL AO . 5 . IN REPLY, THE LD DEPARTMENTAL REPRESENTATIVE REFERRED TO THE PROVISIONS OF SUB - SECTION ( 3 ) OF SECTION 124 AND SUBMITTED THAT THE AS SESSEE WAS NOT ENTITLED TO CALL IN QUESTION THE JURISDICTION OF THE ASSESSING OFFICER WHO HAD ISSUED THE NOTICE U/S 143(2) AFTER EXPIRY OF ONE MONTH FROM THE END OF THE MONTH IN WHICH HE WAS SERVED THE NOTICE ISSUED U/S 143(2) AND THEREFORE THE NOTICE ISSU ED BY THE SAID ASSESSING OFFICER WAS A VALID NOTICE AS IT WAS SERVED WELL WITHIN THE PERIOD OF LIMI TATION LAID DOWN IN SECTION 143(2). 6 . WE HAVE HEARD BOTH THE PARTIES. ACCORDING TO SUB - SECTION ( 3 ) OF SECTION 124, NO PERSON IS ENTITLED TO CALL IN QUESTI ON THE JURISDICTION OF THE ASSESSING OFFICER AFTER EXPIRY OF ONE MONTH FROM THE DATE ON WHICH HE WAS SERVED THE NOTICE U/S 143(2). AT THE TIME OF HEARING, THE LD COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT HE HAD NOT OBJECTED TO THE JURISDICTION OF THE ASSESSING OFFICER , WHO HAD ISSUED THE NOTICE ORIGINALLY U/S 143(2) , WITHIN ONE MONTH FROM THE DATE ON WHICH HE WAS SERVED WITH A NOTICE U/S 143(2). IN THIS VIEW OF THE MATTER WE HOLD THAT THE ASSESSEE IS NOT ENTITLED TO CALL IN QUESTION THE JURISDICTION OF THE ASSESSING OFFICER, WHO HAD ISSUED NOTICE ORIGINALLY U/S 143(2), AT THIS STAGE. IT IS ADMITTED BY THE ASSESSEE THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 143(2) WAS RECEIVED BY HIM WELL WITHIN THE PERIOD OF LIMITATION LAID DOWN U/S 143(2). IN THIS VIEW OF THE MATTER, GROUND NO.1 TAKEN BY THE ASSESSEE IS DISMISSED. 7 . GROUND NO.2 TAKEN BY THE ASSESSEE READS AS UNDER: - THAT THE LEARNED CIT(A), JAMNAGAR ERRED AND WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION MADE TO TOTAL INCOME BY THE ASSESSI NG OFFICER BEING NOT ALLOWING 4 ITA 443 /RJT/201 1 LOSS ON SALE OF GARLIC OF RS.6,31,500/ - ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE LD CIT(A) HAS DEALT WITH THE ISSUE IN PARAGRAPH 6.1 OF HIS APPELLATE ORDER AS UNDER: - AS REGARDING GROUND NO.2 AGAINST THE DISALLO WANCE OF LOSS ON SALE OF GARLIC OF RS.6,31,500/ - , IT IS FOUND THAT AO HAS DISCUSSED THE MATTER IN DETAIL AND THE DISALLOWANCE WAS MADE BECAUSE THE APPELLANT FAILED TO PRODUCE VARIOUS EVIDENCES CALLED BY THE ASSESSING OFFICER. THE AO WAS CORRECT IN MAKING E NQUIRIES, AS FIRST TIME THE APPELLANT HAS SHOWN THE TRADING IN GARLIC AND THAT TOO RESULTING INTO LOSSES. FOR WANT OF VARIOUS EVIDENCES LIKE GENUINENESS OF PURCHASE, TRANSPORTATION EXPENSES, LOADING AND UNLOADING EXPENSES AND EVIDENCES TO PROVE THE SALE, T HE AO RIGHTLY CAME TO THE CONCLUSION THAT LOSS IS NOT SUBSTANTIATED BY ANY EVIDENCES. THE REPLY OF THE APPELLANT DURING THE APPELLATE PROCEEDINGS IS VERY GENERAL IN NATURE. IT IS TRUE THAT THE AGRICULTURAL COMMODITY MARKET IS WELL FLUCTUATING, HOWEVER, THE LOSS GENERATED DUE TO THE TRADING IN GARLIC IS CORRECT THAT ONUS LAYS ON THE APPELLANT. NOTHING HAS BEEN PRODUCED TO SHOW THAT WHEN THE GARLIC WAS SOLD IN THE MONTH OF MARCH, 2007, THE SALE PRICE WAS LESS AS COMPARED TO THE PRICE PAID BY THE APPELLANT WHE N PURCHASES WERE MADE IN THE MONTH OF JANUARY, 2007. THE LOSS OF RS.6,31,500 HAS RESULTED IN THE SHORT SPAN OF 3 MONTHS ONLY (JANUARY, 2007 MARCH, 2007). KEEPING IN VIEW ALL FACTS MENTIONED IN THE ASSESSMENT ORDER AND THE EVIDENCES PRODUCED BY THE APPELL ANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO APPELLATE PROCEEDINGS IT IS HELD THAT APPELLANT HAS SQUARELY FAILED TO DISCHARGE ITS ONUS TO PROVE THAT THE TRADING IN GARLIC ACTUALLY AND REALLY HAS RESULTED INTO TRADING LOSS OF RS.6,31,500. UNDER THE CIRCUMSTANCES THE DISALLOWANCE MADE BY THE AO AND THE ADDITION ON ACCOUNT OF DISALLOWANCE OF RS.6,31,500 IS CONFIRMED. GROUND OF APPEAL NO.2 STANDS DISMISSED. 5 ITA 443 /RJT/201 1 9. IN SUPPORT OF APPEAL , THE LD . C OUNSEL FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS IN WHICH IT IS CLAIMED THAT THE LOSS ON SALE OF GARLIC IS GENUINE. IN REPLY, THE LD DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LD CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS, INCLUDING WRITTEN SUBM ISSIONS FILED BY THE ASSESSEE. THE ASSES SEE CLAIMED THAT HE HAD TRADED IN GARLIC WHICH RESULTED INTO LOSSES. TRADING IN GARLIC REQUIRES NOT ONLY PURCHASES AND SALES BUT ALSO THEIR PHYSICAL MOVEMENT FROM ONE PLACE TO ANOTHER PLACE. SUCH MOVEMENTS NEED TO BE SUPPORTED BY DOCUMENTS EVIDENCING THEIR TRANSPORTATION. THE ASSESSEE HOWEVER COULD NOT PRODUCE ANY EVIDENCE TO PROVE THE GENUINENESS OF PURCHASE, TRANSPORTATION EXPENSES, LOADING AND UNLOADING EXPENSES AND DOCUMENT ARY EVIDENCES TO PROVE THE SALE ETC. UNLE SS TRADING IN SALES IS PROVED WITH THE HELP OF RELEVANT EVIDENCE, IT IS NOT POSSIBLE TO ALLOW LOSS ON ACCOUNT OF TRADING IN GARLIC. AT THE TIME OF HEARING THE ASSESSEE WAS ASKED AS TO WHETHER THERE WAS ANY EVIDENCE TO PROVE THE TRANSPORTATION OF GOODS UPO N THEIR PURCHASE/ SALE IN RESPECT OF WHICH LOSS HAS BEEN CLAIMED. THE ASSESSEE COULD NOT OFFER ANY SATISFACTORY EXPLANATION. UNLESS THERE IS RELEVANT EVIDENCE ON RECORD TO ESTABL ISH THE GENUINENESS OF BOTH PURCHASE S AND SALE S OF GARLIC, THE LOSS CLAIMED BY THE ASSESSEE CANNOT BE ALLOWED. IN OUR VIEW, THE LD CIT(A) HAS CORRECTLY APPRECIATED THE FACTUAL AND LEGAL ASPECT S OF THE CASE. WE ARE IN COMPLETE AGREEMENT WITH HIS DECISION. GROUND NO.2 TAKEN BY THE ASSESSEE IS DISMISSED. 11. GROUND NO.3 TAKEN BY THE ASSESSEE READS AS UNDER: - THAT THE LEARNED CIT(A), JAMNAGAR ERRED AND WAS NOT JUSTIFIED IN NOT ENHANCING THE REMUNERATION PAYABLE TO PARTNERS ON THE BASIS OF BOOK PROFIT WORKED OUT BY THE ASSESSING OFFICER ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 12 . WE HAVE HEARD BOTH THE PARTIES. NO MATERIAL INCLUDING PARTNERSHIP DEED HAS BEEN PLACED BEFORE US TO SHOW THAT THE PARTNERS WERE ENTITLED TO REMUNERATION WITH REFERENCE TO THE ADDITIONS MADE BY THE AO. IT HAS BEEN RIGHTLY HELD BY THE CIT(A) THAT THE PARTN ERS ARE ENTITLED TO REMUNERATION ON BOOK PROFIT AND NOT ON THE ADDITION 6 ITA 443 /RJT/201 1 MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME. THE ORDER PASSED BY THE LD CIT(A) IS THEREFORE CONFIRMED. GROUND NO.3 IS DISMISSED. 13. THE APPEAL FILED BY THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED ON 21 . 06 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 21 .0 6 .2013 B T COPY OF ORDER FORWARDED TO: - 1 . APPELLANT M/S M K TRADING CO., GRA IN MARKET, JAMNAGAR 2 . RESPONDENT - ITO, WARD 1(1), JAMNAGAR 3 . CONCERNED CIT , JAMNAGAR 4 . CIT (A) , JAMNAGAR 5 . DR, ITAT, RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY. PRIVATE SECRETA RY, ITAT, RAJKOT