The ITO, Ward-1(2)(1), RAJKOT-GUJARAT V. M/s Karmal Kotda Juth Seva Sahkari Mandli Ltd., RAJKOT-GUJARAT

ITA 458/RJT/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6284 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 29-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M N MOURYA
• Keywords: Corroborative evidences; Set aside
• Section: 142(1); 80P; 139(1); 148; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI MAHAVIR PRASAD , JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] IT O , WARD - 1 (2)(1) , RAJKOT (APPELLANT) VS M/S. KARMAL KOTADA JUTH SEVA SAHKARI MANDLI LTD. RAJKOT PAN: A ADAS2687R (RESPONDENT) REVENUE BY : S H RI M.N. MOURYA , CIT - D . R. ASSESSEE BY: NONE DATE OF HEARING : 2 1 - 01 - 2 020 DATE OF PRONOUNCEMENT : 28 - 01 - 2 020 / ORDER P ER : AMARJ IT SINGH, ACCOUNTANT MEMBER : - THESE TWO ASSESSEE S APPEAL S FOR A.Y. 2009 - 10 , AR ISES FR OM ORDER S OF THE CIT(A) - 1, RAJKOT DATED 10 - 10 - 2016 , I N PROCEEDINGS UNDER SECTION 144 R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HA S RAISED FOLLOWING GROUNDS OF APPEAL: - I T A NO S . 458 & 459 / RJT /20 16 A SSESSMENT YEAR 200 9 - 10 I.T.A NO S . 458 & 459 /RJT /20 16 A.Y. 2009 - 10 PAGE NO IT O VS. M/S. KARMAL KOTADA JUTH SEVA SAHKARI MANDLI LTD. 2 1. THE ID. CIT(A) RAJKOT HAS ERRED IN LAW AND ON FACTS IN ESTIMATING INCOME @ 2% OF TOTAL RECEIPTS, WHICH IS WITHOUT ANY BASIS AND BY ENTERTAINING FRESH EVIDENCES, WITHOUT SEEKING REMAND REPORT OF THE AO, AS THE BEST JUDGMENT ASSESSMENT WAS FINALIZED U/S. 144 OF THE I T ACT. 2. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE IS IN RECEIPT OF CONTRACTUAL INCOME AND COMMISSION INCOME FROM FCI, THESE ARE TRADING TRANSACTIONS AND HENCE, ESTIMATION OF PROFIT HAS NO RELEVANCE. 3. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING DEDUCTION U/S. 80 P OF THE ACT, WITHOUT CONSIDERING THE FACT THAT, NO RETURN U/S. 139(1) HAS BEEN FILED AND HENCE, NO CLAIM HAS BEEN MADE AT THE FIRST INSTANC E. 4. THE ID. CIT(A) HAS ALSO ERRED IN LAW AND ON FACTS IN DIRECTING TO ALLOW DEDUCTION U/S. 80 P WITHOUT APPRECIATING THE FACT THAT, FACTUALLY ALSO, THE ASSESSEE IS HAVING CONTRACTUAL RECEIPTS AND BROKERAGE AND COMMISSION INCOME, WHICH AR E NOT ELIGIBLE DED UCTIONS US. 80 P OF THE I T ACT AND THE ASSESSEE HAS NOT CARRIED OUT ANY ACTIVITY FOR THE BENEFIT OF ITS MEMBERS. 5. THE ID. CIT(A) HAS ALSO ERRED IN NOT APPRECIATING THE FACT THAT, THE ASSESSMENT WAS REOPENED U/S. 147 OF THE I T ACT ON THE BASIS OF GROSS R ECEIPT OF RS 3,82,31,996/ - AS PER 26AS, WHEREAS, ON THE OTHER HAND THE ASSESSEE HAD NOT EVEN FILED ITS REGULAR RETURN OF INCOME U/S. 139(1) DESPITE HAVING TAXABLE INCOME. 6. THE ID. CIT(A) ERRED IN DIRECTING TO ALLOW THE CREDIT OF PREPAID TAX, WHEREAS, THE ASSESSEE HAD NEVER FILED ITS RETURN AND NEVER CLAIMED THE SAME. 7. IN VIEW OF THE FACTS OF THE CASE, THE DECISION OF THE ID. CIT(A) IS PERVERSE. 8. IT IS THEREFORE PRAYED THAT THE ASSESSMENT ORDER OF THE AO MAY KINDLY BE RESTORED. 3. THE FACT IN BRIEF IS THAT ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HAS RECEIVED INFORMATION AS PER REPORT OF FORM NO. 26AS THAT DURING THE F.Y. RELEVANT TO ASSE SSMENT YEAR UNDER CONSIDERATION, T HE ASSESSEE HAS R ECEIVED GROSS RECEIPT OF RS. 3 , 82 , 31 , 996, HOWEVER, THE ASSESSEE HAS NOT FILED RETURN OF INCOME. T HEREFORE, PROCEEDING U/S. 147 OF THE ACT WAS INITIATED BY ISSUING OF NOTICE U/S. 148 OF THE ACT ON 17 TH OCTOBER, 2013. THE ASSESSEE HAS NOT RESPONDED TO THE NOTICE ISSUED BY THE ASSESSING OFFICER, THEREFORE, THE ASSESSING OFFICER HAS ISSUED A NU MBER OF NOTICES , HOWEVER , THE ASSESSEE HAS NOT MADE ANY COMPLIANCE . THE NUMBERS OF NOTICES ISSUED BY THE ASSESSING OFFICER ARE BRIEFLY REPORTED AS UNDER: - SL. NO. DA TE OF NOTICE NOTICE/LETTER HEARING FIXED ON /DETAILS TO BE FILED ACTION TAKEN BY THE ASSESSEE 1 17.10.2013 U/S.148 OF THE ACT WITHIN 30 DAYS NO REPLY I.T.A NO S . 458 & 459 /RJT /20 16 A.Y. 2009 - 10 PAGE NO IT O VS. M/S. KARMAL KOTADA JUTH SEVA SAHKARI MANDLI LTD. 3 2 07.07.2014 LETTER 14.07.2014 NO REPLY 3 17.07.2014 U/S. 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE 31.07.2014 NOBODY ATTENDED/NO REPLY FILED 4 03.11.2014 U/S. 142(1) OF THE ACT 25.11.2014 NOBODY ATTENDED/NO REPLY FILED 5 01.12.2014 U/S. 142(1) OF THE ACT 29.12.2014 NOBODY ATTENDED/NO REPLY FILED 6 22.12.2014 U/S. 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE 29.12.2014 NOBODY ATTENDED/NO REPLY FILED 7 05.01.2015 U/S. 142(1) OF THE ACT 11.2.2015 NOBODY ATTENDED/NO REPLY FILED 6 06.02.2015 U/S. 142(1) OF THE ACT 13.2.2015 NOBODY ATTENDED/NO REPLY FILED 7 09.03.2015 U/S. 142(1) OF THE ACT - FINAL SHOW CAUSE NOTICE 16.3.2015 NOBODY ATTENDED/NO REPLY FILED IN SPITE OF PROVIDING SUFFICIENT OPPORTUNITIES AS DEMONSTRATED ABOVE, THE ASSESSEE HAS NOT MADE ANY COMPLIANCE, CONS EQUENTLY , THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS FINALIZED U/S. 144 R.W.S. 147 OF THE ACT AND TOTAL INCOME WAS ASSESSED AT RS. 3 , 82 , 31 , 996/ - . 4. THE ASSESSEE HAS FILED APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER. THE LD. CIT(A) HAS PARTLY A LLOWED THE APPEAL OF THE AS SESSEE. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ADJOURNMENT APPLICATION OF THE ASSESSEE WAS REJECTED LOOKING TO THE FACT THAT THIS CASE WAS LISTED FOR HEARING MORE THAN 10 OCCASIONS SINC E 15 - 02 - 2018 AND A NUMBER OF ADJOURNMENTS WERE GRANTED TO THE ASSESSEE . D URING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE HAS CONTENDED I.T.A NO S . 458 & 459 /RJT /20 16 A.Y. 2009 - 10 PAGE NO IT O VS. M/S. KARMAL KOTADA JUTH SEVA SAHKARI MANDLI LTD. 4 THAT LD. CIT(A) HAS COMMITTED GROSS ERROR BY ESTIMATING THE INCOME OF THE ASSESSEE @ 2% OF TOTAL RECEIPT WIT HOUT CONSIDERING THE FACT THAT IN SPITE OF CONCRETE EVIDENCES OF RECEIPT OF RS. 3 , 82 , 31 , 996/ - DETECTED BY THE ASSESSING OFFICER AS PER FORM NO. 26AS , THE ASSESSEE HAS NOT MADE ANY COMPLIANCE BY NOT SUBMITTING ANY DETAIL I.E. SUPPORTING EVIDENCES, BILL, VOUCHER IN SPITE OF GIVING A NUMBER OF OPPORTUNITIES AS REPORTED ABOVE IN THIS ORDER. THE LD. DEPARTMENTAL REPRESENTATIVE HAS ALSO SUBMITTED THAT EVEN THE LD. CIT(A) HAS NOT CALLED ANY REMAND REPORT FROM THE ASSESSING OFFICER BEFORE ADJUDICATING THIS CAS E IN A SUMMARY MANNER WITHOUT ANY BASIS . 6. WE HAVE PERUSED THE MATERIAL AND HEARD LD. DEPARTMENTAL REPRESENTATIVE . IT IS UNDISPUTED FACT THAT IN SPITE OF EARNING RECEIPT OF R S.3 , 82 , 31 , 996/ - , THE ASSESSEE HAD NOT FILED ANY INCOME TAX RETURN FOR THE YE AR UNDER CONSIDERATION . THESE FA CTS WERE BROUGHT TO THE NOTICE OF THE ASSESSEE BY THE ASSESSING OFFICER BY ISSUING NOTICE U /S. 148 OF THE ACT AND THEREAFTER ISSUED A NUMBER OF STATUTORY NOTICES AS CITED ABOVE IN THIS ORDER. HOWEVER, THE ASSESSEE HAS NO T MADE ANY COMPLIANCE TO EXPLAI N THE NATURE OF RECEIPT WITH SUPPORTING EVIDENCES I.E. BILL , VOUCHER AND EXPENSES INCURRED FOR EARNING SUCH RECEIPT . H OWEVER , IT IS NOTICED THAT LD. CIT(A) HAS ADJUDICATED THE MATTER IN A SUMMARY MANNER AS UNDER: - 7. I HAVE DULY CONSIDERED THE SUBMISSION OF THE APPELLANT AND ALSO GONE THROUGH THE DISCUSSION MADE BY THE AO IN ASSESSMENT ORDER. I AGREE WITH THE OVERALL VIEW OF APPELLANT THAT THIS IS NOT THE WAY AN EX - PARTE ASSESSMENT SHOULD BE DONE. THE REVENUE CANNOT T AX THE WHOLE RECEIPT. THE AO HAS NOT ONLY TAXED ALL THE RECEIPT OF CONTRACT, BUT HAS NOT ALLOWED THE CREDIT FOR TAX DEDUCTED FROM THE PAYMENT RECEIVED. THERE SHOULD BE A REASONABLE ESTIMATE OF INCOME EARNED ON THE WHOLE RECEIPT. IN MY VIEW 2% OF THE RECEIP T SHOULD BE REASONABLE AS INCOME ARISING OUT OF SUCH ACTIVITIES. AND FURTHER THIS INCOME IS VERY MUCH ELIGIBLE FOR DEDUCTION U/S.80P. ACCORDINGLY THE AO IS DIRECTED AS UNDER: - (1) TO ESTIMATE THE TAXABLE INCOME @ 2% OF THE RECEIPT; (2) TO ALLOW 80P DEDUCTI ON; I.T.A NO S . 458 & 459 /RJT /20 16 A.Y. 2009 - 10 PAGE NO IT O VS. M/S. KARMAL KOTADA JUTH SEVA SAHKARI MANDLI LTD. 5 (3) TO ALLOW THE CREDIT FOR TAX DEDUCTED AS CLAIMED BY THE APPELLANT. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. IT IS DEMONSTRATED FROM THE ABOVE FINDINGS OF THE LD. CIT(A) THAT LD. CIT(A) HAD ADJUDICATED THE ISSUE WITHOUT SPECIFICALLY C ONSIDERING THE POINT S FOR DETERMINATION OF HIS DECISION AND WITHOUT GI VI NG ANY OPPORTUNITY TO T HE ASSESSING OFFICER TO VERIFY/ EXAMINE THE DETAIL AND SUPPORTING EVIDENCES IN RESPECT OF UNREPORTED RECEIPT OF RS. 3 , 82 , 31 , 996/ - . IN THE LIGHT OF THE ABOVE , IT IS CLEAR FROM THE FINDING OF LD. CIT(A) THAT NO DISCUSSION ON THE SUBMISSION AND SPECIFIC EVIDENCES PRODUCED BY THE ASSESSEE WERE MADE IN HIS FINDINGS AND NO OPPORTUNITY TO THE ASSESSING OFFICER WAS GIVEN FOR EXAMINATION OF THE RELEVANT DE T A I L S WHICH WAS N OT FURNISHED AT ALL BEFORE THE ASSESSING OFFICER I.E. BILL, VOUCHERS AND EXPENSES INCURRED TO EARN THE UNDISCLOSED GROSS RECEIPT. SECTION 250(6) OF THE ACT CONTEMPLATES THAT THE LD. CIT(A) WOULD DETERMINE POINTS IN DISPUTE AND THEREFORE RECORD REASONS ON SUCH P O INT S IN SUPPORT OF HIS CONCLUSION, HOWEVER , THE LD. CIT(A) HAS FAILED TO DETERMINE THOSE P O INTS AND RECORD DETAILED FINDINGS. BECAU S E OF THESE ANOMALIES, I N CASE , THE CASE IS SET ASIDE TO LD. CIT(A), W E WOULD BE MULTIPLYING THE LITIGATION BE CAUSE THE LD. CIT(A) WOULD CALL FOR A REMAND REPORT FROM THE ASSESSING OFFICER AND PROCEEDINGS WOULD COMMENCE ON TWO STAGES IN ORDER TO AVOID THAT SITUATION WE WOULD DEEM IT PROP ER TO RESTORE THIS CASE TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH AFTER EXAMINATION AND VERIFICATION O F THE DETAIL S AND SUPPORTING EVIDENCES. ACCORDINGLY, THE CASE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATING DE - NOVO AND THE ASSESSEE IS DIRECTED TO MAKE COMPLIANCE BEFORE THE ASSESSING OFFICER IN THE SET ASIDE ASSESSMENT PROCEEDINGS W ITHOUT ANY FAILURE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A NO S . 458 & 459 /RJT /20 16 A.Y. 2009 - 10 PAGE NO IT O VS. M/S. KARMAL KOTADA JUTH SEVA SAHKARI MANDLI LTD. 6 ITA NO . 459/AHD /2016 7. THE SOLITARY GROUND OF APPEAL IS AGAINST THE DECISION OF LD. CIT(A) CANCELLING LEVY OF PENALTY OF R S. 1 ,18,10,598/ - SINCE VIDE ITA A PPEAL 458/AHD/2016 AS REFERRED ORDER , WE HAVE RESTORED THE QUANTUM ADDITION TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH, THEREFORE, THE PENALTY LEVIED ON THE SAID ADDITION HAS BECOME INFRUCTUOUS. ACCORDINGLY, WE SET ASIDE THE DECISION OF LD. C IT(A) AND THE ASSESSING OFFICER MAY DECIDE THE ISSUE OF PENALTY ON THE OUTCOME OF THE QUANTUM PROCEEDINGS. THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE ALL OWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OUR T ON 28 - 01 - 20 20 SD/ - SD/ - (MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 28 /01/2020 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT