The ITO,Vapi Ward-3, Vapi V. Shri Ajit Nayalchand Shah, Vapi

ITA 468/AHD/2011

• Counselvise Citation: 46820514 RSA 2011
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: K N BHATT
• Keywords: Opportunity of being heard; Additional evidence; Reasonable cause; Corroborative evidences
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND B. P. JAIN, A M) ITA NO. 468/AHD/2011 A. Y.: 2005-06 THE INCOME TAX OFFICER, VAPI WARD 1, VAPI, SHIVAM COMPLEX, N. H. NO.8, VAPI VS SHRI AJIT NAYALCHAND SHAH, D-303, ADARSH VIHAR, OPP. LAW PRICE SUPER MARKET, GIDC, VAPI PA NO. ADZPS 8325 G (APPELLANT) (RESPONDENT) APPELLANT BY SHRI B. L. YADAV, DR RESPONDENT BY SHRI K. N. BHATT, AR DATE OF HEARING: 21-12-2011 DATE OF PRONOUNCEMENT: 21-12-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A), V ALSAD DATED 22 ND NOVEMBER, 2010 FOR ASSESSMENT YEAR 2005-06, ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS DELETED THE ADDITION ON ACCO UNT OF NET PROFIT OF RS.8,85,659/- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) HAS DELETED THE ADDITION ON ACCO UNT OF UNSECURED LOAN U/S 68 OF RS.1,05,695/-. 2. BRIEFLY, THE FACTS OF THIS CASE ARE THAT THE AS SESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PAPER TUBES. TH E ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,49, 947/-. THE RETURN ITA NO.468/AHD/2011 ITO, VAPI WARD 1, VAPI VS SHRI AJIOT NAYALCHAND SHA H 2 WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLE TED EX-PARTE U/S 144 OF THE IT ACT MAKING THE TWO ADDITIONS ON A CCOUNT OF NET PROFIT AND INCOME FROM OTHER SOURCES ABOVE U/S 68 OF THE I T ACT ON WHICH ABOVE TWO GROUNDS HAVE BEEN RAISED BY THE REVENUE. THE AO NOTED THAT THE ASSESSEE HAS FAILED TO SUBMIT ANY EVIDENCE IN SUPPORT OF THE RETURN AND NO BOOKS OF ACCOUNTS HAVE BEEN PRODUCED. THE STATUTORY NOTICES WERE NOT COMPLIED. IN THE ABSENCE OF ANY PR ODUCTION OF BOOKS OF ACCOUNTS, DETAILS AND SUPPORTING EVIDENCES, EX-P ARTE ASSESSMENT WAS PASSED U/S 144 OF THE IT ACT DETERMINING TOTAL INCOME AT RS.11,41,300/-. BOTH THE ADDITIONS WERE CHALLENGED BEFORE THE LEARNED CIT(A) AND THE LEARNED CIT(A) NOTED THAT TH E AO HAS NOT DISPUTED THE VERACITY OF THE BOOKS OF ACCOUNTS AND THE AUDIT REPORT AND FURTHER THE AO SHOULD NOT HAVE DETERMINED THE I NCOME ARBITRARILY. IT WAS FURTHER FOUND THAT CASH CREDIT WAS TAKEN IN EARLIER YEAR. THEREFORE, BOTH THE ADDITIONS WERE DELETED. 3. THE LEARNED DR SUBMITTED THAT THE LEARNED CIT(A) VIOLATED RULE 46A OF THE IT RULES AND NO REMAND REPORT IS CALLED FOR AT THE APPELLATE STAGE. SINCE NO BOOKS OF ACCOUNTS WERE PR ODUCED BEFORE THE AO, THEREFORE, THERE WAS NO REASON FOR THE LEAR NED CIT(A) TO HOLD THAT THE AO DID NOT DISPUTE THE BOOKS OF ACCOUNTS. THE LEARNED DR SUBMITTED THAT SINCE GENUINENESS OF THE EXPENSES AN D CASH CREDITS AND OTHER DETAILS CONTAINED IN THE BOOKS OF ACCOUNT S WERE NOT PRODUCED BEFORE THE AO AT THE ASSESSMENT STATE, THE REFORE, THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE LEARNED CIT(A) AND THEREFORE, THE MATTER MAY BE REMANDED TO HIS FILE F OR RECONSIDERATION. THE LEARNED COUNSEL FOR THE ASSESSEE VERY FAIRLY ST ATED THAT RULE 46A ITA NO.468/AHD/2011 ITO, VAPI WARD 1, VAPI VS SHRI AJIOT NAYALCHAND SHA H 3 OF THE IT RULES IS NOT COMPLIED WITH AT THE APPELLA TE STAGE AND THE MATTER MAY BE REMANDED TO THE FILE OF THE LEARNED C IT(A) FOR RECONSIDERATION. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S IN THE LIGHT OF THE FINDINGS OF THE AUTHORITIES BELOW. IT IS NOT IN DISPUTE THAT THE ASSESSEE REMAINED EX-PARTE BEFORE THE AO AT THE ASS ESSMENT STAGE. NO DETAILS AND SUPPORTING EVIDENCES WERE FILED IN S UPPORT OF THE RETURN OF INCOME AND NO BOOKS OF ACCOUNTS WERE PROD UCED. NO DETAILS OF CREDITORS WERE FILED. THE AO, THEREFORE, PROCEED ED EX-PARTE AND MADE BOTH THE ADDITIONS. THE LEARNED CIT(A) WAS, TH EREFORE, NOT JUSTIFIED IN HOLDING THAT THE AO SHOULD NOT HAVE DI SPUTED THE VERACITY OF THE BOOKS OF ACCOUNTS AND FURTHER EXPENSES SHOUL D BE EXAMINED BY THE AO. SINCE NOTHING WAS PRODUCED BEFORE THE AO , THEREFORE, FINDING OF FACT RECORDED BY THE LEARNED CIT(A) ARE PERVERSE AND ILLEGAL. EVEN BEFORE DELETING THE ADDITION, THE LEA RNED CIT(A) SHOULD HAVE RESORTED TO THE PROCEDURE PROVIDED UNDER RULE 46A OF THE IT RULES. RULE 46A OF THE IT RULES PROVIDES THAT THE A SSESSEE SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE COMMISSIONER (APP EALS) ANY EVIDENCE WHETHER ORAL OR DOCUMENTARY OTHER THAN THE EVIDENCES PRODUCED BEFORE THE AO EXCEPT IN THE CIRCUMSTANCES NAMELY:- WHERE THE AO HAS REFUSED TO ACCEPT THE EVIDENCE, OR WHERE THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING TH E EVIDENCE, OR WHERE EVIDENCES COULD NOT BE PRODUCED BEFORE THE AO DUE TO REASONABLE CAUSE AND THAT THE ORDER APPEALED WAS PA SSED WITHOUT GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AFORESAID RULE FURTHER PROVIDES THAT NO EVIDENCE SH ALL BE ADMITTED ITA NO.468/AHD/2011 ITO, VAPI WARD 1, VAPI VS SHRI AJIOT NAYALCHAND SHA H 4 UNDER THIS RULE UNLESS REASONS ARE RECORDED BY THE COMMISSIONER (APPEALS) FOR ITS ADMISSION AND THAT OPPORTUNITY SH ALL BE GIVEN TO THE AO TO REBUT SUCH EVIDENCES. IN THIS CASE, THE LEARN ED CIT(A) ADMITTEDLY CONSIDERED ADDITIONAL EVIDENCES AT THE A PPELLATE STAGE WITHOUT FOLLOWING RULE 46A OF THE IT RULES AND NONE OF THE CONDITIONS OF RULE 46 A OF THE IT RULES NOTED ABOVE HAVE BEEN COMPLIED WITH BY THE LEARNED CIT(A). THE LEARNED CIT(A) THUS SHOULD NOT HAVE DELETED THE SUBSTANTIAL ADDITION ON THE MATTER IN ISSUE WIT HOUT CONSIDERING THE PROVISIONS OF RULE 46A OF THE IT RULES AND WITHOUT FOLLOWING THE PROVISIONS OF LAW. THEREFORE, THE MATTER REQUIRES R ECONSIDERATION AT THE LEVEL OF THE LEARNED CIT(A). SINCE, IN THIS CAS E THE LEARNED CIT(A) DID NOT GIVE ANY OPPORTUNITY TO THE AO AT THE APPEL LATE STAGE AND NO JUSTIFIED REASONS HAVE BEEN RECORDED FOR DELETING T HE ADDITIONS, THEREFORE, ORDER OF THE LEARNED CIT(A) IS PASSED CO NTRARY TO THE PRINCIPLES OF LAW. WE ACCORDINGLY, SET ASIDE THE O RDER OF THE LEARNED CIT(A) AND RESTORE THE MATTER IN ISSUE TO HIS FILE WITH DIRECTION TO RE- DECIDE BOTH THE GROUNDS AFRESH BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE AO. THE ASSESSEE IS AT LIBERTY TO PRODUCE ANY SUFFICIENT MA TERIAL BEFORE THE LEARNED CIT(A) AND MAY TAKE ANY LEGAL PLEA BEFORE H IM IN ACCORDANCE WITH LAW. THE LEARNED CIT(A) BEFORE PASSING APPELLA TE ORDER SHALL FOLLOW RULE 46 A OF THE IT RULES IN THIS CASE AND S HALL PASS REASONED ORDER AFTER HEARING THE ASSESSEE AND THE AO. ITA NO.468/AHD/2011 ITO, VAPI WARD 1, VAPI VS SHRI AJIOT NAYALCHAND SHA H 5 5. IN THE RESULT, THE DEPARTMENTAL APPEAL IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. 21/12/2011 SD/- SD/- (B. P. JAIN) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD