Doaba Alloys & Casting Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 4680/DEL/2011

• Counselvise Citation: 468020114 RSA 2011
• Duration Of Justice: 4 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 24-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESANG Y SHIRPA
• Keywords: Capital asset converted into stock in trade; Business income; Opportunity of being heard
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B, NEW DELHI) BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 4680/DEL/2011 ASSESSMENT YEAR : 2007-08 DOABA ALLOYS & CASTINGS PVT. LTD., VS. ITO, WARD 10(4), PLOT 12, BLOCK D, NEW DELHI OKHLA INDL. AREA PHASE I, NEW DELHI GIR / PAN:AAACD2472N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K SAMPATH, ADV. RESPONDENT BY : MS. KESANG Y. SHIRPA, SR. DR DATE OF HEARING : 30.10.2015 DATE OF PRONOUNCEMENT : 27,11,2015 ORDER PER KULDIP SINGH, JM: THE APPELLANT, M/S. DOABA ALLOYS AND CASTINGS PVT. LTD. (HEREINAFTER REFERRED AS THE ASSESSEE), BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE IMPUGNED ORDER DATED 11.08.2011 PASSED BY LD. CIT(A ) XIII, NEW DELHI QUA THE ASSESSMENT YEAR 2007-08 ON THE GROUND THAT: - THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED CONFIRMING THE ACTION OF THE A.O. IN LIMITING THE CLAIM OF EXPENSE AGAINST BUSINESS INCOME TO THE EXTENT OF RS.4,03,035/- ON ESTIMATE BASIS. THE ACTION BEING MOST ARBITRARY AND ERRONEOUS. IT IS PRAYED THAT THE SAME BE QUASHED. ITA NO.4680/DEL/2011 2 2. BRIEFLY STATED, THE FACTS OF THE PRESENT CASE AR E: DURING THE PROCESSING OF RETURN OF INCOME FILED BY THE ASSESSEE QUA THE A SSESSMENT YEAR 2007-08, THE CASE WAS SUBJECTED TO SCRUTINY AND CONSEQUENTLY , NOTICES U/S 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE WERE SERVED UPON TH E ASSESSEE AND IN RESPONSE THERETO, SHRI ANIL SHARMA, CA/AR ATTENDED THE PROCEEDINGS AND FILE NECESSARY DOCUMENTS. DURING THE SCRUTINY, ASS ESSEE CLAIMED THAT IN THE PREVIOUS YEAR, THE COMPANY HAS PURCHASED SCRAP FROM CONTAINER CORPORATION IN ONE LOT FOR RS.19,09,900/- ON 06.06.2006, THE ON LY PURCHASE MADE DURING THE YEAR AND THE SAME WERE SOLD AT RS.18,23,199/- R ESULTING INTO A LOSS OF RS.86,071/-. THE ASSESSEE CLAIMED HUGE EXPENDITURE FOR REDUCING THE TAXABLE HOUSE PROPERTY INCOME IN THE P & L ACCOUNT TO THE TUNE OF RS.16,12,838/- ON A SINGLE TRANSACTION, WHICH IS NO T ELIGIBLE FOR DEDUCTION. SINCE THE ASSESSEE HAS FAILED TO PRODUCE THE COMPLE TE SET OF BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS, THE PROFITS FROM SALE OF SCRAP IS TAKEN @ 5% ON RS.18,23,199/- I.E. RS.91,160/- AND A SSESSED THE INCOME OF ASSESSEE TO RS.10,55,843/-. 3. THE ASSESSEE CARRIED THE ASSESSMENT ORDER BEFORE LD. CIT(A) WHO HAS PARTLY ALLOWED THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT AP PEAL. 4. LD. A.R. FOR THE ASSESSEE CHALLENGING THE IMPUGN ED ORDER, CONTENDED INTER ALIA THAT THE BOOKS OF ACCOUNTS FILED BY THE ASSESSEE HAS NOT BEEN EXPRESSLY REJECTED; THAT ASSESSEE HAS ALSO PRODUCED THE VOUCHERS/BILLS AND REMAND REPORT HAS ALSO BEEN CALLED BY LD. CIT(A) DU RING APPELLATE PROCEEDING, WHO HAS PASSED THE ORDER MERELY ON THE BASIS OF DOUBT. 5. HOWEVER, ON THE OTHER HAND, LD. D.R. VEHEMENTLY RELIED UPON THE ORDER PASSED BY LD. CIT(A). ITA NO.4680/DEL/2011 3 6. THE SOLE QUESTION ARISES FOR DETERMINATION IN TH IS CASE IS, AS TO WHETHER LD. CIT(A) HAS ERRED IN CONFIRMING THE ASSE SSMENT ORDER IN LIMITING THE CLAIM OF EXPENDITURE AGAINST BUSINESS INCOME TO THE TUNE OF RS.4,03,035/- ON ESTIMATE BASIS? 7. THE A.O. PASSED THE ASSESSMENT ORDER ON ACCOUNT OF FAILURE OF ASSESSEE TO PRODUCE THE COMPLETE SALES AND BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS AND PROCEEDED TO ASSESS THE PROF IT FROM SALE OF SCRAP @ 5% AMOUNTING ON RS.18,23,199/- AND ASSESSED THE INC OME OF THE ASSESSEE AT RS.10,55,843/-. 8. UNDISPUTEDLY, DURING THE ASSESSMENT PROCEEDINGS, THE BOOKS OF ACCOUNTS WERE PRODUCED BUT SUPPORTING BILLS AND VOU CHERS WERE NOT THERE FOR PERUSAL OF THE A.O. WHO HAS, WITHOUT INVOKING THE P ROVISIONS CONTAINED U/S 145(2) OF THE ACT HAS EXPRESSED HIS DOUBT ABOUT THE GENUINENESS AND CORRECTNESS OF THE INCOME AS SHOWN IN THE P & L ACC OUNT ON THE RETURN FILED BY THE ASSESSEE PARTICULARLY REGARDING NATURE OF QU ANTUM OF LOSS SHOWN. 9. LD. A.R. CHALLENGING THE IMPUGNED ORDER, CONTEND ED THAT THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE A.O. WHICH HAVE N OT BEEN DISPUTED. ACCOUNTS BOOKS ARE REGULARLY BEING AUDITED WITHOUT ANY COMMENTS AND EVEN ACCEPTED BY THE TAX AUTHORITIES AND AS SUCH IMPOSIT ION OF PREEMPTIVE RATES IS UNWARRANTED BECAUSE NO SUCH RATE IS POSSIBLE IN THI S BUSINESS. LD. A.R. RELIED UPON THE LETTER ADDRESSED TO A.O. LYING AT P AGE 22 OF THE PAPER BOOK WHEREIN IT IS CATEGORICALLY MENTIONED THAT WE ARE PRODUCING HEREWITH VOUCHERS FOR YOUR VERIFICATION IN RESPECT OF SCHEDU LE XVII AND OUR P & L ACCOUNT. FINDINGS OF THE A.O. REGARDING NON FILING OF BILLS AND VOUCHERS BEFORE THE A.O., ARE PATENTLY WRONG IN THE FACE OF LETTER DATED 28.08.2009 LYING AT PAGE 22 OF THE PAPER BOOK FILED BY THE ASS ESSEE DURING APPELLATE ITA NO.4680/DEL/2011 4 PROCEEDINGS BEFORE LD. CIT(A). LETTER DATED 28.08. 2009 LYING AT PAGE 22 OF THE PAPER BOOK HAS NOT BEEN DISPUTED BY LD. CIT(A) NOR HE HAS RETURNED ANY FINDING ON THE SAME RATHER PROCEEDED TO TOW THE LIN E OF A.O. IN A STEREOTYPED MANNER TO DISALLOW THE CLAIM OF ASSESSEE. LD. CIT( A) HAS PROCEEDED ON THE BASIS OF DOUBT EXPRESSED BY THE A.O. REGARDING THE GENUINENESS OF THE CORRECTNESS OF INCOME OF THE ASSESSEE. PROVIDING O PPORTUNITY OF BEING HEARD IS A SINE QUA NON OF PROVIDING JUSTICE FOR A QUASI JUDICIAL AUTHORIT Y, THE A.O. AND CIT(A) IN THIS CASE. A.O. AS WELL AS CIT(A) BE ING QUASI JUDICIAL AUTHORITIES, ARE UNDER OBLIGATION TO PROVIDE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE MATTER AND NOT TO DECI DE THE MATTER BY OVERLOOKING THE DOCUMENTS PLACED ON FILE DURING ASS ESSMENT AS WELL AS APPELLATE PROCEEDINGS. 10. IN VIEW, WHAT HAS BEEN DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE CASE IS REQUIRED TO BE RESTORED TO LD . CIT(A) TO DECIDE AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE PARTIES IN THE LIGHT OF DOCUMENTS RELIED UPON AND PROVIDE SUFFICIENT OPP ORTUNITY DURING APPELLATE PROCE3EDINGS. SO, WE HEREBY ACCEPT THE PRESENT APP EAL OF THE ASSESSEE. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOV., 2015. SD./- SD./- ( N. K. SAINI) (KULDIP SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 27.11. 2015/SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.4680/DEL/2011 5 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 23/11 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 23,26,27, SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 27/11/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 27/11 SR. PS/PS 7 FILE SENT TO BENCH CLERK 30/11 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER