AUREUS JEWELS P. LTD, MUMBAI V. ITO 9(1)(1), MUMBAI

ITA 5083/MUM/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4567 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 18-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SOMNATH S UKKALE
• Assessee Lawyers: SNEHAL J SHAH
• Keywords: Business income; Opportunity of being heard; Principle of natural justice
• Section: 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , AM AND AMARJIT SINGH , JM ./ I.T.A. NO . 4570 / MUM/ 201 0 ( / ASSESSMENT YEA R : 200 6 - 07 ) INCOME TAX O FFICER 9(1)(1), ROOM NO.226, AAYAKAR BHAVAN, MUMBAI - 400020. / VS. M/S AUREUS JEWELS PVT.LTD., B WING, KUMSON BUILDING COMPOUND, VISHWESHWAR NAGAR, OFF AAREY ROAD, GOREGAON, MUMBAI - 400063. ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO .5083/ MUM/ 2010 ( / ASSESSMENT YEA R : 2006 - 07 ) M/S AUREUS JEWELS PVT.LTD., B WING, KUMSON BUILDING COMPOUND, VISHWESHWAR NAGAR, OFF AAREY ROAD, GOREGAON, MUMBAI - 400063 / VS. INCOME TAX OFFICER 9(1)(1) , ROOM NO.226, AAYAKAR BHAVAN, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAECA9858M / REVENUE BY SHRI SOMNATH S UKKALE / ASSESSEE BY SHRI S NEHAL J SHAH / DATE OF HEARING : 1 4. 1.20 16 / DATE OF PRONOUNCEMENT: 14. 1.2016 4570 /M/201 0 AND 5083/M/2010 2 / O R D E R P ER B R BASKARAN, A . M: THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORD ER DATED 26.3.2010 PASSED BY THE LD. CIT(A) - 19, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEAR 2006 - 07. 2. THE AO HAS ESTIMATED THE INCOME OF THE ASSESSEE AT 10% OF THE TOTAL SALES AND THE SAME WAS REDUCED BY THE LD.CIT(A) TO 1%. THE REVENUE HAS FILED THI S APPEAL CHALLENGING THE RE DUC TION OF INCOME AND THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE CONFIRMATION OF INCOME TO THE EXTENT OF 1 %. 3 . THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSM ENT WAS COMPLETED BY T HE AO U/S 144 OF THE INCOME TAX A CT, 1961, S INCE THE ASSESSEE COULD NOT COMPLY WITH THE NOTICES ISSUED BY THE AO . BEFORE THE LD. CIT(A) , THE ASSESSEE PLACED RELIANCE ON A COMPARABLE CASE TO CHALLENGE THE GROSS PROFIT RATE ADOPTED BY THE AO TO ESTIMATE THE INCOME. HOWEVER , TH E SA ME WAS NOT FOUND TO BE A COMPARABLE CASE BY THE LD. CIT(A) AND HENCE, THE LD. CIT(A) ESTIMATED THE INCOME OF THE ASSESSEE AT 1% OF THE TOTAL SALES TURNOVER . THE LD. AR , REFERRING TO THE PAPER BOOK FILED BY THE ASSESSEE , SUBMITTED TH AT THE ASSESSEE IS HAVING ALL THE MATERIALS AND EVIDENCES TO SUPPORT THE RETURN OF INCOME FILED BY IT . THE LD. AR SUBMITTED THAT THE ASSESSEE HAS STOPPED ITS BUSINESS OPERATION IN THE MONTH OF OCTOBER, 2008 AND THE ACCOUNTANT OF THE ASSESSEE WHO WAS LOOKING THE INCOME T AX MATTERS LEFT THE ASSESSEE COMPANY AND HENCE, PROPER REPRESENTATION COULD NOT BE MADE BEFORE THE AO BY FURNISHING THE BOOKS OF ACCOUNT. ACCORDINGLY, THE LD A.R SUBMITTED THAT THE ASSESSEE COULD NOT CO - OPERATE WITH THE AO F OR T HE REASONS BEYOND ITS CONTR OL. HE 4570 /M/201 0 AND 5083/M/2010 3 FURTHER SUBMITTED THAT T HE REPRESENTATIVE OF THE ASSESSEE , WHO APPEARED BEFORE THE LD. CIT(A) , PREFERRED TO CHALLENGE THE RATE OF GROSS PROFIT INSTEAD OF PRODUCING THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE LD.AR SUBMITTED THAT THE ASSESSEE SHOULD B E PROVIDED WITH ONE MORE OPPORTUNITY OF BEING HEARD BEFORE THE A . O TO PRODUCE THE BOOKS OF ACCOUNT. 4 . ON THE CONTRARY, THE LD. D . R STRONGLY OBJECTED TO THE PLEA PUT FORTH BY THE LD.AR. THE LD. D . R SUBMITTED THAT THE ASSESSEE DID NOT AVAIL OPPORTUNITY TO PRODUCE BOOKS OF ACCOUNT BEFORE BOTH THE TAX AUTHORITIES AND HENCE, THE PLEA OF THE ASSESSEE SHO ULD NOT BE ACCEPTED . 5. WE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXP ORT OF JEWELLERY. IT HAS FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30.11.2006 DECLARING TOTAL LOSS OF RS.13.94 LAKHS. WE NOTICE FROM THE ASSESSMENT ORDER THA T THE ASSESSEE HAD DECLARED THE TOTAL TURNOVER AT RS.4.42 CRORES. THE LD. A . R SUBMITTED THAT THE ASSESSEE STOPPED ITS BUSINESS OPERATION IN THE MONTH OF OCTOBER, 2008 AND THE ACCOUNTANT OF THE ASSESSEE , WHO WAS LOOKING THE INCOME TAX MATTERS , HAS LEFT THE ASSESSEE COMPANY AND HENCE PROPER REPRESENTATION COULD NOT BE MADE BEFORE TH E AO BY FURNISHING THE BOOKS OF ACCOUNT. THE LD.AR FURTHER SUBMITTED THAT THE REPRESENTATIVE WHO APPEARED BEFORE THE LD.CIT(A) ALSO DID NOT THINK IT FIT TO PRODUCE THE BOOKS OF ACCOUNT BEFORE THE FIRST APPELLATE AUTHORITY AND IN STEAD PLACED RELIANCE ON A COMP ARABLE CASE IN ORDER TO CHALLENGE THE RATE OF GROSS PROFIT ESTIMATED BY THE AO.. 6. HOWEVER, THE LD. AR APPEARING BEFORE US SUBMITTED THAT THE ASSESSEE IS HAVING ALL EVIDENCES RELATING TO ACCOUNT S OF THE ASSESSEE . WE ALSO NOTICE THAT T HE ASSESSEE HAS ALSO FILED A VOLUMINOUS PAPER BOOK TO SUPPORT ITS CONTENTIONS . IN VIEW OF THE FOREGOING DISCUSSIONS, WE AR E OF 4570 /M/201 0 AND 5083/M/2010 4 THE VIEW THAT THERE IS SOME MERIT IN THE PLEA PUT FORTH BY THE LD.AR. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEE , IN THE INTEREST O F NATURAL JUSTICE, SHOULD BE PROVIDED WITH ONE MORE OPPORTUNITY TO REPRESENT ITS MATTER . HOWEVER, SINCE THE ASSESSEE HAS FAILED TO PRODUCE EVIDENCES BEFORE THE LOWER AUTHORITIES, WE ARE OF TH E VIEW THAT PLEA OF THE LD.AR SHO ULD BE ACCEPTED UPON SOME TERMS. ACCORDINGLY , WE IMPOSE A COST OF RS.10,000 / - UPON THE ASSESSEE AND DIRECT THE ASSESSEE TO REMIT THE S A ME TO THE ACCOUNT OF INCOME TAX DEPARTMENT ON OR BEFORE 30.1.2016 . S UBJECT TO THE PAYMENT OF COST REFERRED ABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT (A) WITH REGARD TO ESTIMATION OF PROFIT AND RESTORE THE SAME TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE SAID ISSUE AFRESH BY CONSIDERING VARIOUS INFORMATION AND EXPLANATION S THAT MAY BE FURNISHED BY THE ASSESSEE . THE ASSESSEE IS ALSO DIRECTED TO FULLY CO - OPERATE WITH THE AO BY FURNISHING ALL THE DETAILS AND INFORMATION THAT MAY B E CALLED FOR THE AO IN THIS REGARD. 7 . IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES . PRONO UNCED ACCORDINGLY ON 14 TH JAN UARY , 2016 . 14HT JANUARY, 2016 SD SD ( AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 14TH JANUARY, 201 6 . . . ./ SRL , SR. PS 4570 /M/201 0 AND 5083/M/2010 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, M UMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUM BAI