Asstt. Commissioner of Income Tax -5, Kanpur V. M/s. Corona Plus Industries Ltd., Kanpur

ITA 53/LKW/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2033 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-07-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 31-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained investment; Reason to believe

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.53/LKW/2013 ASSESSMENT YEAR 2004-05 M/S CORONA PLUS INDUSTRIES LTD. 118/585, KAUSAL PURI, KANPUR PAN AAACC 5820 H VS ACIT - 5, 15/295-A, VAIBHAV BUILDING CIVIL LINES, KANPUR (RESPONDENT) (APPELLANT) SMT. JYOTI VERMA, DR APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY 30/07/2015 DATE OF HEARING 31/08/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R PASSED BY LEARNED CIT(A)-II, KANPUR DATED 31/10/2012 FOR THE ASSESSME NT YEAR 2004-05. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE ID. COMMISSIONER OF INCOME TAX (APPEALS)-I I, KANPUR HAS ERRED IN LAW AND ON FACTS IN QUASHING TH E ASSESSMENT ORDER MADE U/S 148/143(3) OF THE IT ACT 1961 WITHOUT APPRECIATING THE FACTS OF THE CASE AND BY QUOTING PRECEDENTS OF VARIOUS COURTS WITHOUT RELATI NG THESE TO THE FACTS IN ISSUE. 2. THAT THE ID. COMMISSIONER OF INCOME TAX (APPE ALS)-II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING TH E ADDITION OF RS.24,70.124/- MADE AS UNEXPLAINED INVESTMENT ON ACCOUNT OF SALES WITHOUT APPRECIATING THE FACTS THE AO HAD SCRUTINIZED THE SALES/ PURCHASE AC COUNT. 2 3. THAT THE ORDER OF THE ID. COMMISSIONER OF INCOME TAX (APPEALS) BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL OR TAKE ADDITIONAL GROUND DURING THE PENDENCY OF THIS APPEAL. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. AR OF THE ASSESSEE SUPPORTED THE OR DER OF THE LD. CIT(A). HE ALSO SUBMITTED A JUDGMENT OF THE HONBLE DELHI H IGH COURT RENDERED IN THE CASE OF CIT VS. RAINEE SINGH IN ITA NO.566/2009 DATED 20.08.2009 IS AVAILABLE ON PAGES 11 TO 17 OF THE PAPER BOOK. IN R ELIANCE OF THIS JUDGMENT WAS PLACED BY HIM IN SUPPORT OF THIS CONTENTION THA T THE REOPENING ON THE BASIS OF MERE SUSPICION IS NOT VALID. HE ALSO SUBMI TTED THAT IN THE PRESENT CASE ALSO, THE REOPENING ON THE BASIS OF MERE SUSPI CION AND THEREFORE, THE SAME IS NOT VALID. HE ALSO PLACED RELIANCE ON THE T RIBUNALS DECISION RENDERED IN THE CASE OF M/S MAHADEV TRADING CO., VS. THE INC OME TAX OFFICER IN ITA NO. 2095/AHD/2009 DATED 26.08.2011, COPY AVAILABLE ON PAGES 21 TO 33 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT THE ASSES SMENT ORDER PASSED BY THE TRADE TAX AUTHORITY WAS SET ASIDE BY THE TRADE TAX AUTHORITY. THEREFORE, THERE WAS NO MATERIAL ON RECORD FOR THE AO TO FORM REASON TO BELIEVE THAT AN INCOME HAS ESCAPED ASSESSMENT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION. REGARDI NG GROUND NO.1 OF THE REVENUE, WE FIND THAT ON PAGE 4 OF HIS ORDER, L D. CIT(A) HAS OBSERVED THAT ON THE PERUSAL OF ALL THE SUBMISSION INCLUDING REMAND REPORT AND REJOINDER SUBMITTED BY THE ASSESSEE. AFTER REMAND R EPORT, THERE WAS MATERIAL ON RECORD AS REFERRED BY THE AO AND REOPENING WAS M ADE ON THE BASIS OF THAT MATERIAL AND THEREFORE ON THE FACTS OF THE PRE SENT CASE IT CANNOT BE SAID THAT THE REOPENING WAS BASELESS. 3 5. AFTER OBSERVING THIS, LD. CIT(A) HAS STATED ON T HE SAME PAGE OF HIS ORDER THAT THE AO HAS NOT APPRAISED ANY OF THE EVID ENCE, RENDERED TO IN HIS REMAND REPORT WHILE FRAMING THE ORDER AND MAKING AS SESSMENT AND THEREFORE, ITS CONCLUSION IS NOT BASED ANY MATERIAL IN HIS POSITION AND HE SIMPLY ASSESSED BY TRADE TAX AUTHORITY. AFTER MAKIN G THIS DISALLOWANCE, HE HELD THAT MAKING AN ASSESSMENT IN SUCH A MANNER IS FAIRLY NOT PERMISSIBLE AND IS CONTRAVENTION OF THE JUDGMENT OF THE HONBLE SUPREME COURT RENDERED BY LD. AR IN HIS SUBMISSION. WE FAIL TO UNDERSTAND THIS FINDING OF LD. CIT(A) AFTER OBSERVING THIS IN THE PRECEDING PARA THAT TH E REOPENING WAS MADE ON THE BASIS OF MATERIAL. HENCE, WE ARE OF THE CONSIDE RED OPINION THAT IN THE FACTS OF THE PRESENT CASE, THE ORDERS OF THE CIT(A) IS NOT SUSTAINABLE ON THIS ISSUE BECAUSE WHEN THIS IS ACCEPTED BY THE LD. CIT( A) THAT REOPENING WAS MADE ON THE BASIS OF MATERIAL INDICATED BY THE AO I N THE REMAND REPORT REOPENING OF ASSESSMENT CANNOT BE SAID TO BE FAULTY . HENCE, ON THIS ISSUE, WE REVERSE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE AO. ACCORDINGLY, GROUND NO.1 OF THE REVENUE IS ALLOWED. 6. REGARDING GROUND NO.2 OF THE REVENUES APPEAL, W E FIND THAT THIS IS BASIS OF THE ORDER OF THE CIT(A) THAT THERE WAS AMB IGUITY IN THE QUESTIONNAIRE AND THE ASSESSEE COULD NOT HAVE BEEN ACCEPTED TO SUBSTANTIATE SUCH AMBIGUITY. THE COPY OF QUESTIONNAIRE IS AVAILA BLE ON PAGES 8 TO 10 OF THE PAPER BOOK AND IN THE SAID QUESTIONNAIRE, THERE IS APPARENT CONTRADICTION IN QUERY NOS. 3 AND 4, WHICH ARE REPRODUCED BELOW:- III) IN THE FACTORY PREMISES TO STOCK/INVOICE REGI STER WAS FOUND. IV) ON PHYSICAL VERIFICATION OF STOCK REGISTER AT T HE FACTORY PREMISES (MANUFACTURING UNIT) THE DIFFERENCE OF STO CK OF RAW MATERIAL AMOUNTING TO RS.1,60,000/- AND FINISHED GO ODS AMOUNTING TO RS.33 LACKS WAS FOUND. 4 7. FROM THE ABOVE TWO QUERIES REPRODUCED ABOVE, IT IS SEEN THAT AS PER QUERY NO.3, IT IS STATED BY THE AO THAT IN THE FACTORY PREMISES NO STOCK/INVOICE REGISTER WAS FOUND AND QUERY NO.4, HE SAYS THAT ON PHYSICAL VERIFICATION OF STOCK REGISTER ON FACTORY PREMISES, THE DIFFERENCE OF STOCK OF STOCK OF RAW MATERIAL AMOUNTING TO RS.1,60,000/- AND FINISHED GOODS AMOUNTING TO RS.33 LACKS WAS FOUND. WHEN THE STOCK REGISTER IT WAS NOT FOUND THEN HOW THE PHYSICAL VERIFICATION OF STOCK C AN BE COMPARED WITH STOCK REGISTER AND DIFFERENCE STOCK CAN BE WORKED O UT. AS PER THE REPLY OF THE ASSESSEE SUBMITTED TO THE AO AVAILABLE ON PAGE 7 OF THE PAPER BOOK ALSO WHICH WAS SUBMITTED THAT THE ASSESSEE BEFORE A O THAT THERE IS NO QUANTITY AVAILABLE AND THE MATTER EVOLUTION IS ALSO NOT AVAILABLE AND IT MERELY STATES ABOUT THE DIFFERENCE IN THE VALUE OF THE STOCK DIFFERENCE BUT IN THE ABSENCE OF SUCH DATA THE QUERY CANNOT BE REPLIED. EVEN AFTER THIS SPECIFIC REPLY OF THE ASSESSEE BEFORE THE AO, THE AO HAS NOT GIVEN ANY FINDING OF THE ASSESSMENT ORDER THAT WHAT IS TH E POSITION OF DIFFERENCE IN VALUATION OF STOCK. HENCE, IT IS SEEN THAT THE REASON MADE BY THE AO WITHOUT DISPOSING OF THE OBJECTION OF THE ASSESSEE AND ON THE BASIS OF ASSESSMENT ORDER PASSED BY THE TRADE TAX A UTHORITY WHICH WAS SET ASIDE AND THE SUBSEQUENT ORDER OF THE TRADE TAX AUTHORITY HAS NOT BEEN BROUGHT ON RECORD BEFORE US. BUT THE RELIEF AL LOWED BY THE LD. CIT(A) IS ALSO WITHOUT TAKING COGNIZANCE OF THE SUB SEQUENT ORDER OF TRADE TAX AUTHORITY AND WITHOUT REFERRING TO THE MA TERIAL OF 19 PAGES INDICATED BY THE AO IN THE REMAND REPORT. CONSIDERI NG ALL THESE FACTS, WE FEEL IT PROPER THAT THIS MATTER SHOULD GO BACK TO T HE FILE OF THE AO FOR FRESH DECISION AND HE PASS NECESSARY ORDER AS PER L AW. IN THE LIGHT OF THE ABOVE DISCUSSION AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE AND SUCH ORDER OF THE AO SHOULD BE SPEAKING AND REASONED ORDER. GROUND NO.2 OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. 5 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED IN THE TERMS INDICATED ABOVE. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31./08/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. RE GISTRAR