INCOME TAX OFFICER, WARD 5(2), AMRITSAR V. SH. HARPREET SINGH SANDHU, AMRITSAR

ITA 567/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3329 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 04-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALWINDER KAUR LD
• Assessee Lawyers: P N ARORA LD
• Keywords: Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.567(ASR)/2017 ASSESSMENT YEAR:2014- 15 INCOME TAX OFFICER WARD-5(2),AMRITSAR VS. SH. HARPREET SINGH SANDHU, 41-A, GURU AMAR DASS AVENUE AJNALA ROAD, AMRITSAR PAN:BIBPS4277D (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.01(ASR)/2018 (ARISING OUT OF ITA NO.567(ASR)/2017) ASSESSMENT YEAR:2014- 15 SH. HARPREET SINGH SANDHU, 41-A, GURU AMAR DASS AVENUE, AJNALA ROAD, AMRITSAR PAN:BIBPS4277D VS. INCOME TAX OFFICER WARD-5(2) AMRITSAR (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY: SMT. BALWINDER KAUR (LD. DR) RESPONDENT BY: SH. P.N. ARORA (LD. ADV.) DATE OF HEARING: 14-05-2018 DATE OF PRONOUNCEMENT: 21-06-2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REVENUE DEPARTMENT, ON FEELING AGGRIEVED AGAINST THE ORDER DATED 30.06.2017 PASSED BY THE LD. CIT(A)-2, AMRITSAR, U/S 25 0(6) OF ITA NO.567/ASR/2017 , C.O NO.01/AMR/2018 SH. HARPREET SINGH SANDHU, AMRITSAR 2 THE I.T.ACT,1961 (HEREINAFTER CALLED AS THE ACT) FOR ASST. YEAR:2014-15. THE ASSESSEE HAS ALSO PREFERRED THE CROSS OBJECTION IN THE INSTANT APPEAL. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE DEPARTMENT ARE AS UNDER: 01. THE ID. CIT (A) HAS FAILED TO PROVIDE AN OPP ORTUNITY TO THE ASSESSING OFFICER AND TO CALL REMAND REPORT AS PER RULE 46 A OF THE INCOME TAX RULE 1961 ON PAPER BOOKS FIL ED BY THE ASSESSEE IN AN EX-PARTY CASE U/S 144 OF THE I.T . ACT, 1961. 02. THE LD. CIT (A) HAD CHALLENGED THE CONSTITUTI ONAL VALIDITY OF THE RULE 46 A OF THE INCOME TAX RULE 19 61 AND DID NOT PROVIDE AN OPPORTUNITY OF HEARING TO THE AS SESSING OFFICER AS PER RULE 46 A OF THE INCOME TAX RULE 196 1 TO CROSS EXAMINE OF PAPER BOOKS FILED BY THE ASSESSEE IN AN EX-PARTY CASE U/S 144 OF THE I.T. ACT, 1961. 03. THE LD. CIT (A) ERRED BY ACCEPTING THE VIEW OF THE ASSESSEE THAT THE BOOKS OF ACCOUNTS WERE NOT REJECT ED BY THE A.O. AFTER REJECTING THE BOOKS OF ACCOUNTS, THE ASSESSMENT WAS COMPLETED EX-PARTE UNDER SECTION 144 OF THE I.T. ACT, 1961. 04. THE LD. CIT (A) HAS ERRED BY ACCEPTING THE PL EA THAT THE ASSESSEE HAS SUBMITTED A REPLY BEFORE THE A.O. HOWEVER, THE ASSESSEE NEVER APPEARED IN THE ASSESSM ENT PROCEEDINGS NOR FILED ANY REPLY. 05. THE LD. CIT (A) HAS ERRED BY ACCEPTING THE AD DITIONAL EVIDENCES WHICH WERE NOT PRODUCED BY THE ASSESSEE B EFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSME NT PROCEEDINGS. 3. WHEREAS THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN CROSS OBJECTION. ITA NO.567/ASR/2017 , C.O NO.01/AMR/2018 SH. HARPREET SINGH SANDHU, AMRITSAR 3 1. THAT THE ORDER OF THE CIT(A) IS CORRECT IN THE EYES OF LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND AS SUCH THE APPEAL OF THE DEPARTMENT MAY BE DISMISSED. 2. THAT THE LD. CIT(A) HAS NOT ADMITTED ANY FRESH E VIDENCE AND THE QUESTION OF APPLICABILITY OF RULE 46A DOES NOT ARISE AT ALL. 3. THAT THE LD. CIT(A) HAS ACCEPTED THE APPEAL OF T HE ASSESSEE AFTER CONSIDERING THE MATERIAL ALREADY AVA ILABLE IN THE ASSESSMENT ORDER AND THE APPEAL WAS NEVER DECIDED B Y THE WORTHY CIT(A) ON ANY SO CALLED FRESH EVIDENCE. AS S UCH THE APPEAL OF THE DEPARTMENT MAY BE DISMISSED AS IT IS WITHOUT ANY BASE, RHYME & REASON. 4. THE INSTANT CASE, THE ASSESSEE HAS SHOWN G.P RATE @ 0.92% OF THE TURN OVER OF RS.31,04,79,221/- AND THE NET P ROFIT RATE @ 0.16%, HOWEVER, THE ASSESSING OFFICER DID NOT ACCEP T THE SAID RATES ON THE GROUND THAT THE SAME WERE BELOW THAT OF THE OTHER ASSESSEES IN THE SAME TRADE AND THE AO RELIED UPON THE THREE COMPARABLE CASES OF REGULAR ASSESSEES IN THE LINE OF SAME BUSINESS AS OF THE ASSESSEE AND APPLIED THE NET PROFIT RAT E @ 1.95% ON THE TOTAL TURN OVER OF RS.31,04,79,221/- AN D WORKED OUT THE ADDITION OF RS.55,60,461/-, WHICH WAS CHALLENGE D BY THE ASSESSEE BEFORE THE LD. CIT(A) WHO ACCEPTED THE CONTENTION OF THE ASSESSEE AND ACCEPTED THE NET PROFIT RATE OF 0.16%. 5. THE REVENUE DEPARTMENT PREFERRED THE INSTANT APP EAL BY RAISING THE GROUNDS MENTIONED IN PARA -2 OF THE ORDE R AND THE ASSESSEE HAS ALSO PREFERRED TO FILE CROSS OBJECTION AGAINST TH E APPEAL OF THE REVENUE. 6. THE LD. DR ALTHOUGH DID NOT PRESS THE GROUND NOS.1 TO 5 SPECIFICALLY, HOWEVER, WE FEEL IT APPROPRIATE TO ADDRE SS THE SAME. MORE OR LESS THE CASE OF THE REVENUE DEPARTMENT IS THAT THE LD. ITA NO.567/ASR/2017 , C.O NO.01/AMR/2018 SH. HARPREET SINGH SANDHU, AMRITSAR 4 CIT(A) WHILE ADJUDICATING THE APPEAL DID NOT CALL FOR THE REMAND REPORT AS PER RULE 46-A OF THE I.T. RULE, 1961 AND B Y DOING SO HAD CHALLENGED THE CONSTITUTIONAL VALIDITY OF RULE-46 OF THE I.T. RULE AS NO OPPORTUNITY WAS GIVEN TO THE ASSESSING OFFICER TO CROSS EXAMINE THE PAPER BOOKS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A). FURTHER IT IS ALSO AVERRED IN THE GROUNDS THAT EVEN CIT(A) HAS ALSO ERRED BY ACCEPTING THE VIEW OF THE ASSESSEE THAT THE BOOKS OF ACCOUNT WERE NOT REJECTED BY THE AO. FURTH ER, THE LD. CIT(A) HAS ALSO ERRED BY ACCEPTING THE PLEA THAT TH E ASSESSEE HAS SUBMITTED A REPLY BEFORE THE AO, WHEREAS REAL FACT IS THAT THE ASSESSEE NEITHER APPEARED IN THE ASSESSMENT PROCEEDING N OR FILED ANY REPLY. FURTHER IT IS ALSO ERRED BY ACCEPTING THE ADDITIONAL EVIDENCES WHICH WERE NOT PRODUCED BEFORE TH E ASSESSING OFFICER DURING THE COURSE OF PROCEEDINGS. 7. ON THE OTHER HAND, THE LD. AR DRAWN OUR ATTENTION TO PAPER BOOK AND SUBMITTED THAT REPLY HAS BEEN FILED BEFORE THE ASSESSING OFFICER AND ALL THE MATERIAL WITH REGARD TO TH E TRADING AND PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE ASSE SSEE HAVE ALREADY BEEN FILED BEFORE THE ASSESSING OFFICER AND NO NEW MATERIAL HAVE BEEN FILED BEFORE THE LD. CIT(E). 8. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTANCES O F THE CASE AND RELEVANT MATERIAL PLACED ON RECORD AS IT RE FLECTS FROM THE ASSESSMENT ORDER ITSELF THAT THE BALANCE SHEET O F THE ASSESSEE WAS AVAILABLE WITH THE ASSESSING OFFICER AND EVEN IN THE ASSESSMENT ORDER ITSELF, IT HAS WRITTEN BY THE ASSESSING ITA NO.567/ASR/2017 , C.O NO.01/AMR/2018 SH. HARPREET SINGH SANDHU, AMRITSAR 5 OFFICER ON THE LAST PAGE THAT SINCE THE BOOKS OF ACCOUNTS A RE PROVED NOT TO BE MAINTAINED AS PER THE ACCOUNTING STAN DARDS AND THUS, INACCURATE IN REFLECTING THE CORRECT AND COMPLE TE FINANCIAL EVENTS, WHICH GOES TO SHOW THAT THE RELEVANT MATERIALS HAVE BEEN AVAILABLE BEFORE THE ASSESSING OFFICER, HENCE, IT CANNOT BE SAID THAT THE LD. CIT(A) CONSIDERED THE NEW MATERIAL AND WAS REQUIRED TO CALL FOR REMAND REPORT AND TO PRO VIDE AN OPPORTUNITY TO CROSS EXAMINE THE PAPER BOOK U/S 46A OF THE ACT. HENCE, THE GROUND NOS.1,2 & 5 STANDS REJECTED. GROUND NO.3 RELATES TO THE REASONING GIVEN BY THE L D. CIT(A) THAT THE BOOKS OF ACCOUNT OF THE APPELLANT ARE AUDITED BY CHARTERED ACCOUNTANT AND THE SAME HAVE NOT BEEN REJECTE D BY THE AO U/S 45(3) OF THE ACT IN THE ASSESSMENT ORDER. WE REALIZED THAT IN THE INSTANT CASE, NO BOOKS OF ACCOUNT WERE SUBMI TTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, HOWEVER IT WAS OBSERVED BY THE LD CIT(A) THAT BOOKS OF ACCOUNT HAVE NO T BEEN REJECTED. AS THE ASSESSING OFFICER DETERMINED THE N.P RAT E BY BEST JUDGMENT ASSESSMENT BY COMPARING THREE ASSESSEES, WHICH GOES TO SHOW THAT THE ASSESSING OFFICER HAD SOME MATERIAL O F THE ASSESSEE. THE ASSESSING OFFICER REMARKED IN 2 ND PARA AT PAGE NO. 4 OF THE ASSESSMENT ORDER 'SINCE THE BOOKS OF ACCOUNT ARE PROVED NOT TO BE MAINTAINED AS PER THE ACCOUNTING STAN DARDS AND THUS INACCURATE IN REFLECTING THE CORRECT AND COMPLETE FINANCIAL EVENTS. WE FEEL THAT ON THE BASIS OF AFOR ESAID REMARKS OF LD. A.O., THE LD. CIT(A) HAS MADE THE AFORESAID OB SERVATION ABOUT NON-REJECTION OF BOOKS OF ACCOUNT, WHICH SEEMS TO BE ITA NO.567/ASR/2017 , C.O NO.01/AMR/2018 SH. HARPREET SINGH SANDHU, AMRITSAR 6 INADVERTENTLY, HENCE THE OBSERVATION OF THE LD CIT(A ) DOES NOT VITIATE THE ENTIRE ORDER, HENCE THE GROUND NO.3 STAND S REJECTED. THE GROUND NO.4 RELATES TO THE FILING OF REPLY BY TH E ASSESSEE BEFORE THE AO, AS IT WAS AVERRED IN GROUND NO.4 THAT THE ASSESSEE NEITHER APPEARED IN THE ASSESSMENT PROCEEDING N OR FILED ANY REPLY. IN OUR CONSIDERED VIEW, APPEARANCE AN D NON- FILING OF REPLY ALSO DOES NOT INVALIDATE THE ORDER IM PUGNED HEREIN, WHICH OTHERWISE DOES NOT SUFFER FROM ANY ILLEGA LITY, IMPROPRIETY OR PERVERSITY AND HENCE LIABLE TO BE UPHE LD. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DEPA RTMENT STANDS DISMISSED. 10. THE GROUNDS RAISED BY THE ASSESSEE IN CROSS OBJECTION MORE OR LESS ARE IN FAVOUR OF THE ORDER IMPUGNED HERE IN WHICH DOES NOT SURVIVE AFTER SUSTAINING THE IMPUGNED ORDER IT SELF, THEREFORE, NO INDEPENDENT ADJUDICATION IS REQUIRED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.06.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED:21.06.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SH. HARPREET SINGH SANDHU, AMRITSAR (2) THE INCOME TAX OFFICER, WARD-5(2), AMRITSAR (3) THE CIT(A)-2, AMRITSAR (4) THE CIT CONCERNED. (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER