M/s. Farmsons Fashions Pvt. Ltd., Surat V. The Dy.CIT., Circle-1, Surat

ITA 610/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6297 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 27-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 24-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: H V VORA
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.610/AHD/2009 A. Y.: 2005-06 M/S. FARMSONS FASHIONS PVT. LTD., 3003, WORLD TRADE CENTRE, RING ROAD, SURAT VS THE D. C. I. T., CIRCLE-1, SURAT AAYAKAR BHAVAN, MAJURA GATE, SURAT PA NO. AAACF 3415 F (APPELLANT) (RESPONDENT) APPELLANT BY SHRI H. V. VORA, AR RESPONDENT BY SHRI H. K. LAL, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-I, SURAT DATED 23 RD DECEMBER, 2008, FOR ASSESSMENT YEAR 2005-06, ON THE FOLLOWING EFFECTIVE GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPE ALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OF FICER IN PASSING ORDER U/S 142(2A) DIRECTING SPECIAL AUDIT O F ACCOUNT WITHOUT PROVIDING OPPORTUNITY OF PERSONAL H EARING WITHOUT POINTING OUT ANY COMPLEXITY IN THE BOOKS OF ACCOUNT. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS ) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN REJECTING THE BOOK RESULTS BY INVOKING PROVISIONS U /S 145(3) OF THE I. T. ACT. ITA NO.610/AHD/2009 M/S. FARMSONS FASHIONS PVT. LTD. VS DCIT, CIRCLE-1, SURAT 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPE ALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OF FICER IN MAKING ADDITION OF RS.2,22,789/- FOR ALLEGED EXCESS CONSUMPTION OF RAW MATERIALS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPE ALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OF FICER IN MAKING ADDITION OF RS.10,93,328/- FOR ALLEGED UNDERVALUATION OF CLOSING STOCK. 2. IN THIS CASE, THE ASSESSEE CHALLENGED THE AOS O RDER DATED 31 ST MARCH, 2008 PASSED U/S 143(3) READ WITH SECTION 142 (2A) OF THE IT ACT BEFORE THE LEARNED CIT(A). IT WAS SUBMITTED THA T ASSESSMENT WAS FRAMED U/S 143(3) READ WITH SECTION 142(2A) OF THE IT ACT AS PER THE SPECIAL AUDIT REPORT WITHOUT PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO ISSUED SHOW CAUSE NOTICE DATED 24 TH DECEMBER, 2007 AS TO WHY SPECIAL AUDIT U/S 142 (2A) OF THE IT ACT SHOULD NOT BE DIRECTED IN THE CASE OF THE ASSESSEE AND THE AO PASSED THE ORDER U/S 142(2A) OF THE IT ACT ON 31 ST DECEMBER, 2007 DIRECTING THE ASSESSEE TO GET THE ACCOUNTS AUDITED BY SPECIAL AUDITOR. ASSESSMENT WAS RESULTANTLY FRAMED AGAINST THE ASSES SEE. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT SHOW CAUSE DATED 24 TH DECEMBER, 2007 PERTAINED ONLY TO TWO GROUP CONCERNS NAMELY M/S. ALIDHARA TEXTOOL ENGINEERS PVT. LTD. AND M/S. ALIDH ARA TEXPRO ENGINEERS PVT. LTD. AND AS SUCH THERE WAS NO JUSTIF ICATION TO ISSUE DIRECTION FOR SPECIAL AUDIT. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS FILED WRIT PETITION BEFORE THE HONBLE GUJARAT HIGH COURT AGAINST THE ORDER U/S 142(2A) OF THE IT ACT WHICH IS PENDIN G. THE LEARNED CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND ITA NO.610/AHD/2009 M/S. FARMSONS FASHIONS PVT. LTD. VS DCIT, CIRCLE-1, SURAT 3 JUSTIFIED THE ASSESSMENT ORDER PASSED AS PER SPECIA L AUDITORS REPORT AND THIS GROUND WAS DISMISSED. THE ASSESSEE RAISED GROUNDS NO.1 AND 2 ON THIS ISSUE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUT SET SUBMITTED THAT THE WRIT PETITION FILED BY THE ASSESSEE AGAINS T THE SPECIAL AUDIT HAS BEEN DECIDED BY THE HONBLE GUJARAT HIGH COURT IN THE SAME GROUP CASES AND IN THE CASE OF THE ASSESSEE IN SPEC IAL CIVIL APPLICATION NO.7253 OF 2008 AND VIDE ORDER DATED 17 -03-2009, THE HONBLE HIGH COURT HAVE QUASHED THE SHOW CAUSE NOTI CE DATED 24 TH DECEMBER, 2007 AND CONSEQUENTIALLY ORDER DATED 31 ST DECEMBER, 2007 PASSED U/S 142 (2A) OF THE IT ACT. THE HONBLE HIGH COURT AS CONSEQUENCE OF THE ABOVE ORDER ALSO HELD THAT THE A SSESSMENT ORDER DATED 31-03-2008 IS BAD IN LAW AND CANNOT SURVIVE. COPY OF THE ORDER IS PLACED ON RECORD. HE HAS, THEREFORE, SUBMITTED T HAT ADDITION WOULD STAND DELETED. THE LEARNED DR DID NOT DISPUTE THE A BOVE FACT AND THE ORDER OF THE HONBLE HIGH COURT AND THE CONSEQUENCE THEREOF. 5. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF T HE VIEW THAT SINCE THE ORDER OF SPECIAL AUDIT AND CONSEQUENTIAL ASSESSMENT ORDER HAVE BEEN QUASHED BY THE HONBLE HIGH COURT (SUPRA) , THEREFORE, ADDITIONS WOULD NOT SURVIVE. AS A CONSEQUENCE THERE OF ALL THE ADDITIONS WOULD BE DEEMED TO BE DELETED. ITA NO.610/AHD/2009 M/S. FARMSONS FASHIONS PVT. LTD. VS DCIT, CIRCLE-1, SURAT 4 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-06-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 30-06-2011 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