M/s. Vinit Textiles, Kolkata V. ITO, Ward - 45(2), Kolkata, Kolkata

ITA 641/KOL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5614 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2010
• Court: TRIBUNAL
• Department Lawyers: R K PAUL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 133(6)

Judgement Text

, SMC , , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA () BEFORE . . . . . . . . , , , , , ) [BEFORE HONBLE SRI D. K. TYAGI, JM) ! ! ! ! / I.T.A NO. 641 /KOL/2010 '#$ '#$ '#$ '#$ %&' %&' %&' %&'/ // / ASSESSMENT YEAR : 2006-07 M/S. VINIT TEXTILES -VS- INCOME-TAX OFFICER, W D-45(2),KOLKATA. (PA NO. AACFV 1975 B) ()* / APPELLANT ) (+)*/ RESPONDENT ) FOR THE APPELLANT : SRI INDRANIL BANERJEE FOR THE RESPONDENT SRI R. K. PAUL , / ORDER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 29.12.2009 FOR ASSESSMENT YEA R 2006-07 ON THE FOLLOWING GROUNDS : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING AND THEREBY CONFIRM ING THE ADDITION OF THE ENTIRE AMOUNT RS.2,58,425/- ON THE GROUND OF UNDISCLOSED P URCHASE NOT RECORDED IN BOOKS, RATHER THAN THE LEGITIMATE ASSESSABLE INCOM E REPRESENTED BY GROSS PROFIT ELEMENT COMPRISED THEREIN. 2. EVEN OTHERWISE. THE LD. CIT(A) SHOULD HAVE, DESP ITE HAVING ALL THE PERTINENT EVIDENCES, DIRECTED OR CONFINE THE ADDITION ONLY TO THE EXTENT OF NORMAL GROSS PROFIT EMBEDDED IN THE ALLEGED UNDISCLOSED PURCHASE AMOUNT OF RS.2,58,425/- PARTICULARLY WHEN THE OPENING BALANCE WAS SUBJECTED TO SEPARATE REASSESSMENT PROCEEDING AND THE CLOSING BALANCE REMAINED UNPAID RESPECTIVELY. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT AFFORDING REASONABLE OPPORTUNI TY OF BEING HEARD TO YOUR APPELLANT INASMUCH AS YOUR APPELLANT FILED SEPARATE PETITIONS FOR ADJOURNMENT RELATED TO THE DATES OF HEARING FIXED ON 16-10-09, 12-11-09 & 2-12-09 VIDE LETTERS DATED 14-10-09, 11-11-09 & 24-11-09 WHICH H AVE TOTALLY BEEN IGNORED WITH THE COMMENT THAT THERE WAS NO RESPONSE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FILED ITS RETURN OF INCOME DECLARING INCOME OF RS.11,703/-. THE ASSESSING OFFI CER COMPLETED THE ASSESSMENT DETERMINING INCOME AT RS.2,70,130/-. AT THE TIME O F ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER EXAMINED THE PURCHASES CLAIMED BY THE ASSESSEE AND CAUSED VERIFICATION WITH M/S. JAGADAMBA SILK MILLS FROM WH OM THE ASSESSEE CLAIMED TO HAVE 2 MADE PURCHASES. THE ASSESSING OFFICER CALLED FOR I NFORMATION U/S. 133(6) AND NOTICED THAT AS PER THE BOOKS OF M/S. JAGADAMBA SILK MILLS, THE PURCHASES MADE BY THE ASSESSEE WERE RS.4,06,171/- WHEREAS THE ASSESSEE DISCLOSED P URCHASES OF RS.1,47,746/- THEREBY THE ASSESSEE UNDERSTATED PURCHASE BY RS.2,58,425/-. HE, THEREFORE, CAUSED ENQUIRIES AND CAME TO THE CONCLUSION THAT THE ASSESSEE FAILED TO EXPLAIN THE PURCHASES NOT RECORDED OF RS.2,58,425/- AND HELD THAT EXCESS PURCHASES REPRES ENTS THE PURCHASES MADE OUT OF UNDISCLOSED SOURCE OF INCOME AND MADE THE ADDITION OF RS.2,58,425/-. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED BY THE SAID ORDER, NOW THE ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE WHILE REITERATING HIS SAME SUBMISSIONS AS SUBMITTED BEFOR E THE LOWER AUTHORITIES FURTHER SUBMITTED THAT THE ENTIRE AMOUNT OF THE PURCHASE DI SCREPANCY OF RS.2,58,425/- NOTICED AS PER RESPECTIVE BOOKS AND OTHER EVIDENCE, CANNOT BE ASSESSED AS THE ASSESSABLE INCOME. HE ALSO CONTENDED THAT BOTH THE AUTHORITIES BELOW S HOULD HAVE APPRECIATED THAT WHEN PURCHASE IS DETECTED AS TAKING PLACE OUTSIDE THE BO OKS AND NO DISCREPANCY AS TO THE STOCK ETC. IS FOUND THE SAME, AS A NATURAL COROLLARY IS T O BE TAKEN AS SOLD, JUSTIFYING THE TAXABILITY OF THE PROFIT ELEMENT ONLY. QUITE A NUM BER OF JUDGMENTS ARE AVAILABLE WHERE THE HONBLE COURTS AND TRIBUNALS HAD TO DEAL WITH T HE ISSUE OF TREATMENT OF UNRECORDED PURCHASES. IN ALMOST ALL THE CASES THERE HAS BEEN AN UNANIMITY THAT IN SUCH A CASE ONLY THE PROFIT ELEMENT EMBEDDED IN THE UNACCOUNTED PURC HASE IS TO BE TAKEN. THE JUDGMENTS ARE AS UNDER : A) 286 ITR 336 (GAU), B) 302 ITR 246 (P&H), C) 100 ITD 301 (INDORE ITAT) D) 84 ITD 243 (AHD TM) E) 50 TTJ 177 (BANGLORE) F) 201 ITR 608 IN ALL THE ABOVE JUDGMENTS THE CONCLUSION WAS THAT ON NOTICING THE UNRECORDED PURCHASES THE PROFIT (GP OR NP AS THE CASE MAY BE) ALONE IS T O BE TAKEN AS AGAINST THE ENTIRE PURCHASE AMOUNT. HE, THEREFORE, PRAYED THAT THE SA ID JUDICIAL PRECEDENTS MAY KINDLY BE GIVEN EFFECT TO THE INSTANT CASE BY DIRECTING TO AD OPT THE GROSS PROFIT RATE ON THE UNRECORDED PURCHASES OF RS.2,58,425/-. HE ALSO CON TENDED THAT THE FACT OF NON APPEARANCE ON THE DATES FIXED FOR HEARING AS HAS BE EN ALLEGED BY THE LD. CIT(A) IS ALSO 3 NOT CORRECT. THE DULY FILED ADJOURNMENT PETITIONS, THE REFERENCE TO WHICH IS SURPRISINGLY ABSENT IN THE APPELLATE ORDER, IS ITSELF EXPLANATOR Y TO CONTROVERT SUCH OBSERVATION OF THE LD. CIT(A). HE LASTLY SUBMITTED THAT THE LAWFUL TR EATMENT SOUGHT BY THE ASSESEE BEING BACKED BY THE JUDICIAL PRONOUNCEMENTS AS CITED (LA YING DOWN THE TAXABILITY OF THE PROFIT ELEMENT ONLY), THERE IS NO MERIT IN THE ADDITION MA DE IN ASSESSMENT. 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE LOWER AUTHORITIES. 5. AFTER HEARING THE RIVAL SUBMISSIONS, CAREFULLY PERUSING THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAWS CITED BY THE LD. COUNSEL F OR THE ASSESSEE, I FIND THAT THE LD. CIT(A) WHILE CONFIRMING THE ACTION OF THE ASSESSING OFFICER IGNORED THE ADJOURNMENT PETITION FILED BY THE ASSESSEE AND PASSED THE APPEL LATE ORDER EX PARTE AND ALSO THERE IS NO MENTION OF THE ADJOURNMENT PETITIONS OF THE ASSESSE E IN THE SAID APPELLATE ORDER. HENCE, IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY, I RESTORE THE ISSUE TO THE FILE OF THE LD. CIT(A) TO ADJUDICATE THE MATTER AFRESH AFTER TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE ALONG WITH THE CASE LAWS CITED BEFORE ME AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREF ORE, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 7. ORDER IS PRONOUNCED IN THE OPEN COURT ON 17.9.20 10 SD/- . . , (D. K. TYAGI) ( - - - -) )) ) DATED : 17 TH SEPTEMBER, 2010 JUDICI AL MEMBER %./ '#01 '2% JD.(SR.P.S.) , 3 +''4 54&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT M/S. VINIT TEXTILES, 17, PAGEYA PATTY S TREET, KOLKATA-700 007. 2 +)* / RESPONDENT , ITO, WD-45(2), KOLKATA. 3 . ',# / THE CIT, 4 . ',# ( )/ THE CIT(A), KOLKATA 5 . %=' +'# / DR, KOLKATA BENCHES, KOLKATA 4 +'/ TRUE COPY , ,#>/ BY ORDER , ? 1 / DEPUTY REGISTRAR .