Sri Subhas Jaiswal, Howrah V. ITO, Ward - 47(2), Kolkata , Kolkata

ITA 642/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9299 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Opportunity of being heard; Set aside
• Section: 263; 144

Judgement Text

1 ITA NOS.642 & 643/KOL/2018 SHRI SUBHAS JAISWAL, AY: 2008-09 & 2013-14 , C(SMC) , IN THE INCOME TAX APPELLATE TRIBUNAL CS(SMC) BENC H: KOLKATA ( ) . . , ) [BEFORE SHRI A. T. VARKEY, JM] I.T.A. NO. 642 & 643/KOL/2018 ASSESSMENT YEARS: 2008-09 & 2013-14 SHRI SUBHAS JAISWAL (PAN: ALTPJ2901E) VS. INCOME-TAX OFFICER, WD-47(2), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 15.01.2019 DATE OF PRONOUNCEMENT 03.04.2019 FOR THE APPELLANT SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT MD. GHAYAS UDDIN, ADDL. CIT, SR. DR ORDER BOTH THESE APPEALS FILED BY THE ASSESSEE AGAINST TH E SEPARATE ORDERS OF LD. CIT(A)-14, KOLKATA DATED 31.01.2018 FOR AYS 2008-09 AND 2013-1 4. 2. THE GROUNDS OF APPEAL OF THE AY 2008-09 RAISED BY THE ASSESSEE IS THAT THE LD. CIT(A) HAS WRONGLY DISMISSED THE PETITIONERS APPEA L FOR AY 2008-09 BY WRONGLY RECORDING THE FACTS OF AY 2013-14. LIKEWISE, FOR A Y 2013-14 THE ASSESSEES GROUND OF APPEAL IS AGAINST THE ACTION OF THE LD. CIT(A) IN D ECIDING THE APPEAL BY WRONGLY RECORDING FACTS OF AY 2008-09. 3. BRIEF FACTS OF THE CASE OF AY 2008-09 IS THAT AO NOTED THAT ASSESSEE HAD RETURNED TOTAL INCOME OF RS.1,07,860/- VIDE RETURN OF INCOME DATED 30.03.2009. LATER THE CASE WAS TAKEN UP FOR SCRUTINY WHEREIN IT WAS FOUND THAT THE ASSESSEE WAS THE SOLE PROPRIETOR OF FOUR OTHER CONCERNS IN DIFFERENT NAMES AND WAS HAVING SE VERAL BANK ACCOUNTS OF STANDARD CHARTERED BANK AND HDFC BANK. IT WAS ALSO NOTED BY THE AO THAT SUBSTANTIAL TRANSACTIONS 2 ITA NOS.642 & 643/KOL/2018 SHRI SUBHAS JAISWAL, AY: 2008-09 & 2013-14 WERE MADE BY THE ASSESSEE FROM THESE BANK ACCOUNTS. ON VERIFICATION OF THE BANK ACCOUNTS, THE AO FOUND THAT ASSESSEES TOTAL TURNOVER OF AROU ND RS.5.51 CR. FROM THE BANK ACCOUNTS WHICH WERE NOT SHOWN BY THE ASSESSEE. THEREFORE, T HE AO ASKED FOR EXPLANATION FROM THE ASSESSEE AND NOT SATISFIED WITH IT, WENT FOR ESTIMA TION OF INCOME. FOR THAT THE AO TAKING NOTE THAT IN THE ROI FOR THIS ASSESSMENT YEAR, SINC E THE ASSESSEE HAS DECLARED ITS TURNOVER OF RS.12,38,270/- FROM WHICH HE DERIVED NET PROFIT OF RS.1,58,215/- WHICH COMES TO 12.11% OF THE TURNOVER OVER AND THEREAFTER TAKING TOOK NOT E OF THREE OTHER COMPARABLE COMPANIES TRADING RESULT, CAME TO THE CONCLUSION THAT 3% OF R S.5.51 CR. WOULD BE THE SUPPRESSED UNDISCLOSED INCOME WHICH WORKS OUT TO RS.16,53,000/ -. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHICH WAS INSTITUTED ON 29.01.2016. WHILE THE APPEAL WAS PENDING BEFORE THE LD. CIT(A), THE PR. CIT EXERCISE D HIS REVISIONAL JURISDICTION U/S. 263 OF THE ACT ON 27.10.2017 AND SET ASIDE THE ORDER PASSE D BY THE AO DATED 18.12.2015. THEREAFTER THE LD. CIT(A) HAS PASSED THIS IMPUGNED ORDER WHEREBY THE LD. CIT(A) HAS TAKEN NOTE OF THE FACTS OF AY 2013-14 AND DISMISSED THE APPEAL OF THE ASSESSEE FOR AY 2008-2009. 4. COMING TO THE FACT OF AY 2013-14, WE NOTE THAT T HE AO HAS PASSED AN ORDER U/S. 144 OF THE ACT DATED 04.03.2016 WHEREIN THE AO HAS ESTI MATED THE NET PROFIT AFTER REJECTING THE BOOKS OF ACCOUNT @ 0.75% OF THE TURNOVER OF RS.34,3 6,41,460/- WHICH COMES TO RS.25,77,311/-. AGGRIEVED, THE ASSESSEE HAS PREFER RED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DISMISS THE SAME VIDE THE IMPUGN ED ORDER, HOWEVER, TOOK NOTE OF THE FACTS OF AY 2008-09 . THEREFORE, THIS APPEAL HAS BEEN PREFERRED BEFORE US. 5. WE NOTE THAT FOR AY 2008-09 THE APPEAL WAS INSTI TUTED ON 29.01.2016 AND INADVERTENTLY THE LD. CIT(A) TOOK THE FACTS OF AY 2013-14, WHEREIN THE AO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE AND MADE AN ESTIMA TED ADDITION @ .75% OF TURNOVER OF RS.34,36,41,460/- AT RS.25,77,311/-, WHICH THE AO M ADE VIDE ORDER DATED 04.03.2016. AFTER TAKING NOTE OF THE FACTS PERTAINING TO AY 201 3-14, THE LD. CIT(A) DECIDED TO CONFIRM THE ACTION OF THE AO VIDE ORDER DATED 31.01.2018. 3 ITA NOS.642 & 643/KOL/2018 SHRI SUBHAS JAISWAL, AY: 2008-09 & 2013-14 6. WHILE THE STATUTORY FIRST APPEAL FILED BY THE AS SESSEE WAS PENDING BEFORE THE LD. CIT(A), THE PR. CIT VIDE ORDER U/S. 263 DATED 27.10 .2017 SET ASIDE THE ORIGINAL ASSESSMENT ORDER DATED 18.12.2015 AND DIRECTED THE AO TO RE-D O THE ASSESSMENT AFRESH IN RESPECT OF RS.5.51 CR. UNDISCLOSED TRANSACTION. SO AFTER PERU SING THE ORDER OF BOTH THE ASSESSMENT YEARS (AYS. 2008-09 AND 2013-14), I FIND THAT INADV ERTENTLY THE DECISION OF LD. CIT(A) GOT MIXED UP AND THOUGH THE LD. AR STOUTLY ASSAILED THE ACTION OF LD. CIT(A) AS AN OUTCOME OF NON-APPLICATION OF MIND, I REMIND MYSELF THAT TO ER R IS HUMAN AND I DO NOT FIND ANY REASON TO SAY THAT THIS MIX-UP IS INTENTIONAL. SO, WHEN I ADJUDICATE THE DECISION OF AY 2008-09 ON MERITS, I DO NOT COUNTENANCE THE ACTION OF THE LD. CIT(A) IN DISMISSING THE APPEAL OF ASSESSEE, WHEN THE FACT WAS BROUGHT TO HIS NOTICE T HAT THE IMPUGNED ASSESSMENT ORDER DATED 18.12.2015, WHICH WAS PASSED U/S. 147/143(3) OF THE ACT WAS SET ASIDE BY PR. CIT U/S. 263 OF THE ACT BY ORDER DATED 27.10.2017 WHICH THE LD. CIT(A) HAS TAKEN NOTE OF AND STILL WENT AHEAD TO DISMISS THE APPEAL, WHICH GIVES THE IMPRES SION THAT AOS ORDER HAS BEEN CONFIRMED, HOWEVER, I NOTE THAT THE LD. CIT(A) HAS MADE IT CLEAR THAT, THEREFORE, THE PRESENT ASSESSMENT ORDER AGAINST WHICH THE INSTANT APPEAL LIES HAS BECOME INFRUCTUOUS TO THAT EXTENT. IN LIGHT OF THE ABOVE, AS THIS ISSUE AGAINST WHICH THE APPEAL DOES NOT SURVIVE, THE APPEAL IS DISMISSED . SO, THE ULTIMATE RESULT SPELLED OUT BY LD. CIT( A) THOUGH IS THAT APPEAL IS DISMISSED, WHAT THE LD. CIT(A) MEANT FROM THE LANGUAGE USED BY HIM INDICATES THAT THE APPEAL OF ASSESSEE AFTER THE ASSESSMENT OR DER DATED 18.12.2015 OF AY 2008-09 WAS SET ASIDE WAS PASSED BY LD. PR. CIT U/S. 263 OF THE ACT (LEGALITY OF WHICH HAS NOT BEEN CHALLENGED BEFORE US, SO WE REFRAIN TO COMMENT ON I TS LEGALITY) HAS BECOME INFRUCTUOUS AND SO THE APPEAL AGAINST A NON-EXISTING ASSESSMENT ORD ER CANNOT SURVIVE; AND SO IDEALLY EITHER THE ASSESSEE SHOULD HAVE WITHDRAWN THE APPEAL OR TH E LD. CIT(A) SHOULD HAVE HELD THE APPEAL TO BE NON-MAINTAINABLE. SO THE RESULT OF TH E APPELLATE ORDER IMPUGNED BEFORE ME THAT APPEAL FOR AY 2008-09 WHICH WAS DISMISSED BY LD CIT(A) IS LEGALLY UNSUSTAINABLE NEEDS TO BE INTERFERED WITH AND SINCE THE AOS ORDE R DATED 18.12.2015 WHEREIN AO ESTIMATED THE NET PROFIT @ 3% OF RS.5.51 CR. HAS BE EN SET ASIDE BY LD. PR. CIT U/S. 263 OF THE ACT VIDE ORDER DATED 27.10.2017 AND DIRECTION T O RE-DO THE ASSESSMENT AFRESH, I NOTE THAT 4 ITA NOS.642 & 643/KOL/2018 SHRI SUBHAS JAISWAL, AY: 2008-09 & 2013-14 THE LEGAL EFFECT IS THAT AOS ORDER DATED 18.12.201 5 IS NON-EST IN THE EYES OF LAW AND SO THE APPEAL BEFORE THE LD. CIT(A) AFTER LD. PR. CIT PASS ED ORDER U/S. 263 DATED 27.10.2017 WAS AN APPEAL ON A NON-EXISTENT ORDER, SO THE APPEAL IT SELF HAD NO FOUNDATION (ASSESSMENT ORDER DATED 18.12.2015), SO WHEN THE FOUNDATION GOES THE SUPER STRUCTURE FALLS, SO THE RESULT IS THAT THE APPEAL OF THE ASSESSEE IS NOT MAINTAINABLE BEING INFRUCTUOUS. SO THE RESULT IS THAT SINCE THERE IS NO ASSESSMENT ORDER DATED 18.12.2015 EXISTING IN THE EYES OF LAW, NO APPEAL OF ASSESSEE IS MAINTAINABLE AGAINST THAT ASSESSMENT ORDER WHICH IS NON-EXISTING. SO THE APPEAL BEFORE THE LD. CIT(A) NEEDS TO BE TREATED AS NON-MAINTAINABLE AND SO NON-EST IN THE EYES OF LAW. WITH THIS OBSERVATION, THE APPEAL FOR AY 2008-09 IS DISPOSED OFF. 7. COMING TO AY 2013-14. THE AO REJECTED THE BOOKS AND ESTIMATED THE INCOME @ 75% OF TURNOVER OF RS.34,36,41,460/- AT RS.25,77,31 1/- BY ASSESSMENT ORDER DATED 04.03.2016. AS NOTED ABOVE, THE LD. CIT(A) MIXED U P THE FACTS IN THE APPEAL FOR AY 2013- 14 WITH THE FACTS FOR AY 2008-09, WHICH ACCORDING T O ME WAS AN INADVERTENT ERROR. SO, WHEN I ADJUDICATE THE ACTION OF LD. CIT(A) MY ATTEN TION WAS DRAWN TO GROUND NO. 4 WHICH READS AS UNDER: GROUND NO. 4. FOR THAT, THE AO DID NOT ALLOW YOUR PETITIONER ANY CHANCE TO RETRACT HIS STAND BEFORE APPLYING THE NET PROFIT O F 0.75% ON TURNOVER OF SALES. 8. IT IS TAKEN NOTE THAT THIS GROUND OF APPEAL OF T HE ASSESSEE BEFORE THE LD. CIT(A) HAS BEEN TOTALLY IGNORED. IN THIS REGARD, IT IS NOTED THAT DURING ASSESSMENT PROCEEDINGS THE AO ISSUED SHOW CAUSE NOTICE AS ON 15.01.2016 CALLING F OR DETAILS AND EXPLANATION AND THE ASSESSEE REPLIED BY FILING WRITTEN EXPLANATION ON 1 0.02.2016 THROUGH THE ASSESSEES AR AND THE AO ACKNOWLEDGED THAT ASSESSEE ANNEXED WITH THE SUBMISSION CERTAIN DOCUMENTS, BUT ACCORDING TO AO, IT WAS NOT ANY SUPPORTING DOCUMENT S. THEREAFTER, AGAIN THE AO ISSUED SHOW CAUSE NOTICE DATED 11.02.2016 CONVEYING HIS IN TENTION TO REJECT THE BOOKS AND HIS DECISION TO FRAME THE ASSESSMENT EX PARTE. PURSUAN T TO WHICH THOUGH THE ASSESSEE REPLIED, THE AO WAS NOT SATISFIED WITH THE REPLY OF ASSESSEE AND PROCEEDED TO ESTIMATE NET PROFIT @ 0.75%. I NOTE THAT NO OPPORTUNITY WAS GIVEN TO ASS ESSEE TO FURNISH THE COMPARABLES IF HE 5 ITA NOS.642 & 643/KOL/2018 SHRI SUBHAS JAISWAL, AY: 2008-09 & 2013-14 DESIRED TO DO SO, WHICH COULD HAVE ENABLED THE AO T O REACH THE ESTIMATE OF INCOME AT A REASONABLE AND FAIR MANNER. IT SHOULD BE KEPT IN M IND THAT IT IS NOT THE DECISION WHICH MATTERS, THE DECISION MAKING PROCESS WHICH SHOULD B E FAIR, JUST AND REASONABLE AND WHICH IS AN INBUILT FEATURE OF ART. 14, 19 & 21 OF THE CONST ITUTION AS HELD BY THE HONBLE SUPREME COURT IN MANEKA GANDHIS CASE. SO, I AM INCLINED T O SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO GIVE PROPER OPPORTUNITY TO ASS ESSEE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF TIN BOX COMPANY VS. CIT (2001) 249 ITR 216 (SC), WHEREIN IT WAS HELD AS UNDER: IT IS UNNECESSARY TO GO INTO GREAT DETAIL IN THESE MATTERS FOR THERE IS A STATEMENT IN THE ORDER OF THE TRIBUNAL, THE FACT-FINDING AUTHORITY, THAT R EADS THUS : WE WILL STRAIGHTAWAY AGREE WITH THE ASSESSEES SUB MISSION THAT THE INCOME-TAX OFFICER HAD NOT GIVEN TO THE ASSESSEE PROPER OPPORTUNITY OF BEI NG HEARD. THAT THE ASSESSEE COULD HAVE PLACED EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE TRIBUNAL IS REALLY OF NO CONSEQUENCE FOR IT IS THE ASSESSMENT ORDER THAT COUNTS. THAT ORDER MUST BE MADE AFTER THE ASSESSEE HAS BEEN GIVEN A RE ASONABLE OPPORTUNITY OF SETTING OUT HIS CASE. WE, THEREFORE, DO NOT AGREE WITH THE TRIBUNAL AND THE HIGH COURT THAT IT WAS NOT NECESSARY TO SET ASIDE THE ORDER OF ASSESSMENT AND REMAND THE MATTER TO THE ASSESSING AUTHORITY FOR FRESH ASSESSMENT AFTER GIVING TO THE ASSESSEE A PROPER OPPORTUNITY OF BEING HEARD. TWO QUESTIONS WERE PLACED BEFORE THE HIGH COURT, OF WHICH THE SECOND QUESTION IS NOT PRESSED. THE FIRST QUESTION READS THUS : 1. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN NOT SETTING ASIDE THE ASSESSMENT ORDER IN SPITE OF A FINDING ARRIVED AT BY IT THAT THE INCOME- TAX OFFICER HAD NOT GIVEN A PROPER OPPORTUNITY OF H EARING TO THE ASSESSEE ? IN OUR OPINION, THERE CAN ONLY BE ONE ANSWER TO THI S QUESTION WHICH IS INHERENT IN THE QUESTION ITSELF : IN THE NEGATIVE AND IN FAVOUR OF THE ASSESSEE. THE APPEALS ARE ALLOWED. THE ORDER UNDER CHALLENGE IS SET ASIDE. THE ASSESSMENT ORDER, THAT OF THE COMMISSIONER (APPEALS) AND OF THE TRIBUNAL A RE ALSO SET ASIDE. THE MATTER SHALL NOW BE REMANDED TO THE ASSESSING AUTHORITY FOR FRESH CO NSIDERATION, AS AFORESTATED. 9. IN THE LIGHT OF THE FACTS DISCUSSED SUPRA, I AM INCLINED TO SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A) AND REMAND THE MATTER BACK TO AO FOR DE NOVO ASSESSMENT. IN CASE THE SITUATION WARRANTS TO REJECT THE BOOKS OF ACCOUNT A S PER LAW AND IF THE AO PROCEEDS TO ESTIMATE THE INCOME OF THE ASSESSEE, THEN PROPER OP PORTUNITY IS TO BE GIVEN TO ASSESSEE TO 6 ITA NOS.642 & 643/KOL/2018 SHRI SUBHAS JAISWAL, AY: 2008-09 & 2013-14 BRING IN COMPARABLES OF SIMILAR TRADERS LIKE ASSESS EE AND IN THAT EVENT, THE AO ALSO CAN MAKE HIS OWN ENQUIRIES AND BRING COMPARABLES AND AFTER T AKING INTO CONSIDERATION THE OBJECTION RAISED IN-RESPECT OF COMPARABLES TO BE FINALLY ADOP TED FOR ESTIMATING THE INCOME OF ASSESSEE IN AN OBJECTIVE MANNER; AND BY A REASONED ORDER FRA ME AN ASSESSMENT IN ACCORDANCE TO LAW. 10. IN THE RESULT, THE APPEAL OF ASSESSEE FOR AY 20 08-2009 IS DISPOSED OF AS NOT MAINTAINABLE AND APPEAL FOR AY 2013-14 IS ALLOWED F OR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 3RD APRIL, 2019. SD/- (ABY. T. VARKEY) JUDICIAL MEMBER DATED : 3RD APRIL, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT SHRI SUBHAS JAISWAL, P-70, VIVEKANAN DA NAGAR, LILUAH, HOWRAH-711204. 2 RESPONDENT ITO, WARD-47(2), KOLKATA. 3. 4. CIT(A)-14, KOLKATA(SENT THROUGH E-MAIL) CIT, KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR