A.A. TRADING CORPORATION, MUMBAI V. ACIT CC 12, MUMBAI

ITA 6617/MUM/2010

• Counselvise Citation: 661719914 RSA 2010
• Duration Of Justice: 3 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-05-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 13-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARMINDER KAUR
• Assessee Lawyers: JA YANT R BHATT
• Keywords: Search and seizure; Principle of natural justice
• Section: 263

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH. . , ! '#$% , # &' BEFORE S/SH.D.MANMOHAN, VICE-PRESIDEN T & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.6617/MUM/2010, ( ( ( ( / ASSESSMENT YEAR-2003-04 A.A. TRADING CORPORATION, SHOP NO.19B, KOHINOOR CO-OP. SOCIETY, LIND ROAD, MUMBAI. VS A CIT CC 12 8 TH FLOOR, OLD CGO BUILDING, M.K.ROAD, MUMBAI-400020 PAN: AAGFA2484E ( )* / APPELLANT) ( +,)* / RESPONDENT) -. -. -. -. / / / / # ## # / ASSESSEE BY : SHRI JAYANT R. BHATT '' 0 / # / REVENUE BY : SMT. PARMINDER KAUR 0 00 0 . . . . / DATE OF HEARING : 13-05-2014 1( 0 . / DATE OF PRONOUNCEMENT : 13-05-2014 , 1961 0 00 0 254 )1( # ## # $.2. $.2. $.2. $.2.     ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM # # # # &' &' &' &' '#$% '#$% '#$% '#$% # ## # : CHALLENGING THE ORDER DT.21.07.2010 OF THE CIT(A)-3 7,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESS ING OFFICER AMOUNTING TO RS.546089/-WITHOUT APPRECIATING THE RECORDS AVAILABLE ON FILE AND HENC E THE SAME BEING BAD IN LAW SHOULD BE DELETED. 2.UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE AO BY MERELY COMPARING THE AUD ITED ACCOUNTS WITH THE INCOMPLETE AUDITED ACCOUNTS WITHOUT BRINGING ON RECORD ANY DISCREPANCI ES IN AUDITED ACCOUNTS WHICH WAS DULY EXPLAINED ALONG WITH REQUISITE DETAILS FILED AND TH EREFORE THE ADDITIONS MADE BY THE AO IS PURELY BASED ON CONJECTURE AND SURMISE AND THE SAME SHOULD BE DELETED. 3.THE LD. CIT (A) HAS ERRED IN COMING TO THE CONCLU SION THAT THE APPELLANT HAD NOT DISPUTED THE AUTHENTICITY AND VERACITY OF THE OF THE FLOPPIES FO UND DURING THE SEARCH WHEREAS IT WAS ALWAYS A CASE OF THE ASSESSEE THAT DATA AVAILABLE ON SEIZED FLOPPIES DID NOT REFLECT THE COMPLETE PICTURE OF IT S ACCOUNTS FOR THE YEAR ENDED ON 3 1.03.2003 AND SINC E THE ORDER OF THE LD. CIT (A) IS BASED ON MISCONCEIVED FACT DESERVES TO BE STRUCK OFF AND ADD ITIONS MADE NEEDS TO BE DELETED. 4.THE LD. CIT (A) HAS ERRED IN INVOKING THE PROVISI ONS OF SEC. 292C MECHANICALLY AND WITHOUT APPLICATION OF MIND AND WITHOUT APPRECIATING THE TR UE NATURE OF ARGUMENTS PLACED BEFORE HIM AND AS SUCH THE ORDER PASSED BY THE LD. CIT (A) LACKS T HE SANCTITY AND DESERVES TO BE STRUCK OFF AND CONSEQUENTLY THE ADDITION MADE BY THE AO HE DELETED . 5.THE LD.CIT (A) HAS ERRED IN NOT APPRECIATING THE MATERIAL PRODUCED BEFORE HIM IN SUPPORT OF THE ARGUMENT WHERE EACH AND EVERY EXPENDITURE BEING SUB JECT MATTER OF ADDITIONS BY THE AO WERE EXPLAINED AND THEREBY THE LD. CIT (A) HAS VIOLATED THE PRINCIPLES OF NATURAL JUSTICE AND AS SUCH THE ORDER PASSED BY THE LD. CIT (A) DESERVES TO BE STRU CK OFF. RELIEF CLAIMED: 2 ITA NO. 6617/MUM/2010 A.A. TRADING CORPORATION 1.THE ADDITIONS MADE BY THE AO AND CONFIRMED BY THE LD. CIT (A) BEING BAD IN LAW BE DELETED. 2.THE ORDER PASSED BY THE LD. CIT (A) LACKS SANCTIT Y AND BEING VIOLATIVE OF NATURAL JUSTICE SHOULD BE STRUCK OFF. 3.THE APPELLANT CRAVES THE RIGHT TO ADD, AMEND, ALT ER, MODIFY AND OR SUBSTITUTE ANY R ALL THE GROUNDS OF APPEAL AT THE TIME OF HEARING. . 2. THOUGH THERE ARE FIVE GROUNDS OF APPEAL,YET THE EFF ECTIVE GROUND OF APPEAL IS ABOUT AN ADDITION OF RS.5,46,089/-.ASSESSEE-FIRM,ENGAGED IN THE BUSIN ESS OF DEALING IN SCRAP.SEARCH AND SEIZURE ACTION U/S.132 (1)OF THE ACT WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE PARTNERS OF THE FIRM ON 15.10.2003.BUSINESS PREMISES OF THE ASSESSEE-GRO UP WERE COVERED U/S.133A OF THE ACT.DURING THE SEARCH AND SEIZURE/SURVEY OPERATIONS FLOOPY DRI VES WERE FOUND AND SEIZED CONTAINING THE ACCOUNTS OF THE ASSESSEE.ASSESSING OFFICER(AO) FINA LISED THE ASSESSMENT U/S.143(3) R.W.S.153A OF THE ACT ON 29.03.2006 DETERMINING THE INCOME OF THE ASSESSEE AT RS.2.58 LAKHS.LATER ON CIT PROPOSED TO REVISE THE ASSESSMENT ON THE GROUND THA T THE FLOPPIES REVEALED THAT THERE WAS A SECOND SET OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT IN RESPECT OF GROUP CONCERNS FOR THE AY. UNDER APPEAL,THAT COMPARISON OF THE SAME WITH THE FINAL A CCOUNTS OF THE ASSESSEE HAD REVEALED INFLATION OF EXPENSES.AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE AND THE ASSESSMENT ORDER OF THE AO,CIT VIDE HIS ORDER 28.03.2008,HELD THAT ORDER PA SSED BY THE AO WAS ERRONEOUS AND PREJUDI- CIAL TO THE INTEREST OF THE REVENUE.HE DIRECTED THE AO TO REDO THE ASSESSMENT AFTER EXAMINING THE SEIZED FLOPPIES AND AFTER CONSIDERING THE INFLATED EXPENDITURE.IN PURSUANCE OF THE ORDER OF THE CIT, AO FINALISED THE ASSESSMENT U/S.143 R.W.S.263 DETER MINING THE INCOME OF THE ASSESSEE AT RS.8.04 LAKHS.HE MADE AN ADDITION OF RS.5.46 LAKHS TO THE T OTAL INCOME OF THE ASSESSEE UNDER THE HEAD INFLATED EXPENSES. 2.1. AGAINST THE ORDER OF THE AO,ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT ORDER HE HELD THAT THE ASSESSEE HAD NOT DENIED THE RECOVERY OF THE THREE F LOPPIES,THAT IT HAD NOT DISPUTED THE AUTHENTICITY AND VERACITY OF THE FLOPPIES.REFERRING TO THE PROVI SIONS OF SECTION 292 C OF THE ACT,HE UPHELD THE ORDER OF THE AO. 2.2. BEFORE US,AUTHORISED REPRESENTATIVE(AR) STATED THAT SIMILAR ISSUE HAD ARISEN IN THE CASE OF THE OTHER PARTNERS OF THE FIRM/MEMBERS OF THE FAMILY,TH AT MATTER HAS BEEN RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION.HE REFERRED TO THE MA TTERS OF ABDUL HASAN KHAN(ITA/ 6573/ MUM 2010/-AY2003-04,DATED12.09.2012),AKHTAR HUSSAIN KHA N(ITA/6488/MUM/2010,AY 2003 - 04,DATED 27.02.2013),SMT. ALIMUNISIA ALI KHAN(ITA/6 645/MUM/2010,AY2003-04,DATED 23.04. 2014).DEPARTMENTAL REPRESENTATIVE (DR)SUPPORTED THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN THE CASE OF ABDUL HASAN KHAN(SUPRA)MATTER WAS RESTORED BACK TO THE FILE OF THE ASSESSEE.ONE OF US WAS PARTY TO THAT ORDER.IN THAT ORDER MATTER HAD BE EN DISCUSSED AND DECIDED AS UNDER: 4.2 WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED A R OF THE ASSESSEE AS WELL AS LEARNED DR AND CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THOUGH THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER IN THE PROCEEDINGS IN PURSUANCE T O THE REVISION ORDER PASSED UNDER SECTION 263, HOWEVER, THE ASSESSING OFFICER BEING A QUASI-JUDICI AL AUTHORITY IS SUPPOSED TO ADJUDICATE THE ISSUE BY CONSIDERING ALL THE RELEVANT MATERIAL AVAILABLE BEFORE THE ASSESSING OFFICER. IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICE R HAS NOT EXAMINED ANY MATERIAL ON RECORD WHILE DECIDING THE ISSUE OF INFLATED EXPENDITURE. T HE ASSESSING OFFICER HAS MADE ADDITIONS SIMPLY 3 ITA NO. 6617/MUM/2010 A.A. TRADING CORPORATION ON THE BASIS OF DIFFERENCE FOUND BETWEEN THE DETAIL S CONTAINING IN THE FLOPPY SEIZED DURING THE SEARCH AND THE EXPENDITURE BOOKED IN THE AUDITED FI NAL ACCOUNTS OF THE ASSESSEE. THUS, WE FIND FORCE IN THE CONTENTION OF THE LEARNED AR OF THE AS SESSEE THAT THE ASSESSING OFFICER HAS MADE ADDITION MECHANICALLY WITHOUT PROPER EXAMINATION OF THE RECORD. WE FURTHER NOTE THAT THE CIT(A) HAS ALSO NOT MADE ANY EFFORT TO GET THE ISSUE PROPE RLY EXAMINED AND DISMISSED THE APPEAL OF THE ASSESSEE ON THE BASIS OF PRESUMPTION RAISED UNDER S ECTION 292C. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JU STICE, WE SET ASIDE THE MATTER IN THE APPEAL ARISING FROM THE ASSESSMENT ORDER PASSED IN PURSUAN CE TO THE REVISION ORDER UNDER SECTION 263 IN CASE OF AKHTAR HUSSEIN KHAN TO THE RECORD OF THE AS SESSING OFFICER TO REDO THE SAME AFTER CONSIDERING THE RELEVANT MATERIAL ON RECORD AS WELL AS THE CONTENTION OF THE ASSESSEE. NEEDLESS TO SAY THE ASSESSEE BE GIVEN AN OPPORTUNITY OF HEARING BEFORE PASSING THE FRESH ORDER. FOLLOWING THE ABOVE REFERRED ORDERS OF THE TRIBUNAL ,WE REMIT BACK THE ISSUE OF INFLATED EXPENSES TO THE FILE OF THE AO.HE IS DIRECTED TO AFFORD A RE ASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE,IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. 5.6 5.6 5.6 5.6 -. -. -. -. 7 7 7 7 &8 &8 &8 &8 0 00 0 2 22 2 '9. '9. '9. '9. 0 00 0 '. '. '. '. : :: : . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MAY, 2014 .     0 00 0 1( 1( 1( 1( # # # # $ $ $ $ ; ;; ; <& <& <& <& 13 EBZ EBZEBZ EBZ 201 4 0 00 0 2 22 2 = == = SD/- SD/- ( . / D.MANMOHAN) ( '#$% '#$% '#$% '#$% / RAJENDRA) ! / VICE PRESIDENT # # # # &' &' &' &' /ACCOUNTANT MEMBER / MUMBAI, <& /DATE: 13.05.2014. SK     0 00 0 +.> +.> +.> +.> ?#>(. ?#>(. ?#>(. ?#>(. / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / )* 2. RESPONDENT / +,)* 3. THE CONCERNED CIT(A)/ @ A , 4. THE CONCERNED CIT / @ A 5. DR A BENCH, ITAT, MUMBAI / >B2 +. , , . . $ . 6. GUARD FILE/ 2 5 ,>. ,>. ,>. ,>. +. +.+. +. //TRUE COPY//  / BY ORDER, / ' DY./ASST. REGISTRAR , /ITAT, MUMBAI