ITO 16(2)(4), MUMBAI V. COLOR CRAFT, MUMBAI

ITA 6664/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93211 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N P SINGH; S J SINGH
• Assessee Lawyers: HARSHVARDHANA DATTAR
• Keywords: Additional evidence; Question of law; Reassessment proceedings
• Section: 145; 27; 6; 12; 2; 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . , , BEFORE SHRI D. MANMOHAN , VP AND SHRI SANJAY ARORA, AM ./ I.T.A. N O. 5818/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10 ) COLOR CRAFT C/O. JAYESH SANGHRAJKA & CO. CHARTERED ACCOUNTANTS, UNIT NO. 405, HIND RAJASTHAN CENTRE, D. S. PHALKE ROAD, DADAR (E), MUMBAI - 400 014 / VS. ITO - 16(2)(4), MATRU MANDIR, TARDEO , MUMBAI ./ ./ PAN/GIR NO. AADFC 7740 A ( /ASSESSEE) : ( /REVENUE) & ./ I.T.A. NO. 6664/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10 ) ITO - 16(2)(4), MATRU MANDIR, TARDEO, MUMBAI / VS . COLOR CRAFT C/O. JAYESH SANGHRAJKA & CO. CHARTERED ACCOUNTANTS, UNIT NO. 405, HIND RAJASTHAN CENTRE, D. S. PHALKE ROAD, DADAR (E), MUMBAI - 400 014 ./ ./ PAN/GIR NO. AADFC 7740 A ( /REVENUE) : ( /ASSESSEE) / A SSESSEE BY : SHRI HARSHVARDHANA DATTAR / R EVENUE BY : S /S HRI S. J. SINGH & N. P. SINGH / DATE OF HEARING : 0 7 .0 7 .2015 / DATE OF PRONOUNCEMENT : 17 .07 .2015 2 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT / O R D E R PER SANJAY ARORA, A. M.: TH ESE ARE CROSS APPEALS, I.E., BY THE ASSESSEE AND THE REVENUE, AGITATING THE PART ALLOWANCE OF THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.14 4 R/W SECTION 145 R/W SECTION 14 3(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2009 - 10 VIDE ORDER DATED 30.12.2011 BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 23, MUMBAI (CIT(A) FOR SHORT) VIDE HIS ORDER DATED 18.08.2014. ASSESSEES APPEAL (IN ITA NO. 5818/MUM/2014 ) 2. THE ONLY ISSUE ARGUED BEFORE US, INITIAL LY, IN PURSUANCE TO GROUNDS 1 AND 2 OF ITS APPEAL BY THE ASSESSEE, WHO DID NOT PRESS GROUND NO. 5, ALLEGING NON GRANT OF OPPORTUNITY, IS THE VALIDITY OR OTHERWISE IN LAW OF THE ASSESSMENT FOR THE RELEVANT YEAR, IMPUGNED ON THE GROUND OF NON SERVICE OF THE JURISDICTIONAL NOTICE U/S.143(2) OF THE ACT. BACKGROUND FACTS 3. THE ASSESSEE IS A PARTNERSHIP FIRM, CONSISTING OF TWO PARTNERS, NAMELY SHRI SHRIPAL SHAH AND SHRI SRIRAJ PUZIKUNITY , ENGAGED IN THE BUSINESS OF , AS PER THE ASSESSMENT ORDER, OFFSET AND SCRE EN P RINTING, WITH ITS REGISTERED ADDRESS AT 662, FORJET HILL, 3/37, N AVYUG NAGAR NO. 1, TARDEO, MUMBAI - 400 036, WHICH IS ALSO ITS REGISTERED ADDRESS WITH THE INCOME TAX DEPARTMENT. IT IS AN ASSESSEE WITH THE D EPARTMENT (UNDER PAN NO. AADFC 7740 A), AND FIL ED ITS RETURN OF INCOME FOR THE RELEVANT YEAR, WHICH WAS DULY ACCOMPANIED BY AUDITED ACCOUNTS, WITH ITS JURISDICTIONAL ASSESSING OFFICER (A.O.), I.E., ITO - 16(2)(4), MUMBAI, ON 30.09.2009. THE SAME CAME TO BE SELECTED FOR VERIFICATION UNDER THE V ERIFICATION P ROCEDURE UNDER THE ACT. ACCORDINGLY, NOTICE U/S.143(2) WAS ISSUED ON 23.08.2010 (RPB PG. 17). IT IS THE SERVICE OF THIS NOTICE WHICH IS THE SUBJECT MATTER OF DISPUTE; THE SAME BEING VITAL FOR THE ASSUMPTION OF JURISDICTION TO FRAME AN ASSESSMENT U/S. 143 (3), WHICH STOOD FINALLY MADE BY THE A.O. AT RS.18.65 CRORES , INVOKING SECTION 145(3) OF THE ACT, AND SINCE CONFIRMED BY THE FIRST APPELLATE AUTHORITY AT AN INCOME OF RS.18,06,74,262/ - , I.E., BY ALLOWING THE ASSESSEE ITS CLAIM FOR INDIRECT EXPENDITURE AT 3 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT R S.58,00,975/ - FROM THE ASSESSED GROSS PROFIT (GP). IT MAY BE CLARIFIED THAT THE ASSESSEE IN RESPONSE TO NOTICE U/S.142(1) OF THE ACT DATED 09.11.2011, REQUIRING IT TO ATTEND ON 18.11.2011, RAISE D AN OBJECTION TO THE SERVICE OF NOTICE U/S.143(2) ON IT ON 17 .11.2011 VIDE LETTER OF EVEN DATE ( A PB PG.1). THE OBJEC TION STOOD REITERATED IN APPEAL, TO MEET WHICH A REMAND EXPORT WAS CALLED FOR BY THE LD. CIT(A). THE NOTICE UNDER REFERENCE HAVING BEEN SENT PER REGISTERED POST, AS EVIDENCED BY THE SPEED POST DISPATCH FOLDER DATED 30.08.2010 , AS MAINTAINED BY THE OFFICE OF THE AO , AT THE ASSESSEES REGISTERED ADDRESS, WHICH REMAIN UNCHANGED AND WHICH HAD CAME BACK UNSERVED AND , BESIDES , EVIDENCE D BY A RECEIPT , AGAIN D U LY RECEIVED FROM THE POSTAL DEPARTMENT (RPAD PG. 18 ), THE ASSESSEE COULD NOT CLAIM NO N - SERVICE AND ITS OBJECTION WAS, THEREFORE, WITHOUT MERIT. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 4. THE RESPECTIVE CASES THE ASSESSEES CASE, RELYING ON CASE LAW, AS BEFORE THE AUTHORITIES BELOW, I S ALONG WITH THE FOLLOWING LINES : A. THAT T HERE IS NO JUSTIFICATION FOR THE TIME LAG BETWEEN DATE OF ISSUE OF THE NOTICE AND DATE OF SERVICE AS CONTENDED BY LD. A.O. B. THAT T HERE IS NO EVIDENCE OF THE ISSUE OF THE NOTICE. C. THAT THE E VIDENCE CITED BY L D. AO TO PROVE THE SERVI CE HAS NO CREDIBILITY AND AUTHENTICATION. D. THAT, I N ANY CASE, EVIDENCE CITED BY L D. AO DOES NOT PROVE THE SERVICE OF THE NOTICE ON THE SPECIFIED PERSON. THE REVENUE, ON THE OTHER HAND, RELIES ON THE EVIDENCES IN THE FORM OF REGISTER OF DISPATCH MAINTAINE D BY THE OFFICE OF THE CONCERNED ASSESSING OFFICER (A.O.) AND THE ACKNOWLEDGMENT RECEIVED FROM THE POSTAL AUTHORITIES, BESIDES THE PROVISION S OF SECTION 27 OF THE GENERAL CLAUSES ACT, 1897 AND SECTION 114 OF THE INDIAN EVIDENCE ACT, 1882, THE IMPORT OF THE APPLICATION OF WHICH STOOD CONSIDERED BY THE HONBLE HIGH COURT IN THE CASE OF MILAN PODDAR VS. CIT [2013] 357 ITR 619 (JHARKHAND) . THE SERVICE IN ANOTHER CASE, I.E., YAMNI PATIL, WHOSE NAME APPEARS AT S R. NO. 139 OF THE DISPATCH LIST , DATED 4 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT 30.08.2010, A S AGAINST THE ASSESSEES NAME AT S R. NO. 138 OF THE SAID LIST, SERVICE IN WHICH CASE IS NOT IN DISPUTE, IS ADVANCED IN SUPPORT OF THE AU TH E N T ICITY OF THE SAID LIST WHICH BEARS THE ASSESSEES NAME AT S R. NO. 138 THEREOF. IN REJOINDER, THE LD. A UTHORIZED RE PRESENTATIVE (A R ) , THE ASSESSEES COUNSEL, RELIED ON SECTION 21 OF THE EVIDENCE ACT, DEFINING THE CIRCUMSTANCES WHEN AN ADMISSION COULD BE PROVED BY AND ON BEHALF OF THE ASSESSEE MAKING IT. THE RESISTER OF DISPATCH MAINTAINED BY THE DEPARTMENT IS AN ADMISS ION BY IT AND, THEREFORE CANNOT BY ITSELF PROVE IT. FURTHER , THE DECISION IN THE CASE OF MILAN PODDAR (SUPRA) WOULD NOT APPLY, AS IN THAT CASE, MAKING REFERENCE TO PARA 14 OF THE SAID DECISION, THERE WAS NO RECORD OF SERVICE WITH THE REVENUE, IN WHICH CASE THEREFORE THE PRESUMPTION U/S. 2 7 OF THE GENERAL CLAUSES ACT AND SECTION 114 OF THE INDIAN EVIDENCE ACT WOULD BECOME APPLICABLE, WHILE IN THE INSTANT CASE THE CONCERNED RECIPIENT HAD DENIED THE RECEIPT OF ANY NOTICE FROM THE IT DEPARTMENT . DISCUSSION 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 5.1 IT WOULD BE APPROPRIATE TO PROCEED BY REPRODUCING THE RELEVANT PROVIS I ON S, I.E., IN THEIR RELEVANT PARTS, BEING SECTION S 282 AND 292BB OF THE ACT : S ERVICE OF NOTICE GENERALLY. 282. (1) THE SERVICE OF A NOTICE OR SUMMON OR REQUISITION OR ORDER OR ANY OTHER COMMUNICATION UNDER THIS ACT (HEREAFTER IN TH IS SECTION REFERRED TO AS 'COMMUNICATION') MAY BE MADE BY DELIVERING OR TRANSMITTING A COPY THEREOF, TO THE PERSON THEREIN NAMED, ( A ) BY POST OR BY SUCH COURIER SERVICES AS MAY BE APPROVED BY THE BOARD; OR ( B ) IN SUCH MANNER AS PROVIDED UNDER THE CODE OF CIVIL PROCEDURE, 1908 (5 OF 1908) FOR THE PURPOSES OF SERVICE OF SUMMONS; OR ( C ) IN THE FORM OF ANY ELECTRONIC RECORD AS PROVIDED IN CHAPTER IV OF THE INFORMATION TECHNOLOGY ACT, 2000 (21 OF 2000); OR ( D ) BY ANY OTHER MEANS OF TRANSMISSION OF DOCUMENTS AS PROVIDED BY RULES MADE BY THE BOARD IN THIS BEHALF. (2) THE BOARD MAY MAKE RULES PROVIDING FOR THE ADDRESSES (INCLUDING THE ADDRESS FOR ELECTRONIC MAIL OR ELECTRONIC MAIL MESSAGE) TO WHICH THE COMMUNICATION REFERRED TO IN SUB - SECTION (1) MAY BE DELIVERED O R TRANSMITTED TO THE PERSON THEREIN NAMED. 5 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT EXPLANATION . FOR THE PURPOSES OF THIS SECTION, THE EXPRESSIONS 'ELECTRONIC MAIL' AND 'ELECTRONIC MAIL MESSAGE' SHALL HAVE THE MEANINGS AS ASSIGNED TO THEM IN EXPLANATION TO SECTION 66A OF THE INFORMATION TECHNOLOG Y ACT, 2000 (21 OF 2000) . NOTICE DEEMED TO BE VALID IN CERTAIN CIRCUMSTANCES. 292 BB. WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR CO - OPERATED IN ANY INQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THIS ACT, WHICH IS REQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS ACT T HAT THE NOTICE WAS ( A ) NOT SERVED UPON HIM; OR ( B ) NOT SERVED UPON HIM IN TIME; OR ( C ) SERVED UPON HIM IN AN IMPROPER MANNER: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPLETION OF S UCH ASSESSMENT OR REASSESSMENT. S ECTION 27 (OF THE GENERAL CLAUSES ACT ) : MEANING OF SERVICE BY POST 27. WHERE ANY CENTRAL ACT OR REGULATION MADE AFTER THE COMMENCEMENT OF THIS ACT AUTHORIZES OR REQUIRES ANY DOCUMENT TO BE SERVED BY POST, WHETHER T HE EXPRESSION SERVE OR EITHER OF THE EXPRESSIONS GIVE OR SEND OR ANY OTHER EXPRESSION IS USED, THEN, UNLESS A DIFFERENT INTENTION APPEARS, THE SERVICE SHALL BE DEEMED TO BE EFFECTED BY PROPERLY ADDRESSING, PRE - PAYING AND POSTING BY REGISTERED POST, A LETTER CONTAINING THE DOCUMENT, AND, UNLESS THE CONTRARY IS PROVED, TO HAVE BEEN EFFECTED AT THE TIME AT WHICH THE LETTER WOULD BE DELIVERED IN THE ORDINARY COURSE OF POST. S ECTION 114 (OF THE INDIAN EVIDENCE ACT , 1882 ): SECTION 114 IN THE INDIAN EVID ENCE ACT, 18 8 2 114 . COURT MAY PRESUME EXISTENCE OF CERTAIN FACTS. THE COURT MAY PRESUME THE EXISTENCE OF ANY FACT WHICH IT THINKS LIKELY TO HAVE HAPPENED, REGARD BEING HAD TO THE COMMON COURSE OF NATURAL EVENTS, HUMAN CONDUCT AND PUBLIC AND PRIVATE BUSINE SS, IN THEIR RELATION TO THE FACTS OF THE PARTICULAR CASE. ILLUSTRATIONS THE COURT MAY PRESUME 6 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT (A) THAT A MAN WHO IS IN POSSESSION OF STOLEN GOODS SOON AFTER THE THEFT IS EITHER THE THIEF OR HAS RECEIVE D THE GOODS KNOWING THEM TO BE STOLEN, UNLESS HE CAN ACCOUNT FOR HIS POSSESSION; (B) THAT AN ACCOMPLICE IS UNWORTHY OF CREDIT, UNLESS HE IS CORROBORATED IN MATERIAL PARTICULARS; (C) THAT A BILL OF EXCHANGE, ACCEPTED OR ENDORSED, WAS ACCEPTED OR ENDORSED FOR GOOD CONSIDERATION; (D) THAT A THING OR STATE OF THINGS WHICH HAS BEEN SHOWN TO BE IN EXISTEN CE WITHIN A PERIOD SHORTER THAN THAT WITHIN WHICH SUCH THINGS OR STATE OF THINGS USUALLY CEASE TO EXIST, IS STILL IN EXISTENCE; (E) THAT JUDICIAL AND OFFICIAL ACTS HAVE BEEN REGULARLY PERFORMED; (F) THAT THE COMMON COURSE OF BUSINESS HAS BEEN FOLLOWED IN PARTICULAR CASES; (G) THAT EVIDENCE WHICH COULD BE AND IS NOT PRODUCED WOULD, IF PRODUCED, BE UNF AVOURABLE TO THE PERSON WHO WITHHOLDS IT; (H) THAT IF A MAN REFUSES TO ANSWER A QUESTION WHICH HE IS NOT COMPELLED TO ANSWER BY LAW, THE ANSWER, IF GIVEN, WOULD BE UNFAVOURABLE TO HIM; (I) THAT WHEN A DOCUMENT CREATING AN OBLIGATION IS IN THE HANDS OF THE OBLIGOR, THE OBLIGATION HAS BEEN DISCHARGED. THE ASSESSEES RIGHT TO OBJECT TO SERVICE OF NOTICE U/S.143(2) DATED 23.08.2010 IS SAVED ON ACCOUNT OF HIS TAKING THE SAME BEFORE THE A.O. DURING THE ASSESSMENT PROCEEDINGS VIDE LETTER DATED 17.11.2011, FILED ON THAT DATE, THE CONTENTS OF WHICH, BEING RELEVANT ARE AS UNDER: T O, ITO 16 (2)(4), MATRU MANDIR, MUMBAI. SUBJECT: NON RECEIPT OF 143(2) FOR M /S COLOR CRAFT A.V 2009 - 10 (PAN: AADFC7740A) DEAR SIR, AS INFORMED BY THE ASSESSEE, I T IS HEREBY RESPECTFULLY SUBMITTED THAT NOTICE UNDER SECTION 143(2) HAS NOT BEEN SERVED ON THE ASSESSEE WITHIN STATUTORY LIMIT. IT IS FURTHER SUBMITTED THAT SUBMISSI ONS ARE MADE TO CO OPERATE WITH DEPARTMENT IN GOOD FAITH UNDER HUMBLE OBJECTION AND PROTEST. COMPLIANCE IS HEREBY MADE FOR NON ISSUE OF NOTICE UNDER SECTION 143'(2) AS SPECIFIED IN SECTION 292 BB . 7 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT KINDLY TAKE THE ABOVE ON RECORDS AND OBLIGE. THANKING Y OU. YOURS TRULY, FOR JAYESH SANGHRAJKA & CO. CHARTERED ACCOUNTANTS SD/ - PRATIK JOSHI (AUTHORISED SIGNATORY) 5. 2 IT IS, THEREFORE, APPARENT THAT THE ASSESSEE DISP UTED THE SERVICE ON THE BASIS THAT IT WAS NOT WITHIN THE STIPULATED TIME. THAT IS, TH E SERVICE PER SE IS NOT DENIED THEREBY, BUT ONLY OF IT BEING NOT WITHIN THE STIPULATED TIME PERIOD. SECTION 292BB SUPRA IS BOTH EXPLICIT AND SU CCINCT IN THIS REGARD, ENLISTING SEPARATELY THE ASPECTS OF SERVICE WHICH COULD BE OBJECTED TO BEFORE THE COMPLETI ON OF THE ASSESSMENT/REASSESSMENT PROCEEDINGS. THE ASSESSEE IS, IN OUR CONSIDERED VIEW, IN VIEW OF THE CLEAR MANDATE OF THE PROVISION, PRECLUDED FROM ENHANCING THE SCOPE OF HIS OBJECTION IN THE APPELLATE PROCEEDINGS, AS BY CONTENDING NON - SERVICE IN THE INS TANT CASE. THE WORD SUCH IN THE PROVISO WHICH CARVES AN EXCEPTION TO THE GENERAL RULE PROSCRIBING THE RAISING ANY OBJECTION IN ANY PROCEEDINGS OTHER THAN OF ASSESSMENT/REASSESSMENT, I.E., THE PRIMARY PROCEEDINGS, LIMITS THE SAME TO THAT AS TAKEN IN SUCH PROCEEDINGS , SAVING THEREBY THE RIGHT OF OBJECTION IN ITS RESPECT . COMING TO THE ASPECT OF TIMELINESS OF THE SERVICE, THE SAME HAVING BEEN CAUSED BY THE REVENUE PER POST, THE SAME SHALL HAVE TO BE CONSIDERED WITH REFERENCE TO THE RELEVANT PROVISIONS OF LA W GOVERNING THE SAME. SECTION 282B OF THE ACT CLEARLY PROVIDES FOR SERVICE BY POST AS ONE OF THE ACCEPTED MODES OF SERVICE OF ANY COMMUNICATION (AS DEFINED THEREIN) UNDER THE ACT. ACCORDINGLY, SECTION 27 OF THE GENERAL CLAUSES ACT SHALL APPLY. WHAT, THEREF ORE, WE ARE REQUIRED TO SEE IS IF THE PARAMETER S OF THE SAID SECTION ARE MET OR N OT. WE SAY SO AS , EVEN THOUGH ONLY THE ASPECT OF THE TIMELINESS OF SERVICE STANDS OBJECTED TO, INVOKING THE DEEMING OF SECTION 27 OF THE GENERAL CLAUSES ACT COULD ONLY BE WHER E ALL ITS ELEMENTS ARE SATISFIED. IN THE PRESENT CASE, THE SERVICE HAS BEEN MADE BY SPEED POST. THE ISSUE AS TO WHETHER THE SAME CONSTITUTES REGISTERED POST, THE SPEC I ES OF POST REFERRED TO IN SECTION 27 OF THE GENERAL CLAUSES ACT, AND TO WHICH ONLY, T HEREFORE, 8 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT THE SAID PROVISION IS APPLICABLE, STANDS, AS NOTED WITH APPROVAL IN MILAN PODDAR (SUPRA), CLARIFIED BY THE T RIBUNAL, WHOSE ORDER WAS UNDER CHALLENGE BEFORE IT, APPLYING THE PRINCIPLE OF U P DATING CONSTRUCTION, THAT REGISTERED POST W OULD T A K E WITHI N ITS S WEE P NOT ONLY SPEED POST B UT ALSO ALL OTHER MAILS FORM ING PAR T OF THE ESTABLISH SYSTEM OF MA I LS IN WHICH THE I R RECEIPT AND MO VE MENT IS RECORDED TO ASSURE SAFE DELIVERY (PARA 21). ALL THE PRINCIP A L ATTRIBUTES OF REGISTERED POST WERE INHERENTLY P RESENT IN SPEED POST, SO THAT THE TWO WERE OF THE SAME GEN U S (PARA 14). THE TERM REGISTERED POST BEING NOT DEFINED, IT COULD ONLY BE SO IN TERMS OF ITS ELEMENTS, WHICH THE TRIBUNAL GATHERED FROM THE DICTIONARY MEANING OF THE WORD REGISTER ED ; ITS COMMON PARLANCE MEANING; AND ITS SUBSTANCE (PARA S 13, 14). HOW COULD, WE WONDER, A DIFFERENT VIEW OF THE MATTER BE TAKEN OR ADOPTED ? . IN OTHER WORDS, SPEED POST WAS IN SUBSTANCE ONLY REGISTERED POST AND, CONSEQUENTLY, THE STATUTORY PRESUMPTION OF SECTION 27 SHALL HOLD IN ITS RESPECT AS WELL. IT WAS FURTHER NOTED BY THE TRIBUNAL THAT SECTION 27 DID NOT REQUIRE THE MAIL TO BE SENT BY REGISTERED POST TOGETHER WITH ACKNOWLEDGMENT DUE (AD). THE ADDITIONAL REQUIREMENT OF AD COULD NOT, THEREFORE, BE READ INTO THE PR OVISION (PARA 11). THE LEGAL FICTION OF SECTION 27 WOULD, THEREFORE, IMPLY SERVICE WITHIN THE TIME BY WHICH A SPEED POST IS IN THE ORDINARY COURSE OF BUSINESS, DELIVERED. THE SAME, AS PER THE RECORDS OF THE REVENUE, DULY ACKNOWLEDGED BY THE POSTAL DEPARTME NT , IS 30/8/2010 (RPB, PG S . 4, 15 ). THE SAME WAS GIVEN TO THE POST OFFICE, GRANT ROAD, MUMBAI, FOR DELIVERY AT AN ADDRESS IN MUMBAI. IN THE ORDINARY COURSE OF EVENTS, THE SAME WOULD STAND TO BE DELIVERED IN A COUPLE OF DAYS OR PERHAPS A LITTLE MORE AS WHER E THERE IS A HOLIDAY/S IN THE INTERVENING PERIOD ; IT BEING NOBODYS CASE THAT THE COMMUNICATION IS NOT PROPERLY ADDRESSED OR PREPAID. HOWEVER, THE REVENUE ITSELF CLAIMS TO HAVE DELIVERED THE SAME ON 30.09.2010 . THAT IS, BUT FOR THE REVENUE ADDUCING EVIDEN CE, AND CLAIMING ON ITS BASIS, THE IMPUGNED SERVICE ON 30.09.2010, THE STATUTORY PRESUMPTION OF SECTION 27 WOULD HAVE PREVAILED, UNLESS OF - COURSE CONTRARY IS EXHIBITED BY THE ASS ESSEE - ADDRESSEE. IN OTHER WORDS, THE PRESUMPTION OF SERVICE BY THAT DATE STAND S SUCCESSFULLY AND EFFECTUALLY REBUTTED BY THE REVENUE ITSELF BY ADDUCING EVIDENCE AS TO ITS SERVICE ON 30.09.2010. IT IS EQUALLY OPEN TO THE ASSESSEE TO, ON THE BASIS OF THE EVIDENCE; EITHER DISCREDIT THE REVENUES CLAIM , PROVING SERVICE ON ANY OTHER DATE , EITHER PRIOR OR 9 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT AFTER 30.09.2010. T HE SAME WOULD NOT, HOWEVER, IN ANY MANNER B Y ITSELF OPERATE TO DISLODGE THE PRESUMPTION OF SECTION 27, SAVE AN D EXCEPT TO THE EXTENT THAT THE TIME OF THE SERVICE SHALL BE ON THE BASIS OF THE EVIDENCE LED. THE ONLY EVID ENCE PRODUCED BY THE ASS ESSEE IS THAT SHRI AKSHAY V. SHAH, THE PERSON WHOSE SIGNATURE AND MOBILE NUMBER APPEAR ON THE RECEIPT, DENIES HAVING RECEIVED THE SAME. IN THIS REGARD, THE QUESTION THAT ARISES IS AS TO WHO IN THAT CASE RECEIVED THE NOTICE; ITS S ERVICE BEING NOT IN DISPUTE , BUT ONLY T HE TIME THEREOF . THAT IS, THERE IS NO EVIDENCE OR BASIS TO TEST OR DISPROVE THE SERVICE ON 30.09.2010, WHICH IS ADMITTEDLY IN TIME IN TERMS OF SECTION 143(2) OF THE ACT R EAD WITH PROVISO THERETO. THE FACT OF THE SERVI CE ON YAMINI PATIL, ANOTHER NOTICE EE, ON 01.09.2010, I.E., THE DATE SIMILARLY SPECIFIED ON THE RECEIPT, SIMILARLY PREPARED BY THE POSTAL DEPARTMENT, LENDS CREDENCE TO THE CLAIM OF THE DIS PATCH LIST AS PREPARED BEING GENUINE AND AUTHENTIC AND, FURTHER, THAT THE NOTICES ( COMMUNICATION S) WERE ACTUALLY DISPATCHED AS PER THE SAID DOCUMENT. THE SAME THUS BOLSTERS THE REVENUES CASE OF THE SERVICE BEING ACTUALLY EFFECTED ON THE DATE AS SPECIFIED THEREIN, WHICH COULD ONLY BE CHALLENGED ON THE BASIS OF SOME CONTROVE RTING EVIDENCE/MATERIAL , AND WHICH, IN VIEW OF THE OPPOSING CLAIMS, IT NEEDS TO BE APPRECIATED, WOULD HAVE TO BE THE DATE SPECIFIED AND, FURTHER, BEAR CORROBORATION BY THE POSTAL DEPARTMENT. THERE BEING IN FACT NO CONTRARY MATERIAL, THE DATE OF SERVICE, ON THE STRENGTH AND THE BASIS OF THE MATERIAL ON RECORD, WHICH IS ONLY AS GENERA TED IN THE ORDINARY COURSE OF ITS BUSINESS BY THE REVENUE , I.E., A S T O DELIVERY O F COMMUNICATIONS AND THE ARRANGEMENT ENTERED WITH THE POSTAL DEPARTMENT IN ITS RESPECT, IS 30.09. 2010. WE , ACCORDINGLY, H O LD THE SAME TO BE ON THE SAID DATE AND, THEREFORE, THE SERVICE OF NOTICE U/S. 143(2) DATED 23.08.2010 AS WITHIN TIME. 5.3 WE MAY, WITHOUT PREJUDICE TO THE FOREGOING, ALSO DISCUSS THE ASSESSEES CASE AS TO NON SERVICE, I.E., AS LA TER MADE OUT TO , EXPANDING THE SCOPE OF THE OBJECTION RAISED IN THE ASSESSMENT PROCEEDINGS, AND WHICH WE HAVE THEREFORE FOUND AS IN EXCESS OF THE R IGHT SAVED BY THE ASS ESSEE U/S.292BB AND, THUS, NO T VALID. THE ASS ESSEE , AS AFORE - STATED, DENIES THE RECEIPT OF THE NOTICE BY SHRI AKSHAY V. SHAH, WHO IN ANY CASE IS NOT REL ATED THEREWITH, SO THAT SERVICE O N HIM, I.E., ASSUMING SO, IS NOT VALID. WE ARE UNABLE TO , O N A 10 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT PERUSAL OF THE MATERIAL ON RECORD, ACCEPT THE ASS ESSEE S CLAIM, EVEN IN THE EXPANDED FORM. WE HA VE FOR THE PURPOSE PERUSED THE STATEMENT OF SHRI AKSHAY V. SHAH, PLACED AT PGS. 10 - 13 OF THE ASSESSEES PAPER BOOK (APB). HE DOES NOT DENY EITHER THE RECEIPT OF THE DOCUMENT; THE SIGNATURE ON THE RECEIPT; OR THE PHONE NUMBER MENTIONED THEREIN , L EA ST OF ALL THE DATE. HE, AFTER I DENTIFYING HIMSELF, AGREES TO THE LIKENESS OF HIS SIGNATURE WITH THAT AFFIXED ON THE RECEIPT. RATHER, HOW COULD HE THEN DE NY A SIGNATURE WHICH MATCHES HIS ; DATED (30.09.2010) AND , FURTHER, IS ACCOMPANIED BY HIS MOBILE N UMBER (92224951 48), WRITTEN IN THE SAME HAND , AND WHICH IS ONLY HI S , AND FOR WHICH WE HAVE ALSO COMPARED IT WITH THE SIGNATURE AND DATE AS APPEARING IN THE STATEMENT ON OATH UNLESS, THAT IS, CLAIM OF FORGERY IS MADE AND PROVED, AND WHICH IS NOT THE CASE. THAT IS, THE S AME IS ONLY A TA CIT ADMISSION OF IT BEING HIS SIGNATURE. AGAIN, ON BEING QUESTIONED AS TO HOW COULD HE ACCEPT THE DOCUMENTS OF C OLOR CRAFT, A FIRM HAVING ITS REGISTERED ADDRESS LOCATED AT THE SAME ADDRESS , AND WITH WHICH HE DENIES ANY RELATION, HE EXPLAINS OF POSSIBLY SIGNING IT, CONSIDERING IT AS DOCUMENTS RELATING TO HIS FATHERS BUSINESS ( ANSWERS TO Q. NO S . 13 AND 14). YES, HE ALSO EXPLAINS OF NOT HAVING S IGNED A N Y NOTICE RELAT ING TO INCOME TAX OR NOT VISITING THE I NCOME T AX O FFICE (Q . NO. 13). IN THIS R EGARD, VISITING THE INCOME TAX OFFICE IS IRRELEVANT. AS TO THE DENIAL OF NOT HAVING SIGNED ANY INCOME TAX NOTICE , THE SAME FLIES IN THE FACE OF HIS HAVING SIGNED ON THE RECEIPT, WHICH CLEARLY BEARS THE P A R TICULARS , WHICH WE MAY REPRODUCE FOR READY REFERENC E: NO. ITO - 16(2)(4)/ U / S .143(2) A.Y. 2009 - 10 NO.100 _________________________________ TO, M/S. COLOR CRAFT MUMBAI - 36 CONTINUING FURTHER, HIS STATEMENT OF NOT KNOWING THE FIRM, M/S. COLOR CRAFT, WHICH HAS ITS REGISTERED OFFICE AT THE SAME ADD RESS , IN TERMS AS SPECIFIC AND DETAIL ED AS POSSIBLE, IS LUDICROUS . THIS IS EVEN IGNORING AND DE HORS THE SIGNATURE ON A RECEIPT OF A DOCUMENT ADDRESSED TO THE SAID FIRM. ONE IS, GIVEN HIS EDUCATIONAL QUALIFICATION (B.COM/Q. NO. 2), EVEN OTHERWISE HARD PUT TO EXPLAIN HIS BEHAVIOUR IN ACCEPTING A 11 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT DOCUMENT UNDER HIS SIGNATURE , PARTICULARLY OF A FIRM WITH WHICH HE CLAIMS N O RELATION. IT BECOMES INCOMPREHENSIBLE AND OUTSIDE THE BOUNDS OF CREDULITY WHERE HE , AS CONTENDED, HAS NO KNOWLEDGE OF THE SAID FIRM. T HE CO NTEN TION OF NO KNOWLEDGE OF THE SAID FIRM IS EVEN OTHERWISE INCOMPREHENSIBLE ON FACTS, I.E., GIVEN THE FACT THAT THE FIRM HAS ITS PREMISES AT THE STATED ADDRESS , AND HE HIMSELF WAS PHYSICALLY PRESENT THEREAT AT THE RELEVANT TIME, STATING O F THE SAME TO ALS O BE THE ADDRESS OF HIS FATHER S BUSINESS. 5.4 IT IS FOR THE FOREGOING EVIDENCES AND REASONS THAT, NOTWITHSTANDING THE RESPONDENT S CLAIM OF NOT KNOWING THE ADDRESS EE F I RM AND HAVING NOT RECEIVED ANY NOTICE FROM THE INCOME TAX DEPARTMENT, THAT WE FIND N O MERIT WHATSOEVER IN THE ASSESSEES CLAIM OF NON SERVICE OF THE NOTICE UNDER REFERENCE, EVEN AS, AT THE COST OF REPETITION , WE STATE THAT THE SAME COULD BE CONTESTED ONLY QUA ITS TIMING. WE MAY TOWARD THIS ALSO DEAL WITH THE ASSESSEES OTHER CONTENTIONS I N THE MATTER. TRUE, THE NOTICE S OR THE ENVELOPE CONTAINING THE NOTICE S , HAVING BEEN DULY HANDED OVER TO THE POSTAL DEPARTMENT , AS SIGN IFIED BY THE STAMP ED DISPATCH LIST MAINTAINED BY THE CONCERNED OFFICE, ON 30.08.2010, THE DELAY IN ITS DELIVERY, BEING ONL Y ON 30.09.2010, IS NOT ACCEPTABLE AND REMAINS TO BE EXPLAINED. HOWEVER, TO OUR MIND THAT DOES NOT , IN ANY MANNER , VITIATE THE DELIVERY, DULY EVIDENCED. WHAT IS RELEVANT, AND WHAT WE HAVE TO DECIDE, IS WHETHER THE SERVICE ON THE ASS ESSEE ON 30.09.2010 CAN BE SAID TO HAVE TAKEN PLACE IN LAW, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. THE REASON/S FOR THE DELAY, VIZ. THE PREMISES BEING LOCKED OR CLOSED, AND/OR NO RESPONSIBLE PERSON TO TAKE DELIVERY, OR ITS REFUSAL, ETC. ON AN EARLIER OCCASION/S THE POS TMAN CAME TO DELIVER THE NOTICE, COULD ONLY BE ASCERTAINED FROM THE POSTAL DEPARTMENT, WOULD THUS BE OF LITTLE CONSEQUENCE. RATHER, THE VERY FACT OF DELAY, IN - AS - MUCH AS THE SAME IS RECKONED WITH REFERENCE TO 30.08.2010, IMPLIES ACCEPTANCE OF THE REGISTE R/DOCUMENT (OF DISPATCH) MAINTAINED BY THE OFFICE OF THE A.O. THERE IS, IN FACT, EVEN OTHERWISE NO REASON TO DOUBT THE VALIDITY OR AUTHENTICITY OF THE SAME, BEING MA I N TAINED BY THE REVENUE IN THE ORDINARY COURSE OF ITS BUSINESS, SO THAT THE PRESUMPTION OF SECTION 114(F) OF THE EVIDENCE ACT WOULD APPLY, AND WHICH IT HAS SOUGHT TO ESTABLISH WITH REFERENCE TO A CASE OF UNDISPUTED RECEIPT FOR A N ADDRESSEE WHOSE NAME FOLLOWS THAT 12 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT OF THE ASS ESSEE ON THE SAID LIST. THE SERVICE ON THE ASSESSEE IS, TO OUR MIND, PROV ED IN VIEW OF SEC . 27 OF THE GENERAL CLAUSES ACT R/W S . 114 OF THE EVIDENCE ACT. CITING SEVERAL DECISIONS BY THE HONBLE APEX COURT, THE SCOPE OF THE SAID PROVISIONS STANDS EXPLAINED BY THE TRIBUNAL (REFER PARAS 23 TO 26, AT PGS. 634 - 635 OF THE REPORTS ) , W HOSE ORDER IN THE RELEVANT PART STANDS REPRODUCED BY THE HONBLE COURT IN MILAN PODDAR (SUPRA) (AND WHICH ALSO EXPLAINS OUR REFERENCE TO THE PARA NUMBERS THEREOF). THE REBUTTAL OF THE STATUTORY PRESUMPTION, IT IS FURTHER EXPLAIN ED WITH REFERENCE TO , AGAIN , DECISIONS BY THE APEX COURT, COULD ONLY BE WHERE THE PART Y DENYING THE SERVICE PROVE S THAT IT WAS NOT REAL LY SERVE D AND THAT HE WAS NOT RESPONSIBLE FOR THE ABSENCE OF PROOF BY THE PART Y DENYING THE SERVICE THAT HE HAS NOT RECEIVED IT OR THAT HE WAS NOT RE SPONSIBLE FOR THE NON SERVICE (PARA 27/PG. 636 OF THE REPORTS) . NO SUCH REBUTTAL , OR EVIDENCE TO THIS EFFECT, AS AFORE - STATED , HAS BEEN LED IN THE INSTANT CASE. THE FOREGOING WOULD ALSO SHOW THAT THE RELIANCE ON THE SAID DECISION BY THE REVENUE IS NOT, AS CONTE ND ED, MISPLACED, AND TOWARD WHICH WE MAY ALSO REFER TO THE SUBSTANTIA L QUESTION OF LAW (A) RAISED BEFORE THE HONBLE COURT (PG. 623 OF THE REPORTS) . RATHER, IN THE FACTS OF THAT CASE, THERE WAS NO PROOF OF DELIVERY AND THE ONLY BASIS FOR AVER R ING SE RVICE WAS THE SPEED POST HAVING NOT RETURNED BACK UNSERVED. THE RATIO OF THE SAID DECISION IS, THEREFORE, SQUARELY APPLICABLE IN THE FACTS OF THE PRESENT CASE. 5.5 AS REGARDS THE REVENUES RELIANCE ON CASE LAW, WE HAVE, DRAWING ON THE SETTLED LAW ON SERV ICE PER P OST , WHICH IS A PRESCRIBED MODE OF SERVICE U/S.282(1)(A) OF THE ACT, AS CLA RIFIED BY THE HONBLE COURT IN MILAN PODDAR (SUPRA) WITH REFERENCE TO SEVERAL DECISIONS BY THE HONBLE APEX COURT, FOUND IT TO BE A CASE OF VALID SERVICE. EVEN NO INFIRMITY IN THE SAID DECISION S TANDS BROUGHT TO OUR NOTICE DESPITE BEING SPECIFICALLY THE LD. AR BEING SPECIFICALLY QUESTIONED IN THE MATTER DURING HEARING. THE DECISION BY THE TRIBUNAL RELIED UPON WOULD THUS BE OF LITTLE CONSEQUENCE. THE DECISION IN THE CASE OF C IT VS. CEBON INDIA LTD. [2009] 184 TAXMANN 290 (P & H) IS BASED ON A DEFINITE FINDING OF FACT AS TO DATE OF SERVICE BY THE TRIBUNAL, CONFIRMING THAT OF THE FIRST APPELLATE AUTHORITY. AGAIN, IN THE CASE OF M. L. NARANG VS. CIT [1981] 6 T AXMANN 61 (DELHI), T HE DECISION TURNED ON THE LACK /ABSENCE OF THE IDENTI T Y OF THE PERSON ON WHOM THE NOTICE WAS SERVED. THE 13 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT PRESUMPTION PROVIDED BY LAW IS, AFTER ALL, REBUTTABLE. THESE DECISION S WOULD THUS BE OF LITTLE ASSISTANCE TO THE ASSESSEE ; THE DECISION IN THE CASE OF M ILAN PODDAR (SUPRA) , AS AFORE - STATED, BEING A CLEAR EXPOSITION OF THE LAW IN THE MATTER, INCLUDING AS TO THE AMBIT OF THE PRESUMPTION AVAILABLE WHEN SERVICE IS SOUGHT TO BE MADE THROUGH REGISTERED POST. CONCLUSION 6. I N VIEW OF THE FOREGOING, WE HOLD TH E SERVICE ON THE ASSESSEE TO BE ON 30.09.2010, INVOKING THE PRESUMPTION OF SECTION 27 AND SECTION 114(F) OF THE GENERAL CLAUSES ACT AND THE INDIAN EVIDENCE ACT RESPECTIVELY , AS WELL AS NOTICING AND APPRECIATING THE MATER IAL PLACED ON RECORD. TH IS, DESPITE , WE MAY REITERATE , THE POSITION IN LAW, I.E., AS TO THE CONTROVERSY ARISING, IN VIEW OF THE OBJECTION RAISED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS BEING LIMITED TO THE TIME OF SERVICE , WHICH ITSELF THEREFORE BECOMES UNDISPUTABLE . WHICHEVER WAY ONE MAY THUS LOOK AT THE MATTER, SERVICE ON THE ASSESSEE - FIRM ON 30/9/2010 IS IN LAW PROVED UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME BEING WITHIN THE TIME LIMITATION STIPULATED UNDER PROVISO TO S. 143(2), ASSAILING THE ASSESSMENT FOR WANT OF JURISDICTION ON THAT SCORE IS MISPLACED. WE DECIDE ACCORDINGLY. 7. WE MAY NEXT DISCUSS THE CASE ON ITS MERITS, I.E., OF THE INCOME ASSESSED, FOR WHICH OPPORTUNITY WAS SPECIFICALLY GRANTED, AND THE MATTER FINALLY HEARD AFTER SEVERAL ADJOURNMENTS. A T THE OUTSET, THE LD. AR INFORMED THE BENCH THAT HE WAS NOT IN A POSITION TO FURNISH ANY BILLS, VOUCHERS, ETC. IN SUPPORT OF ASSESSEES CASE IN - AS - MUCH AS THE SAME HAS BEEN LOST IN FIRE IN APRIL, 2010. SO HOWEVER, IT WAS INCUMBENT ON THE ASSESSING AUTHORIT Y TO ESTIMATE INCOME, I.E., UPON THE REJECTION OF THE BOOK RESULTS, AFTER CONSIDERING ALL THE RELEVANT FACTS/MATERIALS. THE ASSESSEE HAS DURING THE YEAR TRADED IN PAPER, WHICH YIELDS A GROSS PROFIT RATE OF 1% TO 1.5%, I.E., AS DISCLOSED. AS SUCH, ADOPTING THE PROFIT RATE OF THE ASSESSEES BUSINESS OF OFFSET AND SCREEN PRINTING, WHICH STOOD AT 41.08 % & 48.89 % FOR AYS 2007 - 08 AND 2008 - 09 RESPECTIVELY, WAS NOT VALID. THE AO, HOWEVER, WE OBSERVE, ESTIMATED THE PROFIT FOR THE CURRENT YEAR AT 41.08 %, I.E., AS RETURNED FOR THE IMMEDIATELY PRECEDING YEAR, BEING IN FACT THE LOWEST OF THE PROFIT RATES OBTAINING FOR THE PAST THREE YEARS, RELYING ON THE DECISIONS IN THE CASE OF ACTION ELECTRICALS VS. DY. CIT 14 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT [2002] 258 ITR 188 (DEL) AND P. VENKANNA VS. CIT [1969] 72 ITR 328 (MYS.) , SO THAT A BEST JUDGEMENT ASSESSMENT BASED ON PAST YEARS RESULTS IS VALID AND NOT ARBITRARY. THE SAME STOOD CONFIRMED BY THE FIRST APPELLATE AUTHORITY IN - AS - MUCH AS HE FOUND NO REASON TO DISTURB THE SAME. HE, HOWEVER, ALLOWED THE ASSESSEES CLAIM OF ALL EXPENSES CLAIMED THROUGH DEBIT TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR, AT RS.58,00,975/ - , AGAINST WHICH THE REVENUE IS IN APPEAL. THE LD. AR WAS, AT THIS STAGE, ASKED BY THE BENCH, IF THERE WAS ANYTHING ON RECORD TO SHOW OF A CHANGE OF BU SINESS FOR THE CURRENT YEAR, VIZ., THE CHANGED PROFILE OF THE CUSTOMERS; THE SALES TAX RETURNS; THE AUDITED REPORT U/S.44AB, WHICH, VIDE COLUMN 8 THEREOF REQUIRES THE AUDITOR TO REPORT/SPECIFY THE NATURE OF THE BUSINESS AS WELL AS IF THERE IS ANY CHANGE IN THE BUSINESS DURING THE YEAR, ETC., TO WHICH HE (LD. AR) REPLIED BY STATING THAT THE SAME WAS NOT READILY AVAILABLE WITH HIM, FOR HIM TO RENDER ANY DEFINITE REPLY . HIS ATTENTION WAS THEN DRAWN BY THE BENCH TO PARA 4 OF THE STATEMENT OF FACTS (SOF) BEFOR E THE LD. CIT(A), WHICH CLEARLY STATES OF TRADING IN PRINTING PAPER AS HAVING BEEN ADDED TO THE ASSESSEES BUSINESS DURING THE YEAR. THE SAME IMPLIES THAT THE SAID BUSINESS WAS, IF AT ALL, ALSO CARRIED OUT DURING THE YEAR. HE AGAIN HAD NO EXPLANATION FOR T HE SAME, THOUGH WOULD SUBMIT THAT THE REVENUE HAS ITSELF ASSESSED THE ASSESSEES PROFIT FOR A LATER YEAR AT 20%, THEREBY ACCEPTING THE ASSESSEES CONTENTION OF A CHANGE OVER - IN WHOLE OR IN PART, TO THE TRADING BUSINESS. THE LD. DR WOULD, ON THE OTHER HA ND, SUBMIT THAT THE FIRE REFERRED TO BY THE ASSESSEE, AS CLARIFIED BY THE LD. CIT(A), OCCURRED IN ANOTHER BUILDING, SPECIFYING ITS ADDRESS, AND WHICH HOUSED THE OFFICE/PREMISES OF ANOTHER CONCERN, M/S. SHRUTI ARTS (P.) LTD. THE SAME IS THUS A FALSE PLEA, A ND WHICH IS THE REASON FOR THE REVENUE IN NOT ACCEPTING THE ASSESSEES EXPLANATION FOR NON - PRODUCTION OF THE ACCOUNT BOOKS, REJECTING THE SAME AT THE THRESHOLD AS A MERE EXCUSE/SELF SERVING STATEMENT TOWARD NOT PRODUCING THE ACCOUNT BOOKS. 8. WE HAVE HEA RD PARTIES AND PERUSED THE MATERIAL ON RECORD. THOUGH THE ASSESSEE IMPUGNS THE REJECTION OF BOOKS OF ACCOUNT AND THE CONSEQUENT ESTIMATION OF GROSS PROFIT VIDE ITS GROUND NO.3, THE SAME WAS NOT PRESSED DURING HEARING. 15 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT IN FACT, THERE ARE CLEAR FINDINGS BY THE A.O. (REFER PARAS 17 TO 27.1 OF HIS ORDER), LISTING VARIOUS DEFICIENCIES, AS WELL AS BY THE LD. CIT(A) (REFER PARAS 13 15 OF HIS ORDER), WHICH HAVE NOT BEEN REBUTTED BY THE ASSESSEE IN ANY MANNER. THE BOOKS WERE NOT PRODUCED UNDER A FALSE PLEA OF THE SAME HAVING BEEN DESTROYED IN FIRE. HOW COULD THE ASSESSEE, UNDER THE CIRCUMSTANCES, WE WONDER, CHALLENGE THE NON ACCEPTANCE OF ITS BOOK RESULTS AND THE INVOCATION OF THE BEST JUDGEMENT ASSESSMENT BY THE ASSESSING AUTHORITY? OUR SECOND OBSERVATION IN TH E MATTER, AS WOULD ALSO BE APPARENT FROM THE FOREGOING, IS THAT THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUBSTANTIATE ITS CLAIM OF A CHANGE IN BUSINESS, IN WHOLE OR IN PART, EVEN AS THE AUDIT REPORT U/S.44AB OF THE ACT; THE ASSESSEES ACCOUNT S BEING AUDITED, BEING FURTHER BY AN INDEPENDENT PROFESSIONAL, IS THE MOST DIRECT AND PERTINENT MATERIAL, AND WHICH WOULD BE AVAILABLE. ON THE CONTRARY, THE LD. CIT(A) CLEARLY REFERS TO THE AUDIT REPORT FURNISHED (AT PG. 14 OF HIS ORDER), STATING OF IT AS REPORTING THE ASSESSEES BUSINESS AS: OFF SET AND SCREEN PRINTING, I.E., AS MENTIONED IN THE ASSESSMENT ORDER AND AS BEING TAKEN BY THE REVENUE, AND OF THERE BEING NO CHANGE IN THE BUSINESS DURING THE YEAR, VIDE COLUMNS 8(A) AND 8(B) THEREOF. IN FACT, WH Y, AGAIN, ONE MAY ASK, ONE SWITCH FROM A HIGHLY PROFITABLE BUSINESS TO ONE WHICH CAN HARDLY BE SAID TO BE PROFITABLE AND, THUS, AS BUSINESS AT ALL PROFIT MOTIVE BEING AN ESSENTIAL FEATURE OF AN ACTIVITY TO QUALIFY AS BUSINESS . THE ASSESSEES REPLY, O N THIS QUESTION BEING ASKED DURING HEARING, OF THE EARLIER BUSINESS AS NO LONGER VIABLE, CAN HARDLY BE COUNTENANCED. A BUSINESS WOULD CEASE TO EXIST ONLY ON AN ALTERNATE GOOD/SERVICE, MORE ECONOMICAL THAN THE EXISTING PRODUCT, ARRIVING IN, AND IN FACT ACCE PTED BY, THE MARKET, WHICH TRANSITION ITSELF WOULD TAKE PLACE ONLY OVER A PERIOD OF TIME. THERE IS NO SUCH EXPLANATION; RATHER, NO REFERENCE TO ANY SUCH PRODUCT? T HERE IS FURTHER NOTHING ON RECORD TO SHOW OF THE REVENUE HAVING ACCEPTED THE ASSESSEES PROFI T AT 20% FOR A LATER YEAR, WHICH, EVEN WHERE SO, DOES NOT IN ANY MANNER LEAD TO THE INFERENCE OF THE ASSESSEE HAVING SWITCHED TO THE TRADING BUSINESS, MUCH LESS DURING THE CURRENT YEAR. THE ASSESSEES CLAIMS , ACCORDINGLY, HARDLY PASS MUSTER. THERE IS ACCO RDINGLY NO QUESTION OF ACCEDING TO ITS PLEA FOR ACCEPTANCE OF ADDITIONAL EVIDENCE IN THE FORM OF INDUSTRY AVERAGE OF THE PROFIT OF THE TRADING IN PAPER, DISCLOSING A PROFIT RATE OF 1%. 16 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT SO, HOWEVER, THERE ARE SOME TELL TALE SIGNS WHICH CANNOT BE IGNORED. WE CAPSULE THE BOOK RESULTS FOR THE RELEVANT YEAR AND THE PRECEDING THREE YEARS, I.E., AS CONSIDERED BY THE ASSESSING AND THE FIRST APPELLATE AUTHORITY WHILE ESTIMATING AND CONFIRMING THE ASSESSEES INCOME FOR THE YEAR, AS UNDER: ( AMT. IN RS .) A.Y. TURNOVER (RS.) GP ( % ) NP ( % ) 2009 - 10 45,39,31,931 1.36 0.08 2008 - 09 70,64,029 41.08 4.56 2007 - 08 92,62,077 48.89 4.22 2006 - 07 32,86,170 60 ( - ) 0.1.40 THE FIRST THING THAT STRIKES ONE IS THE QUANTUM INCREASE IN THE TURNOVER FOR THE YEAR VIS - A - VIS THE IMMEDIATELY PRECEDING YEAR, OR EVEN THE AVERAGE FOR THE PAST THREE YEARS (AT RS.65.37 LACS); WITNESSING AN INCREASE OF ABOUT 65 TIMES. THE SALES AFTER MARCH, 2007, IN FACT, EXHIBIT A DOWNWARD TREND, WHICH WOULD SIGNIFY THE SALES FOR THE CURRENT Y EAR TO BE LOWER THAN, OR AT BEST AT PAR WITH THE SALES FOR THE IMMEDIATELY PRECEDING YEAR (AT RS.70.64 LACS). THE SALES QUA MANUFACTURING/PRODUCTION ACTIVITY, WHICH THE ASSESSEES BUSINESS ACTIVITY DENOTES, ARE EVEN OTHERWISE, IT IS TO BE BORNE IN MIND, CO NSTRAINED BY STRUCTURAL LIMITATIONS AS TO CAPACITY PHYSICAL OR FINANCIAL , MARKETING RESOURCES, ETC. THE SECOND ASPECT THAT DRAWS OUR ATTENTION IS THE CHANGE IN THE LEVEL OF INDIRECT EXPENDITURE. THE SAME, AT 36.52% FOR THE IMMEDIATELY PRECEDING YEAR, AN D AT 44.67% FOR THE YEAR PRIOR THERETO, FALLS TO AS LOW AS 1.28% FOR THE CURRENT YEAR, INDICATING, ONCE AGAIN, OF A CHANGE IN THE BUSINESS PROFILE. TRUE, THE SAID EXPENDITURE BEING LARGELY FIXED OR SEMI FIXED, TENDS TO REMAIN CONSTANT, BUT THAT ASSUMPTION WOULD BE VALID ONLY FOR THE SAME LEVEL OF PHYSICAL ACTIVITY/OUTPUT, OR WHERE IT FALLS IN THE SAME RANGE AND , BESIDES, WOULD NOT FALL TO NEGLIGIBLE LEVELS ( IN TERMS OF TURNOVER ) , I.E., WERE IT TO BEAR THE SAME CHARACTER, AS IT DOES. IN FACT, HOLDING THE SAM E CONSTANT AT RS.25.80 LACS, I.E., AS OBTAINING FOR THE IMMEDIATELY PRECEDING YEAR, IMPLIES AN INCREASE OF RS.32.21 LACS (RS.58. 0 1 LACS RS.25.80 LACS) FOR THE CURRENT YEAR, AND WHICH WORKS TO 0.7 2 % OF THE INCREMENTAL TURNOVER 17 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT OF RS.4468.6 8 LACS FOR THE Y EAR, I.E., AS AGAINST A LEVEL OF 36% - 37% (OF THE TURNOVER FOR THE PRECEDING YEAR, FALLING, THUS, TO AS LOW AS 2% OF ITS EARLIER LEVEL, SIGNIFYING , AGAIN , A CHANGE IN THE BUSINESS PROFILE. COUPLE THIS WITH THE FACT THAT THE REVENUE ITSELF STATES OF THE ASS ESSEES SALE FOR THE CURRENT YEAR BEING , IN THE MAIN , TO ITS TWO SISTER CONCERNS, DOUBTING THE SAME ON THAT BASIS, I.E., AS , INFERABLY , NOT GENUINE TRANSACTIONS. UNDER THE CIRCUMSTANCES, WE ONLY CONSIDER IT FIT AND PROPER TO ESTIMATE THE ASSESSEES INCOM E FOR THE YEAR HOLDING OF A CHANGE IN THE ASSESSEES BUSINESS FOR THE CURRENT YEAR, SO THAT TRADING IN PAPER, AS STATED IN ITS SOF , WAS ALSO ADDED TO THE EXISTING BUSINESS OF PRINTING . WE ESTIMATE THE INCOME FOR THE YEAR BY ASCRIBING THE INCREMENTAL SALES TO THE TRADING BUSINESS (IN PRINTING PAPER) , RETAINING THE SALES AND THE NET PROFIT OF THE EXISTING BUSINESS TO THE LEVEL AS DISCLOSED FOR THE IMMEDIATELY PRECEDING YEAR, I.E., AT RS.70 LACS AND 5 .0 % RESPECTIVELY (BY ROUNDING OF THE SAME). FOR THE BALANCE SALES OF RS.4469.32 LACS FOR THE CURRENT YEAR, WE ESTIMATE THE NET PROFIT AT 1.0%, I.E., AT 1/5 OF THE PROFIT ON THE MANUFACTURING ACTIVITY, AND IS ALSO IN LINE WITH THE INDUSTRY AVERAGE , AT LEAST APPARENTLY . THE REVENUE HAS ALSO NOT BROUGHT OR EVEN RELIED UPON ANY MATERIAL IN THIS REGARD. THIS, I.E., THE SAID ESTIMATION BY US, SHALL ALSO TAKE CARE OF THE REVENUES APPEAL AS WELL, WHICH IMPUGNS THE ALLOWANCE OF THE INDIRECT EXPENDITURE AS CLAIMED BY THE ASSESSEE. WE DECIDE ACCORDINGLY. 9. IN THE RESULT, B OTH THE ASSESSEES AND REVENUES APPEAL S ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 17 , 201 5 SD/ - SD/ - ( D. MANMOHAN ) (S ANJAY ARORA) / VICE PRESIDENT / A CCOUNTANT MEMBER MUMBAI ; DATED : 17 . 0 7 .201 5 . . ./ ROSHANI , SR. PS 18 ITA NO S . 5818 & 6664 /MUM/2014 (A.Y. 2009 - 10) COLOR CRAFT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI