ACIT, Chandigarh V. M/s Valco Industries Ltd., Chandigarh

ITA 728/CHANDI/2008

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3813 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 12-08-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Assessee Lawyers: ASHWANI GUPTA
• Keywords: Opportunity of being heard; Additional evidence
• Section: 153A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 728/CHD/2008 ASSESSMENT YEAR : 2005-06 THE ACIT, VS M/S VALCO INDUSTIES LTD., CENTRAL CIRCLE-II, # 3007, SECTOR 19D, CHANDIGARH. CHANDIGARH. PAN: AAACV5195J & CO NO. 36/CHD/2008 IN ITA NO. 728/CHD/2008 ASSESSMENT YEAR : 2005-06 M/S VALCO INDUSTIES LTD., VS THE ACIT, # 3007, SECTOR 19D, CENTRAL CIRCLE-II CHANDIGARH. CHANDIGARH. PAN: AAACV5195J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAVI SARANGAL RESPONDENT BY : SHRI ASHWANI GUPTA DATE OF HEARING : 20.12.2016 DATE OF PRONOUNCEMENT : 23.12.2016 O R D E R PER BHAVNESH SAINI,JM THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECTION BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I LUDHIANA DATED 05.05.2008 FOR ASSESSMENT YEARS 2005-06. 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSING OFFICER PASSED THE EX-PARTE ASSESSMENT ORDER UNDER SECTION 153A READ WITH SECTION 144 OF THE INCOME TA X ACT. THE ASSESSING OFFICER MADE ADDITION OF RS. 35 LACS ON THE ALLEGATION OF DISCREPANCY IN THE STOCK. THE FACTS AS NOTED IN THE IMPUGNED ORDER ARE THAT SEARCH & SU RVEY WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 03.09.2004. DURING THE SURVEY CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE AT CHANDIGARH, TH E STOCK FOUND WAS INVENTORIES. AS PER ASSESSMENT ORD ER, THE STOCK FOUND WAS CATEGORIZED AS RAW MATERIAL AND FINISHED GOODS. AS PER THE ASSESSING OFFICER, DISCREPANCY OF THE STOCK COMES TO 35 TONS. IN TERM S OF VALUE, IT COMES TO RS. 35 LACS CONSIDERING THE PREV AILING VALUE OF ALUMINUM OF RS. 1 LAC PER TON AT THE RELEV ANT TIME. THE ASSESSING OFFICER NOTED IN THE ASSESSMEN T ORDER THAT THE QUANTUM OF STOCK AS PHYSICALLY FOUND AND AS PER THESE STOCK SHEETS IMPOUNDED FROM 184 INDUSTRIAL AREA, PHASE-I CHANDIGARH IS NOT REFLECTE D TO THE SAME EXTENT IN PRESCRIBED REGISTERS RG-23A AND ANNEXURES A-12/A-14. AS PER ASSESSMENT ORDER, THE ASSESSEE COULD NOT EXPLAIN THE DISCREPANCY. THOUGH BEFORE THE ASSESSING OFFICER, IT WAS CONTENDED THAT THERE WAS NO DISCREPANCY AND THAT ACCOUNTS OF THE ASSESSE E WERE AUDITED, ASSESSING OFFICER DID NOT ACCEPT CONTENTION. HE FINALLY OBSERVED THAT SINCE NO EXPLANATION HAS BEEN OFFERED BY THE ASSESSEE, ADDIT ION OF RS. 35 LACS WAS TO BE MADE UNDER SECTION 69A OF THE 3 INCOME TAX ACT ON ACCOUNT OF EXCESS STOCK OF ALUMIN UM FOUND DURING SURVEY. THE ASSESSING OFFICER, ACCORDINGLY, MADE ADDITION OF RS. 35 LACS TO THE RETURNED INCOME. 3. THE ASSESSEE CHALLENGED THIS ADDITION BEFORE LD.CIT(A) AND WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCED IN THE IMPUGNED ORDER. THE ASSESSEE IN THE WRITTEN SUBMISSION ALSO PRAYED THAT INFORMATION ADJUDICATED UPON BY THE LD. ACIT WERE WITH HIM AT T HE TIME OF FRAMING THE ASSESSMENT, HENCE THE SAME MAY PLEASE BE ENTERTAINED BY INVOKING PROVISIONS OF RUL E 46A(3) OR RULE 46A(4) OF THE IT RULES SO THAT JUSTI CE MAY NEITHER BE DENIED TO THE ASSESSEE NOR TO THE REVENU E. FURTHER, SUBMISSIONS WERE ALSO MADE ON MERITS. IT WAS, THEREFORE, CONTENDED THAT ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. 4. THE LD. CIT(APPEALS) CONSIDERING SUBMISSIONS OF THE ASSESSEE AND MATERIAL ON RECORD DELETED THE ADD ITION OF RS. 35 LACS. 5. THE REVENUE IN ITS APPEAL CHALLENGED THE DELETIO N OF ADDITION OF S 35 LACS AS WELL AS CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN ADMITTING FRESH/ADDITIONAL EVIDENCE TO EXPLAIN DISCREPANCY IN STOCK WITHOUT GI VING OPPORTUNITY TO THE ASSESSING OFFICER AND ACCEPTING THE SAME WITHOUT CONFRONTING TO THE ASSESSING OFFICER. 4 6. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER FRAMED EX-PARTE ASSESSMENT ORDER BECAUSE ASSESSEE D ID NOT COOPERATE WITH THE ASSESSING OFFICER FOR FINALI ZATION OF THE ASSESSMENT. THEREFORE, LD. CIT(APPEALS) BEFO RE CONSIDERING THE FRESH/ADDITIONAL EVIDENCE AND SUBMISSIONS AT APPELLATE STAGE, SHOULD HAVE GIVEN OPPORTUNITY TO THE ASSESSING OFFICER TO REBUT THE SUBMISSIONS OF THE ASSESSEE. THE LD. DR SUBMITTED T HAT SINCE THE SUBMISSIONS OF THE ASSESSEE AND ADDITIONA L EVIDENCE WERE NOT CONFRONTED TO THE ASSESSING OFFIC ER AT APPELLATE STAGE, THEREFORE, MATTER MAY BE REMANDED TO THE FILE OF LD. CIT(APPEALS) TO DECIDE THIS ISSUE A FRESH. 7. SHRI ASHWANI GUPTA APPEARED FOR THE ASSESSEE, HOWEVER, HE COULD NOT CONTRIBUTE ANYTHING ON THE MA TTER IN ISSUE AND MERELY CONTENDED THAT HE OBJECTS TO TH E SUBMISSIONS OF LD. DR. 8. WE HAVE HEARD RIVAL CONTENTIONS. IT IS ADMITTED FACT THAT ASSESSING OFFICER PASSED EX-PARTE ASSESSM ENT ORDER UNDER SECTION 144 OF THE INCOME TAX ACT. THE ASSESSEE DID NOT RECONCILE THE DISCREPANCY IN STOCK S, THEREFORE, ASSESSING OFFICER MADE ADDITION OF RS. 3 5 LACS. THE ASSESSEE CHALLENGED THE ADDITION BEFORE L D. CIT(APPEALS) AND FILED WRITTEN SUBMISSION ALONGWITH EVIDENCES AND MATERIAL AND PRAYED THAT SAME MAY BE ENTERTAINED IN VIEW OF RULE 46A OF IT RULES. RULE 46A OF 5 IT RULES READS AS UNDER : 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] OR, AS THE CASE MAY BE, TH E COMMISSIONER (APPEALS)], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTA RY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCE EDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLOWING CIRCUM STANCES, NAMELY : (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE W HICH OUGHT TO HAVE BEEN ADMITTED ; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER] ; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR (D) WHERE THE [ASSESSING OFFICER] HAS MA DE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO A DDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE 3 [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, TH E COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS A DMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS TH E CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] H AS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS-EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE M AY BE, THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT , OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT O R PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] 9. IT IS CLEAR FROM THE ABOVE RULE THAT ASSESSEE WI LL NOT BE ENTITLED TO PRODUCE BEFORE THE LD. CIT(APPEA LS) ANY EVIDENCE WHETHER ORAL OR DOCUMENTARY, OTHER THA N THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE ASSESSING OFFICER EXC EPT 6 ON CERTAIN CIRCUMSTANCES. NO EVIDENCE SHALL BE ADMITTED UNDER RULE 46A UNLESS THE COMMISSIONER (APPEALS) RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. FURTHER, SUCH ADDITIONAL EVIDENCE PRODU CED SHALL NOT BE TAKEN INTO ACCOUNT UNLESS THE ASSESSIN G OFFICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY T O EXAMINE THE EVIDENCE OR CROSS-EXAMINE THE WITNESS. THE LD. CIT(APPEALS) MERELY GOING THROUGH THE WRITTEN SUBMISSION OF THE ASSESSEE AND MATERIAL/EVIDENCE PRODUCED BEFORE HIM BY THE ASSESSEE, DELETED THE EN TIRE ADDITION WITHOUT PASSING ANY ORDER IN WRITING FOR ADMISSION OF ADDITIONAL EVIDENCE AND WITHOUT CONFRONTING ANY SUCH SUBMISSIONS AND MATERIAL TO TH E ASSESSING OFFICER. THEREFORE, RULE 46A IS VIOLATED IN THE MATTER. THE LD. CIT(APPEALS) BEFORE PASSING APPELL ATE ORDER SHOULD HAVE FOLLOWED RULE 46A IN THE MATTER W HICH IS ALSO PRAYED BY THE ASSESSEE IN HIS WRITTEN SUBMISSION. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW MATTER REQUIRES RE-CONSIDERATION AT THE LEVEL OF THE LD. CIT(APPEALS). 10. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE T HE ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RES TORE THIS ISSUE TO HIS FILE WITH DIRECTION TO RE-DECIDE THE MATTER IN ISSUE BY STRICTLY FOLLOWING RULE 46A OF T HE IT RULES IN THE MATTER. THE LD. CIT(APPEALS) SHALL GI VE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ASSESSING OFFICER. 7 11. IN THE RESULT, DEPARTMENTAL APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. 12. THE ASSESSEE ALSO FILED CROSS OBJECTION, HOWEVE R, SHRI ASHWANI GUPTA APPEARING FOR THE ASSESSEE DID N OT ARGUE ON THE CROSS OBJECTION. SINCE THE MATTER IN I SSUE IN DEPARTMENTAL APPEAL HAS BEEN RESTORED TO THE FIL E OF LD. CIT(APPEALS), THEREFORE, ASSESSEE WOULD BE AT L IBERTY TO RAISE ANY RELEVANT CONTENTION BEFORE LD. CIT(APP EALS) ON THE MATTER IN ISSUE. WITH THESE OBSERVATIONS, T HE CROSS OBJECTION IS DISPOSED OFF. 13. IN THE RESULT, DEPARTMENTAL APPEAL IS ALLOWED F OR STATISTICAL PURPOSES AND CROSS OBJECTION OF THE ASS ESSEE STANDS DISPOSED OFF. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD DECEMBER,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD