M/s Pardeep Kumar Jain & Sons HUF, Ludhiana V. ITO, Ludhiana

ITA 787/CHANDI/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5379 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 13-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KUMAR SHARMADR
• Assessee Lawyers: S K MAINGI ITP
• Keywords: Opportunity of being heard; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER ITA NO. 787/CHD/2016 ASSESSMENT YEA R : 2007-08 M/S PARDEEP KUMAR JAIN & SONS(HUF), VS. THE ITO, B-1/976, RAJPURA ROAD, WARD-VII(4), CIVIL LINES, LUDHIANA. LUDHIANA. PAN NO. AAKHP8901M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MAINGI, ITP RESPONDENT BY : SHRI PAWAN KUMAR SHARMA,DR DATE OF HEARING : 24.10.2017 DATE OF PRONOUNCEMENT : 03.01.2018 ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASS AILING THE CORRECTNESS OF THE ORDER DATED 31.03.2016 OF LD. CIT (APPE ALS)-3 LUDHIANA PERTAINING TO 2007-08 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : 1. THE HON'BLE CIT(A) ERRED IN ENHANCING T HE INCOME TO RS. 11,83,750/- UNDER THE PROVISIONS OF SECTION 251(L)(A) OF INCO ME TAX ACT RESULTING IN ADDITION OF RS. 10,95,500/- . 2. THE HON'BLE CIT(A) ERRED IN UTILIZING IT'S POWER BY CROSSING IT'S LIMITATIONS AS PROVIDED IN SUB-SECTION (2) OF SECTI ON 251 OF THE INCOME TAX ACT. 3. THE HON'BLE CIT(A) COULD NOT ISSUE SHOW CAUSE IN PROPER WAY BUT MENTIONED IT-IN IT'S ORDER ( PARA 3.4 OF PAGE 8 OF THE ORDER ) THAT SHOW CAUSE WAS ISSUED WHEREAS IT HAD NEVER BEEN ISSUED. 4. THE HON'BLE CIT(A) ERRED IN WRITING ORDER SHEET NOT IN ROUTINE AND REGULAR WAY BUT IT WAS WRITTEN AFTER THOUGHT AND AFTERCLAP JUST TO COVER THE PROVISIONS OF SHOW CAUSE FOR ENHANCEMENT OF INCOME. 5. THE HON'BLE CIT(A) IN NOT FOLLOWING RULE 6F(5) OF I NCOME TAX RULES BY DEMANDING DOCUMENTARY EVIDENCES FOR INVESTMENTS IN MACHINERY-FROM FINANCIAL YEAR 1986-87 TO 2006. 6. THE LD. AO ERRED IN MAKING ADDITION OF RS. 3,50,000 /- WITHOUT BASIS AND THE HON'BLE CIT(A) CONFIRMED BY ENHANCING THE SAME, THOUGH ON SAME FACTS, THE AO ACCEPT ED THE SOURCES OF IMPROVEMENT TILL 31 ST MARCH, 2000. 2. ADDRESSING THE GROUNDS RAISED, SPECIFICALLY GROUND NO. 3 , IT WAS SUBMITTED BY THE LD. AR THAT NO SPECIFIC NOTICE FOR ENHANC EMENT HAS BEEN ISSUED BY THE CIT(A). REFERRING TO BRIEF FACTS OF THE CASE FILED ALONGWITH THE APPEAL RUNNING INTO THREE PAGES FILED BY THE ASSESSEE, IT W AS SUBMITTED THAT ALTHOUGH THE CIT(A) IN PARA 3.4 PAGE 8 OF HIS ORDER H AS MENTIONED ITA787/CHD/2016 A.Y 2007-08 PAGE 2 OF 3 THAT A SHOW CAUSE NOTICE HAS BEEN ISSUED. THE FACT WAS STRONGLY DISPUTED BY THE ASSESSEE WHO HAS SOUGHT INSPECTION OF THE RECOR D AND NOTICED FROM THE ORDER-SHEET ENTRY DATED 16.03.2016 THAT THERE HAS BEEN AN OVER- WRITING THEREIN AND THE WORD PARTLY HAS BEEN INSERTED BY DIFFERENT INK PRESUMABLY TO OVERCOME THE SHORTCOMING. ACCORDINGLY, IT WAS HIS SUBMISSION THAT ON THIS SPECIFIC POINT, THE ASSESSEE WAS N OT HEARD. FOR READY REFERENCE, THIS OBJECTION POSED IN THE BRIEF FACTS FILED BY THE ASSESSEE IN PARA 5 ARE REPRODUCED HEREUNDER : 5. ON INSPECTION OF THE FILE ON 27/05/2016, IT IS OBSE RVED THAT THE CIT(A) MADE THE ORDER SHEET ENTRIES ON 16/03/2016 AFTER THE CASE WAS FINALLY DISCUSSED AND THE COUNSEL OF THE ASSESSEE S IGNED THE ENTRY WHICH READS AS UNDER: ' PRESENT SH. VIJAY GARG CA FILED REPLY, CASE DISCU SSED.' CA -SD- THE LD. CIT(A) HAS MADE OVERWRITING IN ORDER SHEET BY WRITING THE WORDS PARTLY WHICH IS AFTER THOUGHT AS INK USED FOR WORD PARTLY IS CHANGED. HAD IT BEEN DONE AT THE SAME TIME, THE SAME INK WOULD HAVE BEEN USED FOR THE WORD PARTLY AND CLOSING ENTRY WOULD NOT HAVE BEEN SIGNED BY THE CA AS MENTIONED ABOVE. 2.1 ACCORDINGLY, RELYING UPON GOEL DIE CAST LTD. VS COMMIS SIONER OF INCOME-TAX 297 ITR 72 (P&H), IT WAS HIS SUBMISSION THAT T HE IMPUGNED ORDER MAY BE SET ASIDE DIRECTING THE SAID AUTHORITY TO H EAR THE ASSESSEE AND THEREAFTER PASS AN ORDER. 3. THE LD. SR.DR THOUGH PLACED RELIANCE UPON THE ORDER, HO WEVER, IN THE FACE OF THE CATEGORIC STATEMENT MADE BY THE ASSESS EE IN THE THREE PAGED BRIEF FACTS OF THE CASE UNDER THE SIGNATURES OF THE ASSESSEE WHICH HAS NOT BEEN UPSET AND IT WAS FAIRLY AGREED THAT THE ISSUE MAY B E RESTORED BACK. 4. THE RELEVANT FACTS OF THE CASE ARE THAT IN THE SCR UTINY ORDER PASSED U/S 143(3) READ WITH SECTION 147(A), THE CLAIM OF COST OF MAC HINERY SOLD FOR RS. 16LACS WAS TAKEN AT RS. 12,50,000/- (WHICH THE ASS ESSEE HAD SHOWN AT RS. 12,78,700/- AS ON 31.03.2000) AND THE AO C OMPUTED THE PROFIT OF SALE OF MACHINERY AT RS. 3,50,000/-. 4.1 THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE THE C IT(A) WHEREIN THE ISSUE WAS DECIDED BY THE CIT(A) IN THE FOLLOWING MANNER : 3.4 THEREFORE, DURING APPEAL PROCEEDINGS, A SHOW C AUSE WAS ISSUED AND THE LD. COUNSEL APPEARING FOR THE APPELLANT WAS REQUIRED TO GIVE CO PIES OF RETURN OF INCOME FILED WITH THE DEPARTMENT TO ESTABLISH THE COST OF ASSET I.E MACHI NERY SOLD BY IT AND ALSO TO SUBMIT SUPPORTING EVIDENCE REGARDING COST OF IMPROVEMENT O F MACHINERY, FAILING WHICH IT MAY BE EXPLAINED WHY THE ASSESSMENT MADE BY THE ASSESSING .OFFICER BE NOT ENHANCED AS PER DETAILS SUBMITTED IN THE CASE OF SH. PARDEEP KUMAR JAIN VALUE OF MACHINERY TRANSFERRED IS RS.4,16,250/- ONLY. WHY NOT COST OF MACHINERY TR ANSFERRED SHOULD BE TAKEN AT RS.4,16,250/- CASE ADJ TO 29.03.2016 AT 10.00 AM. ITA787/CHD/2016 A.Y 2007-08 PAGE 3 OF 3 ON THE GIVEN DATE THE LD. COUNSEL EXPLAINED THAT RE PAIRS WERE MADE TO THE MACHINERY BY THE APPELLANT FROM YEAR TO YEAR ON THE BASIS OF INCOME EARNED. THE DETAILS OF INCOME EARNED ARE ALREADY ON RECORD. FURTHER IT WAS EXPLAINED THAT RETURNS OF INCOME OF THE APPELLANT WERE NOT FILED FOR THESE YEARS AS THE INC OME WAS BELOW TAXABLE LIMIT. FURTHER FROM THE ORDER OF THE LD. CIT IN THE CASE O F SH. PARDEEP JAIN, IT IS APPARENT THAT M/S PARDEEP KUMAR JAIN & SONS (HUF) F ILED RETURN OF INCOME A.Y 87-88. AS PER THIS RETURN, THE DECLARED VALUE OF THE MACHINER Y IS RS.4,16,250/-. M/S PARDEEP KUMAR JAIN & SONS HUF HAS NEVER FILED RETURN OF INCOME AFTER A .Y 87-88. THERE IS NO CORROBORATING PROOF IN THE FORM OF RETURN OF INCOME, BANK ACCOUNT OR ANY OTHER DETAILS, WHICH COULD EXPLAIN AND ESTABLISH THE INCOME EARNED BY THE APPE LLANT OR THE REPAIRS IMPROVEMENT MADE TO THE MACHINERY FROM YEAR TO YEAR AND ENHANCEMENT IN THE VALUE OF MACHINERY. THEREFORE, THE COST OF MACHINERY TRANSFERRED IS TAK EN AT RS.4,16,250/-AS DECLARED IN THE LAST RETURN OF INCOME FILED BY THE APPELLANT. T HE MACHINERY WAS SOLD FOR RS.16,00,000/-. THUS, THE APPELLANT EARNED PROFIT OF RS.11,83,750 ( 16,00,000-4,16,250/-) ON THE SALE OF MACHINERY. THE APPELLANT HAS DECLARED INCOME OF RS. 88,250/- IN THE RETURN OF INCOME FILED BY IT. THE INCOME DECLARED BY THE APPELLANT IS ENHA NCED TO RS.11,83,750/- AS PER PROVISION OF SEC 251(1)(A) OF THE I.T. ACT 1961, RESULTING IN AD DITION OF RS.10,95,500/- TO THE RETURNED INCOME OF THE ASSESSEE. 4.2 IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE THAT FO R THE RESULTANT ENHANCEMENT, NO SPECIFIC NOTICE WAS ISSUED AND TAKING NOT E OF THE FACT THAT EVEN AS PER THE IMPUGNED ORDER ITSELF, THE OPPORTUN ITY TO RESPOND WAS ON 29.03.2016, ON WHICH DATE IT WAS PROVIDED, THE ORDE R IS SILENT. THE RECORD SHOWS THAT THE ORDER HAS BEEN PASSED ON 31.03.2016 AND CONSIDERING THE CLAIM OF THE ASSESSEE THAT ON INSPECTION O F THE FILE AS ON 27.05.2016 AS PER STATEMENTS MADE IN PARA 5 OF THE BRIE F FACTS OF THE CASE, THE LACK OF OPPORTUNITY HAS BEEN ASSERTED. THE IM PUGNED ORDER, ACCORDINGLY, IS SET ASIDE AND THE ISSUES ARE RESTORED B ACK TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER PROVIDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03.01.2017. SD/- (DIVA SINGH) JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT/CHANDIGARH