M/s Vardhan Synthetics, Surat V. The Income Tax Officer Wd. 2(2), Surat

ITA 927/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63041 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-10-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 26-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A TINKEY
• Assessee Lawyers: ANIL K SHAH
• Keywords: Deemed to accrue or arise in india; Additional evidence
• Section: 144

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' ( & &' ( & &' ( & &' ( & ' ' ' ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.927/AHD/2009 [ASSTT.YEAR : 1999-2000] M/S.VARDHAN SYNTHETICS PROP: RADHA MOHAN MITTAL E/4210, MILLENIUM TEXTILE MARKET, RING ROAD, SURAT. /VS. ITO, WARD-2(2) SURAT. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI ANIL K. SHAH ( / 0 &/ REVENUE BY : SHRI A TINKEY 2 / %3'/ DATE OF HEARING : 17 TH OCTOBER, 2012 456 / %3'/ DATE OF PRONOUNCEMENT : 02-11-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1999-2000 IS DIREC TED AGAINST THE ORDERS OF THE CIT(A). 2. THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE A S UNDER: 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CSE A S WELL AS THE LAW ON THE SUBJECT, THE CIT(A), SURAT HAS ERRED IN CONFIRMING THE ADDITION OF RS.5,60,096/- ON ACCOUNT OF PURCHASE BILL OF RS.5,60,096/- AS DEEMED INCOME. ITA NO.927/AHD/2009 -2 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CSE AS WELL AS THE LAW ON THE SUBJECT, THE CIT(A), SURAT HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,28,765/- BEING THE AMOUNT OF CASH DEPOSITS IN BANK. 3. ON THE FACTS AND THE CIRCUMSTANCES OF THE CSE A S WELL AS THE LAW ON THE SUBJECT, THE CIT(A), SURAT HAS ERRED IN CONFIRMING THE ADDITION OF RS.6,49,609/- BEING THE AMOUNT OF ADDITION IN THE GP AT @ 2% OF TOTAL TURNOVER. 4. THE LD.CIT(A) HAS FAILED TO GIVE HIS FINDING REG ARDING THE ADDITIONAL GROUND OF APPEAL CHALLENGING THE PROCEED INGS U/S.148. 5. THE LD.CIT(A) HAS FAILED TO CONSIDER OUR PLEA TO EN TERTAIN ADDITIONAL EVIDENCE UNDER RULE 46A. 6. THE A COULD NOT PRODUCE THE RELEVANT EVIDENCE BEFORE THE AO DUE TO CLOSURE OF BUSINESS AND LD.CIT(A) HAS ALSO NOT CONSIDERED THE EVIDENCE PRODUCED BEFORE HIM DURING THE APPELLATE PROCEEDINGS, THE A REQUESTS THAT THE AP PEAL MAY BE SET ASIDE TO THE FILE OF THE AO. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE CIT(A) HAS NOT ACCEPTED THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE IN SUPPORT OF THE CASE OF THE ASSESSEE. H E SUBMITTED THAT THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF THE BANK A CCOUNT OF THE ASSESSEE. HE SUBMITTED THAT THE ENTRIES THEREIN WE RE RECORDED IN THE CASE OF THE COMPANY, M/S.CLASSIC FILAMENT LTD. (CF L FOR SHORT), AND THEREFORE THE ADDITION MADE WERE UNCALLED. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS IN A POSITION TO ESTABLISH THAT ALL THE ENTRIES FORMING THE BASIS OF ALL THE A DDITIONS WERE RECORDED IN THE BOOKS OF THE CFL, WHOSE ACCOUNTS ARE AUDIT ED. HE SUBMITTED IN PARA-8 OF THE APPELLATE ORDER PASSED BY THE CIT( A), THIS CLAIM OF THE ASSESSEE WAS REJECTED OUTRIGHT BY THE CIT(A) FOR NO VALID REASON. HE SUBMITTED THAT ASSESSMENT IN THIS CASE WAS FRAMED EX PARTE UNDER ITA NO.927/AHD/2009 -3 SECTION 144 OF THE ACT, AND THEREFORE NO REASONABLE OPPORTUNITY HAS BEEN ALLOWED TO THE ASSESSEE BY THE AUTHORITIES BEL OW. 4. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF TH E LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT VARDHA N SYNTHETICS, IS A PROPRIETARY CONCERN OF RADHA MOHAN MITTAL, WHO HAPP ENS TO BE DIRECTOR IN CFL. HE SUBMITTED THAT THE CLAIM OF THE ASSESSEE THAT THE ENTRIES WERE RECORDED IN THE BOOKS OF CFL COULD N OT BE ACCEPTED SINCE CFL WAS THE PRINCIPAL AND IT COULD NOT HAVE APPOINTED ONE OF ITS DIRECTORS AS SOLE DISTRIBUTING AGENT OF THE COM PANY. HE RELIED ON THE ORDER OF THE AO AND THE CIT(A). 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE ASSESSMENT IN THIS CASE WAS FRAMED EX PARTE BY THE AO UNDER SECTION 144 OF THE ACT. THE ASSESSEE HAS CLAIMED BEFORE THE CIT(A) THAT ALL THE ENTRIES FORMING BASIS FOR THE ADDITIONS MADE BY THE AO, WER E RECORDED IN THE BOOKS OF CFL. THIS CLAIM OF THE ASSESSEE WAS SUM MARILY REJECTED BY THE CIT(A) WITHOUT GIVING ANY FINDING ON MERIT T HEREOF THAT WHETHER THESE ENTRIES WERE IN FACT RECORDED IN THE BOOKS OF CFL OR NOT. IN THESE FACTS OF THE CASE, WE ARE OF THE VIE W THAT IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE THE ISSUES IN THE GR OUNDS OF THE APPEAL OF THE ASSESSEE TO THE FILE OF THE AO WITH DIRECTION T O DECIDE THE ISSUES AFRESH IN ACCORDANCE WITH LAW AND TO VERIFY THE DIS PUTED ENTRIES THAT WHETHER THEY ARE RECORDED IN THE BOOKS OF CFL AND TO RECORD A SPECIFIC FINDING ON THIS ISSUE AND FRAME A DE NOVO ASSESSMENT AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE. WE MAKE IT CLEAR THAT THE REVENUE IS AT LIBERTY TO CONSIDER THE APPLICABILITY OF PROVISIONS OF SECTION 40A(2)(B) OF THE ACT AS OBSER VED BY THE CIT(A) ITA NO.927/AHD/2009 -4 IN PARA-8 OF HIS ORDER IN THE LIGHT OF THE FACT THA T THE CFL WAS THE PRINCIPAL AND WHETHER IT CAN APPOINT ONE OF THE DIR ECTORS AS ITS SOLE DISTRIBUTING AGENT AND WHETHER THE PAYMENT MADE TO SUCH AGENT COULD BE DISALLOWED UNDER SECTION 40A(2)(B) OF THE ACT. WE DIRECT ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD