ACIT, New Delhi V. High Tech Engineers, New Delhi

ITA 94/DEL/2005

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4216 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-09-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 07-01-2005
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAYANT MISHRA
• Keywords: Reopening of assessment; Principle of natural justice; Additional evidence; Onus to prove; Reason to believe; Reassessment proceedings
• Section: 143(3); 142(1); 80HHC; 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.94/DEL./2005 (ASSESSMENT YEAR : 1998-99) ACIT, CIRCLE 26 (1), VS. M/S. HIGH TECH ENGINEERS , NEW DELHI. A-1/21, JANAKPURI, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI JAYANT MISHRA, CIT DR ORDER PER R.P. TOLANI, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE CIT (APPEALS) FOR THE ASSESSMENT YEAR 1998-99. FOLLOWI NG GROUNDS ARE RAISED : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THE PROCEEDINGS INITIATED U/S 147/148 BAD IN LAW AN D THUS QUASHING THE ASSESSMENT ORDER DT. 29.03.2004 COMPUT ING THE TOTAL INCOME OF THE ASSESSEE AT RS.7,44,09,854/-WIT HOUT APPRECIATING (I) THAT NOTICE U/S 147/148 WAS ISSUED WITHIN THE PRESCRIBED TIME AND AFTER COMPLYING WITH THE REQUIRED PROCEDUR E FOR INITIATING SUCH PROCEEDINGS. (II) THAT APPROVAL OF THE ADDL. CIT TAKEN ON 11.01 .2002 AND ISSUE OF NOTICE U/S 147/148 ON 1.7.2002 SHALL NOT M AKE THE PROCEEDINGS ILLEGAL/BAD IN LAW. ITA NO.94/DEL./2005 2 (III) THAT AS PER SECTION 147, THE A.O. HAS THE JU RISDICTION TO TAX ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ES CAPED ASSESSMENT AND WHICH COMES TO THE NOTICE OF AO SUBS EQUENTLY IN THE COURSE OF THE PROCEEDINGS. (IV) THAT THE DISALLOWANCE/ADDITION MADE ON THE BA SIS OF INFORMATION RECEIVED AFTER THE ISSUE OF NOTICE U/S 147 SHOWING INCOME ESCAPING PROPER TAXABILITY SHALL NOT MAKE TH E PROCEEDINGS BAD IN LAW. (V) THAT THE ASSESSEE WAS ISSUED NOTICE U/S 142(1) , ORDER SHEET ENTRIES AND SHOW CAUSE NOTICE TANTAMOUNTING TO ISSU E OF NOTICES U/S 143(2). 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN HOLD ING AGAINST THE DISALLOWANCE OF DEDUCTION U/S 80HHC BY THE AO WITHOUT APPRECIATING. I) THAT THE ONUS TO PROVE THE GENUINENESS OF THE EX PORTS MADE & THE CLAIM OF ADMISSIBILITY OF DEDUCTION U/S 80HHC IS ON THE ASSESSEE. II) THAT THE ASSESSEE COULD NOT PROVE THE GENUINEN ESS OF EXPORTS AND THE ADMISSIBILITY OF CLAIM U/S 80HHC IN SPITE OF SEVERAL OPPORTUNITIES AFFORDED TO THE ASSESSEE. III) THAT THE REPORT RECEIVED FROM DRI IS AN INTER NAL CONFIDENTIAL CORRESPONDENCE AND IT IS NOT NECESSARY TO SHOW IT TO THE ASSESSEE IF THE SUBSTANCE AND THE MATERIAL OF T HE REPORT IS CONFRONTED TO THE ASSESSEE. 3. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN ADM ITTING FRESH EVIDENCE IN VIOLATION OF RULE 46A WHEN SUFFIC IENT OPPORTUNITY WAS AFFORDED TO THE ASSESSEE AT THE TIM E OF ASSESSMENT PROCEEDINGS. 2. THE ASSESSEE HAS NOT BEEN APPEARING ON VARIOUS H EARINGS AS THE NOTICES CAME BACK WITH THE REMARKS LEFT. THEREAF TER, DR WAS DIRECTED TO SERVE THE NOTICE OF HEARING. LEARNED DR PRODUCED R EPORT DATED 3.3.2010 ITA NO.94/DEL./2005 3 FROM DCIT, CIRCLE 26(1), NEW DELHI WITH THE PROOF O F SERVICE OF NOTICE OF HEARING BY AFFIXTURE ON THE PREMISES OF ASSESSEE, W HICH IS PLACED ON RECORD. THE APPEAL HAS BEEN FILED IN 2005, MANY ADJOURNMENT S HAVE BEEN GRANTED AND THE PROPER SERVICE BY AFFIXTURE ON THE LAST KNO WN ADDRESS OF THE ASSESSEE HAVING BEEN MADE, WE PROCEED TO DECIDE THE APPEAL E X-PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DR. 3. LEARNED DR CONTENDS THAT THE ASSESSEE HAD CHALLE NGED BOTH THE ISSUES OF VALIDITY OF REOPENING OF ASSESSMENT AND ON MERIT S. CIT (A) HAS ALLOWED BOTH THE GROUNDS IN FAVOUR OF THE ASSESSEE, I.E. HO LDING THE REASSESSMENT TO BE BAD IN LAW AND AS WELL AS GIVING RELIEF ON THE M ERITS WITHOUT PROPER JUSTIFICATION AND ADMITTING FRESH EVIDENCE IN VIOLA TION OF RULE 46A. DURING THE COURSE OF ORIGINAL ASSESSMENT, ASSESSEE HAD NOT PRODUCED BOOKS OF ACCOUNT AND VOUCHERS. A.O. ISSUED NOTICES U/S 133( 6) TO VARIOUS PARTIES TO VERIFY THE EXPORTS. THESE NOTICES WERE RETURNED UN SERVED AND NO REPLY BY THE ASSESSEE OR THESE PARTIES WERE FILED IN RESPECT OF EXPORT OF GARMENTS TO RUSSIA THROUGH PORT KOTLA/HELSINKI/HAMBURG. DEPART MENT RECEIVED INFORMATION FROM REVENUE INTELLIGENCE THAT THE ASSE SSEES BILLS WERE EITHER INFLATED OR MADE TO FICTITIOUS FIRMS, THEREFORE, TH E ADDITIONS WERE MADE. CIT (A) MERELY RELIED ON THE FOLLOWING ASSERTIONS OF TH E ASSESSEE : (I) THE RE-ASSESSMENT AMOUNTS TO REVIEW OF THE ORDE R; (II) THERE WAS NO REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT; (III) NO NOTICE U/S 143(2) WAS ISSUED; ITA NO.94/DEL./2005 4 (IV) RE-ASSESSMENT WAS FRAMED IN VIOLATION OF PRINC IPLES OF NATURAL JUSTICE; AND (V) IGNORED THE REMAND REPORT FILED BY THE A.O. 4. THE A.O. FURNISHED A DETAILED REMAND REPORT ON E ACH AND EVERY ISSUE RAISED BY THE ASSESSEE WHO HAD NOT FILED ANY RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148. IN CASE OF NON-FILING OF RETURN IN RESPONSE TO NOTICE U/S 148, THERE IS NO REQUIREMENT TO ISSUE NOTICE U/S 143(2). A.O. FURNISHED ALL THESE FACTS ABOUT THE NON-COOPERATION OF THE ASSESSEE AND FRAMED THE RE- ASSESSMENT IN THE ABSENCE OF EVIDENCE, WHICH CAN BE HELD TO BE A BEST JUDGMENT ASSESSMENT. MERELY MENTIONING OF SECTION 143(3) IN PLACE OF THE RIGHT SECTION, I.E. 144 WILL NOT MAKE THE ASSESSMEN T INVALID AND ITAT HAS POWERS TO APPLY CORRECT SECTION. A.O.S FOLLOWING PARAS ARE RELEVANT : SECTION 292B. RETURN OF INCOME, ETC., NOT TO BE IN VALID ON CERTAIN GROUNDS NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING FURNISHED OR MADE OR ISSUED OR TAK EN OR PURPORTED TO HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHAL L BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON O F ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOM E, ASSESSMENT, NOTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS OR OTHER PRO CEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCOR DING TO THE INTENT D PURPOSE OF THIS ACT. HENCE, OMISSION IN ISSUE OF NOTICE [U/S 143(2)] SHA LL NOT MAKE ASSESSMENT INVALID. 5. SEVERAL OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE AS PER NOTE SHEET ENTRIES AND THE ASSESSEE WAS GIVEN SO MANY OPPORTUNITIES AND SHOW CAUSE LETTER WAS ALSO I SSUED BY ITA NO.94/DEL./2005 5 THE AO TO THE ASSESSEE. A SEARCH OPERATION WAS COND UCTED BY DIRECTORATE OF REVENUE INTELLIGENCE ON 15.10.2003, 17.10.2003 AND 6.2.2004, AND THE ASSESSEE IS VERY WELL KNOWN T O ALL THE FACTS HAPPENED DURING THAT OPERATION. THE ASSESSEE HAS NOT PRODUCED BOOKS OF ACCOUNTS AND DID NOT REPLY TO QUE RIES RAISED BY ASSESSING OFFICER, BUT ONLY MENTIONING THAT BOOK S OF ACCOUNTS ETC. WERE SEIZED BY TILE DIRECTORATE OF RE VENUE INTELLIGENCE. THE ASSESSEE DID NOT COOPERATE IN THE ASSESSMENT PROCEEDINGS. THE AO ON THE BASIS OF REPORT RECEIVED FROM DIRECTORATE OF REVENUE INTELLIGENCE WING, COMPLETED THE ASSESSMENT PROCEEDINGS, BEING THE FACT THAT, IT WAS A TIME BARRING ASSESSMENT. SO, THERE IS NO NEW FACTS IN TH E DRI REPORT WHICH WERE TAKEN AGAINST THE ASSESSEE. 5. CIT (A) HAS ERRONEOUSLY HELD THE VALID REASSESSM ENT TO BE BAD IN LAW IGNORING THE FACT OF NON-FURNISHING OF RETURN AND D ELIBERATE NON-COOPERATION OF THE ASSESSEE. FURTHER, ON MERITS ALSO, THE RELI EF HAS BEEN GIVEN ONLY REFERRING TO DRI REPORT THAT ASSESSEES NAME DOES N OT FIGURE THEREIN. AN IMPORTANT FACT HAS BEEN TOTALLY IGNORED THAT ASSESS EE NEVER PRODUCED VALID DOCUMENTS ABOUT THE EXPORTS OF THE UNDERTAKING AND CORRESPONDING DOCUMENTS. ONCE ASSESSEE HAS NOT PRODUCED BEFORE T HE A.O. THE RELEVANT DOCUMENTS, THE SAME SHOULD NOT HAVE BEEN ADMITTED B Y CIT (A) WITHOUT THERE BEING APPLICATION OF ASSESSEE WITH REASONS AN D GIVING PROPER REASONS ABOUT THE ADMISSION THEREOF. MERELY ASSESSEES FIL ING OF ALLEGED DETAILS OF EXPORT BILL-WISE, GIVING INVOICE NUMBER, BILL OF LA DING AND BANK CERTIFICATE WILL NOT MAKE THE EXPORTS VALID SO AS TO ELIGIBLE U /S 80HHC. IN CASE OF BOGUS EXPORTS, A PROPER TRAIL IS CREATED. A.O. HAS GIVEN FINDING OF FACTS THAT DURING THE COURSE OF REASSESSMENT PROCEEDINGS, ASSE SSEE WAS REPEATEDLY ITA NO.94/DEL./2005 6 ASKED TO PRODUCE THE DETAILS, WHICH WERE NOT FURNIS HED. THEREFORE, THE ADMISSION OF THIS VITAL EVIDENCE ON THE PART OF CIT (A) WITHOUT GIVING PROPER REASONS IS UNJUSTIFIED. 6. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED DR AND PERUSED THE MATERIAL ON RECORD, FROM THE REASSESSMENT ORDER, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE DID NOT COOPERATE IN THE PROCEEDINGS A ND DID NOT PRODUCE CORROBORATIVE DOCUMENTS FOR SUBSTANTIATING ITS EXPO RTS. THEREFORE, THE ASSESSMENT FRAMED BY THE A.O. IN THE ABSENCE OF RET URN OF INCOME AND COMPLIANCE ASKED FOR HAS TO BE TERMED AS BEST JUDGM ENT ASSESSMENT. IN VIEW OF ALL THESE FACTS, THE RE-ASSESSMENT AS FRAME D IS TO BE HELD AS REASSESSMENT U/S 147 148 READ WITH SECTION 144 AS NEITHER ASSESSEE FILED RETURN IN RESPONSE TO NOTICE NOR COMPLIED WITH AO'S REQUEST. CIT (A) HAS SUMMARILY HELD THE REASSESSMENT TO BE BAD IN LAW BY FOLLOWING OBSERVATIONS IN THE CONCLUDING PARA : IN VIEW OF ALL THE FACTS AND REASONING GIVEN IN THE PREPARES, I HOLD THAT THE IMPUGNED REASSESSMENT ORD ER FRAMED BY THE A.O. IS BAD IN LAW AND IS WITHOUT ANY JURISD ICTIONAL AUTHORITY AS NO NOTICE U/S 143(2) WAS ISSUED TO THE ASSESSEE. SINCE THE ORDER IS PLAGUED WITH VARIOUS PROCEDURAL, LEGAL AND FACTUAL INFIRMITIES, THEREFORE, THE SAME IS QUASHED . 7. IN OUR VIEW, NOTICE U/S 143(2) IS THE MANDATORY WHEN ASSESSEE HAD FILED A RETURN OF INCOME IN PURSUANCE TO NOTICE U/S 148. IN THIS CASE, THE ASSESSEE CLAIMED PREMIUM ON HIS NON-FILING OF RETUR N AND NON-COOPERATIVE ITA NO.94/DEL./2005 7 ATTITUDE. THE REASSESSMENT HAS BEEN QUASHED BY CIT (A) BECAUSE NO NOTICE WAS ISSUED U/S 143(2) WHICH IS NOT REQUIRED BY LAW IN THE ASSESSEES CASE. SIMILARLY, CIT(A)S FINDINGS ABOUT REASSESSMENT AMO UNTING TO REVIEW AND OTHER FRINGE ISSUES ON WHICH SUMMARILY ACTION U/S 1 48 HAS BEEN QUASHED ARE NOT BASED ON PROPER CONSIDERATION. WITH DRI INFORM ATION IN POSSESSION, A.O. WOULD HAVE FAILED IN HIS DUTIES IF REASONS WER E NOT RECORDED AND NOTICE U/S 148 WAS NOT ISSUED. IN OUR VIEW, A.O. ACTED IN A DILIGENT MANNER AND WAS LEFT WITH NO OPTION BUT TO FRAME THE ASSESSMENT AS DONE DUE TO THE NON- COOPERATIVE ATTITUDE OF THE ASSESSEE EXCEPT WITH A TECHNICAL MISTAKE OF MENTIONING 143(3). IN OUR VIEW, CIT (A) CONSIDERED THE ISSUE IN A VERY CASUAL AND PERFUNCTORY MANNER, IT SHOULD HAVE BEEN CLEARLY OBSERVED THAT ASSESSEE WAS NON-COOPERATIVE AND RECALCITRANT AND D ID NOT FULFILL HIS LEGAL OBLIGATIONS OF FILING OF RETURN AND COMPLIANCES. B EING AN EXPORTER COMING UNDER VARIOUS REGULATORY REGIMES SHOULD HAVE PRODUC ED THE RELEVANT STATUTORY RECORD AND EVIDENCES. IN OUR VIEW, THE A DDITIONAL EVIDENCE SHOULD NOT HAVE BEEN ADMITTED AND THE APPEAL SHOULD HAVE B EEN DECIDED BY CIT(A) ACCORDINGLY. THERE IS NO FINDING ABOUT THE EXCEPTI ONAL CIRCUMSTANCES AVAILABLE TO ASSESSEE FOR NOT PRODUCING THE EVIDENC E BEFORE A.O. IN VIEW THEREOF, WE HAVE NO HESITATION TO HOLD THAT THE ADD ITIONAL EVIDENCE WAS ACCEPTED BY CIT (A) WITHOUT PROPER JUSTIFICATION. BESIDES THE ISSUE ABOVE VALIDITY OF REASSESSMENT HAS BEEN DECIDED BY CIT (A ) IN A PERFUNCTORY ITA NO.94/DEL./2005 8 MANNER WITHOUT CONSIDERING THE NUISANCES OF THE ASS ESSEES PECULIAR FACTS. 8. SINCE ASSESSEE NEITHER FILED RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 NOR ANY COOPERATION WAS RENDERED WITH A.O. THE ASSESSMENT FRAMED AMOUNTS TO BEST JUDGMENT ASSESSMENT, MERELY BECAUSE THE A.O. HAS MENTIONED IT TO BE U/S 143(3) WILL NOT ALTER THE BA SIC NATURE OF RE-ASSESSMENT AS BEST JUDGMENT ASSESSMENT. IN VIEW OF THE FOREGO ING, THE REASSESSMENT MADE BY A.O. IS VALID AND PROPER. 9. APROPOS MERITS, WE UPHOLD THE GROUND OF REVENUE THAT ADDITIONAL EVIDENCE WAS ADMITTED WITHOUT LAWFUL JUSTIFICATION, THEREFORE, THE RELIANCE OF CIT (A) ON THE SAME IS MIS-PLACED. THIS BEING SO, WHAT REMAINS ON RECORD ARE THE OBSERVATIONS AND FINDINGS OF A.O. WHICH ARE TO BE UPHELD IN GIVEN FACTS AND CIRCUMSTANCES. IN VIEW THEREOF, WE REVER SE THE ORDER OF CIT (A) AND RESTORE THAT OF A.O. ON MERITS 10. IN THE RESULT, WE UPHOLD THE REASSESSMENT AND T HE ADDITIONS MADE THEREIN AS MADE BY THE A.O. CIT (A)S ORDER IS REV ERSED AND THE REVENUES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF APRIL 2010. SD/- SD/- (A.K. GARODIA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 9 TH DAY OF APRIL, 2010 TS ITA NO.94/DEL./2005 9 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-XIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.