M/s. Manorath Hotels Pvt.Ltd., Ahmedabad V. The ACIT.,Cent.Circle-1(4), Ahmedabad

ITSSA 17/AHD/2011

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 7990 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 12-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 153A; 132; 144

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI D.K.TYAGI, JM AND A. MOHAN ALANKAMON Y, AM. MANORATH HOTELS (P) LTD., 2 ND FLOOR, NARAYAN CHAMBERS, NR. PATANG HOTEL, NEHRU BRIDGE CORNER, ASHRAM ROAD, AHMEDABAD. VS. ASSTT. CIT, CEN. CIRCLE-1(4), AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI PRITESH SHAH, AR RESPONDENT BY:- SHRI SAMIR TEKRIWAL, SR.DR DATE OF HEARING : 4/11/2011 DATE OF PRONOUNCEMENT : 18/11/11. O R D E R PER D. K. TYAGI, JUDICIAL MEMBER . THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) DATED 18..11.2010 RAISING FOLLOWING GROUND : - (1) THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF AO OF MAKING ADDITION OF RS.10,00,000/- AS ESTIMATED BUSI NESS INCOME, WHICH IS REQUESTED TO BE QUASHED. 2. THE FACTS OF THE CASE ARE THAT A SEARCH ACTION U NDER SECTION 132 OF THE IT ACT WAS CONDUCTED ON THE NEPTUNE GROUP OF CA SES ON 1/11/2006. IT(SS)A NO.17/AHD/2011 ASST. YEAR :2007-08 IT(SS)A NO.17/AHD/2011 ASST. YEAR 2007-08 2 THEREAFTER, PROCEEDINGS UNDER 153C WERE INITIATED. IN RESPONSE THERETO, THE ASSESSEE HAD REQUESTED THE AO TO TREAT THE E-RE TURN FILED UNDER SECTION 139(1) OF THE IT ACT AS HAVING BEEN FILED U NDER SECTION 153A OF THE IT ACT. CERTAIN DETAILS LIKE RETURN OF INCOME, STATEMENT OF INCOME, AUDIT REPORT, AUDITED BALANCE SHEET, P & L ACCOUNT ETC. WERE SUBMITTED BEFORE THE AO. THE AO PASSED THE ASSESSMENT ORDER O N 31/12/2008 COMPUTING/ESTIMATING TOTAL INCOME AT RS.10,00,000/- . 3. THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APP ELLATE AUTHORITY WHEREIN IT WAS SUBMITTED THAT DETAILS LIKE RETURN O F INCOME, STATEMENT OF INCOME, AUDIT REPORT, AUDITED BALANCE SHEET, P & L A/C ETC. WERE SUBMITTED BEFORE THE AO. THE NEW AO HAD TAKEN CHARGE IN FIRST WEEK OF DECEMBER, 2008. BEFORE THAT PREDECESSOR OF THE AO WAS HANDLIN G THE MATTER AND DETAILS WERE SUBMITTED. EVEN ASSESSEE HAD FURNISHED COPY OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET TOGETHER WITH RETURN OF INCOME. HOWEVER, WITHOUT CONSIDERING FACTS AND EVIDENCES OF THE CASE , THE AO HAD FINALIZED THE ASSESSMENT UNDER SECTION 144 OF THE ACT AND WIT HOUT ASSIGNING ANY DETAILS/EVIDENCES ESTIMATING INCOME OF RS.10 LAKHS, THOUGH THE MATERIALS WERE AVAILABLE ON RECORD. THE AO HAD NOT ISSUED EVE N SINGLE NOTICE OR ANY SHOW CAUSE NOTICE BEFORE FINALIZATION OF ASSESS MENT. IN FACT THE AO HAD NOT CONSIDERED THE FACTS AND WRONGLY ESTIMATED THE INCOME OF RS.10,00,000/- WITHOUT GIVING ANY NOTICE. ESTIMATI NG INCOME OF IT(SS)A NO.17/AHD/2011 ASST. YEAR 2007-08 3 RS.10,00,000/- ON THE BASIS OF MATERIAL AVAILABLE O N RECORD ALSO IS BASELESS AND ON SURMISE BASIS, DUE TO HEAVY LOSSES. THE AO HAD WRONGLY ESTIMATED THE INCOME OF RS.10,00,000/- WITHOUT ANY CORROBORATIVE EVIDENCE AND THERE WERE NO BUSINESS ACTIVITIES. THE ASSESSEE RELIED ON THE FOLLOWING CASE LAWS :- CIT VS. AGRO ENGINEERS (2004) 266 ITR 637 (RAJ) KUSH LEASING (P) LTD. VS. ITO (2008) 23(11) ITCL 14 0 (DEL-TRIB) (2008) 20 SOT 337 (DEL-TRIB) M/S SHYAMLATA KAUSHIK VS. ASSTT. CIT (2008) 306 ITR 117 (DEL-TRIB), (2008) 114 ITD 305 (DEL-TRIB); AND PRAYED THAT THE ADDITION MAY BE DELETED. THE LD. CIT(A) CONSIDERING THE CONTENTION OF AO AND SUBMISSIONS OF ASSESSEE CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER :- 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT. IT IS NOTICED THAT DURING THE COURSE OF ASSESSMENT, THE APPELLANT HAS NOT FURNISHED THE ANNUAL REPORT ALONG WITH BALANCE SHEET AND PROFIT A ND LOSS ACCOUNT. IN THE ABSENCE OF THESE REQUISITE DETAILS, IT IS NOT P OSSIBLE TO COMPUTE TO THE TAXABLE INCOME OF THE APPELLANT. AS THE APPELLANT H AS FAILED TO ATTEND AND FILE THE REQUISITE DETAILS IN THE ASSESSMENT PROCEE DINGS, THE AOS ACTION OF ESTIMATING INCOME OF THE APPELLANT OF RS.10 LAKHS I S CONSIDERED JUSTIFIED. THE AOS ACTION IS CONFIRMED. AGGRIEVED BY THIS ORDER OF THE LD. CIT(A), THE ASSE SSEE IS IN APPEAL BEFORE US. 4. BEFORE US THE LD. COUNSEL OF THE ASSESSEE PLACED COPIES OF ACKNOWLEDGEMENT OF E-RETURN OF INCOME, STATEMENT OF INCOME, AUDIT IT(SS)A NO.17/AHD/2011 ASST. YEAR 2007-08 4 REPORT, AUDITED BALANCE SHEET, P & L ACCOUNT AND SU BMITTED THAT THE ASSESSEE HAD FILED E-RETURN ON 26/02/2008. THE AO R EQUESTED THE ASSESSEE TO FILE RETURN OF INCOME U/S 153A(1)(A). T HE ASSESSEE VIDE LETTER FILED ON 08/10/2008 REQUESTED THE AO TO TREAT THE E -RETURN FILED U/S 139(1) AS HAVING BEEN FILED U/S 153(1)(A). THE AO WAS TRAN SFERRED AND THE NEW AO TOOK CHARGE IN FIRST WEEK OF DECEMBER, 2008. ON 23/12/2008 THE AO VIDE ORDER SHEET ENTRY DATED ASKED THE DIRECTOR OF THE COMPANY TO SUBMIT THE DETAILS OF INCOME CREDITED TO THE PROFIT AND LO SS ACCOUNT AND EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT. THE DIRECTOR IN FORMED THE AO THAT THE STATEMENT OF INCOME, AUDITED BALANCE SHEET & PROFIT AND LOSS ACCOUNT WITH SCHEDULES, DIRECTORS REPORT, AUDITORS REPORT ETC. HAD ALREADY BEEN SUBMITTED. THE NEW AO FAILED TO VERIFY SUCH ITR, A UDITED BALANCE SHEET, PROFIT AND LOSS ACCOUNT, AUDIT REPORT, DIRECTORS R EPORT ETC. AND PASSED THE ASSESSMENT ORDER MAKING AD HOC ADDITION AMOUNTING T O RS.10,00,000/-. WHILE PASSING THE ASSESSMENT ORDER THE AO FAILED TO APPRECIATE THE FACT THAT THE ASSESSEES BOOKS OF ACCOUNT HAD BEEN AUDIT ED AND ASSESSEE HAD FILED NIL INCOME RETURN. BEFORE LD. CIT(A) THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO BUT THE LD. CIT(A) F AILED TO APPRECIATE THE FACTS OF THE CASE AND CONFIRMED THE ADDITION MA DE BY AO WITHOUT CONSIDERING THE P & L ACCOUNT, BALANCE SHEET ETC. H E, THEREFORE, PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THE I MPUGNED ADDITION BE DELETED. IT(SS)A NO.17/AHD/2011 ASST. YEAR 2007-08 5 5. THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHORI TIES AND SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS TH E ASSESSEE HAD NOT FURNISHED THE ANNUAL REPORT ALONG WITH BALANCE SHEE T AND PROFIT AND LOSS ACCOUNT. IN ABSENCE OF THESE DETAILS IT WAS NOT POS SIBLE TO COMPUTE THE TAXABLE INCOME OF THE ASSESSEE. THEREFORE, THE AO E STIMATED INCOME OF ASSESSEE AT RS.10 LAKHS AND THE LD. CIT(A) HAS CONF IRMED THE SAME. THERE IS NOTHING WRONG IN THE ORDERS OF LOWER AUTHORITIES . HE PRAYED THAT THE ORDER OF LD. CIT(A) BE UPHELD. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOIN G THROUGH THE RECORD WE FIND THAT THE ASSESSEE HAD FILED ALL THE DETAILS LIKE ACKNOWLEDGEMENT OF E-RETURN OF INCOME, STATEMENT OF INCOME, DIRECTORS REPORT, AUDITORS REPORT, PROFIT & LOSS ACCOUNT, BA LANCE SHEET WITH SCHEDULES, COPIES OF WHICH HAVE BEEN PLACED ON RECO RD BEFORE US. THESE DETAILS HAVE BEEN IGNORED BY THE LOWER AUTHORITIES. WITHOUT TAKING INTO CONSIDERATION THE DETAILS FILED BEFORE HIM, THE AO HAD PASSED THE ASSESSMENT ORDER U/S 144 BY ESTIMATING AND MAKING A D HOC ADDITION OF RS.10,00,000/- AND THE LD. CIT(A) HAS ALSO CONFIRM ED THE IMPUGNED ADDITION WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE. WE FEEL THAT IN THE INTEREST OF JUSTICE, IT WILL BE JUST AND PRO PER IF THE MATTER IS RESTORED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION, AFTE R PROVIDING REASONABLE IT(SS)A NO.17/AHD/2011 ASST. YEAR 2007-08 6 OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ORDE R ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN OPEN COURT ON 18.11.11. SD/- SD/- (A. MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD, MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 4/11/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 8/11/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..