IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH ‘B’, CHANDIGARH
BEFORE Ms. SUSHMA CHOWLA, JUDICIAL MEMBER
AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER
ITA No.449 /Chd/2011
(Assessment Year : 200 7-08)
The A.C.I.T.,
Circle,
Patiala,
Vs.
M/s Peshawar Soap & Chemical Works,
C/o K.P.Bajaj, Advocate,
Rajbha Road, Patiala.
PAN: AAEFP2048P
(Appellant)
(Respondent)
Appellant by
:
Smt.Jaishree Sharma, DR
Respondent by
:
Shri K.P.Bajaj
Date of hearing :
Date of Pronouncement :
19.10.2011
31.10.2011
O R D E R
PER SUSHMA CHOWLA, J.M, :
The appeal filed by the Revenue is against the order of the
Commissioner of Income-tax(Appeals), Patiala dated 30.03.2011 relating
t o a s s e s s m e n t ye a r 2 0 0 7 - 0 8 a g a i n s t t h e o r d e r p a s s e d u / s 1 4 3 ( 3 ) t h e
Income Tax Act, 1961.
2.
The Revenue has raised the following grounds of appeal
“1.
In the facts and circumstances of the case , Ld. CIT
(A) has erred in holding that the AO was not
justified in making ‘best judgment assessment’ in
the case, without appre ciating the fact that the
assessee
had
failed
to
produce
the
requisite
books/documents despite having been provided with
numerous opportunities and the A O was left with no
alternative
but
to
proceed
with
material/information available on record.
the
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2.
In the facts and circumstances of the case, Ld. CIT
(A)
has
erred
in
deleting
the
addition
of
Rs.12,57,010/-, made by the AO by applying GP @
10% of the total sales, without appreciating the fact
that a similar case i.e. Calcutta Soap Factory,
Patiala had declared gross profit at 17% of the total
sales.
3.
In the facts and circumstances of the case, Ld. CIT
(A)
has
erred
in
deleting
the
addition
of
Rs.1,98,000/- made by the AO u/s 68 on a/c of
unexplained credits, without appreciating the fact
that the assessee had failed to lead any evidence to
prove genuineness of the creditors-in-question i.e.
Jahangir Singh & Dheeraj Malhaotra and the AO
has even doubted their existence as dubious.
4.
In the facts and circumstances of the case, Ld. CIT
(A)
has
erred
Rs.8,80,682/-,
in
made
deleting
by
the
the
addition
AO
on
a/c
of
of
disallowance of expenses, without appreciating the
fact that the assessee had failed to prove either
genuineness of business expediency of the expensesin-question.
5.
In the facts and circumstances of the case, Ld. CIT
(A) has erred in deleting the addition of Rs.48,418/ assessee correctly by the AO as ‘income from other
sources’, without appreciating the fact that though
the assessee had claimed the same as ‘agricultural
income’ but had failed to provide any supporting
evidence.”
3.
The brief facts of the case are that during the course of assessment
proceedings the assessee had failed to appear before the Assessing
Officer on various dates of hearing.
The assessee did not furnish any
information, nor the books of account were produced.
The Assessing
Officer
best
thus
completed
the
assessment
ex-parte
as
judgment
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assessment on the basis of the material/information available on record.
The Assessing Officer made under -mentioned additions :
a)
Addition on account of gross profit
Rs.12,57,010/-
b)
Addition on account of sundry creditors
u/s 68 of the Income Tax Act
Rs.1,98,000/-
Addition on account of expenses
Rs.8,80,682/-
c)
4.
Before the CIT (Appeals) the assessee furnishe d written arguments
which were confronted to the Assessing Officer b y the CIT (Appeals).
The Assessing Officer sent his comments vide letter dated 14.2.2011 and
the assessee filed counter reply on 22.3.2011.
The plea of the assessee
before the CIT (Appea ls) was that there was a dispute amongst the
partners for which civil litigation was going on and the factory premises
were locked.
The assessee further pointed out that written request was
made to the Assessing Officer alongwith the consent of both the p arties
to the dispute to break open the locks and take the books of account
which were not accepted by the Assessing Officer.
The assessee
pleaded that it was prevented by sufficient cause fr om not producing the
books of account before the Assessing Offi cer.
The CIT (Appeals)
thereafter vide para 4.5 observed as under :
“4.5 I have considered the facts of the case and rival
submissions of both the A.O. and the counsel it is
seen that the appellant had a sufficient cause for not
producing the books of accounts and the A.O. was
required to take all the necessary steps to get these
produced before him. IN the circumstances cited by
the appellant the A.O. should have given sufficient
opportunity
produced
for
before
assessment.”
getting
the
making
books
the
of
b est
accounts
judgment
4
5.
The CIT (Appeals) thereafter addressed the issue on merits of
addition and deleted the addition made by the Assessing Officer on all
accounts on the basis of the submissions made by the assessee, by
observing that the Assessing Officer had not carried out necessary
verification before making the addition.
6.
The Revenue is in appeal against the order of the CIT (Appeals).
The learned D.R. for the Revenue stressed that even during the appellate
proceedings and also the remand pr oceedings the assessee failed to
produce the books of account.
The assessee was confronted with the
above said plea of the learned D.R. for the Revenue and was asked to
verify the factual aspects of production of books of account and the
matter was adjourned from 17.10.2011 to 19.10.2011.
7.
On the appointed date of hearing the learned A.R. for the assessee
fairly conceded that the books of account were not produced either
before the CIT (Appeals) or before the Assessing Officer in the remand
proceedings.
It is an admitted fact that the books of account were not
produced during the assessment proceedings.
The learned A.R. for the
assessee further submitted that the books of account are available with
the assessee as pursuant to the decision of the Hon'b le High Court, there
was compromise between the parties.
8.
We have heard the rival contentions and perused the record. In the
facts of the present case before us the assessment was completed ex parte by the Assessing Officer and best judgment assessment was made
as the assessee had failed to produce the books of account and the
relevant details/information before the Assessing Officer during the
course of assessment proceedings.
The plea of the assessee before the
Assessing Officer was that because of th e dispute between the partners
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the books of account were locked up in the premises.
Before the CIT
(Appeals) the plea of the assessee was that the books of account were
now available because of a compromise between the partners of the
assessee firm, pursu ant to the decision of the Hon'ble High Court and
sufficient
information
A d m i t t e d l y,
no
books
was
of
furnished
account
before
were
the
produced
CIT
(Appeals).
before
the
CIT
(Appeals), nor the same were produced before the Assessing Officer
during the assessment/remand proceedings.
The CIT (Appeals) has
d e l e t e d t h e a d d i t i o n w i t h o u t v e r i f yi n g t h e c l a i m o f t h e a s s e s s e e v i s - à - v i s
books of account, nor the Assessing Officer was directed to verify the
books of account of the assessee in connection with various additions
made in the present case.
9.
Under the provisions of Rule 46A of the I.T. Rules, the assessee is
entitled
to
produce
all
such
additional
evidences,
which
was
not
produced by him during the course of assessment proceedings in the
circumstances enshrined in Sub Clause (a) to (d) under Rule 46A (1) of
the I.T. Rules.
The additional evidence can be furnished before the
CIT(A) where (a) the Assessing Officer had refused to admit the
evidence, or (b) where the assessee was prevented by a sufficient c ase
from producing the evidence which he was called upon to produce by the
Assessing Officer; or c) where the assessee was prevented by sufficient
cause from producing any evidence before the Assessing Officer, which
was relevant to any ground of appeal; or d) where the Assessing Officer
has made the order without giving a sufficient opportunity to the
assessee to adduce evidence representing to any ground
of appeal.
Under Rule 46A(2) of the I.T. Rules, it is provided that no evidence
shall be admitted u nder sub rule (1) unless the CIT(A) records in writing
the reasons for its admission and under sub rule (3), the CIT(A) shall not
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take into record any evidence adduced under sub Rule (1) unless the
Assessing Officer has been allowed a reasonable opportunit y to examine
the said evidence or document or cross examine the witness produced by
the assessee or produce any
evidence/document/witness in rebuttal of
the additional evidence produced by the assessee. Under sub rule (4), it
is provided that the CIT(A) is not empowered to direct the assessee for
production of any document or of any witness to enable him to dispose
of the appeal.
10.
In the entirety of the facts and circumstances of the case and the
submissions of the assessee that the books of account w ere available
with the assessee, we deem it fit to restore the issue back to the file of
the CIT (Appeals) with a direction to obtain the remand report from the
A s s e s s i n g O f f i c e r a f t e r v e r i f yi n g t h e c l a i m o f t h e a s s e s s e e f r o m t h e
books of account.
The ass essee is directed to produce the books of
account before the authorities below and the issues are to be adjudicated
a f t e r v e r i f yi n g t h e c l a i m o f t h e a s s e s s e e f r o m t h e r e l e v a n t r e c o r d
including the books of account. Reasonable opportunity of hearing shall
be afforded to the assessee.
Thus grounds of appeal raised by the
Revenue are allowed for statistical purposes.
11.
In t h e r e s u l t , t h e a p p e a l f i l e d b y t h e R e v e n u e i s a l l o w e d f o r
s t a t i s t i c a l pu r p o s e s .
Order Pronounced in the Open Court on
31st
day of October,
2011.
Sd/(MEHAR SINGH)
ACCOUNTANT MEMBER
Sd/(SUSHMA CHOWLA)
JUDICIAL MEMBER
Dated : 31st October, 2011
*Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
True Copy
By Order
Assistant Registrar, ITAT, Chandigarh
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