MESERS S.B. GLOBAL ,AMRITSAR vs. INCOME TAX OFFIER, WARD4(5), AMRITSAR

Briefly stated, the assessee firm which is engaged in the business of export of fresh vegetables to Pakistan had filed its return of income for AY 2014-15 on 21.11.2014, declaring its total income at Rs.11,56,090/-. Return of income filed by the assessee firm was processed as such u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s 143(2) of the Act.

During the course of assessment proceedings it was observed by the A.O. that the export sales of the assessee as shown in its profit and loss account did not match with the export sales figures as was gathered by him from the customs authorities. On a perusal of the record, it was noticed by the AO that while for the export sales reflected by the assessee in its profit and loss account amounted to Rs.22,85,08,874/-, those gathered from the customs authority amounted to Rs.24,14,54,073/-. On being confronted with the aforesaid mismatch the assessee reconciled the difference to the extent of Rs.34,63,139/- along with supportive evidence. As regards the balance variance of Rs.1,06,18,731/-, it was submitted by the assessee that the same pertained to the shipping bills which were cancelled. On the basis of necessary verifications carried out from the customs authority, it was observed by the AO that two export bills viz. (i) bill no. 171 dated 02.09.2013 (Rs.552980/-) and (ii) bill no. 781 dated 21.03.2014 for (Rs.3,66,596/-) were not confirmed as cancelled shipping bills. On the basis of the aforesaid details the AO added the aggregate of the aforesaid unconfirmed bills aggregating to amount of Rs.9,19,576/- as the unexplained sales of the assessee for the year under consideration. Apart from that, the AO inter-alia disallowed 1/5th of the Car depreciation and Car expenses and made an addition/disallowance of Rs.43,483/- to the returned income of the assessee. Also, an adhoc disallowance of Rs.20,000/- out of telephone expenses was made in the hands of the assessee.

Aggrieved, the assessee carried the matter before the CIT(A). However, the CIT(A) not finding favour with the contentions advanced by the assessee upheld the aforesaid additions/disallowances.

The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The Ld. Authorized Representative ( for short ‘AR’) for the assessee, at the very outset of the hearing of the appeal submitted that as the notices issued by the office of the CIT(A) were not received by the assessee, therefore, no appearance could be put forth by the assessee in the course of the proceedings before him. In fact, it was vehemently submitted by the Ld. AR that the aforesaid notices were issued by the CIT(A) on a wrong address viz. “M/s. S. B. Global, H. No. 44, Gali No. 11, Gopal Nagar, Majitha Road, Amritsar.” It was averred by the AR that the actual address of the assesse was “M/s. S. B. Global, H. No. 44, Gali No. II, Gopal Nagar, Majitha Road, Amritsar.” It was submitted by the Ld. AR that as the assessee had remained divested of a sufficient opportunity of being heard, therefore, the appeal was disposed off on the basis of an ex-parte order. Apart from that, it was submitted by the Ld. AR that in the course of the last hearing of the appeal the tribunal had vide an “interim order” dated 13.05.2018 called for a remand report from the AO. It was submitted by the Ld. AR that the AO had thereafter furnished a ‘remand report’ on 18.09.2019, wherein he had once again upheld the addition in respect of the impugned variance of export sales amouting to Rs.9,19,576/- (Rs.5,52,980+3,66,596). It was submitted by the Ld. AR that though the assessee had duly reconciled the mismatch/variance in the export sales as shown in its profit and loss account as against that gathered by the AO from the custom authority, however, addition to the said extent was once again made by the AO on th basis of a pre-determined approach in the course of the remand proceedings. It was submitted by the Ld. AR that as the assessee had remained divested of a sufficient opportunity of substanting its claim before the first appellate authoirty, therefore, the matteer in all fairness may be restored to his file for a denovo adjudication.

Per contra, the Ld. Departmental Representative (for short ‘D.R’) relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the assessee had failed to reconcile the mismatch/variance of the export sales both in the course of original assessment proceedings as well as in the remand proceedings, therefore, the addition of the variance of Rs.9,19,576/- was rightly made in its hands. On the basis of his aforesaid contention, it was averred by the Ld. DR that as the appeal of the assessee was devoid of any merit, therfore, the same did not merit acceptance and was liable to be dismissed.

We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. As is discernible from the orders of the lower auhorities, a difference of Rs.1,29,45,199/- between the export sales reported by the assessee in its profit and loss account as against those gathered by the AO from the custom authories did initially emerge. As the assessee could not reconcile on the basis of supportive evidence the variance in respect of two export bills viz. (i) bill no. 171 dated 02.09.2013 ( for Rs.552980/-) and (ii) bill no. 781 dated 21.03.2014 for Rs.3,66,596/-, therefore, the AO had added the aggregate of the aforesaid two bills amounting to Rs.9,19,576/- as the unexplained sales of the assessee for the year under consideration. As observed by us hereinabove, the tribunal in the course of earlier hearing of the appeal had vide its “interim order” dated 13.05.2018 called for a ‘remand report’ from the AO as regards the impugned variance of Rs.9,19,576/- in the export sales of the assessee. On a perusal of the records, we find that the AO had furnished the ‘remand report’ dated 18.09.2019. As per the ‘remand report’, it was claimed by the AO that as the assessee had failed to produce his account books/necessary documents for reconciliation of the export sales made against bill no. 1663 dated 01.09.2019 for Rs. 5,52,980/- and bill no. 9415 dated 21.03.2014 for Rs.3,66,596/-, therefore, for the said reason it could safely be concluded that the assessee had suppressed its export sales to the extent of Rs.9,19,576/-.

We have given a thoughtful consideration to the aforesaid issue before us. Admittedly, on a perusal of the order of the CIT(A), we find substantial force in the claim of the Ld. AR that as the notices were issued by the office of the first appellate authority at a wrong address, therefore, the assessee for no fault on its part had remained divested of a sufficient opportunity for substantiating its claim in the course of the proceedings before the CIT(A). Our aforesaid view is fortified from the fact that while for the address of the assessee as can be gathered from the assessment order is “……………………Gali No. II”, however, the same is mentioned in the order of the CIT(A) as ………….. “Gali No. 11”. Apart from that, it would be relevant to point out that the Ld. DR could not rebut the aforesaid claim of the assessee. As such, we are of the considered view that there is substantial force in the claim of the Ld. AR that no notice intimating the fixation of the appeal for certain dates viz. 26.09.2017, 15.11.2017 and P a g e | 5 ITA No. 196/Asr./2018 A.Y. 2014-15 22.01.2017 was ever served upon the assessee. Although the AO in compliance to the direction of the tribunal vide its “interim order”, dated 13.05.2018, had furnished a ‘remand report’ dated 18.09.2019, however, we find that the assessee in the course of the remand proceedings also had not been able to lead any tangible material which would dislodge the adverse inferences that were drawn by the lower authority as regards the unrecorded/suppressed sales of the assessee. At the same time, we also cannot remain oblivious of the fact that the CIT(A) without validly putting the assessee to notice had disposed off the appeals on the basis of an ex-parte order. In our considered view, in the totality of the facts of the case the matter in all fairness requires to be restored to the file of the CIT(A) for denovo adjudication in context of the aforesaid issue under consideration. Needless to say, the assessee shall remain at a liberty to adduce additional material in order to substantiate its claim that there was no suppression of export sales in its profit and loss account for the year under consideration. Also, the issues pertaining to viz. (i) disallowance of Car depreciation and expenses; and (ii) disallowance of telephone expenses, as had been assailed by the assessee before us are also restored to the file of the CIT(A), on the same terms for fresh adjudication.

Before parting, we may herein deal with the issue that though the hearing of the captioned appeal was concluded on 04/02/2020, however, this order is being pronounced much after the expiry of 90 days from the date of conclusion of hearing. We find that Rule 34(5) of the Income-tax Appellate Tribunal Rules, 1962, which envisages the procedure for pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners:— (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. As such, “ordinarily” the order on an appeal should be pronounced by the bench within no more than 90 days from the date of P a g e | 6 ITA No. 196/Asr./2018 A.Y. 2014-15 concluding the hearing. It is, however, important to note that the expression “ordinarily” has been used in the said rule itself. This rule was inserted as a result of directions of Hon’ble High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein it was inter alia, observed as under:

""यथ" ""यथ" / The Respondent. ""यथ" ""यथ" 3. आयकर आयकर आयु" आयकर आयकर आयु" आयु"(अपील आयु" अपील अपील) / The CIT(A)- अपील 4. आयकर आयकर आयु" आयकर आयकर आयु" आयु" / CIT आयु"

DR, ITAT, Amritsar Bench, Amritsar 6. गाड" गाड" फाईल गाड" गाड" फाईल फाईल / Guard file. फाईल स"या"पत स"या"पत स"या"पत "ित स"या"पत "ित "ित //// "ित