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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI KULDIP SINGH
Per : Kuldip Singh, Judicial Member:
The appellant, Shri Ashok Popatbhai Chaudhari (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 15.11.2021 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2011-12 on the grounds inter-alia that :- “1. The appellate order passed by Id. CIT(A) is bad in law and without following the statutory provisions and procedure laid down in the act and hence the same is liable to be quashed as null and void.
2. Ld. CIT(A) erred in law as well as on facts in passing the appellate order in utter haste and in casual manner without giving reasonable opportunity to the appellant, particularly when the appellate proceedings has been concluded after issue of the first and maiden notice of hearing without giving any further opportunity of hearing.
3. Ld. CIT(A) erred in law as well as on facts in contending that the appellant had made submission before him, which is factually incorrect as the appellant had yet to make the submission. Ld. CIT(A) reproduced "Statement of Facts" as submission of the appellant in the appellate order. The appellate order has been passed without allowing appellant to make out his submission.
4. Ld. CIT(A) erred in law as well as on facts in upholding order of Id. AO without appreciating the facts of the case, particularly when the rectification proceedings was based on the change or opinion and/ or review of the assessment order passed u/s. 143(3) of the act.
5. Ld. CIT(A) erred in law as well as on facts in upholding the enhancement of profit element of Rs.15,62,380/- i.e. from Rs.2,23,197/- (as assed in the original assessment order @12.50%) to Rs.17,85,577/- (representing gross alleged hawala purchase) by adopting rate of profit at 100% from 12.50% by invoking provision of section 154 of the act.
6. Ld. CIT(A) erred in law as well as on facts in contending that the appellant had not furnished details during the course of the assessment proceedings, even though the same has not been disputed by Id. AO himself in the rectification proceedings. Alternatively and without prejudice Id. CIT(A) ought to have remanded the matter to the file of Id. AO, as the evidences are very critical in nature and disposing the appeal without considering the same caused great injustice to the appellant.
7. Ld. CIT(A) erred in law as well as on facts in arbitrarily ignoring the ratio and decision taken in the case of the appellant in the A.Y. 2009-10 and 2010-11 (which have been upheld by Hon'ble ITAT even) as well as in other cases by jurisdictional ITAT as well as High Court.”
Briefly stated facts necessary for adjudication of the issues at hand are: assessee is into the business of trading of stationery items, filed return of income declaring total income of Rs.5,67,840/-. On the basis of information received from Sales Tax Department that “the assessee had made purchases of Rs.17,85,577/- from five parties who are allegedly hawala dealers” assessment was reopened by initiating the proceedings under section 147/148 of the Income Tax Act, 1961 (for short ‘the Act’). Initially the AO, after declining the contentions raised by the assessee, made addition of Rs.2,23,197/- @ 12.50% of the alleged bogus purchases by passing order under section 147 of the Act. However, subsequently by invoking the provisions contained under section 154 of the Act the Assessing Officer (AO) made addition @ 100% of the bogus purchases i.e. Rs.17,85,577/-, which is well in consonance with the para 4 of the assessment order wherein the AO has intended to make the addition @100% of the alleged bogus purchases but in the computation of income in para 5 mistake has been crept in, which was rectified vide order dated 06.06.2017.
Assessee carried the matter before the Ld. CIT(A) by way of filing appeal challenging the assessment order dated 13.02.2016 who has confirmed the addition by dismissing the appeal. Feeling aggrieved, assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
The Ld. A.R. for the assessee contended that the Ld. CIT(A) has passed the impugned order hastily without providing opportunity of being heard to the assessee to file the written submissions.
6. However, on the other hand, the Ld. D.R. for the Revenue contended that the Ld. CIT(A) has passed the order on the basis of facts and law applicable thereto.
7. Bare perusal of the impugned order passed by the Ld. CIT(A) goes to prove that the contentions raised by the assessee that the impugned order has been passed by the Ld. CIT(A) without providing adequate opportunity of being heard is sustainable from para 4.1 of the impugned order. In para 4.1 of the impugned order the Ld. CIT(A) recorded the fact that “during the appellate proceedings the appellant has submitted as under”: "1. The appellant is engaged in the business of trading of stationer items. 2.The appellant had filed his return of income u/s 139(1) of the Income-Tax Act, 1961 on 29.09.2011 declaring total income of Rs.5,67,840/-. 3. The assessment has been re-opened by issue of notice u/s 148 of the Act on the basis of the information from public domain of Sales Tax Department that the appellant had made purchase of Rs. 17,85,577/- from five parties who have been alleged as "Hawala Dealers" by Sales Tax Department. 4. The appellant filed the return of income in response to notice u/s 148 of the act reiterating the total income declared in the original return of income. 5. In the course of assessment proceedings Id. AO called for various details. The appellant has furnished the same detailed as under:
Letter dated Submission 07/01/2016 Details of nature of business, audit report, address have been furnished. 12/02/2016 Details of purchase made from alleged hawala dealers (supra) including name of supplier, bills, date, item purchase, quantity, corresponding sales invoice, item description as per sales invoice, copy of purchase invoice containing TIN registration, address, vat classification, rate, delivery challans, ledgers and relevant bank statements, one to one relation about purchase and sale etc.
12/02&016 Submission giving details gross profit analysis and past assessment history
After detailed hearing and considering the submissions made by the appellant and also the past assessment history for the AY 2009- 10 Id. AO made addition of Rs.2,23,197/- representing 12.50% of the alleged bogus purchase.
Later on, penalty proceedings u/s 271(1)(c) of the act was initiated, which was dropped after consideration of the submissions of the appellant. 8. Ld AO issued notice u/s 154 of the act on 06/04/2017 on the ground that in Para No. 4 Ld. AO mentioned rate of profit@ 100% in place of 12.50%, whereas in para no. 5 providing computation of the assessed income the profit rate was adopted at 12.50%. 9. The appellant vide letter dated 15.04.2017 made a detailed submission in response to notice u/s 154 of the act and contended that there is no mistake in adopting 12.50% but the typographical mistake in para no. 4 of the assessment order. The intention of Id. AO appears from the computation and the same was in the line of the previous assessment order as well, which is identical in all respect. Further, penalty proceedings was also dropped which shows that Id. AO has categorically applied his mind and concluded the profit rate @ 12.50%. 10. No communication then after from Id. AO. However, suddenly demand has been uploaded on web portal and hence the appellant frequently requested for the details of the demand uploaded. id. AO ultimately after numerous reminder supplied the copy of the rectification order only on 27/05/2019. 11 In the said rectification order Ld. AO simply contended that since in Para 4 the rate of profit is mentioned 100% , the same ought to have been adopted. Being aggrieved of the above order the appellant is in appeal.”
Perusal of the aforesaid quoted portion of the impugned order passed by the Ld. CIT(A) goes to prove that no opportunity of filing written submissions or raising contentions has been given to the assessee rather “statement of facts” annexed by the assessee along with appeal has been taken as his submissions. Even conclusion drawn by the Ld. CIT(A) in para 4.3 and 4.4 also goes to prove that the order has been passed in mechanical manner by extracting the findings returned by the AO without applying his mind.
Assessee brought on record the fact that in the identical facts and circumstances of the case while framing assessment for A.Y. 2009-10 addition @ 12.50% of bogus purchases were made which order has been upheld by the Ld. CIT(A). Copy of assessment order and copy of order passed by the Ld. CIT(A) is available at page 110 to 122 of the paper book.
To decide the issue once for all and to curtail the multiplicity of the proceedings adequate opportunity of being heard is required to be given to the assessee and Revenue is also required to follow the rule of consistency as laid down by the Hon’ble Supreme Court in case of Radhaswami Satsang Vs CIT (1992), 193 ITR 321 (S.C.). So the present appeal is hereby remanded back to the Ld. CIT(A) to decide afresh after providing opportunity of being heard in view of the law laid down by Hon’ble Bombay High Court in case of Md. Haji Adum. Consequently, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 31.10.2022.