SHRI PURUSHOTTAM DAYAL JAIN,KOTA vs. INCOME TAX OFFICER, WARD-2-3, KOTA

PER VIJAY PAL RAO, JM :

This appeal by the assessee is directed against the order dated 15th January,

2018 of ld. CIT (A), Kota for the assessment year 2009-10. The assessee has

raised the following grounds :-

“ 1. In the facts and circumstances of the case the learned CIT (A) has erred in passing order against the principles of natural justice and equity in not providing adequate opportunity to the assessee.

2 ITA No. 630/JP/2018 Shri PurushottamDayal Jain, Kota.

(i) On account of hammali expenses of Rs. 1,83,202/- (ii) On account of indirect expenses of Rs. 49,701/- (iii) On account of household expenses of Rs. 40,020/- (iv) On account of agriculture creditors of Rs. 1,62,27,577/- (v) On account of claim of sales of Rs. 59,81,896/- (vi) On account of unsecured loan of Rs. 33,22,928/- (vii) On account of difference in sundry creditors of Rs. 555/-

the business of dealer in agriculture commodities. The assessee filed his return of

income on 26.09.2009 declaring income of Rs. 4,99,520/-. The AO completed the assessment on 19th December, 2011 under section 144 of the IT Act at the total

income of Rs. 2,63,05,399/-. Thus the AO made various disallowances and additions

on account of freight and hammali expenses, indirect expenses, household

expenses, agriculture creditors, claim on sales and unsecured loans. The assessee

filed appeal before ld. CIT (A) against the assessment order passed under section

144 of the IT Act. However, none has appeared on behalf of the assessee even

before the ld. CIT (A) due to the reason that the assessee was in police custody. The

assessee filed application for raising additional ground as well as additional evidence

to be admitted. The ld. CIT (A) while passing the impugned order has upheld the

disallowances/additions made by the AO on the ground that the assessee was

responsible for presenting documents in support of the claim. However, when the

assessee did not file any evidence before the AO then the AO could not be faulted

for making the additions/disallowances.

3 ITA No. 630/JP/2018 Shri PurushottamDayal Jain, Kota.

was in Jail for about 21 months, during the course of assessment assessee could not

submit any document/information or evidence in support of the various claims made

by the assessee. Further, since all the books of accounts were seized by the State

authorities which were lying in the police custody, therefore, the assessee could not

furnish any document/evidence before the ld. CIT (A). The ld. A/R has referred the

order of impounding the books and other records of the assessee and submitted that

the relevant documents could not be filed as the same were impounded by the State

authorities and lying in the police custody. The ld. A/R has further submitted that

now the assessee has collected all the relevant evidences from the police through

court and, therefore, these evidences are required to be considered in support of the

claims which were disallowed by the AO. Thus the ld. A/R has submitted that the

application filed under section 29 of the ITAT Rules for admitting evidence may be

allowed. The ld. A/R has further submitted that the assessment order passed under

section 144 of the Act is also bad in law as there was no service of notice under

section 143(2) of the Act. He has also prayed that the application filed by the

assessee for admitting additional ground may be allowed. In support of his

contention he has relied upon the decision of the Coordinate Bench of the Tribunal dated 31st May, 2018 in case of Mahendra Kumar Sethia vs. ITO in ITA No.

186/JP/2017. Hence the ld. A/R has submitted that the additional ground raised by

the assessee goes to the root of the matter and is purely legal in nature. Therefore,

the same may be admitted for adjudication.

3.2. On the other hand, the ld. D/R has vehemently objected to the application for

admission of additional evidence as well as raising the additional ground at this

4 ITA No. 630/JP/2018 Shri PurushottamDayal Jain, Kota.

stage and submitted that the AO as well as the ld. CIT (A) granted sufficient

opportunity to the assessee but the assessee did not file any evidence in support of

the claim. Further, when the assessee never objected to the notice under section

143(2) either before the AO or before the ld. CIT (A) then raising such a ground at

this stage without explaining the sufficient reason for not raising the same before

the authorities below is not permitted. He has relied upon the orders of the

authorities below.

record, we note that the assessee did not appear before the AO in the assessment

proceedings due to the reason that the assessee was in the police custody for about

two years. This fact is not in dispute and the ld. CIT (A) has also recorded this fact.

Thus the AO passed the assessment order ex parte under section 144 and made

various disallowances and additions which are about Rs. 2.58 crores. Though the

assessee challenged the assessment order passed by the AO under section 144 by

filing appeal before the ld. CIT (A), however, the assessee did not file any evidence

in support of the claim even before the ld. CIT (A). The assessee submitted before

the ld. CIT (A) that since the assessee was in police custody and all the books of

accounts and other records were impounded by the Government authorities and

lying in the police custody, therefore, the assessee was not able to produce the

relevant evidence. Now the assessee has filed an application for admitting additional

evidence as well as an application for admitting additional ground which reads as

under :-

“ The assessment order framed under section 143(3) is bad in

law there being no service of notice under 143(2).”

5 ITA No. 630/JP/2018 Shri PurushottamDayal Jain, Kota.

We find that the revenue has not disputed that the assessee was in police custody for about 21 months from 22nd October, 2011 onwards and finally released on bail on 20th July, 2013. Thus, during the assessment proceedings, the assessee was in

the police custody and, therefore, the assessee could not appear before the AO. The

assessee has explained the non production of supporting evidence that the entire

books of accounts and other records were in the police custody as impounded by the

Government authorities. Thus we find that the assessee was having sufficient

cause for not appearing before the AO as well as not producing the evidence in

support of the claim. The AO has made various disallowances/additions for want of

the supporting evidence. Accordingly we find that the assessee has made out the

case of sufficient cause for not producing the supporting evidence. Hence we find

merit in the application filed under Rule 29 of the ITAT Rules for admitting the

additional evidence and accordingly the matter is set aside to the record of the AO

for examination of the evidence/documents to be filed by the assessee in support of

various claims.

passed by the AO for want of service of notice under section 143(2). Though this

ground raised by the assessee involves only a legal issue, however, since the

relevant record is not before us as the assessee never questioned the service of

notice under section 143(2) either before the AO or before the ld. CIT (A), therefore,

in the absence of the relevant record, this issue cannot be adjudicated conclusively.

Accordingly in the facts and circumstances of the case, since we have already set

aside the matter to the record of the AO, therefore, this issue is also set aside to the

6 ITA No. 630/JP/2018 Shri PurushottamDayal Jain, Kota.

record of the AO for consideration and adjudication of the same after giving an

opportunity of hearing to the assessee.

Order is pronounced in the open court on 05/09/2018.

Sd/- Sd/- (foØe flag ;kno) (fot; iky jkWo ½ (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Jaipur Dated:- 05/09/2018. Das/

आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

7 ITA No. 630/JP/2018 Shri PurushottamDayal Jain, Kota.