ITO, CUTTACK vs. ASHOK KUMAR BAJORIA, CUTTACK

आयकर अपील�य अ�धकरण, कटक �यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM आयकर अपील सं./ITA No.249/CTK/2015 (�नधा�रण वष� / Assessment Year :2008-2009) ITO, Ward-2(3), Cuttack Vs. Sri Ashok Kumar Bajoria, Town Hall Road, Cuttack �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAVPB 6401 F (अपीलाथ� /Appellant) (��यथ� / Respondent) .. Cross Objection No.42/CTK/2015 (�नधा�रण वष� / Assessment Year :2008-2009) Sri Ashok Kumar Bajoria, Vs. ITO, Ward-2(3), Cuttack Town Hall Road, Cuttack �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAVPB 6401 F (अपीलाथ� /Appellant) (��यथ� / Respondent) .. राज�व क� ओर से /Revenue by : Shri D.K.Pradhan,CITDR �नधा�रती क� ओर से /Assessee by : Shri D.K.Sheth, AR सुनवाई क� तार�ख / Date of Hearing : 29/08/2017 घोषणा क� तार�ख/Date of Pronouncement 31/08/2017 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: The revenue has filed an appeal and the assessee has filed cross objection against the order of CIT(A), Cuttack, dated 27.2.2015, passed in I.T.Appeal No.106/2013-14, u/s.147/143(3) of the Income Tax Act, 1961 for the assessment year 2008-2009, wherein the revenue has raised the following grounds :- 1. Whether in the facts and circumstances of the case the Ld.First Appellate Authority is justified in deleting discrepancy in gross receipts to the tune of Rs.35,66,610 on the ground that contractual receipts of Rs.4,86,24,907 from the IOCL includes service tax of Rs.53,06,694 and not Rs.21,24,128 as shown by the AO - When the AO specifically in the body of the order had mentioned the extracted information obtained from IOCL and established that service tax was Rs.21,24,128 which was not

2 ITA No.249/CTK/2015 & CO No.42/CTK/2015 denied by the assessee during the assessment proceedings. In fact, this service tax details of Rs.53,06,694 accepted by the Id.CIT(A) apparently is to be treated as the additional evidence which was not before the AO while completing the assessment. Ld.CIT(A) is not justified in deciding the issue in favour of the assessee without affording an opportunity to the A.O. to examine the issue in question - in contravention of provisions of Rule 46A of the I.T.Rule 1962. 2. 02. The Id.CIT(A) has erred in giving direction to delete the addition made for short disclosure of contract receipts of Rs.35,66,610 because, even though the details of service tax of Rs.53,06,694 accepted, the gross receipts per 26AS statement excluding the service tax would come to Rs.4,33,18,213 ( Rs.4,86,24,907 - Rs.53,06,694) and not for Rs.4,29,34,169 as disclosed by the assessee in his P&L account. Still there is short disclosure of contract receipts of Rs.3,84,044 ( Rs.4,33,18,213 - Rs.4,29,34,169) which is required to be added to the total income as disclosed by the assessee.

laying of pipeline, cable & conduits, trading in granules & iron steel and

filed the return of income for the assessment year 2008-2009 on

29.09.2008 with total income of Rs.6,60,816/-. The AO on verification of

return found that the assessee has two proprietary concerns namely

Harrison Industries and Anant International and also verified the 3CD tax

audit report filed in respect of each business and the AO found the audit

report in Form No.3CD is not complete and there are discrepancies in

valuation of closing stock. Therefore, the AO issued notice u/s.148 of the

Act and the letter was filed by the assessee along with submissions to

treat the return of income filed on 29.9.2008 as in response to the notice

u/s.148 of the Act and the assessee made a request to communicate the

reasons for reopening the assessment. Subsequently, notice u/s.143(2)

and 142(1) of the Act were issued to the assessee. In compliance, the ld.

AR of the assessee appeared and the AO obtained confirmation of the

3 ITA No.249/CTK/2015 & CO No.42/CTK/2015 transactions by the assessee with Indian Oil Corporation from Chennai

and as per the clarifications, the assessee was called to furnish the quantitative details and it was submitted by the assessee on 21.3.2013.

enclosed in annexures and the closing stock was valued at 78.00 per kg. and valuation of work in progress as on 31.3.2008 was Rs.1,25,35,000/-

reflected in the balance sheet. The AO found discrepancy in the average

value of opening stock vis-à-vis closing stock and work in progress. The

ld. AO observed that the assessee has not maintained the stock register.

Further on verification of the TDS certificate issued by the Indian Oil

Corporation and the amount credited to assessee profit and loss account

referred at page 4 to 7 of the order and there are discrepancies with respect to service tax and contract receipts. The assessee failed to

produce evidence and could not substantiate the profit and loss account

and accordingly the AO has made addition of Rs.35,66,610/- along with

other additions and assessee total income at Rs.83,96,990/- and passed

order u/s.147 r.w..s143(3) of the Act dated 30.3.2013.

the CIT(A). Ld. CIT(A) considered the findings of the AO and the

submissions made by the assessee in respect of contract receipts and

also service tax payments. In the appellate proceedings, the assessee

has submitted the details of service tax in relation to the gross receipts

4 ITA No.249/CTK/2015 & CO No.42/CTK/2015 which are tallied and, therefore, the CIT(A) found that the addition made

by the AO cannot be sustained and deleted the addition. 5. Aggrieved by the order of CIT(A), the revenue has filed an appeal

before the Tribunal. Before us, ld. DR argued that the CIT(A) has erred in granting relief irrespective of the fact that the AO has made addition of

Rs.35,66,610/- due to the difference in the contract receipts and the assessee has submitted in appellate proceedings the details of

Rs.53,06,694/- and the CIT(A) has not called for any remand report or

comments from the Assessing Officer on this issue and prayed for

allowing the appeal.

order of AO is bad in law as the assessee has made a request before the

AO to provide the reasons for initiating the reassessment proceedings and no reasons were provided, therefore, order of AO is against the law

and prayed for dismissal of revenue’s appeal.

Prima facie, the allegation of the revenue is that the CIT(A) has deleted

the addition considering the fact that the assessee has submitted

information respect of service tax and the gross receipts. The revenue’s

contention is that this information was not provided to the AO, therefore,

the AO was deprived to verify and submit his comments. Prima facie ld.

AR’s contention that there is a gross violation of principle of natural justice

and raised the ground that in the assessment proceedings the order passed by the AO is under section 147/143(3) of the Act and the

5 ITA No.249/CTK/2015 & CO No.42/CTK/2015 assessee has filed letter requesting for reasons for reopening of

assessment. Further the assessment was reopened with respect to disclosure of quantity and subsequently due to confirmation from the

company the AO was satisfied with the same which was disclosed in the balance sheet. Further the ld. AR’s contention that assessment cannot be

sustained as the reasons were not communicated to the assessee. We found strength in the arguments of ld. AR, since this ground was not

raised before us but under the provisions of Rule 27 of Appellate Tribunal

Rules 1963 the ld. AR can argue which reads as under :-

“27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.”

We find there is a merit in the arguments of ld. AR in respect of non-

communication of reasons of reassessment proceedings and Rule 27 of ITAT Rules, 1963 permit respondent to make submissions. Accordingly, in

the interest of substantial justice, we remit the entire disputed issue to the

file of the Assessing Officer, who shall provide reasons for reopening and

assessee shall file objections to reassessment proceedings and AO shall

pass order on validity of reassessment proceedings and subsequently

pass speaking order on merits of the case after providing adequate

opportunity of hearing to the assessee. Accordingly, the grounds of

revenue is allowed for statistical purposes

supporting to the order of CIT(A). Since we have restored the disputed

6 ITA No.249/CTK/2015 & CO No.42/CTK/2015 issue to the filed of AO, the cross objection filed by the assessee has become infructuous and the same is dismissed. 9. In the result, appeal of the revenue is allowed for statistical purposes and cross objection of the assessee is dismissed. Order pronounced in the open court on this 31/08/2017. Sd/- Sd/- (N. S. SAINI) (PAVAN KUMAR GADALE) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER कटक Cuttack; �दनांक Dated 31/08/2017 �.कु.�म/PKM, Senior Private Secretary आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant- 1. ��यथ� / The Respondent- 2. आयकर आयु�त(अपील) / The CIT(A), 3. आयकर आयु�त / CIT 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कटक / DR, ITAT, Cuttack 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// (Senior Private Secretary) आयकर अपील�य अ�धकरण, कटक / ITAT, Cuttack