SRI RAVINDRA KUMAR,BOKARO vs. ITO WARD-3(1), BOKARO

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ITA 240/RAN/2017Status: DisposedITAT Ranchi27 November 2018AY 2008-095 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal granted the assessee one more opportunity to produce books of account and relevant documents before the Assessing Officer for assessment. A cost of ₹5,000 was imposed on the assessee.

What were the facts?

The assessee failed to produce books of account before the Assessing Officer due to a dispute between partners. The assessee requested one more opportunity to produce the documents.

What were the issues?

Whether the assessee should be granted another opportunity to produce books of account, and the validity of best judgment assessment based on averaging sales.

Which sections of the Income-tax Act were involved?

Section 144,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, RANCHI ‘ SMC’ BENCH, RANCHI

Before: SHRI N.S SAINI

For Appellant: Shri Nitin Pasari, Adv
For Respondent: Shri A.K.Mohanty, JCIT
Hearing: 26/11Pronounced: 27/11

This is an appeal filed by the assessee against the order of

the CIT(A), Hazaribag, dated 15.6.2017 for the assessment year

2013-14.

2.

The assesse has raised the following grounds of appeal:

‘A FOR THAT the Learned Appellate Authority failed to take into consideration that the addition has been made by the Ld. Assessing Officer by averaging the sales of the entire year on the basis of sales declared as per P & L Account as also the difference on averaging basis for 20.02.2013 to 31.03.2013.

The said averaging has no force of law and has been derived on the assumption & presumption, without there being any

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cogent evidence inasmuch as all through the year, the sale of sweets are not the same, since the same depends upon weather conditions as well.

In summers & rainy season, the sale of sweets is marginal, as compared to the sales in winters, which is comparatively much and averaging the sales for the period 20.02.2013 to 31.03.2013 with that of the entire year is absolutely baseless.

B) FOR THAT, while rejecting the Profit & Loss Account of the Appellant, reference has been made of a judgment rendered by the Hon'ble Apex Court in the matter of Md. Kale Khan as also HM Esuflai, for invoking the powers of best judgment assessment,

However the procedure and formula adopted by the Learned Assessing Officer, upheld by the Appellate Authority does not have in force of law, inasmuch as the instant is not a case where the return has not been furnished or the notice under section 142(1) has not been complied or the provisions as contained under Section 143(2) has not been complied, rather it cannot be suggested in any eventuality, either by the Assessing Officer or by the Appellate Authority, that the claim of expenses (retail trade of sweets) since not supported by any voucher/ bill would not be allowed as expenses, even if some amount of guess work is involved.

C) FOR THAT, the enhancement of turnover by invoking the powers under Section 144, by carrying out best judgment assessment on average sale is absolutely without any reasonable basis.

D) FOR THAT, the Learned Appellate Authority, as also the Learned Assessing Officer failed to take into consideration that the estimate of income invoking powers under Section 144 of the Income Tax Act is not uncanalized & unfettered, rather the same puts reasonable restriction, while exercising such powers and while discharging powers under section 144, the past history of the Assessee, ought to be considered.

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E) FOR THAT, the comparable profit sharing ration shown by the Assessee in the past assessment orders has been completely overlooked, while exercising the powers under Section 144.

F) FOR THAT, without rejecting the books of accounts and without assigning any reason therefore, as to what anomaly or what wrong has been found in the returns furnished ought to be spelt out while carrying out an assessment under section 144 and even if, the books of account are sought to be rejected, reasons are to be assigned as to why the books of accounts are being rejected.

G) FOR THAT, the Learned Appellate Authority as also the Assessing Officer failed to take into consideration that the recommendation of initiating penalty proceedings in terms of Section 271(l)(c) of the Income Tax Act is directly in conflict with the ratio laid down by the Hon'ble Supreme Court in the matter of Dilip N Shroff v. Joint Commissioner of Income Tax reported in (2007) 6 SCC 329.

H) FOR THAT, the Learned Appellate Authority as also the Assessing Officer failed to take into consideration that the recommendation to initiate penalty proceeding is bad in law and is in conflict, since the question of levying penalty has been tested before the Hon'ble Supreme Court in catena of cases the recent being M/s. Reliance Petro Products, wherein the Hon'ble Court taking into consideration the earlier judicial pronouncements on the issue of penalty has been pleased to hold that the penalty can be levied only if, it is proved that there is presence of guilty, dishonest and wilful intent either to defraud revenue or evade the payment of duty on our part. In other words, there has to be positive act on part of Appellant to evade duty.

I) FOR THAT the other & further grounds of appeal, if any, shall be urged at the time of hearing of this appeal.”

3.

At the outset, ld A.R. of the assessee submitted that the

assessee did not produce the books of account before the

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Assessing Officer as there was dispute between the partners. He

submitted that if one more opportunity is granted to the assessee,

then he undertakes to produce books of account and relevant

documents before the Assessing Officer.

4.

Ld D.R. vehemently objected to the above submission of ld

A.R. of the assessee and submitted that where the assessee has

failed to avail the opportunities provided by the Assessing Officer

as well as the CIT(A), no mercy should be shown to the assessee.

5.

In the facts of the case, I am of the considered opinion that

in order to render substantial justice, one more opportunity should

be granted to the assessee as prayed for by ld A.R. of the

assessee to produce the books of account and relevant details

before the Assessing Officer for making the assessment.

However, considering the conduct of the assessee, I am of the

considered view that the assessee should pay a cost of ₹5,000/-

within 30 days from the date of this order and file proof of

payment before the Assessing Officer as well as the Tribunal. The

assessee is further directed to suo-moto appear before the

Assessing Officer within 30 days from the date of this order to fix

the date of hearing of the case. The assessee is further directed

to fully co-operate with the Assessing Officer by filing all the

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necessary evidences/documents as and when called upon to do so

for completion of the assessment. The Assessing Officer is

directed to complete the assessment expeditiously. With these

directions, the appeal is restored back to the file of the Assessing

Officer.

6.

In the result, appeal of the assessee is allowed for statistical

purposes.

Order pronounced on 27 /11/2018.

Sd/- (N.S Saini) ACCOUNTANT MEMBER Ranchi; Dated 27/11/2018 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : M/s. Kozy Sweets, B-17, City Center, Sector-4, Bokaro Steel City, Jharkhand

2.

The Respondent. ITO, Ward 3(3), Bokaro 3. The CIT(A)- Hazaribag 4. Pr.CIT- Hazaribag 5. DR, ITAT, Ranchi 6. Guard file. //True Copy// By order

Sr.Pvt.Secretary, ITAT, Ranchi on tour

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