Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, Hyderabad ‘ A‘ Bench, Hyderabad
Before: Shri R.K. Panda & Shri Laliet Kumar
O R D E R Per Laliet Kumar, J.M : This appeal filed by the assessee is directed against the order dated 31.3.2022 of the learned CIT (A)-11, Hyderabad relating to A.Y. 2018-19 by raising the following grounds of appeal: “1. The impugned order of the Commissioner of Income Tax (Appeals) 11 Hyderabad Dated: 31-03-2022 challenged in this appeal is against law, weight of evidence and probabilities of the case.
2. The learned CIT(A) failed to appreciate that a single appeal is maintainable against composite orders or even against separate orders under the same enactment as held by Hon’ble Calcutta High Court and Hon’ble Patna High Court and consequently dismissed the appeal on merits arbitrarily.
3. The learned CIT(A) grossly erred in dismissing the appeal filed by the appellant as not maintainable despite the fact that the appeal was filed as a common appeal against both the orders u/s 154 as well as u/s 143(3) of the IT Act 1961.
4. The learned CIT(A) failed to appreciate that the appellant 17,64,13,323/- objected to the estimation of GP at 0.53Percentage for A.Y. 2018-19 without finding any defects in the audited books of account and consequently erred in summarily dismissing the appeal. He ought to have allowed the appeal on merits. 5. The learned CIT(A) failed to follow the precedent in this appellant's own case as decided by this Hon’ble Tribunal for A.Y. 2009-10 in and C.o. No. 54/HYD/2014 common order dated: 08-04-2015 deleting similar GP addition and consequently erred in summarily dismissing the appeal. 6. The learned CIT(A) failed to appreciate that book results for A.Y. 2015-16 and A.Y. 2016-17 showing GP of 0.25Percentage and 0.29Percentage respectively were accepted and there was no basis for estimating the GP for the impugned year at the rate of 0.53Percentage and consequently erred in holding that the assessees appeal is infructuous. 7. The learned CIT(A) failed to appreciate that GP at the rate of 0.53Percentage for the A.Y. 2017-18 was an exceptional result due to demonetization of November 2016 and that could not be taken as a basis for the later year. 8. For the above grounds and such other grounds that may be urged at the time of hearing the appellant prays that the appeal be allowed. 10. The appellant craves leave to add to amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary”.
Facts of the case, in brief, are that the assessee firm engaged in the business of sale of pure gold and gold ornaments. It filed a return of income for A.Y. 2018-19 through e-filing acknowledgement No. 32769105108 018 on 08.10.2018 declaring total income of Rs.57,23,200/-. The case was selected for scrutiny through computer aided scrutiny selection system.
Accordingly, notice u/s 143(2) was issued to the assessee on 22.09.2019 which was duly served upon the assessee through email.
The case was selected for Scrutiny through CASS for examining the issue i.e. "High risk transactions (PAN reported in STR)". À perusal of STR on the system showing that the assessee made huge credit of Rs. 312,84,71,392/- including a cash deposit of Rs.66,68,25,000/- during the year. Further, a note for Assessing Officer is also available on the system, which is reproduced as under:
“M/s Vonama.a Jagadishwaraiah is maintaining account with Patny Centre Branch Secunderabad since 25.06. 2016. The account was opened by submitting the copy of PAN Card No.AAEFV8917B as OVD. Sudden spurt of high value cash deposits in the account since declaration of demonetization of high value currency notes of Rs 500/- and Rs. 1000- by Govt of India. The transactions fall under IBA- High Value Cash Deposit in a Day. A few high value cash deposits during demonetization period are as under 10/11/16 Rs 14600000 00 10/11/16 Rs 19400000.00 20/12/16 Rs.7225000.00 The trend of high value cash deposits is still continuing these transactions nay in line with profile of the customer but cash deposits during and after demonetization period. During the year under Consideration, the assessee has shown total sales of Rs. 697,22.22.638/- in its ITR against which the net profit has shown Rs. 5723197/- The assessee shown Gross profit 0.22% and Net profit 0.08% in its books. During the course of assessment proceedings. it was noted that there was substantial increase in the cash sales during the year in comparison to A.Y. 2017-18 and 2019- 20”.
As discussed above, the assessee has deposited the total amount of Rs 66,68,25,000/- in cash during the F.Y. 2017- 18. Through this office notice u/s 142(1) 3 dated 28.12.2021, the assessee was asked to provide details of bank account details of Page 3 of 9 cash deposit, details of the source of cash, copy of the sales ledger & bills and other relevant information along with documentary evidence. In response, the assessee stated that we maintain Bank Account with ICICI Bank vide A/c No. 018305005629. We also maintain our Account with State Bank of India Patny Secunderabad vide A/c No. 00000062 471145529. We also maintain our Account with State Bank of India Panjagutta Hyderabad vide A/c No. 00000062091816872. The cash realized on sale of pure gold, pure silver etc, is deposited in the above bank accounts. Assessing Officer had only made additions of Rs.3,12,29,580/- to the returned income of the assessee as against the cash deposit of Rs Rs 66,68,25,000/ during the demonetization period.
Assessee being aggrieved, received a copy of the assessment order on 28.10.2021, though the order of the Assessing Officer was passed on 01.06.2020. Immediately after receiving the assessment order, the assessee noticed that the Assessing Officer while estimating the income of the assessee, has estimated the income to the tune of Rs.3,12,29,580/- on a/c of Gross Profit, and it was added to the returned income of Rs.57,23,200/- and thus made the additional taxable income at Rs.3,69,52,780/-. The assessee filed a rectification application on 28.10.2021 immediately after receiving the order to which the Assessing Officer passed the rectification order and assessed the total income of the assessee at Rs.3,69,52,780/- instead of Rs.36,95,27,799/-.
Still being aggrieved, the assessee filed an appeal before the learned CIT (A) and the learned CIT (A) dismissed the appeal filed by the assessee by observing as under:
6. Decision: In the instant case, the assessment was completed u/s 143{3) r.w.s i44B by rejecting the books of accounts of the appellant and thereby i 43 estimating the income of the appellant at 0.53% of the turnover, resulting in business income of Rs.3,69,527,799/-, which was the assessed income. It is pertinent to mention here that the appellant did not file any appeal against the order u/s 143(3) r.w.s. 144B dated 01.06.2021. In the said order u/s 143(3) r.w.s. 144B, there was a typographical error in the total assessed income wherein the total income was mentioned as Rs.3,69,527,799/- instead of Rs.3,69,52,779/-. The appellant filed a rectification petition and the same was rectified vide order u/s 154 dated 01.11.2021. Against the order u/s 154, the appellant filed an appeal wherein it has Contested the estimation of profit at 0.53%. in this regard, it is to be noted that the estimation of profit at 0.53% was subject matter of assessment proceedings u/s 143(3) r.w.s. 144B and does not pertain to order u/s 154. The order u/s 154 was merely to rectify an arithmetic error arising out of order u/s 143(3/ r.w.s. 144B and thus the issue of estimation of profit is not the subject matter of order u/s 154 and thus there 1s no cause of grievance related to the ground raised in the appeal, arising out of order u/s 154, in view of the same, the ground no.1 pertaining to estimation of profit at 0.53% become infructuous in the current appeal proceedings and is dismissed accordingly. The ground no.2 and 3 are general in nature and need no separate adjudication. To sum up the appeal is dismissed 6.1 Aggrieved with such order of the learned CIT (A), the assessee is in appeal before the Tribunal.
The learned Counsel for the assessee referring to the assessment order submitted that immediately after passing the assessment order, the assessee had filed the rectification application to correct the typographical error, which was in fact, been acceded to by the Assessing Officer by passing the rectification order on 01.11.2021. However, the assessee, cannot be said to be aggrieved by the rectification or the typographical error in the assessment order, which was corrected by the Assessing Officer and was only aggrieved by the passing of the assessment order itself and the reasons provided in the assessment order for making an addition of Rs.3,12,29,580/- (G.P Addition). The learned DR drew our attention to Form 35 whereby the ground has been challenged, which specifically deals with the making of the G.P addition. The learned AR also submitted that the order passed by the Assessing Officer u/s 143(3) of the Act got merged with the order passed after giving effect to the rectification order passed on 01.11.2021 and therefore, the assessee was within its right to challenge the rectified order along with assessment order before the CIT (A).
Per contra, the learned DR submitted that under the scheme of Income Tax Act, separate remedies are provided for filing appeals against the order u/s 143(3) as well as the order against 154. It was the contention of the learned DR that a separate part of limitation is also provided under the Act for challenging the order before the learned CIT (A). In the instant case, the assessee had only challenged the order passed by the Assessing Officer u/s 154 as discernible from Form 35 (Col.2) where the date of order has been mentioned as 01.11.2021. It was submitted that the order passed by the learned CIT (A) was correct as he found no discrepancy or error in the order passed by the Assessing Officer u/s 154. It was the contention of the learned DR that the learned CIT (A) is not supposed to decide the issue or order which has not been agitated before him, and therefore, the reasons for passing the order are in accordance with law.
We have considered the rival contentions of the parties and perused the material on record. Admittedly, in the present case, the assessee received copy of the assessment order on 28.10.2021 and thereafter, on the very same day, the assessee filed a rectification application before the Assessing Officer, and the rectification order was passed on 01.11.2021. Immediately after receipt of the order dt.01.11.2021, the assessee filed an appeal before the learned CIT (A) on 27.11.2021. Thus, the appeal filed by the assessee was within one month from the date of receipt of the assessment order / rectification order. Though, the assessee had only mentioned 154 order in Col.2A in form 35. However, the learned CIT (A) is not expected to oblivious of the statement of the fact mentioned against Sl.No.11 of the form, which only talks about the wrong adjudication of the G.P estimated by the Assessing Officer and for that purpose, the assessee in Para 11 had relied upon the decision of the Tribunal in assessee’s own case for the A.Y 2012-13. In fact, in the grounds of appeal before the learned CIT (A), the assessee has categorically mentioned: that “your petitioner not accepting the estimation of income of Rs.57,23,200/- to the estimated income of Rs.3,12,29,580/- when the book results are not accepted by the Assessing Officer”. It was further the ground of appeal before the learned CIT (A) that the Assessing Officer cannot make the estimation of profit when the book results are not accepted by the assessee. The substance of the grounds raised before the ld.CIT(A) was only to challenge the order passed by the Assessing Officer u/s 143(3) on 1.6.21, which was subsequently rectified on 1.11.21. For all purposes, the assessee's appeal only challenged the addition of Rs.3,12,29,580/- to the assessee's income. In view of the above, once the assessee has challenged the order of the Assessing Officer in the appellate proceedings, the pedantic hyper-technical approach of the Revenue Officer is required to be rejected as it is an admitted position that the assessment proceedings are not adversarial litigation. Further, the doctrine of merger will go into play for the rescue of the assessee. Once law has given a right to the assessee to challenge the order of the Assessing Officer by following consolidated appeal whereby the assessee can challenge the assessment order and the rectification order then the assessee cannot be non-suited merely because he had only challenged the orders u/s 154.
10. In view of the above, though the Assessing Officer had only made an addition of Rs.3,12,29,580/- to the returned income of the assessee as against the cash deposit of Rs.66,68,25,000/- during the demonetization period, however, still the assessee chooses to challenge the meagre addition of Rs.3,12,29,580/- on the above said technical ground, we are of the opinion that the order of the learned CIT(A) is required to be quashed, and the case is remanded back to the file of the Assessing Officer with a direction to pass the order on merit after treating the appeal of the assessee as an appeal challenging the order u/s 143(3) r.w.s. 154. Needless to say, while exercising power, the learned CIT(A) may use all his powers vested under the Act, including the power to enhance / reduce / confirm the order passed by the Assessing Officer.
In the result, appeal filed by the assessee is allowed for statistical purposes.