M/S SRICHAKRA MERCHANDISING PVT LTD,THIRUVALLUR vs. DCIT COMPANY CIRCLE VI (4), CHENNAI

r.w.s.147 of the Income Tax Act, 1961 (hereinafter ‘the Act’) for the A.Y. 2006-07 vide order dated 29.03.2014.

The assessee has raised two issues. The first issue is, as regards to validity of re-assessment notice u/s.148 of the Act, issued beyond 4 years. For this, the assessee has raised the following ground Nos.2, 3 & 4:- No notice of reassessment u/s 148 was issued and is beyond four years 2) The CIT(A) erred in rejecting the plea that reopening u/s 148 is bad in law as no notice of reassessment u/s 148 nor reasons recorded were served on the Appellant for the AY 2006-07. 3) The CIT(A) ought to have seen that reopening u/s.147/148 of the Income Tax Act, 1961 is done after the expiry of four years , hence, is patently barred by limitation. 4) The CIT(A) failed to see that there is no allegation made in the Assessment Order that there is failure on the part of assessee to make a full and true disclosure of all material facts necessary for assessment as envisaged under proviso to s. 147.

The second issue raised by the assessee is against best judgement completed ex-parte by the AO, that no opportunity of hearing was allowed by AO and this will amount to violation of principles of natural justice. For this, assessee has raised following ground Nos.5 & 6:- Best Judgment completed Ex Parte 5) The CIT(A) ought to have seen that the Assessment Order dated 29.03.2014 passed u/s 144 read with Section 147 has been completed ex-parte and as such, no opportunity of hearing nor notice of reopening

Consequent to the above, the assessee has also raised grounds on merits, which are ground Nos.7 & 8 and the same reads as under:- ON MERITS 7) The CIT(A) erred in confirming the adoption of GP ratio of unaccounted sales to turnover at 1.5% by the Respondent as taken in subsequent AY 2007-08. 8) The CIT(A) failed to have see that as per VAT Assessment Order by the CTO (FAC), Chengalpattu Assessment Circle there is no difference between Purchases and Sales and hence, estimation by the Respondent is nonest in law.

When this appeal was called for hearing, none was present from assessee’s side. We have gone through the order sheet entries, that on various dates except three times one Ms. G.Vardini Karthick present, but on other occasions none was present. This appeal was fixed atleast seven times when bench functioned. From the appeal papers and the orders of the authorities below i.e., CIT(A)’s order and AO’s order, it is noticed that practically both the orders are ex-parte. From the order of the CIT(A), it is noticed that the CIT(A) has not adjudicated the issue of re-opening, whether notice u/s.148 of the Act, can be issued beyond 4 years in the given facts and circumstances of the case. Secondly, the CIT(A) has not at all touched the issue of best judgement completed ex-parte, which is raised by the assessee vide ground Nos.5 & 6, reproduced above. Even on merits we noted from the order of CIT(A), that CIT(A) has not given any finding on merits except accepting the version of the AO. Now, coming to AO's order, it discussed nothing on merits and assessed the income u/s.144 of the Act ex-parte. When these facts were confronted to ld.senior Departmental Representative, he fairly conceded that matter can be restored back to the file of the CIT(A) for fresh adjudication of all these issues.

We have gone through the facts and case records. We notice that none of the authorities below have deliberated on merits of the case. Secondly, the CIT(A) has not adjudicated both the issues on jurisdiction i.e., best judgment made ex-parte as well as notice issued u/s.148 of the Act beyond 4 years, which is beyond jurisdiction, according to the assessee. Since, these issues were not adjudicated, we are of the view that let the CIT(A) re-examine the issues in entirety, but it is also noticed that even the order of the AO is an ex-parte u/s.144 r.w.s. 147 of the Act. Hence, purpose will not be served in case matter is restored back to CIT(A), because AO has to gather all the evidences and he has to adjudicate these issues. Hence in entirety, the assessment is set aside and appellate order is also set aside, matter remanded back to the file of the AO, to re-do the assessment afresh. The assessee is at liberty to raise jurisdictional issues as well as issues on merits before the AO.

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