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Income Tax Appellate Tribunal, “SMC - B” BENCH, BANGALORE
Before: Shri Chandra Poojari
O R D E R This appeal filed by the assessee is directed against the order of the CIT(A), dated 29th March, 2019. The relevant assessment year is 2006-2007.
The assessee has raised following grounds:- “
1. The learned Commissioner (Appeals) on facts, and in law erred in passing impugned order dated 29th March 2019 without considering an) of the grounds, documents and citation produced by the appellant Hence, the Appeal Order is illegal, and liable to be quashed in the interest of justice.
2. The Order of the appeal is not passed on merits of the case and no reasonable opportunity of being heard given to the appellant. OTHER GROUNDS:-
BELATED NOTICE OF SCRUTINY U/S 143(2) OF I.T.ACT. 3. The A.O fail to prove the alleged notice issued VIS 143 (2) I.T Act well within 12 months from the date of filing the IT Returns.
The appellant Chartered Accountant is the only person authorized to produce books of accounts and make representation on belated notice The letter of adjournment found in the assessment records or the signature found in the said adjournment letter is not pertaining either of the Chartered Accountant or the Appellants. CBDT GUIDELINES NOT COMPLIED.
4. The Annexure "F" enclosed along with assessments by A.O. itself proved that the learned A.O exceeded his jurisdiction by causing notice u/s 143 (2) of the IT Act, by not following the Guideline of CBDT it is mandate that the A.O ought to take pre- written permission from CCIT/DGIT. Referring to Annexure "F" The appellants place of business is not a CITY on the other hand it is only GRAM TANA Where the total populations is around 25,000 to 35,000. Ever Madikeri itself is not a CITY at all. The appeal under assessees financial year 2005-06 and not 2006-07. Under the said circumstances, the assessment order passed by the learned assessing authority has exceeded his jurisdiction and passed the assessment u/s 143 (3) of the Income Tax Act, 1961, illegally and violation of the provisions of the Income Tax Act, 1961. NO SUCH INCREMINATE DOCUMENTS IMPOUNDED 5. The A.O further erred in making additions U/S 69 C of the I.T.Act, 196J as cash deficit ofRs.7,94,804/-. The learned A.O if he has come across any such incriminate documents such as alleged ROUCH CASH BOOK first he should have IMPOUNDED the documents and should confront to the appellate as matter of right to rebuttal. In the absence of the such proceedings, any additions made U/s 69 C is illegal and liable to deleted. BOGUS CREDITOR 6. The learned assessing authority erred in making addition of the closing balance of certain Creditors as Bogus Creditor without considering the explanation of the appellant. Such addition is not only illegal and liable to be set-aside in the best interest of justice and equity. A.O. further erred in making additions a sum of Rs.3,85,353/- 7. U/s 234B.
A.O. is also erred adding the Stay amount paid as per this Hon’ble Courts Order of Rs.1,00,000/- and interest 12,500/- and there on Interest U/S 234D a sum of Rs.15,750/- is also liable to be deleted.
The order of the assessment for the year 2006-07 is illegal when appellate authority failed to grant an reasonable opportunity to Cross examination of the witness before utilizing the entries of ledger extract of certain sundry debtors directly obtained by him.
The learned Assessing Authority grossly erred in resorting to the best judgment although the books of accounts were maintained by the appellant in the usual course of their business. There is no discrepancy found in books account as such all the books of accounts is duly audited books of accounts for the assessment year 2006-07 is duly audited under Section 44 AB Audit under the provisions of Income Tax Act,1961 by authorized Chartered Accountant Sri.I.G.Nanaiah. 11. The first Appellate Authority failed to considered all the documents grounds, and explanation urged at the time of hearing the appeal. 12.1t is prayed that this Hon'ble Court may be pleased to read the objections and grounds of appeal
filed before the Assessing Officer and also before the First Appellate Authority as part and parcel of the grounds of appeal to avoid repetition of facts. WHEREFORE, the appellant most respectfully prays that this Hon'ble Court may be pleased to allow the appeal and set-aside the impugned order of the First Appellate Authority passed Under Section 251 (1) of the Income Tax Act, 1961 in Appeal No. A.Y 2006-07 order dated 29TH March 2019 and also Assessing Officers assessment Order passed UIS 143 (3) of the Income Tax Act, 1961 dated 27th December 2017 and direct the assessing officer to accept the return of the appellant and pass such other order/s deem fit in the circumstances of the case in the best interest of justice.”
3. The facts of the case in brief are that the assessee is an individual, who was engaged in trading in spices and flowers. For the assessment year 2006-2007, the assessee filed his return of income on 31.10.2016, admitting total income of Rs.1,72,450. The original assessment was completed u/s.143(3) of the Act on 30.12.2008 on a total assessed income of Rs.10,27,750 which was confirmed in the first appeal vide order dated 17.09.2013. On further appeal, the Tribunal had restored the issues back to the Assessing Officer to verify the issue of service of notice u/s.142(1) of the Act and also whether due procedure has been followed obtaining prior permission from the CCIT for taking up the scrutiny assessment and to decide the issues afresh on the above issues and on merit in accordance with law, after affording reasonable opportunity of being heard to the assessee. Accordingly, the Assessing Officer completed the assessment on a total income of Rs.10,27,748 by way of a speaking order u/s.143(3) r.w.s. 254 of the Act dated 27.12.2017. Aggrieved by the said order of assessment, the assessee again filed an appeal before the CIT(A). In this regard, ITNS 51 was sent to the Assessing Officer by the CIT(A). The Assessing Officer returned the ITNS 51, with a remark that the appeal was filed belatedly by a day. The appellate records were verified in view of the Assessing Officer's remarks. But, the assessee has quoted no reason for belated filing of appeal. The appeal was taken up for hearing by the CIT(A) and in response to the hearing notice issued, there was no response. In the absence of any communication from the assessee until the date of hearing, the CIT(A) did not admit the belated appeal and treated the appeal filed as dismissed. Aggrieved by the said decision of the CIT(A), the assessee approached the ITAT and the ITAT, vide order in dated 26.10.2018, set aside the order of the CIT(A) and remanded the issues raised in the grounds of appeal by the assessee before the CIT(A) for consideration afresh on merits after affording opportunity of being heard.
Thereafter, the appeal was taken up by the CIT(A) for hearing by posting case for hearing on 08.02.2019 and 22.03.2019.
3.1 The assessee has raised certain technical grounds before the CIT(A) that the notice issued u/s. 143(2) time barred and issued without taking approval from the higher Authorities. In respect of this grounds the CIT(A) called for the Assessment records in the examined in the presence of Shri. K. Ramgopal A/R of the appellant. The letter seeking the adjournment was found to be signed to be person on behalf of the assessee therefore, the veracity of issuing of notice and subsequent compliance of A/R of the assessee cannot be doubted because no one would have got interest in doing so other than the A/R of the assessee are anyone of the assessee associate / employee and therefore the contention of the assessee that the notice was not issued in time and without prior approval of the higher authorities were not be accepted.
3.2 Before the CIT(A), in respect of Grounds and merits the assessee has submitted that the A.O. has made the addition u/s. 69C of the I.T.Act, 1961 as cash deficit of Rs.7,94,804 though there was no Rough Cash Books either produced at the time of assessments or no such entry found in the day to day assessments proceedings drawn by A.O At the time of Scrutiny of the books of accounts regarding impounding of rough cash book produced by the assessee. The AO had made correspondence with the letter to assessee’s auditor about production of alleged rough cash books. The Auditor who is a Senior Chartered Accountant and aged and he believed that he might have produced rough cash books and replied. Therefore, submitted that it was the duty of the A.O. to first impound rough cash books and later confront with the assessee. The assessee has raised the ground that there was no rough cash book maintained by the assessee and therefore, no disallowance u/s 69C of the Act can be made cannot be accepted for reason that the onus to prove that the assessee has never maintained any cash book lies on him. During the course of scrutiny assessment the AO has categorically mentioned in his order that the A.R. of the assessee has produced the cash book and ledger on 07.10.2018 and on verification of the cash book the peak deficit cash balance of Rs.7,94,804 on 28.03.2016 was noticed. The working of the peak cash credits also given in tabular form date wise which clearly show that there was cash book maintained by the assessee. The learned AR submitted before the appellate authorities that no cash book was maintained and therefore addition cannot be made u/s. 69C of the Act is neither acceptable nor tenable. In view of the facts and circumstances of the case the CIT(A) confirmed the addition made u/s 69C of the Act.
3.3 Before the CIT(A), in respect of the ground on Sundry Creditors treated as Bogus Creditors and made additions to the income, the assessee has submitted that reconciliation filed before the AO was not considered. The Assessing Officer has considered the submission made by the assessee that expressing his inability to furnish the confirmation letter from M/s.Sagar Traders Mysore, he himself had sent the letter to the party requesting to furnish account copying of the assessee appearing the books of account. Since there was no reply received from the party and the assessee also had failed to establish the genuineness of the creditors the assessing officer has rightly treated the credit as bogus. Accordingly, the CIT(A) upheld the view taken by the Assessing Officer. Against this, the assessee is in appeal before this Tribunal.
The main argument of the learned AR is that the A.O. failed to prove the alleged notice issued u/s 143(2) of the Act well within 12 months from the date of filing of the return of income. The assessee’s Chartered Accountant is the only person authorized to produce books of accounts on behalf of the assessee. The letter of adjournment found in the assessment records or the signature found in the said adjournment letter is not pertaining either of the Chartered Accountant or the assessee. In support of the above argument, the learned AR drew our attention to the notice u/s 143(2) dated 25.06.2007, as under:-
4.1 He also drew our attention to the order sheet entry, as under:-
4.2 The argument of the learned AR is that the notice u/s 143(2) dated 25.06.2007 was issued belatedly and the A.O. did not follow the due procedure under CBDT Circular and did not obtain prior approval from CCIT / DGIT and no notice dated 25.06.2007 has been received by the assessee as claimed by the Assessing Officer. As such, framing the assessment u/s 143(3) is bad in law.
I have carefully gone through the records. The order sheet is as follows:-
25.06.2007 : Notice u/s 143(2) put up as per action pl. 13.07.2007 : Notice u/s 143(2) was actually put up. 29.07.2007 : Please see letter calling for various details along with notice u/s 143(2) and 142(1) put up posting the hearing on 12.08.2008 at 10:30 AM 12.08.2008 : Please see assessee’s letter dated 08.08.2008 requesting for adjournment till 25.08.08. Letter to assessee posting the hearing on 26.08.08 10:30 AM put up.
5.1 Now the contention of the assessee is that notice dated 25.06.2007 was actually put up for signature to A.O. on 29.07.2008 by posting the case on 12.08.2008. This notice issued u/s 143(2) said to be served on the assessee, is bad in law. The notice dated 25.06.2007 by which the case of the assessee was posted on 09.07.2007, was not finding place in the order sheet entry. As per the order sheet entry dated 29.07.2008 the case was posted for hearing on 12.08.2008 at 10:30 AM, which reads as follows:-
If we consider the notice dated 29.07.2008, the time limit to issue notice u/s 143(2) is as follows:- Date of filing Due date for issuance of notice ---------------- -------------------------------------- 31.10.2006 6 months from the end of the financial year in which the return is furnished.
5.2 In the present case, the return was filed on 31.10.2006 relevant to the financial year ended on 31st March, 2007, then six months from 31st March, 2007 was ended on 30th September, 2007. Notice u/s 143(2) was issued on 24.07.2008, which is time barred. Being so, the issue of notice u/s 143(2) of the Act is time barred and therefore, consequent of framing the assessment on the basis of notice issued u/s 143(2) on 29.07.2008 is bad in law. Accordingly, I quash the assessment order.
5.3 Since I have quashed the assessment, I am refrained from going into other grounds of appeal raised by the assessee before me.
In the result, the appeal filed by the assessee is allowed.