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Income Tax Appellate Tribunal, “A” BENCH, PUNE
आदेश / ORDER
PER D. KARUNAKARA RAO, AM :
This appeal filed by assessee is directed against the order of
Commissioner of Income Tax (Appeal)-1, Nashik dated 13.02.2017 for
assessment year 2013-14.
The assessee has raised following grounds in appeal:
“1.The learned CIT(A) erred in confirming the addition of Rs.70,00,000/- made by the A.O. without appreciating the said addition was not justified in law. 2. The learned CIT(A) erred in holding that the addition of Rs.70,00,000/- was justified on the ground that in the course of survey statement recorded u/s. 133A, the assessee had declared additional income of Rs.70,00,000/- in respect of stock shortage, cash found, unaccounted investments and cash payments u/s.40A(3) and hence, he cannot go back on his declaration once the income was declared in the survey statement. 3. The learned CIT(A) failed to appreciate that that the said addition was made solely on the basis of the declaration made in the statement u/s.133A and the dept. had not pointed out any discrepancy in the books of accounts furnished by the assessee in the course of asst. proceedings to justify the addition of Rs.70,00,000/- on merits and hence, the addition was not warranted. 4. The learned CIT(A) erred in not appreciating that at the time of survey action conducted on 21.11.2012, the books of accounts were incomplete, however, after the end of the year, the books of accounts were prepared and as per the finalized books, the stock and cash was reconciled and the A.O. had accepted the said books without pointing out any discrepancy in the same and therefore, there was no reason to make any addition solely on the basis of the declaration made in the survey statement.
Without prejudice to the above grounds, the assessee submits that at the time of survey action, the inventory of stock valuing Rs.25,47,445/- was found as against the stock of Rs.58,37,270/- as per the incomplete books of accounts and hence, if at all, any addition is to be made, then only the G.P. @ 4.66% on the stock shortage should have been taxed and no further addition was justified on facts of the case.
3 ITA No. 660/PUN/2017 S.A. No.20/PUN/2018 A.Y. 2013-14
The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
Briefly stated relevant facts of the case are that the assessee is an
individual and is engaged in the business of all types of pipes, agricultural
implements, machinery etc. The assessee filed return of income of
Rs.26,46,907/-. In the assessment proceedings u/s.143(3) of the I.T Act,
the Assessing Officer assessed income at Rs. 98,67,776/-. This is a case
where there was survey action u/s.133A of the Act on 21.11.2012. During
the proceedings, statement was recorded u/s.134 of the Act from assessee.
The survey action resulted in discovery of certain incriminating documents
and loose papers, and which led to disclose the income of Rs.70,00,000/-.
Subsequently, the assessee retracted the same and therefore, did not
disclose the same in the return of income. It is the case of assessee that no
such disclosure is required as contents of the said impounded loose papers
and other documents, books of accounts were incorporated while
completing the books of accounts and adopted the book profit in filing
return of income. However, as per the discussion given in Para-11 of the
assessment order, the Assessing Officer proceeded to make addition of Rs.
70,00,000/- in the assessment made u/s. 143(3) of the Act.
During the First Appellate proceedings, the assessee could not
improve his case. Eventually, the Commissioner of Income Tax (Appeal)
dismissed the appeal of assessee. The contents of Para-3 and 4 and their
sub-paragraphs are relevant.
Aggrieved with the said order of Commissioner of Income Tax
(Appeal), the assessee filed present appeal before us with the grounds
extracted above.
4 ITA No. 660/PUN/2017 S.A. No.20/PUN/2018 A.Y. 2013-14
At the outset, Ld. Counsel brought our attention to the fact that
Commissioner of Income Tax (Appeal) dismissed the appeal of assessee in
his ex-parte order after giving nominal hearings on 22.11.2016,
16.12.2016, 09.01.2017 and 23.01.2017. As per discussion given in Para
3.5 of impugned order, the appeal of assessee was adjudicated eventually
without ensuring the presence of the assessee or his Authorized
Representative. On this issue, the Ld. Counsel for the assessee submitted
that by making addition of Rs.70,00,000/-, the assessment made
constitutes case of double addition to the extent of said Rs. 70,00,000/-.
The assessee filed written submission on this issue explaining the manner
how it becomes a case of double addition. Contents of Paras in the written
submissions are relevant. In the said written submissions, the assessee
explained with the said addition of Rs.70,00,000/-, an unusual GP of the
assessee is subjected to taxation. The Ld. AR submitted for grant of one
opportunity to the assessee before the Assessing Officer to explain the facts
of the case.
On the other hand, the Ld. DR heavily relied on the order of
Assessing Officer and Commissioner of Income Tax (Appeal). He also
brought our attention to the incriminating materials impounded by
Revenue during survey action.
On hearing both the parties, we find it is evident that the
Commissioner of Income Tax (Appeal) is the product of ex-parte
proceedings. During First Appellate proceedings, the case was decided
without the presence of assessee or his Authorized Representative.
Therefore, in principle, the request for grant an opportunity of being heard
to the assessee, has merit. Accordingly, we are of the opinion that hearing
5 ITA No. 660/PUN/2017 S.A. No.20/PUN/2018 A.Y. 2013-14
dates mentioned in the impugned order does not indicate that notices were
actually served upon the assessee and assessee is well aware about the
said dates of hearing. Notices were sent to assessee through speed post.
There is no conclusive finding regarding service of notices to assessee in
the order of Commissioner of Income Tax (Appeal). The contents of Para-2
of the order of Commissioner of Income Tax (Appeal) are self explanatory in
this regard. Therefore, we are of the opinion that it is a fit case for
remanding all the issues raised in the appeal to the file of Commissioner of
Income Tax (Appeal). This time, Commissioner of Income Tax (Appeal)
should grant reasonable opportunity of being heard to the assessee by not
only sending the notices through speed post but also ensuring the service
of notices upon assessee as per the rules on services of notices. The
assessee is directed to comply with the notices without fail. Accordingly,
grounds raised by assessee are allowed for statistical purposes.
S.A. No. 20/PUN/2018 ( A.Y. 2013-14)
In the preceding paragraphs of this order, we have discussed the
assessment made by Assessing Officer and assessed income of
Rs.98,67,776/- after making addition of Rs.70,00,000/-. The Assessing
Officer issued the demand notice u/s.156 of the Act asking to pay demand
of Rs.30,18,266/-. The assessee filed Stay Application before us requesting
to stay the demand. In this regard, considering the above discrepancies
with regard to issue of proper notice to the assessee, both the parties
submitted that Stay Application could be heard along with main appeal i.e.
ITA No. 660/PUN/2017.
6 ITA No. 660/PUN/2017 S.A. No.20/PUN/2018 A.Y. 2013-14
As per discussion given in the aforementioned paragraphs, we have decided to remit all the issues raised in the appeal on merits to the file of Commissioner of Income Tax (Appeal) for fresh adjudication. In view of our decision of setting aside the order of Commissioner of Income Tax (Appeal), the adjudication of stay application becomes an academic exercise. Thus, stay application moved by the applicant is dismissed.
To sum up, appeal of the assessee is allowed for statistical purposes and stay application moved by the applicant is dismissed.
Order pronounced on 27th day of March, 2018.
Sd/- Sd/- (सुषमा चावला / Sushma Chowla ) (डी.क�णाकरा राव/D. Karunakara Rao) �या�यक सद�य /JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER
पुणे / Pune; �दनांक / Dated : 27th March, 2018. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeal)-1, Nashik 4. The CIT-1, Nashik. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.