ITO, ROHTAK vs. M/S. ARIHANT TELESERVICES, NEW DELHI

Date of Hearing : 14-06-2016 Date of Order : 14-06-2016

O R D E R PER H.S. SIDHU, JM

This appeal is filed by the Revenue is directed against the Order dated 22.4.2014 of the Ld. CIT(A)-Rohtak relevant to assessment year 2010-11 on the following grounds:-

1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and in facts in cancelling the assessment by observing that the time limit for service of notice u/s. 143(2) has expired whereas the said notice dated 7.9.2011 was duly sent by the Department by Speed Post

at the address mentioned in the return filed by the assessee for AY 2010-11. Hence, the service of the notice u/s. 143(2) on the assessee was proper and in time. 2. The appellant craves leave to add, delete or amend any ground or grounds of appeal at the time of hearing.

2. The brief facts of the case are that the assessee filed return declaring an income of Rs. 30,180/- on 30.09.2010. The case was later selected for scrutiny under "CASS" and statutory notice u/s 143(2) of the Income Tax Act, 1961 (hereinafter referred as the Act) was issued on 07.09.2011 by the Ward 19(2), New Delhi. The case was later on transferred to Ward-2, Rohtak and Notice u/s 143(2) was again issued on 26.12.2012 fixing the case for 28.12.2012. On the said date none attended nor any written reply filed. Notice u/s 142(1) alongwith detailed questionnaire dated 22.01.2013 was issued fixing the case for 31.01.2013. On the said date reply was received from the assessee requesting to provide the copy of the notice u/s 143(2) issued by ITO, Ward 19(2), New Delhi. The assessee vide this office letter dated 14.02.2013 was requested to inspect the file for the assessment year 2010-11 on any working day. Notice u/s. 142(1) was also enclosed with the said letter. On 22.02.2013 application was received from the assessee requesting to adjourn the case in the month of March, 2013. The case of the assessee was again fixed for 05.03.2013 by issue of letter dated 28.02.2013. On the said date none attended nor any written reply filed.

Reminder/notice u/s 142(1) was again issued on 06.03.2013 fixing the case for 07.03.2013. But this notice remain uncomplied with. Yet again notice u/s 142(1)/reminder was again issued vide letter no. 8223 fixing the case for 12.03.2013. But again no compliance was made. AO observed that it is quite clear that the assessee is deliberately avoiding to furnish the details/information as called for. Hence, he left with no other alternative than to complete the assessment on the basis of information available on record. Accordingly, AO observed that on perusal of the profit and loss account of the assessee it shows that against the sale/receipts of Rs.61,35,060/- the opening stock is NIL, closing stock is Rs.8,32,281/- and the purchase is Rs.78,82,722/- meaning thereby that the assessee has incurred a gross loss of Rs. 9,09,381/-. AO observed that in spite of ample opportunities provided to the assessee, the assessee deliberately avoided to produce the books of accounts and supporting documents for verification. Keeping in view the above narrated facts the book version of the assessee was rejected and income of the assessee was computed at the rate of 8% of turnover of Rs.61,35,060/- which comes to Rs. 4,90,805/-. A further addition of Rs.20,25,713/- is made to this income as the assessee has also shown commission income of Rs.20,08,293/- and other income of Rs.17,420/- totalling Rs. 20,25,713/-. After taking into account net profit of Rs.30,177/- declared by assessee from its business and addition of Rs.24,86,341/- (490805+2025713-30177) was made to the returned income of assessee.

2.1 AO further observed that on perusal of the balance sheet it shows that the assessee firm reflected the closing capital of Rs.9,05,994/- as on 31.03.2010 after taking into account the net profit of Rs.30,177/- declared by the assessee the amount of Rs.8,75,817/- comes as the capital introduced during the year under consideration. Further, scrutiny of the balance sheet shows that the unsecured loans to the tune of Rs.12,06,742/- are outstanding as on 31.03.2010. AO noted that since the assessee has offered no explanation regarding the source of these unsecured loans and capital introduced, as such, an addition of Rs.20,82,559/- (Rs.8,75,817/- + Rs.12,06,742/-) was made to the returned income of the assessee u/s 68 of the I.T. Act,1961 as unexplained cash credits. Accordingly, the assessment was completed u/s. 144 of the I.T. Act, 1961 at an income of Rs. 45,99,080/- vide order dated 15.3.2013 by the Assessing Officer.

“I have examined the facts of the case and the submissions made by the assessee. The assessment records reveal that the notice u/s 143 (2) dated 07.9.2011 sent by the Department on 8.9.2011 was returned un-served on 15.9.2011 with the remarks of the Postal Department that after enquiries at that address no body of that name was available, hence it was to be returned. The address of the notice was 510/19 Green Road, Shakti Nagar (page 26 and of assessment record, Annexure-I). However, subsequent notice at the same address dated 20.10.2011, 10.7.2012.,

18.7.2012 were received by the appellant for which evidences of receipt have been filed (Annexure-2). The notices should have been served on or before 30.9.2011.However, there has been no service by affixture, as is apparent from the case records. The next notice was issued only on 20.10.2011.

Hence, the time limit for service of notice has expired.

Therefore, I cancel the assessment. The other grounds do not require any adjudication.”

6. On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that he has passed a well reasoned order which needs to be affirmed.

7. I have heard both the parties and perused the records, especially the order of the Ld. First Appellate Authority. After perusing the impugned order of the Ld. CIT(A), I find that Ld. CIT(A) has passed a well reasoned and speaking order because the notice u/s. 143(2) dated 7.9.2011 have not been served within the stipulated time, as a result the time limit for service of notice was expired and also there is no service of affixture. Therefore, Ld. CIT(A) has rightly cancelled the assessment, which does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) and dismiss the Appeal filed by the Revenue.

Order pronounced in the Open Court on 14-06-2016.