ACIT, MEERUT vs. SHRI. SUNIL KHAN, MEERUT

At the time of hearing, no one was present on behalf of the assessee. The appeal was passed over. In the next round also, the assessee remained unrepresented. Since the appeal could be decided without hearing the assessee on the basis of material available on record, it was deemed appropriate to proceed with the present appeal ex-parte qua the assessee responded on merits after hearing the Ld. Sr. DR.

The Ld. Sr. DR heavily relied upon the assessment order and assailing the impugned order submitted that the CIT(A) no doubt remanded the submissions and material to the Assessing Officer directing her to file comments on the written submissions as well as additional evidences as noted in para 4.3.1 of the impugned order, however, compromised her functioning by not directing her to carry out any enquiries etc. for verifying the evidences.

I have heard the submissions and perused the material available on record. I find on going through the orders of the tax authorities and the written submissions extracted by the CIT(Appeals) at pages 6 and 7 of the impugned order alongwith the remand report of the Assessing Officer also extracted in the impugned order and the reply of the assessee thereon which too has been extracted in para 4.3.1 and 4.3.2 respectively in the order under challenge. On going through the same, I find no infirmity in the conclusions drawn. For ready reference the finding under challenge is reproduced hereunder: “4.4. Decision and reason therefore: I have considered AO’s order and the AR’s submissions and the material on record. I find that the AO did not examine the books during the assessment proceedings even though the same were produced on 30.11.2009, the AO did not do so even during remand proceedings. The ledger accounts of parties were produced which were sent to the AO but no comments have been given on those. These are part of books of accounts and, therefore, do no constitute fresh evidence. Even if these were construed as fresh evidences, these go to the very root of the matter and have to be admitted in the interest of natural justice. The AO issued letters to certain creditors which came back unserved. The AO did not take any other effort, say, by way of issuing a summon u/s 131 to verify the creditors. She was supposedly issuing letters in respect of creditors for goods suppliers but ultimately added advances from customers, expenses payable and even hypothecation loan against car u/s 68. The books of accounts of the appellant are audited. In the context of the nature of assessee’s business, the trade creditors always appear in the same way in the books of accounts. Payments to creditors appearing at the end of the year have been made through banking channels in the next year which is evidenced by the books of accounts and bank statements. In the light of these facts, merely because some letters sent to the creditors came back unserved, the addition of entire liability shown in the balance- sheet as creditors cannot be held to be justified. AR’s arguments also find support from the ratios of judgments in the case of Tola Ram Daga vs. CIT (1996),59 ITR 632 (Assam) and ITO vs. Hylam Securities & Finance (P) Ltd., 178 ITR 317 (2009), Gujarat. The addition is deleted. (Relief Rs. 34,09,408) (emphasis provided) I find on a reading of the facts in the light of the submissions of Ld. Sr. DR that the 4.1. AO in the facts and circumstances of the present case has not even cared to upset any of the findings recorded. It is seen that the categorical finding of the CIT(A) that the Assessing Officer failed to examine the books in the course of the assessment proceedings stands unrebutted on record. The specific conclusion of the CIT(Appeals) “I find that the AO did not examine the books during the assessment proceedings even though the same were produced on 30.11.2009, the AO did not do so even during remand proceedings” , I note, has not been assailed. These speaking conclusions remain unrebutted. I further find that it may not be out of place to extract a portion of the written submissions of the assessee extracted in the order by CIT(A) at this point. It is seen that the assessee apart from other submissions has stated that the Hypothecation loan against car from M/s Kotak Mahindra Primus Ltd. is being timely, withdrawal by way of cheque and the copy of account is enclosed herewith for your ready reference and it is seen that the said aspect was also made a subject matter of addition u/s 68 of the Act by the AO. Thus, the facile argument that the AO was deprived of the opportunity to carry out necessary verification has no merits. It is seen that no efforts were made by the AO to issue summons u/s 131 if so warranted in the remand proceedings. If the argument of the Ld.Sr. DR is considered for a moment and it is believed that the AO even if having grossly erred in not looking at the books of account during the assessment proceedings, an error of which the said authority has been held guilty of by the CIT(A) which findings remain unchallenged on record, the fact remains that if the ld. AO was of the view that in the remand proceedings, the filing of Report was handicapped on account of the perceived limited Remand, then what stopped the AO from seeking permission from the CIT(A) to carry out necessary enquiries. There is nothing on record to show that the AO highlighted the perceived limitation to the CIT(A). Nothing has been done by the AO. The AO could easily have sought permission to carry out investigations etc. deemed fit. On going through the remand report extracted at page 8, it is seen that the AO is reiterating the facts as considered at the stage of the assessment and has failed to address the evidences and submissions or made out any case whatsoever that the perceived limitation of remand was communicated to the CIT(A) who failed to address it. The issues have to come at rest sometime and cannot be kept lingering on the suspicions that had the AO carried out further investigations, something more could have unearthed. The submissions, evidences etc. have been remanded. The AO as in the assessment proceedings likewise in the remand proceedings has chosen not to act for which laxity if any, the Department can suffer why the taxpayer should suffer for the inaction/laxity or carelessness of the department based on perceptions of some presumed shortcoming, nothing has been placed on record.

Accordingly, for the reasons given hereinabove, in the peculiar facts and circumstances of the present case, I find no good reason to vary the conclusion drawn being satisfied by the correctness of the same, the departmental appeal is dismissed. Said order was pronounced in the open court at the time of hearing itself.

In the result, the appeal of the Revenue is dismissed.