DOABA ALLOYS & CASTING PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

Briefly stated, the facts of the present case are: during the processing of return of income filed by the assessee qua the assessment year 2007-08, the case was subjected to scrutiny and consequently, notices u/s 143(2) and 142(1) along with questionnaire were served upon the assessee and in response thereto, Shri Anil Sharma, CA/AR attended the proceedings and file necessary documents. During the scrutiny, assessee claimed that in the previous year, the company has purchased scrap from Container Corporation in one lot for Rs.19,09,900/- on 06.06.2006, the only purchase made during the year and the same were sold at Rs.18,23,199/- resulting into a loss of Rs.86,071/-. The assessee claimed huge expenditure for reducing the taxable house property income in the P & L account to the tune of Rs.16,12,838/- on a single transaction, which is not eligible for deduction. Since the assessee has failed to produce the complete set of books of accounts along with bills and vouchers, the profits from sale of scrap is taken @ 5% on Rs.18,23,199/- i.e. Rs.91,160/- and assessed the income of assessee to Rs.10,55,843/-.

The assessee carried the assessment order before Ld. CIT(A) who has partly allowed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal. 4. Ld. A.R. for the assessee challenging the impugned order, contended inter alia that the books of accounts filed by the assessee has not been expressly rejected; that assessee has also produced the vouchers/bills and remand report has also been called by Ld. CIT(A) during appellate proceeding, who has passed the order merely on the basis of doubt. 5. However, on the other hand, Ld. D.R. vehemently relied upon the order passed by Ld. CIT(A).

The sole question arises for determination in this case is, “as to whether Ld. CIT(A) has erred in confirming the assessment order in limiting the claim of expenditure against business income to the tune of Rs.4,03,035/- on estimate basis”? 7. The A.O. passed the assessment order on account of failure of assessee to produce the complete sales and books of accounts along with bills and vouchers and proceeded to assess the profit from sale of scrap @ 5% amounting on Rs.18,23,199/- and assessed the income of the assessee at Rs.10,55,843/-. 8. Undisputedly, during the assessment proceedings, the books of accounts were produced but supporting bills and vouchers were not there for perusal of the A.O. who has, without invoking the provisions contained u/s 145(2) of the Act has expressed his doubt about the genuineness and correctness of the income as shown in the P & L account on the return filed by the assessee particularly regarding nature of quantum of loss shown. 9. Ld. A.R. challenging the impugned order, contended that the books of accounts were produced before the A.O. which have not been disputed. Accounts books are regularly being audited without any comments and even accepted by the tax authorities and as such imposition of preemptive rates is unwarranted because no such rate is possible in this business. Ld. A.R. relied upon the letter addressed to A.O. lying at page 22 of the Paper Book wherein it is categorically mentioned that “we are producing herewith vouchers for your verification in respect of Schedule XVII and our P & L account. Findings of the A.O. regarding non filing of bills and vouchers before the A.O., are patently wrong in the face of letter dated 28.08.2009 lying at page 22 of the paper book filed by the assessee during appellate proceedings before Ld. CIT(A). Letter dated 28.08.2009 lying at page 22 of the paper book has not been disputed by Ld. CIT(A) nor he has returned any finding on the same rather proceeded to tow the line of A.O. in a stereotyped manner to disallow the claim of assessee. Ld. CIT(A) has proceeded on the basis of doubt expressed by the A.O. regarding the genuineness of the correctness of income of the assessee. Providing opportunity of being heard is a sine qua non of providing justice for a quasi judicial authority, the A.O. and CIT(A) in this case. A.O. as well as CIT(A) being quasi judicial authorities, are under obligation to provide opportunity of being heard to the assessee before deciding the matter and not to decide the matter by overlooking the documents placed on file during assessment as well as appellate proceedings.

In view, what has been discussed above, we are of the considered view that the case is required to be restored to Ld. CIT(A) to decide afresh after providing adequate opportunity of being heard to the parties in the light of documents relied upon and provide sufficient opportunity during appellate proce3edings. So, we hereby accept the present appeal of the assessee. Order pronounced in the open court on 27th Nov., 2015.

Sd./- Sd./- ( N. K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Date: 27.11. 2015/Sp Copy forwarded to:-