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Income Tax Appellate Tribunal, MUMBAI “G” BENCH
Before: S/Sh. B.R. Baskaran & Sandeep Gosain
ORDER लेखा सद�य लेखा सद�य बी बी.आर आर. बा बा�करन �करन केकेकेके अनुसार अनुसार/ Per B.R. Baskaran, AM- लेखा लेखा सद�य सद�य बी बी आर आर बा बा �करन �करन अनुसार अनुसार The revenue has filed this appeal challenging the order dated 27-03-2012 passed by Ld CIT(A)-31, Mumbai and it relates to the assessment year 2000-01. The revenue is aggrieved by the decision of Ld CIT(A) in deleting all the additions made by the AO.
This is second round of proceedings before the Tribunal. The assessee is a partnership firm engaged in the business of export of garments. The AO received information from the Enforcement Directorate that they have initiated action against the assessee on the reasoning that the assessee was indulging in ITA/3878/Mum/2012,AY.00-01-Geetanjali Exports bogus exports. Accordingly the AO reopened the assessment of the year under consideration. Since the assessee did not co-operate with the AO, the assessing officer completed the assessment to the best of his judgment u/s 144 r.w.s. 148 of the Act on 25.3.2004 by determining the total income as under:-
Business income 25,40,891 Duty Draw back 2,02,32,195 Sale proceeds 13,75,66,275 Foreign Exchange 38,41,000 Payment to Mukesh Vora & Co. 3,45,78,350 ----------------- 19,87,58,711 ========= In the first round of proceedings, the Ld CIT(A) deleted the additions relating to sale proceeds of Rs.13,75,66,275/-. It appears that the business income of Rs.25,40,891/- was returned by the assessee itself. When the matters confirmed by the Ld CIT(A) were taken up before the ITAT by the assessee, the Tribunal restored them to the file of the AO, vide its order dated 05.06.2009 passed in ITA No.2855/M/07. However, it is seen that the assessee did not furnish all the details that were called for by the AO during the course of set aside proceedings also and hence the AO was constrained to pass the impugned assessment order to the best of his judgment u/s 144 r.w.s. 254 of the Act, wherein he determined the total income of the assessee again at Rs.19,87,58,711/-.
It is pertinent to note that the assessee had submitted before the AO that the show cause notice issued by the Enforcement directorate has since been cancelled by the order dated 11.06.2010 passed by the Hon’ble Special Director of Enforcement and accordingly pleaded to accept the income returned by the assessee, since the assessment had been reopened on the basis of the show cause notice issued by the Enforcement Directorate alleging bogus sales. The AO, however, wanted information about the appeal, if any, filed against the 2
ITA/3878/Mum/2012,AY.00-01-Geetanjali Exports order of the Special Director of Enforcement. But the assessee failed to furnish the same and hence the AO completed the assessment by making all the additions that were originally made.
The Ld CIT(A), however, accepted the contentions of the assessee that the impugned additions shall not survive, since the show cause notice has been cancelled by the Special Director of Enforcement. The assessee also submitted that it has not received any notice with regard to the appeal, if any, filed against the order of the Special Director of Enforcement. Since the specific charges framed upon the assessee had been cancelled by the order passed by the Special Director of Enforcement, the Ld CIT(A) took the view that the impugned additions shall not survive. Accordingly he deleted all the additions made by the AO. Aggrieved, the revenue has filed this appeal before us.
We heard the parties and perused the record. It is an admitted fact that the assessee had declared business income of Rs.25,40,891/- and the addition of sale proceeds of Rs.13,75,66,275/- made in the initial reassessment order was deleted by the Ld CIT(A). Since the department has accepted the order of the Ld CIT(A) passed in the first round of proceedings, the above said addition relating to sale proceeds has attained finality and hence the AO was not justified in adding the same in the set aside proceedings. On this reasoning, we uphold the order of the Ld CIT(A) in respect of addition of Rs.13.75 crores relating to Sale proceeds.
With regard to the remaining additions relating to Duty Drawback, Foreign exchange and Payment made to Mukesh Vora & others, we notice that the assessee did not furnish any information that were called for by the AO relating to them. It is a fact that the impugned assessment was reopened on the basis
ITA/3878/Mum/2012,AY.00-01-Geetanjali Exports of show cause notice issued by the Enforcement Directorate. Once the assessment has been reopened in a valid manner, in our view, the assessing officer is required to pass the assessment order as per the provisions of the Income tax Act, after due examination of various items relating to the reopened reasons and any other income which has escaped the assessment and which comes to his notice during the course of reassessment proceedings. In this regard, the assessee may canvass for deletion of the addition by relying on the order passed by the Special director of enforcement, who had quashed the show cause notice issued by the Enforcement Directorate, but the same cannot be sole ground for deleting the additions. In our view, the order passed by the Special Director of Enforcement can act as a guidance to the AO, but it will not fetter the rights of the AO to examine all the issues as per the provisions of the Income tax Act. We have earlier noticed that the Ld CIT(A) has deleted all the additions solely on the ground that the show cause notice issued by the Enforcement Directorate has since been cancelled by the Special Director. For the reasons discussed above, we are unable to accept the order of Ld CIT(A).
We further notice that the assessing officer was constrained to pass the order to the best of his judgement u/s 144 of the Act both during the course of initial reassessment proceedings as well as during the course of set aside proceedings, since the assessee has failed to co-operate with the AO. Thus, we notice that there is default on the part of the assessee to submit the necessary information to the AO and hence, on that count, the Ld CIT(A) was not justified in finding fault with the assessing officer in not bringing any material on record to support the additions made by him.
ITA/3878/Mum/2012,AY.00-01-Geetanjali Exports 8. In view of the above, we are of the view that the additions relating to Duty Draw back, Foreign exchange and Payment to Mukesh Vora & others require fresh examination at the end of the AO. Accordingly, we set aside the order of Ld CIT(A) passed on the above said issues and restore them to the file of the AO for adjudicating them afresh. The assessee is also directed to fully co-operate with the AO by furnishing all the information relating to the above said additions. After providing adequate opportunity of being heard to the assessee, the AO may pass appropriate order in accordance with the law.
In the result, the appeal filed by the revenue is partly allowed.