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Income Tax Appellate Tribunal, “SMC” “B” BENCH: KOLKATA
Before: Shri Mahavir Singh, JM]
For the Appellant: Shri Miraj D. Shah, Advocate For the Respondent: Shri Rajendra Prasad, JCIT, Sr. DR ORDER Both these appeals by assessee are is arising out of common order of CIT(A)- XXXII, Kolkata vide Appeal Nos. 120 & 119/XXXII/13-14/W-1(2)/HG/R&T/Kol dated 23.09.2014. Assessments were framed by ITO, Wd-1(2), Hooghly u/s. 143(3)/147 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2004-05 and u/s. 144 of the Act for AY 2005-06 vide his separate orders dated 31.12.2008 and 19.12.2007 respectively.
The two inter-connected common issues in these appeals of assessee are against the order of CIT(A) are as under:
(i) The AO after rejecting the books of account estimated the gross profit at 8% in both the years. (ii) Secondly also disallowed labour charges in AY 2004-05 and added sundry creditors in AY 2005-06 which are related to business.
I have heard rival submissions and gone through facts and circumstances of the case. At the outset, ld. Counsel for the assessee first of all referred the AY 2004-05 and stated that the reasons recorded for issuance of notice under section 148 of the Act was not provided to the assessee and accordingly he could not raise the objections before AO for issuance of notice u/s 148 of the Act in terms of the decision of the Hon’ble Supreme Court in the case of G.K.N. Driveshafts (India) Ltd. –vs.- ITO [2003] 259 ITR 19, whrein it is held that when a notice u/s 148 of the Act is issued, then the proper cause of action for the noticee is to file return and if he so desires, can seek reasons for issuing 2 & 2238/K/2014 Dutta Trading Co. AY 2004-05 & 2005-06 notice. The AO is duty bound to furnish reasons and on receipt of reasons the noticee is entiled to file objections to issuance of notice and AO is again duty bound to dispose of the same by passing a speaking order. But in this case, no such procedure was adopted, ld. Counsel stated. On query from the Bench, ld. Sr. D.R. fairly agreed that the issue can be remitted back to the file of the AO.
In respect to AY 2005-06, ld. Counsel for the assessee stated that the assessment was framed u/s 144 of the Act and books of account were rejected without providing reasonable opportunity of being heard to the assessee. On this also, ld. Sr. D.R. fairly agreed that the issue can be remitted back to the file of the AO.
In terms of the above facts and circumstances in both the years, I set aside the orders of the lower authorities and remit the matter back to the file of the AO for deciding the issues de novo in both the years. Accordingly, both the assessments are remitted back for framing de novo to the AO.
In the result, both the appeals of assessee are allowed for statistical purposes.
Order is pronounced in the open court on 03.02.2016 Sd/- (Mahavir Singh) Judicial Member
Dated : 3rd February, 2016 Jd.(Sr.P.S.) Copy of the order forwarded to: