Mr. Shyam Kumar Garg, New Delhi v. ITO, Gwalior

ITA 10/AGR/2010 | 1998-1999
Pronouncement Date: 27-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 1020314 RSA 2010
Assessee PAN ACLPG8795M
Bench Agra
Appeal Number ITA 10/AGR/2010
Duration Of Justice 7 month(s) 11 day(s)
Appellant Mr. Shyam Kumar Garg, New Delhi
Respondent ITO, Gwalior
Appeal Type Income Tax Appeal
Pronouncement Date 27-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 27-08-2010
Date Of Final Hearing 19-07-2010
Next Hearing Date 19-07-2010
Assessment Year 1998-1999
Appeal Filed On 15-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER ITA NO.10/AGR/2010 ASST. YEAR: 1998-99 SHRI SHYAM KUMAR GARG VS. THE INCOME-TAX OFFICE R 105 KUNDAN BAHAWAN WARD 2(2) GWALIOR. AJADPUR COMMERCIAL COMPLEX NEW DELHI 110 033. (PAN : ACLPG 8795 M). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJEEV KUMAR BINDAL & WRITTEN SUBMISSIONS RESPONDENT BY : NONE ORDER PER P.K. BANSAL A.M.: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 02.04.2009 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL :- (1) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON F ACTS IN HOLDING ISSUANCE OF NOTICE U/S 148 OF THE ACT ON 14/3/05 WITHOUT JURISD ICTION BY THE ITO GWALIOR AS VALID DESPITE THE FACT THAT THE APPELLANT WAS FILIN G HIS RETURN OF INCOME IN DELHI FROM THE AY 1999-2000 ONWARDS. A PERSON CANNOT BE ASSESSED BY TWO ASSESSING OFFICER AT THE SAME TIME AND THEREFORE NOTICE ISSUE D WITHOUT JURISDICTION WAS INVALID AND ASSESSMENT MADE THEREON IS BAD IN LAW A ND SHOULD BE QUASHED. (2) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FA CTS IN HOLDING THE NOTICE ISSUED U/S 148 OF THE ACT ON 14/3/05 AS VALID WHIC H OTHERWISE WAS BAD IN LAW SINCE IT WAS APPROVED BY THE ADDL. CIT RANGE-11 G WALIOR ON 17/3/05 I.E. ON DATE AFTER AFFIXTURE OF THE NOTICE AS MENTIONED IN THE ASSESSMENT ORDER. SINCE NO 2 NOTICE WAS EVER RECEIVED BY THE APPELLANT AND THERE FORE THE ENTIRE PROCEEDINGS ARE VOID AB-INITIO AND SHOULD BE QUASHED. (3) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FA CTS IN HOLDING THE ISSUANCE OF NOTICE U/S 148 AS VALID SINCE THERE WAS NO REASON TO BELIEVE THAT ANY PARTICULAR INCOME ESCAPED ASSESSMENT IN THE CASE OF THE APPELLANT AND THEREFORE THE PROCEEDINGS INITIATED BY ISSUANCE OF NOTICE U/S 148 AS WELL AS ASSESSMENT MADE U/S 147 ARE BAD IN LAW AND SHOULD BE QUASHED/A NNULLED. (4) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FA CTS BY CONFIRMING ASSESSMENT U/S 144 AND DISALLOWANCE OF DEDUCTION U/ S 80HHC OF RS.64 78 160/- ON SURMISES AND CONJECTURES BY CONSIDERING THE SAID AMOUNT AS INCOME EARNED FROM OTHER SOURCES AS AGAINST DECLARED EXPORT PROFI TS WITHOUT BRINGING ON RECORD ANY MATERIAL IN SUPPORT THEREOF AND WITHOUT CONSIDE RING THE DETAILS FILED BY THE APPELLANT ON 29/3/06. THUS THE ADDITION SHOULD BE DELETED. 2. THE CASE WAS FIXED FOR HEARING ON 21.06.2010 ON THE BASIS OF THE ORDER PASSED IN THE OPEN COURT ON 28.05.2010 REJECTING THE STAY APPLICATION OF THE ASSESSEE AND ALLOWING THE PRIORITY HEARING TO THE ASSESSEE. ON THE DATE FIXED THE LD . A.R. ATTENDED AND RELIED ON THE WRITTEN SUBMISSIONS MADE BEFORE THE CIT(A). THE CASE WAS A DJOURNED AT THE REQUEST OF THE LD. D.R. FOR 22.06.2010 AFTER HEARING THE COUNSEL FOR THE ASSESS EE. AGAIN THE CASE WAS ADJOURNED FOR THE ARGUMENT OF THE LD. D.R. FOR 24.06.2010. AGAIN THE LD. D.R. SOUGHT ADJOURNMENT FOR 19.07.2010. ON THAT DATE NONE APPEARED ON BEHALF OF THE DEPARTM ENT EVEN THOUGH THE DEPARTMENT WAS FULLY AWARE THAT THE CASE WAS ARGUED AT LENGTH BY THE LD. A.R. ON 21.06.2010 AND ON THAT DATE HE SUBMITTED THE WRITTEN SUBMISSIONS FILED BEFORE THE CIT(A) ON WHICH HE RELIED. WE THEREFORE UNDER THESE CIRCUMSTANCES DISPOSE OF THE APPEAL ON THE BASIS OF THE SUBMISSIONS AS WELL AS THE WRITTEN SUBMISSIONS AS SUBMITTED BY THE LD. A.R. BE FORE THE CIT(A). 3. GROUNDS NO.1 TO 3 WERE NOT PRESSED AND AFTER THA T THE ONLY EFFECTIVE AGROUND REMAIN READ AS UNDER :- 3 (4) THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON FA CTS BY CONFIRMING ASSESSMENT U/S 144 AND DISALLOWANCE OF DEDUCTION U/ S 80HHC OF RS.64 78 160/- ON SURMISES AND CONJECTURES BY CONSIDERING THE SAID AMOUNT AS INCOME EARNED FROM OTHER SOURCES AS AGAINST DECLARED EXPORT PROFI TS WITHOUT BRINGING ON RECORD ANY MATERIAL IN SUPPORT THEREOF AND WITHOUT CONSIDE RING THE DETAILS FILED BY THE APPELLANT ON 29/3/06. THUS THE ADDITION SHOULD BE DELETED. 4. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT ON THE BASIS OF INFORMATION RECEIVED FROM ACIT RANGE-5 NEW DELHI DATED 02.02.2005 THE A.O. NOTED THAT THE ASSESSEE WAS INVOLVED IN BOGUS/OVER INVOICED FRAUD IN EXPORTS OF GARMENTS TO RUSSIA WITH RUSSIAN COMPANIES ZAO CYCLOPA 1000 AND ARENA AND EARNED HUGE INCOME EXCEE DING RS.1 LAKH WHICH WAS NOT SHOWN IN THE RETURN OF INCOME. THEREFORE THE A.O. AFTER R ECORDING THE REASONS INITIATED PROCEEDINGS UNDER SECTION 147 OF THE INCOME-TAX ACT 1961 (THE ACT HEREINAFTER) AND ACCORDINGLY ISSUED NOTICE UNDER SECTION 148 FOR THE A.Y. 1998-99 THROU GH AFFIXTURE AT THE KNOWN ADDRESS OF THE ASSESSEE. THE A.O. NOTED THAT THE ASSESSEE HAS SHO WN TOTAL EXPORTS OF SALES AMOUNTING TO RS.86 40 000/- WHEREAS THE COST OF GOODS INCLUDING DIRECT EXPENSES COMES AT RS.21 37 068/- ONLY. THUS IN THIS CASE THE ASSESSEE HAS SHOWN TO HAVE EARNED PROFIT OF MORE THAN 304% WHEREAS IN ACTUAL PRACTICE IN THE COUNTRY PROFIT ON READYMA DE GARMENTS ARE VARYING FROM 35% TO 50%. CONSIDERING HIS CASE OF EXPORTS AND THAT AT BEST TH ERE MAY BE A MAXIMUM PROFIT @ 80% THE A.O. HAS WORKED OUT THE PROFIT AFTER REDUCING DIRECT EXP ENSES. ACCORDINGLY CONSIDERING THE MARGIN OF PROFIT EVEN 80% CHARGED THEN NET PROFIT ON GOODS P URCHASED CONSIDERING DIRECT EXPENSES COMES AT RS.17 09 654/- AS AGAINST RS.78 35 367/- WORKED OUT AS PER THE RETURN OF INCOME FOR A.Y. 98- 99. BY TAKING THE FIGURES OF DUTY DRAW BACK PROPOR TIONATELY IN REVISED PROFIT AS WORKED OUT ABOVE THE ACTUAL AMOUNT ALLOWABLE U/S. 80HHC WAS W ORKED OUT BY THE A.O. AS UNDER IN PURSUANCE OF RULE 18BBA(3) :- 4 3. TOTAL TURNOVER OF THE BUSINESS RS.38 46 722/- 4. TOTAL EXPORT TURNOVER RS.38 46 722/- 5. TOTAL PROFIT OF THE BUSINESS RS.22 27 232/- 6. EXPORT TURNOVER IN REPORT OF TRADING GOODS RS.3 8 46 722/- 7. DIRECT COST OF TRADING GOODS EXPORTED RS.21 37 068/- 8. INDIRECT COST ATTRIBUTED TO TRADING GOODS EXPORT RS.1 36 349/- 9. TOTAL OF 7 & 8 RS.22 73 417/- 10. PROFIT FROM EXPORT OF TRADING GOODS RS.15 73 305/- (6 MINUS 9) 11. ADJUSTED TOTAL TURNOVER (3 MINUS 6) RS. NIL 12. ADJUSTED EXPORT TURNOVER (4 MINUS 6) RS. NIL 13. ADJUSTED PROFIT OF THE BUSINESS RS.6 53 927/- (5 MINUS 10) 14. PROFIT DERIVED BY ASSESSEE FROM EXPORTS RS.21 61 839/- OF GOODS OR MERCHANDISE TO WHICH SECTION 80HHC APPLIES. COMPUTED UNDER SUB SECTION (3) OF SECTION 80HHC I.E. FIGURES AGAINST SERIAL NUMBER 10 PLUS 90% OF FIGURES AT SERIAL NO.13). 5. THUS THE A.O. CAME TO THE CONCLUSION THAT OUT O F THE TOTAL PROFIT OF RS.86 40 000/- SHOWN BY THE ASSESSEE WHILE THE PROFIT EARNED WOULD HAVE BEEN RS.21 61 839/- FROM THE EXPORT AND ACCORDINGLY HE TREATED THE BALANCE SUM OF RS.64 78 160/- AS INCOME FROM OTHER SOURCES AND PROPOSED TO ADD TO THE INCOME OF THE ASSESSEE FOR A .Y. 1998-99. ACCORDINGLY ASSESSEES OBJECTIONS WERE INVITED. THE ASSESSEE COULD NOT AP PEAR AND ULTIMATELY THE ASSESSMENT WAS COMPLETED ON 27.03.2006 UNDER SECTION 144 OF THE AC T HOLDING THAT THE ASSESSEE HAD AVAILED EXCESS DEDUCTION UNDER SECTION 80HHC FOR RS.64 78 1 60/- BY OVER INVOICING THE GOODS SOLD IN EXPORT BUSINESS SHOWING BY EARNING PROFIT MORE THAN 304% AS AGAINST THE REAL PROFIT OF 70 TO 80%. THE ASSESSEE CAME IN APPEAL BEFORE THE CIT(A) . THE CIT(A) CONFIRMED THE ORDER OF THE A.O. 6. LD. A.R. BEFORE US ALTHOUGH RELIED ON THE WRITTE N SUBMISSIONS MADE BEFORE THE CIT(A) IT WAS POINTED OUT THAT THE CIT(A) HAS ASKED FOR THE R EMAND REPORT COPY OF WHICH IS AVAILABLE ON 5 PAGE NOS.75 TO 78 OF THE PAPER BOOK. DURING THE CO URSE OF REMAND REPORT THE ASSESSEE SUBMITTED ALL THE BOOKS OF ACCOUNTS VOUCHERS COPY OF BANK S TATEMENT PURCHASE BILLS SHIPPING BILLS ETC. BEFORE THE AO. EVEN THE DETAILS OF DUTY DRAW BACK COPY OF THE BANK STATEMENT AS WELL AS LETTER DATED 17.11.2008 ISSUED TO SHRI SHYAM KUMAR GARG WA S ALSO SENT. THE A.O. HAS ALSO OBSERVED THAT THE ASSESSEE HAS SUBMITTED THE FOLLOWING DETAI LS:- 1. ALL THE EXPORT SALES INVOICES 2. LEDGER ACCOUNT COPY OF EXPORT SALES AND PARTY WI SE LEDGERS 3. COPY OF BANK STATEMENT IN WHICH SALES REALIZATIO N WERE CREDITED 4. BILL OF LADING CUSTOM DOCUMENTS INSURANCE CHAR GES PAID BANK ADVICES ETC. COPIES IN SUPPORT OF GENUINENESS OF EXPORT SALES. 5. FURTHER THE ACCOUNTS WERE NOT ONLY AUDITED BY A CHARTERED ACCOUNTANT BUT ALSO A SEPARATE REPORT FOR CLAIMING DEDUCTION U/S 80HHC IS ALSO GIVEN BY HIM SEPARATELY WHICH ALSO SHOWS GENUINENESS OF TRANSACTION TAKEN PLACE D URING THE RELEVANT PERIOD. 6. NEEDLESS TO SAY THAT A CHARTERED ACCOUNTANT IS M OST COMPETENT PERSON FOR THE PURPOSE OF CHECKING OF ACCOUNTS AND HIS REPORT AND CERTIFICATE CAN NOT BE CHALLENGED IN A CASUAL MANNER. 7. PURCHASE ACCOUNTS/LEDGER COPIES. 7. ON THE BASIS OF ALL THESE IT WAS CONTENDED THAT THE ASSESSEE WAS MAINTAINING THE REGULAR BOOKS OF ACCOUNTS. NO DISCREPANCY OR DEFECT IN THE BOOKS OF ACCOUNTS WAS EVER POINTED OUT BY THE A.O. THE BOOKS ARE DULY AUDITED BY CHARTERED A CCOUNTANT. ON THE BASIS OF THE REPORT OF THE CHARTERED ACCOUNTANT THE ASSESSEE CLAIMED DEDUCTIO N UNDER SECTION 80HHC. THE A.O. MERELY PRESUMED THAT THE ASSESSEE HAS SHOWN HIGH PROFIT. NO EVIDENCES TO THE CONTRARY WERE BROUGHT ON RECORD. EVEN NO COMPARATIVE INSTANCE WAS EVER SUBM ITTED IN THE REMAND REPORT BUT IN THE REMAND REPORT THE A.O. SIMPLY JUSTIFIED THE PERCENTAGE OF THE PROFIT ESTIMATED BY THE A.O. IN THE ASSESSMENT ORDER. HE HAS ALSO BY REFERRING TO THE PAPER BOOK FILED BEFORE THE CIT(A) POINTED OUT THAT THE ASSESSEE HAS SUBMITTED COPY OF THE CER TIFICATE ISSUED BY C.A. IN FORM 10CC AND AUDIT REPORT IN FORM 3CD AND IN FORM 3CD EVEN THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT 6 WERE ALSO FILED ALONG WITH THE PHOTOCOPY OF THE APP LICATION FORM FOR IEC CODE PHOTOCOPY OF PURCHASE CONTRACT PHOTOCOPY OF BILL OF LADING PHO TOCOPY OF INVOICE & PACKAGING LIST PHOTOCOPY OF BANK STATEMENT INDICATING RECEIPT OF EXPORT SALE PROCEEDS PHOTOCOPY OF SHIPPING BILLS PHOTOCOPY OF PAYMENT BANK VOUCHER PHOTOCOPY OF LET TER OF CREDIT AND PHOTOCOPY OF SALARY CERTIFICATE IN FORM NO.16. IT WAS POINTED OUT THAT THE A.O. HAS ALSO STARTED THE REASSESSMENT PROCEEDINGS FOR THE A.Y. 1998-99 IN THE CASE OF M/S . K.S. EXIM LTD. IN WHICH THE ASSESSEE IS ONE OF THE DIRECTORS AND IN THAT CASE ALSO DEDUCTION UN DER SECTION 80HHC AS CLAIMED BY THE ASSESSEE WAS DENIED. IT WAS ALSO POINTED OUT BY REFERRING T O THE WRITTEN SUBMISSIONS THAT THE A.O. HAS WRONGLY MENTIONED THAT THE ASSESSEE HAS CLAIMED DED UCTION UNDER SECTION 80HHC AT RS.86 40 000/-. IN FACT THE ASSESSEE HAS CLAIMED T HE DEDUCTION UNDER SECTION 80HHC AT RS.76 88 503/-. THE TOTAL PROFIT OF THE BUSINESS A S PER THE AUDITED PROFIT & LOSS ACCOUNT FILED ALONG WITH THE RETURN WAS RS.78 35 368/-. EVEN ON THAT BASIS IF THE ACTION OF THE A.O. IS TAKEN AS CORRECT THE DISALLOWANCE WOULD HAVE TO BE RESTRICTE D TO RS.55 26 664/- AS AGAINST RS.64 78 160/-. 8. WE HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISS IONS AS WELL AS THE SUBMISSIONS MADE BY THE LD. A.R. AND THE MATERIALS ON RECORD ALONG W ITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE A.O. IN THIS CASE ON THE BASIS OF THE INFORMATION COMMUNICATED AS PER THE LETTER OF THE ADDL. CIT RANGE 5 NEW DELHI DATED 02.02. 2005 REOPENED THE ASSESSMENT OF THE ASSESSEE AND ON THAT BASIS HE FORMED AN OPINION THA T THE ASSESSEE HAS COLORIZED ITS OTHER UNDISCLOSED INCOME IN THE FORM OF INCOME FROM EXPOR T BUSINESS AND AVAILED DEDUCTIONS UNDER SECTION 80HHC AMOUNTING TO RS.76 88 503/- INSTEAD O F LESSER AMOUNT OF DEDUCTION ADMISSIBLE UNDER SECTION 80HHC. ACCORDINGLY NOTICE UNDER SEC TION 148 WAS ISSUED AND SERVED TO THE ASSESSEE THROUGH AFFIXTURE. THE ASSESSEE IS THE PR OPRIETOR OF M/S. SHYAM EXPORTS. THE NOTICE 7 UNDER SECTION 142(1) WAS ALSO SERVED THROUGH AFFIXT URE WHICH REMAINS UN-COMPLIED WITH. THE A.O. THEREFORE ISSUED SHOW CAUSE NOTICE TO THE AS SESSEE WHY THE INCOME SHOULD NOT BE DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SEC TION 154 AND ACCORDINGLY HE WORKED OUT THE DEDUCTION OF PROFIT DERIVED BY THE ASSESSEE FROM EX PORTING AT RS.21 61 839/-BY CONSIDERING THE MARGIN OF PROFIT @ 80% ON THESE EXPORT TURNOVER MAD E BY THE ASSESSEE IGNORING THE AUDITED RESULTS OF THE ASSESSEE BY WHICH THE ASSESSEE HAS S HOWN THE PROFIT EARNED MORE THAN 304%. THE WORKING DETAILS AS COMPUTED BY THE A.O. AND AS WORK ED OUT BY THE ASSESSEE IN HIS ORIGINAL RETURN OF INCOME AS PER FORM 10CC ARE REPRODUCED AS UNDER :- AS PER THE AS PER THE AO BOOKS OF ARBITRARILY ACCOUNTS & ON SURMISES FORM 10CC (RS.) (RS.) PARTICULARS TOTAL PURCHASES & DIRECT COST (TAKEN AS PER BOOKS BY AO) 21 37 068 21 37 068 ADD: GROSS PROFIT (ASSUMED AT 80% OF DIRECT COST BY THE AO) 17 09 654 65 02 932 TOTAL EXPORT TURNOVER (DERIVED BY AO) 38 46 722 86 40 000 GROSS PROFIT (AS ABOVE) 17 09 654 65 02 932 LESS: INDIRECT EXPENSES AS PER BOOKS 1 36 349 1 36 349 NET PROFIT FORM EXPORT OF TRADING GOODS 15 73 305 63 66 583 EXPORT INCENTIVES (REDUCED PROPORTIONATELY BY THE AO) (ACTUALLY RECEIVED/ACTUAL TURNOVER X ASSUMED TURNOVER) = (14 68 800 / 86 40 000 X 38 46 722) 6 5 3 927 14 68 800 90% OF ABOVE 5 88 534 13 21 920 DEDUCTION U/S 80HHC NET PROFIT FROM EXPORT OF TRADING GOODS 15 73 305 63 66 583 90% OF EXPORT INCENTIVES 5 88 534 13 21 920 TOTAL DEDUCTION U/S 80HHC 21 61 839 76 88 503 8 INCOME FROM OTHER SOURCES (COMPUTED BY AO) TOTAL TURNOVER AS PER PROFIT & LOSS ACCOUNT 86 40 000 LESS: DEDUCTION ALLOWED U/S 80HHC (AS ABOVE) 21 61 839 INCOME FROM OTHER SOURCES 64 78 161 NIL 9. THE ASSESSEE WAS MAINTAINING REGULAR BOOKS OF AC COUNTS. THE BOOKS WERE DULY PRODUCED BY THE ASSESSEE DURING THE COURSE OF REMAND PROCEED INGS. THE AUDIT UNDER SECTION 44AD/80HHC WAS CARRIED OUT BY THE CHARTERED ACCOUNTANT. THE A SSESSEE SUBMITTED VARIOUS EVIDENCES TO PROVE THE EXPORTS MADE BY HIM DURING THE YEAR UNDER CONSI DERATION. THE PHOTOCOPIES OF ALL THE EVIDENCES WERE ALSO FILED BEFORE US WHICH ARE AVAIL ABLE FROM PAGES 20 TO 72 OF THE PAPER BOOK. THESE DOCUMENTS INCLUDE PHOTOCOPY OF THE APPLICATIO N FORM FOR IEC CODE PHOTOCOPY OF PURCHASE CONTRACT PHOTOCOPY OF BILL OF LADING PHO TOCOPY OF INVOICE & PACKAGING LIST PHOTOCOPY OF BANK STATEMENT INDICATING RECEIPT OF EXPORT SALE PROCEEDS PHOTOCOPY OF SHIPPING BILLS PHOTOCOPY OF PAYMENT BANK VOUCHER PHOTOCOPY OF LET TER OF CREDIT. ALL THESE PAPERS WERE FILED BEFORE THE CIT(A) ALSO IN THE SHAPE OF PAPER BOOK W HICH WERE FORWARDED BY THE CIT(A) TO THE A.O. FOR SUBMITTING THE REMAND REPORT. THE A.O. HA S DULY ACKNOWLEDGED IN THE REMAND REPORT WHICH IS AVAILABLE FROM PAGES 75 TO 78 OF THE PAPER BOOK THAT DURING THE REMAND PROCEEDINGS SHRI SANDEEP TAORI C.A. ATTENDED AND PRODUCED THE BOOKS OF ACCOUNTS VOUCHER COPY OF BANK STATEMENT PURCHASE BILLS SHIPPING BILLS BEFORE TH E THEN A.O. ON 23.03.2007 AND 11.04.2007. THE ASSESSEE HAS FURNISHED DETAILS OF DUTY DRAW BACK RE CEIVED AND COPY OF BANK STATEMENT. HE ALSO ACKNOWLEDGED THAT THE ASSESSEE HAS SUBMITTED COPY O F THE CONTRACT NOTE DATED 06.03.1998 COPY OF SHIPPING BILLS AND COPY OF LETTER/TRANSFER CREDI T DATED 31.03.1998 AND LETTER/TRANSFER CREDIT MEMO DATED 07.04.1998 FROM STATE BANK OF MYSORE CA NNAUGHT PLACE BRANCH FOR RS.50 00 000/- AND FOR RS.36 40 000/- RESPECTIVELY AS CONFIRMATION OF THE TRANSACTION BUT STILL HE TREATED THE 9 EXPORT OF GOODS TO RUSSIA MADE BY THE ASSESSEE BY M AKING OVER-INVOICING. NEITHER THE A.O. WHO FRAMED THE IMPUGNED ASSESSMENT NOR THE A.O. WHO SUB MITTED THE REMAND REPORT HAS BROUGHT OUT ANY MATERIAL OR EVIDENCE WHICH MAY PROVE THAT THE A SSESSEE HAS OVER-INVOICED THE SALES. NO IOTA OF EVIDENCE IS AVAILABLE OR MENTIONED IN THE ASSESS MENT ORDER. EVEN THE LD. D.R. WHO SOUGHT NUMBER OF ADJOURNMENTS AND ULTIMATELY REMAINED ABSE NT COULD NOT PRODUCE ANY EVIDENCE EVEN THOUGH THE SAME WAS SPECIFICALLY ASKED BY THE BENCH . EVEN NO COMPARATIVE INSTANCE WAS BROUGHT ON RECORD. THIS CLEARLY PROVES THAT THE A. O. HAS DENIED THE DEDUCTION TO THE ASSESSEE UNDER SECTION 80HHC BY TREATING THE PROFIT EARNED B Y THE ASSESSEE TO BE THE INCOME FROM OTHER SOURCES MERELY ON ASSUMPTION AND PRESUMPTION AS THE ASSESSMENT HAS BEEN PASSED ON THE BASIS OF THE EVIDENCE BEING BROUGHT ON RECORD. HONBLE SUPR EME COURT IN THE CASE OF CIT VS. DAULAT RAM RAWATMULL 87 ITR 349 HAS HELD THAT APPARENT IS REAL. ONUS IS ON THE PERSON WHO ALLEGES APPARENT IS NOT REAL. THE ASSESSEE HAS SUBMITTED T HE EVIDENCE IN RESPECT OF THE EXPORT SALES SALES REALIZATION EVEN THE MOVEMENT OF THE GOODS OUTSIDE THE COUNTRY BUT NO CONTRARY EVIDENCE WAS BROUGHT ON RECORD WHICH MAY PROVE THAT THE ASSESSEE HAS OVER-INVOICED THE EXPORT. THE BURDEN OF PROOF IN OUR OPINION LIES ON THE A.O. TO PROVE THAT THE ASSESSEE HAS OVER-INVOICED THE EXPORT AND NOT ON THE ASSESSEE. THE REVENUE SHOULD PROVE THAT THE ASSESSEE HAS DERIVED THE INCOME FROM OTHER SOURCES AND HAS BROUGHT IT BACK IN INDIA THROUGH EXPORTS. THE A.O. HAS NOT BROUGHT ON RECORD ANY IOTA OF EVIDENCE WHICH MAY PROVE THAT THE REVENUE HAS DISCHARGED ITS ONUS. EVEN NO EVIDENCE WAS PUT TO THE ASSESSEE FOR ITS REBUTTA L DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR REMAND PROCEEDINGS WHICH MAY PROVE THAT THE EXPO RT SALES SHOWN BY THE ASSESSEE WERE BOGUS. HE SIMPLY MADE A SCRIBBLING AND GENERAL OBSERVATION THAT IN EXPORT BUSINESS RELATING TO THE READYMADE GARMENTS THE PROFIT IS AROUND 70 TO 80% A ND ON THAT BASIS HE ESTIMATED THE PROFIT OF THE EXPORTS OF GOODS CARRIED OUT BY THE ASSESSEE. EVEN NO COMPARATIVE INSTANCE WAS GIVEN WHICH 10 MAY PROVE THAT THE PROFIT IN SUCH TYPE OF TRANSACTI ON VARY FROM 70% TO 80%. EVEN THE INFORMATION RECEIVED FROM DCIT VIDE LETTER DATED 02 .02.2005 WERE ALSO NOT BROUGHT ON RECORD SO THAT THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY TO RE BUT THAT INFORMATION. THE EVIDENCES PRODUCED BY THE ASSESSEE ALONG WITH THE CERTIFICATE ISSUED B Y THE PROFESSIONALS POINTING OUT THE EXPORT MADE BY THE ASSESSEE AS WELL AS THE EXPORTS PROFIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC CANNOT BE BRUSHED ASIDE UNTIL AND UNLESS THE CHARTE RED ACCOUNTANT MAY BE EXAMINED IN THIS REGARD. THE CERTIFICATE ISSUED IN PURSUANCE OF SEC TION 80HHC IN OUR OPINION WILL NOT HAVE IN THAT CASE ANY EVIDENTIARY VALUE AND THIS PROVISION WILL BECOME REDUNDANT. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITI ON MADE BY THE A.O. AMOUNTING TO RS.64 78 160/- UNDER THE HEAD INCOME FROM OTHER SO URCES AND DIRECT THE A.O. TO ALLOW THE DEDUCTION TO THE ASSESSEE UNDER SECTION 80HHC TREAT ING THE SAID PROFIT DERIVED BY THE ASSESSEE. ALSO THE INCOME FROM EXPORT BUSINESS AND ALLOW DEDU CTION TO THE ASSESSEE UNDER SECTION 80HHC AS HAS BEEN CLAIMED BY THE ASSESSEE. THUS GROUND NO.4 TAKEN BY THE ASSESSEE IS ALLOWED. 10. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27.08.2010) SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 27 TH AUGUST 2010. PBN/* 11 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY