Recon Valves Co., Kolkata v. DCIT, Circle - 50, Kolkata, Kolkata

ITA 1450/KOL/2010 | 2000-2001
Pronouncement Date: 21-07-2011

Appeal Details

RSA Number 145023514 RSA 2010
Assessee PAN AAEFR2520C
Bench Kolkata
Appeal Number ITA 1450/KOL/2010
Duration Of Justice 1 year(s) 7 day(s)
Appellant Recon Valves Co., Kolkata
Respondent DCIT, Circle - 50, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 21-07-2011
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 21-07-2011
Date Of Final Hearing 19-07-2011
Next Hearing Date 19-07-2011
Assessment Year 2000-2001
Appeal Filed On 14-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A KOLKATA [ () . .. . ! ! ! !. .. . '# ] ]] ] [BEFORE HONBLE SRI MAHAVIR SINGH JM & HONBLE S RI C. D. RAO AM] % % % % /ITA NOS.1450 & 1451/KOL/2010 &' ()/ ASSESSMENT YEARS : 2000-01 & 2001-02 (+ / APPELLANT ) - & - ( ./+ /RESPONDENT) RECON VALVES CO. -VERSUS- D.C.I.T.CIRCLE-4 KOLK ATA (PAN: AAEFR 2520 C) + 0 1 '/ FOR THE APPELLANT: SHRI S.BAGCHI ./+ 0 1 '/ FOR THE RESPONDENT: SHRI P.P.SARKAR '2 / ORDER THE ABOVE APPEALS ARE FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS DATED 28.04.2010 OF THE CIT(A)-XXXII KOLKATA PERTAINING TO A.YRS. 2000-01 AND 2001-02 RESPECTIVELY. 2. IN BOTH THE APPEALS THE ASSESSEE HAS RAISE D THE LEGAL ISSUE IN GROUND NO.1 WHICH READS AS UNDER :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LEARNED CIT(APPEALS) ERRED IN DISMISSING THE APPELLANTS CH ALLENGE OF THE VIRES OF ASSUMPTION OF JURISDICTION UNDER SETCION 147 FOR RE ASSESSMENT DESPITE WASNT OF VALID REASONS FOR BELIEF AS TO ESCAPEMENT OF INCOME FROM ASSESSMENT AND BREACH OF THE CONDITIONS PRECEDENT TO SUCH ASSUMPT ION. 3. AT THE TIME OF HEARING BEFORE US THE LD. COUNS EL APPEARING ON BEHALF OF THE ASSESSEE BY REFERRING TO THE ASSESSMENT ORDER AT PA GE-2 WHERE THE AO HAS NOTED THE ORDER SHEET NOTINGS DATED 26.12.2006 FOR A.YR. 2004 -05 AND CONTENDED THAT THE REVENUE IS NOT JUSTIFIED TO PROCEED THE RE-ASSESSME NT PROCEEDINGS SIMPLY BASED ON THE DEPOSITION OF THE ACCOUNTANT OF THE ASSESSEE WITHOU T HAVING A BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT WHICH IS A MAND ATORY REQUIREMENT BEFORE THE 2 INITIATION OF THE RE-ASSESSMENT. THEREFORE HE REQU ESTED TO SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE ONLY. 4. ON THE OTHER HAND THE LD. DR APPEARING ON BEHA LF OF THE REVENUE CONTENDED THAT THE LD. CIT(A) HAS CATEGORICALLY MENTIONED TH AT HE HAS CAREFULLY PERUSED THE ASSESSMENT ORDER AND CALLED FOR THE ASSESSMENT RECO RDS AND ON CAREFUL PERUSAL OF THE RECORDS HE OBSERVED THAT PROCEEDINGS U/S 147 OF THE ACT WERE INITIATED AS PER LAW BY THE AO. THEREFORE HE REQUESTED TO DISMISS THE GROU ND OF THE ASSESSEE. 5. IN VIEW OF THE ABOVE ARGUMENTS WE CONSIDER IT TO CALL FOR THE ASSESSMENT RECORDS TO VERIFY THE REASONS RECORDED THEREIN AND DIRECTED THE LD. DR TO PRODUCE THE ASSESSMENT RECORDS. ACCORDINGLY THE LD. DR PRODUCED THE SAME ON 21.07.2011. 5.1. ON CAREFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD INCLUDING THE REASONS RECORDED IN THE ASSESSMENT ORDER FILED IT IS OBSERV ED THAT THOUGH THE AO HAS EXTRACTED THE ORDER SHEET NOTINGS DATED 26.12.2006 FOR A.YR. 2004-05 WHICH READS AS UNDER :- THE AUTHORIZED REPRESENTATIVE STATES THAT THERE W ERE NO SUCH PARTIES AND NO TRANSACTIONS WERE MADE. BOGUS PURCHASES WERE SHOWN IN THE F.Y. 1999-2000 TO 2000-2001 IN ORDER TO LOWER THE PROFIT. BOGUS PAYME NTS WERE SHOWN TO LIQUIDATE THE BOGUS CREDITORS. IN FACT IN THE ORDER SHEET NOTINGS DATED 26.3.2007 THE AO HAS RECORDED THE FOLLOWING REASONS :- M/S. RECON VALVES CO. A.Y.2000-01 PAN: AAREFR 2520 C REASONS TO BELIEVE THE ASSESSEE FIRM FILED RETURN OF INCOME FOR THE AS SESSMENT YEAR 2000-01 ON 25 OCT 2000 AND SAME WAS PROCESSED U/S 143(1) ON 14 -02-2002 SHOWING A TOTAL INCOME OF RS.59 860/-. IN COURSE OF ASSESSMENT PROC EEDING FOR THE A.Y. 2004- 05 133(6) WAS ISSUED TO THE VARIOUS SUNDRY CREDITOR S FOR VERIFICATION OF TRANSACTIONS CLAIMED TO HAVE BEEN MADE WITH THOSE P ARTIES BUT THE LETTERS WERE RETURNED UN-SERVED. THE ASSESSEE FIRM WAS ASKED TO EXPLAIN AS TO WHY ADVERSE INFERENCE INSTEAD OF TRANSACTION MADE WITH THOSE PA RTIES. IN REPLY THE AUTHORISED REPRESENTATIVE STATED THAT FOLLOWING PAR TIES DID NOT EXIST :- 3 1. ROY & CO. 2. PRIYA & CO. 3. BLUE STAR ENGG. CO. 4. TISTA ENGINEERING CO. 5. BHOWMICK ENGG. CO. 6. CHATTERJEE ENGINEERING CO. 7. DAS ENGG. CO. 8. ESS BEE ENTERPRISE 9. GOUR FURNITURE 10. J.K.TOOLS 11. KAMALA ENGG. WORKS 12. MITRA ENGG.WORKS 13. NORTH CALCUTTA ENGG. WORKS 14. N.K.TOOLS 15. B.K.ENTERPRISE 16. ZENITH ENGG. CO. IT WAS FURTHER ADMITTED THAT BOGUS PURCHASES WAS SH OWN IN THE NAME OF THOSE PARTIES DURING THE F.Y. 1999-2000 TO 2000-01 IN ORDER TO LOWER THE PROFIT. IT IS EVIDENT FROM THE ABOVE FACT THAT INCOME CHARG EABLE TO TAX FOR THE F.Y. 1999-2000 RELEVANT TO THE A.Y. 2000-01 HAS ESC APED ASSESSMENT FOR THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE COR RECT INCOME IN THE RETURN. IN VIEW OF THE ABOVE I HAVE THE REASON TO BELIEVE THAT INCOME MORE THAN RS.1 LAKH HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISION OF SECTION 147 OF THE INCOME TAX ACT 1961. SINCE MORE THAN FOUR YEARS HAVE ELAPSED IN THIS CA SE SATISFACTION OF JT. COMMISSIONER OF INCOME TAX RANGE-50 KOL. IS REQUI RED. SD/- (HARIDAS SAHA) A.C.I.T. CIRCLE-50 KOLKATA M/S. RECON VALVES CO. A.Y.2001-02 PAN: AAREFR 2520 C REASONS TO BELIEVE THE ASSESSEE FIRM FILED RETURN OF INCOME FOR THE AS SESSMENT YEAR 2001- 02 ON 28 SEPT 2001 AND SAME WAS PROCESSED U/S 143( 1) ON 26-12-2002 SHOWING A TOTAL INCOME OF RS.6950/-. IN COURSE OF A SSESSMENT PROCEEDING FOR THE A.Y. 2004-05 133(6) WAS ISSUED TO THE VARIOUS S UNDRY CREDITORS FOR VERIFICATION OF TRANSACTIONS CLAIMED TO HAVE BEEN M ADE WITH THOSE PARTIES BUT THE LETTERS WERE RETURNED UN-SERVED. THE ASSESSEE F IRM WAS ASKED TO EXPLAIN AS TO WHY ADVERSE INFERENCE INSTEAD OF TRANSACTION MAD E WITH THOSE PARTIES. IN REPLY THE AUTHORISED REPRESENTATIVE STATED THAT FO LLOWING PARTIES DID NOT EXIST :- 4 1. ROY & CO. 2. PRIYA & CO. 3. BLUE STAR ENGG. CO. 4. TISTA ENGINEERING CO. 5. BHOWMICK ENGG. CO. 6. CHATTERJEE ENGINEERING CO. 7. DAS ENGG. CO. 8. ESS BEE ENTERPRISE 9. GOUR FURNITURE 10. J.K.TOOLS 11. KAMALA ENGG. WORKS 12. MITRA ENGG.WORKS 13. NORTH CALCUTTA ENGG. WORKS 14. N.K.TOOLS 15. B.K.ENTERPRISE 16. ZENITH ENGG. CO. IT WAS FURTHER ADMITTED THAT BOGUS PURCHASES WAS SH OWN IN THE NAME OF THOSE PARTIES DURING THE F.Y. 2000-2001 TO 2001-02 IN ORDER TO LOWER THE PROFIT. IT IS EVIDENT FROM THE ABOVE FACT THAT INCOME CHARG EABLE TO TAX FOR THE F.Y. 2000-2001 RELEVANT TO THE A.Y. 2001-02 HAS ESC APED ASSESSMENT FOR THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE COR RECT INCOME IN THE RETURN. IN VIEW OF THE ABOVE I HAVE THE REASON TO BELIEVE THAT INCOME MORE THAN RS.1 LAKH HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISION OF SECTION 147 OF THE INCOME TAX ACT 1961. SINCE MORE THAN FOUR YEARS HAVE ELAPSED IN THIS CA SE SATISFACTION OF JT. COMMISSIONER OF INCOME TAX RANGE-50 KOL. IS REQUI RED. SD/- (HARIDAS SAHA) A.C.I.T. CIRCLE-50 KOLKATA 5.2. IT IS FURTHER OBSERVED THAT IN THIS CASE NEITH ER THE ASSESSEE HAS CALLED FOR THE REASONS RECORDED FOR REOPENING NOR THE AO HAS PROPE RLY MENTIONED IN THE ASSESSMENT ORDER THE REASONS RECORDED BY HIM. EVEN THE LD. CIT (A) HAS NOT FURNISHED ANY REASONS RECORDED FOR REOPENING FOR EXAMINATION OF THE ASSES SEE EVEN THOUGH HE RECORDED THE FINDING THAT HE CAREFULLY PERUSED THE ASSESSMENT RE CORDS AND OBSERVED THAT PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE INITI ATED AS PER LAW. 5.3. AT THIS JUNCTURE WE CONSIDER IT APPROPRIATE T O POINT OUT THE OBSERVATIONS MADE BY THE HONBLE APEX COURT IN THE CASE OF GKN DRIVES HAFTS (INDIA) LTD. VS ITO & OTHERS 259 ITR 19 (SC) WHICH HAS HELD AS UNDER :- 5 WHEN A NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT 1961 IS ISSUED THE PROPER COURSE OF ACTION FOR THE NOTICE IS TO FILE T HE RETURN AND IF HE SO DESIRES TO SEEK REASONS FOR ISSUING THE NOTICES. THE ASSESS ING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIP T OF REASONS THE NOTICE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE A ND THE ASSESSING OFFICER IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE A ND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. 5.4. KEEPING IN VIEW OF THE ABOVE OBSERVATIONS OF THE HONBLE APEX COURT AND THE PRESENT FACTS OF THE CASE WE ARE OF THE OPINION TH AT THE RE-ASSESSMENT PROCEEDINGS ARE NOT IN ACCORDANCE WITH LAW. THEREFORE WE SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND REMIT BACK TO THE FILE OF THE AO A S THE ASSESSEE HAS NOT CALLED FOR THE REASONS RECORDED AT THE TIME OF RE-ASSESSMENT TO D O THE RE-ASSESSMENT IN THE LIGHT OF THE OBSERVATIONS MADE BY THE HONBLE APEX COURT. WE ORDER ACCORDINGLY. 6. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.07.2011 SD/- SD/- [ ] [ . !. '# ] [ MAHAVIR SINGH ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (!# !# !# !#) )) ) DATE: 21.07.2011. R.G.(.P.S.) '2 0 .3 4'3(5- COPY OF THE ORDER FORWARDED TO: 1. RECON VALVES CO. 98 M.M.GHOSH ROAD DUM DUM KOLK ATA-700074. 2 THE DCIT CIRCLE-50 KOLKATA. 3. THE CIT 4. THE CIT(A)-XXXII KOLKATA 5. DR KOLKATA BENCHES KOLKATA /3 ./ TRUE COPY '2&:/ BY ORDER DEPUTY /ASST. REGISTRAR ITAT KOLKATA BENCHES 6