ACIT,, Ludhiana v. M/s Jaimal Exports,, Ludhiana

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI N.BARATHVAJA SANKAR VICE PRESIDENT AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITA NO.86 /CHANDI/2010 ( A.Y. 2006-07 ) M/S JAIMAL EXPORTS VS. D.C.I.T. JAIMAL ROAD JANTA NAGAR CIRCLE-V LUDHIANA. LUDHIANA. PAN: AADFJ6803B AND ITA NO.167 /CHANDI/2010 ( A.Y. 2006-07 ) D.C.I.T. VS. M/S JAIMAL EXPORTS CIRCLE-V JAIMAL ROAD JANTA NAGAR LUDHIANA. LUDHIANA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NAVNEET SEHGAL DEPARTMENT BY : SMT.JAISHREE SHARMA O R D E R PER N.BARATHVAJA SANKAR : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE M/S J AIMAL EXPORTS LUDHIANA AND D.C.I.T. LUDHIANA FOR THE AS SESSMENT YEAR 2006-07 IN THE CASE OF THE ASSESSEE M/S JAIMAL EXPORTS. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ A S UNDER :- 2 1. THAT THE PREJUDICIAL OBSERVATIONS MADE IN THE APPELLATE AS WELL AS IN THE ASSESSMENT ORDER ARE EITHER UNFOUNDED OR THE SAME ARE NOT SUSCEPTIBLE OF GIVING RISE TO ANY ADVERSE CONCLUSION. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN CONFIRMING THE EX-PARTE ASSESSMENT ON THE BASIS OF CONJECTURES SURMISES AND WITHOUT ANY BASIS. THE ASSESSMENT BE CANCELLED. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN CONFIRMING THE DISALLOWANCE OF PARTNERS SALARY OF RS.63 000/- AND INTEREST PAID TO PARTNERS ON CAPITAL OF RS.1 86 000/- ON THE BASIS OF CONJECTURES SURMISES AND WITHOUT ANY BASIS. THE DISALLOWANCE MERITS DELETION. 4. THAT THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE DISALLOWANCE OF SALARY PAID TO PARTNER RS.63 000/- AND INTEREST RS.1 86 000/- PAID TO PARTNERS ON THEIR CAPITAL ACCOUNT IS ARBITRARY UNWARRANTED UNCALLED AND HAS BEEN MADE WITHOUT APPRECIATING THE FACTS OF THE CASE. THE DISALLOWANCE MERITS DELETION. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN CONFIRMING AN ADDITION OF RS.1 00 000/- ON THE BASIS OF CONJECTURES SURMISES AND WITHOUT ANY BASIS WHEN ALL PURCHASES SALES ARE FULLY VOUCHED STOCK REGISTER MAINTAINED QUANTITATIVE DETAILS OF STOCK PRODUCTION AND SALES ARE FILED ALONG WITH RETURN. DETAILS OF INVENTORY IN TERM OF QUANTITY AND BASIS OF VALUATION 3 FILED ALONG WITH THE RETURN AND ALL DETAILS ARE AVAILABLE THE ADDITION OF RS.1 00 000/- HAS BEEN CONFIRMED ON THE BASIS OF CONJECTURES SURMISES AND WITHOUT APPRECIATING THE FACTS OF THE CASE. THE ADDITION MERITS DELETION. 6. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN CONFIRMING THE DISALLOWANCE OF RS.2349/- BEING CLUB EXPENSES ON THE BASIS OF CONJECTURES SURMISES AND WITHOUT APPRECIATING THE FACTS OF THE CASE. THE DISALLOWANCE MERITS DELETION. 7. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN CONFIRMING THE RESORT TO SEC 185(5) OF THE INCOME TAX ACT ON THE BASIS OF CONJECTURES SURMISES AND WITHOUT ANY BASIS. THE STATUS AS CLAIMED BE ALLOWED. 8. THAT THE PENAL INTERESTS HAS NOT BEEN CHARGED CORRECTLY UNDER THE PROVISIONS OF THE INCOME TAX ACT. THAT THE PENAL INTERESTS BE CHARGED CORRECTLY. 9. THAT THE PENAL INTERESTS CHARGED IS WRONGLY CALCULATED WHICH BE ORDERED TO BE CORRECTED. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER :- 1. THAT THE LD. CIT(A)-II HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.11 13 011/- OUT OF TOTAL ADDITION OF RS.12 13 011/- MADE BY THE A.O. ON ACCOUNT 4 OF LOW GROSS PROFIT RATE DECLARED BY THE ASSESSEE. 2. THAT THE LD. CIT(A)-II HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4 13 086/- IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME-TAX ACT 1961. 3. THAT THE ORDER OF THE LD. CIT(A)-II BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 3. WE HAVE HEARD THE PARTIES AT LENGTH. THE MAIN CONTENTION OF ASSESSEES COUNSEL WAS THAT THE ASSES SMENT ORDER WAS AN EX-PARTE ORDER MADE UNDER SECTION 144 OF THE INCOME-TAX ACT. WE ALSO FIND THAT THE ASSESSMENT WA S COMPLETED ON 1.12.2008 AS IT WAS GETTING TIME BARRE D. THE ASSESSEES COUNSEL ALSO SUBMITTED THAT IF ANOTHER O PPORTUNITY IS GIVEN BEFORE THE ASSESSING OFFICER THE ASSESSEE COULD SATISFY THE ASSESSING OFFICER REGARDING THE QUERIES RAISED. IN SUCH FACTS AND CIRCUMSTANCES WE RESTORE ASSESSEES APPEA L TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO D ECIDE THE ISSUE AFRESH AFTER GIVING EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO APPEA R BEFORE THE ASSESSING OFFICER WITHOUT SEEKING UNNECESSARY ADJOU RNMENT AND COOPERATE WITH THE ASSESSING OFFICER IN FINALIZ ING THE ASSESSMENT. THUS ASSESSEES APPEAL IS PARTLY ALLO WED. 4. REGARDING THE REVENUES APPEAL SINCE WE HAVE RE STORED ASSESSEES APPEAL TO THE FILE OF THE ASSESSING OFFI CER THE POINTS RAISED IN THE REVENUES APPEAL ALSO MAY BE C ONSIDERED AT THE TIME OF FRESH ASSESSMENT OF COURSE AF TER GIVING 5 EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS REVENUES APPEAL IS ALSO RESTORED TO THE FILE OF TH E ASSESSING OFFICER. 5. IN THE RESULT BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF FEBRUARY 2011. SD/- SD/- ( SUSHMA CHOWLA) (N.BARATHVAJA SANKAR) JUDICIAL MEMBER VICE PRESIDENT DATED 14 TH FEB. 2011 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R.