Mohd. Rais, New Delhi v. DCIT, New Delhi

ITA 3339/DEL/2011 | 2003-2004
Pronouncement Date: 23-04-2014 | Result: Allowed

Appeal Details

RSA Number 333920114 RSA 2011
Assessee PAN AACPR6414K
Bench Delhi
Appeal Number ITA 3339/DEL/2011
Duration Of Justice 2 year(s) 9 month(s) 29 day(s)
Appellant Mohd. Rais, New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 23-04-2014
Date Of Final Hearing 23-04-2014
Next Hearing Date 23-04-2014
Assessment Year 2003-2004
Appeal Filed On 24-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI: JUDICIAL MEMBER AND SHRI SHAMIM YAHYA : ACCOUNTANT MEMBER ITA NO. 3339/DEL/2011 ASSTT. YR: 2003-04 MOHD. RAIS VS. DCIT CIR. 30(1) PROP. MELTON INDIA NEW DELHI. 934 HAVELI AZAM KHAN CHITLI QABAR NEW DELHI. PAN: AACPR 6414 K ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI P.S. SHARDA ADV. RESPONDENT BY : SHRI KEYUR PATEL SR. DR DATE OF HEARING: 23-04-2014 DATE OF ORDER: 23-04-2014. O R D E R PER R.P. TOLANI J.M: : THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 29-04-2011 PASSED BY THE LD. CIT(A)-XXV NEW DELHI IN APPEAL NO. 125/ 2006-07 PERTAINING TO A.Y. 2003-04. FOLLOWING GROUNDS ARE RAISED: A. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT S IN UPHOLDING THE FOLLOWING ADDITIONS AND DISALLOWANCES MADE BY THE RESPONDENT WHICH ARE LIABLE TO AND BE DELETED I N TOTO. A) TRADING ACCOUNT 7 92 498 B) INTEREST AND FINANCE CHARGES 15 40 625 C) TELEPHONE EXPENSES 42 870 D) CAR MAINTENANCE CHARGES 36 195 B. THAT THE LEARNED CIT(A) IN PARA 6.4 OF THE IMPUG NED ORDER HAS MADE UNCALLED REMARKS AND OBSERVATIONS WH ICH ARE UNCALLED FOR AND BEYOND THE SCOPE OF THE APPEAL BEF ORE HIM. IT IS A CLEAR CU8T CASE OF BIAS AND IS LIABLE TO BE EX PUNGED ITA NO. 3339/DEL/2011 MOHD. RAIS VS. DCIT 2 FORTHWITH. THERE WAS NO GROUND OF APPEAL BEFORE HIM SEEKING ANY FINDING TO THAT EFFECT. THE ACT OF THE CIT(A) C LOTHING HIMSELF WITH SUCH POWER HAS VITIATED THE IMPUGNED ORDER DUE TO THE DIRECTIONS IN PARA 6.4 THEREOF BEING ILLEGAL AND UN SUSTAINABLE AND THE SAME ARE LIABLE TO BE SET ASIDE WITH DIRECT IONS TO REFRAIN FROM PASSING ANY DIRECTIONS BEYOND THE SCOPE OF APP EAL BEFORE HIM OR SUCH OTHER AS MAY BE DEEMED FIT BY THIS TRIB UNAL UNDER THE FACTS AND IN CIRCUMSTANCES OF THIS CASE. 2. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE A SSESSEE IS ENGAGED IN BUSINESS OF METALISING PLASTIC ITEMS ETC. AND HAS B EEN INCURRING LOSSES SINCE EARLIER YEARS. THE RETURN OF INCOME FOR THIS YEAR W AS FILED AT A LOSS FIGURE OF RS. 3 24 50 909/- WHICH INCLUDES UNABSORBED CLAIM OF DEPRECIATION FROM EARLIER YEARS. THERE WAS A FALL IN G.P. RATE AND TH REE SUNDRY CREDITORS I.E. M/S BHARTA TRADING CO. S.R. TRADING CO. AND S.K. ENTE RPRISES DID NOT APPEAR BEFORE AO DESPITE NOTICES U/S 133(6) ISSUED. BECAUS E OF THESE FACTORS THE ASSESSEES BOOKS OF A/CS WERE IMPLIEDLY REJECTED WI THOUT GIVING ANY OTHER COGENT REASON AND THE G.P. WAS ESTIMATED. 2.1. SIMILARLY INTEREST ON FINANCE CHARGES TELEPH ONE EXPENSES AND CAR MAINTENANCE CHARES WERE ALSO DISALLOWED WITHOUT PRO PER REASONS. THE ASSESSEES BOOKS OF A/CS ARE DULY AUDITED AND COMPL ETE AND NO SPECIFIC MISTAKES WHAT-SO-EVER HAVE BEEN FOUND. IT IS PLEADE D THAT WHEN THERE IS NEITHER ANY DEFECT OR FAULT IN THE CLOSING STOCK OR JOB WORK CHARGES EVEN IF THE G.P. IS LOW THE ASSESSEES BOOKS OF A/CS CANNO T BE REJECTED AS BUSINESS INCOME CANNOT BE AT A CONSTANT RATE. BESIDES AN ADVERSE INFERENCE HAS BEEN DRAWN AS TO WHY THERE HAS BEEN LOSSES SINCE EARLIER YEARS. THE FACT REMAINS THAT IN EARLIER YEARS NO DISALLOWANCE HAS BEEN MADE . 2.2. BESIDES LD. COUNSEL FURTHER CONTENDS THAT UNF ORTUNATELY ASSESSEE HAS BEEN WRONGLY ACCUSED BY LD. CIT(A) TO HAVE MANIPULA TED THE ACCOUNTS TO CLAIM LOSSES BY FOLLOWING OBSERVATIONS: 6.4. FURTHER AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE I AM OF THE CONSIDERED VIEW THAT THE A SSESSEE IS NOT ITA NO. 3339/DEL/2011 MOHD. RAIS VS. DCIT 3 DISCLOSING THE FULL AND TRUE INCOME AND HAS BEEN MA NIPULATING THE ACCOUNTS TO CLAIM LOSS EVEN AFTER SUCH A HUGE TURNOVER IN BUSINESS AND JOB WORK. ACCORDINGLY THE AO IS DIRE CTED TO EXAMINE ALL THE CASES OF THE ASSESSEE OF THE SUBSEQ UENT YEARS IN CONSULTATION WITH THE CONCERNED RANGE ADDL. CIT AND THE LD. COMMISSIONER OF INCOME TAX AND TAKE THE NECESSARY F OLLOW UP ACTION AS DEEMED FIT. 2.3. ACCORDING TO LD. COUNSEL THERE WAS NEITHER R EQUIREMENT NOR JUSTIFICATION FOR LD. CIT(A) TO GO BEYOND THE SUBJE CT MATTER OF APPEAL AND WITHOUT THERE BEING ANY ALLEGATION OF THE AO ACCUS ED THE ASSESSEE OF MANIPULATING THE ACCOUNTS. THUS THESE UNCALLED FOR REMARKS SHOULD BE EXPUNGED FROM THE ORDER. 3. LD. DR SUPPORTED THE ORDER OF CIT(A). 4. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW THE AS SESSEES CASE HAS NOT BEEN PROPERLY CONSIDERED BY THE LD. CIT(A) THE TRADING R ESULTS CANNOT BE DISTURBED WITHOUT REJECTING THE BOOKS OF A/CS. IN THE BUSINESS PARLANCE THE PROFIT AND GROSS PROFIT DEPEND UPON THE MARKET COND ITIONS AND VARIOUS OTHER FACTORS. IN THE ABSENCE OF SPECIFIC DEFECTS IN THE BOOKS OF A/CS MERE FALL IN THE G.P. RATE CANNOT BE A BASIS FOR REJECTING THE BOOK RESULTS. FURTHER AN ADVERSE INFERENCE HAS BEEN DRAWN FROM THE FACT THAT THE ASS ESSEE HAS EFFECTED SUBSTANTIAL PURCHASE FROM ITS SISTER CONCERN MELTON INDIA PVT. LTD. IN WHICH FAMILY MEMBERS ARE DIRECTORS. THEREFORE SEC. 40A(2 )(B) HAS BEEN PROPOSED TO BE APPLIED WITHOUT GIVING ANY MARKET COMPARABLE AND DISCHARGING THE BURDEN OF PROVING THAT THE PURCHASES WERE UNREASONA BLE AS TO MARKET. BESIDES THE IMPACT OF 40A(2)(B) HAS NOT BEEN FACTO RED AND ONLY AN ADVERSE INFERENCE HAS BEEN DRAWN. 4.1. WE MAY ALSO NOTE THAT THE LD. CIT(A) SHOULD NO T HAVE USED UNFOUNDED ALLEGATION AGAINST THE ASSESSEE WITHOUT SUBSTANTIAT ING THEM AND DIRECTING FURTHER INQUIRY TO AO. SUCH TYPE OF DIRECTIONS NOT ARISING FROM AO'S ORDER ITA NO. 3339/DEL/2011 MOHD. RAIS VS. DCIT 4 MAY BECOME DETRIMENTAL TO THE ASSESSEE IN PENALTY P ROCEEDINGS AND MAY BE REASONS FOR REOPENING OF OTHER PROCEEDINGS. THESE ARE THE FUNCTIONS OF ADMINISTRATIVE AUTHORITIES WHICH ARE VESTED WITH AP PROPRIATE POWERS. LD. CIT(A) AT BEST HAS THE POWER OF ENHANCEMENT OF THE ORDER IN QUESTION AND NOT TO DEVOLVE ON FACTS OF OTHER CASES. IN THE ENTI RETY OF FACTS AND CIRCUMSTANCES WE SET ASIDE THE ISSUE BACK TO THE FI LE OF CIT(A) TO DECIDE THE APPEAL AFRESH IN ACCORDANCE WITH LAW AFTER GIVING A DEQUATE OPPORTUNITY TO ASSESSEE AND PROPER CARE SHOULD BE TAKEN TO REFRAIN FROM MAKING UNFOUNDED ALLEGATIONS. 5. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 23-04-2014. SD/- SD/- ( SHAMIM YAHYA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23-04-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA NO. 3339/DEL/2011 MOHD. RAIS VS. DCIT 5