ITO 14(3)(3), MUMBAI v. SMITA BIPIN KAMANI, MUMBAI

ITA 5063/MUM/2009 | 2005-2006
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 506319914 RSA 2009
Bench Mumbai
Appeal Number ITA 5063/MUM/2009
Duration Of Justice 1 year(s) 4 month(s) 23 day(s)
Appellant ITO 14(3)(3), MUMBAI
Respondent SMITA BIPIN KAMANI, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted E
Tribunal Order Date 28-01-2011
Date Of Final Hearing 06-01-2011
Next Hearing Date 06-01-2011
Assessment Year 2005-2006
Appeal Filed On 04-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI R.K. PANDA (AM) AND SMT ASHA VIJAYARAGH AVAN (JM) ITA NO. 5063/MUM/2009 (ASSESSMENT YEAR-2005-06) THE ITO-14(3)(3) 6 TH FLOOR EARNEST HOUSE NARIMAN POINT MUMBAI-400 021 VS. SMT. SMITA BIPIN KAMANI PROP. SMITA TEX CORPN. 118/119 MANGALDAS BLDG NO. 2 2 ND FLOOR MANGALDAS ROAD MUMBAI-400 002 PAN-AAGPK 2481B (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SURENDRA KUMAR RESPONDENT BY: SHRI D.Z. PATEL O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-XV MUMBAI DATED 23.6.2009 FOR THE A.Y.20 05-06. 2. THE DEPARTMENTAL APPEAL IS AGAINST THE ADDITIONS MADE IN THE ASSESSMENT REGARDING THE BOGUS PURCHASES EXPENSES DEBITED IN P&L ACCOUNT SUNDRY CREDITORS UNPROVED LOAN AND DEBITS IN BANK BALANCE. THE ASSESSEE FILED THE RETURN OF INCOME ON 31.3.2006 DE CLARING TAXABLE INCOME AS RS.86 855/-. IN RESPONSE TO NOTICE U/S.142(1) T HE AUTHORISED REPRESENTATIVE OF THE ASSESSEE ATTENDED AND SUBMITT ED VARIOUS DETAILS. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS NOTICES WE RE ISSUED TO PARTIES FROM WHOM PURCHASES WERE MADE. SIMILARLY NOTICES WERE ALSO ISSUED TO PARTIES TO WHOM THE SALES WERE MADE. THE ASSESSING OFFICER CONCLUDED THAT AS THE ASSESSEE COULD NOT PRODUCE ANY KIND OF BOOKS OF ACCOUNTS IN THE FORM OF P&L ACCOUNT AND BALANCE SHEET AND THEREFORE REJE CTED THE ACCOUNTS AND MADE THE ASSESSMENT U/S.144 OF THE I.T. ACT. EVEN THOUGH HE HAS REJECTED THE BOOKS OF ACCOUNT HE DETERMINED THE BUSINESS IN COME AS RS.57 07 006/- TAKING THE PROFIT AS PER THE P&L ACCOUNT AND DISALL OWING TOWARDS BOGUS PURCHASES (RS.31 92 542/-) EXPENSES DEBITED TO P&L ACCOUNT RS.1 27 350/- ITA NO5063/M/09. 2 SUNDRY CREDITORS U/S.41(1) RS.21 88 972/- UNPROVED LOAN RS.80 000/- AND DIFFERENCE IN BANK BALANCE RS.96 401/-. 3. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE T HE LEARNED CIT(A). BEFORE THE CIT(A) ASSESSEE SUBMITTED AS FOLLOWS: EXPARTE ORDER U/S.144 WAS PASSED ON 27.12.2007 WIT HOUT ELABORATELY MENTIONING THE DATE OF NON-COMPLIANCE A ND FAILURE OF THE APPELLANT REGARDING ANY SHOW CAUSE NOTICE. THE ASSESSEE SUBMITTED EVIDENCES AND WRITTEN SUBMISSION CLARIFYI NG THE INGENUINENESS OF THE ADDITIONS MADE BY THE AO. AS REGARDS BOGUS PURCHASE OF RS.31 92 542/- IT WAS CLARIFIED THAT ENTIRE PURCHASES HAVE BEEN CONFIRMED BY THE SELLING PARTIE S BEFORE THE AO. FURTHER IN RESPECT OF DISALLOWANCE OF EXPENSES IT HAS BEEN EXPLAINED THAT ALL THE EXPENSES HAS BEEN MADE FOR T HE BUSINESS PURPOSES AND PAID THROUGH ACCOUNT PAYEE CHEQUE. SI MILARLY ADDITION IN RESPECT OF SUNDRY CREDITORS OF RS.21 88 972/- IT HAS BEEN EXPLAINED THAT PROPER TIME WAS NOT GIVEN TO OB TAIN THE CONFIRMATIONS FROM THE PARTIES. FURTHER IT CANNOT BE A CESSATION OF LIABILITY. CONFIRMATION LETTER IN RESPECT OF LO AN FROM ARVIND DHIRAJLAL FOR RS.80 000/- HAS BEEN PRODUCED. SIMIL ARLY DIFFERENCE IN BANK BALANCE OF RS.96 401/- HAS BEEN CLARIFIED WITH EVIDENCES. FURTHER CREDIT APPEARING IN ORIENTAL B ANK OF COMMERCE OF RS.54 20 420/- HAS BEEN REBUTTED WITH E VIDENCES. 4. THEREFORE THE LEARNED CIT(A) CALLED FOR A REMAN D REPORT FROM THE AO ON THE ISSUES. THE AO SUBMITTED THE REMAND REPORT D T.17.3.09 AND THE ASSESSEE GAVE COUNTER REPLIES. THE FIRST ISSUE WAS REGARDING REJECTION OF BOOKS OF ACCOUNTS U/S.145 OF THE I.T. ACT BY THE A O. THE CIT(A) OBSERVED THAT THE REJECTION OF ACCOUNTS BY THE AO WAS VAGUE. THE LEARNED CIT(A) ALLOWED THE ASSESSEES GROUNDS OBSERVING AS UNDER: SECOND GROUND OF APPEAL IS IN RESPECT OF REJECTION OF BOOKS OF ACCOUNTS U/S.145 OF THE I.T.ACT. LD. AO HAS REJECT ED THE BOOKS OF ACCOUNTS WITHOUT PROPERLY POINTING OUT THE INCORREC TNESS INCOMPLETENESS AND INGENUINENESS OF THE ACCOUNTS O R WITHOUT POINTING OUT THE DEFECTS OF METHOD OF ACCOUNTING SYSTEMS. T HE REASONING GIVEN BY AO IN PARA 3.4 & 3.5 DOES NOT APPEAR CONVINCING ONE. MERELY ON THE BASIS OF NON-SERVICE OF NOTICE OR SUBMISSION OF PRO OF OF DELIVERY OF GOODS OR REQUIREMENT OF DETAILS OF MODE OF PAYMENT RECEIP T FOR SALE OF GOODS BOOKS OF ACCOUNTS CANNOT BE REJECTED ESPECIALLY IN THE CIRCUMSTANCES WHEN NO PROPER OPPORTUNITY OR SPEAKING SHOW CAUSE N OTICE HAS BEEN GIVEN. AO HAS ADMITTED IN THE ASSESSMENT ORDER THA T SELLING PARTIES OF THE GOODS HAVE ATTENDED THE OFFICE OF THE ASSESSING OFFICER IN RESPONSE TO SUMMONS TO U/S.131 AND HAD FURNISHED COPY OF LED GER ACCOUNT OF ITA NO5063/M/09. 3 THEIR SALES AND AO HAS ALSO MENTIONED THE TRADING A CCOUNT IN THE ASSESSMENT ORDER MEANS CLAIM OF THE APPELLANT WAS N OT BALD OR BASELESS. DURING THE APPELLANT PROCEEDING WHEN MAT TER WAS REMANDED TO THE ASSESSING OFFICER THE SUBSTANTIAL PART OF A CCOUNTS HAS BEEN ADMITTED BY THE AO TO BE CORRECT ONE HENCE I DO NOT SEE ANY PROPRIETY TO REJECT THE BOOKS OF ACCOUNTS IN A VERY SUMMARY MANN ER WITHOUT GIVING PROPER SHOW CAUSE NOTICE AND POINTING OUT THE SUBST ANTIAL DISCREPANCY TO THE APPELLANT FOR HEARING THE COUNTER ARGUMENTS AND EVIDENCES THEREFORE THE SECOND GROUND OF APPEAL IS ALLOWED. 5. AGGRIEVED THE DEPARTMENT IS ON APPEAL BEFORE US . WE FIND THAT THE DEPARTMENT IN THE GROUNDS OF APPEAL HAD NOT SERIOUS LY OBJECTED TO THE FACT THAT THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNTS. IN FACT THE DISALLOWANCES MADE BY THE AO WERE ONLY ON THE BASIS OF FIGURES MENTIONED IN THE BOOKS OF ACCOUNTS. HAVING REJECTED THE BOOK S OF ACCOUNTS AND MADE THE ASSESSMENT U/S 144 THE AO SHOULD HAVE ESTIMATE D THE PROFIT OF THE BUSINESS OF THE ASSESSEE KEEPING IN MIND COMPARABLE CASES. HE HAS NOT DONE SO. THEREFORE WE CONCUR WITH THE ORDER OF TH E LEARNED CIT(A) THAT THE AO ERRED IN REJECTING THE BOOK OF ACCOUNTS FOR THE REASONS STATED IN THE ASSESSMENT ORDER. WE THEREFORE HOLD THAT THE AO OU GHT TO HAVE MADE TO THE ASSESSMENT BASED ON THE BOOKS OF ACCOUNTS AND OTHER CLARIFICATIONS THAT THE ASSESSEE MAY BE CALLED UPON TO FURNISH IN DETERMINI NG THE TAXABLE INCOME. WE ARE THEREFORE NOT DEALING WITH THE OTHER GROUNDS OF APPEAL OF THE REVENUE AGAINST DELETION BY THE CIT(A) OF VARIOUS ADDITIONS MADE BY THE AO. WE SET ASIDE THE ASSESSMENT U/S 144 AND REMIT THE MATTER T O THE FILES OF AO FOR CONSIDERING THE VARIOUS ISSUES AND PASS ORDER OF AS SESSMENT AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY TO THE ASSESSEE TO EXPLAIN HIS CASE AND SUBMIT NECESSARY PROOF OR EVID ENCES. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 28 TH DAY OF JANUARY 2011 SD/- SD/- (R.K. PANDA) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 28 TH JANUARY 2011. RJ ITA NO5063/M/09. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CENTRAL - I CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASST. REGISTRAR I.T.A.T MUMBAI ITA NO5063/M/09. 5 DATE INITIALS 1 DRAFT DICTATED ON: 17.01.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 17.01.2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: ______ 9 DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER: ______