TaxTMI 
TaxTMI 
2015 (6) TMI 255
X X X X Extracts X X X X
X X X X Extracts X X X X
....tice u/s 148 of the Act The assessee submitted during the course of hearing that the books of account had been stolen and FIR had been lodged. It was also contended that search was conducted at the business premises of Glass India a sister concern on 26-01-1997 by the BOI and books and records as per seizure list given to M/s Glass India were seized. 4. The BOI in response to the letter written by the A.O. informed that the suppression of sales were calculated by the tax official of the Bureau from the seized book of account of the assessee on ex parte basis. The A.O. accordingly required the assessee to explain why suppressed sales should not be taken for determining the income for the relevant assessments. The A.O. did not consider the explanation of the assessee satisfactory and finalised the assessments determining the total income at Rs. 9,21,460/- , Rs. 2,20,990/- and Rs. 5,66,530/- for the assessment years 1996-97 to 1998-99 respectively. 5. In fact, the A O made addition of Rs. 28,39 932/- on account of profit on suppressed sales worked out at. Rs. 93,85,104/- on the basis of suppression of sales-tax of Rs. 16,66,843/- as per details given at page 4 of the assessment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o the relevant paras of the assessment orders for three years and submitted that the information obtained from the BOI was very specific and based on the documents of the assessee seized at the time of search at the premises of its sister concern. The Ld. D. R. invited attention to the paper book filed by the Department on 24th August, 2006 and submitted that reasons were recorded for taking action u/s. 147 and the A.O. obtained the approval of the Commissioner of Income-tax for the assessment year 1996-97 and the information received from the BOI has been duly discussed at page 3 of the paper book. He also invited attention to pages 5 to 9 of the paper book consisting of letter dated 24-02-2003 of the Superintendent of Police, Bureau of Investigation, Economic Offences, Guwahati, written to the A.O. along with the enclosure to the letter which is a report to the Commissioner of Taxes. Assam by the Superintendent of BOI (Economic Offence), Guwahati. The Ld. D.R. contended that all these information were very specific and month-wise and year-wise suppressed turnover and sales-tax evaded has been duly shown for the relevant assessment years. It is very clear from the report that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent on 28-02-2003 itself and since there was a gross violation of principles of natural justice the assessment orders were ab initio void He also invited attention to the fact that additional ground was taken before the Ld. CIT(A) on 5 September, 2003 and the additional ground was admitted by the Ld. CIT(A) as is clear from the discussion at page 3 of his impugned order. The Ld. counsel also submitted that the Ld CIT(A) had not given only one bearing on 13-01-2004 as narrated in his order but ¾ hearings were given before deciding the appeal as per the impugned order dated 13-01 -2004. He also reiterated that books of account of the assessee were not seized during, the course of search of the sister concern by the BOI and the Department failed to requisitioned from the BOI any material which was used for estimation of suppressed turnover and evasion of tax and provide opportunities to the assessee by giving copies thereof. The Ld. D.R. filed copies of order sheets in support of her submission that the reasons were duly recorded and many hearings were given to assessee. 9. We have carefully considered the issue. In view of the material placed on record and the rival submiss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ised his coterminous powers and should have caused the enquiries to be made documents requisitioned and provided proper opportunities to the assessee and decided the issue on merits rather than deleting the addition on technicalities. In the interest of justice and fair play we are therefore, of the opinion that the issue is required to be restored to the file of the Ld. CIT (A) for fresh adjudication after making necessary enquiries or causing the enquiries made from the BOI requisitioning the relevant documents and providing proper opportunity to the assessee. It may also be observed that since the relevant information was received by the AO, itself on 25-02-2003 as per letter of the BOI dated 24-02-2003, he could not provide proper opportunity to the assessee but looking to the specific information as to suppressed turnover and taxes evaded, with due respect, in our considered opinion, the decisions relied on by the Ld. counsel cannot be considered applicable to the facts of the case and the failure of the AO to provide proper opportunity cannot be considered a ground to declare the assessment orders under consideration as void because substantive justice should prevail over tec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee on the total sale as per BOI 8,44,763/- Tax rate on sales as applicable 14% to 8% Total sale as per BOI 62,19,081/- Less: Sales already shown by assessee in the Audited annual report filed along with the return of income (-) 38,50,488/- Therefore suppressed sale 23,68,593/- Gross profit earned by the assessee on the Suppressed sale @25.76% of Rs. 23,68,593/ - is 1 6,10,149/- This gross profit is added to the total income of The assessee from business or profession as The assessee has earned this profit from carrying On business of manufacturing activity from Industrial undertaking for which profits earned are Deductible @100% u/s 80IA of the IT Act, 1961 No further expenses on earning this profit is Allowed ass the assessee has already claimed full Administrative expenses and has already been Allowed as deduction from disclosed gross profit As per audited balance sheer. Hence I add 6,10,149/- 6,85,867/- Income from other source: Income by way of unexplained U/s 69 of the IT Act, 1961 on suppressed purchased Based on suppressed sales figure as worked out above. For making suppressed sal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed. The seizure of books of account and documents belongs to M/s. Glass India Ltd. and notice was issued by BIEO to M/s. Glass India Ltd. only for verification of seized documents and accounts. The documents seized by the BIEO was not related to the assessee i.e. M/s. Purbanchal Safety Glass Ltd. but related to M/s. Glass India Ltd. which is a sister concern of the assessee company. The has not brought on record the books seized by the BIEO which were requisitioned belonging to the assessee. The AO never confronted the so-called material used for issuing notice u/s 148 of the Act and thereafter for making addition. Therefore, the addition based on the records, which has not been brought before the AO at the time of assessment. Therefore, there is no lack of principle of natural justice to the assessee and relied on the decision in Ponkunnam Traders, Vijay Kumar Sharma and Sona Builders' case (supra). Since there is no; proper opportunity offered by the AO to confront the seized documents which is the basis of addition made by the AO during the assessment years under consideration. Therefore, addition cannot be sustained. 10. We have considered the rival submission and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t on record before the Bench and admitted by the parties. 13. Therefore, notice u/s 148 of the Act on the the basis of the letter from BIEO dated 7-4-2001 for evasion of sales tax during the assessment years under consideration without reasons brought on record and the satisfaction for escapement of income by the assessee does not held good. 14. The assessee has not challenged the notice u/s 148 of the Act, but the fact on record in appeal before us shows that the notice was issued u/s 148 of the Act and assessment was completed u/s 143(3) with read section 147 of the Act vide order dated 28-2-2003 only for escapement of income. Therefore, legality even of notice u/s 148 of the Act and assessment u/s 147 of the Act has to be decided since it is the basis of assessment u/s 143(3) read with section 147 of the Act. Since the notice u/s 148 of the Act issued without due application of mind, reasons brought on record and satisfaction in issuing notice u/s 148 of the Act having direct nexus with the documents seized/requisitioned not brought on record by the AO. Therefore, issuance of notice u/s 148 of the Act and mechanical approval of the learned CIT(A) cannot hold go....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s 271(l)(c) read with section 274 of the Act for the assessment year 1997-98 vide order dated 28-2-2003. 19. The AO while passing the assessment order u/s 143(3) read with section 147 of the Act made addition of Rs. 3,66,523/- u/s 69 of the Act being unexplained investment for purchase. But the assessee has filed nil return after adjustment of deduction u/s 80 IA of the Act. The assessment was completed u/s 143(3) read with section 147 of the Act vide order dated 28-2-2003. 20. In appeal before the learned CIT(A), the learned CIT(A) by common order deleted the addition made by the AO after observing as under: "In view of the observation and finding, I am of the opinion that the re-assessments made by the Assessing Officer for the assessment years under consideration are based on an information received from Bureau of Investigation (E.O.), Guwahati. While completing the assessments the Assessing Officer did not have any documentary evidence to substantiate the assessments. He had also not obtained/requisitioned books of account/documents allegedly belonging to the appellant from the Bureau of Investigation (E.O.). As the information was not based on mater....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ACT, 1961 In these appeals there is difference of opinion between the Members of the Bench. The following questions are, therefore, referred under section 255(4) of the I.T. Act, 1961, to the Hon'ble President, Income-tax Appellate Tribunal for the opinion of the Third Member :- (i) Whether on the facts and circumstances of the case the Ld. CIT(A) was justified in deleting the additions made by the A.O. under section 69 of the Act as undisclosed investment amounting to Rs. 9,21,461/-, Rs. 2,20,990/- and Rs. 3,66,526/- for the assessment years 1996-97, 1997-98 and 1998-99 respectively on the ground that the reassessments made by the A.O. for the assessment years in question were based on the information received from Bureau of Investigation (Economic Offence) (Guwahati) and that the information was not based on material and documentary evidence to substantiate the assessments ? (ii) Whether on the facts and in the circumstances of the case the order of the Ld. CIT(A) is required to be set aside with the direction to decide the issue afresh after giving proper opportunity to the assessee on the relevant information received by the A.O. on 25-02-2003 fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... O.A. Mao, the learned CIT-DR and Shri Ramesh Goenka-the learned Counsel for the assessee, at length. The assessee is manufacturer of safety glasses. It is apparent from the records that in this case the return for the assessment year 1996-97 was filed on 31st March, 1998 declaring total income at Nil. The case was selected for scrutiny and assessment u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") was made on 30.12.1998 on a total income at Nil. For the assessment years 1997-98 and 1998-99, the returns were filed on 31.03.1999 and 31.08.1999 respectively declaring total income at Nil and the returns were processed u/s 143(1) of the Act. On receipt of information from the Director, Bureau of Investigation (E.O.), the assessments were reopened u/s 147 of the Act. The information received from the Bureau of Investigation (E.O.), Guwahati, Assam dated 07.04.2001 was that the Tax Cell has detected evasion of tax of Rs. 16,66,843 (financial year 1995-96), Rs. 8,44,763 (financial year 1996-97) and Rs. 12,48,675 (financial year 1997-98). The Assessing Officer issued notices u/s 148 of the Act. In response to the said notices, the assessee stated that the orig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pliedly accepted that proper opportunity of being heard to the assessee was not given by the authorities below and therefore, he held that the order of the CIT(A) deserves to be set aside. Accordingly he held that the matter should be remanded to the CIT(A) with a direction to decide all the appeals of the assessee afresh after affording due and proper opportunity of being heard to both the parties, as per law. 8. In this case the impugned additions were made u/s 69 of the Act. Provisions of Sec. 69 of the Act, read as under: - "Unexplained investments 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." 9. In the instant case, the only basis for making additions u/s 69 of the Act was an information forwarded by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6. One bundle loose sheet. 7. One flat file containing challans. 8. One sale register. 9. One bill book. 10. Four cash memo books. Sd/- Dilip Prasad Signature of the person Dated: 26.11.1997 From whom seized. Sd/- R.B. Witness." Dated: 26.11.1997 10. The seizure list clearly reveals that the books of account / documents belonging to M/s. Glass India were seized. Therefore, there was no justification in calculating the sales-tax evasion amount in the case of the assessee for the financial years 1995-96,1996-97 and 1997-98 on the basis of the books of account seized from the premises of and pertaining to M/s. Glass India (a sister concern of the assessee). I find substance in the contention of Shri Ramesh Goenka, the learned Counsel for the assessee that there was no basis for arriving at the stipulated sales-tax evasion by the A.O. relying on the books of account of a sister-concern viz., M/s.Glass India, which were never confronted to the assessee. Further more, a letter from Bureau of Investigation dated 24th February, 2003 makes it clear that the suppression of sales were calcula....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 69 of the Act, for production or manufacture of safety glasses. There is no concrete evidence on record to substantiate the addition u/s 69 of the Act. In my opinion, no addition could be made u/s 69 of the Act, to the income of the assessee. While taking such a view, I am also fortified by the following decisions:- (i) Amarjit Singh Bakshi (HUF) v. Asstt. CIT [2003] 86 ITD 13 (Delhi) (TM) (ii) CIT v. Prem Prakash Nagpal [2013] 40 taxmann.com 353 12. Shri O.A. Mao, the learned CIT-DR, submitted that in view of the decision of the Hon'ble High Court of Delhi in the case of CIT v. PC Chemicals [2013] 359 ITR 129 the matter may be remitted back for fresh consideration by CIT(A). I do not agree with the submissions made by the learned DR. Even, I do not accept the views expressed by the learned AM in this regard. In my opinion, the A.O. could not prove by evidence that the assessee had made unexplained investments of huge amount during the assessment years under consideration and therefore, additions made by the Assessing Officer u/s 69 of the Act could not be sustained. The alleged information received by the A.O. from Bureau of Investigation could not be considered con....