TaxTMI 
TaxTMI 
2018 (12) TMI 1668
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....ment order passed in his case as wrong and bad-in-law ab initio. 2) That on the facts and in the circumstances of the case as well as in law, the learned CIT (A) has erred in upholding the validity of the assessment order passed by Id. AO u/s. 143(3) r.w.s. 147 of the Act in the case of the appellant. The appellant prays for quashing the same as wrong and bad-in-law. 3) a) Without prejudice to other grounds of appeal, that on the facts and in the circumstances of the case as well as in law, the learned CIT (A) has erred in upholding the addition of Rs. 13,11,73,783/- on account of unexplained expenditure u/s. 69C of the Act, solely on the basis of information of undervaluation of imports received from the Directorate of Revenue Intelligence (DRI) without any independent or cogent findings of any such undervaluation and differential payments by the appellant. b) Without prejudice to above, that even if the impugned undervaluation of imports is assumed for a moment, then also the source of the differential payments for such under valuation are very much evident from the information of DRI and the assessment order passed by Id. AO i.e.' corresponding dif....
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....the assessment proceedings u/s. 148 of the Act. 1. The case of the revenue before the Hon'ble Bench is; a) The additional ground which has been raised before the Hon'ble Bench without adducing any reasons or explaining the causes as to by the aforesaid ground of appeal is being taken for the first time before the Hon'ble bench. b) The assessee has not supported the filing of additional ground of appeal by filing an affidavit under Rule 10 of ITAT Rules and the assessee cannot be allowed to raise such additional ground in mechanical manner. c) In the appeal before the first appellate authority, the appellant had challenged the validity of proceedings u/s. 147/148 of the Act which was duly dealt with and dismissed by the QT(A). The assessee has already challenged the same in the ground of appeal no. 1 & 2 as per appeal memo in form no. 36. d) The additional ground raised by the appellant now, does not arise from the facts as found by the authorities below i.e. AO and the CIT(A). Hence, as per decision of Hon'ble Supreme Court in the case of NTPC vs. CIT 229 ITR 383 (1998), the Hon'ble Bench may not like to use its discr....
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....e of imports by Rs. 13,11,73,783/- and evasion of applicable customs duty on the suppressed value of import. Show cause notice of DRI dated 07.02.2011 and statement of facts indicate voluntary payment of differential duty of Rs. 1 crore on 12-13/08/2010 (consequent to DRI raid) by the appellant. In such a situation coupled with non-compliance to notices issued by AO, the Hon'ble Bench may like to consider the "maxim' and decision of Hon'ble Apex court before admitting the appellant the filing of additional ground. 2. Though the Hon'ble ITAT has the discretion to admit additional grounds, the discretion can be exercised only if the appellant is in a position to show the cause as to what prevented him from taking this additional ground at the time of filing of original appeal memo. In the application submitted by the appellant seeking admission of additional ground, the appellant is not in a position to show the as to what prevented him from taking the additional ground. In the application submitted by the appellant seeking admission of additional grounds, the appellant has squarely failed to show any reason or cause that prevented it to raise the addit....
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....ng to procedural matters cannot to raise for the first time before the Tribunal. 3.4. It is open the Tribunal, even if it had earlier given permission to the assessee to produce affidavits and certificates, not to accept them if it decides not to allow the assessee to raise the new contention - Moti Ram V CIT (1958) 34 ITR 646 (SC) 3.5. The Tribunal cannot be said to exercise its discretion arbitrarily if it refuses to permit a party to raise an entirely new point involving additional evidence or investigation into fresh facts, which points was within the' knowledge of the party and could have been raised at an earlier stage -Manji Dana V. CIT (1998) 229 ITR 383 (SC) 3.6. If, as a result of a judicial decision given while the appeals is pending before the Tribunal, it is found that a non-taxable item is tax or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item - National Thermal Power Co. Ltd., V. CIT (1998) 229 ITR 383 (SC). 3.7. A question which ought to have been argu....
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....d to allow the assessee to agitate the question under Rule 11 of the IT. AT Rules (CIT V. Karam Chand Prem Chand (P) Ltd., (1969) 74 ITR 254 (Gujarat), 103 ITR 763 (Gujarat), 126 ITR 251). In view of this there is no case for excise of discretion in favour of the assessee. 3.13. There may be several factors justifying the raising of such a new plea in an appeal and each case has to be considered in its own facts. The AAC must be satisfied that the ground raised was bonafide and that the same could not have been raised earlier for good reasons. 187 ITR 688 (SC) Jute Corporation of India Ltd. 4. In view of the above submissions, it is requested that the matter may be decided on merits keeping in view the various judicial pronouncements which have been enumerated in the written submissions filed by the Department." 5. However it is noticed that the facts of the case of the assessee are different than pretended by the Ld. DR. vide above cited submission. The Ld. DR raised the objection that as per the rule it is required to file an affidavit when some new facts are brought on record however on perusal of the assessment order para-2 it is noticed that the AO has him....
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....e with clean hand, therefore, no indulgence should be given by permitting him to raise addition grounds of appeal. Reference to the following decisions is worth to note: i) Moti Ram V. CIT, 34 ITR 646 (SC) ii) Maji Dana V. CIT, 229 ITR 383 (SC) iii) CIT Vs Commonwealth Trust (India) Ltd. (1996) 87 taxman 393/221 ITR 474 (Ker.) iv) CIT Vs. Begum Noor Banu Alladin, 204 ITR 166, 203 (AP); v) Indian Steel & Wire Products Ltd.CIT, 208 ITR 740 (Cal); vi) CIT Vs. Karamchand Premchand P.Ltd. 74 ITR 254 (Guj) 3. We have duly considered rival submissions and gone through the record carefully. As far as objection of the Revenue regarding non-filing of affidavit is concerned let us take note of Rule 10 of the IT(Appellate Tribunal) Rules, which reads as under: "Where a fact which cannot be borne out by, or is contrary to, the record is alleged, it shall be stated clearly and concisely and supported by a duly sworn affidavit." 4. A perusal of the above rule would indicate that it contemplates for filing of affidavit when some new facts are brought on record. A perusal of the assessment order para-2 would indicate t....
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....nbsp; Sd/- (AMARJIT SINGH) (RAJPAL YADAV)" 6. The brief fact of the case is that information was received from Directorate of the Revenue Intelligence Znanl Unit, Ahmedabad that the DRI conducted a search on 10th August, 2010 at the office premises of M/s. R.G. International, Proprietor Shri Govind Gopal, Suart that assesse has imported polyster film by restoring to under valuation of import price. The differential amount over and ab....
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....65003 283338787 131173784 35653386 The assessee was asked to submit detail of the import and the profit declared by them on such transactions. The assessee responded that copies of impounded/seized material were not provided to him and in the absence of his books of accounts/records it has not been possible for him to finalize his accounts and to prepare the P & L a/c and balance sheet. The assessee has also explained that the payment of almost 30 to 40% of sales were received in cash and same were deposited in the bank a/c. He has further stated that gross profits margin on main items like polyster film, PET film etc. was around 0 to 3% and in Nylon-6 Mono filament they have suffered loss .And the gross margin was between 2% to 3%. It is also stated that after deducting various expenses, he has suffered losses in his business. The assessee has also given the working of gross margin of various items traded by them. Thereafter, the assessing officer stated that assessee could not quantify the income andt has not filed his return of income, therefore, he has issued show case dated 18th March, 2014 in order to complete the assessmemt. The contents of sho....
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....ted to show cause as to why the amount of Rs. 13,11,73,783/- should not be treated as your unexplained expenditure u/s.69C of the I.T.Act and the amount not be added to your total income. 3.2. During the course of assessment proceedings, you have submitted vide your letter dated 10.2.2014 that your books of Accounts have been impounded by the DRI and in absence of books of accounts/records, it is not possible for you to prepare the exact Profit & Loss account. As per the show cause notice issued by the DRI, during 2010-11, you have imported 25,50,687.70 kg of Polyester Films declaring assessable value of Rs. 15,21,65,003/-. However, as per the actual assessable value, the total value of the imported goods is Rs. 28,33,38,783/-. On verification of P&L Account for F.Y.2009-10, it is noticed that you have declared GP^ @7.37%on total sales. Therefore, taking a reasonable view, and considering the GP of 7.37% in the last previous year, the GP in the current year is also taken @7.37%. Accordingly, total sales value of the imported goods will be increased by 7.37% and GP of Rs. 2,08,82,068/- and the total sale value of the goods for the year under consideration will be Rs. ....
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....ong. The imports made by me were at the prices mentioned in the bills of entry. There is no finding of DRI by contemporary pricing evidences to the effect that I had undervalued the imports or that the prices at which other parties have imported similar goods at the same were more than the prices at which I imported the same. No payment was made over and above the amounts mentioned in the bills of entry by me. These goods have been sold by me in the domestic markets. ' No incriminating materials/documents have been found at my business premises. I have no knowledge of transactions that have been made /carried out by Mr. Jayesh Mamrawala. The entire show cause notice of DRI is based on emails of Jayesh Mamrawala or other incriminating things found from him in which there is no mention of my name. I have already disowned all these incriminating material before DRI /Customs authorities. The Custom Authorities have not yet passed any adjudication order against me. In view of above, I humbly pray to your honour to kindly not to make addition of Rs. 13,11,73,783/- as unexplained expenditure u/s. 69C in my hands. 2) Sir, without prejudice to my above contention, I humbl....
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....it but suffered loss from this business which is evident from the details/sample bills of some of the products provided to your honour in last hearing. From the sample workings submitted to your honour in last hearing it was proved that I have suffered loss from this business during this year and is in severe financial crisis. Sir, I have already been ruined and facing severe financial crisis and difficulties. I have already suffered a lot for no fault of mine. In view of above, I pray your honour to consider my case sympathetically and not to make such a huge addition, which does not represent any income actually earned by me." 7. The assessing officer has not accepted the submission of the assessee stating that assessee has not given any explanation regarding the amount of Rs. 13,11,73,783/- paid to overseas supplier through illegal means. Therefore, the assessing officer presumed that the aforesaid amount paid to the overseas supplier was out of books and it was the unexplained expenditure of the assessee. He observed since the assessee has not given any explanation regarding the source of Rs. 13,11,73,783/- therefore the same was treated as unexplained expenditure and added ....
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.... the act by the assessing officer was already pending on date of issuing notice u/s. 148. In this connection, we observe that it was undisputed fact that assessment proceedings initiated u/s. 142(1) of the act by the assessing officer was already pending on date of issuing of notice u/s. 148 and the Ld DR has failed to controvert the undisputed fact with any relevant material. The ld. counsel has placed reliance on the decision of the Co-ordinate Bench of the ITAT in the case of the Medapati Venkayamma vs. ITO vide ITA no. 252/Vizag/2013. The relevant part of the decision is reproduced as under:- "5. We have heard the rival submissions and perused the material placed on record. The assessing officer has passed the order in this case u/s 143(3) of I.T. Act. In this case, the assessee did not file the return of income hence the assessing officer issued notice u/s 142(1). There was no return of income filed by the assessee in response to the notice issued u/s 142(1). The assessing officer is empowered to issue notice u/s 142(1) for the purpose of making assessment under I.T. Act and calling for information in the following circumstances. (a) For the purpose of mak....
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....b-section (5) of that section, or (b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142 33[or fails to comply with a direction issued under sub-section (2A) of that section], or (c) having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143, the 34[Assessing] Officer, after taking into account all relevant material which the 34[Assessing] Officer has gathered, 35[shall, after giving the assessee an opportunity of being heard, make the assessment36] of the total income or loss to the best of his judgment and determine the sum payable by the assessee 37[* * *] on the basis of such assessment : [Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment : Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section.] [(2) ....
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....scribed; and the provisions of this Act shall, so far as may be65, apply accordingly as if such return were a return required to be furnished under section 139 :] 5.4. On furnishing the return of income u/s 148, the assessing officer can choose to drop the proceedings and proceed with the reassessment proceedings by issue of notice u/s 143(2) of I.T.Act and in case the assessee do not respond to notice u/s 148, the assessing officer can proceed to complete the assessment u/s 144, Best judgement . Once the return is filed in response to notice u/s 148, provisions of section 139, 143 and 144 applies in case of 148 also. Therefore, provisions of section 142(1), 148 are para materia for furnishing the return of income except recording the reasons in the case of section 148. Once the assessing officer has initiated assessment proceedings, the assessing officer cannot resort to reassessment unless the assessment proceedings are concluded. In this case, the assessment proceedings were initiated by issue of notice u/s 142(1) and before concluding the assessment proceedings, the assessing officer has issued notice u/s 148 for reassessment. Since the notice u/s 148 is issued without....
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.....2011 To, Shri Govindgopal S. Goyal, C/o: - R. G. International, M-l, Metro Tower, Nr.: Kinnary Cinema, Ring Road, Surat Sir/Madam, In connection with the assessment for the assessment year 2011-12, you are required to: (a) Prepare a true and correct return of your income/ the firm's income/family's income /the local authority's income / the company's income / income of the A.O.P. / income of the body of individual's income of said assessment year in respect of which you are assessable under the Income-tax Act, 1961,during the previous year relevant to the assessment year mentioned above. The return should be in the appropriate form as prescribed in Rule 12 of the Income-tax Rules, 1962. A blank return form is enclosed. It should be duly verified and signed in accordance with the provision on or Section 140 of the said Act, and delivered at my office on or before 9.12.2011. (b) Produce or cause to be produced before me at my office at Room No.209- 2ND Floor, Aayakar Bhavan, Majura Gate, Surat on O9.12.2011 at 11:30 A.M. the accounts and/or documents specified overleaf [as p....