TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 1421
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....T(A) vide his notice dated 13/12/2017, had not furnished the same. Where then, he posited, was the hurry in deciding the appeal ex parte the appellant in April, 2018, after only two notices of hearing. In fact, he was out of the country at the relevant time, advance information of which had been given to the office of the ld. CIT(A)/AO. On being asked as to why, even so, could not the assessee-noticee respond to the said notices inasmuch as it is he who is served the notice/s of hearing, he would reply by stating that there had been, as ascertained by him from the assessee, no service of any notice of hearing. The matter, it was pleaded by him, be, in the interest of justice, restored to the file of the ld. CIT(A) for a decision afresh after providing due opportunity of hearing to the assessee. 3. I have heard the parties, and perused the material on record. 3.1 The case put up by the ld. counsel, Sh. Modh, before me is not on the merits of the case. Digressing from the grounds of appeal (forming part of Form 36, i.e., the Memo of Appeal), he argued - which he is well entitled to with the leave of the Tribunal (see rules 11 and 27 of the Income Tax (Apellate Tribunal) Rules, 1963....
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.... assessing authority, whose order is being impugned before him, and specify his reasons - on each of the points arising for determination, as to why he considers the latter's view as meriting acceptance and is being upheld, i.e., in preference to that of the appellant. That only would show his consideration of the issue/s arising, and the basis of his decision. Further, his order being appealable, it is only thereby that a higher appellate authority would, in further appeal, be able to review his adjudication, absent in the instant case. This is even more relevant where, as in the present case, he proceeds ex parte the appellant. How could he, one wonders, in such a case, state that he is disinclined to interfere for want of any case set-up before him by the appellant, and yet claim the adjudication to be on merits, as he does? That, in fact, makes his order self-contradictory. It cannot, accordingly, be said that he has disposed the assessee's appeal on merits, much less by taking into account all the materials and explanations available on record, which would include that presented in the assessment proceedings. 3.2 In CIT v. H.M. Esufali H.M. Abdulali [1973] 90 ITR 271 (SC), th....
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....the said judgment by him is, clearly, misconceived. 3.3 The matter must, therefore, necessarily travel back to the file of the ld. CIT(A) for a consideration of and a decision on the merits of the case after allowing a reasonable opportunity to the assessee to present his case before him. In fact, in this context, two observations are apposite. The principal addition in this case is on account of a valuation difference (of a storage Godown) based on the report by the Departmental Valuation Officer (DVO) to whom reference was made by the AO during assessment proceedings. 'Valuation' being a technical matter, while the AO is not a technical person, the statute provides for a reference by him to the DVO where he seeks to verify the veracity of the assessee's claim with regard to the cost of acquisition/construction of an asset incurred during the relevant previous year (s.142A). The law accordingly obliges an appellate authority (including the Tribunal) to hear the DVO in adjudicating an appeal agitating an addition based on his valuation report. This has not been observed by the ld. CIT(A), which procedure he shall accordingly comply with in the set aside proceedings, dilating on a....
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....nstant case, the assessee himself does so, i.e., disregards his books - assuming them to be maintained, for returning income, which he does on presumptive basis, i.e., in preference to the results exhibited by the said 'books'. That is, the conduct of the parties, which is in conformity with the law, itself exhibits the unreliability and, thus, the non-acceptance of the accounts, indeed their irrelevance, for the purpose of determining the income of the assessee's relevant business. It may also be borne in mind that it is not necessary that a specific order is to be passed by the AO in its respect, and which could be implicit in his order, even as explained in, inter alia, CIT v. A. Krishnaswami Mudaliar [1964] 53 ITR 122, 126 (SC) in the following words: 'No express order was recorded by the Income-tax Officer that in his opinion the income, profits or gains of the business could not properly be deduced from the method of accounting employed by the firm, but it is implicit in what is stated by him that without valuation of the unexpired exploitation rights the profits of the year of account could not be computed. With this view, it appears, the Appellate Assistant Commissioner a....
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....ied prohibition in the Constitution or other law, evidence obtained as a result of an illegal search or seizure is not liable to be shut out. Accordingly, it was held that even though the search and seizure may be in contravention of section 132 of the Act, still the material obtained thereby is liable to be used subject to law before the Incometax authorities against the person from whose custody it is seized and, therefore, no writ of prohibition in restraint for such use can be granted. This stands reiterated by it in Dr. Pratap Singh & Anr. v. Director of Enforcement [1985] 155 ITR 166 (SC). This aspect would therefore, where assumed, have to be considered and answered after hearing the parties. There is yet another aspect of the matter, which issues forth from the foregoing: Whether a rejection of accounts has to necessarily precede a reference to the DVO u/s. 142A. That is, assuming its applicability and, further, that there has been no implied rejection in the instant case. This is deemed pertinent as there is nothing in the provision of law as well as the clear enunciation of law by the Apex Court per its decisions to so suggest. An addition, as in the instant case, may en....
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....s accounts bearing an entry in its respect. This aspect stands also clarified by the Apex Court in A. Krishnaswami Mudaliar (supra) in the following words: 'If, therefore, there is a system of accounting regularly employed and by appropriate adjustments from the accounts maintained taxable profit may properly be deduced, the Income-tax Officer is bound to compute the profits in accordance with the method of accounting. But where in the opinion of the Income-tax Officer the profits cannot properly be deduced from the system accounting adopted by the assessee it is open to him to adopt a more suitable basis for computation of the true profits.' (pg. 129) What is being not accepted in such a case is the truth of the accounts with regard to the relevant expenditure in the absence of proof - nothing more and nothing less, and which is accordingly disallowed, neutralizing its impact on the profit for the year as per accounts. In case of an addition u/s. 69A, as in the instant case, on the other hand, the statute itself accords credence to the assessee's accounts to the extent of the cost debited therein. It is the excess cost, i.e., with reference to the cost debited in the assessee'....