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TMI Blog2013 (8) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT(A), on following grounds decided against the assessee, in terms of rule 27 of ITAT rules, 1963. a) That disallowance of expenditure amounting to ₹ 6,90,462/- u/s 40(a)(ia) was not sustainable once the estimation of income by application of flat GP rate was upheld by the ld.CIT(A). The disallowance was otherwise also, contrary to law. b) That further disallowance of ₹ 100005/- and ₹ 57561/- out of car expenses/depreciation and telephone expenses were also not sustainable even partly, once estimation of income by application of flat GP rate was upheld which runs contrary to two decisions of jurisdictional High Court in the case of CIT v Smt. Santosh Jain (2008) 296 ITR 324(P H) and CIT v Aggarwal Engg. Co. (2008) 302 ITR 246 (P H). 2. That the assessee prays his application to be admitted and allowed for arguments on the issues raised hereinabove, which have been discussed and decided against the assessee by the ld.CIT(A) in her order under appeal by the revenue. The claim of the assessee in respect of the abovesaid application would be adjudicated in the paras below after adjudicating the appeal of the revenue. 4. The only issue raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld but with name(s) of party(ies) to whom made as per bills No. 4-lot sale to 14-lot sale effected in April, 2004 itself. 63,95,994/- (iii) Cash sale with mention of quantity of goods sold but without mention of name(s) of party(ies) to whom sold as per cash memo. Nos. 2-L to 10-L, 13-L to 15-L, 32-L and 33-L effected in April . May, 2004. 16,16,850/- (iv) Other sale than mentioned at (i) to (iii) above, with quantity of goods sold and name(s) of party(ies) to whom made mentioned therein as per bills No. 11-L, 12-L, 16L to 31-L, 34L and 1-C to 4-C effected in May June, 2004. 1,61,24,085/- Total 2,78,67,929/- 6. The Assessing Officer had also sought information from the State Excise Taxation Department and as per the said information, the assessee had declared sales of ₹ 1,96,07,007/-. The said information was received by the Assessing Officer prior to the filing of the return of income by the assessee. The Assessing Officer noted that in the trading account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee at ₹ 241,36,929/- (Rs.2,78,67,229/- - ₹ 37,30,300/- ), on which GP rate was applied by the Assessing Officer to compute the estimated profits in the hands of the assessee. 7. The CIT(Appeals) accepted the claim of the assessee in view of the opening stock of ₹ 3.07 crores and purchases of ₹ 1.58 crores being made by the assessee. The CIT(Appeals) was of the view that the cash sales of ₹ 37,30,300/- was credited to the trading and Profit Loss Account and the same was not shown as cash introduced in the name of any person with corresponding liability appearing in the balance-sheet. The CIT(Appeals) further observed that in case the sale of the assessee was rejected, than the other fact would be an increase in closing stock, as the Assessing Officer had not proved that the said sales were outside the books or were unaccounted. The CIT(Appeals) further noted that the assessee had not disputed the purchases and only the sales were disallowed. The Assessing Officer was held to have defaulted in not co-relating the purchases of stock available with the assessee to the sales made by the assessee. Further reliance was placed on different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the quantity sold was ever furnished and is also not available with the assessee till date. The assessee in the bills talks of sale of knitted cloth but stock of finished cloth was reduced by the assessee by the aforesaid amount. Reliance was placed upon CIT Vs Om Parkash Sons 55 DTR 254 (P H) and CIT Vs. Sanjay Chhabra [336 ITR 71 (P H)]. 11. The ld. AR for the assessee stressed that all the facts were before the Assessing Officer including the sale tax return in which the said cash sales were not included. The said sales were declared to the Department in the revised return and the only issue raised in the present appeal was in respect of the cash sales totaling ₹ 37,30,300/-. The ld. AR submitted that against one of the cash sales, there was return of goods and if the transaction was not genuine, the assessee could have omitted to show the return of cash. It was further stressed by the ld. AR for the assessee that it was not necessary to maintain details of cash sales. Reliance was placed on R.B.Jassaram Fateh Chand Vs. CIT [75 ITR 33 (Bom)]. The ld. AR further pointed out that originally before the sales tax authority, the assessee had declared sales of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabrication receipt of ₹ 7 lacs, while as per trading account, later filed along with the return of income, the sales were declared at ₹ 2.78 crore. The assessee claims to have filed revised sales tax return on 12.11.2007 in which the sales of ₹ 2.78 crore were declared to the State Excise Taxation Department. The difference in the sales as originally declared to the Sales Tax Department and as in the revised return of income, was claimed to be on account of sales made in lots vide 14 lot sale bills No. 1-lot sale to 14-lot sales in April,2004 amounting to ₹ 101,26,294/- which the assessee claims that by omission was not declared in the original Sales Tax Return. Sales totaling ₹ 63,95,994/- were supported by bills without mentioning of any quantity of goods sold but with names of parties to whom sales were effected in April,2004 itself and the same were accepted by the Assessing Officer. The dispute is in relation to the three sales bills totaling ₹ 37,30,300/- under which cash sales were made in lots without mention of any quantity sold and/or names of the parties to whom sold. Details of the sales made by the assessee vide three bills are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- and the bill No. 3-lot sale totals to ₹ 26,67,280/- whereas the correct total was ₹ 26,18,784/-. The assessee had shown gross value of the goods sold and had added the excise duty to the said value but the calculation error has been made while totaling the two figures in each of the three figures. In the absence of any explanation being given by the ld. AR for the assessee, adverse inference is to be drawn against the assessee. Further, the assessee has failed to produce any evidence as to how the said goods were transported and even the bills do not talk of the requisite details of GR numbers. 15. The Paper Book reflects another bill No. 07-lot dated 16.04.2004 which is placed at page 37 of the Paper Book in which the quantity is mentioned at 12810 @ ₹ 10/- sold for ₹ 128,300/-. Other lot sales made by the assessee have been accepted in view of the naames of the parties being available and the same are not in dispute. However, in respect of first three bills i.e. 1 to 3 lot sales, no such details have been filed by the assessee. Further, the assessee had failed to declare the said sales in the return of income filed by it before the sales tax authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income filed with the Income-tax Department. The learned counsel was unable to substantiate his claim and to show that the amount was either entered in the books of account or was ever surrendered by Shri Mangal Sain as claimed by him. Accordingly, the findings recorded by the Commissioner of Income-tax (Appeals) and the Tribunal are vitiated and are set aside. Reference is now made to the judgment reported as President Industries' case [2002] 258 ITR 654 (Guj). In that case, the Commissioner of Income-tax (Appeals) and the Tribunal had found as a fact that there was no material on record to indicate that any investment was made outside the books of account to make the sales and in such circumstances the entire sale proceeds could not be added as undisclosed income of the assessee but the addition could be only of the profits embedded in the sales. The High Court in the light of the aforesaid finding of fact while dismissing the reference application under section 256(2) of the Act filed by the Revenue had held that no question of law arose for consideration. In the present case, in the absence of any clear cut and unambiguous finding recorded by the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther provided under sub-section (4) that the said memorandum of cross-objection can be treated as an appeal presented within the time specified in sub-section and would be disposed of by the Tribunal accordingly. Under sub-section (6) to section 253 of the Act, the appeal is to be filed in prescribed form and verified in the prescribed manners and is to be accompanied with Tribunal fee, where the appeal is filed by the assessee. However, where the appeal is filed by the revenue, then no appeal fee is payable. Further, alongwith an application for stay of demand, fee of ₹ 500/- is prescribed under sub-section (7) to section 253 of the Act. 20. The Appellate Tribunal, in order to regulate its powers and functions have formulated the Income Tax Appellate Rules, 1963. Rule 27 of Income Tax Appellate Tribunal Rules read as under : The respondent though he may not have appealed, may support the order appealed against on any of the grounds decided against him. The said Rule 27 provides remedy to the respondent to support an order passed on any of the grounds decided against him. 21. The respondent by way of the said Rule 27 is empowered to support the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to issue the notice before formation of the belief. (f) The mere allegation made by the CIB that the assessee purchased the gift from Kochhar is not relevant for the formation of the belief and before issuing the notice under Section 148, the Assessing Officer failed to carry out the necessary enquiry which alone could have given him the material for the formation of the requisite belief. Since no such investigation was carried out, the notice under Section 148 was based merely on the allegation of the CIB and, was based only on reason to suspect. 7. The Ld. Sr. DR, Mr. Shantanu Dhamija, at this juncture raised a primary objection to the effect that the assessee cannot go beyond the order of the CIT(A) and raise the points such as non-recording or non-disclosure of the reasons for reopening the assessment, non-service of the notice under Section 148 and the question of approval of the JCIT under Section 151(1). He pointed out that these are totally new points which are beyond the scope of the appeal which is limited to the question whether the CIT(A) was right in saying that the notice under Section 148 based on reason to suspect and not reason to belief. It is pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee can raise these points before the Tribunal for the first time as a respondent defending the order of the CIT(A) which was based on the only question whether the reasons recorded by the Assessing Officer amounted to reason to believe or reason to suspect. The matter is not res integra. Rule 27 of the Appellate Tribunal Rules, says that the respondent in an appeal can support the order appealed against on any of the grounds decided against him even though he may not have filed an independent appeal or cross-objection. This Rule clearly supports the assessee. In the present case, the assessee has raised the point of non-recording of reason in ground No. 2 before the CIT(A) though this ground is not so categorical as the Ld. Counsel for the assessee wants us to read. Even so, such ground can be inferred from the fact that the assessee has been repeatedly asking for the reasons recorded which were not supplied to her. Even before the Tribunal right from September, 2004, the assessee has been requesting for production of the department's records obviously calling upon the department to show that reasons for reopening have been recorded, but due to some difficulty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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