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TMI Blog2021 (10) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... e other appeal, not withdrawn, is no withdrawal at all. Ad hoc disallowance of the expenditure on Conveyance, Travelling, Boarding Lodging, Site Expenses, and Telephone - HELD THAT:- Disallowance of the said expenses is purely arbitrary and not preceded by or based on any finding by the AO in their respect. This is found correct, with the ld. Sr. DR failing to rebut the same. There is as such no factual basis for the said disallowances, i.e., other than of the conveyance expenditure, and are therefore directed to be deleted. As regards the disallowance of conveyance expenditure, the AO is clear and definite in his finding in the matter, based on an examination of the material before him, and which has not been rebutted in any manner, i.e., including as to its quantum and, at any stage, including before me. The same is accordingly upheld. The powers of the assessing authority in the matter of assessment are plenary and, two, estimation is integral to assessment. The same is accordingly upheld, and the assessee gets part relief. Initiation of the reassessment proceedings - Disallowance of commission expenditure - HELD THAT:- When Ms. Divya Shah, the stated proprietor of K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products, preferred an appeal against its' assessment u/s. 143(3) dated 02/9/2008, assessing its' total income at ₹ 5.02 lacs, as against the returned income of ₹ 2.54 lacs. During the pendency of the said appeal, reassessment was initiated, and income assessed vide order u/s. 143(3) read with s. 147 dated 17/12/2009, enhancing the income for the year to ₹ 6.85 lacs. Penalty proceedings u/s. 271(1)(c) were also initiated in respect of income additionally assessed u/s. 147 and, accordingly, penalty levied at ₹ 60, 275. The assessee filed appeal against both these orders as well. The quantum appeals were taken up together for hearing by the first appellate authority. The ld. CIT(A), as explained by Sh. Usrethe, the ld. Counsel for the assessee, observing two appeals for the same year, which were in his view not permissible, suggested withdrawal of one of them, i.e., qua the original assessment. This was accordingly done, clarifying that the grounds of the said appeal be considered as part of the appeal against the reassessment order. Vide the impugned orders dated 26/6/2012, however, the ld. CIT(A) has dismissed both the quantum appeals, stating the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was however no improvement in the matter thereat, with both the parties reporting no response from the said office. This is indeed unfortunate. Be that as it may, it was decided to proceed with the hearing, and adjudicate on the basis of the material on record after hearing the parties in the matter. 3. I have heard the parties, and pursued the material on record. 3.1. The assessee's principal grievance, raised per several grounds of appeal for ITA 152/2013, is the summary dismissal of its' appeals inasmuch as these are claimed to have not been withdrawn, i.e., contrary to what stands stated in the impugned orders, and which forms the basis of the said summary dismissal. Sure, it is only the appellate record of the office of the ld. CIT(A) that could exhibit as to what actually transpired, as well as the content of the application/s or concession, if any, made by the assessee before her in first appeal. If, as stated in the impugned orders, the assessee had actually withdrawn its appeals before the ld. CIT(A), the same stand rightly dismissed in limine, and there could be no cause of grievance, for this Tribunal to interfere in the matter. However, as the same is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal properly, but not doing so would not mean an abrogation of its' rights or that a misrepresentation by the assessee would be allowed to prevail. No right accrues or would inure on the basis of an untruth or misrepresentation. That fraud vitiates everything is a well-known maxim in law, case law on which, as well as qua misrepresentation, is legion, obviating the need for any elaboration here. Though the same goes without saying, a reservation of right for restitution in favour of the Revenue is considered proper in the facts and circumstances of the case, i.e., with a view to balance the interest of the parties inter se, guided solely by the consideration of not causing prejudice to either side and the following injunction by the Apex Court in CIT v. Walchand Co. (P.) Ltd. [1967] 65 ITR 381 (SC): '...... the expression is intended to define the jurisdiction of the Tribunal to deal with and determine questions which arise out of the subject-matter of the appeal in the light of the evidence, and consistently with the justice of the case. In the hierarchy of authorities the Tribunal is the final fact-finding body: its decisions on questions of fact are not li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding Co., Jabalpur. The assessee challenging the reopening itself, the same shall be considered first as, if the assessee succeeds thereon, the issue qua merits of the said disallowance does not survive for consideration. 5.2. The assessee's case qua the initiation of the reassessment proceedings is that the same is based on an invalid reason, which reads as under: (PB-II, pg. 1) 'Assessee firm filed return of income for Asstt. Year 2006-07 on 31-10-2006 declaring total income of ₹ 3,54,440/-. Case was selected for scrutiny under CASS and assessment completed determining total income at ₹ 5,02,440/- on 02/09/2008. However, as per information received from ACIT, Cir. 2(1), Jabalpur, in one of his case commission paid to M/s. Kirti Trading Co. was disallowed on the basis of statement recorded by him of the proprietor of the firm, Smt. Divya Shah on 18/12/2007. In her statement Smt. Divya Shah categorically denied to carry on any business herself. In the above case, assessee has shown payment of commission of ₹ 1,82,656/- to M/s. Kirti Trading Co. In view of the above findings, the alleged commission expenses to M/s. Kirti Trading Co. shown b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequential to her stating to be not the proprietor of KTC, also clarifying thus to be not engaged in any other business. The rationale and live nexus between her said statement, i.e., the tangible material and information with the AO, and the reason to believe under-assessment, obtains no longer. That is, there is no reason to believe so. I am conscious, when I say so, that she has not denied her relationship with KTC, which, where so, would be the first thing she would have said. In fact, why would anyone be in the first place required to and, in any case, actually make a statement on behalf of a firm, if he has no relation or connection therewith? For all one knows, she may be the wife of Sh. Dilip Shah, the karta, or otherwise a member of Dilip Shah (HUF) and, thus, actively involved in the business of KTC. Why, it could also be that she may be the proprietor at the time of her first statement, and not so at the time of her written reply to the AO, so that both the apparently contradictory versions are correct, and the reason to believe, as recorded, holds. In fact, even the assessee also has not, at any stage, including before the Tribunal, stated so, and it is therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also not been made a part of the record by the Revenue. The AO, rather than pursuing and examining her inasmuch as it was her statement that led to the reason to believe, abandons her, and proceeds to question Sh. Dilip Shah, accepting him to be instead the proprietor of KTC, i.e., as the karta of his HUF. It would all therefore depend on her statement, not on record, or for that matter any other material which formed the basis of the AO regarding her as the proprietor of KTC in the first place. If she has therein admitted to being the proprietor of KTC, the reason as recorded by the AO cannot be faulted with despite her later denying so. Additional material would in that case be required to be brought on record to establish the veracity of her contrary statements, which could only be in the reassessment proceedings. The onus in either case, though, is on the AO inasmuch as he cannot proceed further in the matter of assessment before establishing her being the proprietor. This is as, where not so, he has proceeded/proceeds on a wrong premise. The AO, however, has not done so, rather, proceeds to examine Sh. Dilip Shah, i.e., as the proprietor of KTC. In doing so, he defeats his ow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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