9911796707
TMI Blog1986 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, and (iv) by way of additional ground, the assessee had also challenged certain disallowances out of motor car expenses and depreciation claimed thereon. (c) On 12th April, 1979, the Commissioner (Appeals) disposed of the appeal in the following manner. "The first contention raised by the appellant is against disallowance of the appellant's claim for bad debt of Rs. 25,560. The appellant's representative has drawn my attention to the fact that the ITO has disallowed the appellant's claim without any investigation or examination. It has been claimed that in the assessment order no reasons for disallowing the appellants claim has been mentioned. 2. I have examined the assessment order. The ITO has added a sum of Rs. 25,560 stating that: "bad debt disallowed Rs. 25,560." It is really strange to see that the ITO has not even cared to examine the appellant's claim. The ITO had to examine the appellant's claim and to state detailed reasons if he did not find the claim genuine or admissible. It is apparent that this has not been done in the present assessment. The assessment has therefore been made without proper investigation. The assessment is therefore set aside. The I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly issued bogus bills for the sales made by them. In any case, since the amount of purchase price of Rs. 19,300 has not been still paid by the assessee firm and since the whereabouts of M/s. Vijay Traders are not known, the amount of Rs. 19,300 which has been claimed as purchase made by the assessee firm will be added as income from undisclosed sources in the hands of the assessee firm. Penalty proceedings under s. 271(1)(C) will be initiated against the assessee firm". In the said order, the ITO had determined total income of the assessee at Rs. 2,06,250. Against the aforesaid order of the ITO, the assessee once again preferred an appeal before the Commissioner (Appeals). Apart from taking up grounds which were earlier taken up before this predecessor the assessee had also challenged the addition of Rs. 19,300 made by the ITO. (d) In the meanwhile, the ITO reopened the assessment under s. 147(A) of the Act, with a view to bring to tax another bogus purchase of Rs. 12,358. After following the procedure laid down under the Act, the ITO framed the assessment on 18th Dec., 1980 under s. 143(3) read with s. 147 of the Act, on a total income of Rs. 2,18,608 (Rs. 2,06,250 as det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to law." From the above it is obvious that neither the CIT (A) examined any other grounds of appeal nor he precluded the assessee or the ITO to examine any claim afresh. Therefore, the action taken by the ITO in examining the issue of bogus purchases while framing the present assessment order is justified. The legal objection taken by the learned counsel of the appellant has, therefore, no merit. Moreover it is also noticed that when against the re-opened assessment order for this assessment year the appellant went to the Hon'ble Tribunal, and the same ld. counsel of the appellant was representing the firm, the question of the bogus purchase of Rs. 19,300 got a passing reference. In fact in para 3 of the order of the Tribunal Ahmedabad Bench 'B' in ITA No. 127/Ahd/83 it was observed as under: "At the time of hearing before us the assessee's counsel has produced a copy off S.T.O's order wherein only the amount of Rs. 19,300 has been mentioned as bogus purchase". 8. Coming to the merits of the addition proposed by the ITO it is noticed that during the course of assessment proceedings the ITO himself scrutinised the books of accounts of the assessee firm and discovered that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Commissioner (A), the assessee has come up in appeal before the Tribunal. As regards the legality of addition of Rs. 19,300, the ld. counsel for the assessee strongly argued that since the Commissioner (A), vide his order dt. 12th April, 1979, had set aside the assessment on specific grounds taken up before him, the ITO was not justified in making addition of Rs. 19,300 in the manner he did, vide his order dt. 19th Feb., 1980. In this connection, he relied on the decision of the Hon'ble Calcutta High Court in the cases of Surendra Overseas Ltd. (1979) 120 ITR 872 (Cal) and Katihar Jute Mills Ltd. (1979) 120 ITR 861 (Cal) as well as the order of the Tribunal reported as ITO vs. Chabbra (1986) 25 TTJ (Bom) 101. In this connection, he submitted that once the Commissioner (A) has no power to find a new source and tax it in an appeal preferred by the assessee, the ITO was not justified in adding Rs. 19,300 in an assessment which was framed after setting aside of the earlier assessment by the Commissioner (A) with specific directions. In support of his submissions, he relied on the decision of the Hon'ble Supreme Court in the case of CIT vs. Shapoorji Pallonji Mistry (1962) 44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the IT authorities and justified their action. Adverting to the majority decision of the Tribunal in the case of ITO vs. A.C. Mathiah (1986) 16 ITD 28 (Mad) (TM), he submitted that in the assessment framed afresh by the ITO, the ITO can look into other items as was done by him in the present case. He also submitted that the assessment order of the STO would not be relevant for determining the bogus purchases. Therefore, according to him, the order of the Tribunal in respect of the asst. yr. 1970-71 would not be of much help to the assessee. 8. We have carefully considered the rival submissions of the parties as well as the material already brought on record and we find considerable force in the submissions made on behalf of the assessee both on the validity of addition of Rs. 19,300 as well as on the merits of such addition. The aforesaid two decisions of the Hon'ble Calcutta High Court reported in (1979) 120 ITR 861 872 clearly support the stand taken on behalf of the assessee that in an assessment set aside on specific issues, the ITO cannot make an addition of a new item which he had not considered while framing the assessment originally. Again, it is a trite law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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