TMI Blog2017 (1) TMI 1649X X X X Extracts X X X X X X X X Extracts X X X X ..... mit the same to the file of CIT(A) for his consideration. AT this stage, we refrain from going into other grounds raised by the assessee before us at this level. Appeals of the assessee are partly allowed statistical purposes. - ITA Nos.1379 & 519/Mds/2008 - - - Dated:- 20-1-2017 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER For the Appellant : Shri G. Seetharaman, CA For the Respondent : Shri T.R.Senthil Kumar, Sr. Standing Counsel ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER These two appeals by the assessee are directed against different orders of the Commissioner of Income-tax (Appeals)-I, Chennai for the assessment years 1995-96 and 1997-98. First we take the appeal No.1379/Mds/2008: 2. The only ground raised by the assessee in this appeal is with regard to sustenance of addition of ₹ 5,00,000/- received from Excellent 2 Publicities as undisclosed income. 3. The facts of the case are that the assessee company is engaged in the business of telecasting of T.V. programmes through satellite. No return of income for the A.Y. 1997-98 was filed by the assessee within the due date stipulated u/s.139(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to the persistent non-compliance on the part of the assessee and had directed it to attend the hearing on 11.3.2002 in order to explain the various credits appearing in the bank statements. As usual, there was again non-compliance on the appointed date. However, on 15.03.2002 the assessee had filed a return declaring a net loss of ₹ 45,73,744/- which was accompanied by a covering letter wherein it was contended that since the previous records were not reportedly available, final accounts could not be prepared by the assessee and enclosed along with the return. In the said letter it was also pointed out by the assessee that it was the normal practice followed by the assessee to allow credit of 30 days to the customers for the purpose of collection of advertisement charges and that in consonance with the said practice collections made upto June, 1996 stood accounted for in the A.Y. 1996-97, whereas the collections made thereafter were taken into account for computing income for this A.Y. Since, no other explanation was forthcoming from the assessee nor the source of the deposits in the assessee s bank account was explained by anybody, the A.O. proceeded to complete the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, it is too much to expect of them to cooperate with the assessee. Therefore, the ld. AR submitted that the AO is totally artificial in his approach and he relied on the following decisions: 1) S.Hastimal vs. CIT (49 ITR 273) 2) Tolaram Daga Vs. CIT (59 ITR 632) 3) CIT Vs. Daulat Ram Rawatmull (87 ITR 349) 4.2 The ld. AR, also submitted without prejudice to the above that the assessee had filed the profit and loss account disclosing a turnover of ₹ 5,41,645/- and a net loss of ₹ 45,73,744/-. If for any reason, the explanation regarding ₹ 5 lakhs could not be accepted, this should be set off against the loss of ₹ 45,73,744/-. The ld. AR, further submitted that in any case, the assessment has been completed u/s.144, such an order can be made in the event of the assessee not submitting its return u/s.139 of the Act or having failed to comply with the notice u/s.142(1) or u/s.143(2) of the Act. The return filed has been acted upon and has not been considered invalid. No notice u/s.143(2) has been issued. According to the ld. AR, as per notice u/s.142(1), the AO can ask the assessee to produce any document which has been in its possession. Omi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the two concerns appearing in the books of Excellent 2 Publicities have not been furnished. iii) The aforesaid parties could not be traced in the addresses given. It was the duty of the assessee to furnish the present addresses of the said two concerns to enable the department to verify the assessee s claim. It was not an impossible task. (iv) The identity of the said two concerns has not been established. According to the ld. DR, neither in the grounds of appeal nor in the written submissions, the assessee has given any material to rebut the conclusion raised by the CIT(Appeals). The ld. DR submitted that the assessee has not discharged the initial onus cast on the assessee to prove its claim of receipt of monies from the said parties and the assessee cannot take advantage of the lapse of time. According to the ld. DR, the onus of proof to explain the source of investment is on the assessee u/s.68/69 of the Act and he relied on the decision of the Supreme Court reported in 214 ITR 801 and the Calcutta High Court reported in 208 ITR 465. The ld. DR, relied on the order of the CIT(Appeals). 6. We have heard both the parties and perused the material on record. In this case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Publicities. However, the assessee had not placed contemporaneous evidence. Regarding this, assessee took a plea that the assessment was completed in this case u/s.144 of the Act, the issue is relating to a period more than 11 years and it is not possible to say whether these parties are exist or not? Even if they exist, they would be existing in some other places and it is too difficult to expect to place necessary evidence to support the claim of assessee. In our opinion, these arguments have no merits. The assessee is a duty bound to place necessary evidence to its actual amount outstanding from these parties in earlier years and the said amount has been received in assessment year under consideration through Excellent 2 Publicities. To this effect, the assessee required to file supporting evidence. Since the assessment is completed ex parte u/s.144 of the Act, in the interest of justice, we are of the opinion that it is appropriate to give one more opportunity of hearing to the assessee to place necessary evidence to show that the amount in reality is calculated from those two parties through Excellent 2 Publicities. If the assessee is able to prove the same, though there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to redo the assessment and, therefore, the A.O. had no power even to redo the assessment. 13. The CIT (Appeals) also erred in making huge additions on the basis of the details and materials, which were not available both with the appellant and with the A.O. 14. He overlooked that the additions have been made on the basis of hearsay and opposed to principles of natural justice. 15. The appellant, therefore, prays that it may be held that (i) the appeal filed before the CIT(Appeals) was not barred by limitation, (ii) that the redone assessment was barred by limitation and (iii) that the additions were not justified even on merits. 7.1 The additional ground raised by the assessee is that the assessment was completed without issuing mandatory notice u/s.143(2) of as such, assessment is bad in law. The ld.A.R also prayed that this additional ground to be admitted since it is a legal ground. 8. The ld.A.R submitted that the assessee had filed its Return of Income on 24.03.98, in response to a notice u/s.142(1) of the Act and the A.O. held that it was an invalid return and completed the assessment u/s.144 of the Act on 30.3.98. On appeal, the CIT (A) had set aside the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessments. (v) Though the Return of Income has been held to be a valid one, no notice u/s.143(2) was issued despite appellant s request and no assessment u/s.143(3) could be made. Therefore, the assessment is NULL and VOID. 8.2 Further, the ld.A.R submitted submissions that the entire Assessment Order was based on certain materials said to have been seized by the Officers of the Enforcement Directorate, to which the appellant had no access and, it had requested the AO to get these documents to enable it to verify and they were not even shown the documents and, therefore, the principles of natural justice had been violated and the assessment is not valid. Hence, the assessee was not sure whether even the A.O. had personally seen the papers seized by Enforcement Directorate. According to ld. A.R, on appeal, CIT (A) seems to have agreed with the appellant (stating that the assessment was time barred in the light of Sec.153(2A)) but held that the CIT(A) had in his First Appellate Order not either set-aside or cancelled the original Assessment as a whole but, had only issued directions to the AO to re-adjudicate the issues relating to the substantive additions. Hence, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment. As such, the Assessing Officer has no jurisdiction to pass any further order. He is duty bound to follow the direction of the CIT (Appeals) and he cannot sit over the order of the CIT (Appeals), who is a superior authority. The remedy lies with the department and he has to file an appeal against the order of the CIT (Appeals) if they have any grievance. In the present case, instead of filing the appeal in time against the CIT (Appeals) order, the Assessing Officer made a fresh assessment without jurisdiction which is against the law on the facts of the case and not sustainable in the eye of law. Further, ld.A.R the judgment of the Hon ble Calcutta High Court in the case of Fu Sheen Tannery v. ITO [2003] 262 ITR 456 9. The ld. DR submitted that the original assessment order passed u/s.144 of the Act vide order dated 30.03.1998 and determined the income of the assessee ₹ 9,09,81,425/-. The assessee has preferred an appeal against the above order before the CIT(Appeals). In his order dated 21.12.1998 after considering all the submissions of the assessee, the CIT(Appeals) has stated as follows : So I direct the AO to treat the return as filed in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT, Central-II on 20.09.2004. 9.4 According to the ld. DR, as per the order of the CIT(Appeals), the case was posted for hearings on various dates i.e. 30.09.2004, 17.11.2004, 24.01.2005, 21.02.2005, 10.3.2005, 30.9.2005, 21.10.2005, 07.11.2005 and 12.12.2005. As directed by the CIT(Appeals), detailed questionaire was issued vide letter dated 21.10.2005 requesting the explanation of the assessee on various points, which were set aside. In response to the hearing notices, the Authorized Representative of the assessee has also filed letters dated 29.11.2004, 28.01.2005, 03.02.2005, 19.10.2005, 05.11.2005 and 06.12.2005. The main contentions of the assessee during the course of completion of set aside proceedings and the findings on the same are as under : (a). The Assessee s AR has stated that the CIT(A) has in his order dt. 21.12.1998 has directed to treat the return filed as the return filed in pursuance of notice issued u/s.142(1). Therefore, what has been filed is the valid return. No notice u/s 143(2) has been issued and in the absence of such notice it was claimed that the assessment cannot be made. On this issue, it is brought to the notice of the assessee in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book filed by the Department before this Tribunal, the CIT(A) s Corrigendum order dated 5.2.1999 reads as follows : For all other substantive additions, I have set aside the issues for reconsideration by the assessing officer. So, this item of ₹ 61,70,000 will come in that category of reconsideration and set in the category of protective assessment. So with regard to the item of ₹ 61,70,000, it is no set aside. The Assessing Officer will come to his conclusion after proper verification. 9.8 In view of the above, the ld. DR submitted that the submissions of the assessee are untenable. According to him, the CIT(A) clearly set aside the additions, as great injustice will be done if the assessee is not given an opportunity of being heard to explain the above additions and the original assessment order made was best judgment assessment u/s.144 of the Act, treating that no return of income filed in response to notice u/s.142(1) of the Act. However, the AO has extracted the above CIT(A) orders in his assessment order, hence the above grounds are not correct and the assessment order is a valid order as per law after providing opportunity to the assessee. 9.9 Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that as per directions of the CIT(A) after providing adequate opportunity of being heard and carefully considering the submissions and based on the material available on record, the total undisclosed income of the assessee is arrived. Therefore, the ld. DR, pleaded that since the assessee has failed to make out a case even after the set aside assessment u/s.144 of the Act and no evidences were produced by the assessee during the denova assessment, the present assessment does not call for any interference both on law and facts of the case. 9.9.2 Regarding additional ground, the ld.D.R submitted that even if there is any deficiency in non-issuing of notice u/s.143(2) of the Act, which is only a procedural irregularity and it could be cured, it does not make assessment order null and void. Nullity is where there is a void act or an act having no legal force or validity. In the present case, though the AO not issued notice u/s.143(2) of the Act in a prescribed format, he has given adequate opportunity of hearing to the assessee and there is failure on the part of the assessee to represent the case properly before the AO. There is no failure on the part of the AO so as to make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese three isuses, and with regard to the estimate of income at ₹ 20,00,000, I set aside the assessment . 10.2 On the application dt.12.1.1999 made by the then AO,CIT(A) has passed corrigendum dt.5.2.1999 to the appellate order dt.21.12.1998, in which the CIT(A) has stated as The AO by his letter dt.12.1.1999 had brought to my notice that there is an error in the above narration, in as much as the addition of ₹ 61,70,000/- was not made in a protective manner, but in a substantive manner. I find it to be a fact. For all other substantive additions, I have set aside the issues for reconsideration by the AO. Therefore, this item of ₹ 61,70,000 will come in that category of reconsideration and not in the category of protective assessment . 10.3 Then on 5.3.1999 the then AO has filed another miscellaneous petition before CIT(A), praying for an amendment to the appellate order as below: In the said order, in page No.8 has held that it is seen that the AO went through the statements accompanying the return and made additions by finding out the items in the statements. He could have taken the cognizance of filing of the return. SO I direct the AO to tre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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