TMI Blog2016 (11) TMI 1629X X X X Extracts X X X X X X X X Extracts X X X X ..... rders of Commissioner of Income Tax (A) I, Nashik dt.31.10.2011 for the assessment years 2003-04 and 2004-05. 2. Before us, at the outset ld.AR submitted that though the appeals of Revenue are of the same assessee but for different assessment years but the facts and issues involved in both the appeals are identical except for the assessment year and the amounts involved and therefore the submissions made by him while arguing one appeal would be equally applicable to the other appeal also and therefore, both the appeals can be heard together. The aforesaid submission of the ld.AR has not been objected to by ld.DR. We therefore proceed to dispose of both the appeals by a consolidated order for the sake of convenience. However, we proceed with narrating the facts for assessment year 2003-04. 3. Assessee is a partnership firm stated to be engaged in the business of sale of Naphtha and Superior Kerosene Oil (SKO). Assessee filed its return of income for A.Y 2003-04 on 31.10.2003 declaring total loss of ₹ 96,69,741/-. The return of income was initially processed u/s 143(1) of the Act. Subsequently, on the basis of information received from Joint Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.6 The appellant has challenged the validity of initiation of proceedings u/s.147 and issue of notice u/s.148 of the IT Act, mainly on the following grounds. Mere information received from the Dy. Director of IT(Inv) and Sales tax department - cannot constitute valid reasons for initiation of proceedings u/s.147/148 of the IT Act, in absence of anything to show that the learned A.O has independently applied his mind to arrive at a belief that the income has escaped assessment. The appellant relied upon the following decisions: CIT v/s Sfil Stock Broking Ltd (20l0) 41 DTR (Del) 98/233 CTR (Del) 69; CIT vs. Shri Rajastan Syntex Ltd. (2009) 212 Taxation 275 (Raj); DCIT vs. Rainee Singh (2009) 125 TTJ (Del) 846; CIT vs. Atul Jain (2007) 164 Taxman 33 (Delhi) CIT vs. Smt. Paramjit Kaur (2008) 168 Taxman 39 (Punj . Har), The appellant has filed the objection on 08-062010 to issue of issue notice u/s.148. However, the learned A.O did not dispose off the objections and proceeded further and completed the assessment. As the assessment order is passed without disposing off the appellant's objection, it is bad in law and void ab initio and liable to be annulled. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat amounts representing purchases and sales entered in the books of accounts are correct by the sales tax authorities as well as by the AO. Further, I find from the record that the Sales tax Department considered that Sales tax payable on 'sales entered in books of accounts, is more as per provisions of Sales tax Act, than sales tax actually paid by the assessee and difference of the sales tax payable is works out to ₹ 2,60,OS,953/-.[Sales ₹ 16,25,37,206/- @ 16% = ₹ 2,60,OS,953]. This differential amount has been considered as undisclosed income by the A.O. but he has not explained as to how this is undisclosed income of the appellant. In remand report also the AO has not enlightened anything in this regards and not adduced any evidence to established as to how it is undisclosed income of the appellant. I further noted that it is not a case of Sales tax department that the assessee had collected more amount as Sales tax from customers than shown in the books. So also there is no finding of the A.O with any supporting evidence, that the appellant has collected more sales tax than shown in the books. Further, I find from the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In absence of any escaped income chargeable to tax, no proceedings u/s.147 can be initiated. Further, it is evident that the A.O has not carried out any independent enquiries in this regards nor brought any evidence for the belief of any escapement of income, for issue of the said notice u/s.148 of the IT Act, as contemplated in exp.2 to sec.147 of the IT Act, neither adduced any evidence during remand proceedings. Therefore, it is evident that the A.O merely relied upon the report of Sales Tax Department and initiated proceedings u/s.147, therefore, in absence of anything to show that the learned A.O has independently applied his mind to arrive at a belief that income has escaped assessment, the proceeding cannot be considered as validly initiated. This view is supported by the decision of Hon'ble Delhi High Court in the case of Commissioner of Income Tax V/s Sfil Stock Broking Ltd (2010) 41 DTR (Del) 98/233 CTR (Del) 69. In this case, it is held that It was clear that the Assessing Officer referred to the information and the two directs as 'reason' on the basis of which he was proceeding to issue notice under section 148. These could not be the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vent of the higher appellate authority taking a different view and to avoid any exercise of setting aside to the CIT(A), other grounds are considered on merit. 5. Aggrieved by the order of ld.CIT(A), Revenue is now in appeal before us and raised the following grounds: 1. On the facts, in law and in the circumstances of the case the ld. CIT (A)-I, Nashik has erred in quashing the proceedings u/s. 147/148 of the I.T.Act. and holding void ab initio and annulling it. 2. On the facts, in law and in the circumstances of the case, the ld.CIT(A)-I, Nasik has erred in holding that A.O's action in respect of the Ex Parte assessment cannot be upheld. 3. On the facts, in law and in the circumstances of the case the ld. CIT(A)-I, Nashik has erred in deleting the addition of ₹ 2,60,05,953/- on account undisclosed income of evasion of Sale Tax. 4. On the facts, in law and in the circumstances of the case the ld. CIT(A)-I, Nashik has erred in deleting the addition/disallowance of ₹ 1,77,96,741 (₹ 81,26,860/- plus ₹ 96,69,741/-) on account of business income estimated @ 5% on total sales. 5. On the facts, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dural irregularity. He submitted that violation of any and every procedural provision cannot be said to automatically vitiate the order passed by AO. He further relying on the decision of the Hon ble Apex Court in the case of State Bank of Patiala Vs. S.K. Sharma (AIR 1996 SC 1669) submitted that in case of a violation of procedural provision, which is not of a mandatory character, the complaint of violation has to be examined from the stand point of substantial compliance and that the order passed in violation of the procedural provision can be set aside only when such violation has caused prejudice to the assessee. He further submitted that Hon ble Apex Court in the aforesaid decision has held that while applying the principles of natural justice, the authorities must always bear in mind that the ultimate objective of principles of natural justice is to ensure a fair hearing and to ensure that there is no failure of justice. He also placed reliance on the decisions of Hon ble Gujarat High Court in the case of Principal Commissioner of Income-Tax-2, Vadodara Vs. Sagar Developers (2016) 72 Taxman.com 321 (Guj), Commissioner of Income Tax Vs. Sumantbhai C. Munshaw (1981) 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld lead to unnecessary harassment to the assessee. He submitted that the Hon ble Bombay High Court in the case of KSS Petron Private Ltd., Vs. ACIT Circle 10(2) (ITA No.224 of 2014 order dt.03.10.2016) has held that when the assessment order is passed without jurisdiction and the AO has not followed the laws laid down by the Apex Court in case of GKN Driveshafts (India) Ltd., (supra), there is no reason to restore the issue to the file of the AO to pass a further / fresh order as it would lead to unnecessary harassment of the assessee. With respect to the ld.DR s reliance placed on the decisions in the case of State Bank of Patiala Vs. S.K. Sharma (supra), he submitted that it was a case with respect to the proceedings under labour law and therefore the facts were different and therefore the ratio of that decision would not be applicable to the present facts. He further submitted that the reliance placed by the ld.DR on the other decisions also could not be applied to the present case because the facts of those cases are distinguishable from the facts of the present case. On the issue of ld.DR s reliance placed on the decision in the case of Shriram Petroleum Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the same by passing a speaking order. We further find that in case of KSS Petron Private Ltd (supra) where the facts were that the AO had passed the re-assessment order without disposing of assessee s objection for re-opening of assessment and when the matter was carried before the Tribunal, the Tribunal had set aside the orders and restored the assessment to the AO to pass fresh orders after disposing of the objections to re-opening, the Hon ble High Court observed as under: 8. We note that once the impugned order finds the assessment order is without jurisdiction as the law laid down by the Apex Court in GKN Driveshafts (supra) has not been followed, then there is no reason to restore the issue to the Assessing Officer to pass a further/fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on reopening notice, without jurisdiction (without compliance of the law in accordance with the procedure;, yet the only consequence, would be that in appeal, it would be restored to the Assessing Officer for fresh adjudication after following the due procedure. This would lead to unnecessary harassment of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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