TMI Blog2021 (9) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A). CIT(A) is directed to provide reasonable and fair opportunity of hearing to the assessee before passing the order afresh - Appeal of assessee is allowed for statistical purposes - ITA No. 1581/AHD/2013 & ITA No.2422/AHD/2016 - - - Dated:- 8-9-2021 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Salil Kapoor, Advocate For the Revenue : Shri Sreenivas T. Bidari CIT -DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by same assessee are directed against the separate orders of ld. Commissioner of Income tax (Appeals), Valsad dated 15.03.2013 and 02.07.2016 for assessment year (AY) 2004-05. In ITA No.1581/AHD/2013 the assessee has challenged the addition in quantum assessment and validity of re-opening under section 147 of the Income Tax Act, 1961( the Act ). In ITA No.2422/AHD/2016 the assessee challenged the penalty levied under section 271(1)(c) of the Act. Thus,certain facts in both the appeals are common, therefore, both the appeals were clubbed, heard together and are decided by common order to avoid the conflicting dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case, notice issued u/s 148 and the reassessment order passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 ( the Act ) are illegal, bad in law, barred by time limitation and without jurisdiction. Ground 9: That in view of the facts and circumstances of the case, notice issued u/s 148 and the reassessment order passed u/s 143(3) r.w.s. 147 are illegal bad in law as the approval u/s 151 of the Act is invalid and bad in law. That the purported approval has been granted without any application of mind and therefore, the same is not in terms of the provisions of Section 151 Ground 10: That in view of the facts and circumstances of the case, the assessment order and the additions/disallowances made therein are illegal, bad in law and without jurisdiction as no notice u/s 1143(2) has been served as per the provisions of law and the Income Tax Act Ground 11: That in view of the facts and circumstances of the case, the AO has erred on law and in facts in denying the Assessee deduction u/s 80IB of the Act when the Assessee was entitled to claim the same. The AO has erred on facts and in law in holding that Assessee is not eligible for deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 271(1)(c) of the Act are illegal, bad in law and without jurisdiction. 3. Brief facts of the case are that assessee is a company engaged in manufacturing ofpartially oriented yarn, polyester filament, yarn, bright yarn, texturized yarn, knitting of fabrics in the name and style of Base Industries Ltd.[formerly known as Ramkrishna Filament Ltd.] This was the first year of operation by the newly set up industrial undertaking. The assessee is also engaged in the business of trading of circulating knitted fabrics. The assessee filed its return of income for assessment year (A.Y.) 2004-05 on 31.010.2004 declaring nil income. The case of assessee was reopened under section 147 of the Act. The notice under section 148 dated 19.102010 was issued to the assessee. The reopening was made on perusal of statement of Bank account maintained with Axis Bank, Indore that assessee-company has introduced its on-money through Hindustan Continental Ltd., and Sunil Shares Stock Ltd.,[interconnected with each other] through accommodation entries. It was further noted that cash was deposited systemically and funds were transferred to other accounts. It was further noted that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me day cheque was issued to the assessee-company. During the assessment, the assessee was asked to furnish the details of share application money. In response to assessee furnished return of income of M/s Hindustan Continental Pvt. Ltd., balance-sheet and copy of bank account. The Assessing Officer noted that the assessee-company introduced its on-money through M/s Hindustan Continental Pvt. Ltd., and its accommodation entry and made the addition of ₹ 14.50 lakh. The Assessing Officer further noted that he has already made addition of ₹ 7.31 crores under section 68 of the Act, thus no separate addition of ₹ 14.50 lakh is made. The Assessing Officer further noted that assessee has claimed depreciation of ₹ 1.25 crores. On verification of Schedule-D, forming part of Audit report and audited account. The assessee acquired entire plant and machinery of ₹ 13.46 crores, during the year only and debited depreciation of ₹ 1,06,300/- in the profit and loss account. The assessee was asked to furnish copies of bills in respect of depreciable asset acquired, as it was first year of operation of newly set up industrial undertaking. The assessee could not furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the issues on merit. 9. During the hearing of the submission of both the parties, we have perused the impugned order passed by Ld. CIT(A) dated 15.03.2013. We find that no such issues in the form of legal; grounds was raised before Ld. CIT(A). This fact was confronted to the Ld. AR of the assessee. The AR of the assessee submits that he has raised only legal ground that the re-assessment order is bad in law being barred by limitation and without jurisdiction. Further note notice under section 143(2) was served upon the assessee. Therefore assessment order is liable to be quashed. 10. We have considered the contentions of both the parties and perused the record carefully. We find that in the original appeal, the assessee has challenged the order of Ld. CIT(A) on the ground that order was passed without granting opportunity of hearing. On merit, the assessee has challenge the disallowance of depreciation, addition on account of share application and share capital and disallowance of bogus purchases. We find that the Assessing Officer made all additions by taking the view that no sufficient evidence substantiating the claim of depreciation, share application, and purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital of ₹ 7.31 crores and (ii) disallowance of purchase of ₹ 1.37 lakhs. The assessee field quantum appeal before the Ld. CIT(A) which was dismissed vide order dated 02.07.2016, thereby addition was sustained. The Assessing Officer issued show cause notice for levying penalty under section 271(1)(c) of the Act. The assessee filed its reply dated 25.03.2015 and contended that they have neither concealed the income nor furnished any inaccurate particulars of income and further they have filed appeal before the Tribunal. Therefore the proceeding may be kept in abeyance till the disposal of appeal before Tribunal. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer levied penalty @ 100% tax sought to be evaded on two major additions. The Assessing Officer worked out the penalty at ₹ 2.62 crores vide order dated 27.03.2015. On further appeal before Ld. CIT(A) the penalty was upheld. The Ld. CIT(A) while upholding the penalty held that addition in quantum assessment is sustained. The Ld. CIT(A) noted that despite service of notices on four occasions the assessee had not cared to attend proceedings. Thus, the penalty under section 271(1)(c) ..... 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