TMI Blog2005 (2) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A) has erred in law and on facts in sustaining addition of Rs. 8,77,127 by applying net rate of profit at 0.4 per cent without properly appreciating facts, circumstances, nature of assessee's business and the fact that the rate of 0.02 per cent is the natural outcome of the regular books of account maintained by the assessee. (4) That in any view of the case the authorities below have erred on facts and in law in invoking the provisions of s. 145(3), in applying net rate of profit at 0.4 per cent and in sustaining the assessment which is illegal, unlawful, arbitrary and invalid on account of non-service of statutory notice under s. 143(2) within the prescribed time. (5) That in any view of the case the assessment framed and sustained is bad in law, which deserves to be quashed. (6) That the appellant craves leave to add, alter, amend or withdraw any ground of appeal." 4. We have heard the parties. 5. The brief facts relating to the issues involved in this appeal and as have been revealed from the records are that the assessee was carrying on business of discounting of demand drafts on commission at Aligarh. The CIT(A), Agra, by his order under s. 127 dt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, is concerned, in my opinion, the same has to be accepted. It is the claim of the AO that he had sent the aforesaid notice through speed post on 17th March, 2003 along with penalty notice under s. 271B and this speed post was received by the assessee on 20th March, 2003. As against this, the assessee's claim is that through this speed post she received only penalty notice and no notice under s. 143(2) was received by her. As the assessee is denying the receipt of the notice issued under s. 143(2), the onus is on the AO to prove beyond doubt that the envelope contained this notice also. It is a settled law that onus is on the person who claims the service of notice. Thus, unless the AO shows with clinching evidence that the notice under s. 143(2) was also sent along with notice under s. 271B, his claim cannot be accepted. During the appellate proceedings, I verified the dispatch register of the AO. It is seen that in the dispatch register maintained for the relevant year, on 17th March, 2003, there is an entry at S. No. 1871. Against this entry it is mentioned that a closed envelope was sent to the assessee. Except this there is no other narration about the contents of the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d consequently the assessment is bad in law. 12. The counsel further submitted that if the assessee's return is held to be non est then the assessment is also to be held as illegal and for this purpose has relied on the decision of Tribunal, Pune (Third Member) in case of G.C. Bafna vs. Dy. CIT (2003) 80 TTJ (Pune)(TM) 506 : (2003) 90 ITD 115 (Pune)(TM). 13. On merits, the counsel for the assessee submitted that the assessee being carrying on business at Aligarh, the rate of commission should have been applied as is being accepted by AO at Aligarh and for that purpose has relied on the assessment orders in case of Shri Pradeep Kumar, Shri Praveen Gupta and Shri Suman Gupta which are for asst. yr. 2000-01 and have been passed on 27th March, 2003, 26th March, 2003 and 27th March, 2003, respectively, wherein the rate of commission has been accepted within a range of 0.15 per cent to 0.2 per cent subject to deduction of 30 per cent of the expenses claimed by the assessees. Copies of assessment order placed in the assessee's paper book. 14. In support of his submissions that the rate as being accepted in case of assessees at Aligarh should be applied, the counsel has relied on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that since the ITO, Aligarh, had no jurisdiction over the assessee's case for asst. yr. 2001-02, the return filed by the assessee with him on 27th March, 2002 was non est and this conclusion of ours is supported by the decision of Hon'ble Supreme Court in the case of Industrial Trust Ltd. vs. CIT 1973 CTR (SC) 449 : (1973) 91 ITR 550 (SC) wherein the return filed before an officer who had no territorial or otherwise jurisdiction over the assessee's case was held to be non est. 19.1 The facts of this case as has been borne out from the records are that the appellant-company was incorporated in the then native State of Jaipur with its head quarters at Jaipur and consequently it was ITO, Ajmer who had jurisdiction over the assessee's case but as per Notification No. SRO 1214, dt. 1st July, 1952, the ITO, Ajmer, had jurisdiction over the residents of Jaipur in respect of assessment pending before him and since there was no assessment pending on 1st July, 1952, the ITO, Ajmer, had no jurisdiction over the assessee's case. 19.2 The ITO, Ajmer, issued notice under s. 134(1)(a) of the Act in assessee's case for asst. yrs. 1946-47, 1947-48 and 1949-50, in response to which, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of these facts, we are of the opinion that so far as AO, Agra is concerned, there was no valid return for asst. yr. 2001-02 before him. 24. Coming to question No. 4, we are further of the opinion that in view of our answer to question No. 3, i.e., there being no valid return before the AO, Agra, for asst. yr. 2001-02, he had no jurisdiction to issue notice under s. 143(2) of the Act, notice under s. 143(2) can be issued only during the pendency of a valid return. 25. Coming to question No. 5, we, after having held as supra, i.e., in view of our answers to question Nos. 3 and 4, we are of the opinion that the assessment framed under s. 143(3) on the basis of said non est return and after issuing notice under s. 143(2) on 9th Feb., 2004, was illegal and bad in law. 25.1 This view of ours is supported by the decision of Hon'ble High Court of Calcutta in case of Maya Devi Bansal vs. CIT (1979) 9 CTR (Cal) 235 : (1979) 117 ITR 125 (Cal). 25.1(a) The brief facts in the case before the Hon'ble High Court and as have been revealed from the order are that the assessee was required to furnish her return of income for asst. yr. 1960-61 in pursuance of notice under s. 148 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the IT Act, 1961, cannot be said to be in pan materia. Sec. 144 provides for the circumstances under which, in the absence of a return, a best judgment assessment can be made and lays down the duties of the ITO in making such best judgment assessment. There is no question of any reliance or reference to any return in such a case. But, in an assessment under s. 143(3), the basis is the return. Where there has been a return, though an invalid return, on the basis of which an assessment order under s. 143(3) of the Act has been made, that assessment cannot be treated as a best judgment assessment, as if no return has been filed. 26. After having considered the above decisions, we are of the opinion that so far as present case is concerned, the aforesaid order fully supported the view arrived at by us. 27. In view of our various answers to question Nos. 1 to 5 above, we are of the opinion that the assessment framed under s. 143(3), dt. 27th March, 2002, was void ab initio and the same is quashed/cancelled. 28.1 Before ending with the aforesaid legal issue, we would like to clarify further that in the present case, the Revenue has taken a specific stand that the return furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake note of information from two parties which were favourable to the assessee and relied on the information collected from only one party. Explaining its aspect, the learned counsel submitted that the AO had called for information from three persons namely Shri Harsh Kumar, Kaushal Kishore and Shri Zan Mohammad. 30.1 According to the learned counsel: (i) Shri Harsh Kumar had informed the AO through his letter, the contends of which were as under: "Please refer to your letter No. 970, dt. 4th March, 2004, I hereby humbly submit that during the financial year 2000-01, I had not made any transaction with M/s Meenakshi Traders, Mahavir Ganj, Aligarh, in respect of drafts as mentioned your above letter." (ii) So far as reply from Shri Kaushal Kishore is concerned, he had denied to have maintained books of account but admitted to have got drafts amounting to Rs. 50,000 to Rs. 60,000 during the financial year 2000-01, discounted through M/s Meenakshi Traders, Aligarh, i.e., the assessee. (iii) Shri Zan Mohammad had submitted in writing that since the matter relates to a period of about two to three years old, he was unable to give the details of drafts but confirmed that he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of all submitted, that even if the assessment is considered to be an assessment under s. 144 of the Act, then also the Revenue authorities should have adopted the rate of commission as was being accepted by the AOs in case of other persons at Aligarh. According to the assessee, the AO at Aligarh had been accepting the rate of commission from 0.15 per cent to 0.2 per cent and for that purpose has referred to the assessment orders in case of Shri Pradeep Kumar, Prop. M/s Heera Sons Finance Co., Rashal Ganj, Aligarh and in case of Shri Suman Gupta, Prop. M/s Kamla Bankers, Jaiganj, Aligarh, for asst. yr. 2000-01 completed on 27th March, 2003, copies have been placed on record. The learned counsel further submitted that in the aforesaid cases, the AO has not only accepted the rate of commission at 0.15 per cent rather has allowed deduction to the extent of 30 per cent of the expenses claimed by the assessee out of such commission. He, therefore, submitted that in the present case the rate of commission shown by the assessee should be accepted. 32.2 Coming to the decision of the Tribunal in case of C.K. Telang and Vijay Kumai Dixit, the learned counsel submitted that those decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as erred in law as well as on facts in upholding the addition of Rs. 12,60,000 by the process of estimate. (2) That the learned CIT(A) has failed to appreciate that the additions can only be made on this basis of facts, figures, situation and circumstances of the assessee. No addition can be made or upheld on the basis of some comparison of figures of the other assessees, when they are not comparable, such deviation is against the principle of accounting and is not permitted in law. If at all, any comparison was to be made for the purpose of addition based on the pronouncement of the Hon'ble Tribunal, Agra Bench, Agra, then it should have been on per day income basis, as held by the Hon'ble Tribunal, Agra Bench, Agra, whose orders have been relied and applied while making the addition in the hands of the assessee. (3) That the learned CIT(A) has ignored the basic facts that whenever the addition is made on the basis of comparison of the facts, figures and details, such comparison should be based on the identical facts, figures and details, on the parties whose figures have been taken for such comparison. No comparison can be held valid and lawful when there are sea difference b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet. During the course of assessment proceedings, the assessee was called upon by the AO many times to produce the books of account and various other details but the assessee did not comply with any of the notices requiring furnishing of various details on the plea that she having approached the Hon'ble Allahabad High Court for transfer of jurisdiction over her case from Agra to Aligarh, the matter may be kept pending. On this ground, the assessee went on seeking adjournments. The AO, after having allowed adjournments, finally came to the conclusion that the assessee was seeking adjournments on insufficient grounds and, therefore, he proceeded to make the assessment under s. 144 of the Act. Consequently the AO computed assessee's income from commission on discounting of drafts at the net rate of 1.5 per cent on the total turnover of Rs. 31,50,03,609. 39. The assessee went in appeal before the CIT(A) and submitted that so far as assessment under s. 144 is concerned, the AO was not justified in not allowing the adjournment. With respect to quantum of income, the assessee objected to the rate applied by the AO on the ground that the AO at Aligarh had been accepting the net rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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