Archana Synthetics, Ahmedabad vs Assessee

Archana Synthetics, C/o. Mahavir Prasad Todi, Aura Villa, Block-F, Near Omkar Bungalows, Thaltej, Ahmedabad .... Appellant PAN : AAOFA 2333 G Vs.

ITO, Ward-2, Mehsana .... Respondent

Assessee(s) by : Shri Sakar Sharma, AR Revenue by : Shri M.J. Paul, Sr. DR.

सुनवाई क तार ख/Date of Hearing : 07/05/2015 घोषणा क तार ख /Date of Pronouncement: 14/05/2015

आदे श/O R D E R

PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals), Gandhinagar, Ahmedabad dated 26.12.2011 for Assessment Year 1989-90, on the following grounds:-

1. The learned CIT(A) erred on facts and in law in holding that the service of assessment order on 07/05/1992 was within reasonable time and therefore, order passed by the Assessing Officer was not barred by Limitation and was a valid assessment order.

ITA No.225/Ahd/ 2012 Archana Synthetics vs. ITO AY 1989-90

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2. The learned CIT(A) erred on facts and in law in not adjudicating the appellant's contention that the order passed by the Assessing Officer was barred by Limitation in as much as the notice of demand itself was prepared after the time barring date i.e. 10/04/1992.

3. The learned CIT(A) erred on facts and in law in holding that the order passed by the Assessing Officer was valid even though the same was not communicated to the appellant on or before the time barring date as held by Kerala High Court in 257 ITR 198 (Ker) and 81 ITR 759 (SC).

4. The learned CIT (A) erred on facts and in law in not adjudicating the other grounds of appeal challenging passing of ex-parte order u/s 144 in as much as the order was passed without giving reasonable opportunity of being heard to the appellant and, therefore, ex-parte assessment was made violating principles of natural justice.

5. The learned CIT (A) erred on facts and in law in not adjudicating the appeal on merits in relation to the following quantum additions/disallowances:

(i) Addition on account of low gross profit Rs.18,636/-

(ii) Addition on account of difference in closing stock Rs. 2,03,656/-

(iii) Disallowance of interest paid Rs. 1,20,427/-

(iv) Disallowance of Rent paid Rs. 41,250/-

(v) Disallowance of Brokerage paid Rs. 13,780/-

(vi) Addition on account of balance sheet difference Rs. 1,055/-

(vii) Disallowance of interest paid to partners Rs. 4,320/-

ITA No.225/Ahd/ 2012 Archana Synthetics vs. ITO AY 1989-90

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6. The Ld. CIT (A) erred on facts and in law in upholding the order of the Assessing Officer treating the firm to be assessable as URF despite the fact that the Assessing Officer himself had granted registration as RF intimation u/s 143(1) and there was no conscious default on the part of the appellant in not complying with the requirements of the Assessing Officer for making judicious assessment.

2. The appeal before us was arising out of the set-aside order of the CIT(A) dated 02.02.2000 by the ITAT, 'A' Bench, Ahmedabad vide order dated 11.07.2008. The appeal originally arose from the assessment framed by the ITO, Ward-2, Mehsana dated 31.03.1992 u/s 144 of the Act. The assessee filed an appeal before the CIT(A), who dismissed the appeal vide order dated 02.02.200. Thereafter, the appeal was carried to the ITAT which set aside the specific issue arising out of additional ground taken by the assessee before the ITAT for the first time. In the set aside proceedings, the CIT(A) called for a remand report from the Assessing Officer to find out the facts of the case and it was found that the primary record of dispatch of assessment order and service, etc. were not available with the Assessing Officer; however, the assessee filed 154 application dated 27.05.1992 wherein it was stated by the assessee that the assessment order has been received. Further, Form No.35 was submitted in the officer of the concerned CIT(A) on 28.05.1992 and in the column of data of service of demand notice was mentioned as 07.05.1992.

ITA No.225/Ahd/ 2012 Archana Synthetics vs. ITO AY 1989-90

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2.1 The stand of the assessee has been that the order passed u/s 144 itself has been barred by limitation. The CIT(A) dismissed the appeal of the assessee on the ground that the assessment order as well as demand notice were served on the assessee within the reasonable time.

3. Before us, the undisputed facts of the case are that the assessment order was passed on 31.03.1992 u/s 144 of the Act and notice of demand u/s 156 of the Act was also passed on 10.04.1992 which is placed at page No.19 of the appeal file. We find that the Hon'ble Gujarat High Court in the case of CIT vs. Purshottamdas T. Patel, reported in [1994] 209 ITR 52 (Guj.) has held that assessment is an integrated process involving not only assessment of total income but also determination of tax, and unless total income is determined and determination of tax is also done, it cannot be said that process of assessment is complete. In the said case, total income was determined and assessment order was made within the prescribed time limit but determination of tax was done after the prescribed period was over, in such situation it was held by the Hon'ble Gujarat High Court that the assessment could be said to be barred by limitation.

4. Applying the ratio laid down by the Hon'ble Gujarat High Court in the case of Purshottamdas T. Patel (supra) to the facts of the present case of the assessee, we find that though the assessment order was passed within the prescribed time limit i.e. on 31.03.1992 but determination of tax was done after the ITA No.225/Ahd/ 2012 Archana Synthetics vs. ITO AY 1989-90

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prescribed period i.e. on 10.04.1992. In such situation, the assessment order is barred by limitation as per the ratio laid down by the Hon'ble Gujarat High Court in the case of Purshottamdas T. Patel (surpa) because assessment order includes assessment of total income as well as determination of tax thereon. Since we are allowing assessee's appeal on preliminary issue of limitation, we are refraining to comment on merit of issue at hand and same may be agitated as and when situation arises for the same. Thus, the appeal of the assessee is allowed.

5. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the Court on 14th of May, 2015 at Ahmedabad.

Sd/- Sd/-

(ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 14/05/2015 *Biju T, PS

आदे श क ूितिल'प अमे'षत/Copy षत of the Order forwarded to : 1. अपीलाथ* / The Appellant 2. ू+यथ* / The Respondent. 3. संबंिधत आयकर आयु, / Concerned CIT 4. आयकर आयु,(अपील) / The CIT(A), 5.

'वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER,

//TRUE COPY// उप/ उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad