Parshwa Corporation, Baroda vs Department Of Income Tax

ITA No.1568/Ahd/2011 2 Asst. Year 2002-03

2. The grounds of appeal raised by the Revenue are as under :-

1. The ld. CIT(A) erred in law and on facts in deleting the addition of Rs.39,94,398/- which was made on account of negative cash balance as on 31.03.2002.

2. The ld. CIT(A) further erred in law and on facts in deleting the addition of Rs.7,38,000/- which was made on account of unexplained receipts.

3. The first ground relates to deletion of addition of

Rs.39,94,398/- which was made on account of negative cash

balance. In this case, the assessee has not furnished any evidence

of filing of original return for the year at assessment stage. A

photocopy of form No.2D has been filed declaring total income of

76,760/- but there was no receipt stamp on said return. Thus

evidence of filing of this return was not proved. A search u/s 132

was carried out in this case and the group cases of Shri

Rameshbhai Babubhai Shah of Nadiad on 03/04/2008. Many

incriminating documents/materials were seized during the course

of search, inter alia, Lenovo make lapton. In the said lapton, data

of 65 companies (as per software's language), i.e. entities'(files), ITA No.1568/Ahd/2011 3 Asst. Year 2002-03

books of account for different period was found. Among these 65

entities, the assessee was the one of whom books of account in the

name of (company as per tally software) Parshwa Corporation was

maintained. During the course of search as well as post search

enquiries, the key person of the group Shri Rameshbhai B. Shah

categorically stated that these accounts were being maintained for

various business transactions/accounts which were either totally

out of books or partly out of books. Therefore, these files

contained data of unaccounted business transactions/information of

unaccounted income. Shri Rameshbhai B. Shah failed to submit

bifurcation of accounted and unaccounted income/business during

the course of search as well as post search investigation. Thus the

department came in possession of the information about the files

containing the date of unaccounted business

transactions/information of unaccounted income. Accordingly, the

Assessing Officer issued notice under section 148 on 31.3.2009

and subsequently questionnaires were issued calling for

details/information vide notice u/s 142(1) on 15.09.2009, 12-10- ITA No.1568/Ahd/2011 4

Asst. Year 2002-03

2009 and on 05-11-2009. In response to the notices, the assessee

made its submissions along with objections on 16.10.2009, on

26.10.2009 and on 16.11.2009 before the Assessing Officer. The

Assessing Officer considered the submissions/objections but

rejected the same. The Assessing Officer has discussed this issue

in detail vide para 9(2) of the Assessment Order. The addition was

made on the ground that the assessee could not explain the source

of cash receipts of Rs.8,59,350/- and cash payments of

Rs.59,65,178/-. The second addition of Rs.8,59,350/- was made on

account of unexplained cash receipts. The addition of

Rs.59,65,178/- was made as the cash payments including the

negative cash balance were more than the cash receipts.

3. The matter was carried in appeal before the first appellate

authority, who after considering the submissions of assessee

deleted the impugned additions. The Revenue being aggrieved

with the order of first appellate authority has preferred this appeal

before the Tribunal. The ld. DR supported the order of Assessing ITA No.1568/Ahd/2011 5 Asst. Year 2002-03

Officer whereas the ld. AR relied on the order of first appellate

authority and raised various legal submissions to support the order

of Assessing Officer. On other hand, ld. AR supported the order of

CIT(A).

4. After considering the rival submissions and going through

the material available on record carefully, we find that the

Assessing Officer has made the reassessment without disposing of

the objections of the assessee raised before him as evident from

record. An identical issue came up before the Tribunal wherein a

recent decision in the case of ACIT, Cen.Cir.-2, Baroda vs. M/s

Sagar Developers vide order dated 10/04/2015 in ITA

No.1538/Ahd/2011 for AY 2002-03 the Tribunal has decided the

issue by observing as under :-

"7. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. In the instant case, the respondent assessee in terms of Rule -27 of the Income-tax Appellate Tribunal Rules, 1963 supported the order of CIT(A) on the ground that the impugned assessment order was bad in law as the reassessment was made without disposing off the objections raised by the assessee against the initiation of reassessment proceedings by a separate order. We find that, in the instant case, it is not in dispute that the assessee filed his objections against the issuance of notice u/s 148 of the Act vide his letter dated 11.11.2009 which was received by the office of the Assessing Officer on 16.11.2009. Thereafter, the AO passed the impugned re-assessment order on 20.11.2009 disposing off the objections to ITA No.1568/Ahd/2011 6 Asst. Year 2002-03 reassessment proceedings of the assessee in the order itself. Thus these facts show that the objections raised by the assessee against the issuance of notice u/s 148 of the Act were not disposed off by the AO by passing a speaking order thereon and allowing reasonable time to the assessee after communicating the fate of the objections before processing with the reassessment. The Hon'ble Gujarat High Court in the case of General Motors India P. Ltd. vs. DCIT (supra) has held as under :-

''From the aforesaid discussion, we are of the considered opinion that the writ petition under article 226 of the Constitution of India is maintainable where no order has been passed by the AO deciding the objection filed by the assessee under section 148 of the Act and assessment order has been passed or the order deciding an objection under section 148 of the Act has not been communicated to the assessee and assessment order has decided along with the assessment order. If the objection under section 148 has been rejected without there being any tangible material available with the AO to form an opinion that there is escapement of income from assessment and in the absence of reasons having direct link with the formation of the belief, the writ court under article 226 can quash the notice issued under section 148 of the Act. The writ petition filed by the petitioner is maintainable. The AO is mandated to decide the objection to the notice under section 148 and supply or communicate it to the assessee. The assessee gets an opportunity to challenge the order in a writ petition. Thereafter, the AO may pass the reassessment order. We hold that it was not open to the AO to decide the objection to notice under section 148 by a composite assessment order. The AO was required to, first decide the objection of the assessee filed under section 148 and serve a copy of the order on the assessee. And after giving some reasonable time to the assessee for challenging his order, it was open to him to pass an assessment order. This was not done by the AO therefore, the order on the objection to the notice under section 148 and the assessment order passed under the Act deserves to be quashed."

8. Therefore, respectfully following the above decision of the Hon'ble Jurisdictional High Court, we are of the considered view that the impugned order of reassessment passed by the AO without disposing off the objections raised by the assessee against the issuance of notice u/s 148 by a separate order is liable to be quashed. We order accordingly. Thus, this ground of appeal of the Revenue is dismissed."

In this legal background, ld. AR supported the order of CIT(A).

Nothing contrary was brought to our knowledge on behalf of

Revenue on this legal preposition. Facts being similar, So

following the above order of the Tribunal and in light of the ITA No.1568/Ahd/2011 7 Asst. Year 2002-03

decision of the Hon'ble Gujarat High Court in the case General

Motors India P. Ltd. vs. DCIT 354 ITR 0244 (Guj), we quash the

re-assessment proceedings. The issue raised by the Revenue on

merit in this appeal, goes academic and hence dismissed. Thus,

appeal of Revenue is dismissed on preliminary issue as discussed

above. However, Revenue is at liberty to raise the same as and

when need arises for same.

5. In the result, the appeal filed by the Revenue is dismissed.

Pronounced in the open Court on this the 30th day of June, 2015 Sd/- Sd/-

(Anil Chaturvedi) (Shailendra Kumar Yadav) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 30/6/2015

Mahata/-

Copy of the order forwarded to: 1. The Appellant 2. The Respondent 3. The CIT concerned 4. The CIT(A) concerned 5. The DR, ITAT, Ahmedabad ITA No.1568/Ahd/2011 8 Asst. Year 2002-03

6. Guard File BY ORDER

Dy.Registrar,ITAT, Ahmedabad

1. Date of dictation: 04/06/2015

2. Date on which the typed draft is placed before the Dictating Member: 15/06/2015 other Member:

3. Date on which approved draft comes to the Sr. P. S./P.S.:

4. Date on which the fair order is placed before the Dictating Member for pronouncement: __________

5. Date on which the fair order comes back to the Sr. P.S./P.S.:

6. Date on which the file goes to the Bench Clerk:1/7/2015

7. Date on which the file goes to the Head Clerk:

8. The date on which the file goes to the Assistant Registrar for signature on the order:

9. Date of Despatch of the Order: