24 total views
HYDERABAD TRIBUNAL on Jun 7, 2017 held that for invoking the provisions of Section 144, there should be non-compliance, as provided u/s. 144(1). There should be non- compliance to the notices u/s. 142(1) or 143(2) or fails to make the return as provided. Non-compliance to summons u/s. 131 is not one of the conditions for invoking the best judgment assessment. Moreover, assessee was not given any time to respond as AO completed the assessment even before the posting date. In these circumstances, invoking the provisions u/s. 144 does not arise. Not only that, even before invoking the provisions u/s. 144, AO shall, after giving assessee an opportunity of being heard, make the assessment. Therefore, section mandates that assessee should be given an opportunity of being heard even to invoke the provisions of section 144. Nothing was done by the AO so as to complete the assessment under the provisions of Section 144. Ld.CIT(A) in Tribunal opinion has not considered the provisions of Section 144, but went on to confirm the order stating that there was a non-compliance to notice u/s. 142(1). As seen from the order of the AO, 142(1) notice was issued on the very first occasion but later on assessee has complied with the notices. There seems to be no penalty also levied for non-compliance to various notices. In these circumstances, Tribunal is of the opinion that Ld.CIT(A) erred in confirming the order u/s. 144. Considering the facts of the case and submission that assessee has maintained books of account and is in a position to substantiate the claims, Tribunal is of the opinion that the orders of the authorities are to be set aside and the assessment is to be restored to the file of AO for fresh examination. Assessee also contends that estimation of income at 5% is not correct in the line of business. AO is directed to consider the profit percentage in the line of business, in case the provisions of Section 144 or 145 are to be invoked in this case. Assessee should be given due opportunity to substantiate the claims. The observations of AO and CIT(A) and allegations of assessee should not prejudice the present or future proceedings. With these observations, grounds
SANJAY KUMAR vs.INCOME TAX OFFICER
HYDERABAD TRIBUNAL
B. RAMAKOTAIAH, AM.
ITA No. 1107/HYD/2016
Jun 7, 2017
(2017) 50 CCH 0146 HydTrib
Full decision is as under:-
1. This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-5, Hyderabad, dated 31-05-2016. Assessee has raised various grounds questioning the assessment completed u/s. 144 of the Income Tax Act [Act] as well as estimation of income at 5% with reference to assessee’s line of business.
2. Briefly stated, assessee is in the business of manufacturing and trading of Woven Fabrics. He also undertakes assembling of electrical fans and related job works. Assessee has offered income of Rs. 1,61,360/-. Assessing Officer (AO) by stating that assessee has not responded to various notices, invoked the provisions of Section 144 and estimated the income at 5% of the gross sales taken at Rs. 1,72,63,272/-. In the addition, he also added the sundry income shown in the P&L A/c to an extent of Rs. 10,51,500/-. Assessee took up the matter before the CIT(A) and submitted that AO did not accept the statements, books of account and list of Sundry Debtors etc., and has completed the assessment ex-parte. He also made certain allegations about the conduct of AO in the statement of facts. Ld.CIT(A), however, rejected assessee’s contentions for invoking the provisions of Section 144. With reference to estimation of income at 5% also, he has confirmed the estimation, but excluded the separate addition of job work charges. Assessee is aggrieved on estimation of income at 5% rejecting the books of account.
3. At the outset, Ld. Counsel submitted that the assessment order was passed on 21-12-2010, whereas in the body of the order itself AO acknowledges that summons were issued for appearance on 22-12-2010. Further, it was submitted that Ld.CIT(A) did not consider assessee’s explanation and confirmed the estimation. It was submitted that assessee has maintained books of account and estimation of income was not warranted.
4. Ld.DR, however, supported the orders of the authorities.
5. After considering the rival contentions, I am of the opinion that the matter is to be restored to the file of AO for fresh examination of the assessment itself. As noticed from the assessment order, the AO has issued notices on 07-07-2010 which was served on 12-07-2010 to appear on 19-07-2010. Since there is no response against that notices were issued on 20-08-2010 for appearance on 09-09-2010. As there seems to be no compliance from assessee, again summons were issued for appearance on 21-09-2010 which were complied with. However, for seeking information, the case was adjourned to 25-10-2010. Even though assessee in the statement of facts before the CIT(A) states that he has produced information, AO refused to acknowledge the same. As seen from the order, the AO acknowledges partly to the extent of production of invoices and bills but not books of account. Thereafter, AO records that since it is a pending assessment, assessment will be completed to the best judgment u/s. 144. Later, AO notes that summons were issued asking assessee to produce books of account [and also invoices, bills and vouchers which were produced earlier] by 22-12-2010. However, assessment was passed on 21-12-2010. Since AO has signed on each page of the order dating 21-12-2010 in his hand writing, the order seems to have been passed, even before the assessee could avail the opportunity given.
6. For invoking the provisions of Section 144, there should be non-compliance, as provided u/s. 144(1). There should be non- compliance to the notices u/s. 142(1) or 143(2) or fails to make the return as provided. Non-compliance to summons u/s. 131 is not one of the conditions for invoking the best judgment assessment. Moreover, assessee was not given any time to respond as AO completed the assessment even before the posting date. In these circumstances, invoking the provisions u/s. 144 does not arise. Not only that, even before invoking the provisions u/s. 144, AO shall, after giving assessee an opportunity of being heard, make the assessment. Therefore, section mandates that assessee should be given an opportunity of being heard even to invoke the provisions of section 144. Nothing was done by the AO so as to complete the assessment under the provisions of Section 144. Ld.CIT(A) in my opinion has not considered the provisions of Section 144, but went on to confirm the order stating that there was a non-compliance to notice u/s. 142(1). As seen from the order of the AO, 142(1) notice was issued on the very first occasion but later on assessee has complied with the notices. There seems to be no penalty also levied for non-compliance to various notices. In these circumstances, I am of the opinion that Ld.CIT(A) erred in confirming the order u/s. 144. Considering the facts of the case and submission that assessee has maintained books of account and is in a position to substantiate the claims, I am of the opinion that the orders of the authorities are to be set aside and the assessment is to be restored to the file of AO for fresh examination. Assessee also contends that estimation of income at 5% is not correct in the line of business. AO is directed to consider the profit percentage in the line of business, in case the provisions of Section 144 or 145 are to be invoked in this case. Assessee should be given due opportunity to substantiate the claims. The observations of AO and CIT(A) and allegations of assessee should not prejudice the present or future proceedings. With these observations, grounds are considered allowed for statistical purposes.
7. In the result, appeal of assessee is allowed for statistical purposes.v