Commissioner Of Income Tax,Faridabad v. M/S. G.e. Motors India Pvt. Ltd.faridabad

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 869 of 2008Date of decision: 26.4.2011 Commissioner of Income Tax,Faridabad --- Appellant Versus M/s. G.E. Motors India Pvt. Ltd.Faridabad --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Ms. Urvashi Dhugga, Senior Standing Counselfor the appellant-Revenue. Mr. Rohit Sood, Advocatefor the respondent-assessee. --- AJAY KUMAR MITTAL, J. This order will dispose of two appeals, i.e. Income TaxAppeal Nos. 869 and 886 of 2008 as identical questions have beenclaimed in both the appeals. The facts have been taken fromIncome Tax Appeal No. 869 of 2008. 2. This appeal under Section 260A of the Income-Tax Act,1961 (for short “the Act”) has been filed by the Revenue against the order dated 5.3.2008, passed by the Income Tax Appellate TribunalDelhi Bench ‘I’, New Delhi (in short “the Tribunal”) in ITA No.3812/Del/2005, relating to the assessment year 2000-01. 3.The appeal was admitted by this Court for determinationof the following substantial question of law: “Whether on the facts and in the circumstances of thecase, the Hon’ble ITAT was right in law in restoring backthe matter to the file of Assessing Officer with thedirection that assessment will be framed de novo aftergiving the reasonable opportunity of hearing to theassessee as per provisions of law, without going into themerits of the additions made in the assessment order andeven though the assessee failed to comply with the lawas the assessee deliberately did not produce the books ofaccounts before the Assessing Officer as well as beforethe CIT(A).” 4.The facts, in brief, necessary for adjudication as narratedin the appeal, are that the respondent-assessee is a company whichis engaged in manufacture and sale of fractional Horse Power motorsand trading of some special types of motors and pumps. For theassessment year 2000-01, the assessee filed its return on30.11.2002, under Section 115JA of the Act, declaring an income ofRs. 3,53,96,404/-. The return was processed under Section 143(1)of the Act. Subsequently, the case was selected for scrutiny andnotice under Section 143(2) of the Act was issued. In the saidproceedings, the assessee was required to produce complete booksof accounts, bills, vouchers etc., but somehow he could not produce the same and took a plea that the same were on the computer andthe hard copies thereof will have to be taken. Finding no furtherresponse from the assessee, the assessment was completed underSection 144 of the Act, on the basis of the material available onrecord after disallowing certain expenses at net taxable income ofRs. 1,21,09,760/-, vide order dated 31.3.2003 as it was a timebarring case. The assessee challenged the order dated 31.3.2003on a score of grounds, the foremost of those being the validity ofassessment order made under Section 144 of the Act, before theCommissioner of Income-tax (Appeals) {in short “the CIT(A)”}. TheCIT(A) partly allowed the appeal of the assessee, vide order dated25.7.2005. 5.Both the sides felt aggrieved by the order of the CIT(A)and accordingly, each of them preferred separate appeals before theTribunal. The Tribunal, vide the order under appeal, after scrutinizingthe matter, observed as under: “We have heard both the parties and without going intothe merits, whether the disallowance sustained or deletedby the CIT(A) is correct or not, one fact is clear thatassessee did not produce books of accounts. Accordingto Section 142(1), the Assessing Officer has power torequire the assessee to produce or caused to beproduced such accounts or documents as he requiredand if the same is not produced, the Assessing Officer isauthorized to make best judgment assessment as perSection 144 of the Act. If the assessee is contesting thata particular disallowance is unwarranted, it was to be “We have heard both the parties and without going intothe merits, whether the disallowance sustained or deletedby the CIT(A) is correct or not, one fact is clear thatassessee did not produce books of accounts. Accordingto Section 142(1), the Assessing Officer has power torequire the assessee to produce or caused to beproduced such accounts or documents as he requiredand if the same is not produced, the Assessing Officer isauthorized to make best judgment assessment as perSection 144 of the Act. If the assessee is contesting thata particular disallowance is unwarranted, it was to be supported by evidence i.e. in the shape of books ofaccounts and other related documents. It is not the caseof the assessee that it has not maintained books ofaccounts as the accounts of the assessee are auditedone under Section 44AB of the Act. It was the onlycontention of the assessee that the Assessing Officer didnot give proper opportunity to the assessee to producethe books of accounts. It has already been pointed outthat the disallowance, whether they are admissible or notcannot be ascertained in absence of proper books ofaccounts which are stated to be maintained by theassessee and in respect of which tax audit report underSection 44AB had duly been filed by the assessee. In thisview of the situation, after hearing both the parties, weare of the opinion that both these appeals should berestored back to the file of the Assessing Officer with thedirection that assessment will be framed de novo aftergiving the reasonable opportunity of hearing to theassessee as per provisions of law. For statisticalpurposes, both the appeals will be treated to be allowed.”6.We have heard learned counsel for the parties and haveperused the record. 7. Learned counsel for the Revenue submitted that theTribunal had erred in remanding the case to the assessing officerwith a direction to provide a fresh opportunity to the assessee toproduce the books of accounts and frame a fresh assessmentespecially when the assessing officer had provided adequate opportunity but the assessee had failed to produce the record.Learned counsel, in support of his submission relied upon ajudgment of this Court in Commissioner of Income Tax Vs. SASEducational Society, (200) 319 ITR 65 (P&H). Controverting theaforesaid submission, learned counsel for the assessee submittedthat the accounts of the assessee were audited and assessee hadfiled audit report as required under Section 44AB of the Act, alongwith the return of income. According to the learned counsel, oncethe accounts were maintained and audit report had been filed, itcould not be said that the assessee was negligent in not producingthe books of accounts before the assessing officer. It was furthersubmitted that after the remand vide the impugned order, theassessing officer had passed a fresh assessment order afterexamining the books of accounts of the assessee and, therefore, theappeals had been rendered infructuous. 8.We have given our thoughtful consideration to thesubmissions made by the counsel for the parties and find weight inthe submission made by the counsel for the assessee. It is notdisputed that the accounts of the assessee were audited and theassessee had also filed audit report under Section 44AB of the Act,along with the return of income. In such a situation, it cannot beinferred that the assessee had deliberately not produced the books ofaccounts before the assessing authority. The Tribunal has remandedthe case back to the assessing officer to provide an opportunity tothe assessee and pass a fresh assessment order thereafter.Learned counsel for the Revenue was unable to show to the Courtthat by doing so any prejudice had been caused to the Revenue. 8.We have given our thoughtful consideration to thesubmissions made by the counsel for the parties and find weight inthe submission made by the counsel for the assessee. It is notdisputed that the accounts of the assessee were audited and theassessee had also filed audit report under Section 44AB of the Act,along with the return of income. In such a situation, it cannot beinferred that the assessee had deliberately not produced the books ofaccounts before the assessing authority. The Tribunal has remandedthe case back to the assessing officer to provide an opportunity tothe assessee and pass a fresh assessment order thereafter.Learned counsel for the Revenue was unable to show to the Courtthat by doing so any prejudice had been caused to the Revenue. Moreover, technicalities of law would not come in the way of theCourt in rendering substantial justice, which has been done by theTribunal by the impugned order. Further, the learned counsel for theRevenue was not able to controvert that after the remand, freshassessment had been framed by the assessing officer. The judgmentrelied upon by the learned counsel for the Revenue is on individualfact situation involved therein and it has not been laid down as ablanket proposition of law that in all the cases fresh opportunityshould not be provided to the assessee to produce the books ofaccounts. 9.In view of the above, the substantial question of law isanswered against the Revenue and finding no merit in the appeals,the same are dismissed. (AJAY KUMAR MITTAL) JUDGE April 26, 2011*rkmalik* (ADARSH KUMAR GOEL) JUDGE