The Assistant Commissioner Of Income Tax, Circle-1(2), Raipur v. M/S Rana Projects International Ltd., Raipur

HIGH COURT OF CHHATTISGARH, BILASPUR NAFR TAX CASE NO. 103 OF 2010 The Assistant Commissioner of Income Tax, Circle-1(2), Raipur … Appellant Versus M/s Rana Projects International Ltd., Raipur ... Respondent For Appellant :Ms. Naushina Afreen Ali, Advocate. For Respondent:Mr. Neelabh Dubey, Advocate. Hon'ble Shri Navin Sinha, Chief JusticeHon'ble Shri Justice P. Sam Koshy Per NAVIN SINHA, C.J. Judgment on Board 08/09/2015 1.The present appeal has been preferred by the departmentaggrieved by order dated 14.9.2009 passed by the Income TaxAppellate Tribunal, Bilaspur, Bench Camp at Raipur, in ITA No.55/Nag/2009, pertaining to the assessment year 2004-05. 2.The question of law framed on 13.8.2010 was as follows:- “Whether on the facts and circumstances of the case, the ITATwas justified in confirming the order of the CIT (A) which waspassed on evidence recorded in violation of Rule 46A of theIncome Tax Rules, 1962?” 3.Learned Counsel for the department submitted that theRespondent despite repeated notices did not appear before theAssessing Officer. The latter was thus left with no option but to makebest judgment assessment on basis of materials available before him.The order is reasoned and is based on materials furnished by theRespondent including the figures from the previous years. Referring toRule 46A of the Income Tax Rules, 1962 (hereinafter referred to as “theRules”) it was submitted that the CIT (Appeals) ought not to have permitted the Respondent to produce any evidence which could havebeen, but was not produced before the Assessing Officer especiallywhen there was nothing placed by the Respondent to demonstrate thathis case came under any of the Exceptions under Rule 46A.(1) (a) (b)(c) of the Rules. 4.Reliance was placed on [1994] 77 Taxman 497 (Cal.)[Commissioner of Income-Tax v. Popular Electric Co. (P.) Ltd.] and[1987] 34 Taxman 425 (AP) [H.S. Imam v. Commissioner of Income-Tax]. 5.Learned Counsel for the Respondent submitted that it hadsubmitted audited accounts under Section 44AB of the Income Tax Act,1961 (hereinafter referred to as “the Act”) along with its income taxreturn. Even if the Respondent did not appear despite notices asalleged, the Assessing Officer had a statutory duty to make a bestjudgment assessment under Section 144 of the Act based on the detailsmentioned in the return coupled with the audit report. The audit reporthas not been discussed by the Assessing Officer at all. The CIT(Appeals) called for a remand statement from the Assessing Officerunder Section 250(4) of the Act. It was only after several remindersincluding one routed through the Additional Commissioner that an“evasive reply” was furnished that the order of the Assessing Officerwas correct. Learned Counsel submits that the CIT (Appeals) and theTribunal committed no error in law by holding that without any findingwith regard to any errors or unacceptability of the audited accountssubmitted with the return, the Assessing Officer could not have in hiscapacity for a best judgment assessment applied the rule of the thumbto arrive at a particular figure to be disallowed. No fresh evidence was furnished by the Respondent before the CIT (Appeals) and thereforethe question of invoking Rule 46A of the Rules simply does not arise.The finding of the CIT (Appeals) affirmed by the Tribunal is based onthe audited accounts itself not discussed by the Assessing Officer at all.Referring to Section 250(5) of the Act read with Rule 46A(4) of theRules, without prejudice to the above, it was submitted that even theAppellate Authority had the power to direct production of any documentor examination of any witness to enable him to decide the appealincluding to go into any ground of appeal not specified if the CIT(Appeals) was satisfied with regard to its tenability otherwise. furnished by the Respondent before the CIT (Appeals) and thereforethe question of invoking Rule 46A of the Rules simply does not arise.The finding of the CIT (Appeals) affirmed by the Tribunal is based onthe audited accounts itself not discussed by the Assessing Officer at all.Referring to Section 250(5) of the Act read with Rule 46A(4) of theRules, without prejudice to the above, it was submitted that even theAppellate Authority had the power to direct production of any documentor examination of any witness to enable him to decide the appealincluding to go into any ground of appeal not specified if the CIT(Appeals) was satisfied with regard to its tenability otherwise. 6.We have considered the submissions and are satisfied to holdthat it is apparent from the order of the CIT (Appeals) as affirmed by theTribunal that no additional evidence was sought to be furnished by theRespondent before them. On the contrary, the CIT (Appeals) referredand relied upon the audited accounts filed by the Respondent beforethe Assessing Officer but which was not discussed by him. The remandreport was sought from the Assessing Officer under Section 250(4) ofthe Act in the aforesaid background. We find no infirmity in the finding ofthe Tribunal that the Assessing Officer showed a rather callous attitudein discharge of his statutory duties. 7.Popular Electric Co. (P.) Ltd. (supra), has no application to thefacts of the case because it did not relate to an assessee whoseaccounts were required to be compulsorily audited under the Act.Likewise, H.S. Imam (supra), also has no applicability since it related tothe alternative remedy of the assessee under Section 146 of the Acteven if it did not appear in response to a notice under Section 144 of the Act, Section 146 having been deleted in the year 1989 much prior tothe assessment year in question. 8.We therefore find no merit in the appeal and answered thequestion of law in the negative and against the Revenue. 9.The appeal is dismissed. Sd/- Sd/- (Navin Sinha) (P. Sam Koshy) Judge /sharad/* Chief Justice