Income Tax Appellate Tribunal - Agra
Smt. Meenakshi Devi vs Asstt. Cit on 28 February, 2005
Equivalent citations: (2005)96TTJ(AGRA)813
ORDER
I.S. Verma, J.M. These are two appeals of the same assessee, for assessment years 2000-01 and 2001-02, are against the order of the CIT(A) dated 20-1-2004 and 23-11-2004, respectively.
2. Since both these appeals relate to the same assessee, we have decided to dispose of these two appeals, for the sake of convenience, by this common/consolidated order.
ITA No. 29/Agra/20053. In this appeal, the assessee has objected to the order of the CIT(A) by way of following grounds "(1) That the learned CIT(A) has erred in law and on facts in sustaining the assessment made by the learned assessing officer under section 143(3) without properly appreciating that notice under section 143(2) has not been served upon the assessee within the statutory time limit as required by the proviso to section 143(2).
(2) That the learned CIT(A) has erred in law and on facts in sustaining the rejection of books of account by the learned assessing officer by erroneously and arbitrarily invoking the provisions of section 145(3).
(3) That the learned CIT(A) has erred in law and on facts in sustaining addition of Rs. 8,77,127 by applying net rate of profit at 0.4 per cent without properly appreciating facts, circumstances, nature of assessee's business and the fact that the rate of 0.02 per cent is the natural outcome of the regular books of account maintained by the assessee.
(4) That in any view of the case the authorities below have erred on facts and in law in invoking the provisions of section 145(3), in applying net rate of profit at 0.4 per cent and in sustaining the assessment which is illegal, unlawful, arbitrary and invalid on account of non-service of statutory notice under section 143(2) within the prescribed time.
(5) That in any view of the case the assessment framed and sustained is bad in law, which deserves to be quashed.
(6) That the appellant craves leave to add, alter, amend or withdraw any ground of appeal."
4. We have heard the parties.
5. The brief facts relating to the issues involved in this appeal and as have been revealed from the records are that the assessee was carrying on business of discounting of demand drafts on commission at Aligarh. The CIT(A), Agra, by his order under section 127 dated 10-5-2001, transferred the assessee's jurisdiction from Dy. CIT, Circle, Etawah to Assistant Commissioner, Central Circle, Agra and, therefore, after 10-5-2001 the jurisdiction over the assessee's case was with Assistant Commissioner, Central Circle, Agra. Since the assessee had not filed her return of income for assessment year 2001-02 at Agra till 31-7-2001, a notice under section 142(1) of the Act was issued on 6-2-2003, calling upon the assessee to file her return of income for assessment year 2001-02.
6. The assessee, as per her letter dated 21-2-2003, informed the assessing officer, Central Circle, Agra, that she has filed her return of income for assessment year 2001-02 in IT Office, Aligarh on 27-3-2002 and since she had not received any notice under section 143(2) of the Act, the assessment had become barred by time. On 9-2-2004, the assessing officer, Agra, issued notice under section 143(2) claiming the same to be second notice and also that notice under section 143(2) of the Act had already been sent to the assessee as per speed post dated 17-3-2003. Assessment was completed under section 143(3) wherein the assessing officer rejected the assessee's books of account by holding that the rate of commission charged by the assessee was not verifiable and computed assessee's income from draft discounting by applying a net rate of 1.5 per cent.
7. The assessee went in appeal before the CIT(A) and first challenged the validity of assessment under section 143(3) on the ground that the same had been framed without issuing notice under section 143(2) of the Act. According to the assessee, she was never served upon with a notice under section 143(2) alleged to have been issued on 17-3-2003, because in the letter received through speed post it was penalty notice for initiation of penalty proceedings under section 271B of the Act.
8. The learned CIT(A) verified this fact from the assessment records and concluded that the assessee was never served with a notice under section 143(2) of the Act claimed to have been issued on 17-3-2003. The relevant part of the order of the CIT(A) as contained in para 2.2 of his order read as under :
"I have carefully considered the facts of the case, the submissions of the Authorised Representative and the position of law. In my opinion, these grounds of appeal deserve to fail. So far as the assessees contention that notice under section 143(2) purportedly issued on 17-3-2003 was not received by her, is concerned, in my opinion, the same has to be accepted. It is the claim of the assessing officer that he had sent the aforesaid notice through speed post on 17-3-2003 along with penalty notice under section 271B and this speed post was received by the assessee on 20-3-2003. As against this, the assessee's claim is that through this speed post she received only penalty notice and no notice under section 143(2) was received by her. As the assessee is denying the receipt of the notice issued under section 143(2), the onus is on the assessing officer to prove beyond doubt that the envelope contained this notice also. It is a settled law that onus is on the person who claims the service of notice. Thus, unless the assessing officer shows with clinching evidence that the notice under section 143(2) was also sent along with notice under section 271B, his claim cannot be accepted. During the appellate proceedings, I verified the dispatch register of the assessing officer. It is seen that in the dispatch register maintained for the relevant year, on 17-3-2003, there is an entry at S. No. 1871. Against this entry it is mentioned that a closed envelope was sent to the assessee. Except this there is no other narration about the contents of the aforesaid envelope. Thus, no help could be drawn from the dispatch register. There is no other clinching evidence to show that the envelope in fact contained the 143(2) notice also. It is also seen that after the receipt of the penalty notice issued under section 271B, the assessee submitted a reply vide her letter dated 23-3-2003. If the assessee had really received the notice issued under section 143(2) also along with the penalty notice she would have either complied with this notice or would have sent some letter in response thereto. Admittedly this is not the case. This being the position, as the assessing officer has not been able to establish that notice under section 143(2) was sent on 17-3-2003, along with the penalty notice under section 271B, the claim of the assessee that no such notice was received by her, has to be accepted. It is thus held that no such notice under section 143(2) was served on the assessee by the assessing officer. To this extent the assessee's claim is accepted."
9. With regard to rejection of books of account and computation of income from draft discounting, the CIT(A) upheld the action of the assessing officer as per his findings contained in para 3.2 of the appellate order.
10. It was in the light of the above facts and circumstances of the case that the counsel for the assessee first of all submitted that the return of income filed at Aligarh on 27-3-2002, was a valid return under section 134(4) of the Act and, therefore, the assessment in question was barred by time and if the return was non est then there could not be a valid assessment under section 143(3) on the basis of such return.
11. The learned counsel further submitted that since the revenue authorities have taken note of assessee's return filed at Aligarh on 27-3-2002 and had issued a notice under section 143(2) on the basis of that return on 9-2-2004 and have completed the assessment under section 143(3), the fact remains that the department has considered the assessee's return of income filed at Aligarh to be valid and if this fact is accepted then date of filing of the return should be accepted as 27-3-2002. According to the counsel, even if the date of filing of the return is taken to be assessee's letter dated 21-2-2003, through which the assessing officer, Agra, was apprised of the facturn of having filed the return at Aligarh then also the notice under section 143(2) of the Act issued on 9-2-2004 is beyond time and consequently the assessment is bad in law.
12. The counsel further submitted that if the assessee's return is held to be non est then the assessment is also to be held as illegal and for this purpose has relied on the decision of Tribunal, Pune (Third Member) in case of G.C. Bafha v. Dy. CTT (2003) 80 TTJ (Pune)(TM) 506: (2003) 90 ITD 115 (Pune)(TM).
13. On merits, the counsel for the assessee submitted that the assessee being carrying on business at Aligarh, the rate of commission should have been applied as is being accepted by assessing officer at Aligarh and for that purpose has relied on the assessment orders in case of Shri Pradeep Kumar, Shri Praveen Gupta and Shri Suman Gupta which are for assessment year 2000-01 and have been passed on 27-3-2003, 26-3-2003 and 27-3-2003, respectively, wherein the rate of commission has been accepted within a range of 0.15 per cent to 0.2 per cent subject to deduction of 30 per cent of the expenses claimed by the assessees. Copies of assessment order placed in the assessee's paper book.
14. In support of his submissions that the rate as being accepted in case of assessees at Aligarh should be applied, the counsel has relied on the decision in the following cases -.
(1) R.B. Jessaram Fatehchand (Sugar Dept.) v. CIT (1970) 75 ITR 33(Bom) (2) Ganga Prasad Sharma v. CIT & Anr. (1981) 132 ITR 87 (MP) (3) Brij Bhushan Lal Parduman Kumar, Etc. v. CIT (1978) 115 ITR 524 (SC) (4) Raj Enterprises v. ITO (1995) 51 TTJ (Jp) 408 (5) CST v. Saurashtra Chemicals (1996) UPTC 178 (All) (6) Tolaram Daga v. CIT (1966) 59 ITR 632 (Assam) (7) Jindal Aluminium Ltd. v. Dy. CCT (1990) 115 STC 257 (Kar) (8) Vijay Kumar Dixit v. ITO ITA No. 137/Agra/2002 (9) Umesh Chandra Garg v. Asstt. CIT (2004) 91 TTJ (Agra) 549.
15. The learned Departmental Representative, on the other hand, has supported the order of the revenue authorities.
16. After having considered the rival submissions and facts and circumstances of the case, we are of the opinion that to decide this appeal, we have to answer the following questions :
(1) So far as assessment year 2001-02 is concerned, which of the two assessing officers, i.e., Income Tax Officer, Aligarh or the Assistant Commissioner, Central Circle, Agra, had jurisdiction over the assessee's case ?
(2) Was the return of income for assessment year 2001-02, filed by the assessee with Income Tax Officer, Aligarh on 27-3-2002, a valid, return or not ?
(3) If the aforesaid return was not valid, could the assessing officer, Agra, consider the same as valid and also could consider the same as having been filed on 21-2-2003, when the assessee informed the assessing officer, Agra of the fact that the return for assessment year 2001-02 has been filed with Income Tax Officer, Aligarh on 27-3-2002?
(4) Could any notice under section 143(2) be issued by the assessing officer, Agra, on the basis of aforesaid return for assessment year 2001-02 filed by the assessee with Income Tax Officer, Aligarh ?
(5) Is the assessment framed under section 143(3) after issuing notice under section 143(2) on 9-2-2004 valid in the eyes of law."
17. On merits, we have to decide the following questions (1) Was it a fit case for rejection of books of account ?
(2) Is the net rate of 0.4 per cent upheld by the CIT(A) justified ?
18. So far as issue relating to jurisdiction is concerned, it has been admitted by both the parties that it was assessing officer, Agra, who had the jurisdiction over assessee's case for assessment year 2001-02 because of order of CIT, Agra, passed under section 127 of the Act on 10-5-2001 and, therefore, this gives answer to question No. 1.
19. Coming to question No. 2, we are of the opinion that since the Income Tax Officer, Aligarh, had no jurisdiction over the assessee's case for assessment year 2001-02, the return filed by the assessee with him on 27-3-2002 was non est and this conclusion of ours is supported by the decision of Hon'ble Supreme Court in the case of Industrial Trust Ltd. v. CIT (1973) 91 ITR 550 (SC) wherein the return filed before an officer who had no territorial or otherwise jurisdiction over the assessee's case was held to be non est. 19.1 The facts of this case as has been borne out from the records are that the appellant-company was incorporated in the then native State of Jaipur with its head quarters at Jaipur and consequently it was Income Tax Officer, Ajmer who had jurisdiction over the assessee's case but as per Notification No. SRO 1214, dated 1-7-1952, the Income Tax Officer, Ajmer, had jurisdiction over the residents of Jaipur in respect of assessment pending before him and since there was no assessment pending on 1-7-1952, the Income Tax Officer, Ajmer, had no jurisdiction over the assessee's case.
19.2 The Income Tax Officer, Ajmer, issued notice under section 134(1)(a) of the Act in assessee's case for assessment years 1946-47, 1947-48 and 1949-50, in response to which, the assessee submitted its returns on 11-8-1953. Pending those returns, the Income Tax Officer, Central Circle-IV, Delhi issued fresh notices under section 34 for those very years but the appellant-company did not submit any return rather wrote to that Income Tax Officer saying that it had already submitted its returns before the Income Tax Officer at Ajmer and hence it cannot be called upon to file fresh returns. The assessee's objection was rejected by Income Tax Officer, Central Circle-IV, Delhi, and consequently the assessments were framed.
19.3 On appeal by the assessee, the learned Appellate Assistant Commissioner confirmed the assessments but on appeal by the revenue, the Tribunal held that since the Income Tax Officer at Ajmer had already initiated proceedings under section 34(1A), the Income Tax Officer, Central Circle, could not initiate fresh proceedings and that the notice issued by him were invalid. The Hon'ble Rajasthan High Court reversed the order of the Tribunal in consequence upon the appeal filed by the revenue in CIT v. Industrial Trust Ltd. (1969) 74 ITR 385 (Raj).
19.4 The assessee went in further appeal before the Supreme Court against the order of the High Court of Rajasthan and it was in view of above facts that the Hon'ble Supreme Court held that since no assessment of the appellant-company was pending before the Income Tax Officer, Ajmer, the Income Tax Officer, Ajmer had no jurisdiction over the appellant and the notices issued by him as well as the return submitted by the appellant pursuant to those notices were not valid. A fresh notice issued by the Income Tax Officer, Central Circle-IV, 'Delhi, and the assessments made by him were held to be valid.
20. Respectfully following the above decision, we, so far as present case is concerned, are of the opinion that the return filed by the assessee on 27-3-2002 at Aligarh was not valid return.
21. Answer to question No. 2 is, therefore, that the return filed by the assessee in the present case was non est.
22. Coming to question No. 3, we are of the opinion that the return filed with Income Tax Officer, Aligarh, being non est, the assessing officer, Agra, could not consider the same as valid. Moreover, the assessee, as per her letter dated 4-2-2004 also had not authorised the assessing officer, Agra, to consider that return as having been filed in response to notice under section 142(1) of the Act issued by the assessing officer, Agra, but the assessee had informed in that letter that the return of income having been filed on 27-3-2002, the assessment proceedings stands concluded.
23. In view of these facts, we are of the opinion that so far as assessing officer, Agra is concerned, there was no valid return for assessment year 2001-02 before him.
24. Coming to question No. 4, we are further of the opinion that in view of our answer to question No. 3 (supra), i.e., there being no valid return before the assessing officer, Agra, for assessment year 2001-02, he had no jurisdiction to issue notice under section 143(2) of the Act, notice under section 143(2) can be issued only during the pendency of a valid return.
25. Coming to question No. 5, we, after having held as supra, i.e., in view of our answers to question Nos. 3 and 4 (supra), we are of the opinion that the assessment framed under section 143(3) on the basis of said non est return and after issuing notice under section 143(2) on 9-2-2004, was illegal and bad in law.
26.1 This view of ours is supported by the decision of Hon'ble High Court of Calcutta in case of Maya Deo Bansal v. CIT (1979) 117 ITR 125 (Cal).
25.1(a) The brief facts in the case before the Hon'ble High Court and as have been revealed from the order are that the assessee was required to furnish her return of income for assessment year 1960-61 in pursuance of notice under section 148 of the Act because the assessee had not filed her return of income in the usual course. The Income Tax Officer had enclosed a blank return Form No. 2 prescribed under rule 12 and consequently the assessee submitted her return in the form so enclosed. The Income Tax Officer completed the assessment under section 143(3) of the Act. The assessee went in appeal before the Appellate Assistant Commissioner and contended that the return filed by her being in new form, the entire proceedings were illegal and void ab initio. According to the assessee, the return was required to be filed in form as prescribed in rule 19 and not in rule 12. The Appellate Assistant Commissioner held that the impugned assessment under section 143(3) on the basis of a return not filed in the proper form was invalid and assessment thereon was void ab initio. The Income Tax Officer was, however, directed to proceed on the basis that the assessee did not file any return in response to a notice under section 148. On further appeal, the Tribunal held that the fact that a wrong return form was forwarded to the assessee would not absolve her from filing her return in the correct form and that the Income Tax Officer had no legal obligation to issue any form, that as the assessee had not filed her return in the correct form in response to a notice under section 148, it would amount to not having filed the return at all and that the assessment made by the Income Tax Officer should be treated as were made under section 144 of the Act. Accordingly, the Tribunal set aside the order of Appellate Assistant Commissioner and restored the assessment order.
25.1(b) On reference at the instance of the assessee, the Hon'ble High Court held as under :
"The provisions for filing the return of income in the proper form are statutory and mandatory in nature. No return in the proper form having been filed, the assessment could not have been made under section 143(3) of the Act and it is on that basis that the Tribunal directed that the assessment should be treated as having been made under section 144. Moreover, the Tribunal, by holding that the assessment should be treated as one made under section 144, would be depriving the assessee of her right to apply under section 146 for the statutory remedy of getting the assessment set aside. Therefore, the Tribunal was not justified in setting aside the order of the Appellate Assistant Commissioner and in restoring the order of the Income Tax Officer with the modification that the assessment should be treated as one made under section 144 of the Act. "
25.1(c) The Hon'ble High Court further held that the provisions of sections 143 and 144 of the Income Tax Act, 1961, cannot be said to be in pari materia. Section 144 provides for the circumstances under which, in the absence of a return, a best judgment assessment can be made and lays down the duties of the Income Tax Officer in making such best judgment assessment. There is no question of any reliance or reference to any return in such a case. But, in an assessment under section 143(3), the basis is the return. Where there has been a return, though an invalid return, on the basis of which an assessment order under section 143(3) of the Act has been made, that assessment cannot be treated as a best judgment assessment, as if no return has been filed.
26. After having considered the above decisions, we are of the opinion that so far as present case is concerned, the aforesaid order fully supported the view arrived at by us.
27. In view of our various answers to question Nos. 1 to 5 above, we are of the opinion that the assessment framed under section 143(3), dated 27-3-2002, was void ab initio and the same is quashed/cancelled.
28.1 Before ending with the aforesaid legal issue, we would like to clarify further that in the present case, the revenue has taken a specific stand that the return furnished by the assessee was valid return but has denied to consider the same as having been filed on 21-2-2003 and that the notice under section 143(2) issued on 9-2-2002, was valid notice and consequential assessment filed on 23-2-2004, was an assessment under section 143(3) of the Act , meaning thereby, that in the present case, the department has not claimed that the assessment in question may be validated as assessment under section 144 of the Act-as was the claim of revenue before the Hon'ble High Court of Calcutta in case of Smt. Maya Devi Bansal (supra).
28.2 In view of revenue's specific stand, the assessment in question cannot be validated even as an assessment under section 144 of the Act.
29. So far as assessee's objection with respect to merits of the case are concerned, the counsel for the assessee submitted that the issues to be decided by the Hon'ble Tribunal are:
(1) Were the authorities justified in rejecting the assessee's books of account ?
(2) Were the assessing authorities justified in computing the assessee's income from commission from the business of discounting on DD at the net rate of 0.4 per cent ?
30. So far as issue relating to rejection of assessee's books of account is concerned, the counsel for the assessee, after referring to assessee's various replies (such as replies dated 21-2-2003, 4-2-2004 and 3-3-2004, copies of which are placed on assessee's paper book at page Nos. 31, 35 and 46, respectively), The counsel submitted that when the assessee was called upon to produce the persons who had discounted their drafts, the assessee had specifically requested the assessing officer to summon them under section 131 of the Act and had promised to extend full co-operation and even bear the expenses likely to be incurred in summoning those persons but the learned assessing officer instead of summoning those persons preferred to collect information in exercise of his power under section 133(6) of the Act which was not justified, meaning thereby, that the assessing officer having failed to summon the parties under section 131 of the Act was not justified in coming to the conclusion that the assessee's books of account were not reliable. With regard to the assessing officer's efforts made in collecting information under section 133(6) of the Act, the learned counsel first of all submitted that though the assessing officer had received information from three parties but he, for the reasons best known to him, avoided to take note of information from two parties which were favourable to the assessee and relied on the information Collected from only one party. Explaining its aspect, the learned counsel submitted that the assessing officer had called for information from three persons namely Shri Harsh Kumar, Kaushal Kishore and Shri Zan Mohammad.
30.1 According to the learned counsel:
(i) Shri Harsh Kumar had informed the assessing officer through his letter, the contends of which were as under :
"Please refer to your Letter No. 970, dated 4-3-2004, I hereby humbly submit that during the financial year 2000-01, I had not made any transaction with M/s Meenakshi Traders, Mahavir Ganj, Aligarh, in respect of drafts as mentioned in your above letter."
(ii) So far as reply from Shri Kaushal Kishore is concerned, he had denied to have maintained books of account but admitted to have got drafts amounting to Rs. 50,000 to Rs. 60,000 during the financial year 2000-01, discounted through M/s Meenakshi Traders, Aligarh, i.e., the assessee.
(iii) Shri Zan Mohammad had submitted in writing that since the matter relates to a period of about two to three years old, he was unable to give the details of drafts but confirmed that he had got drafts discounted by M/s. Meenakshi Traders, Aligarh, and had paid commission at the rate of Rs. 1.50 per Rs. 1,000.
30.2 The learned counsel after narrating above details, submitted that the assessing officer had just referred to the reply of Shri Harsh Kumar and ignored the reply of Shri Kaushal Kishore and Shri Zan Mohammad who had duly confirmed to have got their drafts discounted through the assessee and made the payment of commission.
31.1 Coming to the order of the CIT(A), the learned counsel submitted that he has also given weightage to the reply of Shri Harsh Kumar but he posed a question that if the revenue was going to accept the reply of Shri Harsh Kumar that he had not made any transaction through the assessee then the revenue should have considered the drafts, claimed by the assessee to have been brought by Mr. Harsh Kumar, as having been purchased by the assessee and should have made the addition of whole of the amount but it has not been made. The counsel further submitted that when the assessee was going in involving his own money first in purchasing draft by paying commission to the bank and then to discount the same again by paying commission to the bank, he, therefore, submitted that even if reply of Shri Harsh Kumar was considered to be an evidence then also the assessee's books of account could not be rejected. Referring to reply of Shri Kaushal Kishore, the learned counsel further submitted that he having confirmed carrying on the transaction through the assessee, how the assessee could be responsible if that fellow did not disclose the commission paid to the assessee. The learned counsel further submitted that Shri Kaushal Kishore has not denied that he has not paid commission and he has also not claimed that he had paid commission at a high rate than the rate disclosed by the assessee.
31.2 Coming to the reply of Shri Zan Mohammad, the learned counsel further submitted that when he had duly confirmed the payment of commission at the rate of Rs. 1. 50 per Rs. 1, 000 then what were the reasons for ignoring this reply, have not been spelt out by any of the revenue authorities.
31.3 In the above facts and circumstances, the learned counsel strongly submitted that the revenue authorities were not justified in rejecting the assessee's books of account.
32.1 Coming to the rate of commission adopted by the revenue authorities, the learned counsel, first of all submitted, that even if the assessment is considered to be an assessment under section 144 of the Act, then also the revenue authorities should have adopted the rate of commission as was being accepted by the assessing officers in case of other persons at Aligarh. According to the assessee, the assessing officer at Aligarh had been accepting the rate of commission from 0.15 per cent to 0.2 per cent and for that purpose has referred to the assessment orders in case of Shri Pradeep Kumar, Prop. M/s Heera Sons Finance Co., Rashal Ganj, Aligarh and in case of Shri Suman Gupta, Prop. M/s Kamla Bankers, Jaiganj, Aligarh, for assessment year 2000-01 completed on 27-3-2003, copies have been placed on record. The learned counsel further submitted that in the aforesaid cases, the assessing officer has not only accepted the rate of commission at 0.15 per cent rather has allowed deduction to the extent of 30 per cent of the expenses claimed by the assessee out of such commission. He, therefore, submitted that in the present case the rate of commission shown by the assessee should be accepted.
32.2 Coming to the decision of the Tribunal in case of C.K. Telang and Vijay Kumar Dixit (supra), the learned counsel submitted that those decisions were distinguishable on facts and were not applicable to the assessee's case. The learned counsel further submitted that the CIT(A) though has referred to those cases but he himself has not followed the rate of commission sustained in those cases. He, therefore, submitted that application of net commission rate of 0.4 per cent by the CIT(A), in view of the facts and circumstances of the present case, was not justified.
33. The learned Departmental Representative, on the other hand has supported the orders of the revenue authorities.
34. After careful consideration of rival submissions, facts and circumstances of the case as well as various decisions relied upon by the revenue and also the assessment orders in case of other assessees of Aligarh, first we are of the opinion that the revenue authorities were not justified in rejecting the assessee's books of account because the assessee having specifically made request to the assessing officer to summon the parties who had got their demand drafts discounted through the assessee by exercising powers under section 131 of the Act, it was incumbent upon the assessing officer to summon those parties and examine them so that the actual fact could be brought on record. The assessing officer's action in ignoring the assessee's request and calling for information under section 133(6) of the Act cannot be held to be justified and at least cannot be held to be a sufficient reason for rejecting the assessee's books of account. In the totality of the facts and circumstances of the case as well as law, we are of the opinion that the revenue authorities rejected the assessee's books of account without there being any justifiable reason for doing so and, therefore, this action of the revenue authorities is quashed.
35. Coming to the rate of commission, we are again of the opinion that after having held as above, there remains nothing for the revenue to proceed for estimation of assessee's income from commission by applying a particular rate. Only course left with the revenue is to compute the assessee's income as per assessee's books of account and the return filed. We, therefore, direct the assessing officer to compute the assessee's income on the basis of return and books maintained by the assessee.
36. In the result, assessee's appeal is allowed.
ITA No. 96/Agra/200437. The assessee has objected to the order of the CIT(A), dated 20-1-2004, by way of following grounds :
"(1) That the learned CIT(A) has erred in law as well as on facts in upholding the addition of Rs. 12,60,000 by the process of estimate.
(2) That the learned CIT(A) has failed to appreciate that the additions can only be made on this basis of facts, figures, situation and circumstances of the assessee. No addition can be made or upheld on the basis of some comparison of figures of the other assessees, when they are not comparable, such deviation is against the principle of accounting and is not permitted in law. If at all, any comparison was to be made for the purpose of addition based on the pronouncement of the Hon'ble Tribunal, Agra Bench, Agra, then it should have been on per day income basis, as held by the Hon'ble Tribunal, Agra Bench, Agra, whose orders have been relied and applied while making the addition in the hands of the assessee.
(3) That the learned CIT(A) has ignored the basic facts that whenever the addition is made on the basis of comparison of the facts, figures and details, such comparison should be based on the identical facts, figures and details, on the parties whose figures have been taken for such comparison. No comparison can be held valid and lawful when there are sea difference between the figures of the parties. The learned CIT(A) after having admitted that as of fact, the drafts discounted of the assessee are much more than the drafts discounted of other assessees, committed a fault in making the addition on the basis of percentage of drafts discounted, such addition cannot sustain in law. .
(4) That the learned CIT(A) has erred in law and as well as on facts that no figures of other assessees can be relied upon and applied in the case of assessee herein, without fully and completely proving and substantiating those facts and figures which are applied against the assessee while making the addition, no such thing has been done by the learned CIT(A).
(5) That the learned CIT(A) has erred in law as well as on facts in not providing the reasons, basis, and details of the proposed addition of Rs. 12,60,000 which he was intending to uphold on the estimate basis, so that the assessee could have explained her reasons on such proposed addition, as such any additions without providing legal remedy to the assessee is against law.
(6) That upholding of addition of Rs. 12,60,000 by the learned CIT(A) is in total disregard to the facts and has been made without proper and due opportunity given to the assessee. Thus the addition which has been upheld by the learned CIT(A) is against law and principles of natural justice and thereby deserves to be deleted.
(7) That the learned CIT(A) has failed to appreciate that the additions made on mere estimates, irrelevant facts and inadmissible material are invalid and such additions are not the correct additions in the eye of law and shall not sustain in appeal.
(8) That the appellant seeks the leave for making any addition, change or deletion in any ground of appeal."
38. The brief facts as have been revealed from the records and are relevant for deciding this appeal are that the assessee, who was carrying on business of discounting of demand draft on commission, was required to file her return of income for assessment year 2000-01 in consequence upon notice under section 142(1) of the Act issued on 15-3-2001. In response to the above notice under section 142(1), the assessee filed her return of income for assessment year 2000-01 declaring an income of Rs. 2,05,485 on 26-3-2001. Along with return, the assessee had furnished a statement of income and expenditure, balance sheet as well as the computation sheet. During the course of assessment proceedings, the assessee was called upon by the assessing officer many times to produce the books of account and various other details but the assessee did not comply with any of the notices requiring furnishing of various details on the plea that she having approached the Hon'ble Allahabad High Court for transfer of jurisdiction over her case from Agra to Aligarh, the matter may be kept pending. On this ground, the assessee went on seeking adjournments. The assessing officer, after having allowed adjournments, finally came to the conclusion that the assessee was seeking adjournments on insufficient grounds and, therefore, he proceeded to make the assessment under section 144 of the Act. Consequently the assessing officer computed assessee's income from commission on discounting of drafts at the net rate of 1.5 per cent on the total turnover of Rs. 31,50,03,609.
39. The assessee went in appeal before the CIT(A) and submitted that so far as assessment under section 144 is concerned, the assessing officer was not justified in not allowing the adjournment. With respect to quantum of income, the assessee objected to the rate applied by the assessing officer on the ground that the assessing officer at Aligarh had been accepting the net rate of 0.15 per cent to 0.2 per cent and for that purpose had relied on the assessment orders in case of Pradeep Kumar and Suman Gupta both of Aligarh, for assessment year 2000-01. The CIT(A) rejected the assessee's plea with respect to making of assessment under section 144 of the Act but accepted the assessee's plea partly with respect to quantum of rate of commission. He, therefore, reduced the rate of commission to 0.4 per cent by referring to the decision of the Tribunal in case of C.K. Talang and Vijay Kumar Dixit (supra) wherein the Tribunal had sustained the rate of commission at 0.5 per cent and 0.4 per cent, respectively.
40. It was in view of the above facts and circumstances of the case that the learned counsel for the assessee first of all submitted that the assessee was ready to co-operate with the department and will be satisfied if the ex parte assessment is set aside and the assessing officer is directed to make assessment afresh after allowing the assessee an opportunity of being heard. The counsel further submitted that the assessee will produce books of account as well as an the details called for by the assessing officer and will extend full co-operation. Alternatively, the counsel submitted that since the assessing officer at Aligarh had been accepting the net commission rate of 0.15 per cent to 0.2 per cent, the assessee's returned results which show the rate of commission at 0. 17 per cent should be accepted.
41. The learned Departmental Representative, on the other hand, so far as setting aside of the orders is concerned, submitted that he had no objection if the assessment is set aside for making de novo assessment by the assessing officer subject to the condition that the assessee will produce the books of account and extend full co-operation and in case the assessee fails to co-operate and produce books of account and other details, the rate of commission at 0.4 per cent may be applied.
42. On merits, the learned Departmental Representative has supported the order of the CIT(A).
43. After careful consideration of the rival submissions, facts and circumstances for the case, we, in the interest of substantial justice, are of the opinion that it will be in the interest of justice if the assessment is set aside and the assessing officer is directed to make de novo assessment. Consequently we set aside the order of the CIT(A) as well as the assessment order and direct the assessing officer to make de novo assessment in accordance with law after allowing the assessee an opportunity of being heard. The assessee will extend her full co-operation and will produce the books of account and file details required by the assessing officer. In case the assessee fails to co-operate or to produce the books of account, the assessing officer will be free to make a proper assessment as the circumstances may require.
44. In the result, assessee's appeal is allowed for statistical purposes.