Income Tax Appellate Tribunal - Delhi
Aristo Fab (P) Ltd., New Delhi vs Department Of Income Tax on 25 January, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "A" NEW DELHI
BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR
ITA No. 1902/Del/2012
Asstt. Yr: 2006-07
ACIT, Cir. 2(1), Vs. M/s Aristo Fab (P) Ltd.,
New Delhi. B-1/A, Mohan Co-operative Indl.
Estate, Mathura Road, New Delhi.
PAN/ GIR No. AADCA 5259 R
( Appellant ) ( Respondent )
Appellant by : Shri Sameer Sharma Sr. DR
Respondent by : None
ORDER
PER R.P. TOLANI, J.M :
This is revenue's appeal against CIT(A)'s order dated 25-01-2012 relating to the assessment year 2006-07. Sole effective ground raised is as under:
"The ld. CIT(A) has erred on facts and in law in deleting the estimation of total income made by the AO at Rs. 15,00,000/-."
2. None put in appearance on behalf of the assessee at the hearing fixed for 25-06-2013 despite knowledge of the date of hearing as is apparent from the order sheet dated 28-2-2013 when the case was adjourned at the request of assessee's counsel and the next date of hearing was intimated in open court. In view of above, we proceed to dispose of the departmental appeal ex parte qua the assessee, on merits, and in that process we have heard ld. DR and gone through the relevant material available on record.
23. Brief facts are: The assessing officer observed that assessee had not filed return of income and in response to notice u/s 142(1) no body appeared. The assessment was framed ex parte u/s 144. Assessing officer made ad hoc estimate of income at Rs. 15,00,000/- by following observations:
"The assessee failed to comply the above notice also. In view of all the facts noted above, I have no alternate except to complete the time barring assessment ex parte under section 144 of the Income tax Act. Since the assessee ahs not filed the return of income and in the earlier assessment year the assessment of the assessee was made on total loss of (-) Rs. 1,71,34,221/- for A.Y. 2003-04. Hence, after considering all the facts of the case quantum of business activities the earlier assessment year, income of the assessee for the year under reference is estimated at Rs. 15,00,000/-."
3.1. Aggrieved, assessee preferred first appeal where assessee represented that the entire group was running into losses and the cumulative assessed losses of the company for A.Y. 2003-04 were to the extent of Rs. 1,71,34,221/-; the last assessed income of the assessee was in loss and in other group company's cases i.e. Arum Syntex Pvt. Ltd., and Style Syntex Pvt. Ltd., wherein also similar ad hoc estimation of income was made by the assessing officer, has been deleted by the CIT(A) in first appeal. The CIT(A) taking into account the facts and circumstances of the case held that assessing officer has given no basis what so ever to estimate the income of the assessee at Rs. 15,00,000/- and ignored the assessee's losses. Reliance was placed on the ratio of decisions in Sangrur Vanaspati Mills Ltd. Vs. CIT (2007) 211 CTR (P&H) 439; and Kachwala Gems Vs. JCIT 288 ITR 10 (SC), for the proposition that even in case of ex parte assessment the income can be estimated on a reasonable basis and the same should not be arbitrary 3 and capricious, the CIT(A) accepted the plea of the assessee that assessing officer has not given any basis whatsoever for estimate. Therefore, the addition was deleted.
4. Ld. DR supported the order of assessing officer and contended that CIT(A) has not given speaking reasons for granting relief.
5. We have heard rival contentions and gone through the relevant material available on record. The fact that the assessee company was running into losses has not been disputed by the assessing officer in the assessment order. The assessment order is totally non-speaking and the estimate made therein does not refer to any basis whatsoever. In consideration thereof, we find no infirmity in the order of CIT(A), relying on Hon'ble Supreme Court decision in Kachwala Gems (supra) and holding that even for a best judgment assessment, the estimate has to be reasonable and fair. We find that the estimate made by assessing officer is arbitrary, capricious and without any basis whatsoever. In view thereof, we uphold the order of CIT(A).
6. In the result, revenue's appeal is dismissed.
Order pronounced in open court on 25-06- 2013.
Sd/- Sd/- ( T.S. KAPOOR ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 25th June , 2013. MP Copy to : 1. Assessee 2. AO 3. CIT 4. CIT(A) 5. DR