Income Tax Appellate Tribunal - Agra
Firozabad Glass Shell Industries vs Ito on 29 January, 2004
Equivalent citations: (2004)91TTJ(AGRA)627
ORDER
M.L. Gusia, A.M. This appeal of the assessee is directed against the order passed by CIT, Agra, on 22-3-1994, under section 263 of the Income Tax Act, 1961.
2. There are as many as eleven grounds of appeal, but the sum and substance of these grounds are that the learned CIT erred both on facts and in law in invoking the provisions of section 263 of the Act without affording opportunity to the assessee and cancelling the order of assessment passed by ITO, Ward-I, Firozabad, dated 20-9-1991, holding the same as erroneous and prejudicial to the interest of revenue without any material on record. Further, the assessing officer while completing the assessment had duly considered and examined the facts of the case and evidence placed on record relating to sale of delivery orders resulting into a profit for an aggregate sum of Rs. 58,300. Moreover, there is no evidence that the amount invested in the purchases of drafts belongs to the assessee.
3. Briefly, the facts of the issue are that the assessee is a registered firm and assessment has been completed on total income of Rs. 66,600 on 20-9-1991, as against returned income of Rs. 44,950. On 21-2-1991, search and seizure operation was carried out at the office premises of the Chief General Manager, Despatch and Co-ordination, Central Coal Field Ltd. Darbhanga Town, Ranchi. During the course of'search, cash of RS. 9862 was deemed to have been seized under second proviso to section 132(l) of the Income Tax Act, 1961. As per order under section 132(5), in the case of assessee, passed on 14-6-1991, the assessee has deposited an amount of Rs. 9862 for purchase of coal in the office of Chief General Manager, Central Coal Field Ltd. Ranchi. Therefore, notice under rule 112A was issued. However, there was no compliance of the said notice and as per the order under section 132(5), the assessee adopted non-co-operative attitude. It is also mentioned in the order under section 132(5) that the assessee had deposited Rs. 6,30,412 for purchase of 1066 M.T. coal with Central Coal Field Ltd., Ranchi, out of which deemed seizure has been made only of Rs. 9862.08. The details of the investment of Rs. 6,30,412, made through demand drafts are as under :
Draft No. Date Amount MTL/A/2/983687 27-2-1990 3,15,216 TL/A/3/464007 2-3-1990 2.76,166 OL/A/48/860673 2-3-1990 39,030 6,30,412
4. It is also mentioned in the said order that the assessee had filed letter dated 28-2-1990, in the office of Chief General Manager, Central Coal Fields Ltd., Ranchi, in which he has informed that the assessee has deposited Rs. 6,30,412 for purchase of coal. The partner of the firm Shri Dharmendra Mohan Gupta has filed an affidavit in the office of CCL Ranchi for purchase of coal. Considering the above facts, it is held in the order under section 132(5) that the assessee has deposited the amount of Rs. 6,30,412 outside his books of account and will be added to the income of the assessee for the assessment year 1991-92. However, the CIT noted that no such addition has been made in the order passed under section 143(3) on 20-9-1991. According to the CIT, the assessee's claim during the proceedings under section 263 that he has filed copies of accounts along with returns, thus, it should be treated that the matter was examined by the assessing officer is not acceptable as not a single word has been mentioned in the assessment order about the above mentioned drafts. The CIT also noted that no inquiry, whatsoever, was made during the course of assessment proceedings as per order sheet of the assessment record. Therefore, according to the CIT it cannot be accepted that this point was examined by the assessing officer at all. Thereafter, the CIT, in his order under section 263 discussed the case laws cited by the assessee. The CIT held that the order passed by the assessing officer on 29-9-1991, is erroneous and prejudicial to the interest of revenue which is covered by the provisions of section 263 of the Act. He, therefore, cancelled the said order.
5. The learned counsel for the assessee, during the course of hearing before us, vehemently argued that there is no evidence at all to suggest that the assessee had purchased the aforesaid drafts. Therefore, according to him there is no justification for holding that the assessing officer has committed any error which can be regarded as prejudicial to the interest of revenue. The learned counsel for the assessee further argued that said action on the part of the CIT is based on complete misconception of the facts and no material on record. It is further argued that since there is no evidence on record, hence, the assessee was never confronted before passing the order under section 263 of the Act by the CIT. It was also pleaded that assessee has not taken any delivery orders allotted to it by CCL, Ranchi. To the contrary, the assessee has sold the said delivery orders, on which it had earned income of Rs. 68,300, which was duly shown in the return of income. However, the CIT has not discussed it at all in the order under section 263.
6. The learned counsel for the assessee further argued that during the course of proceedings before the assessing officer all the material facts were duly disclosed and it was stated that since, the assessee has not made any investment and delivery orders allotted to it had been sold, there was no justification to hold that the assessee has, made investment. The assessee had also filed copy of account of sale of delivery orders. Thereafter, several case laws were cited relied upon by the learned counsel for the assessee.
7. On the other hand, the learned departmental Representative vide his written submission dated 24-6-2003, has stated as under :
"The above amount of drafts was deposited by the assessee with CCL, Ranchi, for purchase of 1066 M.T. of coal and on the basis of the payments made by the assessee by drafts, the Central Coal Fields Ltd., sales and marketing division, Darbhanga Town, Ranchi, vide their letter dated 19-3-1990, allotted the coal weighing 1066 MT to the assessee. This coal was allotted to the assessee on the basis of an affidavit of Shri Darmendra Mohan Gupta, who happened to be partner of the firm, the clause 6 of the said affidavit reads as under
I also undertake that th e entire quantity of coal to be supplied by Coal India Ltd. will be consumed and/or utilised by the said factory and shall not be misused in any way or used for any other purpose and/or would not be sold, transferred or disposed of to any other person/persons for any reason whatsoever.' As the source of investment of Rs. 6,30,412,made by the assessee in purchase of drafts was not enquired into at the time of regular assessment in this case as is clear from the order sheet entries of the assessment records of the appellant and since the assessment order passed under section 143(3) determining the taxable income at Rs. 66,600 as against the declared income of Rs. 44,950 was considered to be prejudicial to the interest of the revenue, a show-cause notice for cancelling the assessment order under section 263 was issued by the CIT. In response to the said show-cause notice, the assessee 'Vide his reply dated 14-2-1994, submitted that there is no justification for the allegation that the learned assessing officer committed any error which can be regarded as prejudicial to the interest of revenue in not making an addition of Rs.: 6,30,412. It was the case of the assessee that it did not purchase the aforesaid drafts for purchasing the coal from Central Coal Field Ltd. The assessee has also stated that he never took any delivery against the delivery orders allotted to it by Central Coal Field Ltd. On the contrary, the assessee has sold the said delivery order on which it had earned income of Rs. 58,300 which was duly shown in the return of income: It was accordingly maintained that the assessee could not have either purchased the drafts or deposited the same or could have taken delivery against the alleged investment made. The assessee also contended that during the course of assessment proceedings before the learned assessing officer, all material facts were duly disclosed and it was stated that since the assessee has not made any investment and delivery orders allotted to it had been sold, there would be no justification to hold that the assessee has made investment. It was also mentioned that the assessee had also filed copy of account of sale of delivery orders. In such circumstances, it is evident that the learned assessing officer had examined the matter and after being satisfied found that it cannot be said that the assessee has made any investment in the purchase of alleged drafts since the assessee had sold the delivery orders allotted to it and accordingly, brought to tax the sum of Rs. 58,300 being the income earned on sale of delivery orders. After considering the submissions of the assessee, the CIT cancelled the assessment order passed on 20-9-1991, under section 263 for passing the assessment afresh after making necessary enquiries in respect of sources of investment for purchase of 3 drafts amounting to Rs. 6,30,412.
In view of the above facts, I am of the opinion that had the assessee not deposited the amount of Rs. 6,30,412 with the Central Coal Field Ltd., Ranchi, the allotment of 1066 MT would not have been done by the coal authority vide its letter dated 19-3-1990, and as it is clear from clause 6 of the affidavit of Shri Dharmendra Mohan Gupta who happened to be partner of the firm at the relevant time, the coal allotted to the firm was to be used by the firm and not to be sold/transferred to any third party and accordingly, it establishes the fact that the assessee has made investment in purchase of 3 drafts amounting to Rs. 6,30,412 which were deposited with the coal authority for getting the allotment of 1066 MT of coal for its business but no sources for having made investment in purchase of 3 drafts was explained and accordingly, the CIT has rightly cancelled the assessment order which was originally passed under section 143(3) on 20-9-1991, for examining the sources of investment in purchase of 3 drafts of Rs. 6,30,412. The facts of the case are discussed in detail by the CIT in his order dated 22-3-1994, passed under section 263 for examining the sources of investment made in the purchase of 3 drafts for Rs. 6,30,412 and accordingly, I rely on the order of the CIT passed under section 263, dated 22-3-1994. "
8. After hearing the rival contention, we noted that the learned counsel for the assessee neither in his arguments nor in the submissions made before the CIT during the course of proceedings under section 263 of the Act has given the date of sale of the delivery order or the person to whom the delivery order was sold. We have gone through the entire case record, but we could not ascertain the same. However, we noted from the release order dated 19-3-1990, that the same is subject to not transferable, then how it could be possible to sell release order. We, further noted that the assessee vide his letter dated 2-3-1990, addressed to General Manager, CCL., authorised Shri Praveen Kumar to collect the delivery order and all papers from the office. His signatures were also attested by the partner of the assessee-firm. We also noted from p. 7 of the paper book, which is a copy of letter dated 28-2-1990, filed by the assessee-firm in the office of General Manager (Sales), CCL, Ranchi,,in which it has been mentioned that the assessee has deposited Rs. 6,30,412 for purchase of coal. The number and dates of the drafts along with amounts of each of the three drafts have been given in this letter. This letter was signed by the partner of the assessee-firm. We also noted that the partner of the firm Shri Dharmendra. Mohan Gupta has also filed a notarised affidavit dated 2-2-1990, for this purpose. As already mentioned that they have also filed an appointing letter to deal with this transaction, in which Shri Praveen Kumar has been authorised on 2-3-1990. On receipt of these documents required, the General Manager (Marketing), CCL, Ranchi has issued the allotment letter to the firm on 19-3-1990, in which they have referred the assessee's original letter dated 28-2-1990, and payments of all the three drafts are mentioned by the assessee in this letter. However, the assessing officer in his assessment order has not inquired into these details at all and ignoring these facts, he has completed the assessment. Therefore, we are of the view that the assessment order passed by the assessing officer on 20-9-1991, was prejudicial to the interest of revenue and the CIT has rightly cancelled the same under section 263 of the Income Tax Act, 1961. Various case laws cited by the learned counsel for the assessee are based on the facts, different from the instant case. Therefore, we dismiss all the grounds of appeal and uphold the order of CIT, Agra, dated 22-3-1994.
9. In the result, the appeal of the assessee is dismissed.