Income Tax Appeal No. 869 of 2008 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 869 of 2008 Date 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 Counsel for the appellant-Revenue. Mr. Rohit Sood, Advocate for the respondent-assessee. --- AJAY KUMAR MITTAL, J. This order will dispose of two appeals, i.e. Income Tax Appeal Nos. 869 and 886 of 2008 as identical questions have been claimed in both the appeals. The facts have been taken from Income 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 Income Tax Appeal No. 869 of 2008 [2] order dated 5.3.2008, passed by the Income Tax Appellate Tribunal Delhi 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 determination of the following substantial question of law: “Whether on the facts and in the circumstances of the case, the Hon’ble ITAT was right in law in restoring back the matter to the file of Assessing Officer with the direction that assessment will be framed de novo after giving the reasonable opportunity of hearing to the assessee as per provisions of law, without going into the merits of the additions made in the assessment order and even though the assessee failed to comply with the law as the assessee deliberately did not produce the books of accounts before the Assessing Officer as well as before the CIT(A).” 4. The facts, in brief, necessary for adjudication as narrated in the appeal, are that the respondent-assessee is a company which is engaged in manufacture and sale of fractional Horse Power motors and trading of some special types of motors and pumps. For the assessment year 2000-01, the assessee filed its return on 30.11.2002, under Section 115JA of the Act, declaring an income of Rs. 3,53,96,404/-. The return was processed under Section 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice under Section 143(2) of the Act was issued. In the said proceedings, the assessee was required to produce complete books of accounts, bills, vouchers etc., but somehow he could not produce Income Tax Appeal No. 869 of 2008 [3] the same and took a plea that the same were on the computer and the hard copies thereof will have to be taken. Finding no further response from the assessee, the assessment was completed under Section 144 of the Act, on the basis of the material available on record after disallowing certain expenses at net taxable income of Rs. 1,21,09,760/-, vide order dated 31.3.2003 as it was a time barring case. The assessee challenged the order dated 31.3.2003 on a score of grounds, the foremost of those being the validity of assessment order made under Section 144 of the Act, before the Commissioner of Income-tax (Appeals) {in short “the CIT(A)”}. The CIT(A) partly allowed the appeal of the assessee, vide order dated 25.7.2005. 5. Both the sides felt aggrieved by the order of the CIT(A) and accordingly, each of them preferred separate appeals before the Tribunal. The Tribunal, vide the order under appeal, after scrutinizing the matter, observed as under: “We have heard both the parties and without going into the merits, whether the disallowance sustained or deleted by the CIT(A) is correct or not, one fact is clear that assessee did not produce books of accounts. According to Section 142(1), the Assessing Officer has power to require the assessee to produce or caused to be produced such accounts or documents as he required and if the same is not produced, the Assessing Officer is authorized to make best judgment assessment as per Section 144 of the Act. If the assessee is contesting that a particular disallowance is unwarranted, it was to be Income Tax Appeal No. 869 of 2008 [4] supported by evidence i.e. in the shape of books of accounts and other related documents. It is not the case of the assessee that it has not maintained books of accounts as the accounts of the assessee are audited one under Section 44AB of the Act. It was the only contention of the assessee that the Assessing Officer did not give proper opportunity to the assessee to produce the books of accounts. It has already been pointed out that the disallowance, whether they are admissible or not cannot be ascertained in absence of proper books of accounts which are stated to be maintained by the assessee and in respect of which tax audit report under Section 44AB had duly been filed by the assessee. In this view of the situation, after hearing both the parties, we are of the opinion that both these appeals should be restored back to the file of the Assessing Officer with the direction that assessment will be framed de novo after giving the reasonable opportunity of hearing to the assessee as per provisions of law. For statistical purposes, both the appeals will be treated to be allowed.” 6. We have heard learned counsel for the parties and have perused the record. 7. Learned counsel for the Revenue submitted that the Tribunal had erred in remanding the case to the assessing officer with a direction to provide a fresh opportunity to the assessee to produce the books of accounts and frame a fresh assessment especially when the assessing officer had provided adequate Income Tax Appeal No. 869 of 2008 [5] opportunity but the assessee had failed to produce the record. Learned counsel, in support of his submission relied upon a judgment of this Court in Commissioner of Income Tax Vs. SAS Educational Society, (200) 319 ITR 65 (P&H). Controverting the aforesaid submission, learned counsel for the assessee submitted that the accounts of the assessee were audited and assessee had filed audit report as required under Section 44AB of the Act, along with the return of income. According to the learned counsel, once the accounts were maintained and audit report had been filed, it could not be said that the assessee was negligent in not producing the books of accounts before the assessing officer. It was further submitted that after the remand vide the impugned order, the assessing officer had passed a fresh assessment order after examining the books of accounts of the assessee and, therefore, the appeals had been rendered infructuous. 8. We have given our thoughtful consideration to the submissions made by the counsel for the parties and find weight in the submission made by the counsel for the assessee. It is not disputed that the accounts of the assessee were audited and the assessee had also filed audit report under Section 44AB of the Act, along with the return of income. In such a situation, it cannot be inferred that the assessee had deliberately not produced the books of accounts before the assessing authority. The Tribunal has remanded the case back to the assessing officer to provide an opportunity to the assessee and pass a fresh assessment order thereafter. Learned counsel for the Revenue was unable to show to the Court that by doing so any prejudice had been caused to the Revenue. Income Tax Appeal No. 869 of 2008 [6] Moreover, technicalities of law would not come in the way of the Court in rendering substantial justice, which has been done by the Tribunal by the impugned order. Further, the learned counsel for the Revenue was not able to controvert that after the remand, fresh assessment had been framed by the assessing officer. The judgment relied upon by the learned counsel for the Revenue is on individual fact situation involved therein and it has not been laid down as a blanket proposition of law that in all the cases fresh opportunity should not be provided to the assessee to produce the books of accounts. 9. In view of the above, the substantial question of law is answered against the Revenue and finding no merit in the appeals, the same are dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) April 26, 2011 JUDGE *rkmalik*