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Commissioner of Income-tax, Circle-II v/s Ankit Garments Manufacturing Co.


Company & Directors' Information:- R K MANUFACTURING CO LTD [Active] CIN = L27209WB1984PLC037758

Company & Directors' Information:- R K MANUFACTURING CO LTD [Active] CIN = L27209GJ1984PLC098951

Company & Directors' Information:- K C GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2005PTC139844

Company & Directors' Information:- D R GARMENTS (INDIA) PRIVATE LIMITED [Active] CIN = U18101GJ2005PTC046010

Company & Directors' Information:- R. R. GARMENTS LIMITED [Active] CIN = U51900MH1995PLC095544

Company & Directors' Information:- M. B. GARMENTS (INDIA) PRIVATE LIMITED [Active] CIN = U18202WB2011PTC157173

Company & Directors' Information:- ANKIT INDIA LIMITED [Active] CIN = L15500WB1981PLC033900

Company & Directors' Information:- S G GARMENTS LIMITED [Active] CIN = U18101WB2004PLC098193

Company & Directors' Information:- INDIA MANUFACTURING CORPORATION PRIVATE LIMITED [Active] CIN = U24100DL2010PTC198947

Company & Directors' Information:- S I A MANUFACTURING PRIVATE LIMITED [Active] CIN = U74120UP2013PTC057004

Company & Directors' Information:- S K M MANUFACTURING PRIVATE LIMITED [Active] CIN = U17200DL2011PTC223768

Company & Directors' Information:- S T S MANUFACTURING PRIVATE LIMITED [Active] CIN = U28112TZ2006PTC012940

Company & Directors' Information:- K K P GARMENTS PRIVATE LIMITED [Active] CIN = U65921TZ1994PTC005334

Company & Directors' Information:- B K GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2001PTC109850

Company & Directors' Information:- A S P MANUFACTURING COMPANY PVT LTD [Active] CIN = U27109WB1991PTC051461

Company & Directors' Information:- A K MANUFACTURING PVT LTD [Active] CIN = U51909MN1988PTC003110

Company & Directors' Information:- I T A C (INDIA) MANUFACTURING CO LTD [Dissolved] CIN = L51109WB1982PLC034689

Company & Directors' Information:- N K GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2000PTC107093

Company & Directors' Information:- K. D. GARMENTS PRIVATE LIMITED [Active] CIN = U18109WB2005PTC101896

Company & Directors' Information:- G AND A GARMENTS PVT LTD [Strike Off] CIN = U18101PB1995PTC016121

Company & Directors' Information:- V H GARMENTS PRIVATE LIMITED [Active] CIN = U52322MH2008PTC181066

Company & Directors' Information:- M S GARMENTS PRIVATE LIMITED [Active] CIN = U74899DL1991PTC046660

Company & Directors' Information:- J D MANUFACTURING CO PVT LTD [Active] CIN = U51909WB1996PTC079825

Company & Directors' Information:- A S P MANUFACTURING COMPANY PVT LTD [Not available for efiling] CIN = U36900WB1991PTC005146

Company & Directors' Information:- B R D MANUFACTURING PRIVATE LIMITED [Active] CIN = U51109WB1997PTC085188

Company & Directors' Information:- C & Y GARMENTS PRIVATE LIMITED [Active] CIN = U25209TN1988PTC016306

Company & Directors' Information:- ANKIT INDIA LIMITED [Active] CIN = L51109WB1995PLC072855

Company & Directors' Information:- R J S MANUFACTURING PRIVATE LIMITED [Active] CIN = U27104DL1997PTC090521

Company & Directors' Information:- S. S. GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL1996PTC083315

Company & Directors' Information:- R K GARMENTS PRIVATE LIMITED [Active] CIN = U18100GJ1994PTC023240

Company & Directors' Information:- B U MANUFACTURING PVT LTD [Active] CIN = U51109WB1982PTC035271

Company & Directors' Information:- M M MANUFACTURING PVT LTD [Active] CIN = U26922WB1993PTC059837

Company & Directors' Information:- J. C. MANUFACTURING INDIA PRIVATE LIMITED [Active] CIN = U21099WB2020PTC236821

Company & Directors' Information:- H S V GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101DL2005PTC141103

Company & Directors' Information:- S B MANUFACTURING PRIVATE LIMITED [Strike Off] CIN = U31506WB1999PTC088567

Company & Directors' Information:- C B GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18109WB2011PTC161559

Company & Directors' Information:- K. V. J. MANUFACTURING INDIA PRIVATE LIMITED [Active] CIN = U29308DL2017PTC320213

Company & Directors' Information:- A T E MANUFACTURING CO PRIVATE LIMITED [Amalgamated] CIN = U28999GJ1973PTC002296

Company & Directors' Information:- G. M. GARMENTS PRIVATE LIMITED [Active] CIN = U18109DL2006PTC152683

Company & Directors' Information:- D AND D GARMENTS PRIVATE LIMITED [Active] CIN = U74899DL1975PTC007923

Company & Directors' Information:- J P MANUFACTURING AND CO PVT LTD [Strike Off] CIN = U51226WB1982PTC034927

Company & Directors' Information:- D. K. MANUFACTURING (INDIA) LIMITED [Strike Off] CIN = U37200WB2011PLC170403

Company & Directors' Information:- J S GARMENTS (INDIA) PRIVATE LIMITED [Active] CIN = U74900WB2009PTC135262

Company & Directors' Information:- K. B . GARMENTS PRIVATE LIMITED [Active] CIN = U18109WB2011PTC166954

Company & Directors' Information:- S M MANUFACTURING COMPANY PRIVATE LIMITED [Active] CIN = U34300HR1997PTC057824

Company & Directors' Information:- G K MANUFACTURING PRIVATE LIMITED [Strike Off] CIN = U34300PB2012PTC036073

Company & Directors' Information:- P & B MANUFACTURING PRIVATE LIMITED [Active] CIN = U29254TN2010PTC076696

Company & Directors' Information:- A K GARMENTS PRIVATE LIMITED [Active] CIN = U17120DL2015PTC282847

Company & Directors' Information:- D P GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101DL2004PTC129479

Company & Directors' Information:- V S GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2005PTC143084

Company & Directors' Information:- P AND P GARMENTS PVT LTD [Under Process of Striking Off] CIN = U18101DL2005PTC143556

Company & Directors' Information:- V S GARMENTS PRIVATE LIMITED [Active] CIN = U18101HR2005PTC068124

Company & Directors' Information:- L. H. GARMENTS PRIVATE LIMITED [Strike Off] CIN = U17121KA2011PTC060761

Company & Directors' Information:- B. V. H. MANUFACTURING INDIA PRIVATE LIMITED [Active] CIN = U74999GJ2018FTC100633

Company & Directors' Information:- K M S GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101KL2002PTC015310

Company & Directors' Information:- K R GARMENTS PRIVATE LIMITED [Strike Off] CIN = U17111WB1998PTC087046

Company & Directors' Information:- T & A GARMENTS PVT LTD [Strike Off] CIN = U52321TN1993PTC025318

Company & Directors' Information:- P. S. GARMENTS PRIVATE LIMITED [Active] CIN = U18204DL2007PTC164238

Company & Directors' Information:- S. A. GARMENTS PRIVATE LIMITED [Active] CIN = U17121DL2007PTC165007

Company & Directors' Information:- R A MANUFACTURING COMPANY PRIVATE LIMITED [Strike Off] CIN = U36900HR2012PTC047669

Company & Directors' Information:- T S GARMENTS PRIVATE LIMITED [Active] CIN = U51494DL1996PTC076668

Company & Directors' Information:- GARMENTS INDIA PVT LTD [Strike Off] CIN = U51909GJ1979PTC003310

Company & Directors' Information:- I G S GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101DL2004PTC128723

Company & Directors' Information:- P V S GARMENTS PRIVATE LIMITED [Active] CIN = U18101TZ2007PTC013976

Company & Directors' Information:- M. P. GARMENTS PRIVATE LIMITED [Active] CIN = U17291DL2007PTC164129

Company & Directors' Information:- K. S. GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2007PTC164404

Company & Directors' Information:- J K GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2003PTC120039

Company & Directors' Information:- B G GARMENTS PRIVATE LIMITED [Active] CIN = U74899DL2005PTC142488

Company & Directors' Information:- V B GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL1997PTC088244

Company & Directors' Information:- S S R GARMENTS PRIVATE LIMITED [Active] CIN = U74999DL1997PTC088511

Company & Directors' Information:- S P GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101DL2003PTC120709

Company & Directors' Information:- P N GARMENTS PRIVATE LIMITED [Strike Off] CIN = U51311DL2004PTC127524

Company & Directors' Information:- J B GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101PB1996PTC017533

Company & Directors' Information:- A K R MANUFACTURING PRIVATE LIMITED [Active] CIN = U19200RJ2012PTC041177

Company & Directors' Information:- A. D. S. GARMENTS PRIVATE LIMITED [Active] CIN = U52609DL2017PTC321217

Company & Directors' Information:- H. K. GARMENTS PRIVATE LIMITED [Active] CIN = U18109DL2007PTC159196

Company & Directors' Information:- V P GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18109DL2012PTC233293

Company & Directors' Information:- S T GARMENTS PRIVATE LIMITED [Active] CIN = U18109DL2015PTC277043

Company & Directors' Information:- P L GARMENTS PRIVATE LIMITED [Active] CIN = U17120DL2013PTC248417

Company & Directors' Information:- M. K. GARMENTS PRIVATE LIMITED [Active] CIN = U17291DL2007PTC164395

Company & Directors' Information:- U R GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101DL2002PTC114011

Company & Directors' Information:- N J GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2002PTC117748

Company & Directors' Information:- R A GARMENTS PRIVATE LIMITED [Converted to LLP and Dissolved] CIN = U18101DL2003PTC123385

Company & Directors' Information:- P C GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101DL2004PTC129478

Company & Directors' Information:- N V GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2005PTC133534

Company & Directors' Information:- C S GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2005PTC134787

Company & Directors' Information:- L S GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2005PTC136180

Company & Directors' Information:- B L GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2005PTC136912

Company & Directors' Information:- B D S GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2005PTC137898

Company & Directors' Information:- T G GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101DL2005PTC143392

Company & Directors' Information:- B K C GARMENTS PRIVATE LIMITED [Converted to LLP and Dissolved] CIN = U18101DL2006PTC144478

Company & Directors' Information:- R B P GARMENTS PRIVATE LIMITED. [Active] CIN = U18101DL2006PTC148881

Company & Directors' Information:- G P S GARMENTS PRIVATE LIMITED. [Active] CIN = U18101DL2006PTC149330

Company & Directors' Information:- G P GARMENTS PRIVATE LIMITED [Active] CIN = U18101DL2007PTC161067

Company & Directors' Information:- I B GARMENTS PRIVATE LIMITED [Active] CIN = U51909DL2013PTC257044

Company & Directors' Information:- C N C MANUFACTURING PRIVATE LIMITED [Strike Off] CIN = U64204DL2015PTC281449

Company & Directors' Information:- G P S GARMENTS PRIVATE LIMITED. [Active] CIN = U74110DL2006PTC149330

Company & Directors' Information:- I. K. GARMENTS PRIVATE LIMITED [Active] CIN = U51109DL2008PTC180451

Company & Directors' Information:- A G GARMENTS PRIVATE LIMITED [Active] CIN = U51300DL2013PTC257609

Company & Directors' Information:- Y B GARMENTS PRIVATE LIMITED [Strike Off] CIN = U51311DL2004PTC129581

Company & Directors' Information:- V R V GARMENTS PRIVATE LIMITED [Strike Off] CIN = U51311DL2008PTC182256

Company & Directors' Information:- Y N GARMENTS PRIVATE LIMITED [Active] CIN = U81010DL2003PTC123182

Company & Directors' Information:- M V GARMENTS PRIVATE LIMITED [Strike Off] CIN = U74899HR2005PTC141797

Company & Directors' Information:- A AND R GARMENTS PRIVATE LIMITED [Strike Off] CIN = U17120HR2013PTC049037

Company & Directors' Information:- F T GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18109KL2015PTC037773

Company & Directors' Information:- V K GARMENTS PRIVATE LTD [Strike Off] CIN = U18101DL1981PTC012410

Company & Directors' Information:- P M P GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18101DL2005PTC134811

Company & Directors' Information:- A S GARMENTS PRIVATE LIMITED [Active] CIN = U17212CH1992PTC012350

Company & Directors' Information:- V R GARMENTS PVT LTD [Strike Off] CIN = U18101CH1991PTC011345

Company & Directors' Information:- K M P GARMENTS PRIVATE LIMITED [Strike Off] CIN = U18109DL2007PTC162181

Company & Directors' Information:- S B GARMENTS PRIVATE LIMITED [Strike Off] CIN = U51311DL2005PTC141954

    IT Appeal No. 511 of 2013

    Decided On, 26 November 2014

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE SANJIV KHANNA & THE HONOURABLE MR. JUSTICE V. KAMESWAR RAO

    For the Appellant: Suruchi Aggarwal, Sr. Standing Counsel. For the Respondent: Ved Jain, Pranjal Srivastava, Advocates.



Judgment Text

Sanjiv Khanna, J.

1. The present appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (Act, for short) relates to assessment year 2008-09 and impugns the findings recorded by the Income Tax Appellate Tribunal (Tribunal, for short) in their order dated 26th March, 2013. Findings recorded in the said order are primarily factual and it has been observed that the assessee had submitted copies of accounts duly confirmed by all trade creditors and debtors, whose balances were in excess of Rs.1 lac at the closing date of the year under consideration. The Tribunal accordingly set aside and quashed the order under Section 263 of the Act passed by the Commissioner of Income Tax.

2. The respondent-assessee is a partnership firm engaged in the business of readymade garments. Search and seizure proceedings were carried out under Section 132 of the Act on 16th October, 2007 in the case of Shri Dwarka Das Agarwal Group and search had also taken place in the business and residential premises of the respondent-assessee. Subsequently, a notice under Section 142(1) of the Act was issued and the respondent-assessee filed return on 2nd April, 2009, declaring the same income as was declared in its original return i.e. Rs.2,94,87,060/-.

3. The assessment records produced before us reveal that possibly no effective proceedings were held till 26th October, 2009. Order sheet for the said period is not available. Effectuate steps were taken for the first time by issue of notice dated 7th October, 2009, by the Assessing Officer under Section 142(1) of the Act, enclosing therewith a questionnaire going into nine closely typed pages asking for information on 24 questions/points. Some of the questions were also having sub questions. Voluminous data, confirmations and details were asked. One such direction was to furnish copies of accounts duly confirmed by all trade debtors and creditors, whose balances at the end of the year, were in excess of Rs.1 lac. The turnover of the assessee as declared in the return of income for the year in question was Rs.16,01,30,230/-. The assessee attended the proceedings, filed replies and other details. Hearings were held on 23rd November, 2009, 11th December, 2009, 15th December, 2009 and 29th December, 2009. Order sheets for proceedings held on 26th October, 2009 and thereafter till 23rd November, 2009 are not on record. However, the assessment records are bulky and show that numerous papers, confirmations, particulars, explanations etc. were furnished. Confirmations submitted by the respondent-assessee are more than 100 in number. The debtors and creditors, it was stated, were located all over India and the assessee had written and asked them for confirmations to be submitted to the department.

4. As noticed above, the last hearing before the Assessing Officer was held on 29th December, 2009. On the said date, the assessee had furnished several confirmations and documents.

5. In assessment order passed on 31st December, 2009, two additions of Rs.11,94,982/- and Rs.3,64,696/-, on account of discrepancies, were made.

6. The Assessing Officer, it is claimed by the revenue, had recorded the following office note:-

"Office Note

1. All the documents/materials seized/impound during the course of the search/survey operation conducted on 16.10.2007 in Dwarka Das Agarwal Group of cases have been examined and nothing adverse pertaining to this assessee in previous year under consideration; was noticed as a result thereof.

2. Copy of accounts of the assessee existing in this Circle have been verified from their respective assessment records and of the assessee's existing elsewhere are being sent to their respective AOs for necessary verification at their end.

3. During the course of the assessment, the assessee was required to produce copies of accounts duly confirmed by the concerned parties in respect of fresh loans/deposits as also in respect of debtors and creditors whose balances were in excess of Rs. 1 lac. Since all of such confirmed copies of accounts have not been filed so far and since the assessment in this case is getting barred by time today, the assessment in this case is completed subject to the condition that the same shall be reopened in case any discrepancy is noticed subsequently in the aforesaid accounts."

7. The Commissioner of Income Tax issued notice under Section 263 of the Act on the ground that the assessment order was erroneous and prejudicial to the interest of the Revenue as the Assessing Officer had passed the assessment order despite noticing the fact that the assessee had not submitted confirmed copies of accounts in all cases (See paragraph 3 of the above office note).

8. Thereafter, the Commissioner of Income Tax, set aside the assessment for fresh assessment as per law after affording opportunity to the assessee and upon making proper inquires and verifications. The reasoning of the Commissioner of Income Tax in his order under Section 263 of the Act dated 27th March, 2012 reads:-

"It was observed that assessment has been completed by the Assessing Officer without obtaining the complete reply to the questionnaire annexed to notice u/s 142(1) dated 07/10/2009. In the above questionnaire, the assessee was inter alia asked to furnish copy of account, duly confirmed, of the parties from whom loans/deposits were given or taken and also in respect of debtors and creditors having balance above Rs.1 Lakh. The above information was not fully furnished by the assessee inspite of specific request. Provisions of Section 68 of the Income Tax Act, 1961 clearly lays down that where any sum is found credited in the books of an assessee and the assessee offers no explanation about the nature and source thereof, or the explanation offered is unsatisfactory, the sum so credited will be added to the income of the assessee. Since, the assessee had failed to furnish the confirmed copy of accounts till the fag end of the proceedings, inspite of specific request made by the Assessing Officer in the questionnaire annexed to notice u/s 142(1), the provisions of section 68 were attracted."

9. The Commissioner of Income Tax had documented the stand of the assessee that they had furnished confirmations from all trade creditors and debtors having a balance of Rs.1 lac and above. In the impugned order, the Tribunal has accepted that the assessee's contention that they had furnished confirmations of all the creditors and debtors having a balance of Rs.1 lac and above. The said finding was recorded by the tribunal after examining the assessment records, which were produced on directions before the Tribunal. In this factual background, it has been held that the Commissioner of Income Tax could not have exercised power under Section 263 of the Act. Thus the order of the Tribunal is that the Commissioner of Income Tax had proceeded on wrong facts and assumptions.

10. It is noticeable that in the grounds of appeal filed before us, names and details of a single creditor or debtor having a balance of Rs.1 lac or more from whom confirmation had not been furnished has not been indicated or stated. The order passed by the Commissioner of Income Tax under Section 263 also does not give names and details of any creditor or debtor who had not furnished or given confirmation. Thus, the finding of the Tribunal cannot be held to be perverse.

11. Learned senior standing counsel for the Revenue had submitted that confirmations were filed on the last day and, therefore, they were not verified. Thus, Commissioner of Income Tax was justified in holding that the assessment order was erroneous and prejudicial to the interest of the Revenue. The said contention must fail for a number of reasons. Firstly, with regard to the confirmations already submitted, note No.2 of the office note is relevant. It records that copy of the accounts of the confirming parties had been verified from their respective assessment records with the said Assessing Officer. In respect of the confirming assessees assessed under another charge, details had been sent to the respective Assessing Officer for verification at their end. It is not the allegation of the Revenue that on verification any of the conformation given by the creditors or debtors was found to be wrong or incorrect. Secondly, this is not the ground or reason why the Commissioner of Income Tax had invoked his power under Section 263 of the Act and passed the said order. The power and order under the said section is predicated that confirmations from all debtors and creditors were not furnished. The order does not proceed or hold that the Assessing Officer had failed to carry out required verification of the confirmations furnished and, therefore, the assessment order was erroneous and prejudicial to the interest of the Revenue. By accepting the arguments of the Revenue, we would be creating a new case, which was not the basis of the notice and the order under Section 263 of the Act.

12. It is unfortunate that in the present case, the Assessing Officer waited till the end and took up the assessment proceedings only three months before the end of the limitation period. A detailed questionnaire was only issued in October, 2009 and the first effective hearing was fixed on 26th October, 2009. Surprisingly, even the order sheets between 26th October, 2009 till 23rd November, 2009 are not on record and have not been shown. A reading of the questionnaire going into 9 pages would indicate that enormous and magnitudes of details/information were asked for. This would have required time for compilation, affirmation and clarification. The queries were answered by several letters on record. For confirmations, the assessee had to write letters to the creditors

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and debtors all over the India and wait for their response. The Tribunal has noted that the assessee had submitted bill, invoices, vouchers etc. to the Assessing Officer. 13. Normally, scrutiny assessment order under Section 143(3) of the Act should be presumed and hypothesised as made after due verification and ascertainment of facts. Principle of finality has sound and salutatory basis, but can be disturbed as per the statute and within confines of the provision applicable. Therefore, it has to be ensured administratively that the Assessing Officer act and proceed promptly, keeping in mind the limitation period and also the factum that the assessee may require time to furnish details, confirmations etc. 14. In view of the finding of the Tribunal that the assessee had furnished confirmations from all debtors and creditors, with balances in excess of Rs.1 lac; a finding of fact that we do not see any reason to disturb, the present appeal by the Revenue has to be dismissed. We order accordingly. In the facts of the present case, there will be no order as to costs.
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