If AO says that assessee not maintained books of account than there is no question of producing the same by the assessee

OR D E R

PER Kul Bharat, Judicial Member:-

Both these appeals are filed by Revenue in two different cases, but since both are connected cases in view of this fact that ‘substantive’ addition was made in the hands of one assessee i.e., Shri Pranbhai S Fultariya and ‘protective’ addition was made in the hands of the other assessee i.e., Nirav (Thaltej) Owners Association. Both these appeals are being decided by way of common order for the sake of convenience.

2. Both these appeals are related to same assessment year (AY) i.e., AY 2007-08 and are directed against two separate orders of same Commissioner of Income-tax (Appeals)-III, Ahmedabad (‘C IT(A)’ for short) both dated 13-04- 2010. Grounds raised by Revenue in the case of Shri Pranbhai S Fultariya in ITA No. 2302/Ahd/201 0 are as under:-

“1) The ld. CIT(A) has erred in law and on facts and circumstances of the case in directing the Assessing Officer to restrict the total receipts to Rs.3,01,15,915/- as against that of Rs. 7,23,44,731/- estimated by the AO and thereby restricting the addition @ 8% of the reduced receipts at Rs. 13,33,610/- as against that of Rs.57,87,580/-.

2) The ld. CIT(A) has further erred in law and on facts and in circumstances of the case in holding that there was no suppression of sales in spite of finding given by the Assessing Officer in the assessment order after verifying and relying on the impounded documents.

3) The ld. CIT(A) has further erred in law and on facts by treating the individual ledger account of the buyer as books of accounts of the assessee.

4) The ld. CIT(A) has erred in law and in facts by holding that the Assessing Officer ought to have invoked the provisions of section 145 of the Act in spite of the fact that the assessee did not produce the books of accounts during the course of assessment proceedings and in considering the fact that the assessment order has been passed u/s. 144 of the I.T. Act.”

3. Grounds raised by Revenue in the case of Nirav (Thaltej) Owners Association in ITA No. 2303/Ahd/201 0 are as under:-

“1) The ld. CIT(A) has erred in law and on facts and circumstances of the case in deleting the protective addition made in the hands of assessee AOP though the substantive addition made in the hands of Shri Pranbhai S Phultariya has been confirmed to the extent of Rs. 13,33,609/- in which the addition was made by the Assessing Officer on substantive basis.

2) On the facts and in the circumstances of the case, the Ld. CIT appeal ought to have upheld the order of the Assessing Officer by confirming the addition on protective basis as worked out by him in the case of Shri Pranbhai S Phultariya in whose case, the substantive addition has been reduced.”

4. In both cases, none appeared on behalf of assessee on the appointed date of hearing although two separate applications for adjournment are available on record having been filed by one Shri Aseem L Thakkar, Chartered Accountant (CA) but no Power of Attorney from these two assessees in favour of this CA is available on record and hence, these adjournment applications are not maintainable and therefore ignored.

5. Ld. SR-DR of the Revenue submitted that assessment year was framed by the Assessing Officer u/s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) because no books of accounts were produced by the assessee as has been stated by the Revenue in Ground No.4 raised in the case of Shri Pranbhai S Fultariya. He further submitted that Ld. CIT(A) has not obtained any remand report from the Assessing Officer and therefore the order of Ld. CIT(A) is not sustainable.

6. We have considered the submission of Ld. SR-DR of the Revenue. We find that a clear finding was given by the Assessing Officer in para 13.2 of the assessment order in the case of Shri Pranbhai S Fultaria that assessee has not filed any return of income though specifically required u/s. 142(1) of the Act and assessee has not maintained books of account. Ld. CIT(A) has not given a finding that this observation of the AO in para-13.2 of the assessment order is incorrect that assessee is not maintaining any books of account. It is also held by Ld. CIT(A) that AO was justified in framing the assessment u/s. 144 of the Act. Thereafter it is stated by the Ld. CIT(A) in para-1 2 of his order that AO has not specified any defect in the profit and loss account or in the books of account produced. This finding of Ld. CIT(A) is contradictory and without any basis because when the AO says that assessee has not maintained any books of account, there is no question of producing any books of account by the assessee either before the AO or before Ld. CIT(A) and then how it is expected from the AO that he should point out specific defect in the books of account of the assessee. In view of this contradictory finding of Ld. CIT(A) which is without basis also, we are of the considered opinion, that order of Ld. CIT(A) is not sustainable but still we feel that in the interest of justice, this matter should go back to the file of Ld. CIT(A) for fresh decision after providing reasonable opportunity of being heard of both sides. He should decide the entire appeal afresh by passing a speaking and well reasoned order. Accordingly, we set aside the order of Ld. C IT(A) and restore the matter back to his file for fresh decision in the light of above discussion.