M/s Samant Singh Lucknow

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IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH “B”, LUCKNOW

BEFORE SHRI, A.K. GARODIA, ACCOUNTANT MEMBER
AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER

ITA No.434/LKW/2015
Assessment Year 1994-95

M/s Samant Singh, Vs The Income Tax Officer-I(3),
2/282, Virat Khand, Income Tax Office,
Gomti Nagar, Ashok Marg,
Lucknow Lucknow

PAN AAXFS 5589 B

(Appellant) (Respondent)

Appellant by Shri A.P. Sinha, Advocate
Respondent by Smt. Alka Singh , DR
Date of hearing 11 /0 8/2015
Date of pronouncement 30/09/2015

O R D E R
PER A. K. GARODIA, A.M.

This is an assessee’s appeal directed against the order of Ld. CIT (A), Lucknow-I

dated 02.03.2015 for the AY 1994-95.

2. The grounds raised by the assessee are as under:

“1- The Hon’ble C.I.T. (Appeals)-I, Lucknow erred while sustaining
the additions of Rs.4,72,084.00 and Rs.89,115.00.

1- (a)The Hon’ble C.I.T.,(Appeals)-I, Lucknow erred while
sustaining the above addition without allowing adequate
opportunity.

1- (b)The sustenance of additions is wrong by holding that the
certified copy of audit report along with Form No. 3 CB and 3 CD
was not filed.
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2- The Hon’ble C.I.T. (Appeals)-I, Lucknow erred while sustaining the
addition of Rs.9,50,000.00 again by holding the certified copy of
audit report could not be filed.

2 (a)He further erred while sustaining the above addition by holding
that no confirmation from the creditors was found.

2(b)He erred while not appreciating that the original audit report and
the main creditor were produced before the Ld. Income Tax Officer in
proceeding u/s 143 (3)/254 of the Income Tax Act, 1961.

It is respectfully prayed that both the additions may either be deleted or
the order of the Hon’ble C.I.T. (Appeals) – 1, Lucknow be set aside to be
looked a fresh. It is pertinent to mention that the hearing before the
Hon’ble C.I.T. (Appeals)-I, Lucknow had concluded in September, 2014
and the order has been passed in March, 2015.”

3. At the very outset, it was submitted by the Ld. AR of the assessee that this is

second round of appeal. He submitted that in the first round, the Tribunal, restored

the matter back to the file of the AO for fresh decision as per its order dated

17.07.2006 in ITA No. 232/Alld/2002. He further submitted that against this

Tribunal’s order, the assessee has filed Miscellaneous Application, which was

dismissed by the Tribunal and against such dismissal of the M. A. by the Tribunal,

the assessee filed an appeal before the Hon’ble Allahabad High Court. He also

submitted that on pages 34 to 37 of the paper book is the judgment of the Hon’ble

Allahabad High Court in Income Tax Appeal No. 9 of 2012 dated 10.09.2013. In

particular, our attention was drawn to pages 36 to 37 of the paper book, where it is

held by the Hon’ble Allahabad High Court that the Tribunal order is modified and the

AO is directed to make the assessment denovo by ignoring the direction issued by

the Tribunal. He also pointed out that it is also held by the Hon’ble Allahabad High

Court that if the AO has already given effect to the order passed by the Tribunal,

then liberty is granted to the assessee to file an appeal before the first appellate

authority and he will adjudicate the same strictly on merit within a period of three

months by ignoring the delay, if any. He further submitted that as per this judgment
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of the Hon’ble Allahabad High Court, when the books are admittedly destroyed in

the flood, the same cannot be produced before the AO and therefore, the issue in

dispute should be decided without asking for production of the books. He submitted

that since the order of the AO is on the basis of earlier Tribunal’s direction, the same

is not valid. He submitted that under these facts, the matter may be restored back

to the file of the CIT(A) for fresh decision on merit in the light of this judgment of

the Hon’ble Allahabad High Court.

4. We have considered the rival submission. We find that in the impugned order,

Ld. CIT(A) has noted down entire history of the case. He had noted on page 3 of his

order that the Hon’ble High Court has upheld the order of the Tribunal about

restoring the matter back to the AO but modified the order of the tribunal by

directing the AO to make the assessment denovo ignoring the directions issued by

the Tribunal. Thereafter in Para 4 of his order, he had decided the issue on this

basis that the direction of the Tribunal relating to addition on account of material

consumed and labour charges was neither agitated before the Hon’ble High Court

nor any direction was issued by the Hon’ble High Court in that regard and

thereafter, he has upheld these two additions on this basis that these two additions

were made by the AO as per direction of the Tribunal. He has also observed that the

assessee has not filed any details relating to the material purchases and labour

charges. In our considered opinion, when the books are destroyed in flood and the

same cannot be produced and still it is the direction of the Hon’ble Allahabad High

Court that the issue in dispute regarding allowability of expenditure is to be decided

on merit, the addition made by the AO and upheld by the Ld. CIT(A) on the basis of

earlier tribunal order is not justified. In our considered opinion, the allowability of

the expenses under the head material consumed and labour charges should be

decided on the basis of past history of the assessee and the position in the

subsequent years and if it is found that the expenses in the present year under
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these two heads are at par as compared to the earlier and/or subsequent years,

then no disallowance is called for. This is one example we have given as to how to

examine and decide the claim of the assessee. If the expenses in the present year

are more than the earlier or subsequent years then also, the assessee should be

given an opportunity to explain the reasons for such extra expenditure in the

present year and if the reasons, if any, explained by the assessee are found to be

reasonable, the matter should be decided in the light of those explanations. Hence,

we feel that in the interest of justice, the matter should go back to the file of the

CIT(A) for fresh decision as per the direction of the Hon’ble Allahabad High Court

and in view of above discussion after providing reasonable opportunity of being

heard to both sides. We ordered accordingly.

5. In the result, the appeal of the assessee stands allowed for statistical

purposes.

(Order was pronounced in the open court on the date mentioned on the caption page)

Sd/- Sd/-
(SUDHANSHU SRIVASTAVA) (A.K. GARODIA )
Judicial Member Accountant Member

Dated: 30/09/2015
Aks
Copy of the order forwarded to :
1.The Appellant
2.The Respondent.
3.Concerned CIT

4.The CIT(A)
5.D.R., I.T.A.T., Lucknow Asstt. Registrar

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