THE HON’BLE SRI JUSTICE P.SAM KOSHY

AND

THE HON’BLE SRI JUSTICE SUDDALA CHALAPATHI RAO

WP.No. 25959 of 2008

O R D E R: (Per the Hon’ble Sri Justice Suddala Chalapathi Rao)

The instant Writ Petition is filed to declare the order of the

Income Tax Appellate Tribunal, Hyderabad Bench ‘A’ (for short ‘the Tribunal’) in MA.No.23/HYD/08, dt.16.05.2008, in IT(SS) A.No.119/H/2005 for the block period 1997-98 to 2002-03 as without jurisdiction, improper, arbitrary, unjust, besides violative of principles of natural justice and violative of provisions of Income Tax Act, 1961 (for short ‘the Act’) and consequently to set

aside the same.

2. Heard the N.Praveen Reddy, learned Senior Standing Counsel for Income Tax appearing for the petitioner/Revenue. None appeared for the 3^rd respondent, who was added as legal representative of the 2^nd respondent/assessee, despite service of

notice.

3. The brief facts of the case are that the 2^nd respondent/ assessee is engaged in the business of sale of wedding cards.

During a search and seizure operation conducted by the 1^st respondent-income tax authorities on 09.10.2002, unaccounted sales of Rs.13.72 lakhs for the period 28.05.2002 to 12.09.2002 and excess stock worth Rs.2,95,996/- was found. In the statement recorded under Section 132(4) of the Act the assessee admitted undisclosed income of Rs.16.75 lakhs(Rs.13.72 lakhs of unaccounted sales and Rs.2.95 lakhs of unaccounted stock). Further in response to the notice issued under Section 158BC, the assessee filed returns disclosing an income of Rs.2,35,286/-. The assessing officer while completing the assessment, vide order dt.29.10.2004, added Rs.1,75,482/- as profit at 20% on the undisclosed sales of Rs.8,72,000/- and determined the total undisclosed income at Rs.4,10,768/-.

4. Against the said order of assessment, the 2^nd respondent/assessee preferred an appeal before the Commissioner of Income Tax (Appeals) (for short ‘CIT(A)’) vide ITA.No.0281/CC- 6HYD/CIT(A)-1/04-05, and by order dt.13.05.20025, the CIT(A) held that the assessing officer ought to have estimated sales for all the assessment years falling in the block period and applied net profit @ 20% on the estimated sales, as admitted by the assessee and accordingly, ought to have determined the undisclosed income @ Rs.32,93,692/- as against the undisclosed income determined by the assessing officer at Rs.4,10,768/- and pursuant thereto, issued notice of enhancement.

5. Aggrieved by the order of the CIT(A), the assessee preferred an appeal in IT(SS)A.No.119/H/2005, before the Income Tax Appellate Tribunal, Bench ‘A’, Hyderabad (for short ‘the ITAT’). By order dt.31.10.2007, the learned ITAT, by appreciating the facts and evidence on record and by following the decision of this Court in Rajni & Co. v. Asst. CIT1 upheld that the lower authorities’ decision based on materials found during the search and the partner’s admission. However, it directed the Assessing Officer to telescope the estimated profits on the suppressed stocks, by partly allowing the appeal filed by the assessee.

6. Thereafter, the assessee has filed Miscellaneous Application vide MA.No.23/H/2008 under Section 254(2) of the Act seeking rectification of the order of learned ITAT by setting aside the same and restoration of appeal for fresh hearing.

1 251 ITR 561

7. The learned ITAT after hearing both sides, vide order dt.16.16.2008, has recalled its earlier order, dt.31.10.2007 in IT(SS) A.No.119/H/2005 and restored the appeal and posted it for fresh hearing.

8. Assailing the order of recall in MA.No.23/HYD/08, dt.16.05.2008, the petitioner/Revenue filed this writ petition.

9. Learned Senior Standing Counsel appearing for petitioner/Revenue contended that the order passed by the 1st respondent in MA.No.23/H/08, dt.16.06.2008 recalling its own order, dt.31.10.2007, in IT(SS) A.No.119/H/2005 is in gross violation of Section 254(2) of IT Act and it is void-ab-initio.

10. We have taken note of the above submissions and perused the record.

11. The only