Bijay Kumar Jain, Kolkata V. DCIT, C ircle- 54, Kolkata, Kolkata

ITA 1018/KOL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5527 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2010
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 17-05-2010
• Court: TRIBUNAL
• Department Lawyers: D R SINDHAL
• Assessee Lawyers: N P JAIN
• Section: 263

Judgement Text

1 , , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA () BEFORE . . . . . . . . , , , , , SHRI D.K.TYAGI, JUDICIAL MEMBER. !' !' !' !' /AND . .. . . .. .! !! ! , # C.D. RAO, ACCOUNTANT MEMBER '$ '$ '$ '$ / ITA NO . 1018/KOL/2010 %&' !() / ASSESSMENT YEAR : 2005-06 (+, / APPELLANT ) BIJAY KUMAR JAIN (PAN: ACRPJ 7259B) - !& - - VERSUS -. (.+,/ RESPONDENT ) DCIT, CIRCLE-54, KOL. +, / 0 / FOR THE APPELLANT: / SHRI N.P.JAIN & SHRI DEEPAK JAIN .+, / 0 / FOR THE RESPONDENT : / SHRI D.R.SINDHAL 1 / ORDER ( . .. . . .. .! !! ! ) # PER SHRI C.D.RAO, A.M . THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E ORDER PASSED BY THE C.I.T, KOLKATA-XIX., KOLKATA DATED 25.03.2010 FOR THE ASSE SSMENT YEAR 2005-06 UNDER SECTION 263 OF THE I.T.ACT. 2. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L, APPEARING ON BEHALF OF THE ASSESSEE, HAS SUBMITTED THAT IMMEDIATELY IN THE PRE CEDING ASSESSMENT YEAR ALSO, THE LD. CIT PASSED THE ORDER UNDER SECTION 263 ON THE S AME ISSUE I.E., THE DEPOSITS SHOWN BY THE ASSESSEE IN THE BALANCE SHEET ON ACCOUNT OF ADVANCES RECEIVED FROM THE CLIENTS OF THE ASSESSEE IN THE STATUS OF SOLICITOR OR ATTOR NEY. WHILE PASSING THE CONSEQUENTIAL ORDER IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, AFTER EXAMINING ALL THE DETAILS OF THE ADVANCES AND THE SUBMISSIONS MADE BY THE LD. CO UNSEL FOR THE ASSESSEE, THE AO PASSED THE ORDER UNDER SECTION 143/154/263 ON 19.11 .09 BY OBSERVING THAT THE ADVANCES FROM PARTIES/CLIENTS AS ON 31.03.04 HAVE A LREADY BEEN APPROPRIATED TOWARDS THE FEES IN THE SUBSEQUENT YEARS. THUS, IN FACT, TH ERE IS NO LOSS OF REVENUE AS THE 2 AMOUNT HAS BEEN CONSIDERED AS THE INCOME OF THE ASS ESSEE IN THE SUBSEQUENT YEARS, WHEN IT SO MATERIALIZED. FOR THIS ASSESSMENT YEAR A LSO, THE ASSESSEES COUNSEL HAS FILED THE DETAILS OF LOANS AND ADVANCES AS ON 31.03.05 AN D HOW THE SAME HAS BEEN ADJUSTED IN THE SUBSEQUENT ASSESSMENT YEARS, PLACED AT PAGE NOS. 19A AND 19B OF THE PAPER BOOK, SHOWING THE OPENING BALANCE, ADVANCES RECEIVE D DURING THE YEAR, ADJUSTED DURING THE YEAR, CLOSING BALANCE AS ON 31.03.05 AS WELL AS IN THE REMARKS COLUMN, WHEN THIS CLOSING BALANCE HAS BEEN ADJUSTED. BASED ON THIS, HE CONTENDED THAT FOR THE ASSESSMENT YEAR 2005-06 ALSO, SINCE THE ASSESSEE IS ABLE TO DEMONSTRATE HOW THE ADVANCES HAVE BEEN ADJUSTED IN THE SUBSEQUENT ASSES SMENT YEARS, THE ORDER OF THE LD. CIT IS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E. THEREFORE, HE REQUESTED TO SET ASIDE THE SAME. 3. ON THE OTHER HAND, THE LD. D.R., APPEARING ON BE HALF OF THE REVENUE, RELIED ON THE ORDERS OF THE C.I.T. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE FACT TH AT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, THE LD. CIT(A), WHILE PASSING THE ORDER UNDER SECTION 263, HAS OBSERVED THAT THUS, NEITHER BEFORE THE HONBLE TRI BUNAL NOR THE HONBLE HIGH COURT OF CALCUTTA, THE QUESTION OF ASSESSABILITY OR OTHER WISE OF THE SAID ADVANCESBY REASON OF THE ASSESSEE REGULARLY FOLLOWING CASH SYSTEM OF ACCOUNTING WAS PRESENTED CATEGORICALLY. HOWEVER, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE HIGH COURT OF CALCUTTA, THE AO IS DIRECTED FOLLOW THE DECISION OF THE HONBLE TRIBUNAL [SUPRA] IN ASSESSING THE SAID ADVANCES--- AS, THE SAME HAS B EEN UPHELD BY THE HONBLE HIGH COURT OF CALCUTTA. [A COPY OF THE SAID ORDER OF THE HIGH COURT IS ENCLOSED HEREWITH, MARKED AS ANNEXURE] AND THE AO, WHILE PASSING THE CONSEQUENTIAL ORDER UNDER SECTION 143/154/263 OF THE I.T. ACT, HAS OBSERVED A S UNDER: THUS, I FIND THAT THE TOTAL SUM OF RS.58,20,174/- A PPEARING AS ADVANCES FROM PARTIES/CLIENTS AS ON 31.3.2004 HAS ALREADY BE EN APPROPRIATED TOWARDS FEE IN THE SUBSEQUENT YEARS. THUS, IN FACT THERE IS NO LOSS OF REVENUE AS THE AMOUNT HAS BEEN CONSIDERED AS THE IN COME OF THE ASSESSEE IN THE SUBSEQUENT YEARS, WHEN IT SO MATERI ALIZED. 3 FURTHER, THE AUTHORISED REPRESENTATIVE POINTED OUT FROM THE LIST THAT OUT OF THE SAID AMOUNT OF RS.58,20,174/- A SUM OF RS.44 ,08,662 WAS FROM BROUGHT FORWARD AMOUNT FROM EARLIER YEAR(S) AND IT DID NOT REPRESENT ANY AMOUNT RECEIVED DURING THE RELEVANT PREVIOUS YE AR, I.E. FY 2003-04. MR. JAIN, THE AUTHORISED REPRESENTATIVE OF THE ASSE SSEE FILED BEFORE ME A COPY OF ORDER DATED 11.9.06 OF CIT(A)-XXXIV, KOLKAT A IN THE CASE OF R.N. JHUNJHUNWALA, IN WHICH AT PAGE 2 (FOURTH LINE) , I FIND THAT IN THAT CASE ALSO THE SAID ASSESSEE FOLLOWED CASH SYSTEM OF ACCOUNTING. IN THE CASE BEFORE ME ALSO THE ASSESSEE FOLLOWS CASH SYSTE M OF ACCOUNTING. THUS THE SYSTEM OF ACCOUNTING AS A MATTER OF FACT I N BOTH THE CASES IS IDENTICAL. THUS, IN VIEW OF THE DECISION OF THE TRIBUNAL AS CO NFIRMED BY THE HIGH COURT IN THE CASE OF R.N.JHUNJHUNWALA THE SAID ADVA NCES FROM CLIENTS CANNOT BE CONSIDERED AS INCOME. THE LD. CIT HAS ALS O CONCLUDED AND DIRECTED TO FOLLOW THE ORDER OF THE TRIBUNAL AND TH E CALCUTTA HIGH COURT. I RESPECTFULLY FOLLOW THE SAID DECISIONS ACC ORDINGLY. THAT BEING THE CASE, NO INTERFERENCE IS CALLED FOR IN THE INCO ME ON THIS ISSUE OF ADVANCE FROM CLIENTS. 4.1 HOWEVER, ON THE SAME ISSUE, THE PRESENT CIT HAS GIVEN A CONTRARY VIEW TO THE DECISIONS OF THE TRIBUNAL AS WELL AS THE HONBLE HI GH COURT AND SET ASIDE THE ORDERS OF THE AO BY TREATING THE SAME AS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE. 4.2 ON PERUSAL OF THE DETAILS OF THE PREVIOUS ASSES SMENT YEAR AS WELL AS THAT OF THE PRESENT IMPUGNED ASSESSMENT YEAR 2005-06 ON THE SAM E FACTS, SINCE DIFFERENT CITS HAVE TAKEN DIFFERENT VIEWS, WE ARE NOT INCLINED TO PUT OUR OBSERVATIONS ON THIS LEGAL ISSUE WHETHER THE TRIBUNAL ORDER OR THE HIGH COURT ORDER IS APPLICABLE TO THE PRESENT FACTS OF THE CASE. HOWEVER, THE UNDISPUTED FACTS OF THIS CASE ARE THAT THE AO, WHILE PASSING THE CONSEQUENTIAL ORDER TO 263 ORDER IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, WHETHER WARRANTED OR NOT, HE HAS GIVEN A FIND ING THAT THUS, I FIND THAT THE TOTAL SUM OF RS.58,20,174/- APPEARING AS ADVANCES FROM PA RTIES/CLIENTS AS ON 31.3.2004 HAS ALREADY BEEN APPROPRIATED TOWARDS FEE IN THE SU BSEQUENT YEARS. THUS, IN FACT THERE IS NO LOSS OF REVENUE AS THE AMOUNT HAS BEEN CONSID ERED AS THE INCOME OF THE ASSESSEE IN THE SUBSEQUENT YEARS, WHEN IT SO MATERIALIZED. SIMILARLY, FOR THE IMPUGNED ASSESSMENT YEAR, IN OUR CONSIDERED OPINION, AS THE ASSESSEE HAS ESTABLISHED THAT ALL THE ADVANCES AS ON 31.03.05 HAVE BEEN SUBSEQUENTLY ADJU STED IN THE SUBSEQUENT ASSESSMENT YEARS, COPIES OF WHICH HAVE BEEN PLACED AT PAGE NOS. 19A AND 19B OF THE 4 PAPER BOOK AND THE LD. D.R. COULD NOT CONTRADICT TH E SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE, WE FIND NO JUSTIFICATION ON THE P ART OF THE LD. CIT TO INVOKE THE PROVISIONS OF SECTION 263. THEREFORE, WE SET ASIDE THE ORDERS OF THE LD. CIT ON THIS ISSUE AND ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 2 1 3 4& 25 THIS ORDER IS PRONOUNCED IN COURT ON 29.10.2010. SD/- SD/- 6 6 6 6. . . . . . . . , , , , , D.K.TYAGI, JUDICIAL MEMBER. . .. . . .. .! !! ! , # C.D. RAO, ACCOUNTANT MEMBER ( (( (# # # #) )) ) DATE: 29.10.2010 1 / .%%7 87(9- COPY OF THE ORDER FORWARDED TO: 1. BIJAY KUMAR JAIN, 6A, KIRAN SHANKAR ROY ROAD, GROUN D FLOOR, KOLKATA- 700 001. 2. DCIT, CIRCLE-54, KOLKATA 3. C.I.T. 4 . DR, KOLKATA BENCHES, KOLKATA 7 .%/ TRUE COPY, 1&4/ BY ORDER, DEPUTY /ASST.REGISTRAR , ITAT, KOLKATA BENCHES MST(SR.P.S.)