M/s. Achyut Cashew Factory, Kolhapur V. Commissioner of Income-tax : II,

ITA 1081/PUN/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9804 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-10-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 06-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAI
• Keywords: Gift; Revision of order; Difference of opinion; Change of opinion
• Section: 263; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / IT A NO. 1081 /P U N/201 5 / ASSESSMENT YEAR : 20 1 2 - 1 3 M/S. ACHYUT CASHEW FACTORY A/P TULAS, TAL. VENGURLA, DIST. SINDHUDURG. . / APPELLANT PAN: A ACFA6135E VS. THE COMMISSIONER OF INCOME TAX - II , KOLHAPUR . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : MS. DIVYA BAJPAI / DATE OF HEARING : 2 8 . 1 1 .201 8 / DATE OF PRONOUNCEMENT: 12 . 1 2 .201 8 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF PR. CIT - 2, KOLHAPUR , DATED 1 7 . 0 6 .201 5 RELATING TO ASSESSMENT YEAR 20 1 2 - 1 3 PASSED UNDER SECTION 263 ( 1 ) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER HAS ERRED IN LAW AND ON MERIT IN PASSING AN ORDER UNDER SECTION 263(1) OF THE INCOME TAX ACT 1961 AND SETTING ASIDE THE ORDER OF THE A.O . PASSED UNDER SECTION 143(3) OF THE ACT. IT A NO. 1081 /P U N/20 1 5 M/S. ACHYUT CASHEW FACTORY 2 2) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER HAS ERRED IN LAW AND ON MERIT IN ENHANCING THE VALUE OF CLOSING STOCK OF THE ASSESSEE WHEN SUCH VALUATION WAS FOUND TO BE PROPER BY THE A.O. WHILE FRAMING THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT AND THERE WAS NO APPARENT ERROR ON THE FACE OF ORDER. THE ORDER PASSED U/S 263(1) BY THE LEARNED COMMISSIONER OF INCOME TAX IS NOTHING BUT CHANGE OF OPINION AS HELD BY THE HONBLE BOMBAY HIGH COURT IN GABRIEL INDIA IN 203 ITR 108. 3. THE PRESENT APPEAL IS AGAINST EXERCISE OF JURISDICTION UNDER SECTION 263 BY THE COMMISSIONER AGAINST ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE COMMISSION ER IN PARA 2 NOTES THAT THE CASE WAS SELECTED FOR SCRUTINY AS PER CASS FOR THE REASON TO EXAMINE LARGE AMOUNT NOT CREDITED TO PROFIT AND LOSS ACCOUNT AS PER SCHEDULE A - 01 UNDER SECTION 14A OF THE ACT. THE COMMISSIONER WAS OF THE VIEW THAT THE ASSESSMENT O RDER PASSED BY ASSESSING OFFICER IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE, THE EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT TH E LIMITED ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST ASSESSMENT MADE IN THE HANDS OF ASSESSEE, WHEREIN THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY AS PER CASS, UNDER WHICH ONLY LIMITED ISSUES WERE ADDRESSED BY ASSESSING OFFICER AND ONCE THE ASSESSEE FILED THE EXPLANATION, THE SAME WAS HELD TO BE CORRECT AND THE INCOME RETURNED BY THE ASSESSEE WAS ACCEPTED, SUBJECT TO MINOR ADDITIONS ON ACCOUNT OF DECLINE IN THE GROSS PROFIT RATE. HE THUS, POINTED OUT THAT THERE IS NO MERIT IN THE AFORESAID ORDER PASS ED BY THE COMMISSIONER. IT A NO. 1081 /P U N/20 1 5 M/S. ACHYUT CASHEW FACTORY 3 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE EARLIER DATE OF HEARING WAS DIRECTED TO BRING TO THE NOTICE OF TRIBUNAL WHETHER ANY APPROVAL FROM THE PRINCIPAL COMMISSIONER WAS TAKEN FOR CONVERTING LIMITED SCRUTIN Y INTO FULL SCRUTINY. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS FAILED TO FURNISH ANY SUCH APPROVAL BUT HAS STRESSED THAT THE REQUIREMENT OF TAKING SUCH APPROVAL WAS VIDE CBDT CIRCULAR IN 2014, WHICH IS MUCH AFTER THE DATE OF ASSESSMENT IN THE HANDS OF ASSESSEE. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDER POINTED OUT THAT SIMILAR PROPOSITION HAS BEEN ACCEPTED BY THE TRIBUNAL IN THE CASE OF ANOTHER ASSESSEE RELATING TO ASSESSMENT YEAR 2009 - 10 AND ALSO BY THE K OLKATA BENCH OF TRIBUNAL IN NAYEK PAPER CONVERTERS VS. ACIT (2005) 93 ITD 144 (KOL) FOR ASSESSMENT YEAR 2002 - 03 AND BY THE DELHI BENCH OF TRIBUNAL IN GIFT LAND HANDICRAFTS VS. CIT (2008) 19 SOT 5 (DEL)(URO) AND HAS STRESSED THAT THE SAME SITUATION WAS THER E FROM YEAR TO YEAR. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RESPECT OF EXERCISE OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. THE ASSESSMENT OF ASSESSEE WAS TAKEN UP FOR SCRUTINY UNDER CASS FOR LIMITED PURPOSE, WHICH IS ALSO MENTIONED BY THE COMMISSIONER IN ITS ORDER PASSED UNDER SECTION 263 OF THE ACT. IT IS NOT DISPUTED THAT THE CASE OF ASSESSEE WAS PICKED UP FOR SCRUTINY UNDER CASS AND THE QUESTION WHICH ARISES IS THAT WHERE THE ASSESSMENT HAS BEEN PICKED UP FOR LIMITED SCRUTINY AND THE ASSESSING OFFICER AFTER VERIFYING THE ISSUE HAS PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT, CAN THE COMMISSIONER EXERCISE THE JURISDICTION UNDER SECTION 263 OF TH E ACT ON AN ISSUE FOR WHICH ASSESSMENT WAS NOT PICKED UP FOR SCRUTINY IN THE HANDS OF ASSESSEE. IT A NO. 1081 /P U N/20 1 5 M/S. ACHYUT CASHEW FACTORY 4 9. WE FIND THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN THE CASE OF SHRI SHANKARSINGH C. THAKUR VS. CIT IN ITA NO.833/PN/2014, RELATING TO ASSESSMENT YEAR 20 09 - 10, ORDER DATED 12.08.2016 AND IT WAS HELD AS UNDER: - 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE EXERCISE OF JURISDICTION OF REVISION BY COMMISSIONER UNDER SECTION 263 OF THE A CT. WHERE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, THE COMMISSIONER IS EMPOWERED TO EXERCISE THE JURISDICTION UNDER SECTION 263 OF THE ACT AGAINST SUCH ASSESSMENT ORDER PASSED BY THE ASS ESSING OFFICER. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSING OFFICER HAD SELECTED THE RETURN OF INCOME FILED BY THE ASSESSEE FOR SCRUTINY IN CASS I.E. IT WAS PICKED UP FOR LIMITED PURPOSE OF EXAMINING THE SOURCE OF CASH DEPOSITS ABOVE THE THR ESHOLD LIMIT IN THE SAVINGS BANK ACCOUNT. THE SCRUTINY TO BE CARRIED OUT IN THE CASE OF ASSESSEE WAS LIMITED SCRUTINY. THE CBDT HAD PASSED INSTRUCTIONS IN SUCH CASES WHICH WERE PICKED UP FOR SCRUTINY ON THE BASIS OF DATA IN AIR OR CASES OF CASS. IT HAS BEEN DECIDED THAT SCRUTINY OF SUCH CASES WOULD BE LIMITED TO THE INFORMATION RECEIVED OR APPLIED AND IN CASE WHERE THE ASSESSING OFFICER WAS OF THE VIEW THAT WIDER SCRUTINY HAD TO BE TAKEN UP, THEN THE SAME HAD TO BE CARRIED OUT WITH THE APPROVAL OF ADMINI STRATIVE COMMISSIONER, WHERE THERE WAS POTENTIAL ESCAPEMENT OF INCOME OF MORE THAN RS.10 LAKHS. THE ASSESSMENT IN THE CASE OF ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON ACCOUNT OF SCRUTINY UNDER CASS FOR LIMITED REASONING. THE ASSESSING OF FICER HAD NOT OPTED FOR WIDER SCRUTINY IN THE CASE OF ASSESSEE. IN SUCH CIRCUMSTANCES, WHERE THE ASSESSING OFFICER HAD EXERCISED THE LIMITED POWERS OF SCRUTINIZING THE CASE OF ASSESSEE ON THE POINTS FOR WHICH IT WAS SELECTED, THE ORDER OF ASSESSING OFFICE R CANNOT BE HELD TO BE ERRONEOUS FOR NOT LOOKING AT ISSUE WHICH WAS NOT PART OF ITS SELECTION PROCESS. 9. THE COMMISSIONER HAS HELD THE ORDER OF ASSESSING OFFICER TO BE ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST OF REVENUE BY NOT CONSIDERING THE CLA IM OF DEDUCTION OF RS.3,89,838/ - ON ACCOUNT OF CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE FROM THE SALARY. IN VIEW THEREOF, WHERE THE ASSESSING OFFICER HAD LIMITED ZONE OF EXERCISING OF HIS JURISDICTION, NON - LOOKING INTO THE CLAIM OF ASSESSE E ON ACCOUNT OF CONVEYANCE AND ADDITIONAL CONVEYANCE ALLOWANCE CANNOT MAKE THE ASSESSMENT ORDER AS ERRONEOUS. IN ANY CASE, EVEN IF WE TAKE UP THE POINT THAT THE ASSESSING OFFICER NEEDED TO WIDEN ITS SCRUTINY, THEN THE EMBARGO IS PLACED BY THE CBDT CIRCULA R THAT THE PERMISSION IS TO BE SOUGHT FROM THE ADMINISTRATIVE COMMISSIONER WHERE THE ESCAPEMENT OF INCOME IS MORE THAN RS.10 LAKHS. THE TOTAL EXPENDITURE CLAIMED AS DEDUCTION WAS RS.3,89,838/ - AND IT IS BEYOND THRESHOLD LIMIT OF RS.10 LAKHS AND HENCE, COU LD NOT BE PART OF WIDER SCRUTINY, IF ANY. EVEN THE CLAIM OF ASSESSEE IS JUSTIFIABLE, WHEREIN THE CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE HAS BEEN PAID BY THE EMPLOYER LIC OF INDIA TO THE ASSESSEE, WHO WAS THE DEVELOPMENT OFFICER, ON ACCOU NT OF REIMBURSEMENT OF EXPENSES. SUCH REIMBURSEMENT WOULD ONLY TAKES PLACE WHERE THE ASSESSEE ESTABLISHES ITS CLAIM THAT IT HAS INCURRED EXPENSES. IN SUCH CIRCUMSTANCES, WHERE THE EXPENSES HAVE BEEN REIMBURSED TO THE ASSESSEE, THERE IS NO MERIT IN THE OR DER OF COMMISSIONER IN HOLDING THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE INCURRING OF EXPENDITURE. SINCE THE ORDER PASSED BY ASSESSING OFFICER IS NOT ERRONEOUS, THE CONDITIONS LAID DOWN IN SECTION 263 OF THE ACT ARE NOT FULFILLED. ACCORDINGLY, THE CO MMISSIONER HAS EXCEEDED HIS JURISDICTION IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT, WHICH ARE SET - ASIDE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. IT A NO. 1081 /P U N/20 1 5 M/S. ACHYUT CASHEW FACTORY 5 10. THE ISSUE ARISING IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE OR DER OF TRIBUNAL AND FOLLOWING THE SAME PARITY OF REASONING, WE FIND NO MERIT IN THE EXERCISE OF JURISDICTION BY COMMISSIONER UNDER SECTION 263 OF THE ACT IN THE PRESENT FACTS AND CIRCUMSTANCES , SINCE NO EVIDENCE HAS BEEN FILED TO SHOW THAT LIMITED SCRUTINY WAS CONVERTED TO FULL SCRUTINY . ACCORDINGLY, WE HOLD THAT ORDER PASSED BY THE COMMISSIONER IS BOTH INVALID AND BAD IN LAW. 11 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCE D ON THIS 12 TH DAY OF DECEMBER , 201 8 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 12 TH DECEMBER , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3 . 4 . , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRI VATE SECRETARY , / ITAT, PUNE