JAIPUR SAHAKARI KRAYA VIKRAYA SAMITI LTD., Jaipur V. ITO, Jaipur

ITA 109/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5256 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAGHUVIR SINGH DAGUR CIT DHK
• Keywords: Audit objection; Difference of opinion; Competent authority; Change of opinion
• Section: 143(3); 80IB; 194C; 147; 148; 263; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 109/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. JAIPUR SAHAKARI KRAYA VIKRAYA SAMITI LTD., B-34, SURAJPOLE MANDI, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, WARD 5(4), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAAJJ 0166 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI PRAVEEN SARASWAT (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAGHUVIR SINGH DAGUR, (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.6.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 16/06/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS)- II, JAIPUR DATED 11.11.2014 PERTAINING TO ASSESSMEN T YEAR 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1(A) LEARNED CIT (A) ERRED ON FACTS AND LAW BY UPHO LDING THE ASSUMPTION OF JURISDICTION U/S 147 BY THE LD. ASSES SING OFFICER, WHICH IS INVALID AS THE NOTICE U/S 148 WAS ISSUED AFTER TAKI NG APPROVAL OF COMMISSIONER OF INCOME TAX-II, JAIPUR INSTEAD OF JO INT COMMISSIONER, RANGE-5, JAIPUR, AS REQUIRED U/S 151(1) OF THE INCO ME TAX ACT, 1961. THEREFORE, THE IMPUGNED NOTICE U/S 148 AND RE-ASSES SMENT ORDER PASSED U/S 144/147 PURSUANT TO SUCH NOTICE, IS INVA LID, ILLEGAL AND VOID- AB-INITIO. 1(B) LEARNED CIT (A) ERRED ON FACTS AND LAW BY UPHO LDING THE REOPENING U/S 147 WHICH IS INVALID AS THE SAME IS B ASED ON THE LEGAL OPINION OF THE C&AG AUDITOR, WITHOUT POINTING OUT A NY FACTUAL ERROR/OMISSION AND NO NEW INFORMATION/FACT HAS COM E TO THE KNOWLEDGE OF ASSESSING OFFICER SINCE SUBMISSION OF THE 2 ITA NO. 109/JP/2015 JAIPUR SAHAKARI KRAYA VIKRAYA SAMITI LTD. REPLIES/DOCUMENTS DURING THE ORIGINAL ASSESSMENT PR OCEEDINGS U/S 143(3). ADDITIONAL GROUND 1(C) : ALTERNATIVELY AND WITHOUT PREJUDICE TO GOA NO. 1( A) AND 1(B), LD. CIT (A) HAS ERRED BY HOLDING THAT A VALID APPROVAL U/S 151 TO THE REOPENING HAS BEEN GRANTED BY LD. JCIT VIDE HER LETTER DATED 20/03/2013 TO THE ASSESSING OFFICER. 2(A) LEARNED CIT (A) ERRED ON FACTS AND LAW BY CONF IRMING THE DISALLOWANCE U/S 40(A)(IA) FOR RS. 18,97,450/- BEIN G THE PAYMENT TO TRANSPORTERS, ON WHICH TDS U/S 194C & INTEREST THER EON, WAS DEPOSITED ON 25.02.2010 I.E. AFTER THE DUE DATE OF FILING RET URN I.E. 30.9.2009 FOR AY 2009-10, BY HOLDING THAT SECOND PROVISO TO SECTI ON 40(A)(IA) INSERTED BY FINANCE ACT, 2012 IS NOT RETROSPECTIVE, THOUGH THE PROVISION IS DECLARATORY, CURATIVE IN NATURE AND AIMED AT REM OVAL OF HARDSHIPS OF ASSESSEE. 2(B) WITHOUT PREJUDICE TO THE ABOVE GROUND, THE APP ELLANT SUBMITS THAT LEARNED AO COMMITTED ERROR IN MAKING DISALLOWA NCE U/S 40(A)(IA) FOR RS. 18,97,450/- RELATING TO TRANSPORTATION CHAR GES AS SECTION 40(A)(IA) IS APPLICABLE ONLY TO EXPENDITURE WHICH I S PAYABLE AS ON 31 ST MARCH OF EVERY YEAR AND CAN NOT BE INVOKED TO DISAL LOW THE AMOUNTS WHICH HAVE ALREADY BEEN PAID DURING THE PREVIOUS YE AR, WITHOUT DEDUCTING TAX AT SOURCE. NO AMOUNT WAS PAYABLE ON A CCOUNT OF TRANSPORTATION CHARGES AS AT 31.03.2009 RELATING TO AY 2009-10. 3. LEARNED CIT (A) ERRED ON FACTS AND LAW BY CONFIR MING THE DISALLOWANCE U/S 80P FOR THE ACTIVITIES RELATING TO FACILITATING MARKETING OF THE COMMODITIES UNDER PUBLIC DISTRIBUTION SYSTEM (PDS) FOR GOVT. OF RAJASTHAN FOR THE BPL SECTION OF SOCIETY. 2. BRIEFLY STATED THE FACTS ARE THAT CASE OF ASSESS EE WAS REOPENED AND THE ASSESSMENT UNDER SECTION 144 READ WITH SECTION 147 OF THE IT ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 15 TH OCTOBER, 2013. WHILE FRAMING THE ASSESSMENT, THE AO RESTRICTED THE DEDUC TION CLAIMED U/S 80P(2)(C)(I) OF THE ACT. THE ASSESSEE AGGRIEVED BY THIS ORDER PREF ERRED AN APPEAL BEFORE LD. CIT (A) 3 ITA NO. 109/JP/2015 JAIPUR SAHAKARI KRAYA VIKRAYA SAMITI LTD. WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWE D THE APPEAL. THE LD. CIT (A) DIRECTED THE AO TO ALLOW DEDUCTION IN RESPECT OF TH E ACTIVITY WHICH QUALIFIES FOR DEDUCTION UNDER SECTION 80-P OF THE ACT. THE ASSES SEE AGGRIEVED BY THE ORDER, IS IN APPEAL BEFORE THIS TRIBUNAL. 3. GROUND NO. 1(A) AND 1(B) RELATE TO THE VALIDITY OF REOPENING. APART FROM GROUND NO. 1(A) AND 1(B), THE ASSESSEE HAS ALSO FIL ED AN ADDITIONAL GROUND NO. 1(C). APROPOS GROUND NO. 1(A) AND 1(C), LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE APPROVAL WAS NOT GRANTED BY THE PRESCRIBED AUTHORITY. THE LD. COUNSEL SUBMITTED THAT IT IS BORNE OUT FROM THE RECORDS THA T THE APPROVAL WAS GIVEN BY THE CIT BUT NOT ADDITIONAL CIT. THEREFORE, THE INITIATI ON OF PROCEEDINGS ARE VITIATED. THE LD. COUNSEL IN SUPPORT OF THIS CONTENTION HAS TAKEN US THROUGH THE PAPER BOOK PAGE NOS. 20, 21 AND 22. THE LD. COUNSEL SUBMITTED THAT AT PAGE 20, NOTICE U/S 148 OF THE ACT WAS ISSUED, WHEREIN IT HAS BEEN STATED THAT THE NOTICE IS BEING ISSUED AFTER OBTAINING THE NECESSARY SATISFACTION OF THE CIT-II, JAIPUR. HE FURTHER SUBMITTED THAT AT PAGE 21 LETTER DATED 18.2.2013 BY THE ITO IS ENC LOSED SEEKING INSTRUCTION IN RESPECT OF THE MAJOR REVENUE AUDIT IN THE CASE OF T HE ASSESSEE. THE LD. COUNSEL FURTHER SUBMITTED THAT AT PAGE 22 ANOTHER LETTER DA TED 4 TH MARCH, 2013 IS ENCLOSED ADDRESSED TO THE CIT-II, JAIPUR SEEKING APPROVAL FO R TAKING REMEDIAL ACTION UNDER SECTION 148 OR 263 OF THE ACT. THE LD. COUNSEL FURT HER POINTED OUT THAT VIDE LETTER DATED 11 TH MARCH, 2013 THE ITO REPORTED TO THE DEPUTY DIRECTO R, CRA-II THAT THE AUDIT OBJECTION IS ACCEPTED AND THE AO HAS BEEN DIR ECTED TO TAKE REMEDIAL ACTION. THE LD. COUNSEL SUBMITTED THAT THIS ACTION GOES TO SHOW THAT THE APPROVAL WAS NOT GRANTED BY THE ADDITIONAL CIT WHICH IS REQUIRED UND ER THE LAW. 4 ITA NO. 109/JP/2015 JAIPUR SAHAKARI KRAYA VIKRAYA SAMITI LTD. 3.1. ON THE CONTRARY, LD. D/R SUBMITTED THAT THERE IS A CLERICAL MISTAKE IN THE NOTICE DATED 20 TH MARCH, 2013 WHEREIN IN PLACE OF ADDITIONAL CIT JAI PUR, COMMISSIONER OF INCOME TAX-II, JAIPUR IS WRITTEN. T HE LD. D/R SUBMITTED THAT VIDE LETTER DATED 20 TH MARCH, 2013, ADDITIONAL CIT RANGE-5 HAD GIVEN PERM ISSION TO THE AO FOR INITIATING PROCEEDINGS UNDER SECTION 148 OF THE ACT. THE LD. D/R DREW OUR ATTENTION TO PAGE NOS. 22 & 26 IN SUPPORT OF THIS C ONTENTION. 3.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE POSI TION OF LAW THAT AS PER SECTION 151(1) OF THE ACT, NO NOTICE SHALL BE ISSUED U/S 14 8 BY AN AO WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER, U NLESS THE JOINT COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY SUCH AO THA T IT IS A FIT CASE FOR ISSUE OF SUCH NOTICE. PROVIDED THAT AFTER THE EXPIRY OF FOUR YEA RS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNL ESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THE ARGUM ENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE ARE THAT IN THE INSTANT CASE THERE WAS NO APPROVAL BY THE ADDITIONAL CIT. THE AO HAS PROCEEDED ON THE BASIS OF THE APPR OVAL GRANTED BY THE CIT. THEREFORE, AO HAS WRONGLY ASSUMED JURISDICTION NOT CONFERRED BY THE COMPETENT AUTHORITY FOR REOPENING THE ASSESSMENT. IF WE ACCEP T THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE, IT WOULD RESULT INTO ABSU RDITY. WHEN THE HIGHER JURISDICTIONAL AUTHORITY IN THE SCHEME OF ACT, HAS GRANTED APPROVAL EVEN IF IT IS ASSUMED THAT THE ADDITIONAL CIT HAS NOT ACCORDED TH E REQUISITE PERMISSION, IN OUR CONSIDERED VIEW IT WOULD NOT VITIATE THE PROCEEDING S. MOREOVER, IN THE PRESENT CASE, THE REVENUE HAS DEMONSTRATED THAT THE ADDITIONAL CI T HAS DULY ACCORDED THE 5 ITA NO. 109/JP/2015 JAIPUR SAHAKARI KRAYA VIKRAYA SAMITI LTD. PERMISSION VIDE LETTER DATED 20 TH MARCH, 2013 ENCLOSED AT PAGE 26 OF THE PAPER BOOK, WHICH IS NOT REBUTTED BY THE ASSESSEE. UNDER THESE FACTS, WE DO NOT SEE ANY MERIT INTO THE GROUND NOS. 1(A) AND 1(C) (ADDITIONA L GROUND). BOTH THE GROUNDS ARE DISMISSED. 4. APROPOS GROUND NO. 1(B), THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE AO HAS NOT APPLIED HIS MIND AND THE REOPEN ING OF THE ASSESSMENT IS MADE ON THE BASIS OF THE AUDIT OBJECTION. THE LD. COUNS EL FOR THE ASSESSEE SUBMITTED THAT IT IS SETTLED LAW IN REGARD TO INTERPRETATION OF LA W THAT AUDITORS OPINION CANNOT BE TREATED AS INFORMATION FOR REOPENING ASSESSMENT. I N SUPPORT OF THIS CONTENTION, THE LD. COUNSEL HAS PLACED RELIANCE ON THE JUDGMENT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT VS. LUCAS TVS LTD. (200 1) 117 TAXMAN 366 (SC). 4.1. ON THE CONTRARY, THE LD. D/R HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO CHANGE OF OPINION AN D THE AUDIT OBJECTION IS A VALID INFORMATION. 4.2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD. IT IS FAIRLY CONCEDED BY THE LD. D/R THAT THE REOPENING W AS MADE ON THE BASIS OF THE AUDIT OBJECTION. ADMITTEDLY, THE OBJECTION RAISED BY THE AUDITOR IS WITH REGARD TO THE RATE OF ENTITLEMENT OF DEDUCTION UNDER SECTION 80P(2)(C) (I). THE QUESTION OF ENTITLEMENT OF DEDUCTION IS NECESSARILY AN ISSUE OF APPLICATION OR INTERPRETATION OF LAW. THEREFORE, IN OUR CONSIDERED VIEW, THE RATIO LAID D OWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LUCAS TVS LTD. (SUPRA) IS SQ UARELY APPLICABLE, WHEREIN THE HONBLE APEX COURT HELD THAT AN AUDITORS OPINION I N REGARD TO APPLICATION OR INTERPRETATION OF LAW CAN NOT BE TREATED AS INFORMA TION BY THE AO AS INFORMATION FOR RE-OPENING OF ASSESSMENT. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF 6 ITA NO. 109/JP/2015 JAIPUR SAHAKARI KRAYA VIKRAYA SAMITI LTD. HONBLE APEX COURT, WE HEREBY HOLD THAT THE REOPENI NG UNDER SECTION 147 IS INVALID AND THE ASSESSMENT SO FRAMED IS HEREBY QUASHED. GRO UND NO. 1(B) OF ASSESSEES APPEAL IS ALLOWED. 5. REGARDING REMAINING GROUNDS, WE ARE NOT ADJUDICA TING THE SAME AS WE HAVE ALREADY HELD THAT THE ASSESSMENT FRAMED BY THE AO I S NOT VALID IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT (SUPRA). 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/06/2016. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 16/06/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- JAIPUR SAHAKARI KRAYA VIKRAYA SA MITI LTD., JAIPUR. 2. THE RESPONDENT- THE ITO WARD 5(4), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 109/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 109/JP/2015 JAIPUR SAHAKARI KRAYA VIKRAYA SAMITI LTD. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 143(3) OF THE ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VID E ORDER DATED 28 TH MARCH, 2013. WHILE FRAMING THE ASSESSMENT, THE AO REJECTED THE B OOKS OF ACCOUNTS AND APPLIED PERCENTAGE COMPLETION METHOD THEREBY HE MADE AN ADD ITION OF RS. 1,24,61,054/-. HOWEVER, THE AO ON THE ALTERNATIVE PLEA MADE ADDITI ON OF RS. 5,31,79,520/- THEREBY COMPUTED INCOME OF RS.4,16,82,707/- AGAINST THE LOS S DECLARED AT RS. 1,14,96,813/-. THE AO ALSO DENIED THE DEDUCTION UNDER SECTION 80IB (10) TO THE ASSESSEE. THE ASSESSEE AGGRIEVED BY THIS ORDER PREFERRED APPEAL B EFORE LD. CIT (A), WHO AFTER CONSIDERING THE SUBMISSIONS AND THE DECISIONS OF TH E TRIBUNAL IN ITA NO. 73 TO 77/JP/2012, 689 TO 690/JP/2012 DATED 14.3.2012 DELE TED THE ADDITION. HOWEVER, IN RESPECT OF THE CLAIM OF DEDUCTION, THE LD. CIT (A) DID NOT ADJUDICATE THE SAME. THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF LD. CIT (A). THE ISSUE, WHICH ONLY REQUIRES OUR CONSIDERATION IS WITH REGARD TO D ELETION OF ADDITION OF RS. 5,31,79,520/-. 8 ITA NO. 109/JP/2015 JAIPUR SAHAKARI KRAYA VIKRAYA SAMITI LTD. 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON /06/201 6. FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHART ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- /06/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE DCIT, CIRCLE-2, JAIPUR. 2. THE RESPONDENT- M/S. UNIQUE BUILDERS & DEVELOPER S (KRISHNA), JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 1008/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR