M/s Damodar Developers Pvt. Ltd., Kolkata V. CIT, -IV, KOLKATA, Kolkata

ITA 1216/KOL/2014

• Counselvise Citation: 121623514 RSA 2014
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 28-05-2014
• Court: TRIBUNAL
• Department Lawyers: V IJAY KUMAR LD
• Assessee Lawyers: SOUMITRA CHOUDHURY LD
• Keywords: Principle of natural justice; Assessment record
• Section: 263; 143(3)

Judgement Text

, C , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA ( ) , 1 , [BEFORE HON BLE SHRI SHAMIM YAHYA, AM & HON BLE SHRI GEORGE MATHAN, JM] I.T.A NO. 1216/KOL/2014 A.Y 2009 - 10 M/S. DAMODAR DEVELOPERS P.LTD VS. C.I.T, KOL - IV, KOLKATA PAN: A ABCD 8985B [ APPELLANT ] [ R ESPONDENT ] APPE LLANT BY : SHRI SOUMITRA CHOUDHURY, ADVOCATE, LD.AR RESPONDENT BY : SHRI V IJAY KUMAR, LD.CIT /SR.DR /DATE OF HEARING : 10 - 12 - 2014 /DATE OF PRONOUNCEMENT: 16 - 12 - 2014 / ORDER , SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.CIT DATED 2 8 - 03 - 2014 PERTAINING TO ASSESSMENT YEAR 200 9 - 10. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: - 1. FOR THAT THE LD. COMMISSIONER OF INCOME TAX ERRED BOTH IN THE LAW AND IN FACT BY CANCELLING THE ASSESSMENT ORDER U/S.263 OF THE I.T ACT 1961 WITHOUT APPRECIATING THE FACT OF THE CASE. 2. FOR THAT THE LD. COMMISSIONER OF INCOME TAX ERRED BOTH IN LAW AND IN FACT BY NOT ACCEPTING THE SETTLED LAW AS PER THE APEX COURT ORDER AS REPORTED IN 2343 I.T.R IN THE CASE OF MALABAR INDUSTRI AL CO. LTD V. CIT(2000) 243 ITR 83. 3. FOR THAT THE SAID ORDER IS ILLEGAL VOID ABINITIO AS IT SEEKS TO VIOLATE THE PRINCIPLE OF NATURAL JUSTICE. 4. FOR THAT THE APPELLANT CO. CRAVES LEAVE TO PUT FURTHER GROUNDS AND TO ALTER AND/OR MODIFY ANY OF THE GROUN DS TAKEN HERE IN ABOVE EITHER BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. IN THIS CASE THE LD.CIT HAS PASSED HIS ORDER U/S. 263 OF THE ACT BY OBSERVING AS UNDER: - N THIS CASE THE ASSESSEE COMPANY FILED ITS RETURN ON 30 - 12 - 2009 DECLARING TOTAL INCOME OF RS.71,84,860/ - . THE ASSESSMENT U/S. 143(3) WAS COMPLETED ON 19 - 12 - 2011. 2. SUBSEQUENTLY, ON EXAMINATION OF THE ASSESSMENT RECORDS, IT IS NOTICED THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON AN AGGREGATE SUM OF RS.38,08,021/ - I.E RENT OF RS.20,37,840/ - , CONSULTANCY CHARGES OF ITA NO .1216/KOL/2014 M/S. DAMODAR DEVELOPERS PVT. LTD 2 RS.1,08,275/ - , PROFESSIONAL CHARGES OF RS. 4,80,000/ - AND SALES PROMOTION CHARGES OF RS.11,81,906/ - . ACCORDINGLY, THE AGGREGATE SUM OF RS.38,08,021/ - SHOULD HAVE BEEN DISALLOWED U/S. 40(A)(IA) OF THE IT ACT, 1961. THE ORDER DATED 1 9 - 12 - 2011 PASSED U/S. 147/143(3) OF THE INCOME TAX ACT, 1961 IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. NOTICE U/S. 263 WAS ISSUED ON 20 - 03 - 14. IN RESPONSE OF THE NOTICE MR. BABUL BISEWAS, A.R OF THE ASSESSEE APPEARED AND FILED A WRITTEN SUBMISSION. THE ASSESSEE SUBMITTED THAT DUE TO THE AGITATION OF EMPLOYEES THE COMPANY REMAINS NON - OPERATIVE SO NO EXPLANATION COULD BE SUBMITTED IN RESPECT OF THE ISSUES MENTIONED ABOVE. 4. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE I AM OF THE VIEW THAT THE ISSUE NEEDS RECONSIDERATION. THEREFORE, THE ASSESSMENT IS BEING SET ASIDE AND THE ISSUE IS BEING REFERRED BACK TO THE TABLE OF THE AO FOR RE - CONSIDERATION. THE AO IS DIRECTED TO RE - COMPUTE THE INCOME AFTER GIVING ADEQUATE OPPOR TUNITY TO THE ASSESSEE. 4. AGAINST THE ABOVE ORDER OF THE LD.CIT THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE LD. COUNSEL AND PERUSED THE RECORD . THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ORDER PASSED U/S. 263 OF THE A CT BY THE LD.CIT IS NOT AT ALL SUSTAINABLE. HE SUBMITTED THAT THERE IS NO FINDING OF THE LD.CIT THAT T HE ORDER OF THE ASSESSING OFFICER IS PRE - JUDICIAL OR ERRONEOUS. IN THIS REGARD, HE REFERRED TO THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF MA LABAR INDUSTRIAL CO. LTD V. CIT REPORTED IN (2000) 243 ITR 83 (SC) . T HE LD. COUNSEL OF THE ASSESSEE PLEADED THAT THE ORDER OF THE LD.CIT PASSED BY THE LD.CIT U/S 263 OF THE ACT IS LIABLE TO BE QUASHED INASMUCH AS NO ERROR OR PREJUDICE TO THE INTEREST O F REVENUE HAS BEEN FOUND BY THE LD.CIT IN HIS ORDER. PER CONTRA, THE LD.DR HAS RELIED UPON THE ORDER OF THE LD.CIT IN REFERRING THE SAME TO THE TABLE OF THE AO FOR RE - CONSIDERATION. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION. WE FIND THAT SECTION 263 OF THE I.T ACT 1961 PROVIDES FOR THE LD.CIT TO PASS AN ORDER OF REVISION , IF HE CONSIDERS THAT ANY ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE HON BLE APEX COURT HAD AN OCCASION TO EXPOUND UPO N THE PROVISIONS OF SECTION 263 IN THE CASE OF M/S. MALABAR INDUSTRIAL CO. LTD (SUPRA) . IT WAS HELD THAT FOR ASSUMING JURISDICTION U/S. 263 THE LD.CIT HAS TO SATISFY TWIN CONDITIONS NAMELY, A) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ERRONEOUS AND B) IT IS PRE - JUDICIAL TO THE INTEREST OF THE REVENUE. IF ANY OF THEM IS ABSENT I.E IF THE ORDER OF THE ITO IS ERRONEOUS, IT IS NOT PREJUDICIAL TO THE REVENUE, IF IT IS NOT ERRONEOUS OR PRE - JUDICIAL TO THE REVENUE U/S. 263(1) . I T WAS FURTHER HELD THAT THERE CAN BE NO DOUBT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY MISTAKE OR ERROR COMMITTED BY THE A O . ITA NO .1216/KOL/2014 M/S. DAMODAR DEVELOPERS PVT. LTD 3 7. NOW, WE EXAMINE THE PRESENT ORDER OF THE LD.CIT ON THE ANVIL OF AFORESAID PROVISIONS AND CASE LAW. IN THIS CASE, THE LD. CIT HAS OBSERVED THAT THE ASSESSEE HAD MADE CERTAIN PAYMENTS OF RENT, CONSULTANCY CHARGES , PROFESSIONAL CHARGES AND SALES PROMOTION CHARGES. THE LD.CIT HAS OPINED THAT THIS SUM HAS TO BE DISALLOWED U/S. 40(A)(IA) OF THE ACT , A S THE ASSESSEE HAD NOT DEDUCTED THE TDS THEREON. NOW, WE FIND THAT THE LD.CIT S ORDER IS TOTALLY SILENT AS TO WHY THE TDS WAS TO BE DEDUCTED ON THE AFORESAID PAYMENTS. THERE IS NO LAW THAT WHENEVER ABOVE PAYMENTS ARE MADE INVARIABLY THE TDS HAS TO BE DEDUCTED . T HE TDS IS DEDUCTIBLE ONLY IF THE CONDITIONS SPECIFIED FOR DEDUCTION OF TDS ARE EXISTING. HENCE, THE LD.CIT S OBSERVATION IN THE ORDER THAT THE AO S ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE HAS NO BASIS WHATSOEVER. FURTHER, WE FIND THAT THE OBSERVATION O F THE LD.CI T THAT THE AO S ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EMANATING FROM THE SHOW CAUSE NOTICE. IN THE OPERATIVE PART OF THE ORDER PASSED U/S. 263 OF THE ACT THE LD.CIT HAS HELD THAT HE WAS OF THE VIEW THAT TH E ISSUE NEEDS RE - CONSIDERATION , T HEREFORE, HE WAS SET TING ASIDE THE ISSUE AND REFER RING BACK TO THE TABLE OF THE AO FOR RE - CONSIDERATION. WE FIND THAT THE SECTION 263 OF THE ACT DOES NOT GIVE ANY POWER WHATSOEVER TO THE LD.CIT TO REMIT THE ISSUE TO TH E FILE OF THE AO WITHOUT HIS FINDING THAT THE ORDER OF THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, WE ARE OF THE OPINION THAT THE LD.CIT S ORDER PASSED U/S. 263 OF THE ACT IS NOT SUSTAINABLE AS THE LD .CIT HAS NOT GIVEN A FINDING THAT THE ORDER OF THE AO PASSED U/S. 143(3) OF THE ACT IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE . THE LD.CIT HAS SIMPLY SET ASIDE THE MATTER AND REFERRED BACK TO THE TABLE OF THE AO FOR RE - CONSI DERATION. IN OUR VIEW THIS IS NOT AT ALL PERMISSIBLE U/S. 263 OF THE ACT . ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LD.CIT U/S. 263 OF THE ACT AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED AS STATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 16/12/2014 . SD/ - SD/ - [ 1 , ] [ , ] [ GEORGE MATHAN , JUDICIAL MEMBER] [ SHAMIM YAHYA, ACCOUNTANT MEMBER / DATED: 16 - 1 2 - 2014 / COPY OF THE ORDER FORWARDED TO: ITA NO .1216/KOL/2014 M/S. DAMODAR DEVELOPERS PVT. LTD 4 1 . /APPELLANT - M/S. DAMODAR DEVELOPERS PVT. LTD 84/3 NARESH MITRA SARANI, KOL - 26. 2 / RESPONDENT : CIT, KOL - IV, KOLKATA, AAYKAR BHAVAAN, KOL - 64. 3 . / CIT, 4 . ( )/ CIT(A), 5 . / DR, KOLKATA BENCHES, KOLKATA *PP/SPS [ / TRUE COPY] / BY ORDER, /ASSTT REGISTRAR.