ITO, Sangrur V. M/s Manohar Rice Traders, Dirba

ITA 1241/CHANDI/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5479 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-04-2011
• Assessment Year: 1996-1997
• Appeal Filed On: 02-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAGANPREET SANDHU
• Keywords: Business income
• Section: 40A(3); 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS.SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1241 /CHD/2010 (ASSESSMENT YEAR : 1996-97) THE INCOME-TAX OFFICER, VS. M/S MANOHAR RICE TRAD ERS, SUNAM (H.Q.,SANGRUR) DIRBA. PAN: AAFFM5059G (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. LAGANPREET SANDHU, DR RESPONDENT BY : SHRI ASHWANI KUMAR O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (A), DATED 26.08.2010 RE LATING TO ASSESSMENT YEAR 1996-97 AGAINST THE ORDER PASSED U/ S 143(3) OF THE INCOME-TAX ACT. 2. THE GROUND NO.1 RAISED BY THE REVENUE IS AS UNDE R : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN GIVING RELIEF TO THE ASSESSEE O N THE GROUND THAT THE AO HAD EXCEEDED THE JURISDICTION BY MAKING DISALLOWANCE U/S 40A(3) OF THE INCOME TAX ACT, 1961, WITHOUT APPRECIATING THE FACT THE LD. CIT(A), HAVING CHANGED THE NATURE OF RECEIPT FROM PROFESSIONAL TO BUSINESS INCOME, COULD 2 NOT SHUT OUT THE AO FROM LEGALLY EXAMINING THE SAME, INTER-ALIA, U/S 40A(3), WHICH THE AO WAS DULY BOUND AS PER THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BRITISH PAINTS (1991) 181 ITR 44 (SC). 3. THE BRIEF FACTS RELATING THE CASE ARE THAT ORIGI NAL ASSESSMENT IN THE CASE MADE ON 28.3.2003 UNDER SECTION 144/147 OF THE ACT ON A TOTAL INCOME OF RS.50,44,120/-. THE CIT(A) DELETED THE ADDITION IN RESPECT OF DEDUCTION UNDER SECTION 80HHC OF RS.34,18,596/- AND ON ACCOUNT OF PROCESSING CHARGES OF RS.9,01,535/-. THE TRIBUNAL VIDE ORDER DATED 12.3.2009 IN I.T.A.NO. 118/CHANDI/2004 DELETED THE ADDITION OF RS.2,49,403/-. IN RESPECT OF THE SECOND ADDITION OF RS.3,94,370/- THE MATTER WAS RESTORED BACK TO THE CIT(A) WITH THE UND ERMENTIONED DIRECTIONS : HAVING CONSIDERED THE RIVAL SUBMISSIONS AS ALSO THE MATERIAL ON RECORD, WE ARE SATISFIED THAT THE CIT(APPEALS) UNJUSTIFIABLY SHUT-OUT THE CASE OF THE ASSESSEE IN LIMINE WITHOUT GOING INTO THE MERITS OF THE ADDITION. THEREFORE WE DEEM IT FIT AND PROPER TO R ESTORE THE ISSUE BACK TO THE FILE OF THE CIT(APPEALS) FOR ADJUDICATION AFRESH, AFTER ALLOWING AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. THE CIT(APPEALS) SHALL, A FTER CONSIDERING THE PLEAS OF THE ASSESSEE, PASS APPROPR IATE ORDERS IN ACCORDANCE WITH LAW ON THIS ISSUE. 4. THE CIT(A) VIDE ORDER DATED 6.3.2008 FOLLOWING T HE DIRECTIONS OF THE TRIBUNAL GAVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE AND THE CONTENTION OF THE ASSESSEE IN THIS REGARD WAS THAT THE APPELLANT PURCHASED CLOTH WORTH RS.5,80,932/- DURING THE YEAR 1995-96 RELEVANT OF THE ACT ASSESSMENT YEAR 1996-97 AND OUT OF WHICH HE SUPPLIED THE SAME 3 OF VALUE RS.3,94,370/- TO THE EXPORTER M/S BALLARPU R INDUSTRIES, NEW DELHI WHICH THE A.O. HAS CONSIDERED THE AMOUNT OF R S.3,94,370/- AS PROFESSIONAL INCOME BUT IT IS ACTUALLY THE BUSINESS INCOME ON ACCOUNT OF SALE OF CLOTH SUPPLIED TO THE PERSON TO WHOM THE RI CE WAS SUPPLIED. 5. THE MATTER WAS REMANDED TO THE ASSESSING OFFICER FOR VERIFICATION AND IN THE REMAND REPORT, THE ASSESSING OFFICER STA TED AS UNDER : IN THIS REGARD, IT IS SUBMITTED THAT THE VERIFICAT ION HAS BEEN CONDUCTED FROM THE BOOKS OF THE ASSESSEE REGARDING ADDITION OF RS.3,94,370/- MADE ON ACCOUNT OF PROFESSIONAL INCOME WHICH IS ACTUALLY BUSINESS INCO ME ON ACCOUNT OF PURCHASE AND SALE OF CLOTH SUPPLIED TO T HE EXPORTER TO WHOM THE RICE WAS SUPPLIED. THE COPY O F ACCOUNTS OF THE ASSESSEE. TRADING AND P & L A/C FOR THE YEAR ENDED ALONGWITH PURCHASE AND SALE BILLS OF CLO TH HAVE BEEN OBTAINED & VERIFIED FROM THE BOOKS OF ACC OUNT. THE PHOTOCOPIES OF THE ABOVE DOCUMENTS ARE ENCLOSED HEREWITH. 6. THE CIT(A) VIDE ORDER DATED 6.3.2008 HELD AS UND ER : 04. THEREFORE, IN THE LIGHT OF ABOVE, IT BECOMES C LEAR THAT THE INCOME DERIVED BY THE ASSESSEE IS BUSINESS INCOME ACCORDINGLY IT SHOULD BE TAXED LIKE THAT AND IF IT IS ELIGIBLE FOR DEDUCTION U/S 80HHC AFTER FULFILLING ALL THE CONDITIONS AS PER THE PROVISIONS OF LAW, THE A.O. SHOULD ACCORDINGLY GIVEN SUCH BENEFIT. 7. THE ASSESSING OFFICER THEREAFTER PASSED AN ORDER GIVING EFFECT TO THE ORDER OF THE CIT(A) VIDE ORDER DATED 1.7.2009. THE ASSESSING OFFICER VIDE THE SAID ORDER WAS OF THE VIEW THAT FO LLOWING THE DIRECTIONS 4 OF CIT(A) IN TREATING THE INCOME AS BUSINESS INCOME , THE SAID INCOME IS TO BE COMPUTED U/SS 28 TO 44 OF THE INCOME-TAX ACT. THE ASSESSING OFFICER FURTHER FOUND FROM THE PERUSAL OF THE PURCH ASE BILLS, CERTAIN PAYMENTS TO BE MADE IN VIOLATION OF SECTION 40A(3) OF THE ACT AND ACCORDINGLY, COMPUTED THE DISALLOWANCE AT RS.5,80,9 32/-. THE CIT(A) VIDE ORDER DATED 26.8.2010 IN PARA 4.8 HELD AS UND ER : 4.8 IN VIEW OF THE CONTENTIONS OF THE COUNSEL FOR THE APPELLANT I FIND MERIT IN THE SAME. THE A.O. HA S EXCEEDED HER JURISDICTION TO TAX THE AMOUNT IN PROCEEDINGS U/S 143(3) R.W.S.250(6) OF THE ACT FOR GROUNDS THAT WERE NEVER BEFORE THE APPELLATE AUTHORITIES. THE ENTIRE ASSESSMENT PROCEEDINGS ARE NOT OPEN AGAIN FOR ANY FRESH INVESTIGATION/SCRUTINY . THE A.O. IS TO RESTRICT HIMSELF TO THE DIRECTIONS GIVEN. THE ADDITION MADE ON NEW GROUNDS IS DELETED. A,O. IS DIRECTED TO TAKE ACTION AS GIVEN IN THE APPELLATE ORDERS ONLY. 8. THE LEARNED D.R. FOR THE REVENUE STRESSED THAT T HE ORDER OF THE CIT(A) IN THIS REGARD WAS NOT SUSTAINABLE IN VIEW O F THE FINDING OF THE CIT(A). 9. THE LEARNED A.R. FOR THE ASSESSEE PLACED RELIANC E ON THE ORDER OF THE CIT(A). 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE PRESENT PROCEEDINGS ARISE BEFORE US ON PURSUANT TO THE ORDER OF THE TRIBUNAL UNDER WHICH CERTAIN DIRECTIONS WERE GIVEN TO THE CIT(A) WITH REGARD TO THE ADDITION OF RS.3,94,370/- MADE IN THE ORIGINAL ASSESSMENT PROCEEDINGS. THE CIT(A) VIDE ORDER DATED 6.3.2008 HELD THE SAID INCOME 5 DERIVED BY THE ASSESSEE TO BE BUSINESS INCOME, ELIG IBLE FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT. THE MATTER WAS RES TORED BACK TO THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFY ING WHETHER THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 8 0HHC OF THE ACT IN VIEW OF THE PROVISIONS OF LAW. THE ASSESSING OFFIC ER VIDE ORDER DATED 1.7.2009 HAS TRAVERSED BEYOND THE JURISDICTION CAST UPON HER UNDER SECTION 143(3) READ WITH SECTION 250(6) OF THE ACT. THERE IS NO MERIT IN THE FRESH INVESTIGATION CARRIED OUT BY THE ASSESSIN G OFFICER. ACCORDINGLY, UPHOLDING THE ORDER OF THE CIT(A) WE D ISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF APRIL, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH APRIL, 2011 RATI COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. . 6