Smt.Nidhi Jain , Bhopal V. The Pr CIT-1, Bhopal

ITA 128/Ind/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5717 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 04-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Set aside
• Section: 263; 144; 142(1); 143(2); 13; 145(3)

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER (Conducted through Virtual Court) ITA No.128/Ind/2021 Assessment Year: 2015-16 Smt. Nidhi Jain Bhopal बनाम/V s. Pr. CIT-1 Indore (Appellant / Assessee) (Respondent / Revenue) PAN: AIWPJ5820H Assessee by Shri S.S. Deshpande, AR Revenue by None Date of Hearing 24.08.2022 Date of Pronouncement 19.09.2022 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by revision-order passed by Ld. Pr. Commissioner of Income-Tax-1, Bhopal (in short “Ld. PCIT”) dated 19.03.2021 u/s 263 of the Income-tax Act, 1961 (in short “the Act”), which in turn arises out of assessment-order dated 29.12.2017 passed by Ld. ITO-3(1), Bhopal (in short “Ld. AO”) u/s 144 of the act for Assessment-Year 2015-16, the assessee has filed this appeal. 2. By means of various grounds raised in the appeal-memo, the assessee claims that the revision-order passed by Ld. PCIT is not justified and deserves to be quashed. Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 2 of 13 3. This appeal is required to be argued by Ld. CIT-DR from revenue side, but when the matter was called for hearing, none appeared on behalf of revenue. It is observed that the revenue has been seeking regular adjournments. Vide 1 st letter dated 12.08.2022, adjournments have been sought for cases fixed on 16.08.2022 to 18.08.202 on medical-ground of Ld. CIT-DR. Thereafter, vide 2 nd letter dated 18.08.2022 (accompanied by a certificate of Dr. Manish Nema), adjournments have been sought for cases fixed on 22.08.2022 to 23.08.2022 on medical-ground. Again vide 3 rd letter dated 23.08.2022, adjournments have been sought for the cases fixed on 24.08.2022 to 25.08.2022 on medical-ground and in the same letter it is also mentioned that the charge had been given to a different CIT-DR, but interestingly it is also mentioned that the new CIT-DR is attending training at IIM, Ahmedabad and therefore unable to represent. It is also observed that in the 2 nd letter dated 18.08.2022 and 3 rd letter dated 23.08.2022, although request has been made to grant adjournments in “following cases” or “cases as per list” but no details of cases for which adjournments were required is actually furnished. The revenue has not taken care to make a suitable arrangement to represent its cases. Initially for a few days, the ITAT has allowed adjournment-requests but thereafter it was not possible to entertain such requests any more due to discomfort to the litigants and their counsels. Therefore, the adjournment-request of revenue is not accepted in this appeal. We proceed to dispose of appeal after hearing the Ld. AR and material available on record. 4. Briefly stated the facts are such that the assessee filed return of income declaring a total income of Rs. 4,27,600/- on 24.09.2015, which was selected under “limited scrutiny” through CASS to examine two issue, viz. (i) Sales-turnover mismatch, and (ii) Increase in capital. Ld. AO issued statutory notices u/s 143(2)/142(1) which were complied with by the assessee and the details and documents as required by Ld. AO were filed. Finally, Ld. AO completed assessment at a total income of Rs. 70,19,123/- after making certain additions. Subsequently, Ld. PCIT examined the records of assessment-proceeding and observed that the assessment-order Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 3 of 13 passed by Ld. AO is erroneous in so far as it is prejudicial to the interest of revenue for the reason that the Ld. AO did not examine “increase in closing stock”, a component of increase in capital, amounting to Rs. 31,40,298/-. Ld. PCIT, therefore, initiated action u/s 263 of the Act. 5. The assessee submitted reply to Ld. PCIT in detail on 19.03.2021 wherein all facts were narrated to prove that the Ld. AO had examined the “increase in closing stock” of Rs. 31,40,298/- and completed assessment after having been satisfied with the submission of assessee, therefore there was no error in the assessment-order. However, the Ld. PCIT was not satisfied with the submission of assessee and passed revision-order on 19.03.2021 holding the assessment-order as erroneous and prejudicial to revenue. Ld. PCIT further set aside the assessment-order and directed the Ld. AO to make a de novo assessment after examining the issue afresh. The observation and conclusion made by Ld. PCIT is extracted below: “4.1 During the year under consideration, the assessee increased her capital and furnished justification for increase in capital. In regard to justification of increase in capital due to change in the closing stock, no explanation has been brought on record. The assessee has not furnish any valid reason to explain the discrepancy in opening and closing stocks as reported in the original ITR and as in the ITR in response to notice u/s 142(1) at the stage of assessment proceedings. The assessee did not furnish any stock register, purchase vouchers, transport receipts or any other supporting document to substantiate her claim. In absence of documentary evidences and satisfactory explanation the source of the increase in capital could not be considered as explained. The issue concerns here is that whether the assessing officer made all necessary enquiries which should have been made during the assessment. On perusal of case record, it is clear that the assessing officer has not enquired into the issue. It is incumbent upon the assessing officer to investigate the facts required to be examined and verified to complete the assessment as per law. If the Assessing Officer fails to conduct the said investigation, he commits an error and the word ‘erroneous’ includes failure to made the enquiry. In such cases, the order becomes erroneous because enquiry or verification has not been made. As per the amendment made to clause (a) to explanation 2 (inserted by Finance Act 2015 w.e.f. 1.6.2015) of section 263(1) of I.T. Act which is reproduced here below: Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 4 of 13 “For the purposes of this, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if in the opinion of the Principal Commissioner or Commissioner. (a) The order is passed without making inquiries or verification which should have been made. (b) The order is passed allowing any relief without inquiries into the claim. (c) .. (d) ... 5. For the above reasons I am satisfied that this is a fit case where action u/s 263 is justified and inescapable.” 6. Being aggrieved by revision-order passed by Ld. PCIT as aforesaid, the assessee has filed this appeal and now before us. 7. During hearing, Ld. AR made a very strong submission, from very beginning till end, to canvass that the observation of Ld. PCIT that the ld. AO has not examined the issue of “increase in closing stock”, is totally incorrect and far from truth. Ld. AR submitted that a bare perusal of the case-record available in the file of revenue, is sufficient enough to demonstrate that the Ld. AO has in fact examined the issue of “increase in closing stock” before finalizing assessment. In support of this, Ld. AR drew our attention to the following documents which are placed in Paper-Book: (i) Firstly, Ld. AR carried us to the assessment-order passed by Ld. AO, where the Ld. AO has as observed as under: , द . . - प ! " द ! # , # $ % प ! &' ( ) द* . + , - . 2015-16 द ! / 0 - , / ं - 0 -, 23%4 $ प 4 5प ं " 6 & $ 7 ! 8 9 ) # &', # $ % प ! &' ( : - प 66 ( ; ंद ) प - CASS <= 4 % ं > " 6 ) &', : ं ं, " ! Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 5 of 13 9प?4 - ं , # $ % प ! &' ( - 8 ; ंद ) @ प : 0 9 A 66 ( द + , - . 2015-16 द ! / 0 - ं 23%4 $ प 4 " द प B ं C. 6,64,211/- , ) D> E- F. 27,00,909/-, Gं+ 945 C. 30,59,700/- द= &' H = 4 H C. 46,36,257/- द= &' ं + , - . 2015-16 द ! / 0 - ं H = 4 " द प B ं C. 1,10,08,538/- ं ) D> E- C. 48,79,988/- ं Gं+ 945 C. 1,02,64,705/- द= &' ' " = 4 ' " C. 1,65,70,619/- द= &' ( द ) द* Sales Turnover Mismatch and Increase in capital ं ं, " ! 9प?4 - ं , : ! 9प?4 - ) द* 9 ) # &', & प B - I ं . & ं &' ं ं, " Jद ं 18.12.2017 , 143(2) /, 142(1) & J4 ं ! 9प?4 - ं ( # /प + , - . 2015-16 & ) द ! B / 0 - ं 23%4 $ प 4 14.12.2017 द ! ं= K, / 0 - ं ं= K, 23%4 $ प 4 " :प < ) Gं प &' ( & &' # द ! प ) 9 " , 145(3) & G L द ( ं ं, " /प Gप ! 9प?4 - ) Jद ं 9 ) " ( द ) द* ! 9प?4 - 9 ) # &', " :M ! # &' # / 0 - /ं N , Clarical Mistake -, Provisional Audit Report /ं N" B / 0 - " 9 ) & 6 B ं# H & & O & ं द प /ं N7 ं Jद ं 11.09.2015 23%4 $ प 4 ं H " = 4 द " 9 ) &', & /ं N L # ( द Gप ! 9प?4 - " & &' # + , - . 2014-15 H " = 4 Gं+ ' " C.30,59,700/- &' Gं+ ' " प ) / 0 - + , - . 2015-16 " ं 8 945 C. 30,59,700/- द= 6 J& # ं 8 945 C. 93,61,512/- द= &' ( C. 63,01,812/- 945 GK, 9 प Gं+ 945 C. 1,02,64,705/- द= &' ं द B ं द !6 C. 42,03,767/- 9 प C. 78,49,290/- ! 9प?4 - द 9 A & ) G ) , # &' ( ं ं, " ) द* द ं . . 9प?4 - ं प ं ) : ं 9 ) & ं # &' ( ! Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 6 of 13 G ) 6 B ं# /ं N Provisional Audit Report /, प 9 ) & Clerical Mistake - 8 Jद G I Provisional Audit Report /ं % Jद ं 11.09.2015 &9 >$ & 23%4 $ प 4 /ं N" & ) G ) , # &' ( द + , - . 2014-15 ं 2015-16 / 0 - " + P ) /ं N" द= &' : Q ं 0 - .+ . . 2014-15 0 - G ) .+ . . 2015-16 0 - G ) $ 1. ) ; Q C. 4,40,67,000/- 6,72,58,506/- 2. 8 C. 18,82,599/-R (4.27 + = ) 35,30,894/- (5.24 + = ) 3. = ) S 8 C. 5,48,916/-R (1.24 + = ) 7,33,723/- (1.09 + = ) 4. द B ं द !6 12,30,900/-R (2.79 + = ) 42,03,767/- (6.25 + = ) 78,49,290/- (11.67 + = ) & ) G ) , # &'( द ) द* 9 ) # ! 9 T & ं &' G I 9 + 7 " द + , - . 2015-16 ! प ) 9 7 U ं प B - & & ं & &', , V ) J4प B - , G0 Gप B - & &' ( G I द ! = ) S Pप B - " ं ) ?4 & ं & B W , द LX GK, B K6 Accounting Standards प :K6 Fप & ं # & &' ( 9प?4 &' # द ! पS+ GK, B K6 ! 7 + Fप प & ं # & &' 9 + 7 " ! प ) 9 7 प$ - G L # &' ( G I , 144 & Y ZU L + + , - /द = (Best Judgement Assessment) प $ & ) द - " , 145(3) & ! प ) 9 7 G L # &' ं द -7 " B 23%4 $ प 4 ं / 0 - " द= द B ं द !6 C. 42,03,767/- 9 प द B ं द !6 C. 78,49,290/- 9 A & ) G ) , # &' ( Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 7 of 13 ) द* द ं . . द B ं द !6 ; [6 , ! प ) 9 " U Jद 9 ) & ) & प L ) : द B ं द !6 ; [6 ं ! प ) 9 " U Jद & ं 9 ) &' ( G I द B ं द !6 " C. 78,49,290/-(-) C. 42,03,767/- = C. 36,45,523/- \ U द / " % &' ं द 0 FS , 271(1)( ) = 9 & = ) C &' ( R 2. द + , - . 2014-15 / 0 - " . प B ं C. 6,64211/- द= &' ं + , - . 2015-16 द* . प B ं C. 1,10,08,538/- द= &' द + , - . द* C. 1,03,44,327/- प B ं " GK, \ U &', ं ं, " / द9 ] ं , प L ) द / द9 ] 9 ) & ं # &' : ! " &' # द H " . . :ं 4 4 C. 42,58,029/- Clarical Mistake - ) D> E- " द= प B ं \ U " द= &' ं C. 29,46,000/- 0प^ . ! द G6 Pप U प B ं " \ U &', # + , - . 2014-15 0 - " & ं Jद! = . = C. 31,40,298/- + , - . 2015-16 Gं+ 945 " A 0S - 0 - /ं N 8 Jद ( ! 9 ) & ) G ) , # &' ( द + , - . 2014-15 द* _% ं - 7द, & & ) B , 8 प " 8 B !_% Q ं 8, C. 22,29,600/- ं 94 Pप ं GL !6 & ) C. 1,61,700/- C. 5,54,700/- द ) & ) !6 ) C. 29,46,000/- G6 Pप U ! द प B ं " \ U द= &' प B ं " \ U 9V 9प?4 - ं प L ) : &' # & H . . 4 Cप - प द ! द ( प L ) Gप " : H ! 5प ं GL द9 ] 9 ) & ं # &' ( G I C. 29,46,000/- G` 0. 9V # + = & ) द / " N &' ं द 0 FS , 271(1)( ) = 9 & = ) C &' (“ R (ii) The, the Ld. AR drew our attention to the query-letter dated 18.12.2017 issued by Ld. AO u/s 142(1), a copy of which is placed at page Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 8 of 13 No. 38 of the Paper-Book, relevant extracts thereof are being reproduced below: “: प 6 - प , 142(1)/143(2) & J4 ं पं A % ( G ) प " a ं ' , . . ं द प+ a = ' :प 9 & ) ं : + द प G ) + K 15.09.2017 + , : ) ^ $ 7 9 ) &', # $ % प ! &' ( : + , - . 2015-16 Jद ं 14.12.2017 द ! ं= K, / 0 - ^ + , / ं - पV ं ं= K, 23%4 $ प 4 5प 9 ) &', # $ % प ! &' ( B / 0 - Jद ं 24.09.2015 द ! 23%4 $ प 4 ं Jद ं 14.12.2017 द ! ं= K, / 0 - ं T 23%4 $ प 4 " + P Gं प &' :- Q ं 0 - + , - . 2015-16 " द ! B 0 - G ) + , - . 2015-16 " द ! ं= K, 0 - G ) b U / 1 ं 8 945 93,61,512/- 30,59,700/- (-) 63,01,812/- 2 Gं+ 945 1,02,64,705/- 76,08,416/- (-) 26,56,289/- 3 द B !6 42,03,767/- 78,49,290/- (+)36,45,523/- 4 !6 9,95,284/- 9,98,091/- (+) 2,807/- 5 ` !6 2,55,078/- 2,52,270/- (-) 2,808/- 6 ं 8 प B ं 8,30,251/- 6,64,211/- (-) 1,66,040/- 7 प B ं " b U 97,02,124/- 29,46,000/- (-) 67,56,124/- 8 /& - 2,57,560/- 2,50,000/- (-) 7,560/- 9 ) D> E- 48,79,988/- 91,38,017/- (+) 42,58,029/- 10 Pप U ं द + U " Gं 1,65,70,619/- 1,39,14,044/- (-) 26,56,575/- :प < Q ं 1 10 8 \ U / ं= K, / 0 - " &'( : ! 9प?4 - Q ं J& 9 ) " ( Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 9 of 13 6 B ं# /प + , - . 2015-16 & ) द ! B / 0 - ं 23%4 $ प 4 Jद ं 14.12.2017 द ! ं= K, / 0 - ं ं= K, 23%4 $ प 4 " :प < ) Gं प &' & &' # द ! प ) 9 7 U ं प B - & & ं & &' G I < 7 द ! प ) 9 " , 145(3) & G L द ( ं ं, " /प Gप ! 9प?4 - ) Jद ं 9 ) " ( G I पV O /प प ) I Gं+ G द # & &' # /प , 143(2)/142(1) J4 G ) प " + , - . 2015-16 / 0 - : प B / 0 - ^ + ं / ं - पV , 9 ! प ) 9 ", ! द ; Q ; , 9 !6c [6 , द द 7 ं द 7 0 -, प B ं ! , 8 H ! 7 0 - " Jद ं 20.12.2017 > / Fप 9 ) ", # - " Gं+ /द = # " ( द ) + K & ं \ ( (1) Sales Turnover Mismatch ) 0 Q द9 ] 9 ) ", ं ) 0 Q " 9 6 # ं # - &' 8 ! 9प?4 - 9 ) "( (2) Increase in Capital /प . द* प B ं " b U &' \ U द9 ] 9 ) " (“ (iii) Thereafter, Ld. AR carried us to the reply filed by assessee on 19.12.2017 in response to the aforesaid query-letter dated 18.12.2017 and drew our attention to Point No. 1, 2 and 6 submitted by assessee therein: “1. In the A.Y. 2015-16, the audit report for the year was submitted mistakenly on the provisional data basis. Because of very overloaded and end of time limit of audit report in the September month and party was also not providing the data on time, this mistake was happen. And accidently we were unable to cross check it, due to this we forget to mention “Provisional” word on the top of the documents. 2. Just because of the above error the provisional figures of opening and closing stock for the respective year i.e. F.Y. 2014-15 it changes. Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 10 of 13 Particulars Original submitted Revised submitted Difference Opening stock (Rs.) 9361512 3059700 6301812 Closing Stock (Rs.) 10264705 7608416 2656289 But in actual our opening stock is Rs.3059700/- And closing stock is 7608416/- in actual. 6. In the respective year there was a decrease in the capital, following reasons are responsible: Particulars Original Audit report Revised Audit report Difference Change in opening capital 9702124 2946000 6756124 The reasons are: a. There is one limit a/c in the bank for Rs.4258029/- was included in the capital account by the staff ignorance. b. The rest difference amount of Rs.2498095 was occurred due to change in profit (due to change in the closing stock as mention in the point 1). c. Party has a shop in the karond mandi which was shown for the first time in the balance sheet of Rs. 2229600/- and stamp duty of Rs. 161700 was paid on it. The rest Rs. 554700/- was incurred on the land development charges. Else there is no other change in the capital during the year. 7. As there is a decrease of Rs.7560/- in the drawing for the respective year, we accepted the same. 8. As we have mentioned in point 6 regarding the secured loan was included in the capital account instead of secured loan account by the staff ignorance of Rs.4258029/-. Therefore the secured loan amount in the previous audit report was submitted undervalued. But we have actual limit a/c in the bank.” 8. Placing a strong reliance upon above documents and analyzing contents thereof at length, Ld. AR vehemently argued that the Ld. AO has Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 11 of 13 raised quarries with regard increase in capital / increase in stock and the assessee has also given detailed explanation with regard to these items. Ld. AR, therefore, argued that there is no lack of inquiry by the Ld. AO qua increase in closing-stock. For the sake of clarity, completeness and further arguments, Ld. AR also pointed out that in the present case, the assessee had filed original-return on the basis of “provisional balance-sheet” due to mistake, but when this mistake came to her notice during assessment- proceeding, the assessee immediately submitted audited Balance-Sheet dated 11.09.2015 and requested Ld. AO to consider the same, which Ld. AO accepted. Further, the assessee also placed before Ld. AO a reconciliation of all figures including increase in capital / increase in closing-stock item by item, which is very much evident from the letter dated 18.12.2017 filed in response to query-letter u/s 142(1) issued by Ld. AO, which stands reproduced in the foregoing paragraph. Ld. AR submitted that it is after consideration of assessee’s submission on various items including increase in closing-stock that the Ld. AO made addition of Rs. 36,45,523/- out of Wages & Bardana Expenditure and Rs. 29,46,000/- on account of investment in a plot, but no addition on account of increase in closing- stock. Thus, Ld. AR submitted that the issue of increase in closing stock stands fully enquired into and examined by Ld. AO. Therefore, the revision- order passed by Ld. PCIT on the basis that the Ld. AO had not examined “increase in closing-stock” does not have merit. 9. Ld. AR dutifully supported the revision-order passed by Ld. PCIT but, however, could not controvert the submission made by Ld. AR. 10. We have considered submissions of both sides and perused the documents pointed out by Ld. AR. Suffice it to say that the Ld. AR has successfully demonstrated, with reference to the contents of documents narrated in the foregoing paragraphs, that the Ld. AO has made detailed enquiries with respect to the increase in capital including increase in closing-stock. We further observe from the reply-letter dated 19.03.2021 filed by assessee to Ld. PCIT in response to notice u/s 263 (copy placed in Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 12 of 13 Paper-Book) that the assessee has explained all of the above submissions made before us, to Ld. PCIT as well to prove that there was no lack of enquiry by Ld. AO. However, in the revision-order, the Ld. PCIT has not discussed the submissions made by assessee and simply cut-short by mentioning “A written submission was filed on 19.03.2021 which was placed on record”. 11. In view of above and for the reasons stated above, we are of the firm view that the Ld. AO has made sufficient enquiry and the assessee has also filed explanation with respect to the issue escalated by Ld. PCIT in notice u/s 263. Therefore, the assessment-order passed by Ld. AO cannot be said to be erroneous and prejudicial to the interest of revenue. Being so, we are inclined to hold that the revision-order passed by Ld. PCIT does not meet the requirement of section 263 and deserves to be quashed. We order accordingly. 12. In the result, the appeal of Assessee is allowed. Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 19/09/2022. Sd/- Sd/- (SUCHITRA KAMBLE) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Jद ं /Dated : 19.09.2022 Patel/Sr. PS Nidhi Jain ITA No.128/Ind/2021 Assessment Year 2015-16 Page 13 of 13 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore 1. Date of taking dictation 2. Date of typing & draft order placed before the Dictating Member 3. Date on which the approved draft comes to the Sr. P.S./P.S. 4. Date on which the fair order is placed before the Dictating Member for pronouncement 5. Date on which the file goes to the Bench Clerk 6. Date on which the file goes to the Head Clerk 7. Date on which the file goes to the Assistant Registrar for signature on the order 8. Date of dispatch of the Order