Vijayaraja & Co., Coimbatore V. ACIT, Coimbatore

ITA 1286/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96063 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 02-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2015
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: K RAGHU
• Keywords: Capital asset; Revision of order; Opportunity of being heard; Reasonable cause; Bad and doubtful debts
• Section: 263; 63; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! , ' #$ BEFORE SHRI N.R.S.GANESAN, JUDICIAL MMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO. 1286/MDS/2015 / ASSESSMENT YEAR : 2010-11 M/S. VIJAYARAJA & CO., 120, SENGUPTHA STREET, RAMNAGAR, COIMBATORE-641009. PAN AACFV1532G ( /APPELLANT) VS THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-II, COIMBATORE. ( /RESPONDENT) / APPELLANT BY : SHRI K. RAGHU, CA / RESPONDENT BY : SHRI PATHLAVATH PEERYA, CIT / DATE OF HEARING : 02.09.2015 ! / DATE OF PRONOUNCEMENT: 04.09.2015 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME-TAX DATED 1 2.3.2015. - - ITA 1286/15 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: (1) THE IMPUGNED ORDER U/S 263 OF THE I.T.ACT, 196 1, SETTING ASIDE THE ORDER PASSED U/S 143(3) OF I.T.AC T, 1961, AS PREJUDICIAL, THEREFORE, INVOKING THE JURISDICTIO N TO REMEDY THE LOSS OF REVENUE, IS UNSUSTAINABLE IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN EXCESS OF HIS JURISDICTION. (2) THE LEARNED PRINCIPAL COMMISSIONER OF INCOME- TAX-L, COIMBATORE, OUGHT TO HAVE HELD THAT THE ORDER OF TH E AO, U/S 143(3), IS NOT ERRONEOUS, SO FAR AS IT IS PREJU DICIAL TO THE INTEREST OF THE REVENUE, AS THE VIEW OF THE AO, IN MAKING THE ASSESSMENT, CANNOT BE HELD AS NOT A POSS IBLE VIEW IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. (3) THE LEARNED PCIT HAS GROSSLY ERRED IN HOLDING THAT THERE WAS UNDER-ESTIMATION OF WORK IN PROGRESS AND THEREFORE, THE CLAIM OF BUSINESS LOSS TO THE EXTENT OF ` 4,85, ,91,104/- IS NOT CORRECT, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. (4) THE LEARNED PCIT OUGHT TO HAVE HELD THAT THE ALLOWANCE OF BAD DEBTS BY THE AO WAS NOT ERRONEOUS, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. (5) THE LEARNED PCIT HAS ERRED IN HOLDING THAT, W ITHOUT ANY MATERIAL, THAT THE AO HAS COMPLETED THE ASSESSM ENT WITHOUT CAREFUL EXAMINATION OF THE CLAIM OF EXPENDI TURE, TO THE EXTENT OF ` 1,57,00,149/-, AS STATED BY HIM IN THE IMPUGNED ORDER, AS THE ASSESSMENT WAS COMPLETED AFT ER DUE APPLICATION OF MIND, BY THE AO, WHILE MAKING TH E ASSESSMENT U/S 143(3), IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. - - ITA 1286/15 3 3. THERE IS A DELAY OF 15 DAYS IN FILING THIS APPE AL BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED A PETITION PRAYIN G FOR CONDONATION OF DELAY. WE HAVE GONE THROUGH THE R EASON GIVEN IN THE CONDONATION PETITION AND WE FIND THAT THERE IS A REASONABLE CAUSE FOR THE DELAY OF 15 DAYS IN FILING THE APPEAL . THEREFORE, THE SAME IS CONDONED AND THE APPEAL IS ADMITTED FOR ADJ UDICATION. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER PASSED THE ASSESSMENT ORDER U/S.143(3) OF THE ACT O N 23.3.2013 DETERMINING THE INCOME AS FOLLOWS : TOTAL INCOME AS PER RETURN (-) 5,24,6 8,590/- ADDITION ON ACCOUNT OF DIFFERENCE BETWEEN CONTRACT RECEIPTS AND ` 4,12,58,441/- 26AS STATEMENT ADDITION ON ACCOUNT OF DIFFERENCE IN RESPECT OF ADVANCE AMOUNT ` 1,41,36,384/- ` 5,53,94,825/- SHOWN IN BOOKS OF ACCOUNTS AND THE ADVANCE AMOUNT SHOWN IN 26AS STATEMENT TOTAL ` 29,26,235/- THE CIT, AFTER GOING THROUGH THE ABOVE ORDER, ISSUE D NOTICE UNDER SEC.263 OF THE ACT, SEEKING EXPLANATION IN R ESPECT OF UNDER-ESTIMATION OF WORK IN PROGRESS TO THE EXTENT OF ` 4,85,91,104/- AND BAD DEBT OF ` 85,49,304/-. HE OBSERVED THAT BAD DEBT CANNOT BE ALLOWED AS DEDUCTION, SINCE IT HAS - - ITA 1286/15 4 NOT BEEN OFFERED IN EARLIER YEARS. FURTHER, THE AS SESSEE CLAIMED A SUM OF ` 1,57,00,000/- AS LOSS FROM CIVIL CONTRACT WORK. THE ASSESSEE FOLLOWING PROJECT COMPLETION ME THOD, CLAIMED THE ENTIRE EXPENDITURE AS PART OF LOSS, THO UGH PROJECT IS NOT COMPLETED. THE ASSESSEE DID NOT COM PLETE PROJECTS BUT IT WAS CLAIMED AS LOSS, SO AS TO SET O FF THE CAPITAL GAINS ON TRANSFER OF CAPITAL ASSETS AND INT EREST INCOME. THE ASSESSEE REPLIED TO THE ABOVE NOTICE I SSUED U/S.263. HOWEVER, THE CIT NOT AGREEING WITH THE CO NTENTION OF THE ASSESSEE, HAS GIVEN DIRECTION TO THE AO TO P ASS FRESH ORDER AFTER CARRYING OUT DETAILED ENQUIRY ABOUT THE SE ISSUES. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE TH ROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE OBJECTION S OF THE CIT, IN HIS ORDER IS THAT THE AO HAS NOT MADE AN EN QUIRY ON THE ISSUES RAISED BY HIM. THE ASSESSMENT ORDER IS VERY SILENT ON THESE ISSUES. THERE IS NO WHISPER ABOUT THE IMPUGNED ISSUES IN THE ASSESSMENT ORDER. EVEN ASS UMING THAT THE AO HAD CALLED FOR PARTICULARS, THE DETAILS WERE ALSO FURNISHED BY THE ASSESSEE, IF THE AO WITHOUT PROBIN G THE - - ITA 1286/15 5 MATTER FURTHER HAD ALLOWED THE CLAIM OF THE ASSESSE E AND IF THE CIT ON THE BASIS OF MATERIALS FORMED AN OPINION THAT THE GRANT OF ALLOWANCE MADE BY THE AO WAS ERRONEOUS AND NOT WARRANTED BY LAW, THE JURISDICTION OF THE CIT U/S.2 63 IS NOT OUSTED. THE CIT MAY NOT HAVE RECORDED HIS FINAL CONCLUSION, BUT, THE QUESTION FOR EXERCISING THE PO WER OF REVISION BY THE CIT IS WHETHER THE ORDER OF THE AO CAN BE REGARDED AS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE. IT MAY BE ERRONEOUS IN THE SENSE THAT THE AO HAD PASSED THE ORDER WITHOUT PROPERLY CONDUCTING TH E ENQUIRY IN COMPLETION OF THE ASSESSMENT AND THE ORD ER MAY ALSO BE ERRONEOUS WHEN THE ALLOWANCE WAS GRANTED AG AINST THE PROVISIONS OF LAW. THEREFORE, THE VIEW EXPRESS ED BY THE CIT THAT THE AO HAD COMPLETED THE ASSESSMENT WITHOU T EXAMINING THE RECORDS AND THAT HAS GIVEN THE JURISD ICTION TO THE CIT TO INVOKE THE PROVISIONS OF SEC.263 OF THE ACT. THE AO HAD NOT RECORDED HIS FINDING INDICATING THE MATE RIAL ON WHICH HE CAME TO SUCH A CONCLUSION. A READING OF T HE ORDER OF THE AO SHOWED THAT HE HAS NOT APPLIED HIS MIND W HILE DECIDING THE ISSUES RAISED BY CIT. BEING SO, THE A O HAS TO EXAMINE THE ISSUE AFRESH BASED ON THE MATERIAL AND IN THAT - - ITA 1286/15 6 WAY, WE DO NOT FIND ANY INTERFERENCE IN THE ORDER O F THE CIT. BEING SO, IN OUR OPINION, THE ASSESSEE CANNOT HAVE ANY GRIEVANCE. THE AO WILL EXAMINE THE ISSUES RAISED B Y THE CIT IN HIS ORDER U/S.263 AND HE WILL PASS A FRESH O RDER AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AS SUCH, AT THIS STAGE, WE REFRAIN FROM GOING TO THE MERIT O F THE ISSUES RAISED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 04 TH OF SEPT., 2015 AT CHENNAI. SD/- SD/- ( ' . . ' . #$ ) ( % & ' ( ) ) N.R.S.GANESAN * )+,-./0-1223-04* 5 67 /JUDICIAL MEMBER 6789::2;.<-.<=>?@>0 %5 /CHENNAI, A6 /DATED, THE 04 TH SEPT., 2015. MPO* 6$ BCDC /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. E)* /CIT(A) 4. E /CIT 5. CF# G /DR 6. #HI /GF.