H.Kannan, Madurai V. ACIT Non Corporate Circle 2, Madurai

ITA 1315/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0467 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 30-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S BARATH
• Assessee Lawyers: S SANKARALINGAM RETD
• Keywords: Bad and doubtful debts; Assessment record; TDS; Set aside
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 1315/CHNY/2019 / ASSESSMENT YEAR :2014-15 SHRI H. KANNAN, M/S. UNIKANS, 256/2, VASUKI NAGAR, THIRUVALLUVAR COLONY, P & T NAGAR, MADURAI 625 002. [PAN:AAKPK9016E] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 2, MADURAI 625 002. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI S. SANKARALINGAM, RETD. CIT / RESPONDENT BY : SHRI S. BARATH, CIT / DATE OF HEARING : 09.07.2019 /DATE OF PRONOUNCEMENT : 13.09.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX, MADURAI-1, MADURAI, DATED 27.03.2019 FOR AY 2014-15 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 [ACT IN SHORT]. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THE IMPUGNED ORDER IS BARRED BY LIMITATION AS THE ORDER WAS DESPATCHED ONLY ON 05.04.2019 AND RECEIVED BY THE ASSESSEE ON 06.04.2019. 2. THE IMPUGNED ORDER IS ILLEGAL AND INVALID AS NOTICE UNDER SECTION 263 WAS ISSUED ON ONE GROUND BUT THE ORDER WAS PASSED ON DIFFERENT GROUND WITHOUT GIVING NOTICE TO THE ASSESSEE. I.T.A. NO. 1315/CHNY/19 2 3. THE LEARNED PCIT OUGHT TO HAVE NOTED THAT THE ASSESSEE BY LETTER DATED 12.02.2019 REQUESTED FOR ISSUE OF FRESH NOTICE ON DIFFERENT GROUND, IF ANY, BUT PCIT CHOSE TO PASS THE IMPUGNED ORDER WITHOUT ISSUING FRESH NOTICE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 30.09.2014 ADMITTING A TOTAL INCOME OF .3,54,27,500/-. THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT .3,64,27,500/-. 2.1 ON EXAMINATION OF ASSESSMENT RECORDS, THE LD. PCIT OBSERVED THAT THE ASSESSEE HAD SHOWN THE CONTRACT RECEIPTS OF .35,11,55,068/- IN THE PROFIT AND LOSS ACCOUNT AND THE SAME WAS ACCEPTED IN THE ASSESSMENT ORDER. HOWEVER, AS PER FORM 26AS, THE TOTAL CONTRACT RECEIPTS WERE .42,97,03,041/- AND TDS WAS .53,48,216/-. THUS, THE DIFFERENCE AMOUNT OF .7,85,46,973/- [.42,97,03,041 .35,11,55,068] WAS FOUND OMITTED TO BE ADDED TO THE ASSESSED INCOME OF THE ASSESSEE WHILE PASSING ASSESSMENT ORDER. SINCE THE ABOVE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, A SHOW-CAUSE NOTICE WAS ISSUED AND SERVED ON 28.09.2018. THE AR OF THE ASSESSEE SHRI SL. SETHUMADAVA, CA FILED A REPLY TO THE SHOW-CAUSE NOTICE IN LETTER DATED 04.10.2018. SUBSEQUENTLY, THE ASSESSEES AR SHRI SETHUMADAVA SUBMITTED ADDITIONAL DETAILS OF SHOW CAUSE NOTICE RELATED IN THE LETTER DATED 12.02.2019. SINCE THE RECONCILIATION STATEMENT FOR THE VARIATION BETWEEN THE CONTRACT RECEIPTS AS PER PROFIT AND I.T.A. NO. 1315/CHNY/19 3 LOSS ACCOUNT AND AGGREGATE CONTRACT RECEIPTS AS PER FORM 26AS HAVE NOT BEEN PROPERLY ENQUIRED AND VERIFIED AND THE DIFFERENCE, IF ANY, WAS NOT BROUGHT TO TAX, THE LD. PCIT SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICER TO FRAME THE ASSESSMENT AFRESH AFTER MAKING NECESSARY ENQUIRIES AND VERIFICATION. 3. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER PASSED UNDER SECTION 263 OF THE ACT RAISING VARIOUS GROUNDS AS REPRODUCED HEREINABOVE. 4. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. PCIT. 5. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS CHALLENGED THAT THE ORDER PASSED UNDER SECTION 263 OF THE ACT IS BARRED BY LIMITATION. THE RELEVANT PROVISION READS AS UNDER: 263(2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AFTER EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. ADMITTEDLY, THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 14.09.2016, I.E., IN THE FINANCIAL YEAR 2016-17 AND THE ORDER UNDER SECTION 263 OF THE ACT SOUGHT TO BE REVISED WAS PASSED ON 27.03.2019, WHICH IS WELL WITHIN THE PERIOD PRESCRIBED IN THE STATUTE. THUS, THE FIRST I.T.A. NO. 1315/CHNY/19 4 GROUND RAISED BY THE ASSESSEE THAT THE REVISION ORDER IS BARRED BY LIMITATION STANDS DISMISSED. 5.1 THE NEXT GROUNDS RAISED BY THE ASSESSEE ARE THAT THE IMPUGNED ORDER IS ILLEGAL AND INVALID AS NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED ON ONE GROUND, BUT THE ORDER WAS PASSED ON DIFFERENT GROUND WITHOUT GIVING FRESH NOTICE TO THE ASSESSEE. UNDER SECTION 263 OF THE ACT, THE ASSESSEE WAS SHOW-CAUSED TO FILE REPLY WITH REGARD TO THE VARIATION BETWEEN THE CONTRACT RECEIPTS AS PER PROFIT AND LOSS ACCOUNT AND AGGREGATE CONTRACT RECEIPTS AS PER FORM 26AS. ON EXAMINATION OF THE ASSESSMENT RECORDS, THE LD. PCIT HAS NOTICED THAT THE CONCILIATION STATEMENT FILED BEFORE HIM FOR THE VARIATION BETWEEN THE CONTRACT RECEIPTS AS PER PROFIT AND LOSS ACCOUNT AND AGGREGATE CONTRACT RECEIPTS AS PER FORM 26AS WAS ALSO FILLED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. FROM THE RECONCILIATION STATEMENT, THE LD. PCIT NOTED IN RESPECT OF PARTY IN SL.NO. 19 [VELAMMAL MEDICAL COLLEGE] THAT AS AGAINST THE SALE BILL OF .3,46,46,850/-, THE ASSESSEE HAS ACCOUNTED THE SALE OF .1,55,21,027/- IN THE PROFIT AND LOSS ACCOUNT, WHEREIN, THE PRICE DIFFERENCE OF .1.08 CRORES HAS BEEN CLAIMED, DESPITE THE FACT THAT THE PARTY HAD PAID .3.5 CRORES BY DEDUCTING TDS. SIMILARLY, IN RESPECT OF NUMBER OF PARTIES, THE SALE VALUE HAS BEEN REDUCED FROM SALES, WITH THE NARRATION OF CEDED AS DISCOUNT THERE IS NO CHANCES OF RECOVERY RUNNING INTO LAKHS OF RUPEES THOUGH THEY WERE NOT PART OF FORM 26AS. FROM THE ABOVE, I.T.A. NO. 1315/CHNY/19 5 WE FIND THAT THE LD. PCIT HAS RIGHTLY OBSERVED THAT THE RECONCILIATION STATEMENT FILED ON RECORD WAS NOT EXAMINED BY THE ASSESSING OFFICER AND THUS, THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE REDUCTION OF SALE VALUE BY THE AMOUNT PURPORTED TO BE NOT RECOVERABLE AMOUNTED TO WRITING OFF OF BAD DEBTS, WHICH STOOD ALLOWED IN ABSENCE OF ANY EXAMINATION OR INQUIRY BY THE ASSESSING OFFICER AND THEREBY, THE LD. PCIT DIRECTED THE ASSESSING OFFICER TO FRAME THE ASSESSMENT AFRESH AFTER MAKING NECESSARY ENQUIRIES AND VERIFICATION. THE ENTIRE FINDINGS OF THE LD. PCIT ARE TOTALLY RELATED TO THE GROUND FOR WHICH THE NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED AND HE HAS NOT DEVIATED OR TAKEN ANY NEW/FRESH GROUND WHILE PASSING ORDER UNDER SECTION 263 OF THE ACT. THUS, GROUND NO. 2 & 3 RAISED BY THE ASSESSEE ARE DISMISSED. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS FILED ADDITIONAL GROUND FOR ADJUDICATION STATING THAT BASED ON THE WRITTEN SUBMISSION FILED, THE LD. PCIT HAS PASSED THE ORDER UNDER SECTION 263 OF THE ACT WITHOUT INFORMING AND DISCUSSING THE ISSUE ON WHICH THE IMPUGNED ORDER WAS PASSED WITH THE ASSESSEE OR HIS REPRESENTATIVE. ON PERUSAL OF THE ASSESSMENT RECORDS, THE LD. PCIT HAS OBSERVED THAT THERE IS VARIATION BETWEEN THE CONTRACT RECEIPTS AS PER PROFIT AND LOSS ACCOUNT AND AGGREGATE CONTRACT RECEIPTS AS PER FORM 26AS AND ACCORDINGLY, BY CLEARLY STATING THE REASON, A NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE ON 28.09.2018 I.T.A. NO. 1315/CHNY/19 6 REQUESTING EITHER TO APPEAR PERSONALLY OR THROUGH AR ALONG WITH WRITTEN SUBMISSIONS AND SUPPORTING DOCUMENTS ON 05.10.2018. THE AR OF THE ASSESSEE SHRI SL SETHUMADAVA, C.A. FILED A REPLY TO THE SHOW-CAUSE NOTICE IN LETTER DATED 04.10.2018 AND SUBSEQUENTLY ANOTHER ADDITIONAL DETAILS THROUGH LETTER DATED 12.02.2019. THE ASSESSEE HAS NOT FILED ANY DIFFERENT PARTICULARS, WHICH WAS NOT AVAILABLE ON RECORD. AS WE HAVE OBSERVED HEREINABOVE THAT THE ENTIRE FINDINGS OF THE LD. PCIT ARE TOTALLY RELATED TO THE GROUND FOR WHICH THE NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED AND HE HAS NOT DEVIATED OR TAKEN ANY NEW/FRESH GROUND WHILE PASSING ORDER UNDER SECTION 263 OF THE ACT, WARRANTING ISSUE OF ANY SEPARATE NOTICE, THE ADDITIONAL GROUND FILED BY THE LD. AR IS LIABLE TO BE DISMISSED. MOREOVER, THE CASE LAW RELIED UPON BY THE LD. AR IN THE CASE OF CIT V. AMITABH BACHCHAN IN CIVIL APPEAL NO. 5009 OF 2016 & ORS. DATED 11.05.2016 HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE, WHEREIN, THE HONBLE SUPREME COURT RESTORED THE ORDER PASSED UNDER SECTION 263 OF THE ACT. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 13 TH SEPTEMBER, 2019 IN CHENNAI. SD/- SD/- (S. JAYARAMAN) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 13.09.2019 VM/- I.T.A. NO. 1315/CHNY/19 7 /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.