M/s. D S P Industries, Nashik V. Income-tax Officer,

ITA 1516/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1962 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 20-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B; HITENDRA NINAWE
• Assessee Lawyers: R P DAWARE

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1516/PN/2015 #& & / ASSESSMENT YEAR : 2011-12 M/S. D.S.P. INDUSTRIES, PLOT NO.F 144, MIDC, AMBAD, NASHIK - 422 010 PAN NO.AACFD7194C . / APPELLANT V/S ITO, WARD-1(2), NASHIK . / RESPONDENT / APPELLANT BY : SHRI R.P. DAWARE / RESPONDENT BY : SHRI HITENDRA NINAWE & B / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 01-09-2015 OF THE CIT(A)-I, NASHIK RELATING TO ASSE SSMENT YEAR 2011-12. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN RAISED BY TH E ASSESSEE THEY ALL RELATE TO THE ORDER OF THE CIT(A) IN UP HOLDING THE ORDER OF THE AO DISALLOWING THE REMUNERATION OF RS.3,29,593/- TO PARTNERS IN THE 154 PROCEEDINGS. / DATE OF HEARING :12.04.2016 / DATE OF PRONOUNCEMENT: 15.04.2016 2 ITA NO.1516/PN/2015 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND FILED ITS RETURN OF INCOME ON 29-07-201 1 DECLARING TOTAL INCOME OF RS.69,730/-. THE RETURN WAS PROC ESSED AND INTIMATION U/S.143(1) WAS ISSUED ON 12-01-2013 DETERM INING THE TOTAL INCOME AT RS.3,99,320/ -. SUBSEQUENTLY, THE ASS ESSEE FILED A RECTIFICATION APPLICATION U/S.154 REQUESTING THE AO TO RE CTIFY THE SAME BY REDUCING THE REMUNERATION PAID TO PARTNERS FROM THE TOTAL INCOME. HOWEVER, THE AO PASSED THE ORDER HOLDING THAT THE DEMAND HAS BEEN CORRECTLY CALCULATED BY THE SYSTEM AN D ACCORDINGLY REJECTED THE RECTIFICATION APPLICATION. 4. IN APPEAL THE LD.CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD NOT CLA IMED PARTNERS REMUNERATION AND INTEREST IN HIS RETURN OF INCOME. ACCOR DING TO HER, THE AUTHORITY RECTIFYING THE MISTAKE U/S.154 CANNOT GO BEYOND RECORDS AND LOOK INTO FRESH EVIDENCE OR MATERIAL WHICH HAS NOT BEEN IN RECORD AT THE TIME WHEN THE ORDER IS SOUGHT TO BE RECTIFIED OR PASSED. ACCORDING TO HER THE RECORDS FOR THE PURPOSE OF SECTION 154 ARE THOSE WHICH ARE AVAILABLE TO THE AUTHORITIES AT THE T IME OF INITIATION OF PROCEEDINGS FOR RECTIFICATION. SINCE THE ALLOWABILITY OF PARTNERS REMUNERATION AND INTEREST REQUIRED FRESH INVES TIGATION OF FACTS, THEREFORE, IT CANNOT BE CONSIDERED AS MISTAKE APPAR ENT FROM RECORD. ACCORDINGLY, SHE UPHELD THE ORDER OF THE AO IN REJECTING THE RECTIFICATION APPLICATION FILED U/S.154 OF THE I.T. ACT. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PAGE 3 OF THE PAPER BOOK DREW THE ATTENTION OF THE BENCH TO THE ACK NOWLEDGEMENT OF ITR-V WHEREIN GROSS TOTAL INCOME WAS DECLARED AT RS.69 ,730/- 3 ITA NO.1516/PN/2015 AND TAX PAYABLE WAS CALCULATED AT RS.21,547/-. REFERRING T O PAGE 5 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH T O THE COMPUTATION OF TOTAL INCOME WHEREIN THE AMOUNT OF RS.69,73 0/- WAS CALCULATED AFTER REMUNERATION TO PARTNERS AT RS.3,29,593/- . REFERRING TO PAGE 9 OF THE PAPER BOOK HE DREW THE ATTE NTION OF THE BENCH TO THE INTIMATION U/S.143(1) ISSUED BY THE AO ON 12- 01-2013 WHEREIN THE INCOME HAS BEEN MENTIONED AT RS.3,99,320/- WH ICH IS BEFORE THE ALLOWABLE REMUNERATION TO PARTNERS OF RS.3,29,592 /-. REFERRING TO THE ACKNOWLEDGEMENT OF THE RETURNS FILED BY T HE INDIVIDUAL PARTNERS HE SUBMITTED THAT THE PARTNERS IN THE IR INDIVIDUAL RETURNS HAVE DISCLOSED THE REMUNERATION FROM TH E PARTNERSHIP FIRM AND THEY HAVE PAID THE TAXES IN THEIR RE SPECTIVE HANDS. HE ACCORDINGLY SUBMITTED THAT WHEN THE ASSESSE E HAS DECLARED INCOME OF RS.69,730/- AFTER DEDUCTING THE REMUNER ATION PAID TO PARTNERS AT RS.3,29,592/- THE AO WAS NOT JUSTIFIED IN PASSING THE ORDER U/S.143(1) DETERMINING THE TOTAL INCOME AT RS.3,99,320/- AND SUBSEQUENTLY REJECTING THE RECTIFICATION PETITION FILED BY THE ASSESSEE. HE SUBMITTED THAT SINCE THE MISTAK E WAS APPARENT FROM RECORD THE AO SHOULD HAVE ENTERTAINED TH E RECTIFICATION PETITION AND SHOULD HAVE PASSED THE CONSEQUE NTIAL ORDER. THE CIT(A) WAS ALSO EQUALLY UNJUSTIFIED IN REJECTING THE APPEA L FILED BY THE ASSESSEE AND UPHOLDING THE ORDER OF THE AO. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED TH AT THE MISTAKE IS NOT APPARENT FROM RECORD AND REQUIRES DEEP ENQUIRIES/INVESTIGATION. IN SUCH CASES, THE ORDER CANNOT BE RECTIFIED U/S.154 OF THE I.T. ACT. 4 ITA NO.1516/PN/2015 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE ASSESSEE FILED TH E RETURN OF INCOME ON 29-07-2011 DECLARING TOTAL INCOME OF RS.69,729/ - AS PER ACKNOWLEDGEMENT NO. 2120002656, A COPY OF WHICH IS P LACED AT PAGE 3 OF THE PAPER BOOK. THE COMPUTATION OF INCOME PLACE D AT PAGE 15 OF THE PAPER BOOK SHOWS THE NET INCOME DECLARED AT RS.69,730/- WHICH IS AFTER THE REMUNERATION TO PARTNERS AT RS.3,29,59 2/-. WE FIND THE INTIMATION U/S.143(1) WAS ISSUED TO THE ASSESSEE VI DE ORDER DATED 12-01-2013 WHEREIN THE INCOME HAS BEEN DETERMINE D AT RS.3,99,320/- WHICH IS BEFORE REMUNERATION TO PARTNERS. UN DER SUCH CIRCUMSTANCES WHEN THE ASSESSEE BROUGHT THE MIST AKE TO THE NOTICE OF THE AO BY FILING A RECTIFICATION PETITION U/S.154 WE A RE OF THE CONSIDERED OPINION THAT THE AO SHOULD HAVE ENTERTAIN ED THE RECTIFICATION PETITION AND RECTIFIED THE MISTAKE BY REDUCING T HE INCOME TO THE EXTENT OF REMUNERATION TO THE PARTNERS. SINCE THE AO HAS NOT APPRECIATED THE MISTAKE, THE CIT(A) SHOULD HAVE ALLOWED THE CLAIM OF THE ASSESSEE IN THE APPEAL FILED BEFORE HER. HOWEVER , THE SAME WAS TURNED DOWN BY THE CIT(A) ON THE GROUND THAT ASSESSEE HAS NOT CLAIMED THE REMUNERATION AND INTEREST TO PARTNE RS IN THE RETURN OF INCOME AND THE AUTHORITY RECTIFYING THE MISTAKE U/S.154 OF THE ACT CANNOT GO BEYOND THE RECORDS AND LOOK INTO FRE SH EVIDENCE OR MATERIAL WHICH HAS NOT BEEN ON RECORD AT THE TIME WHEN THE ORDER SOUGHT TO BE RECTIFIED WAS PASSED. THE ABOVE OBSERVAT ION OF THE CIT(A) IN OUR OPINION IS CONTRARY TO THE FACTS SINCE THE ACKNOWLEDGEMENT OF RETURN OF INCOME FILED BY THE ASSESSEE SHOWS THE TOTAL INCOME AT RS.69,729/-. CONSIDERING THE TOTALITY O F THE FACTS OF THE CASE, WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRE CT THE AO TO ALLOW THE REMUNERATION TO THE PARTNERS AT RS.3,29,593/- FR OM THE 5 ITA NO.1516/PN/2015 TOTAL INCOME OF RS.3,99,320/-. GROUNDS RAISED BY THE ASSES SEE ARE ACCORDINGLY ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15-04-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED :15 TH APRIL 2016 ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) , / THE CIT(A)-I, NASHIK 4. % / THE CIT-I, NASHIK 5 . 6. ( ++,, ,, / DR, ITAT, B PUNE; 0 / GUARD FILE. / BY ORDER , ( + //TRUE COPY // ( + //TRUE COPY// 23 + , / SR. PRIVATE SECRETARY ,, / ITAT, PUNE