M/s. Maruti Cotton Company, JUNAGADH V. The Commissioner of Income Tax, RAJKOT-GUJARAT

ITA 153/RJT/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2348 (ITAT-RAJKOT)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] , , ! BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.153/RJT/2015 ( / ASSESSMENT YEAR : 2005-06) M/S.MARUTI GINNING & PRESSING GIRGADHDA ROAD UNA / VS. THE CIT RAJKOT-III, RAJKOT & ./ ./ PAN/GIR NO. AAFFM 4727 M ( &( / APPELLANT ) .. ( )&( / RESPONDENT ) &( * / APPELLANT BY : SHRI SAMIR JANI, A.R. )&( + * / RESPONDENT BY : SHRI YOGESH PANDEY,CIT-DR ,-. + / DATE OF HEARING 10/12/2015 /0 + / DATE OF PRONOUNCEMENT 22/01/2016 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX-III, AHMEDABAD [CIT IN SHORT] DATED 26/02/2015 PERTAINING TO ASSESSMENT YEAR (AY) 2005- 06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- THE GROUNDS AS RAISED HEREUNDER ARE WITHOUT PREJU DICE TO EACH OTHER. 1. THE LD.CIT-III, RAJKOT ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE REASSESSMENT U/S.147 CONSIDERING THE ASSESSMENT AS ERRONEOUS IN SO ITA NO.153 /RJT/2015 M/S. MARUTI GINNING & PRESSING VS. CIT ASST.YEAR 2005-06 - 2 - FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENU E INSPITE OF THE FACT THAT THE LD.A.O. HAS ISSUED A SHOW CAUSE NOTICE FOR PROVING THE GENUINENESS OF URD PURCHASES AND ON REPLY BY APPELL ANT HOLDING URD PURCHASES TO THE EXTENT OF RS.30000/- DISALLOWA BLE UNDER SECTION 40A(3). THE SAME IS PRAYED FOR UPHOLDING A ND SETTING ASIDE THE ORDER UNDER SECTION 263. 2. THE LD.CIT-III, RAJKOT HAS ERRED IN LAW IN CONSIDER ING THE INVESTIGATION & VERIFICATIONS MADE BY THE LD.ASSESS ING OFFICER INSUFFICIENT AND FINALLY HOLDING THE REASSESSMENT I S ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE RE VENUE. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR MODIFY AND OF THE GROUNDS AT OR BEFORE THE TIME OF FINAL HEARING. 2. THE EFFECTIVE GROUND IN THIS APPEAL IS AGAINST I NVOKING THE PROVISIONS OF SECTION 263 OF THE ACT AND QUASHING T HE ASSESSMENT MADE U/S.143(3) R.W.S.147 OF THE ACT DATED 25/03/2013. 2.1. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUING A NOTICE U/S.148 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT). THE REASON FOR SUCH REOPENING (AS ENCLOSED AT PAGE NO.46 OF THE PAPER-BOOK) WAS THAT THE ASSESSEE HAD CLAIMED COTTON PURCHASE FROM VARIOUS PERSONS IN CAS H THAT TOO ABOUT RS.20,000/-. THE ASSESSEE HAS NOT SUBMITTED THAT S UCH PURCHASES ARE FROM CULTIVATORS OR AGRICULTURISTS. THE ASSESSEE H AS ALSO NOT SUBMITTED PROOF IN FORM NOD.7/12 EXTRACT OR 8A CERTIFICATE IN REGARD TO LAND HOLDING AND CROPS CULTIVATED BY THE PERSONS FROM WHOM THE A SSESSEE HAS PURCHASED THE COTTON. ON THIS BASIS, THE ASSESSING OFFICER (AO IN SHORT) PROCEEDED TO MAKE ASSESSMENT AND THE ASSESSMENT U/S .143(3) R.W.S.147 OF ITA NO.153 /RJT/2015 M/S. MARUTI GINNING & PRESSING VS. CIT ASST.YEAR 2005-06 - 3 - THE ACT WAS FRAMED VIDE ORDER DATED 25/03/2013, THE REBY THE AO MADE ADDITION OF RS.6,160/- BEING 20% OF THE PAYMENT OF RS.30,800/-. SUBSEQUENTLY, THE LD.CIT INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT BY ISSUING NOTICE TO THE ASSESSEE CALLING UPON THE ASSESSEE AS TO WHY THE PROCEEDINGS U/S.63 OF THE ACT BE NOT INITIATED. TH E BASIS OF INITIATION OF PROCEEDINGS AS RECORDED IN THE SHOW-CAUSE NOTICE WA S THAT THE AO FAILED TO MAKE ENQUIRY WITH REGARD TO THE GENUINENESS OF T HE PURCHASES CLAIMED BY THE ASSESSEE. THE LD.CIT, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PASSED THE IMPUGNED ORDER THEREBY THE LD.C IT SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO VERIFY THE GENUINENESS OF THE URD PURCHASES BY MAKING NECESSARY INVESTIGATION AND VERIFICATION IN RESPECT OF AGRICULTURAL LAND HOLDING, THE CROP TAKE N, AND ACTUAL PURCHASES BY THE ASSESSEE FROM THE CONCERNED URD TRADERS AND THEN PASSED A WELL- REASONED ORDER ACCORDINGLY. AGGRIEVED BY THE ORD ER OF THE LD.CIT, NOW THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD.COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUE D THAT THE LD.CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC TION 263 OF THE ACT. HE SUBMITTED THAT THE AO HAS APPLIED HIS MIND SINCE TH E REOPENING OF THE ASSESSMENT WAS MADE TO VERIFY THE URD COTTON PURCHA SES. HE SUBMITTED THAT RELEVANT DETAILS WERE FURNISHED BEFORE THE AO AND THE AO WAS SATISFIED THAT THE PURCHASE WAS MADE FOR THE PURPOS E OF AGRICULTURAL ITA NO.153 /RJT/2015 M/S. MARUTI GINNING & PRESSING VS. CIT ASST.YEAR 2005-06 - 4 - PRODUCE. THEREFORE, UNDER THESE FACTS, THE LD.CIT OUGHT NOT TO HAVE REVISED THE ORDER. 3.1. ON THE CONTRARY, LD.CIT-DR SHRI YOGESH PANDEY VEHEMENTLY OPPOSED HE SUBMISSION OF THE LD.COUNSEL FOR THE ASS ESSEE AND SUBMITTED THAT IT IS APPARENT FROM THE RECORDS THAT THE ASSES SMENT MADE BY THE AO IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THEREFORE, HE SUBMITTED THAT IN VIEW OF THE JUDGEMENT OF THE H ONBLE APEX COURT RENDERED IN THE CASE OF MALABAR INDUSTRIAL CO.LTD. VS. CIT REPORTED AT [2000] 243 ITR 83(SC) AND ALSO PLACED RELIANCE ON T HE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE C ASE OF ADANI AGRO (P.) LTD. VS. DCIT REPORTED AT [2013] 32 TAXMANN.CO M 356 (GUJARAT). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENTS RELIED UPON BY THE LD.COU NSEL FOR THE ASSESSEE. THE UNDISPUTED FACTS ARE THAT, IN THIS CASE, THE AS SESSMENT WAS REOPENED ON THE GROUND THAT THE PURCHASES OF URD KAPAS OF RS .3,98,60,119/- HAD BEEN MADE IN VIOLATION OF PROVISION OF SECTION 40A( 3) R.W.S.6DD(J) OF THE I.T.RULES, 1962. THERE IS NO DISPUTE THAT THE AO H AD ISSUED A NOTICE REQUESTING THE ASSESSEE TO EXPLAIN SUCH PURCHASES. IN REPLY THERETO, THE ASSESSEE HAD SUBMITTED THAT THE CASH PAYMENT MADE B Y IT ARE COVERED BY THE EXCEPTION EMBEDDED UNDER RULE 6DD(E)(I) AS ALL SUCH PAYMENTS ARE ITA NO.153 /RJT/2015 M/S. MARUTI GINNING & PRESSING VS. CIT ASST.YEAR 2005-06 - 5 - MADE FOR AGRICULTURAL PRODUCE. THERE IS NO DISPUTE WITH REGARD TO THE LEGAL POSITION THAT IN CASE THE ASSESSEE MAKES PURC HASE OF AGRICULTURAL PRODUCE AND PAYMENTS IN EXCESS OF RS.20,000/- IS MA DE TO THE CULTIVATOR/GROWER OR PRODUCER OF SUCH PRODUCE OR P RODUCTS, IN THAT EVENT, THE PROVISIONS OF SECTION 40A(3) OF THE ACT WOULD N OT BE APPLICABLE. SO, THE ASSESSEE WAS REQUIRED TO DEMONSTRATE THAT THE P URCHASES ARE MADE OF AGRICULTURAL PRODUCE AND THE PAYMENTS ARE MADE TO T HE CULTIVATOR OR GROWER OF SUCH PRODUCE. THE AO WAS REQUIRED TO EXA MINE THIS ASPECT AND TO VERIFY THE CLAIM OF THE ASSESSEE BY MAKING N ECESSARY ENQUIRY IN THIS REGARD. IF THE AO FAILS TO MAKE ENQUIRY WITH REGARD TO THE CLAIM OF THE ASSESSEE, THEN IN OUR CONSIDERED VIEW, THE ORDE R OF THE AO WOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE AND THE LD.CIT WOULD BE WITHIN ITS JURISDICTION TO REVISE SUCH ORD ER U/S.263 OF THE ACT. IN THE PRESENT CASE, THE AO HAS MADE ENQUIRY FROM T HE ASSESSEE AND IN RESPONSE THERETO, THE ASSESSEE SUBMITTED CERTAIN DE TAILS. ON THE BASIS OF SUCH ENQUIRY, THE AO FORMED AN OPINION WITH REGARD TO GENUINENESS OF THE PURCHASES. HOWEVER, FROM THE RECORDS IT APPEAR S THAT THE AO HAS NOT GIVEN ANY FINDING ON THE ENQUIRY SO MADE. ONCE WE COME TO THE CONCLUSION THAT THE AO HAS MADE THE INQUIRIES AND T HEN FORMED AN OPINION, IT CANNOT BE OPEN TO US TO SUSTAIN THE REV ISION PROCEEDINGS ON THE FACTS OF THIS CASE. MERELY BECAUSE THE IMPUGNED OR DER SHOULD HAVE BEEN BETTER WRITTEN, OR MORE ELABORATE CANNOT BE REASON ENOUGH TO SUBJECT IT TO REVISION PROCEEDINGS. AS FOR THE HONBLE JURISDICT IONAL HIGH COURTS ITA NO.153 /RJT/2015 M/S. MARUTI GINNING & PRESSING VS. CIT ASST.YEAR 2005-06 - 6 - JUDGEMENT IN THE CASE OF ADANI AGRO (P.)LTD. (SUPRA ), IT CANNOT BE, AND IS NOT, A SUPPORT FOR THE PROPOSITION THAT MERELY BECA USE THE MATTER HAS BEEN REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR F RESH ADJUDICATION AND UNINFLUENCED BY OBSERVATION ON MERITS, REVISION PRO CEEDINGS CANNOT BE FAULTED DE HORS THE FACTS OF THE CASE NOT WARRANTIN G ASSUMPTION OF JURISDICTION UNDER SECTION 263. SUCH AN APPROACH W ILL REDUCE THE TIME LIMITS FOR COMPLETION OF ASSESSMENTS TO AN EMPTY RI TUAL, AND MAKE FINALITY OF PROCEEDINGS MEANINGLESS. IN THE LIGHT OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE QUASH THE REVISION PROCEEDINGS AS UNSUSTAINABLE ON MERITS. THE ASSESSEE GETS THE REL IEF ACCORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 22 ND DAY OF JANUARY, 2016 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/ 01 /2016 ..,, -. ,../ T.C. NAIR, SR. PS ITA NO.153 /RJT/2015 M/S. MARUTI GINNING & PRESSING VS. CIT ASST.YEAR 2005-06 - 7 - / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )&( / THE RESPONDENT. 3. 4 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-CONCERNED 5. 7-8 , , , /DR,ITAT, RAJKOT 6. 8CD E. / GUARD FILE. / BY ORDER, )7 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) & ' , / ITAT, RAJKOT 1. DATE OF DICTATION .. 23.12.15 (DICTATION-PAD 16 - PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 1.1.16 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.22.1.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 22.1.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER