The Mattewal Coop. L/C Society Ltd., Amritsar V. Income Tax Officer, Amritsar

ITA 166/ASR/2010

• Counselvise Citation: 16620914 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Difference of opinion; Agreed addition; Change of opinion
• Section: 143(3); 133A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: AMRITSAR BENCH: AM RITSAR BEFORE SHRI H L KARWA, HONBLE VICE PRESIDENT AND SHRI D K SRIVASTAVA, HONBLE ACCOUNANT MEMBER ITA NO. 166/ASR/2010 ASSESSMENT YEAR: 2006-07 THE MATTEWAL CO-OP L/C SOCIETY LTD. VS. THE INCOME- TAX OFFICER, AMRITSAR. WARD IV(3), AMRITSAR. PAN : AAAAT5385J APPELLANT BY: SHRI P.N. ARORA, ADV. RESPONDENT BY: SHRI TARSEM LAL, DR DATE OF HEARING: 07.12.2011 DATE OF PRONOUNCEMENT: 16 .12.2011 ORDER D K SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE LD. CIT, AMRITSAR U/S 263 OF TH E INCOME-TAX ACT, 1961 ON 12.3.2010, ON THE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF THE COMMISSIONER OF INCOME-TA X-II, AMRITSAR, PASSED UNDER SECTION 263 OF THE ACT, IS ILLEGAL, I NVALID AND VOID AB- INITIO AND THE SAME IS LIABLE TO BE CANCELLED. 2. THE LD. CIT, HAS GROSSLY ERRED IN HOLDING/TREATI NG THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. THAT THE LD. CIT DID NOT APPRECIATE THAT ALL THE INFORMATION WAS DULY FURNISHED ALONGWITH THE RETURN OF INCOME AND A LL THE NECESSARY DETAILS WERE FILED AT THE TIME OF HEARING OF THE C ASE UNDER SECTION 143(3) OF THE I.T.ACT, 1961, AND ALL THE ENQUIRIES WERE MET AND THE BOOKS OF ACCOUNTS ALONGWITH OTHER DOCUMENTS AND VO UCHERS WERE DULY PRODUCED BEFORE THE A.O. AS SUCH THERE WAS NO JUSTIFICATION FOR INVOKING THE PROVISIONS OF SECTION 263 OF THE A CT. 4. THAT THE LD. CIT WANTED TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT ON THE FOLLOWING BASIS. 2 THESE FACTS INDICATE NO BOOKS OF ACCOUNTS WERE PR EPARED IN REGULAR COURSE OF BUSINESS. THEREFORE, NO BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE AO, WHEN THE ASSESSMENT ORDER D ATED 03.09.2007 FOR THE A.Y. 2006-07 WAS PASSED. ACCORDI NGLY, THE AO HAD FAILED TO EXAMINE THE BOOKS OF ACCOUNTS AND VOU CHERS BEFORE PASSING THE SAID ASSESSMENT ORDER. EVEN OTHERWISE T HERE IS NO MENTION WHATSOEVER IN THE ASSESSMENT ORDER DATED 03 .09.2007 OR IN THE CASE RECORDS AS TO WHICH VOUCHERS WERE EXAMI NED AND FOUND TO BE CORRECT/UNVERIFIABLE. THIS FURTHER SHOWS THAT IN REALITY NO EXAMINATION OF ANY BOOKS OF ACCOUNTS AND VOUCHERS H AD TAKEN PLACE AT THE TIME OF PASSING OF THE ASSESSMENT ORDE R DATED 03.09.2007, THUS RENDERING THE ENTIRE PROCESS OF SC RUTINY ASSESSMENT ORDER TO BE A FARCE. 5. THE VERY BASIS ON WHICH THE LD. CIT WANTED TO IN VOKE THE PROVISIONS OF SECTION 263 OF THE ACT DID NOT EXIST AS THE BOOKS OF ACCOUNTS WERE DULY PRODUCED AND WERE DULY AND THORO UGHLY EXAMINED AT THE TIME OF ASSESSMENT BY THE A.O. THE AUDIT REPORT WAS DULY FILED ALONGWITH THE RETURN OF INCOME WHICH REPORT WAS FROM THE CA WHO WAS AN INDEPENDENT BODY WHO PREPA RED THE AUDIT REPORT AFTER EXAMINING ALL THE BOOKS OF ACCO UNTS AND OTHER DOCUMENTS AND THESE BOOKS OF ACCOUNTS ARE STILL IN THE CUSTODY OF THE DEPARTMENT. 6. THAT THUS THE PROVISIONS OF SECTION 263 OF THE A CT, ARE NOT AT ALL APPLICABLE IN THIS CASE AND AS SUCH THE ORDER OF TH E AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE. AS SUCH THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT, IS BAD IN LAW AND THE SAME IS LIABLE TO BE CANCELLED. 7. THAT WRITTEN SUBMISSIONS WERE DULY FURNISHED BEF ORE THE CIT DURING THE COURSE OF HEARING U/S 263 AND THE CIT DID NOT APPRECIATE THE WRITTEN SUBMISSIONS FURNISHED BEFORE HIM. THEY ARE MADE PART AND PARCEL OF THE GROUNDS OF APPEAL. HAD HE APPRECIATED THE FACTS & CIRCUMSTANCES OF THE CASE, AS WELL AS THE WRITTEN S UBMISSIONS, THE LD. CIT WOULD NOT HAVE INVOKED THE PROVISIONS OF SE CTION 263 OF THE ACT. AS SUCH THE ORDER PASSED BY THE CIT U/S 263 OF THE ACT, IS ILLEGAL, INVALID AND VOID AB-INITIO AND THE SAME IS LIABLE TO BE CANCELLED. 2. THE ASSESSEE IS A CIVIL CONTRACTOR. IT FILED ITS RETURN OF INCOME ON 15.11.2006 RETURNING TOTAL INCOME AT RS. 2,25,080/- . THE ASSESSEE ALSO CLAIMED 3 REFUND OF TDS AMOUNTING TO RS.27,35,263/-. THE RETU RN WAS PROCESSED AND REFUND AMOUNTING TO RS.27,35,263/- WAS GRANTED TO T HE ASSESSEE ALONGWITH INTEREST UNDER SECTION 244A. ASSESSMENT U/S 143(3) WAS COMPLETED ON 3.9.2007 ASSESSING THE TOTAL INCOME AT RS. 3,35,080/- AFTER MAKING AGREED DISALLOWANCE OF RS. 60,000/-. SURVEY OPERATIONS U/S 133A OF THE IN COME-TAX ACT, 1961 WERE CARRIED OUT BY THE DEPARTMENT AT THE BUSINESS PREMI SES OF THE ASSESSEE ON 27.3.2008 DURING WHICH THE RELEVANT BOOKS OF ACCOUN TS WERE NOT FOUND AT THE BUSINESS PREMISES OF THE ASSESSEE. THE REQUEST MA DE BY THE SURVEY TEAM FOR PRODUCTION OF BOOKS OF ACCOUNT FOR THE ASSESSMENT Y EAR 2001-02 ONWARDS ALSO DID NOT YIELD ANY RESULT. TAKING NOTE OF THE RES ULTS OF SURVEY, THE LD. CIT CALLED FOR AND EXAMINED THE RECORDS OF THE ASSESSEE. HE F ORMED PRIMA FACIE BELIEF THAT THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) OF THE ACT ON 3.9.2007 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. HE THEREFORE ISSUED A SHOW CAUSE NOTICE ON 13.8.2009 CALLING UPON THE ASS ESSEE TO EXPLAIN AS TO WHY THE SAID ASSESSMENT ORDER PASSED BY THE AO SHOULD N OT BE REVISED IN TERMS OF SECTION 263. AFTER TAKING INTO ACCOUNT THE SUBMISS IONS OF THE ASSESSEE, THE LD. CIT PASSED THE IMPUGNED ORDER ON 12.3.2010 HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE AO ON 3.9.2007 WAS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE AS HE HAS NOT MADE THE REQUISITE ENQUIR Y WITH REGARD TO PROPER MAINTENANCE OF BOOKS OF ACCOUNT BEFORE COMPLETING T HE ASSESSMENT. HE THEREFORE CANCELLED THE ASSESSMENT ORDER PASSED BY THE AO ON 3.9.2007 AND DIRECTED HIM TO MAKE A FRESH ASSESSMENT IN CONFORMI TY WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 4 3. PERUSAL OF THE MATERIALS AVAILABLE ON RECORD SHO WS THAT THE ASSESSEE HAD REPORTED CONTRACT RECEIPTS AT RS. 12,39,61,308/- ON WHICH IT HAD SHOWN NET PROFIT OF 0.22%. THE AO COMPLETING THE ORIGINAL ASSESSMEN T, HOWEVER PREFERRED TO MAKE AGREED ADDITION OF RS. 60,000/- WITHOUT ANY EX AMINATION AS TO THE CORRECTNESS AND COMPLETENESS OF THE BOOKS OF ACCOUN T IN THE LIGHT OF RELEVANT BILLS AND VOUCHERS AS ALSO THE REASONABLENESS OF NP RATE SHOWN BY IT. AS STATED EARLIER, THE ORIGINAL ASSESSMENT U/S 143(3) WAS COM PLETED ON 3.9.2007. SURVEY U/S 133A WAS THEREAFTER CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 27.3.2008. PERUSAL OF THE ORDER PASSED BY THE LD. CIT U/S 263 OF THE ACT SHOWS THAT THE BOOKS OF ACCOUNT WERE NOT FOUND AT THE TIM E OF SURVEY. IT ALSO SHOWS THAT THE STATEMENT OF SHRI HARPAL SINGH SETHI, PRES IDENT OF THE ASSESSEE-SOCIETY WAS RECORDED ON OATH DURING THE COURSE OF SURVEY ON 27.3.2008 DURING WHICH HE STATED THAT THE BOOKS OF ACCOUNT WOULD BE PRODUCED LATER AS THEY WERE WITH SH. KHURANA, THE ACCOUNTANT OF THE ASSESSEE. PERUSAL OF THE IMPUGNED ORDER UNDER APPEAL FURTHER SHOWS THAT SHRI HARPAL SINGH SETHI, WAS SPECIFICALLY ASKED IN THE COURSE OF HIS STATEMENT TO PRODUCE THE BOOKS OF ACC OUNT FROM FINANCIAL YEAR 2000-01 TO 2007-08. HE WAS ALSO ASKED TO STATE AS TO WHETHER THE BOOKS OF ACCOUNT OF THE AFORESAID YEAR WERE MISPLACED OR LOS T. IN RESPONSE, SH. SETHI STATED THAT NO BOOKS OF ACCOUNT WERE AVAILABLE AT T HE BUSINESS PREMISES. BUT THEY WERE AVAILABLE WITH THE ACCOUNTANT. HE CONFIRM ED THAT THE BOOKS OF ACCOUNT WERE NEITHER LOST NOR MISPLACED. THE STATEMENT OF SH. HARPAL SINGH SETHI, WAS AGAIN RECORDED DURING WHICH HE WAS ASKED TO STATE A S TO WHETHER HE HAD BROUGHT THE BOOKS OF ACCOUNT. IN RESPONSE TO THE A FORESAID QUERY HE STATED THAT 5 NO BOOKS OF ACCOUNT WERE AVAILABLE WITH THE ASSESSE E AND THAT HE HAD NO FURTHER COMMENTS TO OFFER IN THIS REGARD. THE STATEMENT OF THE WIFE OF SH. NAVNEET KHURANA, ACCOUNTANT WAS ALSO RECORDED IN WHICH SHE DENIED THAT ANY OF THE BOOKS OF ACCOUNT OF THE ASSESSEE WAS LYING WITH THE ACCOUNTANT. SH. HARPAL SINGH SETHI WAS CONFRONTED WITH THE AFORESAID INFOR MATION ALSO IN RESPONSE TO WHICH HE STATED THAT HE HAD NOTHING TO SAY IN THE M ATTER. ON 18.6.2008, ANOTHER STATEMENT OF SH. HARPAL SINGH SETHI WAS RECORDED ON OATH WHEREIN HE OFFERED ADDITIONAL INCOME OF RS. 2.00 CRORES FOR ASSESSMENT YEAR FOLLOWING THE ASSESSMENT YEAR UNDER APPEAL. 4. BASED ON THE AFORESAID INFORMATION AVAILABLE ON RECORD, THE LD. CIT CAME TO THE CONCLUSION THAT THE BOOKS OF ACCOUNT TOGETHE R WITH BILLS AND VOUCHERS WERE NOT AT ALL MAINTAINED BY THE ASSESSEE AND THER EFORE THE ASSERTION IN THE ASSESSMENT ORDER THAT THE BOOKS OF ACCOUNT WERE PR ODUCED WAS INCORRECT. ACCORDING TO THE LD. CIT THERE WAS NO MATERIAL ON R ECORD TO SUPPORT THE FINDING THAT THE BOOKS OF ACCOUNT TOGETHER WITH BILLS AND V OUCHERS IN SUPPORT THEREOF WERE AT ALL MAINTAINED OR PRODUCED BEFORE THE AO DU RING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. IT IS IN THIS BACKGROUND TH AT THE LD. CIT CONCLUDED THAT THE ORIGINAL ASSESSMENT ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 5. AGGRIEVED BY THE IMPUGNED ORDER PASSED BY THE LD . CIT, THE ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF A PPEAL, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORIGINAL ASSE SSMENT ORDER AND SUBMITTED 6 THAT THE BOOKS OF ACCOUNT WERE INDEED MAINTAINED A ND PRODUCED BEFORE THE AO. HE ALSO FILED COPIES OF ORDER SHEETS RECORDED BY T HE AO AND SUBMITTED THAT THE BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE AO ON 28. 08.2007. HE SUBMITTED THAT THE ORIGINAL ASSESSMENT WAS COMPLETED BY THE AO AFTER SCRUTINY AND EXAMINATION OF THE BOOKS OF ACCOUNT PRODUCED BEFORE HIM AND IT WAS FOR THIS REASON THAT THE PROPOSAL OF THE LD. CIT TO INVOKE J URISDICTION UNDER SECTION 263 OF THE ACT WAS OPPOSED NOT ONLY BY THE AO BUT ALSO BY SH. RAVI SARANGAL, ADDL. CIT. IT WAS SUBMITTED THAT THE SAME ADDL. CIT, ON HIS APPOINTMENT AS C.I.T, HAS PASSED THE IMPUGNED ORDER. IN SUPPORT OF HIS SUBMIS SIONS, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON SEVERAL JUDGMENTS, WHI CH ARE AS UNDER: I) CIT VS. SOHANA WOOLLEN, 296 ITR 238 II) CIT VS. MAX INDIA LTD. 295 ITR 282 III) BONGAIGAON REFINERY AND PETROCHEMICALS 287 ITR 120 IV) N.P. SANTOSH KUMAR VS. ACIT 306 ITR 319 V) CIT- SHIMLA VS. GREENWORLD CORPORATION 181 TAXMAN 1 11 VI) COPY OF ORDER DATED 29.4.2009 PASSED IN THE CASE OF SHASHI SINGLA VS. ITO WARD 1(3), BHATINDA, IN ITA NO.567(ASR)/2008. VII) MALABAR INDUSTRIAL CO. LTD., VS. CIT (2000) 243 ITR 82 (SC) VIII) CIT VS. R.K. CONSTRUCTION CO. (2009) 313 ITR 65 (GU J) IX) ORDER OF THE ITAT, CHANDIGARH A BENCH IN THE CASE OF AMRIK SINGH VS. ACIT (2010) 36 DTR (CHD) (TRIB) 111 X) CIT VS. ASHISH RJPAL 180 TAXMAN 623 7 XI) ORDER OF ITAT AMRITSAR BENCH, DATED 16 TH JULY, 2009, IN THE CASE OF M/S. TRG INDUSTRIES PVT. LTD. VS. CIT, JAMMU IN ITA NO. 210(ASR)/2009 XII) CMS COMPUTERS (P) LTD & ANR. VS. APPROPRIATE AUTHOR ITY & ORS 11 DTR 236(BOM) XIII) CALCUTTA ELECTRIC SUPPLY CORPORATION (INDIA) VS. IT O & ORS 207 ITR 892 (CAL.) XIV) ORDER OF ITAT, DELHI BENCH IN THE CASE OF ADDL. CIT VS. SHIPRA ESTATE LD. (2010) 35 SOT 256 (DEL.) XV) CIT VS. DEEPAK MITTAL 324 ITR 411 (P&H) XVI) COPY OF ORDER DATED 27.4.2006 OF ITAT, AMRITSAR BEN CH IN THE CASE OF ACIT CC-1, AMRITSAR VS. RAJA & CO. IN I TA NO.369(ASR)/2002. XVII) ORDER OF THE ORDER OF TRIBUNAL DATED 31.01.2005 IN THE CASE OF VIJAY BHARAT CIGARETTE STORE, PATHANKOT VS. ACIT, CIRCLE, PATHANKOT, ITA NO. 201(ASR)/2010. XVIII) ORDER OF THE TRIBUNAL DATED 31.01.2011 IN THE CASE OF ROSHAN LAL VEGETABLE PRODUCTS PVT. LTD. (BATHINDA) VS. ITO WARD 1(2), IN ITA NO. 06(ASR)/2010 XIX) CIT VS. VIKAS POLYMERS 194 TAXMAN 57 (DEL.) XX) COPY OF ORDER OF THE ITAT, JODHUR BENCH, IN THE CAS E OF KWAL PRO EXPORTS VS ACIT 110 ITD 59 XXI) COPY OF THE ORDER OF ITAT MUMBAI BENCH, IN THE CASE OF MAHINDRA & MAHINDRA LTD. VS. DCIT 122 TTJ 577 (MUM. ) XXII) COPY OF ORDER OF ITAT MUMBAI BENCH (SB), DATED 31.03.2011 IN THE CASE OF SYNERGY ENTREPRENEUR SOLU TIONS IN ITA NO. 3076/MUM/10. XXIII) COPY OF ORDER OF ITAT MUMBAI BENCH DATED 10.07.2009 IN THE CASE OF GEOMETRIC SOFTWARE SOLUTIONS VS ACIT CI R. 10(2), MUMBAI IN ITA NO.3464(MUM)/2008. 8 5.1. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO FILE D WRITTEN SUBMISSIONS IN WHICH HE HAS CONTENDED THAT THE LD. CIT WAS NOT CO MPETENT TO REVISE THE ASSESSMENT ORDER AS THE ASSESSMENT ORDER WAS PASSED AFTER MAKING AGREED ADDITION. IT IS ALSO STATED IN THE WRITTEN SUBMISSI ONS THAT THE ORDER PASSED BY THE LD. CIT WAS BASED ON MERE CHANGE OF OPINION. IT IS ALSO SUBMITTED THAT THE LD. CIT HAS NOT PLACED ANY MATERIAL ON RECORD TO ESTABL ISH THAT THERE WAS ANY OMISSION ON THE PART OF THE A.O. IN COMPLETING THE ORIGINAL ASSESSMENT. 6. IN REPLY, THE LD. DR HAS SUPPORTED THE ORDER PAS SED BY THE LD. CIT. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY BOTH THE PARTIES. DURING THE COURSE OF SURVEY, THE PRESIDENT OF THE S OCIETY HIMSELF CONFIRMED THAT THERE WERE NO BOOKS OF ACCOUNT FOR THE ASSESSMENT Y EAR UNDER APPEAL. HE ALSO SURRENDERED A SUM OF RS.2.00 CRORES AS ADDITIONAL I NCOME OF THE ASSESSEE. AT THE TIME OF HEARING, A QUERY WAS MADE TO THE LD. CO UNSEL FOR THE ASSESSEE AS TO WHETHER THE BILLS AND VOUCHERS ON THE BASIS OF WHIC H BOOKS OF ACCOUNT WERE WRITTEN, WERE AVAILABLE WITH THE ASSESSEE. HE REPLI ED IN THE NEGATIVE. IN OUR VIEW, THE LD. CIT HAS CORRECTLY TAKEN INTO ACCOUNT THE RESULT OF SURVEY IN COMING TO THE CONCLUSION THAT THE ASSESSMENT FRAMED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASS ESSEE HAS DECLARED NET PROFIT AT 0.22%. THIS FACT ITSELF SHOULD HAVE PROVOKED THE AO COMPLETING THE ORIGINAL ASSESSMENT TO PROPERLY EXAMINE THE BOOKS OF ACCOUNT AS ALSO THE BILLS AND VOUCHERS ON THE BASIS OF WHICH BOOKS OF ACCOUNT WER E MAINTAINED. THERE IS NO 9 INDICATION IN THE ASSESSMENT ORDER THAT THE BILLS A ND VOUCHERS WERE AT ALL MAINTAINED OR PRODUCED BEFORE THE AO COMPLETING THE ORIGINAL ASSESSMENT. THE FACTS BROUGHT ON RECORD CLEARLY ESTABLISH THAT THE ASSESSMENT ORDER AS ORIGINALLY PASSED WAS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. IN OUR VIEW, THE LD. CIT HAS RIGHTLY EXERCISED HIS JURISDI CTION U/S 263 AND CANCELLED THE ASSESSMENT ORDER WITH THE DIRECTION TO THE AO TO PA SS A FRESH ASSESSMENT ORDER IN CONFORMITY WITH LAW. WE SEE NO INFIRMITY IN HIS ACTION. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 .1 2.2011 SD/- SD/- (H L KARWA) (D K SRI VASTAVA) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 16TH TH DECEMBER, 2011 /SKR/ COPY TO:- 1. THE APPELLANT: THE MATTEWAL CO-OPERATIVE L/C SO CIETY 2. THE LD. CIT, 3. THE D.R., INCOME TAX DEPARTMENT, AMRITSAR