GOURI SHANKAR JAIN HUF , KOLKATA V. P.C.I.T-11, Kolkata

ITA 1662/KOL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2360 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-07-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 11-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM BILASH MEENA
• Assessee Lawyers: ANKIT JALAN
• Keywords: Business income; Opportunity of being heard
• Section: 43B; 143(3); 44AB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA VIRTUAL COURT HEARING (BEFORE SRI J. SUDHAKAR REDDY, HONBLE ACCOUNTANT MEMBER & SRI S.S. GODARA, HONBLE JUDICIAL MEMBER) ITA NO. 1662/KOL/2019 ASSESSMENT YEAR: 2014-15 M/S. GOURI SHANKAR JAIN HUF...........................................APPELLANT C/O. AGARWAL VISHWANATH & ASSOCIATES 133/1A, S.N. BANERJEE ROAD PUSHKAL BHAWAN 3 RD FLOOR KOLKATA 700 013 [PAN : AACHG 9644 L] VS. PRINCIPAL COMMISSIONER OF INCOME TAX-11, KOLKATA.........................RESPONDENT APPEARANCES BY: SHRI ANKIT JALAN, ADVOCATE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI RAM BILASH MEENA, CIT D/R, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : OCTOBER 1 ST , 2020 DATE OF PRONOUNCING THE ORDER : NOVEMBER 25 TH , 2020 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX - 11, (HEREINAFTER THE LD. PR. CIT), PASSED U/S. 263 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 15/03/2019, FOR THE ASSESSMENT YEAR 2014-15. 2. THERE IS A DELAY OF 27 (TWENTY SEVEN) DAYS IN FILING OF THIS APPEAL. AFTER PERUSING THE PETITION FOR CONDONATION OF DELAY, WE ARE CONVINCED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN FILING THE APPEAL IN TIME. HENCE, WE CONDONE THE DELAY AND ADMIT THIS APPEAL. 3. THE ASSESSEE IS A HUF AND HAD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014-15 ON 29/11/2014, DECLARING TOTAL INCOME OF RS.15,08,400/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS FOR THE REASON THAT IT HAD LOW NET PROFIT OR LOSS SHOWN FROM LARGE GROSS RECEIPTS. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 20/12/2016. LATER, THE LD. PR. CIT, REVISED THE ASSESSMENT U/S 263 OF THE ACT AFTER ISSUING SHOWCAUSE NOTICE ON 28/02/2019. THE REASONS FOR REVISION ARE GIVEN IN PARA 4 PAGE 2 OF THE ORDER U/S 263 OF THE ACT, PASSED BY THE LD. PR. CIT, WHICH IS EXTRACTED FOR READY REFERENCE:- 4. (I) MR. ANIL KUMAR TIWARY, FCA AND A/R, SUBMITTED A WRITTEN SUBMISSION ON 11.03.2019 ALONG WITH POWER OF ATTORNEY, ON BEHALF OF THE ASSESSEE. THE SUBMISSION HAS BEEN CONSIDERED CAREFUL TAR COLUMN 26B(B) SPECIFICALLY MENTIONS IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (A), (B), (C), (D),OR (F) OF SECTION 43B THE LIABILITY FOR WHICH WAS INCURRED IN THE PREVIOUS YEAR AND WAS NOT PAID ON STATEMENT MEANS THAT THE AUDITOR HAS CERTIFIED THAT THE AMOUNT OF RS.1,96,26,619/ TOWARDS VAT LIABILITY TANTAMOUNT TO VIOLATION OF PROVISIONS OF SECTION 43B AND THE SAME SHOULD HAVE DISALLOWED BY THE AUDITOR HIMSEL PROFIT OF BUSINESS OF THE ASSESSEE. FURTHER, THE TRADING AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE FOR THE FINANCIAL YEAR 2013 ANY VAT INPUT OR OUTPUT ENTRIES. THEREFORE, IT IS CLEAR TH ENTRIES ARE INCLUDED IN TOTAL PURCHASES AND TOTAL SALES SHOWN IN THE TRADING AND PROFIT AND LOSS ACCOUNT OF THE AUDIT REPORT. 3.1. THEREAFTER, THE LD. PR. CIT, THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER PASSED U/S 263 OF THE ACT IS BAD IN LAW BECAUSE, THE SHOWN FROM LARGE GROSS RECEIPTS TO VERIFY ANY OTHER ASPECT. HE SUBMITTED THAT THE LD. PR. CIT CANNOT REVISE THE ASSESSMENT ORDER ON ANY OTHER SCRUTINY ISSUES. HE FURTHER SUBMITTED THAT VALUE ADDED TAX WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT AND HENCE SECTION 43B OF THE ACT, DOES NOT APPLY. HE REFERRED TO THE AUDIT REPORT ISSUED U/S 44A AUDITOR HAD CLEARLY STATED THAT THE INDIRECT TAX HAS NOT PASSED THROUGH THE PROFIT AND LOSS ACCOUNT AND SUBMITS THAT THE REPLY TO THE SHOWCAUSE NOTICE AND THE EVIDENCE SHOWS THAT VAT HAD NOT BEEN CL AIMED AS A DEDUCTION BY THE ASSESSEE AND THUS NO DISALLOWANCE CAN BE MADE U/S 44AB OF THE ACT 4.1. THE LD. D/R, ON THE OTHER HAND, SUBMITTED THAT THIS FACT REQUIRED TO BE PROPERLY VERIFIED BY THE ASSESSING OFFICER AND NOT DOING SO IS NON THAT THE ORDER PASSED BY THE ASSESSING OFFICER APPLICATION OF MIND AND HENCE THE SAME CONTENDED THAT THERE IS NOT PREJUDICE CAUSED TO THE ASSESSEE AS THE ASSESSING OFFICER WAS DIRECTED TO CONDUCT A FRESH ASSESSMENT ON A PRIORITY BASIS AND COMPLETE THE SAME PREFERABLY WITHIN THREE MONTHS AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 2 (I) MR. ANIL KUMAR TIWARY, FCA AND A/R, SUBMITTED A WRITTEN SUBMISSION ON 11.03.2019 ALONG WITH POWER OF ATTORNEY, ON BEHALF OF THE ASSESSEE. THE SUBMISSION HAS BEEN CONSIDERED CAREFUL LY BUT THE SAME HAS BEEN FOUND WITHOUT MERIT AS THE TAR COLUMN 26B(B) SPECIFICALLY MENTIONS IN RESPECT OF ANY SUM REFERRED TO IN (D),OR (F) OF SECTION 43B THE LIABILITY FOR WHICH WAS INCURRED IN THE PREVIOUS YEAR AND WAS NOT PAID ON OR BEFORE THE AFORESAID DATE. THE ABOVE STATEMENT MEANS THAT THE AUDITOR HAS CERTIFIED THAT THE AMOUNT OF RS.1,96,26,619/ TOWARDS VAT LIABILITY TANTAMOUNT TO VIOLATION OF PROVISIONS OF SECTION 43B AND THE SAME SHOULD HAVE DISALLOWED BY THE AUDITOR HIMSEL F FROM THE CALCULATION OF NET PROFIT OF BUSINESS OF THE ASSESSEE. FURTHER, THE TRADING AND PROFIT AND LOSS ACCOUNT OF THE ASSESSEE FOR THE FINANCIAL YEAR 2013 -14 RELEVANT TO AY 2014- 15, DO NOT SHOW ANY VAT INPUT OR OUTPUT ENTRIES. THEREFORE, IT IS CLEAR TH AT THE VAT INPUT AND OUTPUT ENTRIES ARE INCLUDED IN TOTAL PURCHASES AND TOTAL SALES SHOWN IN THE TRADING AND PROFIT AND LOSS ACCOUNT OF THE AUDIT REPORT. THEREAFTER, THE LD. PR. CIT, DISCUSSED VARIOUS CASE- LAW AND CAME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER PASSED U/S 263 OF THE ACT IS BAD IN LAW BECAUSE, THE REASON FOR SELECTION OF SCRUTINY IS LOW NET PROFIT/LOSS SHOWN FROM LARGE GROSS RECEIPTS AND THUS, THE ASSESSING OFFICER DID NOT HAVE THE POWER TO VERIFY ANY OTHER ASPECT. HE SUBMITTED THAT THE LD. PR. CIT CANNOT REVISE THE ASSESSMENT ORDER ON ANY OTHER ISSUE OTHER THAN WHAT WAS PERMITTED UNDER LIMITED SCRUTINY ISSUES. HE FURTHER SUBMITTED THAT VALUE ADDED TAX WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT AND HENCE SECTION 43B OF THE ACT, DOES NOT APPLY. HE REFERRED TO THE AUDIT REPORT ISSUED U/S 44A B OF THE ACT, SPECIFICALLY TO CO LUMN 26, WHEREIN, THE TAX AUDITOR HAD CLEARLY STATED THAT THE INDIRECT TAX HAS NOT PASSED THROUGH THE PROFIT AND AND SUBMITS THAT THE REPLY TO THE SHOWCAUSE NOTICE AND THE EVIDENCE SHOWS AIMED AS A DEDUCTION BY THE ASSESSEE AND THUS NO DISALLOWANCE CAN BE MADE U/S 44AB OF THE ACT . THE LD. D/R, ON THE OTHER HAND, SUBMITTED THAT THIS FACT REQUIRED TO BE PROPERLY VERIFIED BY THE ASSESSING OFFICER AND NOT DOING SO IS NON - APPLICATION OF M THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS WITHOUT ENQUIRY AND WITHOUT AND HENCE THE SAME IS AN ERRONEOUS ORDER. HE VEHEMENTLY CONTENDED THAT THERE IS NOT PREJUDICE CAUSED TO THE ASSESSEE AS THE ASSESSING OFFICER WAS DIRECTED TO CONDUCT A FRESH ASSESSMENT ON A PRIORITY BASIS AND COMPLETE THE SAME PREFERABLY WITHIN THREE MONTHS AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING ITA NO. 1662/KOL/2019 ASSESSMENT YEAR: 2014-15 M/S. GOURI SHANKAR JAIN HUF (I) MR. ANIL KUMAR TIWARY, FCA AND A/R, SUBMITTED A WRITTEN SUBMISSION ON 11.03.2019 ALONG WITH POWER OF ATTORNEY, ON BEHALF OF THE ASSESSEE. THE SUBMISSION LY BUT THE SAME HAS BEEN FOUND WITHOUT MERIT AS THE TAR COLUMN 26B(B) SPECIFICALLY MENTIONS IN RESPECT OF ANY SUM REFERRED TO IN (D),OR (F) OF SECTION 43B THE LIABILITY FOR WHICH WAS INCURRED IN OR BEFORE THE AFORESAID DATE. THE ABOVE STATEMENT MEANS THAT THE AUDITOR HAS CERTIFIED THAT THE AMOUNT OF RS.1,96,26,619/ - TOWARDS VAT LIABILITY TANTAMOUNT TO VIOLATION OF PROVISIONS OF SECTION 43B AND THE F FROM THE CALCULATION OF NET PROFIT OF BUSINESS OF THE ASSESSEE. FURTHER, THE TRADING AND PROFIT AND LOSS ACCOUNT 15, DO NOT SHOW AT THE VAT INPUT AND OUTPUT ENTRIES ARE INCLUDED IN TOTAL PURCHASES AND TOTAL SALES SHOWN IN THE TRADING AND LAW AND CAME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER PASSED U/S 263 OF THE LOW NET PROFIT/LOSS AND THUS, THE ASSESSING OFFICER DID NOT HAVE THE POWER TO VERIFY ANY OTHER ASPECT. HE SUBMITTED THAT THE LD. PR. CIT CANNOT REVISE THE THAN WHAT WAS PERMITTED UNDER LIMITED SCRUTINY ISSUES. HE FURTHER SUBMITTED THAT VALUE ADDED TAX WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT AND HENCE SECTION 43B OF THE ACT, DOES NOT APPLY. HE REFERRED TO LUMN 26, WHEREIN, THE TAX AUDITOR HAD CLEARLY STATED THAT THE INDIRECT TAX HAS NOT PASSED THROUGH THE PROFIT AND AND SUBMITS THAT THE REPLY TO THE SHOWCAUSE NOTICE AND THE EVIDENCE SHOWS AIMED AS A DEDUCTION BY THE ASSESSEE AND THUS NO DISALLOWANCE THE LD. D/R, ON THE OTHER HAND, SUBMITTED THAT THIS FACT REQUIRED TO BE PROPERLY APPLICATION OF M IND. HE ARGUED WITHOUT ENQUIRY AND WITHOUT IS AN ERRONEOUS ORDER. HE VEHEMENTLY CONTENDED THAT THERE IS NOT PREJUDICE CAUSED TO THE ASSESSEE AS THE ASSESSING OFFICER WAS DIRECTED TO CONDUCT A FRESH ASSESSMENT ON A PRIORITY BASIS AND COMPLETE THE SAME PREFERABLY WITHIN THREE MONTHS AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING 5. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THE TAX AUDITOR IN THE REPOR U/S 44AB OF THE ACT, HAS CLEARLY STATED THAT THE INDIRECT TAX ARE NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT. THIS FACT WAS STATED BY THE ASSESSEE BEFORE THE LD. PR. CIT REPLY TO THE SHOWCAUSE NOTICE ISSUED U/S 263 OF THE ACT FACT WERE FURNISHED. IN OUR VIEW, IT WAS THE DUTY OF THE LD. PR. CIT TO FACIE AS TO WHETHER THE INPUT AND OUTPUT ENTRIES HAVE BEEN ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT OR NOT, AS CERTIFIED BY THE TAX AUDI HAVE COME TO THE CONCLUSION THAT THERE WAS AN ERROR IN THE ASSESSMENT ORDER THE ASSESSING OFFICER AND THAT THIS ERROR IS PREJUDICIAL TO THE INTEREST OF THE REVENUE WHEN VAT IS NOT ROUTED THROUGH THE PROFIT AND CLAIMED THIS AMOUNT IT AS A DEDUCTION WHEN VAT IS NOT CLAIMED AS A DEDUCTION, WHILE COMPUTING THE INCOME, THE QUESTION OF DISALLOWING THE SAME U/S 44AB OF THE AC THE LD. PR. CIT HAS COMMITTED AN ERROR IN NOT EXAMINING THE ISSUE BY HIMSELF BEFORE COMING TO THE CONCLUSION THAT THERE IS AN ERROR REVENUE, WHICH REQUIRES REVISIO HOLD THAT THE ORDER PASSED U/S 263 OF THE ACT, IS BAD IN LAW AND ALLOW THIS APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE SD/- [ S. S. GODARA ] JUDICIAL MEMBER DATED : 25.11.2020 {SC SPS} 3 AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THE TAX AUDITOR IN THE REPOR CLEARLY STATED THAT THE INDIRECT TAX ARE NOT ROUTED THROUGH THE THIS FACT WAS STATED BY THE ASSESSEE BEFORE THE LD. PR. CIT REPLY TO THE SHOWCAUSE NOTICE ISSUED U/S 263 OF THE ACT AND EVIDEN CES WERE FURNISHED. IN OUR VIEW, IT WAS THE DUTY OF THE LD. PR. CIT TO AT LEAST AS TO WHETHER THE INPUT AND OUTPUT ENTRIES HAVE BEEN ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT OR NOT, AS CERTIFIED BY THE TAX AUDI TOR. WITHOUT DOING SO, HE COULD NOT HAVE COME TO THE CONCLUSION THAT THERE WAS AN ERROR IN THE ASSESSMENT ORDER AND THAT THIS ERROR IS PREJUDICIAL TO THE INTEREST OF THE REVENUE WHEN VAT IS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE COULD NOT HAVE IT AS A DEDUCTION . VAT IS NOT DEBITED TO THE PROFIT AND LOSS ACCOUNT. WHEN VAT IS NOT CLAIMED AS A DEDUCTION, WHILE COMPUTING THE INCOME, THE QUESTION OF DISALLOWING THE SAME U/S 44AB OF THE AC T, DOES NOT ARISE. THUS, IN OUR CONSIDERED VIEW, THE LD. PR. CIT HAS COMMITTED AN ERROR IN NOT EXAMINING THE ISSUE BY HIMSELF BEFORE COMING TO THE CONCLUSION THAT THERE IS AN ERROR WHICH IS PREJUDICIAL TO THE INTEREST OF THE WHICH REQUIRES REVISIO N, BY INVOCATION OF POWERS U/S 263 OF THE ACT. THUS, WE HOLD THAT THE ORDER PASSED U/S 263 OF THE ACT, IS BAD IN LAW AND ALLOW THIS APPEAL OF THE IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 25 TH DAY OF NOVEMBER, 20 20 [ J. SUDHAKAR REDDY ACCOUNTANT MEMBER ITA NO. 1662/KOL/2019 ASSESSMENT YEAR: 2014-15 M/S. GOURI SHANKAR JAIN HUF AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT THE TAX AUDITOR IN THE REPOR T ISSUED CLEARLY STATED THAT THE INDIRECT TAX ARE NOT ROUTED THROUGH THE THIS FACT WAS STATED BY THE ASSESSEE BEFORE THE LD. PR. CIT IN ITS CES IN SUPPORT OF THIS AT LEAST VERIFY, PRIMA AS TO WHETHER THE INPUT AND OUTPUT ENTRIES HAVE BEEN ROUTED THROUGH THE PROFIT TOR. WITHOUT DOING SO, HE COULD NOT HAVE COME TO THE CONCLUSION THAT THERE WAS AN ERROR IN THE ASSESSMENT ORDER PASSED BY AND THAT THIS ERROR IS PREJUDICIAL TO THE INTEREST OF THE REVENUE . LOSS ACCOUNT, THE ASSESSEE COULD NOT HAVE IS NOT DEBITED TO THE PROFIT AND LOSS ACCOUNT. WHEN VAT IS NOT CLAIMED AS A DEDUCTION, WHILE COMPUTING THE INCOME, THE QUESTION OF T, DOES NOT ARISE. THUS, IN OUR CONSIDERED VIEW, THE LD. PR. CIT HAS COMMITTED AN ERROR IN NOT EXAMINING THE ISSUE BY HIMSELF BEFORE WHICH IS PREJUDICIAL TO THE INTEREST OF THE BY INVOCATION OF POWERS U/S 263 OF THE ACT. THUS, WE HOLD THAT THE ORDER PASSED U/S 263 OF THE ACT, IS BAD IN LAW AND ALLOW THIS APPEAL OF THE 20 . SD/- J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER COPY OF THE ORDER FORWARDED TO: 1. M/S. GOURI SHANKAR JAIN HUF C/O. AGARWAL VISHWANATH & ASSOCIATES 133/1A, S.N. BANERJEE ROAD PUSHKAL BHAWAN 3 RD FLOOR KOLKATA 700 013 2. PRINCIPAL COMMISSIONER OF INCOME TAX 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 4 M/S. GOURI SHANKAR JAIN HUF AGARWAL VISHWANATH & ASSOCIATES PRINCIPAL COMMISSIONER OF INCOME TAX -11, KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA. ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES ITA NO. 1662/KOL/2019 ASSESSMENT YEAR: 2014-15 M/S. GOURI SHANKAR JAIN HUF TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES