ASSAM TIMBER TRADERS, JAIPUR V. PR.CIT-1, JAIPUR

ITA 17/JPR/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6599 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 01-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Revision of order; Loose papers; Opportunity of being heard
• Section: 263; 143(3); 40(b); 69B; 69A; 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES B, JAIPUR JH LANHI XLKA] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA -@ ITA NO. 17/JP/2021 ASSESSMENT YEAR: 2016-17 ASSAM TIMBER TRADERS, D-8, KABIR MARG, BANI PARK, JAIPUR. CUKE VS. PR.CIT-1 JAIPUR. PAN NO.: AACFA 8222 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI S.L. PODDAR (ADV) JKTLO DH VKSJ LS @ REVENUE BY : SHRI B.K. GUPTA (PR.CIT-DR) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 17/08/2021 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 08/09/2021 VKNS'K@ ORDER PER: SANDEEP GOSAIN, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. PR.CIT-1, JAIPUR DATED 30/03/2021 PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) FOR THE A.Y. 2016-17. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED PR.CIT- 1, JAIPUR ERRED IN PASSING THE ORDER U/S 263 OF THE IT ACT 1961 WHICH IS VOID AB-INITIO DESERVES TO BE QUASHED. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX HAS ERRED AND PASSING THE ORDER U/S 263 OF INCOME TAX ACT, 1961 ON THE GROUNDS WHICH ARE NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE OR ERRONEOUS. ITA 17/JP/2021_ ASSAM TIMBER TRADERS VS PR.CIT 2 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED PRINCIPAL CIT HAS ERRED IN GIVING THE FINDINGS ON THE ISSUES WHICH HAS ALREADY BEEN DECIDED BY THE LEARNED ASSESSING OFFICER. 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED PRINCIPAL CIT HAS ERRED IN NOT CONSIDERING THE REPLY SUBMITTED BY THE ASSESSSEE PRIOR TO THE PASSING OF ORDER U/S 263 OF THE IT ACT, 1961. 5. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED PRINCIPAL CIT HAS ERRED IN GIVING DIRECTION FOR FOLLOWING ISSUES WHICH HAS ALREADY DEALT BY THE LEARNED ASSESSING OFFICER IN THE ORDER PASSED U/S 143(3) OF THE IT ACT, 1961 (I) ISSUE REGARDING ALLOWABILITY OF SALARY OUT OF SURRENDERED INCOME. (II) ISSUE REGARDING ALLOWABILITY OF EXPENSES OUT OF SURRENDERED INCOME. (III) APPLICABILITY OF SECTION 1151313E OF THE IT ACT (IV) APPLICABILITY OF SECTION 69, 69A & 69B OF THE IT ACT, 1961. 2. THE HEARING OF THE APPEAL WAS CONCLUDED THROUGH VIDEO CONFERENCE IN VIEW OF THE PREVAILING SITUATION OF COVID-19 PANDEMIC. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE IS A PARTNERSHIP FIRM. THE ASSESSEE FILED ITS RETURN OF INCOME ON 17/10/2016 DECLARING TOTAL INCOME OF RS. 3,17,67,830/-. A SURVEY WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM ON 10.12.2015. DURING THE COURSE OF SURVEY SOME INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. THE STOCK INVENTORY WAS ALSO PREPARED BY THE SURVEY PARTY. THE SURVEY PARTY FOUND SOME ITA 17/JP/2021_ ASSAM TIMBER TRADERS VS PR.CIT 3 DISCREPANCIES IN THE LOOSE PAPERS AND ALSO IN THE STOCK AS PER STOCK REGISTER AND AS PER STOCK INVENTORY PREPARED BY THE SURVEY TEAM. DURING THE COURSE OF SURVEY STATEMENT OF SHRI MANOJ JAIN PARTNER OF THE ASSESSEE FIRM WAS ALSO RECORDED IN WHICH HE HAS ADMITTED THAT THE ASSESSEE FIRM IS INDULGED IN UNACCOUNTED BUSINESS ACTIVITIES AND HAS EARNED SUBSTANTIAL BUSINESS INCOME BY SUCH UNACCOUNTED BUSINESS ACTIVITIES. THE INCOME SO EARNED BY THE ASSESSEE FIRM HAS BEEN INVESTED IN THE STOCK AND DEBTORS AND THEREFORE THE EXCESS STOCK OF RS. 3,01,01,642/- AND EXCESS CASH OF RS. 2,24,166/- AND UNDISCLOSED DEBTORS OF RS. 2,50,00,000/- WAS SURRENDERED. THIS SURRENDER WAS DULY EXPLAINED IN THE STATEMENT AND THE RELEVANT QUESTIONS AND ANSWERS ARE QUESTION NO. 15 TO 17 FOR STOCK SURRENDER, QUESTION NO. 18 FOR EXCESS CASH SURRENDER AND QUESTION NO. 20 FOR SURRENDER OF DEBTORS. (PAPER BOOK PAGE NO. 52 TO 67). ALL THESE SURRENDERS ARE FOR BUSINESS INCOME. SINCE THE ASSESSEE FIRM IS NOT INDULGED IN OTHER ACTIVITIES OTHER THAN BUSINESS ACTIVITIES. THEREFORE THE SURRENDERED INCOME IS ONLY BUSINESS INCOME AND NOTHING ELSE. THEREFORE THE ASSESSEE FIRM IS ENTITLED TO DRAW SALARY AND REMUNERATION AND ALLOWABLE UNDER SECTION 40(B) OF THE ACT. THE CONTENTION OF THE ASSESSEE FIRM WAS ACCEPTED BY THE AO AND THE ASSESSMENT WAS COMPLETED ON RETURNED INCOME. THEREAFTER, ITA 17/JP/2021_ ASSAM TIMBER TRADERS VS PR.CIT 4 NOTICE U/S 263 OF THE ACT WAS ISSUED BY THE LD. PR. CIT-1, JAIPUR ON 15.03.2021 STATING THAT THE INCOME OFFERED BY THE ASSESSEE FIRM DURING THE COURSE OF SURVEY ON ACCOUNT OF EXCESS STOCK, CASH AND DEBTORS WAS REQUIRED TO BE ASSESSED UNDER THE PROVISIONS OF SECTION 69/69A AND 69B OF THE ACT AND TO BE TAXED U/S 115BBE @ 30% WITHOUT ALLOWING FOR ANY DEDUCTION IN RESPECT OF ANY EXPENDITURE OR ANY ALLOWANCE AND PASSED THE ORDER U/S 236 OF THE ACT BY SETTING ASIDE THE EARLIER ASSESSMENT ORDER AND DIRECT THE AO TO PASS A FRESH ORDER IN THE LIGHT OF OBSERVATION MADE IN THE IMPUGNED ORDER. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT ON THE GROUNDS MENTIONED ABOVE. 5. AT THE VERY OUTSET, DURING THE COURSE OF ARGUMENT, WE NOTICED THAT THE ORDER U/S 263 OF THE ACT WAS PASSED ON 30/03/2021 BY THE LD. PCIT-1, JAIPUR WHEREIN IT HAS CATEGORICALLY MENTIONED IN PARA NO. 3 OF THE ORDER THAT OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSEE BUT THE ASSESSEE HAD NOT FILED ANY REPLY IN RESPONSE TO SHOW CAUSE NOTICE U/S 263 OF THE ACT, THEREFORE, MATTER WAS DECIDED BY THE PR.CIT ON THE BASIS OF MATERIAL PLACED ON RECORD. 6. WHEREAS ON THE CONTRARY, THE LD. AR VEHEMENTLY RELIED UPON THE DETAILED REPLY FILED BEFORE THE LD. PCIT AND HAS ALSO RELIED UPON ITA 17/JP/2021_ ASSAM TIMBER TRADERS VS PR.CIT 5 THE OTHER DOCUMENTS WHICH IS AT PAGE NOS. 1 TO 89 OF THE PAPER . THE LD DR HAS DRAWN OUR ATTENTION TOWARDS PAGE NOS. 40 TO 51 OF THE PAPER BOOK WHICH IS A DETAILED REPLY FILED BY THE ASSESSEE IN RESPONSE TO SHOW CAUSE NOTICE U/S 263 OF THE ISSUED BY THE LD. PCIT. HOWEVER, AT PAGE NO. 40 OF THE PAPER BOOK WHICH IS E- PROCEEDINGS RECEIPT ACKNOWLEDGEMENT AND PARTICULAR OF DOCUMENTS, WE NOTICED THAT DUE DATE FOR SUBMISSION OF THE REPLY WAS 23/3/2021. HOWEVER, THE REPLY TO THE SHOW CAUASE NOTICE WAS FILED BY THE ASSESSEE ON 30/03/2021 VIDE ACKNOWLEDGEMENT NUMBER MENTIONED AT THE TOP OF THE RECEIPT AND EVEN ADMITTEDLY THE ASSESSEE HAS SUBMITTED THIS REPLY ONLY ON 30/03/2021 WITH THE OFFICE OF LD. PCIT. THEREFORE, UNDER THESE CIRCUMSTANCES, SINCE THE REPLY WAS FILED BY THE ASSESSEE AT A LATER STAGE, THEREFORE, THE SAME WAS NOT BEFORE THE LD. PCIT AT THE TIME OF PASSING OF ORDER U/S 263 OF THE ACT DATED 30/3/2021. HENCE, UNDER THESE CIRCUMSTANCES, THE SAID REPLY OR THE DEFENCE PUT FORTH BY THE ASSESSEE COULD NOT BE CONSIDERED BY THE LD. PCIT. 7. BE THAT AS IT MAY CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES AND THE FACTUAL POSITION OF THE CASE THAT THE SPECIFIC REPLY/DEFENCE PUT FORTH BY THE ASSESSEE BEFORE THE LD. PCIT COULD NOT BE CONSIDERED AT THE TIME OF PRONOUNCEMENT OF ORDER U/S 263 OF ITA 17/JP/2021_ ASSAM TIMBER TRADERS VS PR.CIT 6 THE ACT. THEREFORE, CONSIDERING THE SUBSTANTIAL JUSTICE, WE RESTORE THE MATTER BACK TO THE FILE OF LD. PCIT FOR FRESH RECONSIDERATION OF THE ENTIRE MATTER AFTER CONSIDERING THE REPLY/DEFENCE DATED 30/3/2021 AT PAGE NO. 40 TO 51 OF THE ASSESSEES PAPER BOOK OR ANY OTHER DOCUMENTS PLACED ON RECORD BY THE ASSESSEE. NEEDLES TO MENTION HERE THAT THE LD. PCIT WHILE RECONSIDERING THE ENTIRE MATTER AND PASSING THE ORDER, APPROPRIATE OPPORTUNITY OF BEING HEARD BE GIVEN TO THE ASSESSEE. 8. BEFORE PARTING, WE MAY MAKE IT CLEAR THAT OUR DECISION TO RESTORE THE MATTER BACK TO THE FILE OF LD. PCIT SHALL IN NO WAY BE CONSTRUED AS HAVING ANY REFLECTION OR EXPRESSION ON THE MERITS OF THE DISPUTE, WHICH SHALL BE ADJUDICATED BY LD. PCIT INDEPENDENTLY IN ACCORDANCE WITH LAW. 9. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH SEPTEMBER, 2021. SD/- SD/- FOE FLAG ;KNO LANHI XLKA (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08/09/2021 *RANJAN ITA 17/JP/2021_ ASSAM TIMBER TRADERS VS PR.CIT 7 VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- ASSAM TIMBER TRADERS, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE PR.CIT-1, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 17/JP/2021) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR