M/s Aggarwal Promoters, Kharar V. PR. CIT-2, Chandigarh

ITA 1708/CHANDI/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7968 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 26-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH GUPTA
• Keywords: Opportunity of being heard; Bonafide belief; Condonation of delay; Set aside
• Section: 40A(3); 143(3); 143(1); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH , . '.., # $, %& BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 1708/CHD/2017 / ASSESSMENT YEAR : 2012-13 M/S AGGARWAL PROMOTERS, VILLAGAE DESUMAJRA, KHARAR THE PR. COMMISSIONER OF INCOME TAX-2, CHANDIGARH ./PAN NO. AASFA5580H / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH. PARIKSHIT AGGARWAL, CA ' ! / REVENUE BY : SH. ASHISH GUPTA, CIT DR # $ % /DATE OF HEARING : 28.02.2019 &'() % / DATE OF PRONOUNCEMENT : 16. 04.2019 %'/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 01.2.2017 OF THE PR. COMMISSIONER OF IN COME TAX-2, CHANDIGARH [HEREIN REFERRED TO AS PCIT]. 2. THE ASSESSEE IN THIS APPEAL HAS AGITATED THE AC TION OF THE PCIT IN SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE AS SESSING OFFICER EXERCISING HIS REVISION POWERS U/S 263 OF THE IN COME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. THERE IS A DELAY OF 265 DAYS IN FILING THE PRESE NT APPEAL. A SEPARATE APPLICATION HAS BEEN MOVED FOR CONDONATION OF DELAY WHICH HAS ALSO BEEN SUPPORTED WITH THE AFFIDAVIT OF SHRI AMARJIT GARG, PARTNER OF THE ASSESSEE ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 2 FIRM. IT HAS BEEN EXPLAINED IN THE APPLICATION THAT THE TAX MATTERS OF THE ASSESSEE FIRM WERE LOOKED INTO BY HIS COUNSEL NAMEL Y SHRI VARINDER GARG, ADVOCATE. THAT THE PARTNERS OF THE ASSESSEE FIRM WE RE NOT WELL-VERSED WITH THE PROCEDURE AND TECHNICALITIES OF THE TAX MATTERS AND WERE DEPENDENT ON THE COUNSEL, SHRI VARINDER GARG. THAT WHEN THE NOT ICE OF THE PROCEEDINGS U/S 263 WAS RECEIVED BY THE ASSESSEE, THE SAME WAS SUPPLIED TO SHRI VARINDER GARG, ADVOCATE FOR FURTHER ACTION. THEREAF TER, THE ASSESSEE RECEIVED THE IMPUGNED ORDER PASSED BY THE LD. PCIT U/S 263 OF THE ACT WHICH WAS ALSO SUPPLIED TO THEIR COUNSEL SHRI VARIN DER GARG. HOWEVER, SHRI VARINDER GARG, DID NOT TAKE ANY ACTION IN THIS RESPECT AND NEVER ADVISED THE ASSESSEE ABOUT THE MAINTAINABILITY OF T HE APPEAL AGAINST THE ORDER U/S 263 OF THE ACT. EVEN THEREAFTER A FRESH ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER WHICH WAS AGAIN SUP PLIED TO SHRI VARINDER GARG, COUNSEL FOR THE ASSESSEE FOR FURTHER ACTION. HOWEVER, AT THIS STAGE, SHRI VARINDER GARG SURRENDERED AND SUGGESTED THAT H E HAD NO EXPERIENCE OF APPEARANCE BEFORE THE APPELLATE AUTHORITIES AND THA T THE ASSESSEE SHOULD ENGAGE SOME OTHER COUNSEL TO PURSUE THE MATTER BEFO RE THE APPELLATE AUTHORITY. WHEN THE ASSESSEE SOUGHT ADVISE OF SOME OTHER COUNSELS, THEN IT WAS POINTED OUT BY THEM THAT ASSESSEE WAS NOT PROPE RLY ADVISED BY THE EARLIER COUNSEL ABOUT THE MAINTAINABILITY OF THE AP PEAL AGAINST THE ORDER PASSED U/S 263 OF THE ACT. THE ASSESSEE THEREAFTER ENGAGED THE PRESENT COUNSEL AND IMMEDIATELY FILED THE APPEAL AGAINST TH E ORDER PASSED BY THE LD. PCIT U/S 263 OF THE ACT. THAT THE DELAY IN F ILING THE APPEAL WAS NEITHER INTENTIONAL NOR DELIBERATE BUT SOLELY DUE T O WRONG PROFESSIONAL ADVICE GIVEN BY THEIR EARLIER COUNSEL. THAT THERE W AS A REASONABLE AND ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 3 BONAFIDE CAUSE FOR THE DELAY IN FILLING THE APPEAL, THEREFORE, THE DELAY DESERVES TO BE CONDONED. 4. THE LD. COUNSEL HAS ALSO INVITED OUR ATTENTION TO THE IMPUGNED ORDER PASSED U/S 263 OF THE ACT TO SUBMIT THAT EVEN THE E ARLIER COUNSEL DID NOT THE APPEAR BEFORE THE PCIT IN THE PROCEEDINGS CARRIED O UT U/S 263 OF THE ACT AND THAT THE SAID ORDER PASSED BY THE LD. PCIT U/S 263 OF THE ACT WAS AN EX-PARTE ORDER. THE AVERMENTS MADE IN THE APPLICATI ON HAVE BEEN FURTHER CORROBORATED WITH THE AFFIDAVIT OF SHRI AMARJIT GAR G, PARTNER OF THE ASSESSEE FIRM. THE LD. COUNSEL FOR THE ASSESSEE HA S FURTHER RELIED ON THE TWO DECISIONS OF THE COORDINATE BENCH OF THE TRIBUN AL, FIRSTLY, THE DECISION OF KOLKATA BENCH OF THE TRIBUNAL DATED 2 2.11.2018 IN THE CASE OF SAHALBUDDIN QUADIRI VS. DCIT ITA NO. 1617/KOL//20 16 AND SECONDLY ON THE DECISION DATED 3.12.2018 OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ASHTE LOGISTICS PVT LTD, MUMBAI VS. PR. CI T-1, ITA NO. 229/MUM/2018, WHEREIN, IN SOMEWHAT SIMILAR CIRCUMST ANCES, THE RESPECTIVE COUNSELS FOR THE ASSESSEE DID GIVE WRONG ADVISE ABOUT THE MAINTAINABILITY OF THE APPEAL AGAINST ORDER PASSED U/S 263 OF THE ACT, AND THE COORDINATE BENCHES OF THE TRIBUNAL TAKING INTO CONSIDERATION THE BONAFIDE BELIEF OF THE ASSESSEES WHICH WAS BASED O N THE ADVISE OF THE COUNSEL THAT APPEAL AGAINST THE ORDER PASSED U/S 263 OF THE ACT WAS NOT MAINTAINABLE, HAVE HELD THAT THE ASSESSEE SHOULD NO T SUFFER ON ACCOUNT OF WRONG ADVISE OF THE CONSULTANT AND, THEREFORE, HAV E CONDONED THE DELAY OF 409 DAYS AND 214 DAYS RESPECTIVELY IN FILLING THE APPEALS AGAINST THE ORDERS PASSED U/S 263 OF THE ACT. ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 4 5. THE LD. DR HAS STRONGLY OPPOSED THE APPLICATION FOR CONDONATION OF DELAY. 6. CONSIDERING THE EXPLANATION GIVEN IN THE APPLICA TION WHICH IS FURTHER CORROBORATED WITH THE AFFIDAVIT OF SHRI AMARJIT SIN GH, PARTNER OF THE ASSESSEE FIRM AND ALSO CONSIDERING THE RIVAL SUBMI SSIONS AND ALSO TAKING NOTE OF THE FACT THAT THE EARLIER COUNSEL OF THE AS SESSEE EVEN DID NOT APPEAR BEFORE THE PCIT IN THE PROCEEDINGS CARRIED OUT U/S 263 OF THE ACT AND ALSO IN THE LIGHT OF THE DECISION OF THE COORDINATE KOKL ATA BENCH IN SAHALBUDDIN QUADIRI VS. DCIT (SUPRA) AND MUMBAI B ENCH OF THE TRIBUNAL ASHTE LOGISTICS PVT LTD, MUMBAI VS. PR. C IT-1 (SUPRA), IN OUR VIEW, INTEREST OF JUSTICE WILL BE SERVED, IF THE DE LAY IN FILING THE PRESENT APPEAL IS CONDONED. WE ORDER ACCORDINGLY. 7. NOW COMING TO THE MERITS OF THE CASE. THE LD. PC IT NOTED FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAD CLAIMED EXPE NDITURE OF 1,59,45,020/- IN THE TRADING ACCOUNT AS LAND COST . HE FURTHER NOTED THAT WHILE PURCHASING THE SAID LAND, OUT OF TOTAL CONSID ERATION, THE ASSESSEE HAD MADE CASH PAYMENT OF 73,68,000/- TWICE VIDE RECEIPT NOS. 2065 & 2066 RESPECTIVELY ON 9.8.2011 TO THE SELLER. FURTHER, FROM THE PERUSAL OF THE LEDGER ACCOUNT, THE LD. PCIT NOTED THAT THE ASSESSE E HAD MADE CASH PAYMENT OF 62,762/- ON ACCOUNT OF EXPENDITURE IN RESPECT OF JOB WORK CHARGES TO M/S DHIMAN ALUMINUM AND INTERIOR DECOR ATOR ON 3.3.2012 AND BUILDING MATERIAL TO OTHER TWO PARTIES. HE, THERE FORE, HELD THAT AS PER THE PROVISIONS OF SECTION 40A(3), WHERE THE ASSESSEE IN CURS ANY EXPENDITURE IN RESPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY ACCOUNT PAY CHEQUES / BANK D RAFT, EXCEEDS ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 5 20,000/- RUPEES, NO DEDUCTION SHALL BE ALLOWED IN R ESPECT OF SUCH EXPENDITURE. THE LD. PCIT, THEREFORE, NOTED THAT S INCE THE AFORESAID PAYMENTS WERE MADE IN CASH, HENCE, THE PROVISIONS O F SECTION 40A(3) WERE ATTRACTED AND THE DISALLOWANCE OF AFORESAID AMOUNT WAS WARRANTED WHICH THE ASSESSING OFFICER FAILED TO DO SO. HE, THEREFO RE, HELD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DA TED 30.12.2014 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. THE LD. PCIT, THEREFORE, SET ASIDE THE ASSESSMENT ORDER DATED 30. 12.2014 PASSED U/S 143(3) OF THE ACT FOR THE ASSESSMENT YEAR UNDER CON SIDERATION WITH A DIRECTION TO THE ASSESSING OFFICER TO PASS THE ASSE SSMENT ORDER AFRESH IN ACCORDANCE WITH LAW KEEPING IN VIEW OF THE AFORESAI D OBSERVATIONS OF THE LD. PCIT REGARDING DISALLOWANCE U/S 40A(3) OF THE A CT AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. AGGRIEVED BY THE SAID ORDER OF THE PCIT PASSED U /S 263 OF THE ACT, THE ASSESSEE HAS COME IN APPEAL BEFORE US. 9. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER IN QUESTION OF THE ASSESSIN G OFFICER DATED 30.12.2014 PASSED U/S 143(3) OF THE ACT AND HAS SU BMITTED THAT THE RETURN FILED BY THE ASSESSEE WAS ORIGINALLY PROCESSED U/S 143(1) OF THE ACT, HOWEVER, THE CASE WAS LATER SELECTED FOR LIMITED SC RUTINY UNDER THE CASS TO VERIFY THE LARGE INCREASE IN UNSECURED LOANS RAISED DURING THE YEAR. THE ENQUIRIES OF THE LD. ASSESSING OFFICER WERE, THEREF ORE, LIMITED TO THE ASPECT OF THE GENUINENESS AND VERIFICATION OF UNSECURED LO ANS, THE DETAILS AND EXPLANATION REGARDING WHICH WERE DULY SUPPLIED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER BEING SATISFIED WITH THE EVIDENCES GIVEN BY THE ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 6 ASSESSEE COMPETED THE ASSESSMENT AT THE RETURNED L OSS OF 10,21,815/- THAT NEITHER THE ASSESSING OFFICER WAS AUTHORISED N OR THERE WAS ANY OCCASION TO THE ASSESSING OFFICER TO SCRUTINIZE AND MAKE ENQUIRIES, ABOUT THE OTHER FACTORS OF THE CASE AS IT WAS A LIMITED S CRUTINY ASSESSMENT CASE, HENCE, THE ENQUIRY, IF ANY, WAS RESTRICTED TO THE L IMITED ISSUE OF UNSECURED LOANS WHICH WAS DULY DONE BY THE ASSESSING OFFICER AND NO FAULT HAS BEEN FOUND BY THE LD. CIT(A) IN THAT RESPECT. UNDER THE CIRCUMSTANCES, THE ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE SAI D TO BE ERRONEOUS. 10. AS PER THE PROVISIONS OF SECTION 263 OF THE ACT , THE CIT / PCIT ON EXERCISER JURISDICTION U/S 263 OF THE ACT, IF HE CONSIDER THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. IT HAS BEEN HELD TIME AND AGAIN BY VARIOUS COURTS OF LAW INCLUDING THE HON'BLE APEX COURT OF THE COUN TRY THAT FOR EXERCISE OF JURISDICTION U/S 263 OF THE ACT, THE TWIN CONDITIO NS MUST BE SATISFIED I.E. (I) THE ORDER PASSED BY THE ASSESSING OFFICER IS E RRONEOUS, AND; (II) IT MUST BE PREJUDICIAL TO THE INTEREST OF REVENUE. IF ANY O F THE TWIN CONDITIONS IS ABSENT, THE COMMISSIONER CANNOT EXERCISE JURISDICTI ON U/S 263 OF THE ACT. RELIANCE IN THIS RESPECT IS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO LTD VS. CIT (2008) 109 TAXMAN 66 (SC). IN VIEW OF THE ABOVE DISCUSSION, THE ORDER PASSED BY THE ASSESSING OFFICER SINCE CANNOT BE SAID TO BE ERRONEOUS, HENCE , THE LD. PCIT WAS NOT AUTHORISED TO INVOKE HIS POWERS U/S 263 OF THE AC T AND CANCEL THE ASSESSMENT ORDER. THEREFORE, THE ORDER PASSED BY TH E LD. PCIT IS QUASHED ON THIS SCORE ALONE. ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 7 11. EVEN ON MERITS, THE LD. COUNSEL FOR THE ASSESSE E HAS INVITED OUR ATTENTION TO THE TRADING ACCOUNT OF THE ASSESSEE FO R THE YEAR ENDED ON 31.3.2012 I.E. FOR THE ASSESSMENT YEAR UNDER CONSID ERATION TO SHOW THAT THE ASSESSEE DURING THE YEAR DID NOT MAKE ANY SALES. TH AT ALL THE PAYMENTS / EXPENDITURE DURING THE YEAR WAS PART OF THE CLOSING STOCK (WORK IN PROGRESS). THAT SINCE THERE WAS NO SALES MADE DURI NG THE YEAR, HENCE, THERE WAS NO QUESTION OF BOOKING ANY EXPENDITURE AG AINST ANY PROFIT OR LOSS AGAINST ANY SALES. THAT SINCE THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE DURING THE YEAR, HENCE, THERE WAS NO QUESTION OF DI SALLOWANCE OF ANY EXPENDITURE UNDER THE PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT. 12. THE LD. DR COULD NOT REBUT THE AFORESAID CONTEN TION ALSO OF THE ASSESSEE. 13. SINCE THE ASSESSEE DID NOT CLAIM ANY EXPENDITUR E DURING THE YEAR, NO DISALLOWANCE OF EXPENDITURE CAN BE MADE EVEN UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THEREFORE, THE ORDER PA SSED BY THE ASSESSING OFFICER EVEN ON MERIT CANNOT BE SAID TO BE PREJUDIC IAL TO THE INTEREST OF REVENUE. IN VIEW OF THE ABOVE DISCUSSION, THE ORDER PASSED BY THE LD. PCIT U/S 263 OF THE ACT IS NOT SUSTAINABLE IN THE E YES OF LAW AND THE SAME IS ACCORDINGLY QUASHED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2019 SD/- SD/- ( ' . . , # $ / B.R.R. KUMAR) %& / ACCOUNTANT MEMBER ( / SANJAY GARG ) / JUDICIAL MEMBER DATED : 16.04.2019 .. ITA NOS. 1464/CHD/2017- M/S BHANDARI KNIT EXPORTS, LUDHIANA 8 '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR