Utkal Marine Primary Fish Production &Marketing CO-OP Society Ltd., Jagatsinghpur V. Pr. CIT-1, Bhubaneswar

ITA 18/CTK/2022

AI Insights

The case involves an appeal by Utkal Marine Primary Fish Production And Marketing Co. Op. Society Ltd. against the order of the Pr.CIT, Bhubaneswar-1, which was passed under section 263 of the Income Tax Act. The Pr.CIT had set aside the original assessment made by the Assessing Officer (AO) under section 143(3), claiming it was erroneous and prejudicial to the interest of the revenue. The main contention was regarding the addition of undisclosed profits and disallowance of certain expenses. The Tribunal examined whether the Pr.CIT had conducted a proper enquiry and whether the issues raised justified the setting aside of the assessment order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127006 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 22-02-2022
• Other Referred Cases: M/s Earth Minerals Co. Ltd. vs. ITA No.223/CTK/2019, Orissa State Police Housing & Welfare Corporation Ltd. vs. [2022] 139 taxmann.com 207 (Orissa), D.G.Housing Projects Ltd. vs. [2012] 20 taxmann.com 587 (Delhi)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAROJ KUMAR MAHAPATRA
• Section: 207

Judgement Text

आयकर अऩीऱीय अधधकरण, कटक न्यायऩीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK (THROUGH VIRTUAL HEARING) BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER आयकर अऩीऱ सं/ITA No.18/C TK/2022 (ननधाारण वषा / Asses s m ent Year : 2017-2 018) Utkal Marine Primary Fish Production And marketing Co. Op. Society Ltd., Sector-21, New Fishing Harbour, Paradeep Port, Jagatsinghpur Vs Pr.CIT-1, Bhubaneswar PAN No. :AAAAU 3800 F (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Shri Mohit Sheth, Advocate राजस्व की ओर से /Revenue by : Shri Saroj Kumar Mahapatra, Pr.CIT-DR स ु नवाई की तारीख / Date of Hearing : 20/07/2023 घोषणा की तारीख/Date of Pronouncement : 20/07/2023 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order of the ld. Pr.CIT, Bhubaneswar-1, dated 04.02.2022, passed in ITBA/REV/F/REV5/2021-22/1039391202(1) for the assessment year 2017-2018. 2. It was submitted by the ld. AR of the assessee that the assessee is an AOP being a cooperative society consisting of fishing boat owners as its members and engaged in trading in HSD and lubricants and running of a diesel pump for facilitation of fishing activities only among its members who are fishermen. It was the submission that the assessment came to be completed u/s.143(3) of the Act on 30.12.2019, wherein the AO had assessed the income of the assessee at Rs.1,18,55,800/-. It was the ITA No.18/CTK/2022 2 submission that the ld. Pr.CIT had invoked his powers u/s.263 of the Act and had issued a show cause notice holding that the AO had added undisclosed profit of Rs.29,18,346/- and consequently the gross profit as per the audited account was to be taken at Rs.56,88,898/- and after reducing the various expenses the net profit was to be determined at Rs.43,91,739/-. Thus, resulting in an under-assessment of Rs.14,73,393/- It was further submitted that the ld. Pr.CIT has also taken a stand that from the profit and loss account, the picnic expenses, entertainment expenses and pooja expenses were not liable to be allowed as it did not have any relation to the business activity of the assessee. The assessee has also claimed Rs.66,837/- in respect of other liabilities in Annexure-V. Ld. Pr.CIT has in para 3.3 raised further issues in respect of which he has alleged that there was violation on the part of the AO to examine various details. It was the submission that the ld. Pr.CIT after raising these issues, which have been mentioned by him in paras 3.1, 3.2 & 3.3 of his order, has given no direction specifically as to his view on the issues. It was the submission that the ld. Pr.CIT has not done any examination much less verification in respect of the said issues but proceed to hold the assessment order to be erroneous insofar as it is prejudicial to the interest of revenue and set aside the assessment on the limited issues as discussed in the notice keeping in mind, inter alia, the observations made hereinabove and the submissions of the assessee during the assessment and that may be furnished during the course of assessment to be done afresh. It was the submission that this was a classic case where there is ITA No.18/CTK/2022 3 no application of mind, there is no enquiry and only on the ground that the assessee had not responded to the show cause notice directed to revise the assessment. It was the submission that the accounts of the assessee being cooperative society are audited by the Accountant General (Cooperative Society). It was the submission that the AO has adopted the profit as audited and approved by the office of the AG(CS). It was the submission that when the AO has done the assessment, he has verified the accounts which have been audited and in respect of which no adverse comments have also been drawn by the office of the AG(CS). It was the submission that as no examination has been done much less an enquiry on the issues raised by the ld. Pr.CIT before passing his order u/s.263 of the Act, in view of the decision of the coordinate bench of this Tribunal in the case of M/s Earth Minerals Co. Ltd., passed in ITA No.223/CTK/2019, order dated 29.08.2022, which has also been upheld by the Hon’ble Jurisdictional High Court in ITA No.24 of 2023 vide order dated 06.03.2023 as also the decision of the Hon’ble Jurisdictional High Court in the case of Orissa State Police Housing & Welfare Corporation Ltd., reported in [2022] 139 taxmann.com 207 (Orissa) as also the proposition of law laid down by the Hon’ble Delhi High Court in the case of D.G.Housing Projects Ltd., reported in [2012] 20 taxmann.com 587 (Delhi), the order passed u/s.263 of the Act is liable to be quashed. 3. In reply, ld. CIT-DR submitted that the assessee has not cooperated in the revisionary proceedings though notices have been issued to the assessee. It was the submission that had the assessee ITA No.18/CTK/2022 4 cooperated in the revisionary proceedings, possibly the ld. Pr.CIT would have been able to do further enquiry. It was the submission that the order passed u/s.263 of the Act is liable to be upheld. 4. We have considered the rival submissions. A perusal of the order of the ld. Pr.CIT passed u/s.263 of the Act shows that no enquiry has been done by the ld. Pr.CIT in respect of issues raised by him in the show cause notice u/s.263 of the Act. Even if the assessee did not cooperate nor responded to the show cause notice, nothing stopped the ld. Pr.CIT from examining the records and draw his conclusions on the basis of evidence available on the record. A perusal of para 3.3 of the order of the ld. Pr.CIT clearly shows that it is fishing and roving enquiry which has been proposed by the ld. Pr.CIT. A perusal of para 7 of the order of the ld. Pr.CIT, setting aside the original assessment order does not talk of how the order of the ld. AO passed u/s.143(3) of the Act after examining the books and records of the assessee, is erroneous and prejudicial to the interest of revenue. This being the fact, respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of Orissa State Police Housing & Welfare Corporation Ltd. (supra) as also the decision of the coordinate bench of the Tribunal in the case of M/s Earth Minerals Co. Ltd. and the principle laid down by the Hon’ble Delhi High Court in the case of D.G.Housing Projects Ltd.(supra), the order passed u/s.263 of the Act is unsustainable and consequently the same is quashed. ITA No.18/CTK/2022 5 5. In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 20/07/2023. Sd/- (GIRISH AGRAWAL) Sd/- (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 20/07/2023 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : आदेशान ु सार/ BY ORDER, (Assistant Registrar) आयकर अऩीऱीय अधधकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- Utkal Marine Primary Fish Production And marketing Co. Op. Society Ltd., Sector-21, New Fishing Harbour, Paradeep Port, Jagatsinghpur 2. प्रत्यथी / The Respondent- Pr.CIT-1, Bhubaneswar 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ड पाईऱ / Guard file. सत्यावऩत प्रतत //True Copy//