George Joseph Fernandez, Raichur V. Assistant Commissioner of Income Tax, Circle-1, Raichur

ITA 1965/BANG/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9412 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-03-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 06-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BALASUBRAMANIAM
• Keywords: Depreciation; Business expenditure; Revised return
• Section: 32; 145; 37

Judgement Text

ITA.1965, 1966 & 2925/BANG/2017 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NOS.1965, 2925 & 1966/BANG/2017 (ASSESSMENT YEARS : 2007-08, 2009-10 & 2011-12) SHRI. GEORGE JOSEPH FERNANDEZ, ENGINEERS & CONTRACTORS, PULLIAH BLOCK, STATION ROAD, RAICHUR .. APPELLANT PAN : AABPF9791J V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 1, RAICHUR .. RESPONDENT ASSESSEE BY : SHRI. BALASUBRAMANIAM, CA REVENUE BY : SHRI. K. R. NARAYANA, JCIT HEARD ON : 21.03.2019 PRONOUNCED ON : 05.04.2019 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THESE ARE THREE APPEALS FILED BY THE ASSESSEE AGAI NST THE SEPARATE ORDERS OF THE CIT (A), GULBARGA, DT.24.07.2017, FOR ASSESSMENT YEARS 2007-08, 2011-12 AND DT.17.10.2017, FOR THE ASSESSM ENT YEAR 2009-10. ITA.1965, 1966 & 2925/BANG/2017 PAGE - 2 02. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE FO R A. Y. 2007-08 ARE AS UNDER : ITA.1965, 1966 & 2925/BANG/2017 PAGE - 3 THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE FOR A. Y. 2009-10 ARE AS UNDER : ITA.1965, 1966 & 2925/BANG/2017 PAGE - 4 THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE FOR A. Y. 2011-12 ARE AS UNDER : A) THE LD. CIT FAILED TO APPRECIATE THAT THE LD. AO MISDIRECTED HIMSELF IN LIMITING THE DEPRECIATION ON THE ASSETS IN RESPECT OF AJAY MEETU INDUSTRIAL FABRICATION PRO PORTIONATE TO 2 MONTHS WAS ARBITRARY AND CONTRARY TO THE PROVI SIONS OF SEC 32 READ WITH SEC 43(6)(C) OF THE IT ACT OF 1961 . ITA.1965, 1966 & 2925/BANG/2017 PAGE - 5 8. THE LD. CIT (A) MISDIRECTED HIMSELF BY CONFIRMIN G THE ORDER OF LD. AO WHEREIN THE LD. AO HAS APPLIED A RATE OF COM MISSION ON SUB- CONTRACTORS PAYMENT WHICH IN REALITY WAS EXPE NDITURE IN THE HANDS OF THE APPELLANT. I.T.A NO.1965/BANG/2017 A. Y. 2007-08 : 03. IN ITA NO.1965/BANG/2017 FOR A. Y. 2007-08, GRO UND NO.1 IS GENERAL. GROUND NOS.2 AND 3 ARE NOT PRESSED BY THE LD AR FOR THE ASSESSEE . ITA.1965, 1966 & 2925/BANG/2017 PAGE - 6 04. IN REGARD TO GROUND NO.4, THE LD. AR HAS DRAWN OUR ATTENTION TO PARA 6 OF THE CIT(A)S ORDER TO THE FOLLOWING EFFEC T : 6. GROUND NO.3. THE APPELLANT'S CONTENTION THAT THE LEARNED DCIT WAS NOT JUSTIFIED IN ADDING RS.6,00,000/- AS I NTEREST DUE ON ADVANCES MADE TO MIS SPR HOLDINGS WHEN THE MATTER WAS PENDING IN LITIGATION BEFORE LOCAL COURT. THE ADDITION WAS NOT WARRANTED AS THE APPELLANT HAD DECLARED TOTAL INTEREST ON RECEIP T BASIS FOR THE AY 2009-10. I HOLD THAT THE APPELLANT'S ARGUMENTS CANNOT BE DEN IED. THE AO FOLLOWED THE ASSESSMENT ORDER FOR THE AY 2006-07 PASSED BY HIS PREDECESSOR WHERE THE INTEREST ENTITLEMENT FROM M/S. SPR WAS TREATED AS INCOME OF THE ASSESSEE AND BROUGHT TO TA X. I HAVE GONE THROUGH THE SUBMISSIONS AND ITS ENCLOSURES AND SCORES OF JUDICIAL PRONOUNCEMENTS RELIED WERE ALSO PERUSED WHICH THE APPELLANT HAD RELIED. THE INTEREST IS TAXABLE ON AC CRUAL BASIS AND THE AO HAD RIGHTLY ADDED THE INTEREST DUE ON ADVANC ES TO SPR HOLDINGS. THE REASONS STATED BY THE ASSESSING OFFIC ER ARE ACCEPTABLE. HOWEVER, IF THE ASSESSEE HAD OFFERED SA ME INCOME ON RECEIPT BASIS FOR THE ASSESSMENT YEAR 200910 AS CLA IMED BY HIM, THE SAME MAY ACCORDINGLY BE EXAMINED FOR NECESSARY ACTION BY THE ASSESSING OFFICER IN THAT PARTICULAR YEAR. IN V IEW OF THE ABOVE DISCUSSION, THE RELEVANT GROUNDS OF APPEAL ON THIS ISSUE IN THIS APPEAL ARE DISMISSED. IT WAS SUBMITTED THAT THE ASSESSEE HAS FOLLOWED THE HYBRID SYSTEM OF ACCOUNTING I.E., RECEIPT BASIS AS WELL AS ACCRUAL B ASIS. IT WAS SUBMITTED THAT FOR THE PURPOSE OF INTEREST TO THE ASSESSEE HA D SHOWN THE INTEREST WHENEVER IT WAS RECEIVED BY THE ASSESSEE AND NOT IN THE YEAR IT WAS ACCRUED TO IT. IT WAS SUBMITTED THAT IN LAW THE AS SESSEE IS PERMITTED TO FOLLOW THE HYBRID METHOD AND CHOICES WAS GIVEN TO FOLLOW ANY OF THE METHODS PRESCRIBED IN LAW . THE LD. AR HAD ALSO REL IED ON SECTION 145 OF THE IT ACT WHICH PROVIDES THE ACCOUNTING MET HOD THAT IS REQUIRED TO BE FOLLOWED. ITA.1965, 1966 & 2925/BANG/2017 PAGE - 7 05. ON THE OTHER HAND THE LEARNED DR SUBMITTED THAT THE ORDER PASSED BY THE LOWER AUTHORITIES IS CORRECT AS, UNDE R SECTION 145 THE CHOICE IS GIVEN TO THE ASSESSEE EITHER TO FOLLOW CA SH OR MERCANTILE SYSTEM OF ACCOUNTING WHICH IS REGULARLY EMPLOYED BY THE ASSESSE. HOWEVER NO WHERE IT WAS MENTIONED THAT BOTH CAN BE APPLIED. 06. WE HAVE HEARD THE RIVAL CONTENTIONS P ERUSED THE MATERIAL ON RECORD. SECTION 145 (1) PROVIDES AS UNDER: 145 (1) INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND G AINS OF BUSINESS OR PROFESSION' OR 'INCOME FROM OTHER SOURC ES' SHALL BE COMPUTED IN ACCORDANCE WITH THE METHOD OF ACCOUNTIN G REGULARLY EMPLOYED BY THE ASSESSEE FROM THE READING OF THE ABOVE SECTION IT IS CLEAR T HAT THE LAW GIVES THE DISCRETION TO THE ASSESSEE TO FOLLOW EITHER CAS H OR MERCANTILE SYSTEM OF ACCOUNTING. THE USE OF THE WORD EITHER CASH OR MERCANTILE CLEARLY INDICATES THAT ONE OF THE TWO M ETHODS PROVIDED UNDER THE ACT, EITHER CASH OR MERCANTILE CAN BE FOL LOWED. THE LANGUAGE USED IN THE STATUTE IS NO INCAPABLE OF HAV ING TWO MEANINGS AND IS CLEAR AND UNEQUIVOCALLY SUGGEST TH AT ONE OF THE TWO METHOD PROVIDED UNDER LAW CAN BE FOLLOWED BY TH E ASSESSEE . WHEN THE CHOICE IS GIVEN BY THE LEGISLATURE TO FOLL OW ONE METHOD AND NOT BOTH OF THEM , IF THE CHOICE IS GIVEN BY TH E STATUTE TWO FOLLOW BOTH THE METHOD AS AND WHEN DECIDED BY THE A SSESSEE , THEN THE STATUTE WOULD HAVE MENTIONED THAT EITHER O NE OF THE METHODS OR BOTH THE METHODS OR MIXED OF THE TWO AS AND DECIDED ITA.1965, 1966 & 2925/BANG/2017 PAGE - 8 BY THE ASSESSEE , BUT STATUTE HAD NOT PROVIDED SO . IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE IS ONLY ENTITLED T O FOLLOW ONLY CASH OR MERCANTILE SYSTEM OF ACCOUNTING. IN THE PRE SENT CASE THE ASSESSEE HAS FOLLOWED MERCANTILE SYSTEM. ACCORDING TO WHICH, THE INCOME IS TO BE ACCOUNTED IN THE YEAR IN WHICH IT I S ACCRUED AND NOT IN THE YEAR IT WAS RECEIVED. SINCE THE INCOME P ERTAINING TO INTEREST DUES AND ADVANCES MADE TO SPR HOLDINGS, WA S ACCRUED IN THE PRESENT YEAR. THEREFORE THE SAME IS CHARGEABLE IN THE CURRENT YEAR ONLY . THEREFORE THE ACTION OF THE LOWER AUTHORITI ES IS CORRECT. IN THE RESULT THIS GROUND NO 3 OF THE ASSESSEE IS R EJECTED. 07. GROUND NO.5 PERTAINS TO DEDUCTION TOWARDS CBF. IN THIS REGARD THE LD. AR HAD DRAWN OUR ATTENTION TO INTERNAL PARA 3 OF PAGE 4, OF THE ASSESSMENT ORDER AND PARA 7 OF THE CIT (A) O RDER, WHERE IN BOTH THE AUTHORITIES HAVE DEALT WITH THE ISSUE OF C BF AND HAVE DENIED IT TO BE TREATED AS BUSINESS EXPENDITURE. TH E LD. AR HAD DRAWN OUR ATTENTION TO PAGE 25 OF THE PAPER BOOK WH ICH IS PART OF THE NOTIFICATION ISSUED BY THE GOVERNMENT OF KARNAT AKA, IN THE BUILDING AND OTHER CONSTRUCTION WORKERS WELFARE CE SS ACT, 1966, PROVIDES AS UNDER: D) ALL GOVERNMENT DEPARTMENTS, PUBLIC SECTOR UNDERTAKINGS AND OTHER GOVERNMENTAL AGENCIES/ BODIE S CARRYING OUT ANY BUILDING OR OTHER CONSTRUCTION WORKS WHICH ARE COVERED UNDER SECTION2(D) OF THE MAIN ACT SHALL, IN CASE THE WORK IS CARRIED OUT THROUGH CONTRACTOR DEDUCT 1% OF THE AMO UNT OF THE COST APPROVED AS PER THE TENDER NOTIFICATION FROM THE BI LL AT THE TIME OF MAKING PAYMENT TO THE CONTRACTORS AND SUCH AMOUNT SO ITA.1965, 1966 & 2925/BANG/2017 PAGE - 9 DEDUCTED FROM THE CONTRACTORS' BILL SHALL BE REMITT ED BY WAY OF ACCOUNT PAYEE CHEQUE IN FAVOUR OF THE KARNATAKA STA TE BUILDING AND OTHER CONSTRUCTION WORKERS' WELFARE BO ARD WITHIN 30 DAYS OF MAKING SUCH PAYMENT ALONG WITH A FORWARDING LETTER ADDRESSED TO THE SECRETARY-CUM-CH IEF EXECUTIVE OFFICER, KARNATAKA STATE BUILDING AND OTH ER CONSTRUCTION WORKERS' WELFARE BOARD,3 RD STAGE, KARMIKA BHAVAN, BANNERGHATTA ROAD, BANGALORE-29. IT WAS FURTHER SUBMITTED THAT PURSUANT TO THIS NOTI FICATION THE ASSESSEE HAD DEDUCTED CBF OF RS.76,595/-, WHICH IS PART OF THE MEMORANDUM OF THE PAYMENT (PAGE 31 OF THE PAPER BOO K), WHERE THE SAME AMOUNT IS SHOWN AS DEDUCTED. ON THE BASIS OF THE ABOVE, IT WAS SUBMITTED THAT THE SAME IS REQUIRED TO BE AN ALLOWABLE DEDUCTION AND THEREFORE THE ACTION OF THE LOWER AUT HORITIES WITHOUT ANY MERIT. 08. ON THE OTHER HAND, THE LD. DR HAD SUBMITTED T HAT THIS EXPENDITURE IS NOT REQUIRED TO BE ALLOWED AS A BUSI NESS EXPENDITURE. 09. WE HAVE GONE THROUGH THE RECORDS AND PERUSED TH E MATERIAL PLACED BEFORE US. THE BUILDING AND OTHER CONSTRUCTION WORK ERS WELFARE CESS ACT, 1966, CAME INTO EFFECT FROM 3 RD NOVEMBER 1995 FOR THE WELFARE OF CONSTRUCTION WORKERS AND TH E GOVERNMENT HAD BEEN ISSUING NOTIFICATIONS MANDATING ALL THE CO NSTRUCTION AGENCIES TO DEDUCT CESS ON THE TOTAL PAYMENT MADE T O THE CONTRACTORS. IF WE LOOK INTO THE MANNER IN WHICH TH E AMOUNT IS TO BE DEDUCTED BY THE GOVERNMENT AGENCY, THEN IT IS CL EAR THAT THE ITA.1965, 1966 & 2925/BANG/2017 PAGE - 10 SAID AMOUNT IS REQUIRED TO BE DEDUCTED BEFORE MAKIN G PAYMENT TO THE CONTRACTOR FROM THE TOTAL AMOUNT OF PAYMENT, AS PER THE TENDER NOTIFICATION. THIS CLEARLY MEANS THAT CESS DEDUCTE D AND DEPOSITED IS NOT AN APPLICATION OF INCOME, RATHER IT IS MANDA TORILY CHARGE REQUIRED TO BE DEPOSITED WITH THE AUTHORITIES WHIC H IS NECESSARY FOR DOING BUSINESS. AS PER SECTION 37 OF THE ACT, AS THE ASSESSEE IS EN TITLED TO DEDUCTION OF ANY EXPENDITURE NOT BEING IN THE NATUR E OF CAPITAL OR PERSONAL EXPENDITURE WHICH WA S LAID OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSI ON. IN THE PRESENT CASE THE AMOUNT OF CESS COLLECTED BY THE GOVERNMENT AGENCY HAS NOTHING BUT AN EXPENDITURE INCURRED FOR DOING THE BUSINESS OR PROFESSION AND FURTHER IT WOULD BE RE QUIRED TO SPENT BY THE CENTRAL POOL FOR THE WELFARE OF THE CONSTRUC TION WORKERS. IN VIEW OF ABOVE WE FEEL THAT FINDING RECORDED BY T HE LOWER AUTHORITIES IS WITHOUT ANY BASIS AND ACCORDINGLY TH E ASSESSEE IS ENTITLED TO DEDUCTION OF EXPENDITURE WHICH IS 1% OF THE COST OF THE WORK DONE BY THE ASSESSEE. COST OF THE WORK DONE BY THE ASSESSEE WAS RS.19,60,649 AND 1% OF THE SAME WOULD BE RS.19, 606/-. HENCE THIS AMOUNT WAS DEDUCTED BEFORE MAKING PAYMEN T TO THE ASSESSEE BY THE AUTHORITIES THEREFORE THE ASSESSEE IS ENTITLED TO THE DEDUCTION OF EXPENDITURE LAID BY HIM FOR THE PURPOS E OF MAKING THE PAYMENT PURSUANT TO NOTIFICATION ISSUED VIDE BU ILDING AND ITA.1965, 1966 & 2925/BANG/2017 PAGE - 11 OTHER CONSTRUCTION WORKERS WELFARE CESS ACT, 1966, BY THE GOVERNMENT OF KARNATAKA. ACCORDINGLY GROUND 5 IS A LLOWED. 10. IN RESPECT OF GROUND NO.6, THE LD. AR SUBMITTED THAT THE ASSESSEE IS HAVING THE CAPITAL FUND OF RS.10,43,14, 790/-. IN THE CONSOLIDATED BALANCE SHEET AS ON 30.03.2007, THE RE SERVE WAS RS.83,56,401/- AND THE LOAN FUNDS WAS 3,54,60,178/- . ON THE BASIS OF THE ABOVE IT WAS SUBMITTED THAT AS THE ASSESSEE WAS HAVING THE INTEREST-FREE FUNDS AND FROM THE SAID AMOUNT THE AS SESSEE HAD GIVEN INTEREST-FREE ADVANCES TO CELINA FERNANDES ( ASSESSEE'S WIFE). IT WAS SUBMITTED THAT THE PRESUMPTION IS ALW AYS IN FAVOUR OF THE ASSESSEE. IF THE ASSESSE IS HAVING INTEREST- FREE FUNDS AVAILABLE WITH HIM THEN THE ACTION OF THE LOWER AUT HORITIES WAS NOT CORRECT WHEREBY THEY HAVE ADDED INTEREST OF RS.2,73 ,584 WHICH IS THE INTEREST ELEMENT AT THE RATE OF 12%. 11.ON THE OTHER HAND THE LD. DR RELIES UPON THE ORD ER PASSED BY THE LOWER AUTHORITIES. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. UNDOUBTEDLY THE ASSESSEE IS HAVING THE C APITAL FUND OF RS.10,43,14,970/- WHICH IS FAR MORE THAN THE AMOUNT PAID BY THE ASSESSEE TO HIS WIFE AS INTEREST-FREE ADVANCES AMOU NTING TO RS.22,79,868. THE HONOURABLE SUPREME COURT IN THE M ATTER OF CIT (LTU) V. M/S. RELIANCE INDUSTRIES LTD IN CIVIL APPEAL NO.10 ITA.1965, 1966 & 2925/BANG/2017 PAGE - 12 OF 2019, HAD ANSWERED THE QUESTION NUMBER ONE AS UN DER : 1. WHETHER THE HIGH COURT IS CORRECT IN HOLDING THA T INTEREST AMOUNT BEING INTEREST REFERABLE TO FUNDS GIVEN TO S UBSIDIARIES IS ALLOWABLE AS DEDUCTION UNDER SECTION 36(1)(III) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) WHEN THE INTEREST W OULD NOT HAVE BEEN PAYABLE TO BANKS, IF FUNDS WERE NOT PROVIDED T O SUBSIDIARIES; ............................................. ..... INSOFAR AS THE FIRST QUESTION IS CONCERNED, THE ISS UE RAISES A PURE QUESTION OF FACT. THE HIGH COURT HAS NOTED THE FIND ING OF THE TRIBUNAL THAT THE INTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE WERE SUFFICIENT TO MEET ITS INVESTMENT. HENCE, IT COULD BE PRESUMED THAT THE INVESTMENTS WERE MADE FROM THE INTEREST FREE FU NDS AVAILABLE WITH THE ASSESSEE. THE TRIBUNAL HAS ALSO FOLLOWED I TS OWN ORDER FOR ASSESSMENT YEAR 2002-03. IN VIEW OF THE ABOVE FINDINGS, WE FIND NO REASON TO INTERFERE WITH THE JUDGMENT OF THE HIGH COURT IN REGARD TO THE FIR ST QUESTION. ACCORDINGLY, THE APPEALS ARE DISMISSED IN REGARD TO THE FIRST QUESTION. IN VIEW OF THE ABOVE IF ASSESSEE IS HAVING HIS OWN CAPITAL FUND WHICH IS MORE THAN THE INTEREST-FREE FUNDS GIVEN AS LOAN, THEN THE PRESUMPTION IS THAT H E HAD INVESTED THE AMOUNT FROM THE INTEREST FREE FUND AND HAS NOT UTILISED THE BORROWED FUNDS. IN THE PRESENT CASE THE ASSESSEE IS HAVING SUFFICIENT INTEREST FRE E FUND HENCE CONCLUSION OF LOWER AUTHORITIES IS NOT CORRECT. TH EREFORE THE ACTION OF THE LOWER AUTHORITIES IS INCORRECT AND GR OUND OF THE ASSESSEE APPEAL IS LIABLE TO BE ALLOWED . THEREFORE THE GROUND NO.6 OF THE ASSESSEE IS ALLOWED. ITA.1965, 1966 & 2925/BANG/2017 PAGE - 13 I.T.A NO.1966/BANG/2017 A. Y. 2009-10_ : 13.GROUND 1 IS GENERAL. GROUND 2 (A) IS NOT PRESSE D. 14.IN RESPECT OF GROUND NO.2(B), THE LD. AR SUBMITT ED THAT THE ASSESSEE HAD DECLARED RENTAL INCOME AT RS.2,16,000/ - AS INCOME FROM HOUSE PROPERTY OUT OF RS.3,96,000/- WHICH WAS THE CORRECT AMOUNT OF INCOME FROM HOUSE PROPERTY. IT WAS SUBMIT TED THAT THE ADDITION SHOULD BE RESTRICTED TO THE DIFFERENCE IN THE AMOUNT I.E., RS.1,80,000 WITH THE STATUTORY DEDUCTION OF 30% UND ER SECTION 24 (A) OF THE ACT. OUR ATTENTION WAS DRAWN TO THE BAL ANCE SHEET AT PAGE 91 TO 93. 15. THE LD. DR RELIES UPON THE ORDER OF THE LOWER A UTHORITIES. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE AO HAD NOTED THAT THE ASSESSEE HAD O NLY DISCLOSED THE AMOUNT OF RS.96,000/- AS INCOME FROM OTHER SOUR CES AND HAS CONCEALED INCOME OF RS.3 LAKHS AND AFTER GIVING THE STATUTORY DEDUCTION OF 1/3 RD FOR REPAIRS HAD ADDED RS.2 LAKHS WHEREAS THE CIT(A) HAD CONFIRMED THE ORDER PASSED BY THE AO. 17. BEFORE US THE ASSESSEE HAS SHOWN THAT THE ASSES SEE HAS DISCLOSED THE INCOME OF RS.2,60,000 AND NOT 96,000 AS RECORDED BY THE AO. IN FACT THE ASSESSEE HAS ADDED BACK RS.2 ,60,000 IN THE COMPUTATION OF INCOME AND THEREAFTER THE TAXABLE LI ABILITY WAS COMPUTED. IN THESE FACTS WE DEEM IT APPROPRIATE TO REMAND THE ITA.1965, 1966 & 2925/BANG/2017 PAGE - 14 MATTER BACK TO THE FILE OF THE CIT(A) TO VERIFY THE CLAIM OF THE ASSESSEE AND THEREAFTER DECIDE THE MATTER. ACCORDIN GLY THIS ISSUE IS REMANDED BACK TO THE FILE OF THE CIT(A) FOR VERI FICATION AND PASSING A SUITABLE ORDER AFTER GIVING AN OPPORTUNIT Y OF HEARING TO THE ASSESSEE. 18. GROUND NO.3 IS NOT PRESSED. 19. GROUND NO.4 IS SIMILAR TO GROUND 6 OF ITA NO. 1965/BANG/2017, WHICH IS IN REGARD TO LOAN GIVEN TO THE ASSESSEES WIFE, WHICH HAS BEEN ADJUDICATED BY US I N PARA 12 (SUPRA). HENCE, THIS GROUND OF THE ASSESSEE IS ALL OWED. 20. GROUND NO.5 IS NOT PRESSED. 21. GROUND NO.6 IS SIMILAR TO GROUND NO.5 ITA NO.1965/BANG/2017, RELATING TO CBF, HAS BEEN ADJUDICATED IN PARA 9 (SUPRA). FOLLOWING THE SAME, WE ALLOW THIS GROUND OF THE ASSESSEE. 22. GROUND NO.7 IS NOT PRESSED. 23. IN RESPECT OF GROUND NO.8, THE LD. AR HAS DRAWN OUR ATTENTION TO PARAGRAPH 12 OF THE CIT APPEALS ORDER. FROM THE PERUSAL OF THE ORDER IT WAS SUBMITTED THE DETAILS WERE NOT SUBMITT ED BEFORE THE LOWER AUTHORITIES TO SHOW THAT THE PAYMENT MADE TO M/S. EXCEL INDUSTRIES, WERE AN EXPENDITURE AND THEREFORE THE A CTION OF THE AO ITA.1965, 1966 & 2925/BANG/2017 PAGE - 15 WAS UNWARRANTED. NOW IT IS SUBMITTED THAT THE DETAI LS HAVE BEEN PROVIDED AND THEY HAVE NOT BEEN EXAMINED BY THE L OWER AUTHORITIES. FURTHER IT WAS SUBMITTED THAT THE MATT ER KINDLY BE REMANDED BACK TO THE FILE OF THE CIT (A) TO VERIFY THE DETAILS AVAILABLE ON RECORD AS WELL AS THE DETAILS SOUGHT T O BE FILED BY THE ASSESSEE. 24. THE LD. DR RELIES ON THE ORDER OF THE LOWER AUT HORITIES. 25. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD. THE BASIS OF ORDER PASSED BY THE CIT(A) IS THAT THE WHOLE OF THE CONTRACT WAS NOT BEEN GIVEN ON SUB- CO NTRACT BASIS TO M/S. EXCEL INDUSTRIES BUT ONLY A PART OF THE CONTRA CT WAS GIVEN. NOW THE ASSESSEE HAD SUBMITTED THAT THE DETAILS ARE AV AILABLE AND HENCE IN THE INTEREST OF JUSTICE WE MAY REMAND THIS TO VERIFY WHETHER WHOLE OF THE CONTRACT WAS BEEN GIVEN ON SU B- CONTRACT BASIS TO M/S. EXCEL INDUSTRIES OR ONLY PART OF THE CONTRACT WAS GIVEN AND ON WHAT AMOUNT AO CAN APPLY RATE OF COM MISSION. 26. IN THE RESULT ABOVE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. I.T.A NO.2925/BANG/2017 A. Y. 2011-12 : 27. THE GROUND NO.1 IS GENERAL. GROUND NO.2 IS NOT PRESSED. GROUND NOS.3 (B) AND (C) ARE ALSO NOT PRESSED. ITA.1965, 1966 & 2925/BANG/2017 PAGE - 16 28. WITH REGARD TO GROUND NO.3(A), THE LD. AR HAS DRAWN OUR ATTENTION TO PARA FIVE AT PAGE 41 OF THE CIT APPEAL S ORDER WHERE IN IT IS RECORDED AS UNDER : 5. GROUND NO.2.A:(DONATIONS CLAIMED U/S 35AC): THE AO STATED THAT THE ORIGINAL RETURN OF INCOME WA S FILED BEYOND THE SPECIFIED DUE DATE IE ON 01/10/2009. AS SUCH IT CANNOT BE TREATED AS RETURN FILED U/S 139(1) AND IT IS TO BE TREATED AS RETURN FILED U/S 139(4) OF THE ACT. AS PER THE P ROVISIONS OF SECTION 139(5), 'IF ANY PERSON, HAVING FURNISHED A RETURN UNDER SUB SUCTION (1), OR IN PURSUANCE OF A NOTICE UNDER SUB SECTION (2) OF SECTION 142, DISCOVERS ANY OMISSION OR ANY WRONG STATEMENT THEREIN, HE MAY FURNISH A REVISED RETURN AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION O F THE ASSESSMENT WHICHEVER IS EARLIER'. FROM THE ABOVE, IT IS EVIDENT THAT ONLY THE PERSON WHO HAD FILED THE RETURN U/S 139(1) IS ENTITLED TO FILE THE REVIS ED RETURN. HENCE, THE ORIGINAL RETURN FILED ON 01/10/2009 WAS TREATED AS RETURN FILED U/S 139(4) AND THE ASSESSEEIS NOT ENTI TLED TO FILE REVISED RETURN U/S 139(5).THIS VIEW WAS SUPPORTED BY THE DE CISION OF THE APEX COURT IN THE CASE OF SRI KUMAR JAGADISH CHANDR A SINHA VS CIT (220 ITR 067). AS SEEN FROM THE RECORDS, THE AS SESSEE CLAIMED DEDUCTION U/S 35AC OF THE ACT AMOUNTING TO RS,15,14,651/- IN THE REVISED RETURNS WHICH WERE TR EATED AS NON-EST. THE AO ALSO PLACED THE REFERENCE OF THE AP EX COURT IN THE CASE OF GOETZE (INDIA) LTD VS CIT [284 ITR323] 2006. IN VIEW OF THE ABOVE THE AO IS JUSTIFIED AND I DO NOT FIND ANY NEED TO INTERFERE WITH THE ORDER. THE APPELLANTS CONTENTI ON STANDS ON A WEAK FOOTING AND IS WITHOUT BASIS AND LACKS MERIT. THE RELEVANT GROUND OF APPEAL IS HEREBY DISMISSED. THE ORDER OF THE CIT (A) CLEARLY SHOWS THAT THOUGH THE ASSESSEE HAS ITA.1965, 1966 & 2925/BANG/2017 PAGE - 17 FILED THE REVISED RETURN OF INCOME, HOWEVER THE SAME WAS NOT CONSIDERED BY THE LOWER AUTHORITIES BY RELYING UPON THE JUDGMEN T OF THE HONBLE SUPREME COURT IN THE MATTER OF GOETZ E (INDIA) LTD (SUPRA). 29. THE LD. DR RELIED ON THE ORDERS OF THE LOWER A UTHORITIES. 30. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD. IN OUR UNDERSTANDING OF GOETZE (INDIA) LTD (SUPRA) SHOWS THAT THIS EMBARGO OF EXERCISE OF POWER IS ONLY WITH THE AO AND NOT TO THE POWERS OF CIT (A) OR THE TRIBUNAL. MOREOVER THE WHOLE PURPOSE OF ASSESSMENT PROCEEDINGS IS TO TAX THE TAXABLE INCOME AND FOR THAT PURPOSE CIT(A) SHOULD EXA MINE THE CLAIM OF THE ASSESSEE OR THE RECTIFIED RETURN OF INCOME FILLED BY THE ASSESSEE BEFORE FIRST APPELLATE AUTHORITY OR THE TRIBUNAL. IN THE PRESENT CASE DES PITE FILING OF THE REVISED RETURN OF INCOME THE CIT (A) HAS NOT EXAMIN ED THE SAME. ACCORDINGLY, WE REMAND THE ISSUE OF DONATION CLAIM ED U/S.35AC TO THE FILE OF CIT(A) TO BE ADJUDICATED BY THE CIT (A ) A FRESH IN ACCORDANCE WITH LAW, AFTER CONSIDERING THE REVISED RETURN OF INCOME. NEEDLESS TO SAY THAT CIT (A) SHALL GRANT OPPORTUNIT Y OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO COOPERA TE IN THE EARLY DISPOSAL OF APPEAL. THE CIT (A) SHALL GIVE FAIR CH ANCE TO THE ASSESSEE TO FILE ALL THE DOCUMENTS WHICH ARE NECESSARY IN SU PPORT OF ITS CASE. THIS GROUND NO.3(A)OF THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSE. 31. GROUND NO.3(D) IS SIMILAR TO GROUND NO.5 ITA NO.1965/BANG/2017, RELATING TO CBF, HAS BEEN ADJUDI CATED IN PARA 9 ITA.1965, 1966 & 2925/BANG/2017 PAGE - 18 (SUPRA). FOLLOWING THE SAME, WE ALLOW THIS GROUND OF THE ASSESSEE. 32. IN THE RESULT, APPEALS OF THE ASSESSEE ARE PART LY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DAY OF APRIL, 2019. SD/- SD/- (A. K. GARODIA) ( LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 05.04.2019 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE. ITA.1965, 1966 & 2925/BANG/2017 PAGE - 19