Ish Kumar, Kaithal V. CIT, Karnal

ITA 213/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77122 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: PRIMAL GOEL
• Section: 143(3); 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.213 /CHD/2014 ASSESSMENT YEAR : 2009-10 ISH KUMAR VS. THE C.I.T., PROP. ISH KUMAR & CO. KARNAL. KAITHAL. PAN: ABMPS6135P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRIMAL GOEL RESPONDENT BY : SMT. JYOTI KUMARI, DR DATE OF HEARING : 22.04.2014 DATE OF PRONOUNCEMENT : 22.05.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX, KARNAL DATED 26.02.2014 AGAINST THE ORDER PASSED UNDER SECTION 263 OF INCOME TAX ACT, 1961 (I N SHORT THE ACT). 2. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER: 1. ORDER PASSED U/S 263 IS NOT BASED ON FACTS, ILL EGAL, ARBITRARY & PASSED WITHOUT CONSIDERING PROPERLY REPLIES FILED B Y APPELLANT & THEREFORE MAY PLEASE BE QUASHED. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T INVOKING OF JURISDICTION UNDER SECTION 263 OF THE ACT BY THE CO MMISSIONER OF INCOME TAX, KARNAL. THE ORIGINAL ASSESSMENT IN THE CASE W AS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 8.7.2011 . THE COMMISSIONER 2 OF INCOME TAX ON PERUSAL OF THE RECORD NOTED THAT T HE ASSESSEE HAD MADE PAYMENT OF RS.1,92,000/- TO M/S MAHALUXMI ROADLINES AND RS.1,44,000/- TO M/S N.R. TRANSPORTS ON ACCOUNT OF FREIGHT. SINC E THE AGGREGATE PAYMENT TO THE RESPECTIVE PARTIES WAS EXCEEDING RS. 50,000/- DURING THE YEAR, AS PER THE COMMISSIONER OF INCOME TAX, THE AS SESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE BUT HE HAD FAILED TO DO SO. ANOTHER POINT NOTED BY THE COMMISSIONER OF INCOME TAX WAS THAT AS PER THE AUDIT REPORT, THE ASSESSEE HAD RAISED UNSECURED LOANS OF RS.3.45 CROR ES AND HAD ALSO RECEIVED UNSECURED LOANS OF RS.32 LACS FROM THE PAR TIES WHICH HAD BEEN SHOWN UNDER THE HEAD OF SUNDRY CREDITORS. APART FR OM THE ABOVE, THERE WERE LIABILITIES OUTSTANDING IN THE BALANCE SHEET A S SUNDRY CREDITORS AMOUNTING TO RS.47,38,640/- AND THERE WERE NO TRANS ACTION DURING THE YEAR WITH THE SAID PARTY. FURTHER BALANCE SHEET O F DELHI BRANCH REVEALED THAT THE ASSESSEE HAD SHOWN SALE OF PROPER TY AT RS.55,66,683/- OUT OF FIXED ASSETS BUT NEITHER THE APPLICABILITY O F CAPITAL GAINS ON THE SAID TRANSACTION HAD BEEN EXAMINED NOR THE LIABILIT Y OF WEALTH TAX ON THE PROPERTY AT DELHI WAS SHOWN. THE COMMISSIONER OF INCOME TAX IN VIEW THEREOF ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE UN DER SECTION 263(1) OF THE ACT, SINCE THE ASSESSMENT COMPLETED BY THE ASSE SSING OFFICER WAS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF T HE REVENUE. THE COPY OF THE SHOW CAUSE NOTICE IS PLACED AT PAGES 1 TO 3 OF THE PAPER BOOK. 4. BEFORE THE COMMISSIONER OF INCOME TAX, THE EXPLA NATION OF THE ASSESSEE WAS THAT THE FREIGHT WAS PAID DURING THE Y EAR AND WAS NOT PAYABLE AS ON 31.3.2009 AND HENCE THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WERE NOT APPLICABLE. WITH REGARD TO THE I SSUE OF UNSECURED LOANS AND SUNDRY DEBTORS THE CONTENTION OF THE ASSE SSEE WAS THAT THE SAME HAD ALREADY BEEN VERIFIED BY THE ASSESSING OFF ICER AND THESE AMOUNTS ERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. FURTHER IT WAS 3 STATED BY THE ASSESSEE THAT SECTION 41(1) OF THE AC T DOES NOT APPLY IN THE CASE AS THE COPIES OF ACCOUNTS DULY CONFIRMED BY SU NDRY CREDITORS WERE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. IN RE SPECT OF THE ISSUE OF SALE OF PROPERTY, THE ASSESSEE HAD EXPLAINED THAT N O SALE TRANSACTION OF PROPERTY WAS MADE DURING THE YEAR AND IT WAS ONLY S URRENDERED AMOUNT RECEIVED FROM THE BUILDERS WHICH WAS DEPOSITED FOR ALLOTMENT OF FLATS. THE LEARNED A.R. FOR THE ASSESSEE BEFORE THE COMMIS SIONER OF INCOME TAX STRESSED THAT ALL THESE ASPECTS WERE EXAMINED B Y THE ASSESSING OFFICER BEFORE PASSING THE ASSESSMENT ORDER AND HEN CE THE ORDER PASSED BY THE ASSESSING OFFICER COULD NOT BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE COMMISSIONER OF INCO ME TAX HELD THAT THE CONTENTIONS RAISED BY THE ASSESSEE WERE DEVOID OF A NY MERITS. IN RESPECT OF THE APPLICABILITY OF SECTION 40(A)(IA) OF THE AC T THE COMMISSIONER OF INCOME TAX REFERRED TO CBDT CIRCULAR DATED 16.12.20 13 UNDER WHICH THE BOARD HAD CLARIFIED THAT THE SAID PROVISIONS WOULD COVER NOT ONLY THE AMOUNTS WHICH WERE PAYABLE AS ON 31 ST MARCH OF PREVIOUS YEAR BUT ALSO THE AMOUNTS WHICH WERE PAID ANY TIME. FURTHER THE ONUS OF PROVING THE CREDIT THE GENUINENESS OF THE CREDITORS WAS AN ESSE NTIAL INGREDIENT OF SECTION 68 OF THE ACT AND THE SAME WAS NOT DISCHARG ED BY THE ASSESSEE. REGARDING THE ISSUE OF LIABILITIES OUTSTANDING IN T HE BALANCE SHEET AND APPLICABILITY OF CAPITAL GAINS AND CHARGEABILITY OF WEALTH TAX ON SALE TRANSACTION OF LAND, THE ASSESSING OFFICER HAD FAIL ED TO MAKE PROPER ENQUIRIES AND INDEPENDENT INVESTIGATIONS. THE COM MISSIONER OF INCOME TAX HELD THAT THE ASSESSMENT ORDER HAD BEEN PASSED WITHOUT PROPER INVESTIGATION AND WITHOUT APPLYING OF MIND TO THE F ACTS OF THE CASE, RENDERS THE ASSESSMENT ORDER LIABLE TO BE DEALT WIT H AS CONTEMPLATED UNDER SECTION 263 OF THE ACT. THE COMMISSIONER OF INCOME TAX SET ASIDE THE ASSESSMENT ORDER TO BE MADE AFRESH ON THE ISSUE AND THE ASSESSING OFFICER WAS DIRECTED TO COMPLETE THE ASSE SSMENT IN ACCORDANCE 4 WITH LAW AFTER CARRYING OUT NECESSARY ENQUIRIES AND PROVIDE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF THE COMMISSIONER OF INCOME TAX. THE LEARNED A.R. FOR T HE ASSESSEE POINTED OUT THAT THE ORIGINAL ASSESSMENT IN THE CASE WAS CO MPLETED UNDER SECTION 143(3) OF THE ACT AND DURING THE COURSE OF ASSESSME NT PROCEEDINGS VARIOUS QUERIES WERE RAISED. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT QUESTIONNAIRES WERE ISSUED BY THE ASSESSIN G OFFICER WHICH ARE PLACED AT PAGES 13 AND 14 OF THE PAPER BOOK IN WHIC H VARIOUS QUERIES WERE RAISED BY THE ASSESSING OFFICER. FURTHER OUR ATTENTION WAS DRAWN TO THE REPLY FILED BEFORE THE ASSESSING OFFICER PLA CED AT PAGES 16 TO 19 OF THE PAPER BOOK UNDER WHICH THE EXPLANATION IN RE SPECT OF VARIOUS SUNDRY CREDITORS WAS FILED AND ALSO THE COPIES OF U NSECURED LOANS WERE ALSO FURNISHED. IN RESPECT OF THE FIRST ISSUE OF N ON DEDUCTION OF TAX AT SOURCE THE ASSESSEE SUBMITTED THAT THE ORAL REPLY W AS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN RESPECT OF SUND RY CREDITORS. IT WAS EXPLAINED THAT VARIOUS AMOUNTS WERE OUTSTANDING FRO M THE SAID PARTIES WHICH HAVE TO BE ADJUSTED AGAINST THE UNSECURED LOA NS AND THE CLAIMS THEREOF WERE DULY FILED BEFORE THE ASSESSING OFFICE R. 6. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THA T SOME INFORMATION WAS FILED BY THE ASSESSING OFFICER. HO WEVER, NO ENQUIRY OF ANY ACCOUNT WAS MADE BY THE ASSESSING OFFICER EVEN IN RESPECT OF THE UNSECURED LOANS. THE ASSESSING OFFICER FAILED TO T AKE ON RECORD THE BANK STATEMENT OF THE PERSON WHO HAD ADVANCED THE S AID LOANS. RELIANCE WAS PLACED ON THE DECISIONS OF HON'BLE SUPREME COUR T IN MALABAR INDUSTRIAL CO. LTD. VS. CIT [243 ITR 83 (SC)] AND I N SMT. TARA DEVI AGGARWAL VS. CIT [88 ITR 323 (SC)]. 5 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE COMMISSIONER OF INCOME TAX UNDER THE PROVISIONS OF SECTION 263 OF THE ACT IS EMPOWERED TO INVOKE JURISDICTION WHERE THE O RDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. THE TWIN CONDITIONS OF THE ORDER BEING E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE TO B E SATISFIED IN ORDER TO ENABLE THE COMMISSIONER OF INCOME TAX TO INVOKE THE JURISDICTION UNDER SECTION 263 OF THE ACT. WHERE THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE OR VICE- VERSA, THE COMMISSIONER OF INCOME TAX WAS NOT EMPOW ERED TO INVOKE THE JURISDICTION UNDER SECTION 263 OF THE ACT AS THE TW IN CONDITIONS HAVE TO BE SATISFIED SIMULTANEOUSLY. 8. THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. VS. CIT (SUPRA) HAVE LAID DOWN THE PROVISIONS OF SECTION 26 3 OF THE ACT COULD NOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAK E OR ERROR COMMITTED BY THE ASSESSING OFFICER. IT WAS FURTHER HELD THA T AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE S AME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NA TURAL JUSTICE OR WITHOUT APPLICATION OF MIND . IT WAS FURTHER HELD BY THE HON'BLE APEX COURT THAT WHERE ERRONEOUS ORDER PASSED BY THE ASSE SSING OFFICER RESULTS IN LOSS OF TAXES LAWFULLY PAYABLE BY A PERSON, THEN SUCH ORDER WOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. 9. IN THE FACTS OF THE PRESENT CASE WE FIND THAT TH E ASSESSMENT IN THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND CERTAIN QUERIES WERE RAISED BY THE ASSESSING OFFICER. HOWEVER, THE ASSE SSING OFFICER HAD FAILED TO CARRY OUT ANY ENQUIRY IN RESPECT OF THE C LAIM OF THE ASSESSEE VIS--VIS SUNDRY CREDITORS OR UNSECURED LOANS. MER ELY BECAUSE THE 6 ASSESSEE HAD FILED CERTAIN EVIDENCES WOULD NOT ESTA BLISH THAT THE ASSESSING OFFICER HAS TAKEN ONE VIEW OF ACCEPTING T HE FACTORS AS EXPLAINED WARRANTING NO ADDITION IN THE HANDS OF TH E ASSESSEE, SPECIALLY IN CASES WHERE BASIC ENQUIRIES HAS NOT BEEN MADE BY THE ASSESSING OFFICER. THE ASSESSEE CLAIMED THAT IT HAD RECEIVED CERTAIN ADVANCES FROM THE PERSONS ENLISTED IN THE LIST OF SUNDRY CREDITOR S BUT THIS FACT HAD NOT BEEN VERIFIED BY THE ASSESSING OFFICER. IN RESPECT OF THE APPLICATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, WE FIND THAT THE ASSESSING OFFICER HAD FAILED TO RAISE ANY QUERY AND WE FIND N O MERIT IN THE PLEA OF THE ASSESSEE THAT THE ORAL REPLY WAS GIVEN VIS--VI S APPLICATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT TO THE F REIGHT PAYMENT. THE PERUSAL OF THE REPLY FILED BY THE ASSESSEE DURING T HE ASSESSMENT PROCEEDINGS DO NOT INSPIRE CONFIDENT AND IN THE ABS ENCE OF ANY ENQUIRY BEING CARRIED OUT BY THE ASSESSING OFFICER THE ORDE R PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND AS IT HAD RESULT ED IN ESCAPEMENT OF INCOME AND DUE TAXES THEREON, IS ALSO PREJUDICIAL T O THE INTEREST OF THE REVENUE. IN VIEW THEREOF, WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME TAX IN INVOKING THE JURISDICTIONAL UNDER SEC TION 263 OF THE ACT AND REMITTING THE ISSUE BACK TO THE FILE OF THE ASS ESSING OFFICER TO CARRY OUT NECESSARY INVESTIGATION. THUS THE GROUNDS OF A PPEAL RAISED BY THE ASSESSEE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF MAY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH MAY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 7