Arjun Mahato , Burdwan V. Principal CIT - Burdwan, Burdwan

ITA 2172/KOL/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6043 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-03-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 12-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY RAI
• Assessee Lawyers: SOUMITA CHOUDHURY
• Keywords: Revision of order
• Section: 143(3); 142(1); 2(A); 263

Judgement Text

I.T.A. NO. 2172/KOL/2018 A.Y. 20 14-2015 ARJUN MAHATO 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 2172/KOL/2018 ASSESSMENT YEAR: 2014-2015 ARJUN MAHATO,...................................... ........................................APPELLANT MALANCHA, KANAINATSHAL, DVC MORE, P.O. SRIPALLI, BURDWAN-713101 [PAN: AEZPM1499Q] -VS.- PRINCIPAL COMMISSIONER OF INCOME TAX, BURDWAN,..... .............RESPONDENT AAYAKAR BHAWAN, ANNEXE BUILDING, COURT COMPOUND, BURDWAN-713101 APPEARANCES BY: SHRI SOUMITA CHOUDHURY, ADVOCATE, FOR THE APPELLANT SHRI SANJAY RAI, CIT, D.R. , FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : MARCH 17, 2021 DATE OF PRONOUNCING THE ORDER : APRIL 21, 2021 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER LD. PRINCIPAL COMMISSIONER OF INCOME TAX, BURDWAN DATED 24.08.2018 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF RETAIL TRADING OF RICE AND TRUCK PL YING. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y HIM ON 25.11.2014 DECLARING A TOTAL INCOME OF RS.2,68,588/-. THE SAID RETURN WAS SELECTED FOR LIMITED SCRUTINY THROUGH CASS FOR THE REASON TH AT CASH DEPOSITS FOUND TO BE MADE IN THE BANK ACCOUNTS OF THE ASSESSEE WER E MORE THAN THE TURNOVER DECLARED BY THE ASSESSEE. DURING THE COURS E OF ASSESSMENT I.T.A. NO. 2172/KOL/2018 A.Y. 20 14-2015 ARJUN MAHATO 2 PROCEEDINGS, IT WAS FOUND BY THE ASSESSING OFFICER THAT THE TOTAL DEPOSITS MADE IN THE BANK ACCOUNT OF THE ASSESSEE WITH PUNJA B NATIONAL BANK, BURDWAN BRANCH DURING THE YEAR UNDER CONSIDERATION WERE RS.7,61,00,785/-, WHICH INCLUDED, INTER ALIA, CASH DEPOSITS AMOUNTING TO RS.4,26,73,906/-. HE ALSO FOUND THAT TOTAL DEPOSITS MADE IN ANOTHER BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH UNION BANK, BURDWAN BRANCH DURING THE YEAR UNDER CONSIDERATION AMOUNTED TO RS. 18,95,000/- OUT OF WHICH THE ASSESSEE HAD DISCLOSED ONLY RS.4,40,580/- IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. HE A CCORDINGLY TREATED THE DEPOSITS OF RS.4,41,28,326/- (RS.4,26,73,906/- PLUS RS.14,54,420/-) AS UNDISCLOSED TURNOVER OF THE ASSESSEES BUSINESS AND INCOME FROM THE SAME AMOUNTING TO RS.35,30,266/- AS WORKED OUT BY A PPLYING THE PROFIT RATE OF 8% WAS BROUGHT TO TAX BY HIM IN THE HANDS O F THE ASSESSEE IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE AC T VIDE AN ORDER DATED 25.08.2016. 3. THE RECORDS OF THE ASSESSMENT MADE BY THE ASSESS ING OFFICER UNDER SECTION 143(3) SUBSEQUENTLY CAME TO BE EXAMINED BY THE CONCERNED LD. PRINCIPAL CIT AND ON SUCH EXAMINATION, HE WAS OF TH E VIEW THAT THE ASSESSING OFFICER SHOULD HAVE TAKEN THE ENTIRE DEPO SITS MADE IN BOTH THE RELEVANT BANK ACCOUNTS OF THE ASSESSEE AGGREGATING TO RS.7,82,95,785/- AS THE UNDISCLOSED BUSINESS TURNOVER OF THE ASSESSEE A ND SHOULD HAVE COMPUTED THE UNDISCLOSED INCOME OF THE ASSESSEE FRO M THE SAME BY APPLYING THE NET PROFIT RATE OF 8% ON RS.7,82,95,78 5/- INSTEAD OF RS.4,41,28,326/-. HE ACCORDINGLY ISSUED A NOTICE TO THE ASSESSEE UNDER SECTION 263 REQUIRING HIM TO SHOW-CAUSE AS TO WHY T HE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) SHOULD N OT BE REVISED BY TREATING THE SAME AS ERRONEOUS AS WELL AS PREJUDICI AL TO THE INTEREST OF THE REVENUE. 4. IN REPLY TO THE NOTICE UNDER SECTION 263, THE FI RST CONTENTION RAISED ON BEHALF OF THE ASSESSEE BEFORE THE LD. PRINCIPAL CIT WAS AS UNDER:- I.T.A. NO. 2172/KOL/2018 A.Y. 20 14-2015 ARJUN MAHATO 3 'THAT THE CASE WAS SELECTED FOR 'LIMITED' SCRUTINY BASED ON INFORMATION/REPORT THAT CASH DEPOSIT IN SAVINGS ACC OUNTS EXCEEDS TURNOVER, UNDER (ASS. THE ASSESSMENT THEREO F INCLUDING 142(1) QUESTIONNAIRE THEREFORE WAS CARRIE D UNDER THE PARAMETER OF CBDT INSTRUCTION 7/2014 DATED 26.0 9.2014. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT WITH IN THE PARAMETER OF CBDT INSTRUCTION NO. 7/2014. THE ASSES SMENT CARRIED OUT UNDER SUCH MANNER AND MODE AS LAID DOWN IN INSTRUCTION OF CBDT, CANNOT BE CONSTRUED AS ERRONEO US AND PREJUDICIAL TO THE INTEREST OF REVENUE ATTRACTING P ROPOSITION FOR REVISION UNDER SECTION 263 OF THE ACT. THIS IS MORE SO BECAUSE INSTRUCTION NO. 7/2014 DATED 26.09.2014 ARE EQUALLY APPLICABLE FOR ALL OFFICERS OF THE DEPARTMENT.' 5. THE LD. PRINCIPAL CIT DID NOT FIND MERIT IN THIS CONTENTION RAISED ON BEHALF OF THE ASSESSEE AND REJECTED THE SAME BY OBS ERVING AS UNDER:- IN THE INSTANT CASE THE ASSESSING OFFICER HAD SUFF ICIENT INFORMATION ON RECORD AND IN HIS CUSTODY THAT OTHER THAN CASH DEPOSIT, WHICH IS THE ISSUE FOR SELECTION FOR SCRUTINY UNDER CASS, THERE WERE SUBSTANTIAL UNDISCLOSED DEPO SITS THROUGH OTHER MODES, I.E. THROUGH CHEQUE, RTGS & NE FT ETC. TO THE BANK ACCOUNTS OF THE ASSESSEE WHICH HAS ESCA PED ASSESSMENT. THE ASSESSING OFFICER SHOULD HAVE APPLI ED HIS MIND THAT THE SOURCE OF THESE DEPOSIT REQUIRED SUBS TANTIAL VERIFICATION. THE ASSESSING OFFICER SHOULD HAVE ACT ED IN ACCORDANCE WITH PARA-4 OF CBDT INSTRUCTION NO. 7/20 14 AND SHOULD HAVE TAKEN UP THE CASE FOR COMPREHENSIVE SCR UTINY WITH THE PR. CIT FOR APPROVAL. THE ASSESSING OFFICE R HAS FAILED ABIDE BY THE INSTRUCTIONS LAID DOWN AT PARA- 4 OF CBDT INSTRUCTION NO. 7/2014. THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT ON 25.08.20 16 IS DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE INTERESTS OF THE REVENUE, WITHIN THE PARAMETER LAID DOWN IN EXPLANATION 2(A) AND 2(C) OF SECTION 263 OF THE INC OME TAX ACT, 1961. 6. THE SECOND CONTENTION RAISED ON BEHALF OF THE AS SESSEE IN REPLY TO THE NOTICE ISSUED BY THE LD. PRINCIPAL CIT UNDER SE CTION 263 WAS THAT AN APPEAL WAS PREFERRED AGAINST THE ORDER PASSED BY TH E ASSESSING OFFICER UNDER SECTION 143(3) BEFORE THE LD. CIT(APPEALS) ON THE ISSUE OF UNACCOUNTED DEPOSITS FOUND TO BE MADE IN THE BANK A CCOUNTS OF THE ASSESSEE AND THE SAME HAVING BEEN ALREADY CONSIDERE D AND DECIDED BY THE LD. CIT(APPEALS) VIDE HIS APPELLATE ORDER DATED 28. 04.2017, IT WAS NOT PERMISSIBLE FOR THE LD. PRINCIPAL CIT TO EXERCISE J URISDICTION UNDER SECTION 263 ON THE ISSUE WHICH HAD ALREADY BEEN CONSIDERED AND DECIDED IN I.T.A. NO. 2172/KOL/2018 A.Y. 20 14-2015 ARJUN MAHATO 4 APPEAL BY THE LD. CIT(APPEALS). THIS CONTENTION OF THE ASSESSEE ALSO DID NOT FIND FAVOUR WITH THE LD. PRINCIPAL CIT, WHO REJ ECTED THE SAME FOR THE FOLLOWING REASONS:- IT IS EVIDENT FROM THE GROUNDS OF APPEAL THAT THE ASSESSEE HAD NO GRIEVANCE ON THE ISSUE OF DETERMINATION OF UNDIS CLOSED DEPOSITS IN BOTH THE BANK ACCOUNTS OF THE ASSESSEE. SINCE, IT IS NOT AN ISSUE OF THE APPEAL, CIT(A) HAS NOT CONSIDER ED AND DETERMINED THE ISSUE OF DETERMINING OF UNDISCLOSED DEPOSITS IN BOTH THE BANK ACCOUNTS OF THE ASSESSEE. HE HAS PROC EEDED TO DECIDE ON THE ISSUES RAISED IN THE GROUNDS OF APPEA L BY THE ASSESSEE, BASED ON THE UNDISCLOSED DEPOSITS IN BOTH THE BANK ACCOUNTS OF THE ASSESSEE AS DETERMINED BY THE ASSES SING OFFICER. SINCE THE ASSESSEE HAD NOT DISPUTED THE TO TAL UNDISCLOSED DEPOSITS IN BOTH THE BANK ACCOUNTS OF T HE ASSESSEE AS DETERMINED BY THE ASSESSING OFFICER, CIT(A) HAD NOT ADJUDICATED THE MATTER AND PROCEEDED. MERE REFERENC E OF THIS ISSUE IN THE APPEAL ORDER CANNOT BE CONSIDERED THAT THIS ISSUE HAS BEEN CONSIDERED AND DETERMINED IN THE APPEAL. T HEREFORE, IT IS AMPLY EVIDENT THAT THE ISSUE OF DETERMINING O F TOTAL UNDISCLOSED DEPOSITS IN BOTH THE BANK ACCOUNTS OF T HE ASSESSEE HAS NOT BEEN CONSIDERED AND DETERMINED IN THE APPEA L. ACCORDINGLY, THE JURISDICTIONAL PR. COMMISSIONER OF INCOME TAX HAS THE AUTHORITY TO EXERCISE POWER CONFERRED U PON HIM U/S 263 OF THE ACT THIS ISSUE. 7. THE LD. PRINCIPAL CIT ACCORDINGLY REJECTED BOTH THE CONTENTIONS RAISED ON BEHALF OF THE ASSESSEE IN REPLY TO THE NO TICE ISSUED UNDER SECTION 263 AND SETTING ASIDE THE ORDER PASSED BY T HE ASSESSING OFFICER UNDER SECTION 143(3) VIDE HIS IMPUGNED ORDER PASSED UNDER SECTION 263, HE DIRECTED THE ASSESSING OFFICER TO MAKE THE ASSES SMENT AFRESH AS UNDER:- (A) TO VERIFY, EXAMINE AND DETERMINE THE TOTAL UND ISCLOSED DEPOSITS MADE TO BOTH THE BANK ACCOUNTS OF THE ASSE SSEE IN A/C NO. 415402010004022 WITH UNION BANK OF INDIA, BURDW AN AND A/C NO. 3194000100070201 WITH PUNJAB NATIONAL BANK, BURDWAN DURING THE F.Y. 2013-14. (B) TO RE-COMPUTE THE TOTAL INCOME OF THE ASSESSEE IN ACCORDANCE WITH THE DIRECTION OF THE COMMISSIONER O F INCOME TAX (APPEAL) ORDER DATED 28.04.2017 IN APPEAL NO. 59/CIT(A)/ITO/W-2(1)/BWN/2016-17 FOR A.Y. 2014-15 I N ASSESSEE'S OWN CASE. AGGRIEVED BY THE ORDER OF THE LD. PRINCIPAL CIT PAS SED UNDER SECTION 263, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE T RIBUNAL. I.T.A. NO. 2172/KOL/2018 A.Y. 20 14-2015 ARJUN MAHATO 5 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS SUBMITTED THAT THE CASE OF SHRI BINOD KUMAR MAHATO, BROTHER OF THE ASSESSEE, WHO IS ALSO ENGAGED IN THE BUSINESS OF PL YING OF TRUCKS AND TRADING OF RICE WAS SELECTED BY THE SAME ASSESSING OFFICER FOR LIMITED SCRUTINY THROUGH CASS TO EXAMINE THE SIMILAR ISSUE OF CASH DEPOSITS FOUND TO BE MADE IN THE BANK ACCOUNTS OF THE ASSESSEE, WH ICH WERE MORE THAN THE TURNOVER DECLARED BY HIM. HE HAS SUBMITTED THAT THE ASSESSMENT ORDER IN THE SAID CASE WAS PASSED BY THE SAME ASSES SING OFFICER ON THE SAME DATE ON THE SIMILAR LINE BY TREATING THE CASH DEPOSITS FOUND TO BE MADE IN THE BANK ACCOUNTS OF THE ASSESSEE AS UNDISC LOSED TURNOVER AND ESTIMATING THE INCOME OF THE ASSESSEE FROM SUCH UND ISCLOSED TURNOVER BY APPLYING THE PROFIT RATE OF 8% ON THE CASH DEPOSITS . HE HAS SUBMITTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SEC TION 143(3) IN THE SAID CASE OF BINOD KUMAR MAHATO WAS SUBSEQUENTLY SET ASI DE BY THE SAME LD. PRINCIPAL CIT VIDE AN ORDER UNDER SECTION 263 PASSE D ON THE SAME DATE I.E. 24.08.2018 WITH THE SIMILAR DIRECTION TO THE A SSESSING OFFICER TO MAKE THE SAME AFRESH AFTER REJECTING BOTH THE CONTENTION S RAISED ON BEHALF OF THE ASSESSEE IN REPLY TO THE NOTICE ISSUED UNDER SE CTION 263 AS DONE IN THE PRESENT CASE. HE HAS SUBMITTED THAT THE ORDER P ASSED BY THE LD. PRINCIPAL CIT IN THE CASE OF BINOD KUMAR MAHATO UND ER SECTION 263 ON THE SIMILAR LINE AS IN THE PRESENT CASE WAS CHALLENGED BY THE SAID IN THE APPEAL FILED BEFORE THE ITAT BY RAISING BOTH THE CO NTENTIONS AS RAISED BEFORE THE LD. PRINCIPAL CIT DURING THE COURSE OF P ROCEEDINGS UNDER SECTION 263 AND THE SAME WERE ACCEPTED BY THE TRIBU NAL VIDE ITS ORDER DATED FEBRUARY 24, 2021 PASSED IN ITA NO. 2173/KOL/ 2018 THEREBY QUASHING THE ORDER PASSED BY THE LD. PRINCIPAL CIT UNDER SECTION 263 FOR THE REASONS AS SUMMARIZED IN PARAGRAPH NOS. 9 & 10 OF THE ORDER AS UNDER:- 9. THE PROPOSITIONS OF LAW LAID DOWN IN THESE CAS E-LAW IS THAT, WHEN THE ASSESSING OFFICER COMPLETED ASSESSME NT U/S 143(3) OF THE ACT, AFTER EXAMINING THE ISSUES FOR W HICH THE CASE HAS BEEN SELECTED FOR LIMITED SCRUTINY, THEN I T CANNOT BE HELD THAT THERE IS AN ERROR IN THE ORDER OF THE ASS ESSING I.T.A. NO. 2172/KOL/2018 A.Y. 20 14-2015 ARJUN MAHATO 6 OFFICER, FOR THE REASON THAT HE HAS NOT SOUGHT PERM ISSIONS TO EXAMINE OTHER REASONS. IF THE ASSESSING OFFICER HAS NOT EXAMINED ANY OTHER ASPECT, THAN THE REASONS FOR WHI CH THE ASSESSMENT WAS SELECTED FOR SCRUTINY, IN OUR VIEW, NO FAULT CAN BE FOUND WITH THE ASSESSING OFFICER. THUS, IN O UR VIEW, NON-SEEKING OF PERMISSION FOR-CONVERSION OF LIMITED SCRUTINY TO COMPLETE SCRUTINY IN TERMS OF PARA 4 OF THE CBDT INSTRUCTION NO. 7/2014, DOES NOT PER SE RENDER THE ASSESSMENT ORDER U/S 143(3) OF THE ACT, ERRONEOUS. 10. EVEN OTHERWISE, THE ENTIRE ISSUE OF LIMITED SC RUTINY, REASONS FOR SELECTION, THE BANK ACCOUNTS IN QUESTIO NS WERE BEFORE THE ID. PR. CIT. ON THIS ISSUE OF TURNOVER, THE ORDER OF THE ASSESSING OFFICER HAS MERGED WITH THE ORDER OF THE ID. CIT(A) DT. 28/04/2017. WHAT THE ASSESSING OFFICER M ISSED, IS ALSO MISSED BY THE ID. CIT(A). THE ID. PR. CIT CANN OT ORDER THE ASSESSING OFFICER TO FOLLOW THE ORDER/DIRECTION S OF THE ID. CIT(A) ON ISSUES WHICH WERE NOT PART OF THE APPELLA TE ORDER OF THE ID. CIT(A). UNDER THESE CIRCUMSTANCES, THE I D. PR. CIT CANNOT EXERCISE HIS POWERS U/S 263 OF THE ACT, TO R EVISE THE ORDER THAT HAS MERGED WITH THE ORDER OF THE ID. CIT (A). FOR THESE REASONS, WE UPHOLD THE TECHNICAL CONTENTION O F THE ASSESSEE AND QUASH THE ORDER PASSED BY THE ID. PR. CIT U/S 263 OF THE ACT AND ALLOW THE APPEAL OF THE ASSESSEE . 9. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ISSUES INVOLVED IN THE PRESENT CASE ARE THUS SQUARELY COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL RENDERED IN THE CASE OF BINOD KUMAR MAHATO (SUPRA), WHEREIN SIMILAR ISSUES HAVE BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE IDENTICAL FACTS AND CIRCUMSTANCES AND EVEN THE LD. D.R. HAS NOT BEEN ABLE TO REBUT OR CONTROVERT THIS POSITION. WE, THEREFORE , RESPECTFULLY FOLLOW THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL REND ERED IN THE CASE OF BINOD KUMAR MAHATO (SUPRA) AND QUASH THE IMPUGNED O RDER PASSED BY THE LD. PRINCIPAL CIT UNDER SECTION 263. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 21, 202 1. SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER VICE -PRESIDENT (KZ) KOLKATA, THE 21 ST DAY OF APRIL, 2021 I.T.A. NO. 2172/KOL/2018 A.Y. 20 14-2015 ARJUN MAHATO 7 COPIES TO : (1) SHRI ARJUN MAHATO, MALANCHA, KANAINATSHAL, DVC MORE, P.O. SRIPALLI, BURDWAN-713101 (2) PRINCIPAL COMMISSIONER OF INCOME TAX, BURDWAN, AAYAKAR BHAWAN, ANNEXE BUILDING, COURT COMPOUND, BURDWAN-713101 (3) COMMISSIONER OF INCOME TAX (APPEALS), BURDWAN , (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.