Shri Mufaddal Hatpipliawala, Indore V. The ITO 4(2), Indore

ITA 230/IND/2013

• Counselvise Citation: 23022714 RSA 2013
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRUDULA BAJPAI
• Assessee Lawyers: S S DESHPANDE
• Section: 143(3); 263

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 230/IND/2013 A.Y. 2009-10 MUFADDAL HATPIPLIAWALA INDORE PAN ABGPH 7157J :: APPELLANT VS COMMISSIONER OF INCOME TAX II BHOPAL :: RESPONDENT APPELLANT BY SHRI S.S. DESHPANDE RESPONDENT BY S MT. MRUDULA BAJPAI DATE OF HEARING 20.8. 2013 DATE OF PRONOUNCEMENT 20.8. 2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER D ATED 18.3.2013 OF THE LEARNED FIRST APPELLATE AUTHORITY, INDORE, ON THE 2 GROUND THAT THE LEARNED CIT IS NOT JUSTIFIED IN INV OKING THE PROVISIONS OF SECTION 263 OF THE ACT ON THE GROUND THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF REVENUE. 2. DURING HEARING OF THIS APPEAL, SHRI S.S. DESHPAN DE, LEARNED COUNSEL FOR THE ASSESSEE, CONTENDED THAT THE ORIGIN AL ASSESSMENT WAS FRAMED AFTER DUE SCRUTINY OF FACTS AND AS SUCH THE ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F REVENUE, THEREFORE, ACTION U/S 263 DESERVES TO BE QUASHED. IT WAS ALSO PLEADED THAT THE LEARNED CIT TOTALLY IGNORED THE FA CT THAT DUE INQUIRY REGARDING DEPOSIT IN THE BANK WAS MADE BY T HE ASSESSING OFFICER AND THEN THE NET PROFIT RATE OF 5% WAS APPL IED. ON THE OTHER HAND, MRS. MRUDULA BAJPAI, LEARNED CIT DR STRONGLY DEFENDED THE INVOCATION OF SECTION 263 BY CONTENDING THAT SOURCE OF DEPOSIT WAS NOT EXAMINED BY THE ASSESSING OFFICER, THEREFORE, T HE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE IN TEREST OF THE REVENUE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF A RE THAT THE ASSESSEE 3 DERIVES INCOME FROM RETAIL TRADING OF IRON WINDOWS, DOORS AND GC SHEETS, ETC. AND ALSO THE WORK OF FABRICATION ON JO B BASIS. AIR INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER T HAT CASH AMOUNTING TO RS. 25,33,671/- WAS DEPOSITED IN THE S AVINGS BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF SUCH DEPOSIT. THE ASSESSEE EXPLAINED THA T CASH DEPOSIT IN THE BANK IS THE AMOUNT WITHDRAWN FROM CASH BOOK AND OUT OF THE TURNOVER OF THE BUSINESS. HOWEVER, THE ASSESSING OF FICER FOUND THAT THE ASSESSEE HIMSELF SHOWED THE TURNOVER AT RS. 11, 38,337/- ONLY SHOWING THE GROSS PROFIT AT RS. 1,57,980/-. THERE WERE FREQUENT WITHDRAWALS AND DEPOSITS IN THE SAID ACCOUNT. THE ASSESSEE HIMSELF OFFERED THAT THE AMOUNT OF CASH DEPOSITED MAY BE TR EATED AS TURNOVER OF THE BUSINESS AND REQUESTED TO CONSIDER NET PROFIT AT 5%. THE ASSESSING OFFICER APPLIED NET PROFIT RATE AT 5% AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF SU PPRESSED SALES RESULTING INTO ADDITION OF RS. 1,26,684/-. ON THE BASIS OF MATERIAL AVAILABLE ON RECORD, WE FIND THAT IT IS NOT THE CAS E OF THE REVENUE THAT NO INQUIRY WAS MADE BY THE ASSESSING OFFICER. RATHER DUE 4 ENQUIRY WAS MADE AS IS EVIDENT FROM ORIGINAL ASSESS MENT ORDER DATED 21.11.2011 FRAMED U/S 143(3) OF THE ACT IN WH ICH DUE QUERY WAS RAISED BY THE ASSESSING OFFICER AND THE SAME WA S COMPLIED WITH BY THE ASSESSEE. THE ASSESSING OFFICER FOUND T HAT THE REMAINING AMOUNT WHICH WAS NOT SHOWN AS A TURNOVER WAS ADDED AS ADDITIONAL INCOME TO THE TOTAL INCOME OF THE ASS ESSEE BY APPLYING NET PROFIT RATE OF 5%. IT HAS BEEN MENTIONED IN TH E ASSESSMENT ORDER ITSELF (PAGE 13 OF THE PAPER BOOK) THAT THE I NCOME WAS ADDED ON ACCOUNT OF SUPPRESSED SALES, SO THERE IS NO LOSS TO THE REVENUE. IF THE ASSESSING OFFICER WOULD NOT HAVE ADDED THE S AME, THERE WOULD HAVE BEEN LOSS TO THE REVENUE WHICH IS NOT A CASE H ERE. IF THE OBSERVATION MADE IN THE IMPUGNED ORDER IS PRESUMED TO BE CORRECT, STILL THE ASSESSING OFFICER AFTER MAKING DUE INQUIR Y MAY COME TO THE SAME CONCLUSION, THEREFORE, NO PURPOSE WOULD BE SER VED IF THE ORDER FRAMED U/S 263 IS AFFIRMED. WE FURTHER NOTE THAT WH ILE FRAMING THE ASSESSMENT THE LEARNED ASSESSING OFFICER HAS CONDUC TED DUE INQUIRIES BY RAISING QUESTIONNAIRE AND THE SAME HAS BEEN COMPLIED WITH BY THE ASSESSING OFFICER. IT IS ALSO NOT THE CASE THAT THE 5 ASSESSMENT HAS BEEN FRAMED IN UNDUE HASTE WITHOUT E XAMINING THE FACTS. BEFORE INVOKING THE REVISIONAL JURISDICTION U/S 263 TWO PRE- REQUISITES MUST BE PRESENT BEFORE THE LEARNED CIT I .E. THAT ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IF THE ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE I NTEREST OF THE REVENUE, THE LEARNED CIT CANNOT EXERCISE THE REVISI ONAL JURISDICTION AS WAS HELD BY THE HONBLE JURISDICTIONAL HIGH COUR T IN H.H. MAHARAJA PAWAR, DEWAS VS. CIT; 138 ITR 518. THE HO NBLE DELHI HIGH COURT EVEN WENT TO THE EXTENT IN ADDL.CIT VS. J.K. DCOSTA; 133 ITR 7 THAT ASSESSMENT MUST NOT BE SET ASIDE FOR MIN OR OMISSIONS. EVEN IT IS NOT THE CASE THAT THE ASSESSMENT WAS FRA MED U/S 143(1) OF THE ACT. THE RATIO LAID DOWN IN CIT VS. ANDHRA CIVIL CONSTRUCTION LTD.; 140 TAXMAN 308 (MAD) FURTHER SUPPORTS THE CAS E OF THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSING OFFICE R DULY EXAMINED THE FACTS, NOTICES WERE ISSUED ALONG WITH QUESTIONN AIRE, REPLY OF THE ASSESSEE WAS ENTERTAINED AND EXAMINED AND AFTER APP LYING THE MIND, ASSESSMENT WAS FRAMED, THEREFORE, IT CANNOT B E SAID THAT THE ASSESSMENT WAS FRAMED IN UNDUE HASTE OR WITHOUT APP LICATION OF MIND. IN VIEW OF THE MATERIAL AVAILABLE ON RECORD, WE FIND NO 6 JUSTIFICATION IN THE IMPUGNED ORDER INVOKING REVISI ONAL POWERS U/S 263 OF THE ACT, THEREFORE, THE APPEAL OF THE ASSESS EE IS ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCL USION OF THE HEARING ON 20.8.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 20.8.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-202021