Bhubaneswar Development Authority, Bhubaneswar V. CIT, Bhubaneswar

ITA 237/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4414 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 10-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2010
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: G NAIKR KAR ARS
• Keywords: Principle of natural justice
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 237/CTK/2010 / ASSESSMENT YEAR 2005 - 06 BHUBANESWAR DEVELOPMENT AUDHORITY, AKASH SHOVA BUILDING, SACHIVALAYA MARG,BHUBANESWAR 1, PAN:AAALB 0073 G - - - VERSUS - COMMISSIONER OF INCOME - TAX, BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI G.NAIK/R.KAR, ARS / FOR THE RESPONDENT: / SMT. PARAMITA TRIPATHY, DR / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE AGITATES THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX U/S.263. 2. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THAT THE ORDER DATED 31.03.2010 PAS SED U/S.263 OF THE I.T.ACT BY THE LEARNED CIT FOR THE ASSESSMENT YEAR 2005 - 06 IS NOT JUST AND LEGAL ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. THE LEARNED CIT ERRED IN LAW AS WELL AS FACT IN EXCEEDING HIS JURISDICTION TO GO BEYOND THE ISSUES RAISED IN THE SHOW CAUSE NOTICE DATED 23/25.,11.2009 IN ORDER TO CANCEL THE ASSESSMENT ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE. THE LEARNED CIT WITHOUT CONSIDERING PROPERLY THE SUBMISSIONS AND EXPLANATIONS OF THE ASSESSEE SHOULD NOT HAVE CANCELLED THE ASSE SSMENT BY INVOKING SECTION 263 OF THE I.T.ACT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. THE LEARNED CIT SHOULD HAVE PROPERLY CONSIDERED THE FACT THAT THE ASSESSEE IS NOT CARRYING ON ANY BUSINESS OR PROFESSION AND IT IS GOVERNED BY AN ACT OF STATE LEGISLATURE I.T.A.NO. 237/CTK/2010 2 CALLED ORISSA DEVELOPMENT AUTHORITIES ACT, 1982 AND RULES FRAMED THERE UNDER, THEREFORE, THE CONTEMPLATION OF THE LEARNED CIT IN RESPECT OF CERTAIN PENAL AND OTHER PROVISIONS OF THE I.T.ACT IS NOT JUST AND CORRECT ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE. THE OBSERVATION OF THE LEARNED CIT TO THE EFFECT THAT MOST OF THE ISSUES WERE NOT PROPERLY EXAMINED DURING THE ASSESSMENT PROCEEDING DOES NOT INFER THAT THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERE ST OF REVENUE ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE. THE LEARNED CIT WAS NOT OF THE FIRM CONCLUSION THAT IN WHAT WAY THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE ON THE FACTS IN THE CIRCUMSTANCES OF TH E CASE. THE REASONS AS ASSIGNED BY THE LEARNED CIT IN CANCELING THE ASSESSMENT ARE CONTRARY TO THE FACT AND NOT TENABLE UNDER THE LAW ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 3. A T THE OUTSET THE LEARNED DR POINTED OUT THAT THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER ON THE BASIS OF THE DIRECTION OF THE LEARNED CIT U/S.263 WHEN AFTER AFFORDING DUE OPPORTUNITY TO THE ASSESSEE AN ORDER WAS PASSED U/S.143(3)/263. THE ADDITIONS OR DISALLOWANCE MADE BY THE ASSESSING OFFICER IN HIS ORDER HAS BEEN APPEALED AGAINST BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY THEREFORE SETTLES THE ISSUES IN FAVOUR OF THE REVENUE THAT THE ORDER U/S.263 HAS BEEN SUBJECTED TO CORRELATING TO ERRORS FOUND BY THE LEARNED CIT(A) IN THE ASSESSMENT ORDER AND HAS BEE N APPEALED AGAINST BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY CONFIRMS THE SECOND LIMB OF THE REVISIONARY POWERS ASSUED BY THE LEARNED CIT U/S.263. 4. THE LEARNED COUNSEL FOR THE ASSESSEE, HOWEVER, INSISTED THAT HIS ARGUMENTS MAY KINDLY BE RECORD ED AS A MATTER OF ABUNDANT PRE - CAUTION. HE POINTED OUT THAT ON NON - INITIATION OF PROCEEDING U/S.271B , THE LEARNED CIT HAS NOT CONSIDERED THE SUBMISSION OF THE APPELLANT THAT IT IS NOT CARRYING ON ANY I.T.A.NO. 237/CTK/2010 3 BUSINESS/PROFESSION SO AS TO ATTRACT PROVISIONS OF SECTI ON 44AB. ON STATUS AS LOCAL AUTHORITY , WHICH WAS N OT A PART OF THE SHOW CAUSE NOTICE, H OWEVER, CHANGE OF STATUS WILL NO WAY MAKE THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. ON C OMPUTATION OF LOSS ON THE PROVISIONAL ACCOUNT B Y THE LEARNED AO WHICH IS NOT A FACT, THE O BSERVATION OF THE LEARNED CIT MADE IN LAST PARAGRAPH OF PAGE - 3, PAGE - 4 AND FIRST AND SECOND PARAGRAPH OF PAGE - 5 WERE NEVER FORMED PART OF THE SHOW CAUSE NOTICE. THIS CLEARLY SHOWS THAT THE LEARNED CIT HAS NEITHER EXAMINED THE RECORDS NOR EXERCISED HIS INDEPENDENT JUDGMENT BEFORE INITIATING PROCEEDINGS U/S.263 FOR WHICH THE ENTIRE ORDER IS VITIATED AND NOT SUSTAINABLE ON THIS GROUND ALONE. IN SUPPORT OF THE ABOVE CONTENTION THE APPELLANT RELIES ON THE JUDGMENT OF HO NBLE SUPREME COURT OF INDIA IN THE CASE OF SIRIPUR PAPER MILLS VS. CWT REPORTED IN (1 970) 77 ITR 6 (SC). LAW IS ALSO SETTLED THAT PROCEEDING UNDER SECTION 263 HAS TO BE STRICTLY CONFINED TO THE NOTICE ISSUED INVOKING THE JURISDICTION UNDER THAT SECTION FO R THE REASONS STATED THEREIN . LAW DOES NOT PERMIT EXPANDING PROCEEDINGS UNDER SECTION 263 AFTER ITS INITIATION BEYOND WHAT S STATED IN THE NOTICE ITSELF, SSI LIMITED V. DCIT (2004) 85 TTJ (CHE) 1 049. ON A LLOWANCE OF BROUGHT F ORWARD LOSS OF 12,24,20,620 BY THE LEARNED ASSESSING OFFICER, WHICH AGAIN IS NOT FACT, CLEARLY SHOWS THAT THE LEARNED CIT HAS NEITHER EXAMINED THE RECORDS NOR EXERCISED HIS INDEPENDENT JUDGMENT BEFORE INITIATING PROCEEDINGS U/S.263 FOR WHICH THE ENTIRE ORDER IS VITIATE D AND NOT SUSTAINABLE ON THIS GROUND ALONE. IN SUPPORT OF THE ABOVE CONTENTION THE APPELLANT RELIES ON THE JUDGMENT OF HONBLE SUPREME COURT OF INDIA IN CASE OF SIRIPUR PAPER MILLS VS. CWT REPORTED IN (1970) 77 ITR 6 (SC). ON VARIOUS ACTS OF COMMISSION AND OMISSION AS COMMENTED IN INTERNAL AUDIT REPORT , THE LEARNED CIT HAS NOT POINTED OUT THE EXACT OMISSION. LAW IS WELL SETTLED THAT IT IS NECESSARY FOR THE CIT TO POINT OUT THE EXACT ERROR IN THE I.T.A.NO. 237/CTK/2010 4 ORDER WHICH HE PROPOSES TO REVISE. FOR THIS PROPOS ITION HE RE LIED ON THE DECISION IN THE CASE OF COMMISSIONER OF INCOME TAX - V - G.K.KABRA (1995) 211 ITR PAGE - 336 (AP) . ON N ON - RECONCILIATION OF LOAN AVAILED FROM HUDCO BECAUSE NO LOANS WERE AVAILED NOR REPAID DURING THE PERIOD UNDER DISPUTE BASED ON V ARIOUS DEFECTS AS POINTED OUT BY THE AUDITOR IN INTERNA L AUDIT REPORT , THE LAW IS WELL SETTLED THAT IN EXERCISE OF POWER THE CIT MUST BRING TO BEAR AN UNBIASED MIND, CONSIDER IMPARTIALLY THE OBJECTIONS RAISED BY THE AGGRIEVED PARTY AND DECIDE THE DISPUTE ACCORDING TO PROCE DURE CONSISTENT WITH THE PRINCIPLES OF NATURAL JUSTICE . HE CANNOT PERMIT HIS JUDGMENT TO BE INFLUENCED BY DICTATION OF ANOTHER AUTHORITY, SIRIPUR PAPER MILLS VS. CWT REPORTED IN (1970) 77 ITR 6 (SC). THE O BSERVATION OF THE LEARNED CIT MADE IN PARAGRAPH - 5 W AS NEVER FORMED PART OF THE SHO W CAUSE NOTICE. THE LEARNED CIT HAS CONCLUDED THAT IN VIEW OF THE DISCUSSIONS ALREADY MADE, IT IS REASONABLE TO HOLD THAT THE ASSESSMENT WAS MADE IN A PERFUNCTORY MANNER FROM WHICH IT IS APPARENT THAT THE LEARNED CIT WAS NE VER OF THE FIRM CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN VIEW OF THE FACTS AND SUBMISSIONS MADE ABOVE, THE IMPUGNED ORDER MAY KINDLY BE QUASHED. 5. WE HAVE HEARD THE RIVAL CONTENT IONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER WAS PREVENTED FOR VERIFICATION OF THE AUDITED ACCOUNT WHICH ORIGINALLY PROMPTED HIM TO INITIATE PROCEEDINGS U/S.271B. THE LEARNED CIT IN HIS ORDER U/S.263 HAS HEAVILY RELIED ON THE A UDITED ACCOUNTS, WHICH BY THAT TIME WAS MADE AVAILABLE BY THE ASSESSEE. MOST OF THE ISSUES AS CONSIDERED BY THE LEARNED CI T AND NOW POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE DO INDICATE ERRORS COMMITTED IN THE ASSESSMENT ORDER FOR WANT OF THE AU DITED FINANCIAL STATEMENT. THE LEARNED DR HAS SUBMITTED THAT THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER IN I.T.A.NO. 237/CTK/2010 5 RESPONSE TO NOTICE U/S.143(2)/263, WHICH ORDER WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY AND THE FATE IS PENDING. THE PREJUDI CE CAUSED BY THIS ORDER HAS BEEN THEREFORE ESTABLISHED BY THE ASSESSEE ITSELF BY RAISING THE ISSUES B EFORE THE CIT(A). THE LEARNED CIT, THEREFORE, HAS FULFILLED THE REQUIREMENT OF ASSUMING JURISDICTION U/S.263 WHEN IT HAS BEEN HELD BY THE VARIOUS COURTS TH AT THE REVISIONARY POWERS COULD ONLY BE ASSUMED WHEN BOTH THE LIMBS NAMELY ERRORS IN THE ORDER OF ASSESSMENT ARE ESTABLISHED TO HAVE CAUSED PREJUDICE TO THE INTEREST OF REVENUE. WE FIND THEREFORE NO INFIRMITY IN THE ORDER OF THE LEARNED CIT U/S.263 AND THEREFORE, IS UPHELD. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 13 TH MAY, 2011 S D/ - S D/ - ( . . . ) , ( K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 13 TH MAY, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : BHUBANESWAR DEVELOPMENT AUDHORITY, AKASH SHOVA BUILDING, SACHIVALAYA MARG,BHUBANESWAR 1 2 / THE RESPONDENT: COMMISSIONER OF INCOME - TAX, BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY OR DER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.