Shri Rajendra Kantilal Shah, Ahmedabad V. The CIT.,A'bad-VI, Ahmedabad

ITA 2370/AHD/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4387 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-07-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 10-08-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Assessee Lawyers: M K PATEL
• Keywords: Difference of opinion; Prejudicial to interest; Change of opinion
• Section: 143(3); 133A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 2370/AHD/2009 ASSESSMENT YEAR :2004-05 RAJENDRA KANTILAL SHAH PROP.: GAHANA G OLD MARKET, MANINAGAR, AHMEDABAD V/S . THE COMMISSIONER OF INCOME TAX AHMADABAD VI, NARAYAN CHAMBERS, ASHRAM ROAD, AHMEDABAD PAN NO. A OOPS5362R (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI M. K. PATEL, A.R. /BY RESPONDENT SHRI ABHAY DAMLE, CIT D.R. /DATE OF HEARING 23.07.2013 /DATE OF PRONOUNCEMENT 06.09.2013 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL IS LATE BY 104 DAYS. THE APPELLANT HAS EXPLAINED REASONS FOR DELAY. ACCORDINGLY, WE CONDONE THE DELAY AND A LLOW THE APPEAL TO PROCEED. 2. THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF CIT-VI, AHMEDABAD, DATED 24.02.20 09 FOR ASSESSMENT YEAR 2004-05. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UN DER: 1. THE LEARNED CIT HAS ERRED IN PASSING THE ORDER U/S.263 OF THE ACT TREATING THE ASSESSMENT ORDER U/S.143 FOR A.Y.2 004-05 PASSED BY THE A.O. AS ERRONEOUS AND PREJUDICIAL TO THE REVENUE ON THE GROUND THAT THE SAME WAS COMPLETED W ITHOUT CARRYING OUT NECESSARY INQUIRIES. THE LEARNED CIT H AVING NOT PROPERLY CONSIDERED AND APPRECIATED THE SUBMISSIONS OF THE APPELLANT FILED BEFORE HIM, THE IMPUGNED ORDER U/S. 263 OF THE ITA NO. 2370/AHD/09 A.Y. 04-05 PAGE 2 ACT REQUIRES TO BE QUASHED AS BAD IN LAW AND WITHOU T JURISDICTION. 2. IT IS CONTENDED THAT THE APPELLANT HAVING PRODUC ED RELEVANT MATERIAL AND OFFERED EXPLANATIONS IN PURSUANCE OF T HE NOTICES ISSUED U/S.142(1) AND 143(2) OF THE ACT IN RESPECT OF THE ISSUES IN QUESTION AND AFTER CONSIDERING THE MATERI AL AND EXPLANATIONS AVAILABLE ON RECORD, THE A.O. HAD CAME TO A DEFINITE CONCLUSION AND A PARTICULAR VIEW WAS TAKEN , THE MERE FACT THAT THE LEARNED CIT WAS OF A DIFFERENT VIEW, CANNOT FORM A BASIS FOR ACTION FOR REVISION OF THE ASSESSMENT ORD ER. THE IMPUGNED ORDER OF REVISION U/S.263 OF THE ACT IS TH US WHOLLY JUSTIFIED AND BAD IN LAW. RELIANCE IS PLACED ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ARVIND JEWELLERS (2003) 259 ITR 502, 506 (GUJ). 3. THE LEARNED CIT FURTHER ERRED IN NOT APPRECIATIN G THE FACT THAT WHEN THE ASSESSING OFFICER MADE REASONABLE ENQUIRY ON THE ISSUES INVOLVED AND PASSED ORDER TAKING INTO CONSID ERATION ALL MATERIAL AND EXPLANATION AVAILABLE ON RECORD, IT CO ULD NOT BE SAID THAT THE ASSESSING OFFICER EITHER PASSED AN OR DER WITHOUT MAKING A REASONABLE ENQUIRY ON THE ISSUE INVOLVED O R PASSED A ORDER SIMPLY ACCEPTING WHAT THE ASSESSEE HAD STAT ED AND FAILED TO MAKE ENQUIRY CALLED FOR IN THE CIRCUMSTAN CES OF THE CASE, AND AS SUCH THE ORDER OF THE ASSESSING OFFICE R COULD NOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO INTERESTS OF REVENUE, SIMPLY BECAUSE HE (LEARNED CIT) WAS OF THE VIEW THAT PROPER ENQUIRIES HAVE NOT BEEN CARRIED OUT. ACCORDI NGLY, THE IMPUGNED ORDER U/S.263 OF THE ACT REQUIRES TO BE QU ASHED AS WITHOUT JURISDICTION AND BAD IN LAW. 3. ORIGINALLY, IN THIS CASE ASSESSMENT U/S. 143(3) WAS PASSED ON 26.12.2006. LD. A.O. MADE ADDITION ONLY RS. 50,000 /- ON ACCOUNT OF GP SHORT FALL AND ALSO CHANGED THE HEAD OF INCOME FROM BUSIN ESS INCOME TO INVESTMENT ITA NO. 2370/AHD/09 A.Y. 04-05 PAGE 3 U/S. 69B FOR RS. 3,11,422/-. THE LD. CIT, AHMADABA D, FOUND THIS ASSESSMENT PREJUDICIAL TO THE INTEREST OF REVENUE AND ERRONEOU S. THUS, HE GAVE THE SHOW CAUSE NOTICE VIDE LETTER DATED 03.02.2009, WHICH WA S REPLIED BY THE ASSESSEE. THE SHOW CAUSE NOTICE WAS ISSUED WITH REFERENCE TO INVESTMENT MADE IN SALES AT RS. 53,70,000/- AND ON NO INTEREST HAD BEE N DISALLOWED BY THE A.O. AND DISCLOSURE MADE U/S. 133A AT RS. 3,11,427/- NEU TRALIZED BY THE ASSESSEE BY DEBITING THE PURCHASE ACCOUNT. THE LD. CIT OBSE RVED THAT THE ASSESSEES OWN FUND AS WELL AS BORROWED FUND ARE MIXED UP AND THE A.O. DID NOT MAKE ANY VERIFICATION IN THIS REGARD. IT WAS ALSO NOT E XAMINED WHETHER THE SAID CAPITAL OF RS. 33,12,396/- WAS AVAILABLE IN THE FOR M OF FREE CASH WHICH WAS INVESTED IN THE PURCHASE OF SAID SHARES. HE HAS HE LD THAT UNSECURED LOAN OF RS. 1,02,81,009/- WAS UTILIZED IN MAKING THE INVEST MENT OF SHARES. AS PER THE ASSESSEES OWN ADMISSION, THE SAID INVESTMENT WAS M ADE WITH MOTIVE OF APPRECIATION IN THE VALUE OF SHARES AND FOR EARNING THE DIVIDEND INCOME. THE SAID INVESTMENT WAS NOT MADE BY THE ASSESSEE IN COU RSE OF HIS BUSINESS AND THEREFORE, THE ASSESSEE WAS NOT JUSTIFYING IN CLAIM ING THE ENTIRE INTEREST PAID ON BORROWINGS AS ALLOWABLE DEDUCTION U/S. 36(1)(III ) OF THE IT ACT. THE A.O. ALLOWED THE DEDUCTION OF RS. 5,80,773/- ON ACCOUNT OF INTEREST PAID ON THE UNSECURED LOAN OF RS. 1,02,88,009/- WITHOUT CARRYIN G OUT NECESSARY INQUIRY. SIMILARLY, THE LD. A.O. HAD NOT MADE ANY INQUIRY RE GARDING PURCHASES WHICH WERE ADMITTEDLY NOT RECORDED IN THE BOOKS OF ACCOUN T OF THE ASSESSEE AT THE TIME OF SURVEY COULD HAVE AT A LATTER STAGE BEING D EBITED TO THE PURCHASE ACCOUNT. THE A.O. DID NOT EXAMINE WHETHER THE DEBI T OF RS. 3,12,427/- IN THE PURCHASE ACCOUNT HAD THE EFFECT OF NULLIFYING THE D ISCLOSED INCOME CREDITED BY ITA NO. 2370/AHD/09 A.Y. 04-05 PAGE 4 THE ASSESSEE IN THE P&L ACCOUNT. THEREFORE, LD. CI T FOUND THE ORDER DATED 26.12.2006 ON BOTH THE ISSUE ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE AND ACCORDINGLY, HE SET ASIDE THE ASSESSMEN T ORDER ON TWO ISSUES AND RESTORED THE FILE TO THE A.O. FOR FURTHER VERIF ICATION. THE A.O. WAS DIRECTED TO FRAME THE ASSESSMENT ORDER AFRESH AS PER LAW AFT ER CARRYING OUT NECESSARY INQUIRY. 3. BEING AGGRIEVED BY THE ORDER OF THE CIT, THE ASS ESSEE CARRIED THE MATTER BEFORE US. LD. COUNSEL FOR THE APPELLANT CO NTENDED THAT THE A.O. HAD CONSIDERED BOTH THE ISSUES AND RAISED QUERY VIDE LE TTER DATED 13 TH JULY, 2006, 24 TH OCTOBER, 2006 & 23 RD NOVEMBER, 2006 WHICH WERE REPLIED BY THE ASSESSEE VIDE LETTER DATED 18.11.2006 AND ARGUED TH AT THE MATERIAL AND EXPLANATION WAS AVAILABLE ON RECORD BEFORE THE A.O. AND LD. A.O. HAD COME TO A DEFINITE CONCLUSION AND A PARTICULAR VIEW WAS TAK EN. THE MERE FACT OF THE LD. CIT WAS OF A DIFFERENT VIEW CANNOT FORM A BASIS FOR ACTION FOR REVISION OF THE ASSESSMENT ORDER. THUS, REVISION MADE U/S. 263 IS BAD IN LAW. HE RELIED UPON IN CASE OF CIT VS. ARVIND JEWELLERS (2003) 259 ITR 502, 506 (G UJ). THUS, HE REQUESTED TO SET ASIDE THE ORDER TO THE CI T. AT THE OUTSET, LD. CIT D.R. VEHEMENTLY RELIED UPON THE ORDER OF CIT. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. LD. A.O. HAD NOT MADE ANY INQUIRY WITH REG ARD TO THE INVESTMENT MADE IN SHARES FOR RS. 53,70,000/- AND SOURCE OF IN VESTMENT THEREIN. THE FUND WAS MIXED UP I.E. OWNED FUND AS WELL AS BORROW ED FUND. THE APPELLANT HAD PAID INTEREST OF RS.5,80,773/-, WHICH HAS BEEN ALLOWED BY THE A.O. WITHOUT VERIFYING. FURTHER, THERE WAS A DISCLOSURE U/S. 133A OF THE IT ACT ON ITA NO. 2370/AHD/09 A.Y. 04-05 PAGE 5 ACCOUNT OF EXCESS STOCK OF RS.3,11,427/- WHEREAS TH E APPELLANT ALSO DEBITED THE SIMILAR AMOUNT IN PURCHASE ACCOUNT. EFFECTIVEL Y, THE APPELLANT HAD NEUTRALIZED THE DISCLOSURE BY DEBITING THE PURCHASE . THE LD. A.O. HAD NOT VERIFIED THE FACT AND NO INQUIRY HAD BEEN MADE BEFO RE ACCEPTING THE ASSESSEES CLAIM UNDER BOTH THE HEADS. THE A.O. RA ISED THE QUERY BUT THE ASSESSEE DID NOT REPLY ON BOTH ASPECTS BEFORE HIM. THE LD. CIT HAS SET ASIDE THE ORDER TO THE A.O. AND DIRECTED TO PASS ORDER AS PER LAW AFTER PROPER VERIFICATION AND INQUIRY. THUS, WE HAVE CONSIDERED VIEW THAT LD. CITS ORDER IS NOT A CHANGE OF OPINION BUT IS AS PER THE HONBLE S UPREME COURT DECISION IN CASE OF MALABAR INDUSTRIAL COMPANY LTD. VS. CIT [2000] 243 ITR 83 (SC). 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 06.09.2013 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;