Shri Bararam Sha, Keonjhar V. Pr. CIT, , Cuttack

ITA 238/CTK/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9291 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 22-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Assessee Lawyers: B K TIBREWAL
• Keywords: Revision of order; Business expenditure; Opportunity of being heard; Principle of natural justice; Assessment record; TDS; Set aside
• Section: 43B; 143(3); 40(a)(ia); 37(1); 250; 194J; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 238 /CTK/20 1 9 ( / A SSESSMENT Y EAR : 20 14 - 20 1 5 ) SRI BALARAMA SHA, C/O - S.K.MINER AL HANDLING (P) LTD NEAR BUS STAND, BARBIL, KEONJHAR - 758035, ODISHA VS. PR.CIT, CUTTACK PAN NO. : BIGPS 6536 N ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI B.K.TIBREWAL, AR /REVENUE BY : SHRI M.K.GAUTAM, CIT DR / DATE OF HEARING : 09 / 0 3 /20 2 1 / DATE OF PRONOUNCEMENT : 12 / 0 3 /20 2 1 / O R D E R PER BENCH : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29.03.2019 , PASSED BY THE PR.CIT , CUTTACK FOR THE ASSESSMENT YEAR 20 14 - 20 1 5 , ON THE FOLLOWING GROUNDS OF APPEAL : - 1) THAT THE LD. PR. CIT, CUTTACK HAS ERRED IN LAW BY INVOKING SECTION 263 ON THE ISSUES WHICH WERE NEVER THE PART OF ORIGINAL ASSESSMENT US 143(3) (LIMITED SCRUTINY) AND HEN CE THE ORDER PASSED U/S 263 IS BAD IN LAW AND NEEDS TO BE ANNULLED. 2) THAT THE LIMITED SCRUTINY ORDER PASSED U/S 143(3) DATED 30 - 12 - 2016 WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AN D HENCE THE LD. PR. CIT, CUTTACK HAS ERRED IN LAW BY INVOKING SECTION 263. HENCE FRESH ASSESSMENT IS UNLAWFUL & THE ORDER PASSED U/S 263 NEEDS TO BE QUASHED. 3) THAT THE LD. PR. CIT CUTTACK HAS ERRED IN LAW BY PASSING THE ORDER U/S 263 EX - PARTY I.E. WITHO UT SERVICE OF ANY NOTICE TO THE APPELLANT AND ADEQUATE OPPORTUNITY HAS NOT BEEN PROVIDED TO THE APPELLANT FOR NECESSARY REBUTTAL AGAINST THE SPECIFIC ADDITION MADE BY THE LD. PR. CIT, CUTTACK WHICH VIOLATES PRINCIPLE OF NATURAL JUSTICE AND HENCE THE ORDER NEEDS QUASHED IN TOTO. ITA NO. 238 /CTK/201 9 2 4) THAT THE LD. PR. CIT CUTTACK IS WHOLLY UNJUSTIFIED AND FACTUALLY WRONG IN MAKING THE DISALLOWANCES U/S 40(A)(IA) AMOUNTING TO RS. 2,05,68,414/ - & 50,000/ - BASING UPON THE WRONG FACTS THAT THE TDS HAS NOT BEEN DEPOSITED WHEREAS THE TOTAL TDS AMOUNT HAS BEEN DULY - DEDUCTED AND DEPOSITED IN THE CENTRAL GOVT, ACCOUNT BEFORE THE DUE DATE OF FILLING INCOME TAX RETURN U/S 139(1). HENCE THE DISALLOWANCES MADE BASING UPON WRONG SETUP FACTS IS ARBITRARY AND NEEDS TO BE DELETED IN TOTO. 5) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. PR. CIT CUTTACK ERRED BY MAKING THE ADDITIONS U/S 43B AMOUNTING TO RS. 34,15,070/ - TOWARDS SERVICE TAX LIABILITY WHICH IS NOT A PART OF PROFIT AND LOSS ACCOUNT AND THERE IS NO IMPACT IN THE TAXABLE PROFIT. THE ADDITION IS ARBITRARY AND NEEDS TO BE DELETED IN TOTAL. 6) THAT THE LD PR. CIT IS WHOLLY UNJUSTIFIED AND WRONG IN MAKING THE DISALLOWANCES 37(1) IN THE HANDS OF THE APPELLANT WHICH REPRESENTED DISALLOWANCE OF INTEREST AMOUNTING TO R S 93,546/ - DEPOSITED AGAINST SERVICE TAX LIABILITY DUE TO DELAY IN PAYMENT OF SERVICE TAX. HENCE ARBITRARY PRESUMPTION HAS NO PLACE FOR MAKING THE ADDITIONS/ DISALLOWANCES AND THE DISALLOWANCES OF RS. 93,546/ - NEEDS TO BE DELETED IN FULL. 7) THAT THE OR DER OF THE LD. PR. CIT, CUTTACK BEING NOT BASED ON THE FACTS OF THE CASE OF THE APPELLANT AND BEING CONTRARY TO LAW, SHOULD HENCE BE QUASHED AND THE APPELLANT BE GIVEN SUCH RELIEF OR RELIEFS AS PRAYED FOR. 8) THAT THE APPELLANT CRAVES LEAVE TO AMEND, AL TER, MODIFY, SUBSTITUTE, ADD TO, ABRIDGE AND/ OR RESCIND ANY OR ALL OF THE ABOVE GROUNDS. 2. AT THE OUTSET, LD. AR OF THE ASSESSEE DID NOT PRESS THE GROUNDS NO.1 TO 3, THEREFORE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. GROUND NO.8 IS GENERAL IN NATUR E. NOW, THE GROUNDS REMAINED AS GROUND NOS.4 TO 7, WHICH TO BE DECIDED BY US IN THE FOLLOWING PARAGRAPHS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL IN THE BUSINESS OF MINING CONTRACT AND FILED ITS RETURN OF INCOME ELECTRONICALLY ON 13.04.2015 DECLARING TOTAL INCOME OF RS.87,11,270/ - . THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED BY THE AO. LATER ON THE CASE WAS CALLED FOR BY INVOKING THE POWERS VESTED U/S.263 ITA NO. 238 /CTK/201 9 3 OF THE ACT BY THE PR.CIT, CUTTACK, WHEREIN THE PR.CIT HAS OBSERVED AS UNDER : - DECISION : 8. I HAVE DULY CONSIDERED THE PROVISIONS OF LAW, THE FACTS OF THE CASE, THE SUBMISSIONS OF THE ASSESSEE AND PERUSED THE ASSESSMENT RECORDS. 9. IT IS NOTICED FROM THE ASSESSMENT RECORD THAT THE SERVICE TAX LIABI LITY OF RS.34,15,070/ - RELATING TO F.Y.2013 - 14, WAS NOT PAID ON OR BEFORE DUE DATE OF FURNISHING THE RETURN, AS PER THE TAX AUDITOR'S CERTIFICATE IN FORM - 3CD [CLAUSE NO.26(B)(B)]. HENCE, THIS AMOUNT WAS REQUIRED TO BE DISALLOWED U/S.43B OF THE ACT AND ADDE D TO THE TOTAL INCOME. BUT THE AO HAD FAILED TO BRING THE SAME TO TAX WHILE COMPLETING THE ASSESSMENT FOR THE AY. 2014 - 15. 10. SECONDLY, THE AO HAD NOT EXAMINED THE ISSUE OF NON DEPOSIT OF TDS OF RS.4,03,172/ - AND RS.5,000/ - MADE U/S.194CAND 194J OF THE ACT RESPECTIVELY. AS A RESULT, DISALLOWANCE OF CORRESPONDING EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT ON ACCOUNT OF CONTRACT CHARGES AMOUNTING TO RS.2,05,68,414/ - AND PROFESSIONAL FEES AMOUNTING TO RS.50,000/ - WAS NOT MADE U/S.40(A)(IA) OF TRIE ACT FOR NON - COMPLIANCE WITH THE APPLICABLE TDS PROVISIONS. 11. THIRDLY, IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.93,546/ - TOWARDS 'INTEREST/PENALTY'. THIS IS NOT ADMISSIBLE AS A BUSINESS EXPENDITURE IN VIEW OF EXPLANATION - 1 TO SECTION 37(1) OF THE ACT AND THE DECISION OF THE SUPREME COURT IN THE CASE OF BHARAT COMMERCE AND INDUSTRIES LTD. VS CIT, 230 ITR733(SC). HOWEVER, THE AO HAD NOT EXAMINED THE ALLOWABILITY OR OTHERWISE OF THIS CLAIM WHILE SCRUTINIZING THE CASE U/S 143(3) O F THE INCOME TAX ACT, 1961. 12. HENCE, ON THE WHOLE, THE AO FAILED TO EXAMINE THE ISSUES NOTED ABOVE IN CONSONANCE WITH THE PROVISIONS OF INCOME TAX ACT. THE AO FAILED TO APPLY HIS MIND TO THE ISSUES, WHICH HAD A MATERIAL BEARING ON THE ASSESSMENT OF THE CORRECT INCOME OF THE ASSESSEE. HE SHOULD NOT HAVE REMAINED PASSIVE IN THE FACE OF THE ADVERSE COMMENTS ARISING FROM THE TAX AUDITOR'S REPORT IN FORM NO. 3CD. AS A RESULT, THE ASSESSMENT ORDER DATED 30.12.2016 IS FOUND TO BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263(1) OF THE IT. ACT, 1961. 13. WHILE HOLDING SO, I HAVE ALSO TAKEN INTO CONSIDERATION THE RATIO LAID DOWN BY THE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 8 3 (SC). IN THAT CASE, IT HAS BEEN HELD THAT IN THE FOLLOWING CIRCUMSTANCES AN ORDER WOULD BE HELD ERRONEOUS - 'AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND'. (EMPHASIS MINE). ITA NO. 238 /CTK/201 9 4 14. I ALSO DRAW SUPPORT FROM THE FULL BENCH DECISION OF GAUHATI HIGH COURT IN THE CASE OF CIT V. JAWAHAR BHATTACHARJEE (2012)34 1 ITR 434(GAU) (FB). IN THAT CASE, THE HON'BLE HIGH COURT HAS HELD THAT CASES OF ASSESSMENT ORDERS PASSED ON WRONG ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW OR WITHOUT APPLICATION OF MIND , WOULD BE COVERED WITHIN THE SCOPE OF SECTION 263 OF THE I T ACT. 15. SIMILARLY, THE HON'BLE HIGH COURT OF CALCUTTA IN THE CASE OF DAWJEE DADABHOY & CO V. S.P. JAIN (1957) 31 ITR 872 (CAL.) HAS HELD THAT ALTHOUGH THE WORDS 'PREJUDICIAL TO THE INTEREST OF REVENUE' HAVE NOT BEEN DEFINED IN THE ACT, IT MUST MEAN THAT THE ORDER OF ASSESSMENT UNDER CHALLENGE IS SUCH AS NOT IN ACCORDANCE WITH LAW, IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALIZED. THE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. BHAWAGAN DAS [2005]272 ITR 367(AII) H AS ALSO HELD THE SAME VIEW. WITHOUT DOUBT, THE PRESENT CASE SQUARELY FALLS UNDER THAT CRITERION. 16. IN THIS CONTEXT, REFERENCE CAN ALSO BE MADE TO THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASES OF RAMAPYARI DEVI SARAOGI (1968) 67 ITR 84 (SC) AN D SRNT. TARADEVI AGARWAL VS CST 88 ITR 323 (SC), WHEREIN THE HON'BLE APEX COURT HAS HELD THAT LACK OF ENQUIRY OR VERIFICATION AT THE RELEVANT TIME BY THE AO WOULD CONSTITUTE 'PREJUDICE TO THE INTEREST OF REVENUE' AND WOULD MAKE SUCH ORDER 'ERRONEOUS'. SIMI LARLY, THE HON'BLE HIGH COURT OF ORISSA IN THE CASE OF UMA SHANKAR RICE MILLS V. CIT (1991) 187 ITR 638 (ORI.) HAS OBSERVED THAT WHERE THE COMMISSIONER FELT THAT PROPER ENQUIRY WAS NOT MADE BY THE AO DURING THE ASSESSMENT PROCEEDING, HE WAS JUSTIFIED IN IN VOKING THE PROVISIONS OF SECTION 263 IN RESPECT OF THE ORDER PASSED BY THE AO. 17. THE ABOVE VIEWS OF THE COURTS HAVE BEEN GIVEN STATUTORY APPROVAL BY THE INSERTING EXPLANATION - 2 TO SECTION 263 (1) W.E.F. 01.06.2015, WHICH READS AS UNDER: - EXPLANATION 2 TO SECTION 263 'FOR THE PURPOSE OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMIS SIONER OR COMMISSIONER, (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORD ER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASS ESSEE OR ANY OTHER PERSON. ITA NO. 238 /CTK/201 9 5 18. RECENTLY, THE ITAT, CUTTACK BENCH, CUTTACK, WHILE UPHOLDING ACTION U/S 263 IN THE CASE OF CUTTACK DEVELOPMENT AUTHORITY V. CIT, CUTTACK IN ITA NO. 361/CTK/2014 ON THE SAME GROUND OF FAILURE TO CONDUCT FURTHER ENQUIRIES W HERE CIRCUMSTANCES DEMANDS SO, HAS HELD AS UNDER: 'WE RELY ON VARIOUS JUDICIAL PRONOUNCEMENTS, WHEREIN, IT WAS HELD THAT THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE INCOME TAX OFFICER SHOULD H AVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. IT WAS ALSO HELD THAT THE INCOME TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN TH E RETURN OF INCOME. WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH SO AS TO PROVOKE AN ENQUIRY, IT IS HIS DUTY TO MAKE PROPER ENQUIRY. FAILURE TO MAKE ENQUIRY IN SUCH CIRCUMSTANCES WOULD MAKE THE ASSESSMENT ORDER ERRONEOUS. THE HON'BLE APEX COURT IN THE CASE OF SMT TARA DEVI AGGARWAL VS. CIT, 88 ITR 323 (SC), HAS HELD THAT THE CIT MAY CONSIDER AN ORDER OF THE AO TO BE ERRONEOUS NOT ONLY IT CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT BUT ALSO BECAUSE IT IS A STEREO TYPED ORD ER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN AND FAILS TO MAKE ENQUIRIES WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. RECENTLY, THE HON'BLE APEX COURT IN THE CASE OF DENIAL MERCHANTS PVT LTD VS ITO IN SPECIAL LEAVE (C) NO.(S ) 23976/2017 AND OTHERS ORDER DATED 29.11.2017 HAS UPHELD THE JUDGEMENT OF HON'BLE CALCUTTA HIGH COURT PASSED ON 10.04.2017 IN G.A. NO.599/2016, DISMISSING THE SPECIAL LEAVE PETITION OBSERVING THAT THE CIT AFTER SETTING ASIDE THE ORDER OF THE ASSESSING OFF ICER, SIMPLY DIRECTED THE ASSESSING OFFICER TO CARRY THOROUGH AND DETAILED ENQUIRY.' 19. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE HAS NOT APPEARED BEFORE THE UNDERSIGNED TO THE SHOW CAUSE NOTICE ISSUED U/S 263 OF THE IT ACT. IN THAT NOTICE, IT HAD BEEN STATED THAT THE FAILURE OF THE AO TO BRING TOTAL AMOUNT OF RS.2,41,27,030/ - [RS.34,15,070+ RS.2,05,68,414 + RS.50,000 + RS.93,546] TO TAX IN RESPECT OF THE ISSUES MENTIONED THEREIN, HAD MADE HIS ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERST OF RE VENUE. HOWEVER, IN SPITE OF GRANTING ADEQUATE OPPORTUNITY, THE ASSESSEE HAS NOT CHOSEN TO FILE ANY REPLY. THEREFORE, NO MEANINGFUL PURPOSE WOULD BE SERVED BY REMITTING THESE ISSUES BACK TO THE AO FOR FRESH EXAMINATION. 20. ACCORDINGLY, I DIRECT THE AO TO MODIFY HIS ASSESSMENT ORDER DATED 30.12.2016 BY MAKING FURTHER ADDITION OF RS.2,41,27,030/ - UNDER THE FOLLOWING HEADS: I) RS.34,15,070 TOWARDS UNPAID SERVICE TAX U/S.43B, II) RS.2,05,68,414/ - U/S 40(A)(IA) ON ACCOUNT OF CONTRACT CHARGES ON WHICH TDS WAS DEDUCTED BUT NOT CREDITED TO THE CENTRAL GOVERNMENT ACCOUNT BY THE DUE DATE, III) RS.50,000/ - U/S.40(A)(IA) ON ACCOUNT OF PROFESSIONAL CHARGES ON WHICH TDS WAS DEDUCTED BUT NOT CREDITED TO THE CENTRAL GOVERNMENT ACCOUNT BY THE DUE DATE, IV) RS.93,546/ - UNDER EXPLANATION - 1 TO SECTION 37(1) OF THE ACT ON ACCOUNT OF INTEREST/PENALTY DEBITED TO P & L ACCOUNT. 21. THE AO IS DIRECTED TO GIVE EFFECT TO THIS ORDER LATEST BY 30/06/2019, AS MANDATED U/S 153(5)OF THE ACT. ITA NO. 238 /CTK/201 9 6 4. LD. C OUNSEL OF THE ASSESSEE CHALLENGING THE EXERCISE OF REVISONARY POWER BY THE LD. PR.CIT U/S.263 OF THE ACT SUBMITTED THAT FROM THE IMPUGNED ORDER IT IS CLEARLY DISCERNIBLE THAT THE LD. PR.CIT ISSUED NOTICE ON 14.03.2019 FIXING THE DATE OF HEARING ON 22.03.20 19 TO THE ASSESSEE RESIDING AT BARBIL, KEONJHAR , WHICH IS APPROXIMATELY 250 KMS AWAY FROM CUTTACK. THEREAFTER ANOTHER NOTICE DATED 27.03.2019 WAS ISSUED FIXING THE DATE FOR HEARING AFTER ONE DAY I.E. ON20.09.2013 AND ON THE VERY SAME DATE, THE LD. PR.CIT P ASSED ORDER EX - PARTE WITHOUT ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE, THEREFORE, ON THIS SOLE COUNT THE IMPUGNED ORDER DESERVES TO BE QUASHED. LD. AR OF THE ASSESSEE ALSO SUBMITTED THAT THE LAST LETTER WAS ALSO SERVED TO THE ASSESSEE THROUGH EMAIL BUT OPPORTUNITY OF HEARING COULD NOT BE AVAILABLE TO THE ASSESSEE SINCE NO EARLIER NOTICE WAS RECEIVED BY THE ASSESSEE AND IN THE NOTICE WHICH WAS RECEIVED BY THE ASSESSEE THROUGH EMAIL, ONLY ONE DATE TIME WAS GIVEN AND IT WAS NOT PRACTICALLY POSSIBLE FOR THE ASSESSEE TO COME TO CUTTACK, COMPLETE JOURNEY OF 250 KMS AND CONTACT HIS COUNSEL AND FILING REPLY TO THE NOTICE ISSUED BY THE REVISONARY AUTHORITY. LD. AR ALSO SUBMITTED THAT THE LD. PR.CIT HAS PICKED UP THE MAIN ISSUE REGARDING EXPENDITURE ON ACCOUNT OF CONTRACT CHARGES AND PROFESSIONAL FEES WITHOUT MAKING TDS AND NON - COMPLIANCE WITH THE APPLICABLE PROVISIONS OF TDS. LD. AR ALSO SUBMITTED THAT THE LD PR.CIT HAS ALSO DISPUTED THE PAYMENT OF SERVICE TAX LIABILITY ALLEGING THAT IT WAS NOT ITA NO. 238 /CTK/201 9 7 PAID ON OR BEFOR E THE DUE DATE OF FURNISHING OF RETURN, THEREFORE, TO BE DISALLOWED U/S.43B OF THE ACT. LD. AR OF THE ASSESSEE ALSO SUBMITTED THAT THE LD. PR.CIT ALSO PICKED UP ANOTHER SIMILAR ISSUE OF DEBITING AN AMOUNT OF RS.93,546/ - TOWARDS INTEREST/PENALTY, WHICH WAS NOT ADMISSIBLE AS AN EXPENDITURE AS PER SECTION 37(1) OF THE ACT. LD. AR VEHEMENTLY POINTED OUT THAT IF THE ASSESSEE COULD HAVE GIVEN OPPORTUNITY OF BEING HEARD THEN HE WOULD BE ABLE TO DEMONSTRATE AND EXPLAIN BY WAY OF RELEVANT AND SUBSTANTIAL EVIDENCE TH AT THERE IS NO VIOLATION OF ANY PROVISIONS OF THE ACT AND THE ASSESSEE HAS MADE COMPLIANCE OF ALL THE PROVISIONS WHILE MAKING THE IMPUGNED PAYMENTS AS PICKED UP BY THE LD. PR.CIT FOR REVISING THE ORDER U/S.263 OF THE ACT. LD. AR VEHEMENTLY SUBMITTED THAT T HE ASSESSEE WAS NOT PROVIDED DUE OPPORTUNITY OF HEARING BY THE LD. PR.CIT TO EXPLAIN HIS STAND WITH SUPPORT OF RELEVANT DOCUMENTARY EVIDENCE, THEREFORE, THE IMPUGNED ORDER HAS BEEN PASSED IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND, THEREFORE, THE SAM E MAY BE QUASHED. FURTHER THE LD. AR SUBMITTED THAT THE ASSESSMENT ORDER CANNOT BE HELD ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN THE BACK OF THE ASSESSEE WITHOUT PROVIDING DUE OPPORTUNITY OF HEARING, THEREFORE, THE IMPUGNED ORDER MAY KINDLY BE QUASHED. 5. REPLYING TO THE ABOVE, LD. CIT - DR STRONGLY SUPPORTED THE IMPUGNED REVISONARY ORDER PASSED U/S.263 OF THE ACT AND SUBMITTED ITA NO. 238 /CTK/201 9 8 THAT THE AO HAS FAILED TO EXAMINE ALL THE FOUR ISSUES IN CONSONANCE WITH THE PROVISIONS OF THE INCOME TAX ACT, 1961 A ND ALSO FAILED TO APPLY HIS MIND TO THE ISSUES WHICH ADDED MATERIAL BEARING ON THE ASSESSMENT ON THE CORRECT INCOME OF THE ASSESSEE. LD. AR SUBMITTED THAT THE AO SHOULD NOT HAVE REMAINED PASSIVE IN THE FACE OF THE ADVERSE COMMENTS ARISING FROM THE TAX AUD ITORS REPORT IN FORM NO.3CD. AS A RESULT, THE ASSESSMENT ORDER DATED 30.12.2016 WAS RIGHTLY FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263(1) OF THE ACT. ACCORDINGLY, LD. CIT - DR SUBMITTED THAT THE APPEAL OF THE ASSESSEE MAY KINDLY BE DISMISSED. 6. SINCE ON THE CONCLUSION OF THE ARGUMENTS OF BOTH THE SIDES, LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO PRESS GROUND NOS.1 TO 3, THEREFORE, THE SAME ARE DISMISSED AS NOT PRESSED THEREBY U PHOLDING THE ACTION OF PR.CIT IN REVISING THE ORDER OF AO. LD. AR ALSO SUBMITTED THAT THE ASSESSEE WAS NOT ALLOWED DUE OPPORTUNITY OF HEARING PROPERLY BEFORE THE LD. PR.CIT TO FILE RELEVANT AND SUPPORTED DOCUMENTARY EVIDENCE AND ALL MATERIALS WHICH RESULT ED INTO BASELESS ADDITIONS. LD. AR SUBMITTED THAT IN THIS CASE, THE LD. PR.CIT HAS NOT SET ASIDE THE ASSESSMENT ORDER BUT MODIFIED THE ORDER BY MAKING ADDITION ON ALL FOUR ISSUES WITHOUT LOOKING INTO THE RELEVANT DOCUMENTARY EVIDENCE IN POSSESSION OF THE A SSESSEE AND EXPLANATION OF THE ASSESSEE ON ALL FOUR ISSUES. THE LD. AR FURTHER SUBMITTED THAT SINCE THE ORDER HAS ITA NO. 238 /CTK/201 9 9 BEEN MODIFIED BY THE PR.CIT, THEREFORE, THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO PLACE HIS EXPLANATION AND STAND ALONG WITH SUPPORTED D OCUMENTARY EVIDENCE IN THE INTEREST OF JUSTICE AND HENCE, THE AO MAY KINDLY BE DIRECTED TO CONSIDER AND ADJUDICATE ALL THE FOUR ISSUES AFTER ALLOWING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. REPLYING TO THE ABOVE, LD. CIT - DR SUBMITTED THAT THE LD. PR .CIT IS VERY WELL EMPOWER TO REVISE AND MODIFY THE ORDER WHILE PASSING THE ORDER U/S.263(1) OF THE ACT, THEREFORE, THE ORDER OF MODIFICATION CANNOT BE CHALLENGED. HOWEVER, IN ALL FAIRNESS, THE LD. CIT - DR SUBMITTED THAT IF IT IS FOUND JUST AND PROPER TO ALL OW THE ASSESSEE AN OPPORTUNITY TO EXPLAIN HIS CASE AND STAND ON ALL FOUR ISSUES BY WAY OF SUPPORTING DOCUMENTARY EVIDENCE AND MATERIAL, THEN THE DEPARTMENT HAS NO SERIOUS OBJECTION IN RESTORING ALL THE FOUR ISSUES TO THE FILE OF AO FOR CONSIDERATION AND AD JUDICATION OF THE GRIEVANCE OF THE ASSESSEE. 8. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT IN THE EARLIER PART OF THIS ORDER, WE HAVE HELD THAT THE ACTION OF THE PR.CIT IN REVISING THE ORDER U/S.263 OF THE ACT WAS QUITE CORR ECT AND JUSTIFIED BASED ON CERTAIN LEGAL PRINCIPLES OF THE ACT, AND, THUS, WE UPHOLD THE SAME. WE ARE ALSO IN AGREEMENT WITH THE LD. CIT - DR WHILE PASSING THE ORDER U/S.263 OF THE ACT. LD. PR.CIT, AS PER SCHEME OF SECTION 263 OF THE ACT, IS VERY WELL EMPO WER TO REVISE/ MODIFY THE ASSESSMENT ORDER WITHOUT RESTORING THE ISSUE TO THE FILE OF AO FOR RE - ITA NO. 238 /CTK/201 9 10 ADJUDICATION. IN THE PRESENT CASE, LD. PR.CIT HAS MODIFIED THE ASSESSMENT ORDER DIRECTING THE AO TO MADE ADDITIONS ON ALL FOUR POINTS AND IT IS ALSO AMPLY CLEAR THAT THE ASSESSEE WAS NOT ALLOWED TO SUBMIT HIS STAND WITH HIS EXPLANATION AND OFFER RELEVANT DOCUMENTARY EVIDENCE AND MATERIAL BEFORE THE LD. PR.CIT DURING THE PROCEEDINGS U/S.263 OF THE ACT. THEREFORE, KEEPING IN VIEW THE SUBMISSION OF BOTH THE SIDES, WE FIND IT JUST AND PROPER AND NECESSARY TO ALLOW THE ASSESSEE TO SUBMIT HIS EXPLANATION BEFORE THE AO ALL OTHER RELEVANT MATERIAL AND DOCUMENTARY EVIDENCE AND THE AO SHALL CONSIDER AND DECIDE THE SAME AFTER ALLOWING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. ACCORDINGLY, ALL THE FOUR ISSUES RAISED IN GROUND NOS.4 TO 7 ARE RESTORED TO THE FILE OF AO WITH A DIRECTION AS NOTED ABOVE AND THE AO IS DIRECTED TO ADJUDICATE THE ABOVE I S SUES AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDING LY, WE UPHOLD THE ACTION OF THE LD. PR.CIT IN INVOKING THE POWERS U/S.263 OF THE ACT. THUS, GROUND NOS.1 TO 3 ARE DISMISSED AND GROUND NOS.4 TO 7 ARE ALLOWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATI STICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 12 / 0 3 / 20 2 1 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 12 / 0 3 /20 2 1 PRAKASH KUMAR MISHRA, SR.P.S. ITA NO. 238 /CTK/201 9 11 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK 1. / THE APPELLANT - SRI BALARAMA SHA, C/O - S.K.MINERAL HANDLING (P) LTD NEAR BUS STAND, BARBIL, KEONJHAR - 758035, ODISHA 2. / THE RESPONDENT - PR.CIT, CUTTACK 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTT ACK 6. / GUARD FILE. //TRUE COPY//