Assistant Commissioner of Income Tax (Central) , Jabalpur V. M/s.Tirupati Construction (PAN AACFT8104E), Opp. Railway station, Burhar, Dist.- Shahdol (M.P.)

ITA 25/JAB/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2256 (ITAT-JABALPUR)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 07-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V B SARGAR
• Assessee Lawyers: B K NEMA
• Keywords: Earning of tax free income; Validity of assessment
• Section: 143(3); 14A; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 25/JAB/2017 / ASSESSMENT YEAR : 2012-13 ASSTT. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE JABALPUR VS M/S. TIRUPATI CONSTRUCTION, OPP. RAILWAY STATION, BURHAR, DISTT. SHAHDOL (MP) PAN : AACFT 8104 E / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI V.B. SARGAR, DR ASSESSEE BY : SHRI B.K. NEMA, ADV. / DATE OF HEARING : 15/03/2018 / DATE OF PRONOUNCEMENT: 16/03/2018 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER:- THIS APPEAL OF REVENUE FOR ASSESSMENT YEAR 2012-13 IS DIRECT ED AGAINST THE ORDER OF THE CIT(A)-2, JABALPUR DATED 14.03.2017 VIDE APPEAL NO.J/CIT(A)2/JBP/ACIT/CIR/KATNI/024/2015-16, ARISING OUT OF OR DER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 17.03.2015 FRAMED BY THE ACIT, CIRCLE-KATNI. 2. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE RECORD, ARE THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN CIVIL CONSTRUCTION WORK. RETURN OF INCOME WAS FILED ON 29.09.2012 SHOWING INCOME OF RS.28,01,030/-. CASE SELECTE D FOR SCRUTINY AND NOTICES UNDER SECTION 143(2)/142(1) WERE SERVED UPON THE ASSESSEE. ASSESSEE WAS UNABLE TO COMPLY WITH THE NOTIC ES FOR THE REASON THAT SEARCH WAS CONDUCTED ON 16.10.2014 IN THE ENTIRE SINGHANIA GRO UP WHICH ALSO INCLUDED ASSESSEES FIRM M/S. TIRUPATI CONSTRUCTI ON. HOWEVER, LEARNED ASSESSING OFFICER, ON GOING THROUGH THE PANCHNAMA COPY DATED 02.02.2015 SHOWING THE WARRANT OF SEARCH, OBSERVED THAT THE NAME OF THE ASSESSEE-FIRM WAS NOT THERE AND HE ACCORDINGLY CONCLUDED THAT THE ASS ESSMENT ITA NO. 25/JAB/2017 ACIT VS. TIRUPATI CONSTRUCTION AY : 2012-13 2 PROCEEDINGS CANNOT BE ABATED AT THIS STAGE AND DIRECTED T HE ASSESSEE TO PARTICIPATE AND CO-OPERATE IN THE ASSESSMENT PROCEEDINGS . HOWEVER, ASSESSEE KEPT ON PURSUING THAT THIS ASSESSMENT PROCEED ING CANNOT BE INITIATED BECAUSE ASSESSEE IS COVERED UNDER THE SEARCH. AT LAST LEARNED ASSESSING OFFICER PASSED AN EX-PARTE ORDER UNDER SECT ION 144 OF THE ACT ASSESSING INCOME AT RS.1,05,58,160/-; THEREBY MAKING ADDITION U NDER VARIOUS HEADS TOTALING TO RS.77,57,130/-. 3. APPEAL OF THE ASSESSEE BEFORE THE LD. CIT(A) BROUGH T PART RELIEF. AGAINST THE ADDITION DELETED BY THE LD. CIT(A), THE R EVENUE IS NOW IN APPEAL BEFORE THE TRIBUNAL RAISING FOLLOWING GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS.26,71,657/- ON ACCO UNT OF DISALLOWANCE OF INTEREST, RS.1,13,425/- ON ACCOUNT OF DI SALLOWANCE OF ONE HALF PERCENT OF EXEMPT INVESTMENT AND RS.33,68,698/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES WITHOUT APPRECIATING THE FACTS BROUGHT INTO LIGHT BY THE AO DURING ASSESSMENT PROCEEDINGS. 4. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDER OF THE LEARNED ASSESSING OFFICER IN RELATIO N TO THE IMPUGNED THREE ADDITIONS DELETED BY THE LD. CIT(A). ON THE OTHER H AND, LEARNED COUNSEL FOR THE ASSESSEE, SO FAR AS MERITS OF THE CASE ARE CONCERNE D, SUPPORTED THE FINDINGS OF THE LEARNED CIT(A). HOWEVER, LEARNED COU NSEL FOR THE ASSESSEE ALSO RAISED THE ISSUE BY QUOTING RULE 27 OF THE INCOME- TAX (APPELLATE TRIBUNAL) RULES CHALLENGING THE VALIDITY OF ASSESSMENT PASSED UNDER SECTION 144 OF THE ACT BY TAKING A PLEA THAT DURING THE COURSE O F ASSESSMENT PROCEEDINGS THE ASSESSEE WAS SUBJECT TO SEARCH UNDER S ECTION 132 OF THE ACT AND THEREFORE ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER IS NOT VALID. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MAT ERIAL PLACED BEFORE US. REVENUE IS IN APPEAL AGAINST THE DELETION O F ADDITION OF ITA NO. 25/JAB/2017 ACIT VS. TIRUPATI CONSTRUCTION AY : 2012-13 3 RS.26,71,657/- FOR DISALLOWANCE OF INTEREST, RS.1,13,425/- FOR DI SALLOWANCE OF 0.5% OF EXEMPT INVESTMENT AND DELETION OF DISALLOWANCE O F EXPENSES OF RS.33,68,698/-. 6. NOW, COMING TO THE MERITS OF THE CASE; APROPOS ISS UE NO.1 RELATING TO DISALLOWANCE OF INTEREST OF RS.26,71,657/-, WE OBSERVE THAT T HE ASSESSING OFFICER HAS MADE A DISALLOWANCE UNDER SECTION 14A OF THE A CT READ WITH RULE 8D OF IT RULES. THERE IS NO FINDING OF ASSESSIN G OFFICER ABOUT THE INVESTMENT IN THE SHARES AND SECURITIES OR INVESTMENT OF ASSETS FETCHING THE EXEMPT INCOME. EVEN THERE IS NO EVIDENCE AS TO WHETH ER THERE IS ANY EXEMPT INCOME EARNED BY THE ASSESSEE. LEARNED DEPARTMENTAL REP RESENTATIVE ALSO COULD NOT THROW ANY LIGHT ON THE VARIOUS LIMBS WHICH NEEDS TO BE FULFILLED BEFORE MAKING THE DISALLOWANCE UNDER SECTION 14A OF THE ACT. THEREFORE, RESPECTFULLY FOLLOWING VARIOUS JUDGMENTS RELIED ON B Y THE LD. CIT(A) IN ITS APPELLATE ORDER AND ALSO IN THE GIVEN FACTS AND CIRCUMS TANCES OF THE CASE WHERE THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DUR ING THE YEAR, WE FIND NO JUSTIFICATION IN THE ORDER OF THE LEARNED ASS ESSING OFFICER MAKING DISALLOWANCE UNDER SECTION 14A OF THE ACT AT RS.26,71,657/-. WE ACCORDINGLY UPHOLD THE VIEW TAKEN BY THE LEARNED CIT(A ) AND DISMISS THIS ISSUE RAISED BY THE REVENUE IN GROUND NO.1 OF THE APPE AL. 7. APROPOS ISSUE NO.2 RELATING TO DISALLOWANCE OF 0.5% OF EXEMPTED INVESTMENT AT RS.1,13,425/-, WE FIND THAT THIS DISALLOWANCE I S ALSO WITH REGARD TO SECTION 14A OF THE ACT READ WITH RULE 8D. IN THE PRECEDING PARAGRAPH WE HAVE ALREADY DECIDED THAT AS THERE WAS NO EXEMP T INCOME EARNED BY THE ASSESSEE, NO DISALLOWANCE WAS CALLED FOR UN DER SECTION 14A OF THE ACT AS HELD BY VARIOUS HONBLE COURTS. WE, THEREF ORE, TAKING THE SAME VIEW, FIND NO REASON TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A) DELETING ITA NO. 25/JAB/2017 ACIT VS. TIRUPATI CONSTRUCTION AY : 2012-13 4 THE IMPUGNED DISALLOWANCE OF RS.1,13,425/-. THIS SECOND I SSUE RAISED BY THE REVENUE IN GROUND NO.2 IS ALSO DISMISSED. 8. APROPOS ISSUE NO.3 WHICH IS ARISEN ON ACCOUNT OF EST IMATED DISALLOWANCE OF EXPENSES OF RS.34,72,050/- BEING 5% OF THE TO TAL EXPENSES, WE OBSERVE THAT THE ASSESSING OFFICER HAS MERELY MADE AN AD-HOC DISALLOWANCE WHILE COMPLETING THE ASSESSMENT UNDER SEC TION 144 OF THE ACT. WE FURTHER FIND THAT WHEN THE ISSUE CAME UP BEFORE THE LD. CIT(A), ASSESSEE SUBMITTED COPIES OF LEDGER ACCOUNT OF THE PURCHASES, RENT, REPAIRS OF MACHINERY, SALARY AND WAGES AND OTHER EXPENSES TOTALING TO RS.6,94,40,999/- LEARNED ASSESSING OFFICER HAD MADE AN AD-HOC DISALLOWANC E OF 5% ON THIS AMOUNT. WE FURTHER OBSERVE THAT BOOKS OF ACCOUNTS OF T HE ASSESSEE ARE DULY AUDITED UNDER SECTION 44AB OF THE ACT AND ALL THE IMPUG NED EXPENSES AND PURCHASES HAVE BEEN EXAMINED BY THE LD. CIT(A) AND NO M ISTAKE HAS BEEN POINTED OUT BY THE FIRST APPELLATE AUTHORITY. LEARNE D DEPARTMENTAL REPRESENTATIVE HAS ALSO BEEN UNABLE TO PROVE ANY DISTING UISHING FACT TO SHOW THAT IN THE PAST SUCH DISALLOWANCES HAVE BEEN MADE WHICH HAVE BEEN CONFIRMED BY THE HIGHER APPELLATE AUTHORITIES. WE, TH EREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS APPRECIATING THE FACT THAT THE ASSESSEE IS MAINTAINING REGULAR BOOKS OF ACCOUNTS WHICH ARE AUDITED BY A QUALIFIED CHARTERED ACCOUNTANT, FIND NO REASON TO INTE RFERE IN THE FINDINGS OF THE LD. CIT(A) SUSTAINING THE ADDITION. IN THE RE SULT, ISSUE NO.3 RAISED BY THE REVENUE IN GROUND NO.1 REGARDING DISALLOWANCE OF RS .33,68,698/- IS ALSO DISMISSED. 9. DURING THE COURSE OF HEARING BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO RAISED A PLEA REFERRING TO RULE 27 OF IN COME-TAX (APPELLATE TRIBUNAL) RULES. RULE 27 OF INCOME-TAX (APPELLATE TRIBU NAL) RULES SAYS THE THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT T HE ORDER APPEALED ITA NO. 25/JAB/2017 ACIT VS. TIRUPATI CONSTRUCTION AY : 2012-13 5 AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM AND SUBMITTED THAT THE IMPUGNED ASSESSMENT ORDER IS NULL AND VOID AND NEEDS T O BE QUASHED IN VIEW OF THE FACT THAT A SEARCH WAS CONDUCTED U/S 132 OF THE ACT IN THE CASE OF ASSESSEE AND OTHER GROUP CONCERNS. POST SEARCH ASSESSME NT WAS AGAIN FRAMED IN THE CASE OF ASSESSEE FOR THE AY 2012-13 AND THE PR OVISIONS OF LAW DO NOT PERMIT TO FRAME TWO ASSESSMENTS FOR THE SAME ASS ESSMENT YEARS IN THE CASE OF AN ASSESSEE. 10. WE OBSERVE THAT WHILE ADJUDICATING THE MERITS OF THE CASE, WE HAVE CONFIRMED THE VIEW TAKEN BY THE LD. CIT(A) DELETING ALL THE ADDITIONS AND THEREFORE, DEALING WITH THE LEGAL ISSUE RAISED BY THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO RULE 27 OF INCOME-TAX (APPELLATE T RIBUNAL) RULES IS MERELY ACADEMIC IN NATURE AND THUS WE DECLINE TO DECIDE ON THIS LEGAL ISSUE. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 16 TH MARCH, 2018 AT JABALPUR. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER JABALPUR; DATED 16/03/ 2018 *BIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, JABALPUR 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, JABALPUR