M/s. India Finance Limited, Kolkata V. CIT, Central Circle - I, Kolkata, Kolkata

ITA 252/KOL/2012

• Counselvise Citation: 25223514 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 15-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: MANOJ KATARUKA
• Section: 263; 143(3)

Judgement Text

I.T.A. NO . 2 52 /KOL./201 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI SHAMIM YAHYA (ACCOUNTANT MEMBER) , AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 2 52 /KOL . / 20 1 2 ASSESSMENT YEAR : 200 7 - 20 0 8 M/S. INDIA FINANCE LIMITED, .............. ... . ............ .. .APP ELL ANT 5, RUSSEL STREET, (1 ST FLOOR), KOLKATA - 700 071 [PAN : A A ACI 5527 M ] - VS. - COMMISSIONER OF INCOME TAX, ........................... . RESPONDENT CENTRAL CIRCLE - 1, KOLKATA, 18, RABINDRA SARANI, PODDAR COURT, KOLKATA - 700 00 1 APPEARANCES BY: SHRI MANOJ KATARUKA , ADVOCATE , FOR THE ASSESSEE SHRI RAVI JAIN , CIT, D.R. , FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : DEC EM BER 0 9 , 2 01 4 DATE OF PRONOUNCING THE ORDER : DEC EM BER 11 , 201 4 O R D E R PER GEORGE MATHAN : THIS IS AN APPEAL FILED BY THE ASSESSE E AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX , CENTRAL - I, KOLKATA PASSED UNDER SECTION 263 IN M. NO. CIT(C - I)/263/(INDIA FINANCE LTD./TECH/11 - 12/KOL/8290 - 92 DATED 21 .1 1 .201 1 FOR TH E ASSESSMENT YEAR 200 7 - 0 8 . 2 . SHRI MANOJ KATARUKA , ADVOCATE, REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI RAVI JAIN , CIT, D.R., REPRESENTED ON BEHALF OF THE REVENUE. I.T.A. NO . 2 52 /KOL./201 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 2 OF 5 3. AS THE APPEAL OF THE ASSESSEE IS TIME - BARRED BY 19 DAYS, THE ASSESSEE HAS FILED PETITION FOR CONDONATION OF DELAY. AFTER HEARING THE SUBMISSIONS OF THE ASSESSEE AND THE AFFIDAVIT FILED, WE ARE OF THE VIEW THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FOR 19 DAYS DELAY IN FILING THE APPEAL. CONSEQUENTLY THE DELAY IS CONDONED AND THE APPEAL IS DISPOSED OF O N MERIT. 4 . AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD. A.R. THAT THE ORIGINAL ASSESSMENT ORDER HAS BEEN PASSED UNDER SECTION 143(3) OF THE ACT ON 11.05.2009, WHERE IN THE ASSESSING OFFICER HAD ACCEPTED THE RETURNED INCOME. IT WAS SUBMITTED THAT T HE LD. CIT ON PRESUMPTIONS HAD INVOKED HIS POWERS UNDER SECTION 263 AND HAD HELD THAT ADEQUATE ENQUIRY HAD NOT BEEN DONE BY THE ASSESSING OFFICER IN RESPECT OF THE PURCHASE AND SALE OF COTTON FABRIC AS ALSO THE LOANS TAKEN BY THE ASSESSEE , ON WHICH INTERES T HAD BEEN CLAIMED. LD. A.R. DREW OUR ATTENTION TO PAGE 7 OF THE ORDER OF LD. CIT, WHEREIN IT IS MENTIONED BY THE LD. CIT IT IS VERY LIKELY THAT THE ASSESSEE HAS TRIED TO REDUCE ITS INCOME BY BOOKING FICTITIOUS LOSS ON SALE AND PURCHASE OF COTTON YARN . H E FURTHER DREW ATTENTION TO THE REFERENCE BY THE LD. CIT THAT THE TRANSACTIONS APPEARED HIGHLY SUSPICIOUS. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD DONE COMPLETE VERIFICATION AS WAS EVIDENCED BY THE ORDER - SHEET NOTING S , WHICH WAS SHOWN AT PAGES 56 TO 58 OF THE PAPER BOOK. IT WAS THE SUBMISSION THAT EVEN BEFORE THE LD. CIT IT WAS SUBMITTED THAT THE BOOKS OF ACCOUNTS AS ALSO THE AUDITED ACCOUNTS WERE PLACED BEFORE THE ASSESSING OFFICER. THE QUANTITATIVE DETAILS AND THE VALUE OF THE PURCHASE AND SA LE OF COTTON YARN WERE ALSO PLACED BEFORE THE ASSESSING OFFICER AS WERE ALSO SHOWN IN THE TAX AUDIT REPORT. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD ALSO EXAMINED THE COPY OF THE LEDGER ACCOUNTS OF THE PURCHASERS AND SELLERS AND THE SAME WAS AL SO VERIFIED WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE POWERS UNDER SECTION 263 COULD NOT BE INVOKED FOR MAKING RO VI NG INQUIRIES. IT WAS THE SUBMISSION THAT THE ORDER UNDER SECTION 263 WAS LIABLE TO BE QUASHED. I.T.A. NO . 2 52 /KOL./201 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 3 OF 5 5 . IN REPLY, LD. CIT, D.R. SUBMITTED THAT THE ASSESSING OFFICER WAS NOT ONLY A ADJUDICATOR BUT WAS ALSO AN INVESTIGATOR. FOR THIS PROPOSITION, HE PLACED RELIANCE ON THE DECISION OF THE HON BLE GUWAHATI HIGH COURT IN THE CASE OF CIT VS. - JAWAHAR BHATTACHARJEE REPORTED IN [2012] 24 TAXMAN.COM 215 (GU WA HATI) AS ALSO THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF KRISHNA SHRIRAM IN ITA NO. 1649/DEL./2011 DATED 29.01.2014 AND ALSO IN THE CASE OF NINE STAR ENTERPRISES (P) LTD. IN I.T.A. NO. 1054/HYD./2 011 DATED 31.12.2012. I T WAS THE SUBMISSION THAT THE ASSESSMENT ORDER WAS VERY CRYPTIC ORDER AND CLEARLY SHOWED NON - APPLICATION OF MIND. IT WAS THE SUBMISSION THAT THE PURCHASES AND SALES WERE ALL FROM CONNECTED CONCERNS WHICH HAD THE SAME ADDRESS, THOUGH ADMITTEDLY THIS WAS FOUND AFTER THE ORDER UNDER SECTION 263 HAD BEEN PASSED. IT WAS THE SUBMISSION THAT THE ORDER PASSED UNDER SECTION 263 WAS LIABLE TO BE UPHELD. 6 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE SHOW - CAUSE NOTICE ISSUED BY T HE LD. CIT FOUND AT PAGE 1 OF THE PAPER BOOK SHOWS THAT THE REASON GIVEN FOR THE PURPOSE OF INITIATING PROCEEDINGS UNDER SECTION 263 IS BECAUSE THE ASSESSEE HAD SET OFF THE LOSS ON SALE AND PURCHASE OF COTTON YARN FROM THE INTEREST INCOME AND THERE WAS NO SUCH BUSINESS IN THE EARLIER YEARS AND T HE RECORDS ALLEGEDLY DID NOT SHOW ANY EVIDENCE OF HAVING BEEN FURNISHED TO SUPPORT THE SAID CLAIM OF THE LOSS NOR THE ASSESSING OFFICER HA D RAISED ANY QUERY OR INQUIRY REGARDING THE GENUINENESS OF THE LOSS. A PERUSAL OF THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263 SHOWS THAT THERE IS NO SPECIFIC FINDING BY THE LD. CIT AS TO HOW THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ALL THAT IS BEING SAID IS THAT THE ASSESSEE VERY LIKELY HAS TRIED TO REDUCE ITS INCOME BY BOOKING FICTITIOUS LOSS AND THAT NON - VERIFICATION APPEARED TO BE HIGHLY SUSPICIOUS . CIT S POWERS UNDER SECTION 263 ADMITTEDLY CANNOT BE INVOKED ON MERE PRESUMPTION S AND SURMISES NOR ON SUSPICION. IN FACT , A PERUSAL OF THE ORDER - SHEE T NOTING FOUND IN THE PAPER BOOK CLEARLY SHOWS I.T.A. NO . 2 52 /KOL./201 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 4 OF 5 THAT THE ORIGINAL NOTICE UNDER SECTION 143(2) WAS ISSUED IN SEPTEMBER, 2008, THEN AGAIN THE PROCESS CONTINUED IN MARCH, 2009. FOUR HEARINGS WERE CONDUCTED. DETAILS HAD BEEN CALLED FOR AND THE SAME HAVE BEEN HE LD TO HAVE BEEN FILED AND ON 11 TH MAY ,2009 THE ASSESSMENT ORDER HAS BEEN PASSED. ADMITTEDLY THE ORDER - SHEET NOTING IS DONE BY THE ASSESSING OFFICER AND NOT BY THE ASSESSEE AND SAME ALSO IN THE CASE OF THE ASSESSMENT ORDER. THE ASSESSEE CANNOT DEMAND ANY SP ECIFIC NOTING IN THE ORDER - SHEET NOTINGS NOR IN THE ASSESSMENT ORDER. JUST BECAUSE THE ASSESSING OFFICER DOES NOT MAKE A COMPLETE RECORDING OF WHAT WAS HAPPENED IN THE ASSESSMENT PROCEEDINGS PER SE DOES NOT MAKE THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE. IN FACT, A PERUSAL OF THE PROVISIONS OF SECTION 263 REQUIRES FOR MAKING OR CAUSING TO BE MADE OF SUCH INQUIRY AS THE LD. CIT DEEMS NECESSARY. THIS ITSELF SHOWS THAT THERE MUST BE APPLICATION OF MIND BY THE LD. CIT O N THE BASI S OF INQUIRIES DONE BY THE LD. CIT . H ERE CLEARLY JUST BY THROWING ALLEGATION ON THE ASSESSMENT PROCEEDINGS ON SUSPICION AND PRESUMPTIONS , THE ASSESSMENT ORDER IS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. NO ENQUIRY HAS BEEN DONE BY T HE LD. CIT. THIS IS NOT PERMISSIBLE. THIS VIEW OF OURS ALSO FINDS SUPPORT TO THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. J.L. MORRISON REPORTED IN 366 ITR 593 (CAL.). IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORD ER PASSED UNDER SECTION 263 BY THE LD. CIT IS UNSUSTAINABLE ON THE FACTS MENTIONED ABOVE AND CONSEQUENTLY THE SAME STANDS QUASHED. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DEC EM BER, 2014. SD/ - SD/ - SHAMIM YAHYA GEORGE MATHAN ( ACCOUNTANT MEMBER) ( JUDICIAL MEMBER) KOLKATA, THE 11 TH D AY OF DEC EM B ER , 201 4 I.T.A. NO . 2 52 /KOL./201 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 5 OF 5 COPIES TO : (1) M/S. INDIA FINANCE LIMITED, 5, RUSSEL STREET, (1 ST FLOOR), KOLKATA - 700 071 (2) COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, KOLKATA, 18, RABINDRA SARANI, PODDAR COURT, KOLKATA - 700 001 ( 3 ) COMMISSIONER OF INCOME TAX ( 4 ) THE DEPARTMENTAL REPRESENTATIVE ( 5 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.