Jayaram Automobiles, Kakinada V. THE ACIT, CIRCLE - 1, Kakinada

ITA 265/VIZ/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6667 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Keywords: Revision of order; Depreciation; Bad and doubtful debts; Difference of opinion; Change of opinion
• Section: 43B; 143(3); 194C; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 265 /VIZ/ 201 4 ( / ASSESSMENT YEAR: 20 0 9 - 10 ) JAYARAM AUTOMOBILES D.NO.13 - 1 - 17/1, MAIN ROAD SURYARAOPETA KAKINADA [ PAN : A ACFJ8152C ] THE ACIT CIRCLE - 1 KAKINADA ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, AR / RESPONDENT BY : S HRI R. GOVINDARAJAN , DR / DATE OF HEARING : 05. 0 9 .2017 / DATE OF PRONOUNCEMENT : 13 .09.2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX [CIT ] , RAJAHMUNDRY VIDE F. NO. 38/263/CIT/RJY/2013 - 14 DATED 27 .0 3 .201 4 . 2 ITA NO. 265 /VIZ/2014 JAYARAM AUTOMOBILES, KAKINADA 2. A LL GROUNDS OF APPEAL ARE AGAINST THE ORDER PASSED BY THE CIT, RAJAHMUNDRY U/S 263 OF I.T.ACT. IN THIS CASE, ASSESSMENT WAS COMPLETED U/S 143(3) BY ORDER DATED 15.07.2011 ON TOTAL INCOME OF RS.17,18,960/ - ACCEPTING THE INCOME RETURN ED . THE CIT , RAJAHMUNDRY HAS TAKEN UP THE CASE FOR REVISION U/S 263 AND FOUN D THE FOLLOWING DEFICIENCIES AND DISCREPANCIES IN THE ASSESSMENT MADE BY THE ASSESSING OFFICER. (I) THE ASSESSEE CLAIMED BAD DEBTS AMOUNTING TO RS.93,425/ - BUT AO HAS NOT CALLED FOR THE DETAILS SUCH AS NAME AND ADDRESS OF THE DEBTORS AND THE YEAR IN WHICH THE SAME WAS ADMITTED AS INCOME, DATE AND DETAILS OF GOODS SUPPLIED ETC. THE ASSESSING OFFICER ALSO DID NOT VERIFY WHETHER THE BAD DEBTS WERE WRITTEN OFF IN THE BOOKS OF ACCOUNTS OR NOT. (II) THE ASSESSEE DEBITED A SUM OF RS.1,38,137/ - TOWARDS FREIGHT CH ARGES. THE ASSESSING OFFICER NEITHER CALLED FOR THE DETAILS NOR DID HE CALL FOR THE DETAILS OF TDS . (III) THE ASSESSEE DEBITED A SUM OF RS.6,01,389/ - TOWARDS SERVICE TAX, BUT THE ASSESSING OFFICER DID NOT CALL FOR THE 3 ITA NO. 265 /VIZ/2014 JAYARAM AUTOMOBILES, KAKINADA EVIDENCES FOR PAYMENT OF TAX WHICH IS ALLOWED ON ACTUAL PAYMENT BASIS U/S 43B OF IT ACT . (IV) THE ASSESSEE DEBITED A SUM OF RS.49,78,145/ - TOWARDS INTEREST, BUT THE A SSESSEE FURNISHED THE DETAILS ONLY TO THE EXTENT OF RS.47,79,603/ - . THE REMAINING DETAILS WERE NOT FURNISHED BY THE ASSESSEE . (V) THE CIT OBSERVED THAT THE TOTAL TURNOVER OF THE ASSESSEE WAS RS.38,57,67,253/ - . WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER DID NOT CALL FOR THE RETURN S FILED BEFORE THE VAT TAX AUTHORITIES FOR CROSS VERIFICATION OF TRADING RESULTS A ND TO VERIFY WHETHER THE DIFFERENCE IF ANY AND RECONCILIATION OF THE SAME. (VI) THE CIT FURTHER NOTICED THAT DURING THE ASSESSMENT YEAR, THE ASSESSEE HAS CLEARED UNSECURED LOAN O F RS.18 LAKHS BUT THE SOURCES AND THE MODE OF REPAYMENT WAS NOT EXAMINED BY TH E ASSESSING OFFICER. (VII) THE PARTNERS OF THE FIRM HAVE INTRODUCED HUGE SHARE CAPITAL DURING THE YEAR, BUT THE ASSESSING OFFICER DID NOT EXAMINE THE SOURCES FOR INTRODUCTION OF CAPITAL BY THE PARTNERS. 4 ITA NO. 265 /VIZ/2014 JAYARAM AUTOMOBILES, KAKINADA (VIII) THE ASSESSEE HAS ACQUIRED A BUILDING FOR A S UM OF RS.4,62,925/ - AND CLAIMED THE DEPRECIATION THEREON. BUT THE ASSESSING OFFICER HAS NOT CALLED FOR THE DETAILS WHETHER THE BUILDING WAS USED FOR THE PURPOSE OF BUSINESS OR NOT. 2.1. THE CIT HAS TAKEN UP THE CASE FOR REVISION AND ISSUED NOTICE U/S 263 DIRE CTING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE SAME SHOULD NOT BE REVISED U/S 263. THE ASSESSEE FILED POINT - WISE EXPLANATION BEFORE THE CIT. NOT BEING CONVINCED WITH THE EXPLANATION OF THE ASSESSEE, THE LD.CIT PASSED AN ORDER U/S 263 HOLDING THE ASSES SMENT MADE U/S 143(3) AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND SET ASIDE THE ASSESSMENT ORDER TO REDO THE ASSESSMENT AFTER VERIFYING THE ISSUES RAISED BY THE LD.CIT IN THE ORDER PASSED U/S 263. AGGRIEVED BY THE ORDER OF THE ASSESSIN G OFFICER, THE ASSESSEE IS IN APPEAL BEFORE US. 3. APPEARING FOR THE ASSESSEE, LD.AR ARGUED THAT THE ASSESSING OFFICER HAS CALLED FOR THE DETAILS DURING THE ASSESSMENT PROCEEDINGS, CONSIDERED THE DETAILS FURNISHED AND COMPLETED THE ASSESSMENT AFTER HAV ING SATISFIED WITH THE CORRECTNESS OF INFORMATION FURNISHED BY THE ASSESSEE. LD.AR REFERRING TO PAPER BOOK PAGE NOS. 18 TO 21 STATED THAT 5 ITA NO. 265 /VIZ/2014 JAYARAM AUTOMOBILES, KAKINADA THE ASSESSING OFFICER HAS ISSUED NOTICES AND DETAILED QUESTIONNAIRE WITH REGARD TO ISSUES RAISED IN THE NOTICE U/S 263 AND VERIFIED THE SAME. SINCE THE ASSESSING OFFICER HAS VERIFIED ALL THE DETAILS AND CONSIDERED THE SAME WHILE PASSING THE ASSESSMENT ORDER, THERE IS NO CASE FOR MAKING REVISION U/S 263. HENCE, THE ORDER MADE U/S 263 IS MERE CHANGE OF OPINION WHICH SHOULD BE QUASHED. 4. ON THE OTHER HAND, LD.DR ARGUED REFERRING THE ORDER PASSED U/S 263 PARTICULARLY IN RESPECT OF SERVICE TAX AND BAD DEBTS STAT ED THAT THERE WAS AN UNDER ASSESSMENT WITH REGARD TO SERVICE TAX AND ALLOWABILITY WITH REGARD TO THE BAD DEBTS. IN THE BAD DEBTS AN ITEM APPEARING IN THE NAME OF AREA MANAGER, CANTEEN STORES DEPARTMENT I S A GOVT. OF INDIA ORGANIZATION WHICH CANNOT BECOME BAD. THE LD.DR ARGUED THAT THE LD. CIT HAS RIGHTLY REVISED THE ORDER U/S 263 WHICH IS IN ACCORDANCE WITH THE PROV ISIONS OF I.T. ACT WHICH NEEDS TO BE UPHELD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. AS PER THE PAPER BOOK, THE ASSESSEE HAS SUBMITTED THE TDS DETAILS, RENTS, PREMIUMS AND COMMISSIONS, ADDITIONS TO ASSETS, 6 ITA NO. 265 /VIZ/2014 JAYARAM AUTOMOBILES, KAKINADA UNSECU RED LOANS, STOCK REGISTER, SUNDRY CREDITORS AND OTHER LIABILITIES VIDE LETTER DATED 02.02.2011. FURTHER VIDE LETTER DATED 18.06.2011, COPY OF PARTNERSHIP DEED, THE DETAILS OF PENAL INTEREST, SALES TAX PAYMENT, TRIAL BALANCE DIFFERENCE, THE DETAILS OF CLOSI NG STOCK, ACCOUNT COPY OF ONE OF THE PARTNERS, SRI DASARI SAIKRISHNA, WORKSHOP OUTSIDE JOB PAYMENTS, TRANSIT LOSS WERE FURNISHED BY THE ASSESSEE VIDE LETTER S REFERRED ABOVE. OTHER DETAILS CALLED FOR BY THE CIT U/S 263 WERE NOT FURNISHED BY THE ASSESSEE. T HERE IS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAS FURNISHED THE INFORMATION AND VERIFIED BY THE AO . THOUGH THE ASSESSEE HAS FURNISHED THE DETAILS OF DEBTS AS PER PAGE NO. 32 OF PAPER BOOK, THE ASSESSEE HAS NOT FURNISHED THE DETAILS IN THE YEAR IN WHICH TH E DEBT WAS INCURRED AND THE SAME WAS OFFERED TO INCOME. SIMILARLY IN THE CASE OF PAYMENT OF UNSECURED LOANS, THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF THE SOURCES FOR RE PAYMENTS. SOURCES FOR INTRODUCTION OF CAPITAL WERE ALSO NOT FURNISHED BY THE ASS ESSEE. WITH REGARD TO SERVICE TAX, THERE WAS SHORT PAYMENT OF RS.23,610/ - WHICH HA D ESCAPED ASSESSMENT. THOUGH THE ASSESSEE STATED THAT T HE PROVISIONS OF SECTION 194C ARE NOT APPLICABLE, IT HAS NOT FURNISHED THE DETAILS OF PARTY - WISE PAYMENT. THE ASSESSI NG OFFICER COMPLETED THE ASSESSMENT ACCEPTING THE RETURN OF 7 ITA NO. 265 /VIZ/2014 JAYARAM AUTOMOBILES, KAKINADA INCOME AND IS SILENT WITH REGAR D TO FURNISHING OF DETAILS REFERRED ABOVE. IT IS CLEAR FROM THE ABOVE THAT THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT WITHOUT APPLICATION OF MIND. NON VERIFICATION OF THE DETAILS AND NOT MAKING THE VERIFICATION OF INFORMATION WHICH REQUIRED TO BE MADE IS ERRONEOUS AS HELD BY HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD. VS. CIT [243 ITR 83]. FURTHER, IN RESPECT OF SERVICE TAX, T HERE WAS CLEAR UNDER ASSESSMENT OF RS.23,610/ - WHICH WAS NOT BROUGHT TO TAX BY THE AO . T HEREFORE, THE ASSESSMENT PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE , H ENCE, WE DO NOT FIND ANY ERROR IN THE ORDER PASSE D BY THE LD. CIT U/S 263 AND THE SAME IS UPHELD. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 TH SEP 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 13 . 0 9 .2017 L. RAMA, SPS 8 ITA NO. 265 /VIZ/2014 JAYARAM AUTOMOBILES, KAKINADA / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT JAYARAM AUTOMOBILES, D.NO.13 - 1 - 17/1, MAIN ROAD, SURARAOPETA, KAKINADA 2 . / THE ACIT, CIRCLE - 1, KAKINADA 3 . / THE CIT , RAJAHMUINDRY 4 . THE JOINT COMMISSIONER OF INCOME - TAX, KAKINADA RANGE, KAKINADA 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM