M/s. Spark Dealers Pvt. Ltd., Kolkata V. CIT, Central-III, Kolkata, Kolkata

ITA 267/KOL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2602 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2010
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 03-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 09-02-2010
• Court: TRIBUNAL
• Department Lawyers: B DOGRA
• Assessee Lawyers: S M SURANA
• Keywords: Opportunity of being heard; Set aside
• Section: 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL 'B BENCH : KOLKATA (BEFORE HONBLE SRI D.K.TYAGI, J.M. AND HONB LE SRI B.C.MEENA, A.M.) I.T.A. NO. 267 /KOL/2010 ASSESSM ENT YEAR : 2005-06 M/S SPARK DEALERS PVT LTD. VS CIT, CENTRAL-III, KOLKATA (PAN NO. AAFCS 0283 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SRI S.M.SURA NA. RESPONDENT BY : SRI B. DOGRA, CIT (DR). O R D E R PER SHRI B.C.MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT, CENTRAL III, KOLKATA DATED 11.12.2009 FOR THE ASSESSMENT YEAR 2005-06. 2. GROUNDS RAISED ARE AS FOLLOWS : 1. THAT THE LD. CIT-CENTRAL-III, KOLKATA HAD NO BASIS IN INITIATING THE PROCEEDINGS U/S 263 OF THE I.T.ACT. 2. THAT THE LEARNED CIT-CENTRAL-III, KOLKATA WAS WRONG IN HOLDING THAT THE REPLY GIVEN BY THE APPELLANT-COMPANY IS UNACCEPTABLE. 3. THE LEARNED CIT, CENTRAL-III, KOLKATA WAS WRONGLY IN SETTING OUTSIDE THE ORDER U/S 263 IN SPITE OF HIS ADMISSION TH AT THE CONCERNED TRANSACTION OF RS.1,00,50,000/- WAS NOT TAKEN IN THE ASSESSMENT YEAR 2005-06 AND RELATED TO EARLIER YEARS. 4. THAT THE LD. CIT-CENTRAL-III, KOLKATA W AS WRONG IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT COMPANY THAT T HE ASSESSMENT AS MADE BY THE A.O. IS NOT PREJUDICIAL TO THE INTEREST O F THE REVENUE AND SHOULD NOT BE SET ASIDE. 5. THAT THE LEARNED CIT, CENTRAL-III, KOLKAT A DID NOT RAISE THE ISSUES ON WHICH HE SET ASIDE THE ORDER U/S 263 IN HIS N OTICE, THUS DENYING THE BASIC RIGHT TO THE COMPANY TO FILE ITS OBJECTIONS. 6. THAT THE ORDER SETTING ASIDE THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 AS PASSED BY THE CIT-CENTRAL-III, KOLKATA IS WRONG , UNLAWFUL , HARRASIVE AND WAS PASSED WITHOUT GIVING ANY OPPOR TUNITY TO THE APPELLANT COMPANY TO REPRESENT ON ISSUES WHICH WAS RAISED FOR THE FIRST TIME IN THE ORDER U/S 263 SETTING ASIDE THE ASSESSMENT. 7. THE APPELLANT CRAVES LEAVE TO FILE ADDITION AL GROUND/S OR AMEND THE GROUNDS ON OR BEFORE HEARING OF THIS APPEAL. 2 3. THE CIT HAS SET ASIDE THE ORDER BY HOLDING AS UNDER : TO SUM UP , THE A.O. HAS COMPLETED THE ASSESSMEN T ON THIS ISSUE WITHOUT MAKING REQUISITE ENQUIRY AND ALSO WITHOUT DUE A PPLICATION OF MIND. THE IMPUGNED ASSESSMENT ORDER IS THUS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND IS LIABLE TO BE SET- ASIDE ON THIS ISSUE. ACCORDINGLY, IN THE EXERCISE OF REVISIONARY POWERS UNDER SECTION 263 OF INCOME TAX ACT, 1961, THE ASSESSMENT OF ASSESSMENT YEAR 2005-06 IS HEREBY SET ASIDE TO THE A.O. WITH A DIRECTION TO EXAMINE THIS ISSUE IN THE LIGHT OF ABOVE DISCUSSIONS AND TO MAKE ASSESSMEN T DE NOVO ON THIS ISSUE, AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE COMPANY. 4. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LE ARNED A.R. SUBMITTED THAT THIS AMOUNT OF RS.1,00,50,000 WAS NOT RECEIVED IN THE BOOKS OF ACCOUNT DURING THE YEAR. IT WAS A BALANCE COMING FROM THE PA ST YEARS WHICH CAN BE SEEN FROM THE BALANCE SHEET FOR THE YEAR ENDING ON 31.3.98 WHICH IS AVAILABLE AT PAGE 46 OF THE PAPER BOOK. THE RELEVANT NOTE IN THE BALANCE S HEET UNDER THE HEAD, NOTES TO THE ACCOUNTS, READ AS UNDER : AN AMOUNT OF RS.2,54,22,459 IS BEING SHOWN AS UN SECURED LOANS RECEIVED UNDER SCHEDULE 2 WHICH, WE ARE GIVEN TO UNDERSTAN D, HAS BEEN RECEIVED FROM VARIOUS PARTIES OUT OF WHICH A SUM OF RS.1,00 ,50,000 STILL TO BE CONFIRMED BY PROPER CONFIRMATION. THUS, WITH NO STRETCH OF IMAGINATION THIS AMOU NT CAN BE BROUGHT TO TAX IN THE YEAR UNDER CONSIDERATION. HE PLEADED THAT ALL THE DETAILS WERE SUBMITTED BEFORE THE CIT AND THE ASSESSEE OBJECTED AGAINST THE PR OCEEDINGS U/S 263 OF THE INCOME TAX ACT WHICH IS EVIDENT FROM THE LETTER O F THE ASSESSEE DATED 11.12.09 FILED BEFORE THE CIT, CENTRAL-II, KOLKATA. COPY IS AVAILABLE AT PAGE 3 OF PAPER BOOK. HE ALSO PLEADED THAT THE VARIOUS BALANCE SHEETS FOR THE PRIOR PERIOD WERE SUBMITTED BEFORE THE CIT WHICH CLEARLY SHOWS THAT T HIS AMOUNT WAS BEING CARRIED FORWARD FROM PAST SO MANY YEARS. THE CITS OBSER VATION THAT THE ASSESSEE HAS NOT CHALLENGED THE REVISION PROCEEDINGS IS ALSO N OT CORRECT. THE ASSESSEE HAS CHALLENGED THE PROCEEDINGS WHICH IS EVIDENT FROM THE LETTER SUBMITTED BEFORE THE CIT , WHERE THE ASSESSEE HAS STATED THAT NO ERROR IS COMMITTED WHILE MAKING THE ASSESSMENT , AND THE ASSESSMENT SHOULD NOT BE REOP ENED. THE OBSERVATION THAT PROFIT & LOSS ACCOUNTS WERE NOT FOUND ON THE RECOR D IS ALSO UNTRUE. THE ASSESSEE 3 SUBMITTED ALL THE RELEVANT DOCUMENTS ALONG WITH T HE RETURN OF INCOME. THE CIT HIMSELF HAS RECORDED THAT TWO COPIES OF THE SCHE DULE 1 TO VI WHICH WERE AVAILABLE ON RECORD. HE SUBMITTED THAT ALL RELEVA NT DOCUMENTS WERE SUBMITTED ALONG WITH RETURN. ASSESSEE IS NOT RESPONSIBLE F OR NOT MAINTAINING THE RECORDS PROPERLY FOR DEPARTMENT. 5. THE CITS RELIANCE ON THE AUDITORS SPECIFIC NOTE ABOUT THE LOAN AMOUNT FOR THE YEAR UNDER CONSIDERATION IS ALSO NOT JUSTIF IED AS THE SAME NOTE HAS BEEN MADE BY THE AUDITORS IN THE PAST SO MANY YEARS. T HE AMOUNTS REMAINED THE SAME. THEREFORE, THE CIT IS NOT JUSTIFIED IN TAKING U P THE REVISION PROCEEDINGS. HE ALSO PLEADED THAT THE ASSESSMENT ORDER PASSED BY T HE A.O. WAS NOT ERRONEOUS NOR IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENU E. THEREFORE, THE CIT IS NOT JUSTIFIED IN SETTING ASIDE THE ORDER OF THE A.O . HE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. VS CIT (243 ITR 83) (SC). 6. AFTER HEARING BOTH THE SIDES AND GOING THROUGH THE FACTS OF THE CASE, WE FIND THAT THE AMOUNT OF RS.1,00,50,000 WAS BEIN G CARRIED FORWARD FROM THE PAST SO MANY YEARS. THE CIT HIMSELF WAS CONVINCED T HAT THIS AMOUNT WAS NOT RECEIVED DURING THE YEAR. IN SUCH CIRCUMSTANCES THE ORDER FOR THE ASSESSMENT YEAR 2005-06 PASSED BY THE A.O. CANNOT BE HEL D TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ORDER EVEN CAN NOT B E SAID TO BE ERRONEOUS . THERE WAS NO INCORRECT ASSUMPTION OF FACTS AND NO INCORR ECT APPLICATION OF LAW. KEEPING THESE FACTS IN VIEW, THE CIT WAS NOT JUST IFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.05.2010 SD/- SD/- (D.K.TYAGI) (B.C.M EENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07.05.2010 4 COPY FORWARDED TO :- 1) ACIT, CC-XX, KOLKATA. 2) M/S SPARK DEALERS PVT. LTD., 46A, RAFI AHMED KIDWAI ROAD, 5 TH FLOOR, KOLKATA. 3) CIT(A), KOLKATA. 4) CIT, KOLKATA. 5) D.R., ITAT, KOLKATA. BY ORDER ASSISTANT REGISTRAR I.T.AT., KOLKATA. BCD