M/s Kamadhenu Silks, Vijayawada V. The CIT, Vijayawada

ITA 272/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0842 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 20-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SASMAL
• Assessee Lawyers: C SUBRAMANYAM
• Keywords: TDS; Set aside
• Section: 143(3); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH: VISAKHAPATNAM BEFORE: SRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SRI B.R. BASKARAN, ACCOUNTANT MEMBER I.T.A. NO 272/VIZAG/2009 ASSESSMENT YEAR : 2005-06 KAMADHENU SILKS, VIJAYAWADA VS. CIT, VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.AAGFK 0412 Q APPELLANT BY : SHRI C. SUBRAMANYAM, CA RESPONDENT BY : SHRI B. SASMAL, DR O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 31-03-2009 PASSED BY LD CIT, VIJAYAWADA U/S 263 OF THE INCOME- TAX ACT DIRECTING THE AO TO RE-DO THE ASSESSMENT PASSED U/S 143(3) FOR THE ASSE SSMENT YEAR 2005-06. 2. AGGRIEVED BY THE ORDER PASSED BY LD CIT, THE ASS ESSEE IS IN APPEAL BEFORE US. 3. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 RELATING TO THE ASSESSEE WA S COMPLETED U/S 143(3) OF THE ACT ON 20.3.2007. WHILE EXAMINING THE ASSESSME NT RECORDS, THE LD CIT NOTICED THAT THE FOUR PARTNERS OF THE ASSESSEE FIRM HAS BROUGHT IN FRESH CAPITAL TO THE TUNE OF RS.22.98 LAKHS AND FURTHER THE ASSESSEE FIRM HAS TAKEN NEW UNSECURED LOANS TO THE TUNE OF RS.8.60 LAKHS. THE AO HAD EXAMINED BOTH TYPES 2 OF FRESH CREDITS DURING THE COURSE OF ASSESSMENT PR OCEEDINGS AND WAS SATISFIED WITH THE EXPLANATIONS FURNISHED IN THIS REGARD. HO WEVER, THE LD CIT FELT THAT THE ASSESSEE HAS NOT PROPERLY EXPLAINED THE SOURCES OF PARTNERS AND CREDITORS AND THE AO HAS ALSO NOT EXAMINED THE ISSUES IN PROPER P ERSPECTIVE. ACCORDINGLY, THE LD CIT CONSIDERED THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY SET ASIDE T HE ASSESSMENT ON THESE TWO ISSUES WITH A DIRECTION TO REEXAMINE THEM AFRESH. 5. THE LD AR INVITED OUR ATTENTION TO THE PAPER BOOK FILED BY THE ASSESSEE AND SUBMITTED THAT THE AO HAS RAISED QUERIES ON BOTH TY PES OF CREDITS AND THE ASSESSEE HAS ANSWERED THE SAID QUERIES IN A DETAILE D MANNER BOTH WITH REGARD TO THE FRESH CAPITAL INTRODUCED BY THE PARTNERS AND AL SO WITH REGARD TO THE FRESH UNSECURED LOAN TAKEN DURING THE YEAR UNDER CONSIDER ATION. LD AR FURTHER SUBMITTED THAT WITH REGARD TO THE INTEREST PAYMENTS MADE ON THE UNSECURED LOANS, THE ASSESSEE HAS ALSO DEDUCTED TDS. ACCORD ING TO LD AR, BY PRESCRIBING THE MODE OF ENQUIRIES TO BE MADE IN CASE OF FRESH C REDITS, THE LD CIT IS ENTERING INTO THE QUASI JUDICIAL FUNCTIONS OF THE AO, WHICH IS NOT IN ACCORDANCE WITH THE LAW. BY PLACING RELIANCE ON THE FOLLOWING CASE LAW , THE LD AR SUBMITTED THAT ONCE THE ASSESSING OFFICER HAS COMPLETED THE ASSESS MENT AFTER CONSIDERING ALL THE REQUISITE INFORMATION CALLED FOR BY HIM, THE SAID A SSESSMENT CANNOT BE TERMED AS ERRONEOUS. A. CIT V GIRDHARILAL (2002) 258 ITR 331 (RAJ.) B. ASHOK KUMAR PARASRAMKA V ACIT (1998) 65 ITD 1 (CAL) C. CIT V HASTINGS PROPERTIES (2002) 119 TAXMAN 36 (CAL .) D. HINDUSTAN MARKETING & ADVERTISING CO. V ITO (28 ITD 231) E. TRIVENI ENGG. WORKS LTD. V DCIT (2003) 131 TAXMAN 3 2 (DEL) F. BALJEES V ACIT (2003) 123 TAXMAN 150 (CHD) 3 ON THE OTHER HAND, LD DR STRONGLY SUPPORTED THE ORD ER OF LD CIT. 6. WE HAVE HEARD THE PARTIES AND CAREFULLY PERU SED THE RECORD. AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL COMPANY V CIT REPORTED IN (2000) 243 ITR 83 (SC), THE LD CIT CAN INVOKE TH E PROVISIONS OF SECTION 263 OF THE ACT ONLY IF IT CAN BE SHOWN THAT THE SUBJECT AS SESSMENT ORDER IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF R EVENUE. IN THE CASE OF HINDUSTAN MARKETING & ADVERTISING CO. LTD., SUPRA, THE HONBLE DELHI TRIBUNAL HAS OBSERVED AS UNDER IN PARA 26 OF THE ORDER. THE HONBLE SUPREME COURT IN THE CASE OF JAIN BRO S. V UNION OF INDIA (1970) 77 ITR 107 LAID DOWN THAT THERE IS NO PRESUM PTION THAT OFFICERS OR AUTHORITIES WHO ARE ENTRUSTED WITH RESPONSIBLE DUTI ES UNDER THE TAXATION LAWS WOULD NOT DISCHARGE THEM PROPERLY AND IN A BONA FID E MANNER. IN OTHER WORDS, FOR EXAMINATION OF THE RECORD, TO SEE WHETHER S. 26 3 APPLIES, ONE HAS TO PROCEED WITH THE PRESUMPTION THAT THE OFFICERS INVOLVED IN MAKING THE ASSESSMENT ACTED IN A BONA FIDE MANNER. THE RECORD IS TO BE EXAMINE D TO SEE WHETHER IN THE DISCHARGE OF DUTIES IN THIS MANNER THERE HAS BEEN A N ERROR WHICH HAS RESULTED IN PREJUDICE TO THE REVENUE AND HAS, THUS MADE THE ORD ER ERRONEOUS SO AS TO BE PREJUDICIAL TO THE INTERESTS OF REVENUE. IT WAS FURTHER HELD THAT WHERE ENQUIRIES ARE MADE B Y THE AO, MATERIAL GATHERED AND EXAMINED AND ASSESSMENT FRAMED, IT CANNOT BE SA ID THAT ITO DID NOT MAKE NECESSARY ENQUIRIES AND HENCE THERE IS NO SCOPE FOR REVISION BY COMMISSIONER UNDER S. 263. SIMILAR VIEWS HAVE BEEN EXPRESSED BY THE HONBLE HIGH COURTS ALSO IN THE CASES RELIED UPON BY THE ASSESSEE. 6.1 IN THE INSTANT CASE, THE AO HAS CALLED FOR THE DETAILS OF PARTNERS AND UNSECURED LOANS, VIDE HIS LETTER DATED 05.1.2007. THE ASSESSEE HAS FILED THE DETAILS OF PARTNERS, THEIR P.A. NUMBERS, CONFIRMATI ON LETTERS OBTAINED FROM THE CREDITORS, ACCOUNT COPY OF PARTNERS AND CREDITORS E TC. IT WAS ALSO SHOWN THAT ALL THE PARTNERS ARE ASSESSED TO INCOME TAX. THUS IT I S NOT A CASE THAT THE AO HAS FAILED TO EXAMINE THE DETAILS OF FRESH CREDITS OBTA INED FROM THE PARTNERS AND CREDITORS. AS HELD BY THE DELHI TRIBUNAL, ONCE THE AO HAS EXAMINED THE ISSUE OF 4 FRESH CREDITS AND FRAMED THE ASSESSMENT AFTER OBTAI NING SATISFACTION WITH THE EXPLANATIONS OF THE ASSESSEE, IT CAN NOT BE SAID TH AT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. HENCE THERE IS NO SCOPE FOR REVISION U/S 263. IN VIEW OF THE ABOVE, WE REV ERSE THE ORDER OF LD CIT PASSED U/S 263 OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 3 RD MAY, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE : 03-05-2010 A COPY OF THIS ORDER IS FORWARDED TO : 01 M/S KAMADHENU SILKS, D.NO.27-16-166, BESANT ROAD , VIJAYAWADA 520 002 02 THE CIT, VIJAYAWADA 03 THE ITO WARD-2(1) VIJAYAWADA 04 THE ADD.CIT, RANGE-2 VIJAYAWADA 05 THE DR, ITAT, VISAKHAPATNAM 06 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY ITAT, VISAKHAPATNAM BENCH