Jayanta Kumar Jena, Cuttack V. ITO, Cuttack

ITA 275/CTK/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65105 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2012
• Court: TRIBUNAL
• Department Lawyers: MATI PARAMITA TRIPATHY
• Assessee Lawyers: S N SAHU
• Keywords: Revision of order; Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 275/CTK/2012 / ASSESSMENT YEAR 2007 - 08 SRI JAYANTA KUMAR JENA, C/O. S.N.SAHU, ADVOCATE, MADHU SUDAN NAGAR, TULSIPUR, CUTTACK 753 008 PAN: ACRPJ 9329 E - - - VERSUS - INCOME - TAX OFFICER, WARD 1(1), CUTTACK. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.N.SAHU, AR / FOR THE RESPONDENT: / SHRI MATI PARAMITA TRIPATHY, CIT - DR / DATE O F HEARING: 21.08.2012 / DATE OF PRONOUNCEMENT: / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX ASSUMING JURI SDICTION U/S.263 OF THE I.T.ACT,1961 FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE IS AN INDIVIDUAL CONDUCTING BUSINESS OF RETAIL OUTLET OF AC SHEETS, CEMENT AND M.S.RODS FILED RETURN OF INCOME OF 3,32,520. ASSESSMENT U/S.147 WAS MADE ON 25.9.2009 WHEN THE ASSESSING OFFICER CONSIDERED AMOUNTS NOT DEDUCTIBLE U/S.40A(3) FOR MAKING ADDITION OF 66,424. VERIFICATION OF THE TRANSPORT CHARGES MADE TO DISALLOWANCE OF EXPENSES AMOUNTING TO 22,200 AND THE INCOME FROM TRUCKS OWNED BY THE ASSESSEE WERE COMPUTED U/S.44AE WHEN DEPRECIATION THEREON WAS ALSO DISALLOWED. THE ASSESSING OFFICER ALSO MADE ADDITION OF HOUSE PROPERTY INCOME WHEN THE CLAIM OF INTEREST WAS DISALLOWED I.T.A.NO. 275/CTK/2012 2 AND THE INVESTMENT IN THE HOUSE PROPE RTY WAS CONSIDERED SEPARATELY AS INCOME FROM OTHER SOURCES. THIS WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY AND VIDE ORDER DT.17.8.2011 WAS PASSED GRANTING PART RELIEF TO THE ASSESSEE ON THE APPEAL INSTITUTED ON 15.12.2009. 3. THE LEARNED CO UNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS SUBMITTED THAT THE SHOW CAUSE NOTICE U/S.263 WAS ISSUED BY TH E LEARNED CIT TO THE ASSESSEE ON 7.3.2012 WHICH WAS REPLIED TO ON THE OBSERVATION OF THE LEARNED CIT IN HIS SHOW CAUSE NOTICE. IT WAS SUBMITTED THA T THE ASSESSEE DID NOT DEBIT 32,85,622 AS TRANSPORTATION CHARGES UNDER THE HEAD DIRECT EXPENSES . THEREFORE, THE ALLEGATION MADE BY THE LEARNED CIT IS MISCONCEIVED AND INDICATES LACK OF APPLICATION OF MIND. AS TO THE LIABILITY SHOWN UNDER BONUS PAYABLE 63,400, IT WAS SUBMITTED THAT THE SAME HAD BEEN DULY PAID WITHIN THE DUE DATE OF FILING OF RETURN I.E., 27.06.2007 AS REQUIRED UNDER LAW. FURTHER IT WAS SUBMITTED THAT THE ASSESSMENT ORDER U/S.147 WAS SUBJECT MATTER OF APPEAL BEFORE THE CIT(A) AND THE SAME HAS BEEN DISPOSED OF VIDE OR DER DT.17.08.2011 BEFORE THE DATE OF ORDER U/S.263.THEREFORE, THE DOCTRINE OF MERGER WILL APPLY AND NO PROCEEDING/S.263 WILL LIE. THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US CONTENDED THAT THE ORDER PASSED BY THE LEARNED CIT IS AGAINST THE PRINCIPLES O F NATURAL JUSTICE AS NO REASONABLE OPPORTUNITY FOR COMPLIANCE TO THE NOTICE WAS GIVEN, ONLY ONE DATE WAS FIXED, WHICH IS ALLEGED TO BE NOT COMPLIED. FOR THIS PROPOSITION HE RELIED ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF BERNLAL TIWARI V. CIT (173 ITR 280). HE FURTHER ARGUED THAT THE IMPUGNED ORDER IS ILLEGAL BECAUSE THERE IS NO FINDING IN THE ORDER U/S.263 AS TO HOW THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE FURTHER CONTENDED THAT QUESTION OF LIABIL ITY TO DEDUCT TAX AT SOURCE U/S.194(C) AND U/S.40(A)(IA) OF THE I.T.ACT WILL ARISE ONLY IF THE I.T.A.NO. 275/CTK/2012 3 ASSESSEE ENGAGES THE TRANSPORTERS AS SUB - CONTRACTOR, EITHER TO CARRY OUT THE WHOLE, OR PART OF THE WHOLE OF THE TRANSPORT CONTRACT. BUT THE ASSESSEE HAD NOT EMPL OYED ANY SUB - CONTRACTOR NOR HAS MADE ANY PAYMENT IN PURSUANCE TO ANY ORAL OR WRITTEN AGREEMENT. FOR THIS PROPOSITION, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISIONS IN THE CASE OF CIT V. UNITED RICE (277 CTR 332 (P &H), RAMANANDA AN D CO., V.CIT (163 ITR 702 (HP) AND ALSO THE DECISIONS OF ITAT,CUTTACK BENCH IN THE CASE OF M/S.R.R.CARYING CORPORATION 126 TTJ(CUTTACK) 240, M/S.CHANDRAKANT THACKER (129 TTJ 1) AND SANJAY KUMAR PRADHAN, REPORTED IN14 ITR (TRIBUNAL) 150. LASTLY HE SUBMITTE D THAT POWER U/S.263 CANNOT BE INVOKED FOR MAKING FISHING AND ROVING ENQUIRIES RELYING ON THE DECISIONS REPORTED IN 203 ITR 108 (BOM) AND SAKHI CHARITIES (244 ITR 226)(MAD). FURTHER HE SUBMITTED THAT FOR MINOR OMISSION OR MISTAKE THE ASSESSMENT ORDER CANNO T BE SET ASIDE RELYING ON THE DECISION IN THE CASE OF ADDL.CIT V. J.K.D.KOSTA (133 ITR 7)(DEL). HE FURTHER SUBMITTED THAT THE FAILURE OF THE ITO TO DEAL WITH A CLAIM AT THE ASSESSEE IN THE ASSESSMENT ORDER MAY BE AN ERROR BUT NOT AN ERRONEOUS ORDER BY ITSE LF AND NOT ENOUGH TO GIVE JURISDICTION TO THE CIT U/S.263, RELYING ON THE DECISION IN THE CASE OF J.P. V. CIT (111 ITR 326)(ALL). 3.1. HE ARGUED THAT THE ORDER OF THE LEARNED CIT, CUTTACK U/S 263 OF THE I.T. ACT, 1961 IS ILLEGAL, UNJUSTIFIED AND AGAINST TH E FACTS ON RECORD AND THEREFORE IS LIABLE TO BE QUASHED. T HERE WAS ONLY ONE NOTICE / OPPORTUNITY WAS GIVEN WHICH COULD NOT BE COMPLIED DUE TO COMMUN ICATION GAP BETWEEN THE ASSESSEE S LAWYER AND THE LEARNED COMMISSIONER SHOULD HAVE GIVEN FURTHER OPPORTUNITY FOR COMPLIANCE OF THE NOTICE IN THE INTEREST JUSTICE. AN ORDER WITHOUT AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND HENCE IS A NULLITY. THE ORDER U/S 263 DTD. 30.3.2012 PASSED BY THE LEARNED CIT IS ILLEGA L AS THERE IS NO FINDING THAT THE I.T.A.NO. 275/CTK/2012 4 ORDER SOUGHT TO BE REVISED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. NO MATERIAL EVIDENCE HAVE BEEN BROUGHT ON RECORD TO INDICATE TO SATISFY HIMSELF THAT THE ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE WHICH IS THE PRIMARY REQUIREMENT FOR INVOKING SECTION 263 AND HENCE THE ORDER IS LIABLE TO BE VACATED. WHEN THE ENTIRE BOOKS OF ACCOUNTS, RELEVANT RECORDS DULY AUDITED WERE PRODUCED BEFORE THE LEARNED A.O., IT WOULD BE PRESUMED THAT AFTER DUE EXAMINATION AND DUE ENQUIRY OF EACH AND EVERY POINT THE A.O. HAS PASSED THE ORDER U/S. 147 DTD. 25 - 11 - 2009 AND ON MERE SUSPICION AND SURMISES, THE LEARNED CIT CANNOT ASSUME JURISDICTION U/S. 263 OF THE I.T.ACT. [DHIRAJLAL GIRIDHARILAL VS. CIT 26 ITR 7 36 (SC) , VENKANT KRISHNA RICE & CO. 163 ITR 129 (MAD) RELIED ON.] . THE ORDER OF THE CIT IS INVALID BECAUSE THE LEARNED CIT DID NOT MENTION ALL OBJECTIONS AS MENTIONED IN HIS ORDER WHEN ALL RELEVANT RECORDS HAD BEEN PRODUCED BEFORE ASSESSING OFFICER. IN VI EW OF THE ABOVE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED ORDER OF THE LEARNED CIT MAY BE QUASHED. 4. THE LEARNED DR SUBMITTED THAT AS THE FACTS HAVE BEEN ENUMERATED BY THE LEARNED COUNSEL FOR THE ASSESSEE ITSELF AS MENTIONED ABOVE, SHE FULLY SUPPORTED THE ORDER OF THE LEARNED CIT PASSED/S.263 AS ERRORS PREJUDICIAL TO THE INTEREST OF REVENUE HAVE BEE N POINTED OUT BY THE LEARNED CI T WHICH REQUIRE CONSIDERATION BY THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PA RTIES AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. WE ARE UNABLE TO SATISFY OURSELVES TO THE LINKING OF THE SHOW CAUSE NOTICE TO THE ORDER PASSED BY THE LEARNED CIT U/S.263 ON 30.3.2012 BEING THE IMPUGNED ORDER BEFORE US. THE LEARNED CIT HAS O BSERVED THAT THE ASSESSING OFFICER WAS TO CALL THE AUDITED BOOKS OF ACCOUNT FOR THE IMPUGNED ASSESSMENT YEAR TO EXAMINE THE CLAIM OF I.T.A.NO. 275/CTK/2012 5 TRANSPORTATION CHARGES WHICH THE ASSESSING OFFICER HAD ALREADY SEEN AND WAS APPEALED BEFORE THE APPELLATE AUTHORITY WHICH P ART RELIEF WAS GRANTED BY THE LEARNED CIT(A). THE LEARNED CIT VIDE HIS ORDER U/S.263 ALSO DIRECTED THE ASSESSING OFFICER TO CALL FOR INFORMATION INSOFAR AS THE INFORMATION WAS TO BE INFORMNO.151 AS PER I.T.RULES,1962. THIS ISSUE WAS ALSO VERIFIED BY THE AS SESSING OFFICER WHEN HE SOUGHT TO ASSUME COMPUTATION OF INCOME UNDER THE PROVISIONS OF SECTION 44AE. THE LEARNED CIT IN HIS ORDER U/S.263 WAS ALSO ANXIOUS TO KNOW WHETHER THE LEARNED CIT(A) WAS APPRISED OF THE DETAILS OF SUCH VEHICLE OWNERS WHETHER OR NOT HAD SUBJECT TO DEDUCTION OF TAX AT SOURCE ON HAVING COMPLIED FOR FILING DECLARATION IN FORM 15J. THE ASSESSING OFFICER WAS ALSO TO VERIFY WHETHER THE CLAIM OF BONUS AMOUNTING TO 63,400 WAS PAID ON OR BEFORE THE DUE DATE OF FURNISHING OF RETURN WHETHER COU LD BE DISALLOWED UNDER THE PROVISIONS OF SECTION 43B. 6. WE ARE UNABLE TO SATISFY OURSELVES TO THE PROPOSITION OF THE LEARNED CIT IN HIS ORDER INSOFAR AS HE HAS NOT POINTED OUT ANY ERROR PREJUDICIAL TO THE INTEREST OF REVENUE FOR HIM TO ASSUME JURISDICTION U/S.263.THE LEARNED COUNSEL FOR THE ASSESSEE HAS RIGHTLY POINTED OUT THAT THE DEFECT FOR ASSUMPTION OF JURISDICTION INSOFAR AS ALL THE MATERIALS WERE AVAILABLE TO THE ASSESSING OFFICER WHICH IN THE AUDITED FINANCIAL STATEMENTS WERE VERIFIED AND THE DOUBTS IN THE MIND OF THE LEARNED CIT TO ISSUE SHOW CAUSE NOTICE AFTER THE ISSUE HAVING BEEN DELIBERATED UPON BY THE LEARNED CIT WAS KNOWN TO IT WHEN A COPY OF THE ORDER OF THE LEARNED CIT(A) WAS ALSO SENT TO THE CONCERNED CIT(ADMINISTRATION).ON OUR PERUSAL OF T HE SAME, WE DO FIND THAT ASSUMPTION OF JURISDICTION HAS BEEN ON MISINTERPRETATION OF FACTS AND NON - APPLICATION OF MIND TO THE EXTENT THAT THE LEARNED CIT HIMSELF HAS DIRECTED THE ASSESSING OFFICER WITHOUT POINTING OUT ANY ERROR PREJUDICIAL TO THE INTEREST OF REVENUE EITHER TO THE ASSESSEE OR TO THE ASSESSING OFFICER. I.T.A.NO. 275/CTK/2012 6 THEREFORE, FINDING NO MERIT IN THE ORDER OF THE LEARNED CIT AND THE LEARNED CIT - DR HAS ONLY SUPPORTED THE ORDER WITHOUT HIGHLIGHTING THE NATURE OF DEFECT, IF ANY, IN THE ASSESSMENT ORDER WHICH WAS TO BE CONSIDERED BY THE ASSESSING OFFICER ON THE DIRECTION OF THE LEARNED CIT HAS NOT BEEN BROUGHT ON RECORD. FINDING NO INFIRMITY IN TH E CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WE HAVE NO HESITATION IN QUASHING IMPUGNED ORDER PASSED BY THE LEARNED CIT U/S.263 AND WE QUASH THE SAME BY ALLOWING THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : SRI JAYANTA KUMAR JENA, C/O. S.N.SAHU, ADVOCATE, MADHU SUDAN NAGAR, TULSIPUR, CUTTACK 753 008 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD 1(1), CUT TACK 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 12.09.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLA CED BEFORE THE DICTATING MEMBER 13.09.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE G OES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.