ACIT, Bareilly V. M/s. Pilibhit Printers and Publishers Pvt. Ltd.,

ITA 28/LKW/2011

• Counselvise Citation: 2823714 RSA 2011
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 06-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 20-01-2011
• Court: TRIBUNAL
• Department Lawyers: P K B AJAJ
• Assessee Lawyers: K R RASTOGI
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, LUCKNOW BENCH 'B', LUCKNOW BEFORE SHRI H. L. KARWA, HON'BLE VICE PRESIDENT AND SHRI N. K. SAINI, ACCO UNTANT MEMBER I.T.A. NO.28/LKW/11 ASSESSMENT YEAR: 2007-2008 A.C.I.T.-II, VS. M/S PILIBHIT PRINTERS AND BAREILLY. PUBLISHERS PVT. LTD., PILIBHIT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P. K. BAJAJ, D. R. RESPONDENT BY: SHRI K. R. RASTOGI, C.A. O R D E R PER N. K. SAINI: THIS APPEAL FILED BY THE DEPARTMENT IS DIRECTED A GAINST THE ORDER DATED 07/10/2010 OF CIT(A), BAREILLY RELATING TO ASSESSME NT YEAR 2007-2008. 2. FIRST ISSUE IN THIS APPEAL VIDE GROUND NO. 1 RE LATES TO DELETION OF ADDITION OF ` 5,13,153/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN BALANCE SHEET. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 28/03/2008 DECLARING NET LOSS O F ` 10,63,203/-. THE SAID RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT. L ATER ON THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER POINTED OUT TH AT THE ASSESSEE IN COMPLIANCE TO THE NOTICE U/S 142(1)/143(2) ATTENDED TIME TO TI ME AND FURNISHED SOME EVIDENCE AND EXPLANATIONS. HE LATER ON POINTED OUT THAT INSPITE OF VARIOUS 2 OPPORTUNITIES, THE ASSESSEE DID NOT FURNISH PROPER EVIDENCE, EXPLANATION AND THE BOOKS OF ACCOUNT AND THAT THE PROCEEDINGS WERE BECO MING TIME BARRING. THE ASSESSING OFFICER, THEREFORE, COMPLETED THE ASSESSM ENT U/S 144 READ WITH SECTION 145(3) OF THE I.T. ACT. THE ASSESSING OFFI CER OBSERVED THAT THE BALANCE SHEET OF THE ASSESSEE WAS TALLIED ON ` 1,02,87,905/-. HOWEVER, THE TOTAL OF ASSETS SIDE CAME TO ` 97,74,752/-. THUS, THERE WAS A DIFFERENCE OF ` 5,13,153/- ( ` 1,02,87905 - ` 97,74,752/-) IN THE ASSETS SIDE. HE ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. 3. THE ASSESSEE CARRIED THE MATTER TO LEARNED CIT(A ) AND SUBMITTED THAT BOTH THE SIDES OF BALANCE SHEET OF THE ASSESSEE WER E COMPLETELY TALLIED AND THERE WAS NO DIFFERENCE AT ALL. IT WAS POINTED O UT THAT THE ASSESSING OFFICER NEVER RAISED THIS POINT IN HIS QUERIES NOR WHEN THE ASSESSEE APPEARED BEFORE HIM FOR ASSESSMENT PROCEEDINGS. THE ASSESSEE IN SU PPORT OF THE ABOVE CONTENTIONS FURNISHED THE COPY OF THE BALANCE SHEET AND THE LONG LIST OF QUERIES RAISED BY THE ASSESSING OFFICER ALONG WITH THE RESP ONSE GIVEN BY THE ASSESSEE. IT WAS ALSO STATED THAT THE OBSERVATIONS OF THE ASS ESSING OFFICER WERE FACTUALLY INCORRECT IN MAKING SUCH OBSERVATION IN THE ASSESSM ENT ORDER THAT THE ASSESSEE DID NOT FURNISH RECONCILIATION OF DIFFERENCE IN RES PONSE TO QUERY RAISED BY HIM ON THE ISSUE. IN SUPPORT OF THE ABOVE CONTENTION, THE ASSESSEE FURNISHED COPY OF QUESTIONNAIRE DATED 13/11/2005 TO PROVE THAT THE AS SESSING OFFICER DID NOT RAISE 3 THIS QUERY AND ALSO FURNISHED THE COPY OF THE LETTE R WHICH WAS FURNISHED TO THE ASSESSING OFFICER ON 21/12/1009. 3.1 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE, OBSERVED THAT IN THE FIGURES OF THE BALANCE SHEET P LACED ON RECORD, THERE WAS NO SUCH DIFFERENCE. HE FURTHER OBSERVED THAT THE BALA NCE SHEET WAS DRAWN ON 22/08/2007 AND DULY SIGNED BY THE CHARTERED ACCOUNT ANT, SHRI SANJAY K. AGARWAL FROM RAJEEV NANDAN AND CO. CHARTERED ACCOUN TANTS. THE TOTAL OF EACH SIDE OF THE BALANCE SHEET WAS ` 1,02,87,905.88 AND IN THE PRECEDING PERIOD THE CORRESPONDING FIGURE IN EACH SIDE OF THE BALANCE SH EET WAS ` 91,61,238.66. THE LEARNED CIT (A) AFTER CONSIDERING THE ABOVE FACTS, WAS OF THE VIEW THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER IN CASU AL MANNER BY COMPLETELY IGNORING THE FACTS AND FIGURES ON THE RECORD. HE, THEREFORE, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. NOW THE DEPARTMENT IS IN APPEAL. 4. THE LEARNED D. R. STRONGLY SUPPORTED THE ORDER O F THE ASSESSING OFFICER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LEARNED CIT (A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT APPEARS THAT THE ASSESSING OFFICER MADE THE 4 ADDITION IN CASUAL MANNER PARTICULARLY WHEN THERE W AS NO DIFFERENCE IN THE ASSETS AND LIABILITY SIDES OF THE BALANCE SHEET. THE TOTA L OF EACH SIDE WAS AT ` 1,02,87,905.88 FOR THE CURRENT YEAR AND AT ` 91,61,238.66 FOR THE PREVIOUS YEAR. THE COPY OF THE BALANCE SHEET IS PLACED AT PAGE NO. 3 OF THE ASSESSEES COMPILATION, IN THE SAID BALANCE SHEET, SUNDRY DEB TORS & ADVANCES ARE MENTIONED AT ` 5,13,553/-, THE ASSESSING OFFICER DUE TO OVERSIGHT MIGHT HAVE NOT SEEN THIS FIGURE AND PRESUMED THAT THERE WAS DIFFER ENCE OF ` 5,13,553/- IN THE ASSET SIDE OF THE BALANCE SHEET. THE SAID COPY OF THE BALANCE SHEET IS DULY SIGNED BY THE MANAGING DIRECTOR ON 22/08/2007 AND C ERTIFIED BY THE CHARTERED ACCOUNTANT, RAJEEV NANDAN AND CO.. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LEARNED CIT (A) ON TH IS ISSUE. 6. THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE DELETION OF ADDITION OF ` 17,35,752/- MADE BY THE ASSESSING OFFICER TOWARDS D IFFERENCE IN CARRY FORWARD LOSSES & DISCLOSED IN BALANCE SHEET. 6.1 THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER MADE THE ADDITION OF ` 17,35,752/- BY OBSERVING IN PARA 5 OF THE ASSESSMEN T ORDER DATED 22/12/2009 AS UNDER: 5. IN THE COURSE OF EXAMINATION OF COMPUTATION OF INCOME IN WHICH THE ASSESSEE HAS WORKED OUT LOSS OF ` 10,63,230/- FOR THE PERIOD UNDER CONSIDERATION. FURTHER, THE ASSESSEE H AS ALSO GIVEN A STATEMENT OF BUSINESS LOSSES BROUGHT FORWARDED WHIC H IS AS UNDER: 5 ASSESSMENT YEAR BROUGHT FORWARD LOSS SET-OFF LOSS CARRY FORWARDED 2005-06 1,45,270 NIL 1,45,270 2006-07 67,069 NIL 67,069 2007-08 NIL NIL 10,63,227 TOTAL 2,12,339 NIL 12,75,566 ON THE OTHER HAND ON PERUSAL OF BALANCE SHEET IT IS OBSERVED THAT THE BROUGHT FORWARDED LOSS DISCLOSED BY THE ASSESSE E OF ` 19,48,091/-, AFTER INCLUDING THE AMOUNT OF LOSS OF ` 10,63,227/- THE TOTAL LOSS DISCLOSED BY THE ASSESSEE OF ` 30,11,318/-. IN THESE CIRCUMSTANCES THE LOSS CLAIMED IN COMPUTING CHART A ND BALANCE SHEET THERE IS A DIFFERENCE OF ` 17,35,752/- ( ` 30,11,318 - ` 12,75,566). IN THIS REGARD ALSO THE ASSESSEE WAS R EQUIRED TO REASONS ABOUT THE DIFFERENCE IN THE LOSS BETWEEN TH E COMPUTATION GIVEN BY THE ASSESSEE AND SHOWN IN BALANCE SHEET. I N RESPONSE OF THIS QUERY ALSO THE ASSESSEE HAS NEITHER GIVEN ANY EXPLANATION NOR SUBMITTED ANY RECONCILIATION STATEMENT ALONG WITH S UPPORTING EVIDENCE. IN THESE CIRCUMSTANCES THE DEPARTMENT HAS NO OPTION BUT TO DETERMINE THE ADDITION OF ` 17,35,752/- DUE TO DIFFERENCE LOSS SHOWN IN BALANCE SHEET AND COMPUTATION CHART. HENCE THE AMOUNT OF ` 17,35,752/- IS TREATED AS INCOME OF THE ASSESSEE FO R THE PERIOD UNDER CONSIDERATION. 7. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT (A) AND SUBMITTED THAT THE ASSESSING OFFICER WAS NOT CORRECT IN STATING THAT NO RECONCILIATION STATEMENT WAS SUBMITTED BEFORE HIM T OWARDS THE QUERY RAISED BY HIM WITH REGARD TO THE DIFFERENCE BETWEEN THE LOSS SHOWN IN THE BALANCE SHEET AND THAT BROUGHT FORWARD LOSS IN THE RETURN OF INCOME. IT WAS STATED THAT THE ASSESSEE HAD GIVEN RESPONSE TO EACH AND EVERY QUERY RAISED BY THE ASSESSING OFFICER AND THAT THE REASON FOR THE DIFFERENCE OF 6 LOSS IN BETWEEN AS SHOWN IN BALANCE SHEET AND THAT BROUGHT FORWARDED WAS QUITE SIMPLE THAT THE LOSS SHOWN IN THE BALANCE SHEET FOR ` 30,11,318.28 REFLECTED THE TRUE LOSS INCURRED BY THE ASSESSEE TI LL THE DATE OF BALANCE SHEET WHILE THE AMOUNT BROUGHT FORWARDED AS LOSS REPRESEN TED THE LOSS WHICH COULD HAVE BEEN JUSTIFIABLY BROUGHT FORWARDED AS PER THE PROVISIONS OF INCOME TAX ACT, 1961 AND SINCE THE ASSESSEE COULD NOT FILE ITS EARL IER RETURN OF INCOME IN TIME WHICH DID NOT ENTITLE THE ASSESSEE TO CARRY FORWARD THE LOSS INCURRED, HENCE THE AMOUNT BROUGHT FORWARD AS LOSS IS MUCH LESS THAN TH E ACTUAL LOSS INCURRED BY THE ASSESSEE. 7.1 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE, OBSERVED THAT IT WAS EVIDENT THAT THE CARRIED FORWA RD BUSINESS LOSS REFLECTED IN THE BALANCE SHEET WAS AS PER THE PROVISIONS OF THE COMPANIES ACT AND THE AMOUNT CLAIMED IN THE RETURN OF INCOME WAS BASED ON THE APPLICATION OF THE RELEVANT PROVISIONS OF THE I.T. ACT, 1961. THEREF ORE, IT SEEMS THAT THE ASSESSING OFFICER MADE THE ADDITION WITH THE PRESUMPTION THAT THERE WAS NO DIFFERENCE IN THE PROVISIONS OF BOTH THE ACTS FOR THE PURPOSE OF DETERMINING THE QUANTUM OF CARRIED FORWARD BUSINESS LOSSES. ACCORDING TO TH E LEARNED CIT (A), SUCH ACTION OF THE ASSESSING OFFICER WAS STATUTORILY NOT CORREC T, HENCE NOT SUSTAINABLE. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFF ICER WAS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 7 8. THE LEARNED D. R. STRONGLY SUPPORTED THE ORDER O F THE ASSESSING OFFICER AND FURTHER SUBMITTED THAT THERE WAS DIFFERENCE IN THE BROUGHT FORWARD LOSS SHOWN BY THE ASSESSEE IN THE STATEMENT OF BUSINESS LOSS A ND AS DISCLOSED IN THE BALANCE SHEET. THE RESULTANT DIFFERENCE WAS WORKED OUT BY THE ASSESSING OFFICER AT ` 17,35,752/-. AS SUCH THE ASSESSING OFFICER WAS JUS TIFIED IN MAKING THE ADDITION. 9. IN HIS RIVAL SUBMISSIONS, THE LEARNED COUNSEL FO R THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LEARNED CIT (A) ON THI S ISSUE. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE INSTANT CA SE, IT APPEARS THAT THE ASSESSEE PREPARED THE BALANCE SHEET IN ACCORDANCE WITH THE P ROVISIONS OF THE COMPANIES ACT AND DISCLOSED THE FIGURE OF CARRIED FORWARD LOS S, WHICH WAS ACTUALLY SUFFERED BY THE ASSESSEE, HOWEVER, IN THE INCOME TAX RETURNS , ONLY THOSE LOSSES WERE BROUGHT FORWARDED WHICH THE ASSESSEE WAS ENTITLED T O SET OFF, THE REASON FOR THE DIFFERENCE WAS EXPLAINED BY THE ASSESSEE BY STATING THAT IN SOME YEARS THE RETURNS OF INCOME WERE NOT FURNISHED IN TIME, THERE FORE, THE BENEFIT FOR CARRYING FORWARD THE LOSS WAS NOT AVAILABLE TO THE ASSESSEE. AS THE ASSESSEE APPLIED THE PROVISIONS OF THE COMPANIES ACT AS WELL AS OF THE I NCOME TAX ACT AND DISCLOSED 8 THE FIGURES ACCORDINGLY IN THE BALANCE SHEET AND IN COME TAX RETURN, THE DIFFERENCE IN THOSE FIGURES WAS DUE TO THE AMOUNT FOR WHICH TH E CLAIM OF THE ASSESSEE WAS NOT ALLOWABLE BECAUSE THE RETURNS IN THE EARLIER YE ARS WERE NOT FILED IN DUE TIME BUT IT CANNOT BE SAID THAT THE ASSESSEE MADE ANY EX CESSIVE CLAIM IN THE INCOME- TAX RETURNS. IT IS ALSO NOT THE CASE OF THE ASSESS ING OFFICER THAT THE CLAIM OF THE ASSESSEE AT ` 12,75,566/- ON ACCOUNT OF CARRIED FORWARD LOSS WAS WRONG AND THE AMOUNT OF ` 30,11,380/- SHOWN BY THE ASSESSEE WAS NOT IN ACCORD ANCE WITH THE PROVISIONS OF THE COMPANIES ACT. THEREFORE, THE AD DITION MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE IN THE EYES OF LAW. IN THAT VIEW OF THE MATTER, WE ARE OF THE VIEW THAT THE LEARNED CIT (A) WAS FULLY JUSTIFI ED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENT APPEAL. 11. IN THE RESULT, THE APPEAL IS DISMISSED. (THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 08 /04/2011) SD/. ( H. L. KARWA ) VICE PRESIDENT SD/. (N. K. SAINI) ACCOUNTANT MEMBER DATED: 08/04/2011 *SINGH COPY FORWARDED TO THE: - 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR