Sh. Kamal Mittal, Rohtak V. Pr. CIT, Rohtak

ITA 2835/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4087 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 18-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: NAVEEN GUPTA
• Keywords: Revision of order; Opportunity of being heard; Prejudicial to interest
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B , NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 2835 /DE L/ 2016 ASSESSMENT YEAR: 2011 - 12 SH. KAMAL MITTAL, PROP. SHIVAM AUTO, OPP. MODEL SCHOOL, ROHTAK VS. PR. CIT, INCOME TAX OFFICE, ROHTAK PAN : AERPM5234R ( APPELLANT ) (RESPONDENT) APPELLANT BY SH. NAVEEN GUPTA, ADV. RESPONDENT BY MS. RACHNA SINGH, CIT(DR) DATE OF HEARING 16.01.2018 DATE OF PRONOUNCEMENT 23.01.2018 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATE D 23/03/2016 PASSED BY THE LD. PRINCIPAL COMMISSIONER OF I NCOME T AX, ROHTAK (IN SHORT THE LD. CIT ) CANCELLING THE ASSESSMENT UNDER SECTION 263 OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) FOR ASSESSMENT YEAR 2011 - 12. THE GROUNDS RAISED WITH ASSESSEE ARE REPRODUCED AS UNDER: 1. THAT THE ORDER OF THE LD. PR. CIT IS AGAINST LAW AND FACTS. 2. THAT THE LD. PR. CIT ERRED IN INVOKING SEC. 263 OF THE I.T. ACT AND CANCELLING THE ASSESSMENT ORDER PASSED BY THE LD. A.O. U/S 143(3) AND DIRECTING HIM TO REFRAME ASSESSMENT, ALTHOUGH NEITHER THE ORDER OF LD. ASSESSING OFFICER WAS ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 2 3 . THAT THE LD. PR. CIT ERRED IN GIVING DIRECTIONS U/S 263 OF THE ACT TO THE LD. A.O., ALTHOUGH ALL THE ISSUES WERE DULY CONSIDERED BY THE LD. A.O. DURING ASSESSMENT PROCEEDINGS AND AFTER EXAMINING ALL THE DOCUMENTS/SUBMISSIONS, ONE OF THE POSSIBLE VIEWS WA S TAKEN. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR ALTER ANY OF THE GROUNDS OF APPEAL. 2. T HE BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED BY THE ASSESSING OFFICER ON 25/10/2013 AT TOTAL INCOME OF RS.41,88,630/ - . SUBSEQUENTLY, THE LD. CIT ON PERUSAL OF THE RECORDS OBSERVED THAT COMMISSION INCOME OF RS.11,64,761.35/ - WAS NOT OFFERED FOR INCOME AND INTEREST WAS NOT CAPITALIZED IN CONTRAVENTION OF SECTION 36 (1)(III) OF THE ACT OUT OF THE INTEREST EXPENSES OF RS. 46,09,878/ - . THE LD. CIT NOTED THAT NO ENQUIRY WAS CARRIED OUT BY THE ASSESSING OFFICER IN THIS RESPECT. IN THE OPINION OF LD. CIT , THE ASSESSMENT ORDER DATED 25/10/2013 PASSED BY THE ASSESSING OFFICER WAS ERRONEO US SO AS TO PREJUDICIAL TO THE INTEREST OF R EVENUE AND ACCORDINGLY , HE ISSUED SHOW - CAUSE NOTICE UNDER SECTION 263 OF THE ACT CALLING FOR EXPLANATION FROM THE ASSESSEE. THE ASSESSEE WAS GIVEN OPPORTUNITY OF BEING HEARD. BEFORE THE LD. CIT , THE AUTHORI Z ED RE PRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE COMMISSION WAS RECEIVED BY THE ASSESSEE FROM INSURANCE COMPANIES/F INANCER AND IT WAS REFLECTED IN FORM NO. 26 AS. THE LD. CIT, HOWEVER , IN THE IMPUGNED ORDER NOTED THAT THE AR DID NOT PRODUCE DOCUMENTARY EVID ENCE , INCLUDING ANY AGREEMENT WITH INSURANCE COMPANIES/FINANCERS. REGARDING THE SECOND ISSUE ALSO , THE LD. CIT OBSERVED THAT THE ASSESSEE FAILED TO FURNISH COPY OF ADVANCE AGREEMENT/REGISTERED DEED OF THE PROPERTY. HE NOTED THAT NO ENQUIRIES WERE DONE BY T HE ASSESSING OFFICER ON THIS ISSUE. 3 2.1 IN VIEW O F THE OBSERVATIONS THE LD. CIT V IDE HIS ORDER DATED 23/03/2016 HELD THE ORDER OF THE ASSESSING OFFICER AS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE R EVENUE. AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. BEFORE US, THE LD. COUNSEL FILED A PAPER BOOK , CONTAINING P AGES 1 TO 27. SUPPORTING THE GROUNDS, THE LD. COUNSEL SUBMITTED THAT ALL THE ISSUES WERE DULY CONSIDERED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDING AND AFTER EXAMINING THE DOCUMENT ARY SUBMISSION FILED BY THE ASSESSEE, HE PREFERRED NOT TO MAKE ANY ADDITION ON THE ISSUES RAISED BY THE LD. CIT. HE REFERRED TO COPY OF ASSESSMENT ORDER, PLACED ON PAGES 1 TO 4 OF THE PAPER BOOK AND SUBMITTED THAT THE ISSUE S LIKE FALL IN NET PROFIT ETC . WERE DULY EXAMINE D BY THE ASSESSING OFFICER AND IT WAS NOT CASE OF LACK O F ENQUIRY . HE ALSO SUBMITTED THAT IS SUE OF COMMISSION INCOME OF RS.11,64, 761/ - HAS BEEN EXAMINED BY THE ASSESSING OFFICER IN ASSESSMENT ORDER PASSED IN CONSEQUENCE TO ORDER UNDER SECTION 263 OF THE ACT AND NO ADDITION HAS BEEN MADE ON T HIS ACCOUNT, AND, THUS, THE ORDER OF CIT U/S 263 OF THE ACT IS NOT A VALID ORDER. 4. ON THE CONTRARY, THE LD. CIT ( DR ) SUBMITTED THAT THE ASSESSMENT ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER WITHOUT MAKING ENQUIRIES OR VERIFICATION , WHICH SHOULD HAVE BEEN MADE ON THE ISSUES OF COMMISSION INCOME AND INTEREST EXPENDITURE AND , THUS , THE ORDER OF THE ASSESSING OFFICER IS DEEMED TO BE ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE R EVENUE IN VIEW OF EXPLANATION - 2 TO SECTION 263 OF THE ACT. ACCORDING TO HER, THE ASSESSMENT ORDER HAS BEEN PASSED WITHOUT APPLICATION OF THE MIND AND , THUS , IT FALLS UNDER THE EXPR ESSION ERRONEOUS AND PREJUDICIAL TO INTEREST OF R EVENUE UNDER SECTION 263 OF THE ACT. IN SUPPORT OF HER CONTENTION , SHE RELIED ON FOLLOWING JUDICIAL PRONOUNCEMENT: 4 I . CIT VS. BHAGWAN DAS, [2005] 272 ITR 367 (ALLAHABAD) II . CIT - V VS. NAGESH KNITWEARS (P.) LTD. , 345 ITR 135 (DELHI) III . GEE VEE ENTERPRISES VS. ADDL. CIT, [1975] 99 ITR 375 (DELHI) IV . NIIT VS. CIT (CENTRAL - II), [2015] 60 TAXMANN.COM 313 (DELHI TRIB.) 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ISSUE IN DISPUTE IN THE FACTS OF THE CASE BEFORE US IS WHETHER ANY ENQUIRY WAS CARRIED OUT BY THE ASSESSING OFFICER ON THE ISSUE OF COMMISSION INCOME OR IN RESPECT OF INTEREST EXPENDITURE IN QUESTION. 6. BEFORE US, LD. COUNSEL HAS NOT FILED COPY OF ANY QUESTIONNAIRE ISSU ED BY THE ASSESSING OFFICER OR ANY SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ON THE ISSUE OF COMMISSION OR ON THE ISSUE OF INTEREST EXPENDITURE. DURING THE HEARING , THE LD. COUNSEL WAS SPECIFICALLY ASKED BY THE BENCH TO PRODUCE ABOVE E VIDENCES IN SUPPORT OF THE CONTENTION THAT ASSESSING OFFICER CARRIED OUT ANY EXAMINATION ON THE ISSUE OF COMMISSION/INTEREST EXPENDITURE. HO WEVER , LD. COUNSEL EXPRESSED HIS INABILITY TO PRODUCE ANY SUCH EVIDENCES. THUS , IN THE FACTS OF THE CASE , IT IS EVIDENT THAT NO ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER ON THE ISSUES RAISED BY THE LD. CIT IN PROCEEDING UNDER SECTION 263 OF THE ACT. 7. WE FIND THAT HON BLE J URISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME T AX VS. NAGESH KNI TWEARS PRIVATE L IMITED (2012) 345 ITR 135(DELHI) , HELD THAT TH E ASSESSING OFFICER IS BOTH AN INVESTIGATOR AND AN ADJUDICATOR AND AS AN I NVESTIGATOR, THE ASSESSING OFFICER SHOULD INVESTIGATE THE FACTS, HE IS REQUIRED TO EXAMINE AND VERIF Y TO COMPUTE THE TAXABLE INCOME AND , IF HE FAILS TO CONDUCT THE SAID 5 INVESTIGATION, HE COMMITS AN ERROR AND THE WORD ERRONEOUS INCLUDE FAILURE TO MAKE THE ENQUIRY . THE HON BLE HIGH COURT HELD THAT IN SUCH CASES THE ORDER BECOMES ERRONEOUS BECAUSE THE ENQUI RY OR VERIFICATION HAS NOT BEEN MADE AND NOT BECAUSE WRONG ORDER HAS BEEN PASSED ON THE MERITS. SIMILARLY , HON BLE DELHI HIG H COURT IN THE CASE OF GEE VEE E NTERPRISES VS. ADDITIONAL COMMISSIONER OF INCOME - TAX, DELHI - I (1975) 99 ITR 375 HAS OBSERVED THAT T HE WORD ERRONEOUS IN SECTION 263 INCLUDES THE FAILURE TO MAKE AN INQUIRY WHEN THE CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT. HON BLE SUPREME COURT IN THE CASE OF RAMADEVI SARAOGI VS. CIT , (1968) 67 ITR 84 (SC) HAS ALSO GIVEN SIMILAR OBSERVATION THA T WHERE THE ASSESSING OFFICER HAS ACCEPTED A PARTICULAR CONTENTION OR ISSUE WITHOUT ENQUIRY WHATSOEVER THE ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE R EVENUE. 8. IN VIEW OF THE EXPLANATION - 2 TO THE SECTION 263 OF THE ACT , WHICH HAS BEEN INSERTED BY FINANCE ACT , 2015 W.E.F. 01/06/2015 , IF THE ORDER IS PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE, THE ASSESSMENT ORDER IS DEEMED TO BE ERRONEOUS. FOR READY REFERENCE , THE RELEVANT EXPLANATION IS R EPRODUCED AS UNDER: REVISION OF ORDERS PREJUDICIAL TO REVENUE. 263. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE C IRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. [EXPLANATION 1.] [EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, IT IS HE REBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, 6 (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119 ; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISDICTIONAL HIGH COURT OR S UPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON.] 9. IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENT AND THE PROVISIONS OF THE ACT, IT IS EVIDENT THAT O N ORDER WITHOUT MAKING ENQUIRIES ON THE ISSUES IN QUESTION IS LIABLE TO BE HELD AS ERRONEOUS INSOFAR AS IT IS PREJ UDICIAL TO THE INTEREST OF THE R EVENUE. IN THE INSTANT CASE , THE LD. COUNSEL OF THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE OF ANY ENQUIRY CARRIED OUT BY THE ASSESSING OFFICER ON THE ISSUE OF COMMISSION INCOME OR INTEREST EXPENDITURE AND , THUS , IN OUR OPINION , THE LD. CIT HAS VALIDLY ASSUMED JURISDICTION UNDER SECTION 263 OF THE ACT. 10. THE LD. COUNSEL HAS ARGUED THAT ON THE ISSUE OF COMMISSION THE ASSESSING OFFICER HA S EXAMINED THE MATTER SUBSEQUENTLY AND IN THE ASSESSME NT ORDER PASSED IN COMPLIANCE TO 263 PROCEEDINGS, NO ADDITION HAS MADE AND , THEREFORE , TO THE EXTENT THE JURISDICTION ASSUMED BY THE LD. CIT UNDER SECTION 263 OF THE ACT IS NOT VALID. WE ARE NOT CONVINCED WITH THIS ARGUMENT OF THE LD. COUNSEL . THE VALIDITY OF THE ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT IS DECIDED WHETHER THE ASSESSING OFFICER CARRIED OUT ANY ENQUIRY ON THE ISSUE IN ORIGINAL ASSESSMENT PROCEEDINGS. IF H E DID NOT CARRY OUT ANY ENQUIRY IN THE ORIGINAL ASSESSMENT ORDER, THAT ORDER IS ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE R EVENUE AND THE CIT HAS ASSUMED THE JURISDICTION VALIDLY. THE SUBSEQUENT ACTION OF THE ASSESSING OFFICER OF MAKING NO ADDITION AFTER EXAMINATION OF THE ISSUE, CANNOT MAKE THE ACTION OF THE LD. CIT 7 UNDER SEC TION 263 OF THE ACT , INVALID. ACCORDINGLY , THE GROUNDS OF THE APPEAL ARE DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 2 3 R D JAN . , 201 8 . S D / - S D / - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 R D JANUARY , 201 8 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI