SHRI LAXMI CHAND FULWANI, Jaipur V. CIT, Ajmer

ITA 288/JPR/2012

• Counselvise Citation: 28823114 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Keywords: Revision of order; Opportunity of being heard; Assessment record
• Section: 143(3); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT) ITA NO. 288/JP/2012 ASSESSMENT YEAR : 2009-10 PAN: AACPF 4804 B SHRI LAMI CHAND FULWANI VS. THE CIT PROP. M/S. NIRMAL TEA COMPANY AJMER PALI BAZAR, BEAWAR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL DEPARTMENT BY: SHRI A.K. KHANDELWAL DATE OF HEARING: 20-08-2013 DATE OF PRONOUNCEMENT: 20-08-2013 ORDER PER KUL BHARAT, JM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT, AJMER DATED 13-03-2012 FOR THE ASSESSMENT YEAR 2009-10 WH EREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED U/S 263 BY THE CIT IS ILLEGAL AND BAD IN LAW . 1.1 THE LD.CIT HAS ERRED IN FACTS AND IN LAW IN HO LDING THE ASSESSMENT ORDER DATED 27-07-2011 PASSED U/S 143(3) AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE BY OBSER VING THAT SINCE AT THE TIME OF CREDIT/PAYMENT OF INTEREST TO PAYEES TH E ASSESSEE WAS NOT IN RECEIPT OF FORM NO. 15G, HE OUGHT TO HAVE DE DUCTED TAX AT SOURCE FROM THE INTEREST PAYMENT AND THEREFORE, THE INTEREST PAYMENT OF RS. 3,95,259/- IS NOT ALLOWABLE TO ASSES SEE U/S 40(A)(IA) OF THE I.T. ACT, 1961 AND THE SAME IS LIABLE TO BE ADDED BACK TO THE INCOME OF THE ASSESSEE. 1.2 THE LD. CIT HAS ERRED IN FACTS AND IN LAW IN DI RECTING THE AO TO VERIFY THE ADAT SALES FROM SALES TAX ASSESSME NT ORDER VIZ-A- VIZ FROM VAT SUMMARY REPORT IGNORING THAT SALES AS PER VAT ASSESSMENT ORDER AND AS PER BOOKS OF ACCOUNTS ARE D ULY RECONCILED. 2 1.3 THE LD CIT HAS ERRED IN FACTS AND IN LAW IN GIV ING THESE DIRECTIONS WITHOUT GIVING ANY SPECIFIC FINDINGS THA T HOW THE ORDER PASSED BY THE AO ON THIS ISSUE IS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF REVENUE. 2.1 BRIEFLY, THE FACTS STATED ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) WAS FRAMED VIDE ORDER DATED 31-03-2009. SUBSEQUENTLY, THE LD. CIT ISSUED NOTICE ON 29-02-2012 TO THE ASSESSEE U/S 263 OF THE ACT CALLING THEREIN THE EXPLANATION OF THE ASSESSEE AND BY GIVING AN OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE FILED THE WRITTEN SUBMISSION ON 13-02- 2012 IN RESPONSE TO SAID NOTICE. THE SAID WRITTEN SUBMISSION WAS NOT FOUND ACCEPTABLE BY THE LD. CIT. THEREFORE, THE ORDER OF THE AO WAS REVISED U/S 263 OF THE ACT. WHILE REVISI NG THE ORDER, THE LD. CIT DIRECTED THE AO TO MAKE DE NOVO ASSESSMENT. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORDER OF THE LD. CIT. 2.2 DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT IS NOT JUSTIFIED AS THE RE WAS NO OCCASION TO INVOKE THE PROVISION OF SECTION 263 OF THE ACT. HE SUBMITTED T HAT ALL THE DETAILS WERE AVAILABLE WITH THE AO. HE FURTHER SUBMITTED THAT UNDER THE FACTS O F THE PRESENT CASE, THE LD. CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISION OF SECTION 263 OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE OF VARIOUS DECISIONS IN SUPPORT OF HIS CONTENTIONS WHICH ARE AS UNDER:- 1. CIT VS. AMIT CORPORATION, 213 TAXMAN 19 (GUJ) (H .C.) (MAGZ.). 2. CIT VS. LEISURE WEAR EXPORTS LTD., 202 TAXMAN 13 0 (DEL.)(H.C.) (MAGZ). 3. PRADEEP BANDH VS. CIT , 81 DTR 289 (JD.) (TRI B.) 3 4. RAJIV ARORA VS. ACIT, 131 ITD 58 (JP.) 5. SHYAM SUNDER CHAND VS. ITO 60 DTR 270 (JP) 2.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE LD. CIT. HE SUBMITTED THAT THE ASSESSEE WAS REQUIRED TO SUBMIT FORM NO. 1 5 G IN ACCORDANCE WITH THE PROVISIONS OF LAW. HE FURTHER SUBMITTED THAT IN THE PRESENT CA SE, THE ASSESSEE HAS NOT FURNISHED THE REQUISITE FORM NO. 15G PURPORTED TO HAVE BEEN ISSUE D ON OR BEFORE 31-03-2009. HE POINTED OUT THAT FORM NO. 15G AS FILED BY THE ASSES SEE IS DATED 04-04-2009. THEREFORE, THERE WAS TOTAL NON-APPLICATION OF MIND BY THE AO. HE FURTHER SUBMITTED THAT THE LD. CIT WAS RIGHT IN HOLDING THAT THE ASSESSMENT ORDER IS E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2.4 IN REJOINDER, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FORM NO. 15G WAS DULY SUBMITTED BEFORE 07-04-2009. HE SUBMITTED THAT VERIFICATION WAS FILLED UP BY THE ACCOUNTANT ALTHOUGH THE UNFILLED VERIFICATION FROM WAS RECEIVED ON 31-03-2009 AND THE SAME WAS SUBMITTED TO THE AO. HE ALSO POINTED OUT T HAT THIS FACT IS DULY STATED BY THE DECLARENTS IN FORM NO. 15G. HE HAS DRAWN OUR ATTENT ION TO PAGE 5 OF THE PAPER BOOK TO THIS EFFECT. 2.5 WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIALS AVAILABLE ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW. WE FIND TH AT THE LD. CIT HAD INVOKED THE PROVISION OF SECTION 263 OF THE ACT BY ISSUING NOT ICE DATED 29-02-2012.THE CONTENTS OF THE NOTICE DATED 29-02-2102 ARE REPRODUCED AS UNDER :- THE ASSESSMENT IN YOUR CASE FOR THE ASSESSMENT YE AR 2009-10 WAS COMPLETED U/S 143(3) BY THE ITO, WARD- 1, BEAWAR ON 27-07-2011 AT AN INCOME OF RS. 7\6,70,920/- AGAINST THE RETURNED INC OME OF RS. 6,55,990/-. ON PERUSAL OF ASSESSMENT RECORDS, IT IS SEEN THAT Y OU HAVE PAID INTEREST TO 4 VARIOUS PERSONS AS PER TABLE APPENDED BELOW WITHOUT DEDUCTION OF TAX AT SOURCE U/S 194 OF THE I.T. ACT, 1961:- S.N. 1 NAME OF THE PERSONS WHO INTEREST PAID 2 DATE OF EXECUTION OF FORM NO.15G 3 INTEREST AMOUNT 4 1. MISS. MEENAKSHI CHELANI, MAKADWALI ROAD, VAISHALI NAGAR, AJMER 04-04-2009 (15G) RS. 46,923/- 2. SMT. SUNITA CHELANI, 1/5 SHASTRI NAGAR, BEAWAR 04-04-2009 (15G) RS. 92,286/- 3. SMT. KOMAL FULWANI, FULWANI NIWAS, KISHANGARH 04-04-2009 (15G) RS. 1,74,527/- 4. SHRI VIKAS CHELANI, 1/6 SHASTRI NAGAR, BEAWAR 04-04-2009 (15G) RS. 81,523/- YOU HAVE SUBMITTED FORM NO. 15G ON VARIOUS DATES AS PER COLUMN 3 OF THE ABOVE TABLE IN THE CASES AFTER THE END OF PREVIOUS YEAR. THUS TAX HAD TO BE DEDUCTED AT SOURCE U/S 194A THE IT ACT, 1961 BUT YOU HAVE FAILED TO DO SO. THE PROVISIONS OF SECTION 40(A) (IA) OF THE IT ACT, 1961 ARE READ AS UNDER:- IN THE CASE OF ANY ASSESSEE, ANY INTEREST, COMMI SSION OR BROKERAGE PAYABLE TO A RESIDENT ON WHICH TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED, SHALL NOT BE DEDUCTED IN COM PUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFIT AND GAINS OF BUSI NESS OR PROFESSION. ' IN VIEW OF THE ABOVE PROVISION OF THE ACT THE AO SH OULD HAVE DISALLOWED AND ADDED BACK THE AMOUNT OF PAYMENT OF INTEREST OF RS. 3,95,259/- ON WHICH TDS WAS NOT DEDUCTED BUT HE ALL OWED THE EXPENDITURE OF RS. 3,95,259/- AT THE TIME OF ASSESSMENT. HENCE, THE INCOME OF RS. 3,95,2591- WAS UNDETERMINED. FURTHER YOU HAVE SHOWN ADAT SALES OF RS. 4,81,72,01 9.89 WHICH IS NOT REFLECTED IN THE SALES TAX ASSESSMENT ORDER. NO SEPARATE DETAILS & EVIDENCES OF OWN SALE VIZ A VIZ OF ADAT SALE WERE N EITHER PRODUCED NOR THE SAME WERE CALLED FOR BY THE AO AND THE SALE DECLARE D WAS ACCEPTED. IN VIEW OF THE ABOVE MISTAKE, THE ASSESSMENT ORDER PASSED U/S 143(3) AT THE INCOME OF RS.6,70,920/- ON 27.07.2011 BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THEREFORE, A SHOW 5 CAUSE NOTICE U/S 263 OF THE IT. ACT, 1961 IS HEREBY GIVEN TO YOU FOR WHICH AN OPPORTUNITY OF BEING HEARD IS ALLOWED BEFORE TAK ING SUCH ACTION. THEREFORE, YOU MAY REPRESENT EITHER PERSONALLY OR T HROUGH YOUR A/R AT 11.00 AM ON 13.03.2012 AND ALSO FILE YOUR WRITTEN S UBMISSION, IF ANY. 2.6 THE SUBMISSION OF THE ASSESSEE BEFORE THE LD. C IT WAS THAT THERE WAS NO DEFAULT ON THE PART OF THE ASSESSEE SINCE FORM NO. 15G WAS DUL Y SUBMITTED WITHIN THE PRESCRIBED TIME. HOWEVER, THE LD. CIT DID NOT ACCEPT THE EXPLA NATION AS GIVEN BY THE ASSESSEE. THE LD. CIT HAS GIVEN A FINDING ON FACT THAT VERIFICATI ON PART OF THE FORM 15G HAVE BEEN SIGNED BY THE DEPOSITORS ON 04-04-2009. THIS FINDIN G IS NOT CONTROVERTED BY THE LD. COUNSEL FOR THE ASSESSEE BUT HIS ONLY CONTENTION IS THAT VERIFICATION PART WAS BLANK AND IT WAS FILLED UP BY THE ACCOUNTANT. THE LD. COUNSEL F OR THE ASSESSEE HAS STRONGLY RELIED UPON THE FORWARDING LETTER PURPORTED TO HAVE BEEN I SSUED BY THE DECLARENTS DATED 30-03-2009. THE LD. COUNSEL FOR THE ASSESSEE HAS AL SO RELIED UPON THE AFFIDAVIT OF THE DECLARENTS. 2.7 WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE FACTS AND CIRCUMSTANCES OF THE CASE AND THE SUBMISSIONS MADE BY BOTH THE PARTIES. THE UNDISPUTED FACT REMAINS THAT FORM NO. 15G IS VERIFIED ON 04-04-2009. THE CONTENT ION OF THE LD. COUNSEL FOR THE ASSESSEE IS NOT ACCEPTABLE THAT VERIFICATION PART WAS FILLED UP BY THE ACCOUNTANT AND HE HAS BY MISTAKE WRITTEN A WRONG DATE. THE DECLARENTS IN THEIR AFFIDAVITS NOWHERE STATED THIS FACT THAT THE VERIFICATION AS GIVEN TO THE ASSESSEE WAS UNDATED. IN THE ABSENCE OF SUCH STATEMENTS, THE CONTENTION OF THE LD. COUNSEL FOR T HE ASSESSEE CANNOT BE ACCEPTED. HENCE, WE ARE OF THE VIEW THAT THE AO OUGHT TO HAVE APPLIE D HIS MIND BEFORE ACCEPTING THE FORM NO. 15G AS SUBMITTED BY THE ASSESSEE. THEREFORE, NO N-APPLICATION OF MIND BY THE AO RESULTED INTO THE ASSESSMENT BEING ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF REVENUE. THE ANOTHER BASIS OF THE LD. CIT IS THAT THE ASSESS EE HAD SHOWN ADAT SALES OF RS. 6 4,81,72,019.89 WHICH IS NOT REFLECTED IN THE SALES TAX ASSESSMENT ORDER. NO SEPARATE DETAILS AND EVIDENCES OF OWN SALE VIZ A VIZ OF ADAT SALES WERE PRODUCED NOR THE SAME WERE CALLED FOR BY THE AO AND THE SALE DECLARED WAS ACCEPTED. BEFORE THE LD. CIT, THE CONTENTION OF THE ASSESSEE WAS THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF TEA AND BESIDES THE TRADING, THE ASSESSEE ALSO SERV ES AS CONSIGNMENT AGENT OF SOME OF THE CUSTOMERS. THUS THE SALES OF THE ASSESSEE COMPRISES OF OWN ACCOUNT SALES AS WELL AS CONSIGNMENT AGENCY SALES FOR WHICH THE ASSESSEE REC EIVES COMMISSION. THE ASSESSEE MAINTAINS THE REGULAR BOOKS OF ACCOUNT COMPRISING O F CASH BOOK, JOURNAL, LEDGER AND STOCK REGISTER. THE SEPARATE ACCOUNTS OF OWN ACCOU NT SALES AND CONSIGNMENT AGENCY SALES ARE OPENED IN THE BOOKS OF ACCOUNT. THE ACCO UNTS OF THE ASSESSEE ARE AUDITED U/S 44AB OF THE ACT AND ALSO UNDER THE VAT ACT. THE AUD IT REPORT U/S 44AB DATED 14-08-2009 AND VAT AUDIT REPORT DATED 15-12-2009 WA S OBTAINED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO EXAMINED THE BOOKS O F ACCOUNT, BILLS AND VOUCHERS. THE DETAILED EXPLANATION WAS CALLED FOR AND THE SAME WE RE COMPLIED WITH. HOWEVER, THE LD. CIT DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE A ND HE HAS GIVEN DIRECTION TO THE AO TO VERIFY THE ADAT SALES FROM SALES TAX ASSESSMENT ORD ER VIZ A VIZ FROM VAT SUMMARY REPORT. HENCE IN VIEW OF THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT AS THERE IS NOTHING ON REC ORD TO SUGGEST THAT THE AO HAS MADE ENQUIRY IN RESPECT OF THE SALES EFFECTED BY THE ASS ESSEE. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT WHI CH IS UPHELD. THUS THE GROUNDS RAISED BY THE ASSESSEE ARE REJECTED. 7 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT IMMEDIATE LY AFTER CONCLUSION OF HEARING ON 20-08-2013 SD/- SD/- (B.R. JAIN) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 20 TH AUG, 2013 *MISHRA COPY FORWARDED TO:- BY ORDER 1. SHRI LAXMI CHAND FULWANI 2. THE LD. CIT, AJMER 3. THE LD. CIT 4. THE LD. DR 5. THE GUARD FILE (IT NO.288/JP/12 ) A.R. ITAT: JAIPUR 8 9