Shilpy Steels Pvt. Ltd., Raipur V. Income Tax Officer-3(1), Raipur

ITA 29/RPR/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3836 (ITAT-RAIPUR)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 19-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.K. SINGH
• Keywords: Set aside
• Section: 263; 143(3); 142(1); 143(2)

Judgement Text

ITA NO.29/RPR/2021 A.Y. 2015-16 PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER A ND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER ITA NO.29/RPR/2021 ASSESSMENT YEAR: 2015-16 SHILPHY STEELS PRIVATE LIMITED., VS. INCOME TA X OFFICER 3(1), ROOM NO.7, GROUND FLOOR, RAIPUR. JEEVAN PLAZA, NEAR LODHI PARA CHOWK, RAIPUR (CG) [PAN AAHCS 7975 A] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.B. DOSHI, CA RESPONDENT BY : SHRI R.K. SINGH, CIT D.R. DATE OF HEARING : 30.07.2021 DATE OF PRONOUNCEMENT : 11.10.2021 O R D E R PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE REVISIONAL ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) (PCIT IN SHORT), RAIPUR COMMUNICATED TO ASSESSEE ON 26.03.20 21 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (THE ACT IN SHORT) WHEREBY THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (A.O.) DATED 29.12.2017 UNDER SECTION 143(3) OF THE ACT CONCERNING ASSESSMENT YEAR (A.Y.) 2015-16 WAS SOUGH T TO BE SET ASIDE FOR REFRAMING THE ASSESSMENT IN TERMS OF SUPERVISORY JURISDICTION . 2. AS PER ITS GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE REVISIONAL ACTION OF THE PCIT WHEREBY THE ASSESSING OFFICER (A.O.) WA S DIRECTED TO PASS THE ASSESSMENT ORDER DENOVO AFTER MAKING ENQUIRIES ON THE POINTS SET OUT IN TH E NOTICE WHICH HAS ALREADY EXAMINED AND CONSIDERED DURING TH E ORIGINAL ASSESSMENT PROCEEDINGS CONCERNING A.Y. 2015-16. THE ASSESSEE HAS CHALLENGED THE ASSUMPTION OF JURISDICTION BY THE PCIT UNDER SECTION 263 OF TH E ACT ON THE GROUND THAT THE ASSESSMENT ORDER UNDER REVISION IS NEITHER ERRONEOU S NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO.29/RPR/2021 A.Y. 2015-16 PAGE 2 OF 6 3. BRIEFLY STATED, THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2015-16 IN QUESTION DECLARING LOSS AT RS.8,16,01,631/-. THE R ETURN FILED WAS SUBJECTED TO LIMITED SCRUTINY ASSESSMENT BY ISSUE OF NOTICE UNDER SECTIO N 143(2) OF THE ACT. THE ASSESSMENT WAS EVENTUALLY CARRIED OUT AT A LOSS OF RS.8,16,01,631/-. THE INCOME WAS FINALLY ASSESSED AT A POSITIVE FIGURE OF RS.9.00 CR ORES. 4. THEREAFTER, THE PCIT IN EXERCISE OF REVISIONARY POWERS, ISSUED SHOW CAUSE NOTICE DATED 11.03.2021, SIGNED ON 15.03.2021 AT 1. 53 P.M., REQUIRING THE ASSESSEE UNDER SECTION 263 OF THE ACT, TO SHOW CAUSE AS TO W HY THE IMPUGNED ASSESSMENT SO FRAMED UNDER SECTION 143(3) SHOULD NOT BE MODIFIED/ SET ASIDE ON THE GROUND THAT SUCH ORDER IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. NOTICEABLY, THE DATE OF HEARING WAS ALSO FIXED ON 15.03.2021 AT 4.00 P.M. IT WAS ESSENTIALLY ALLEGED IN THE SHOW CAUSE NOTICE THAT : I) THE ASSESSEE HAS SHOWN TURNOVER AT RS.72,48,88,4 00/- IN THE PROFIT & LOSS ACCOUNT BUT AS PER TAX AUDIT REPORT, THE TURNOVER S HOWN IS RS.63,19,22,626/-. II) SOME OF THE EXPENSES HAVE CONSIDERABLY INCREASE D AS COMPARED TO LAST YEAR WHICH REQUIRED VERIFICATION. III) THE ASSESSEE HAS SHOWN UNSECURED LOAN FROM GOL DFEATHER VENTURES PVT. LTD., WHICH BEING A KOLKATA BASED COMPANY, VERIFICATION R EGARDING SOURCE/GENUINENESS OF TRANSACTION AND IDENTITY WAS REQUIRED WHICH REMAINED TO BE VERIFIED DURING THE COURSE OF ASSESSMENT PROCEED INGS. 4.1 THE REVISIONAL COMMISSIONER THUS ALLEGED THAT T HERE WAS NO APPLICATION OF MIND BY THE A.O. ON ISSUES NOTED ABOVE AND NO ENQUIRY WH ATSOEVER WAS CARRIED OUT. THE PCIT ACCORDINGLY PASSED A REVISIONAL ORDER UNDER SE CTION 263 OF THE ACT AND DIRECTED THE A.O. TO FRAME THE ASSESSMENT IN THE LIGHT OF DI RECTIONS GIVEN IN THE REVISIONAL ORDER. 5. AGGRIEVED BY THE AFORESAID ACTIONS OF THE PCIT, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL AGITATING SUPERVISORY JURISDICT ION USURPED BY THE PCIT UNDER SECTION 263 OF THE ACT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THE ISSUE . ITA NO.29/RPR/2021 A.Y. 2015-16 PAGE 3 OF 6 I) AS REGARDS THE MISMATCH IN THE TURNOVER, THE ASS ESSEE CONTENDS THAT THE TURNOVER SHOWN IN THE PROFIT & LOSS ACCOUNT IS ADMI TTEDLY HIGHER THAN THE TURNOVER SHOWN IN THE TAX AUDIT REPORT. ON FACTS, THE MISMATCH IN THE TURNOVER IS ON ACCOUNT OF EXCLUSION OF CERTAIN OTHER INCOME F ROM THE TURNOVER FOR THE PURPOSE OF CALCULATING GP/NP AND OTHER RATIOS REQUI RED IN THE TAX AUDIT REPORT. IT IS THUS CONTENDED ON BEHALF OF THE ASSESSEE THAT , FIRSTLY, THERE IS NO DIFFERENCE AND THE MISMATCH IS FULLY RECONCILABLE AS DEMONSTRA TED IN THE PAPER BOOK AND SECONDLY AND WITHOUT PREJUDICE, HIGHER TURNOVER IN THE PROFIT & LOSS ACCOUNT HAD IN FACT CAUSED PREJUDICE TO THE ASSESSEE AND NO T TO THE REVENUE. IN THE ABSENCE OF ANY PREJUDICE TO THE REVENUE ON ACCOUNT OF TAXABLE INCOME DETERMINED ON THE BASIS OF HIGHER TURNOVER SHOWN IN THE PROFIT & LOSS ACCOUNT, THE INGREDIENTS OF SECTION 263 ARE NOT MET ON THIS POINT. WE FIND COMPLETE MERIT IN THE PLEA OF THE ASSESSEE NOT ONLY ON THE GROUNDS OF THE RECONCILIATION (AS SHOWN IN PAGE NO.47 OF THE PAPER BOOK) WHICH APPEAR S FULLY JUSTIFIED, THE PCIT HAS FAILED TO MAKE OUT ANY CASE SHOWING PREJUDICE T O THE REVENUE ON ACCOUNT OF HIGHER TURNOVER IN THE PROFIT & LOSS ACCOUNT. T HE ACTION OF THE PCIT ON THIS ISSUE THUS FAILS. II) IN SO FAR THE OTHER ALLEGATION TOWARDS VARIATIO N IN SOME OF THE EXPENSES CLAIMED, WE FIND THAT THE DIRECTION GIVEN BY THE PC IT IS ON ABSOLUTELY VAGUE CONSIDERATIONS. A MERE INCREASE IN EXPENSES QUA PR EVIOUS YEAR DOES NOT NECESSARILY WARRANT FULL-FLEDGED ENQUIRY IN EVERY C ASE UNLESS IT IS SHOWN THAT SUCH INCREASE IN EXPENSE IS DISPROPORTIONATE TO THE SCALE OF OPERATION. THE ACCOUNTS OF THE ASSESSEE ARE AUDITED AND CERTIFIED. THE PCIT HAS NOT BROUGHT ON RECORD THAT WHILE TURNOVER HAS REMAINED STATIC A ND EXPENSES HAVE BEEN INFLATED. ON THE OTHER HAND, WE OBSERVE THAT THE R EVENUE FROM OPERATION HAS INCREASED FROM 55.14 CRORES TO 72.19 CRORES THIS YE AR. THE PCIT WHILE RAISING SUCH POINTS, OUGHT TO HAVE APPLIED HIS MIND TO THE OVERALL STATE OF AFFAIRS. SUCH GENERIC AND NON-DESCRIPT DIRECTION, IF PERMITTED, C OULD RENDER EVERY ASSESSMENT ORDER SUSCEPTIBLE TO REVISIONAL PROCEEDINGS. 7. BESIDES, THE PCIT HAS ISSUED NOTICE ON 15.03.202 1 ASKING THE ASSESSEE FOR ATTENDANCE ON SAME DAY AND THEREAFTER HAS PASSED TH E ORDER WITHIN TEN DAYS ON 26.03.2021. IN OUR VIEW, IT IS THE PCIT WHO HAS AC TED IN HASTE AND WITHOUT DUE APPLICATION OF MIND TO SUCH GLARING FACTS. SIGNIFI CANTLY, THE ASSESSMENT WAS MADE ITA NO.29/RPR/2021 A.Y. 2015-16 PAGE 4 OF 6 UNDER LIMITED SCRUTINY ON SPECIFIC POINTS. THE I SSUE AFORESAID RAISED BY THE PCIT DOES NOT FORM PART OF THE ISSUES RAISED IN THE NOTI CE UNDER SECTION 142(1) DATED 24.07.2017 PLACED IN PAGE NO.8 OF THE PAPER BOOK. THUS, THE A.O. WAS HAVING NO MANDATE TO EXPAND THE SCOPE OF ENQUIRY BEYOND THE P OINTS FOR WHICH CASE WAS PUT UNDER LIMITED SCRUTINY. THE ACTION OF THE A.O. FOR NOT MAKING ALLEGED ENQUIRY ON INCREASE IN THE EXPENSES THUS CANNOT BE LEVELLED AS ERRONEOUS. THUS, LOOKING FROM ANY PERSPECTIVE, THE ACTION OF THE PCIT CANNOT BE C OUNTENANCED ON THIS SCORE. 8. ADVERTING TO THE ALLEGATION TOWARDS NON-VERIFICA TION OF NATURE AND SOURCE OF LOAN FROM GOLDFEATHER VENTURES, WE FIND THAT THE PCIT IS SUED SHOW CAUSE NOTICE FOR VERIFICATION MERELY BECAUSE THE COMPANY IS A KOLKAT A BASED CO. THIS APPROACH, IN OUR VIEW, IS HIGHLY UNTENABLE. CONSEQUENT DIRECTIO NS OF THE PCIT IS CLEARLY IN THE REALM OF SUSPICION AND SURMISES ENTERTAINED BY HIM FOR THE REASON THAT THE LOAN HAS BEEN AVAILED FROM A KOLKATA BASED COMPANY. SUCH AC TION, IF ENDORSED, MAY TANTAMOUNT TO SAYING THAT ALL LOANS GIVEN BY A COMP ANY ADDRESSED AT KOLKATA CARRIES LESSER BONAFIDES IN FINANCIAL TRANSACTIONS. WE CAN NOT RECKON SUCH APPROACH ON JUDICIAL PARAMETERS. SECONDLY AND IMPORTANTLY, THE AFORESAID ISSUE ALSO DID NOT FORM PART OF THE SUBJECT MATTER OF LIMITED SCRUTINY. TH US, THE A.O. WAS ACTUALLY PREVENTED FROM CARRYING OUT ENQUIRIES ON THE POINT BEYOND THE SCOPE OF LIMITED SCRUTINY HAVING REGARD TO THE GUIDELINES ISSUED BY CBDT VIDE INSTRU CTION NO.5 DATED 14.07.2016 IN THIS REGARD. THE PCIT CANNOT ASK THE A.O. TO TRAVE L BEYOND THE SCOPE OF ENQUIRY ASSIGNED BY HIM UNDER LIMITED SCRUTINY. A REFERE NCE CAN BE MADE IN THIS REGARD TO THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF AK ASHGANGA PROMOTERS & DEVELOPERS VS. DCIT - ITA NO.164/CTK/2019, SANJEEV KUMAR KHEMK A VS. PCIT - ITA NO.1361/CAL/2016 AND SURAJ DIAMOND DEALER PVT. LTD. VS. PCIT - ITA NO.3098/MUM/2019. WE THUS HAVE NO HESITATION TO HO LD THAT THE ACTION OF THE A.O. CANNOT BE BRANDED AS ERRONEOUS. THE EXERCISE OF JU RISDICTION UNDER SECTION 263 OF THE ACT IS THUS WITHOUT AUTHORITIES OF LAW AND HENCE FA ILS. 9. HAVING ADDRESSED THE ISSUE ON MERIT, WE ALSO TAK E NOTE OF THE OBJECTIONS RAISED ON BEHALF OF THE ASSESSEE TOWARDS SERIOUS LACK OF O PPORTUNITY TO THE ASSESSEE WHILE REMANDING THE MATTER BACK TO THE A.O. FOR FRESH ASS ESSMENT. NEEDLESS TO SAY, SUCH ACTION OF THE PCIT AFFECTS THE CIVIL RIGHTS OF THE TAX PAYERS IN A COMPLETED ASSESSMENT AND REQUIRES TO BE EXERCISED WITH CIRCUMSPECTION. THE PCIT, IN THE INSTANT CASE, APPARENTLY HAS NOT GIVEN ANY EFFECTIVE OPPORTUNITY TO THE ASSESSEE TO COUNTER THE ITA NO.29/RPR/2021 A.Y. 2015-16 PAGE 5 OF 6 ALLEGATIONS RAISED IN THE SHOW CAUSE NOTICE. HOWEV ER, WE ARE NOT INCLINED TO DELINEATE ON THIS ASPECT. HAVING REGARD TO THE FACT THAT ACT ION OF THE PCIT IS WHOLLY UNJUSTIFIED ON MERIT AS DISCUSSED ABOVE, THE REVISIONAL ORDER O F THE PCIT IS THUS QUASHED AND SET ASIDE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED ON 11.10.2021 AS PER RULE 34(4) OF THE INCOME TAX APPELLATE TRIBUNAL RULES,1963. SD/- SD/- (N.K. CHOUDHRY) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT M EMBER PBN/* TRUE COPY COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER UE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR