Somani Brothers, Hyderabad V. ACIT, Hyderabad

ITA 295/HYD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6496 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-08-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 24-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K TRIPATHY
• Assessee Lawyers: S RAMA RAO
• Keywords: Revision of order; Depreciation; Assessment record
• Section: 143(3); 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI N.R.S. GANSAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA.295/HYD/2010 ASSESSMENT YEAR 2001-02 M/S SOMANI BROTHERS, HYDERABAD (PAN AAGFS 4294 J) VS THE ACIT, CIRCLE 7 (1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI K.K. TRIPATHY, DR O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE CITVI, HYDERABAD DATED 24.3.2005 U/S 26 3 OF THE INCOME TAX ACT, 1961 AND PERTAINS TO THE ASSESSMENT YEAR 2 001-02. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE CIT IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE CIT ERRED IN HOLDING THAT THE AMOUNT PAID TO SRI RAMNIVAS SARDA TOWARDS HANDLING AND TRANSPORT OF RS.5,08,226 /- IS NOT GENUINE AND FURTHER ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER. 3. THE CIT ERRED IN HOLDING THAT THERE IS ANY ERRO R IN THE ASSESSMENT MADE U/S 143(3) R.W.S. 147 AND FURTHER ERRED IN HOL DING THAT ANY PREJUDICE IS CAUSED TO THE REVENUE ON ACCOUNT OF TH E SAID ASSESSMENT. 4. THE CIT OUGHT TO HAVE CONSIDERED THE FACT THAT THE ASSESSING OFFICER RE OPENED THE ASSESSMENT U/S 147 ONLY ON THE PURPOS E OF VERIFICATION OF DIFFERENCE IN THE RECEIPTS FROM NATIONAL FERTILI ZERS LTD. AND ONLY AFTER VERIFICATION OF DIFFERENCE IN RECEIPTS FROM NATIONA L FERTILIZERS LTD., THE CLAIM OF THE ASSESSEE WAS ACCEPTED WHILE COMPLETING THE REASSESSMENT. 5. THE CIT ERRED IN SETTING ASIDE THE ASSESSMENT T O THE FILE OF THE ASSESSING OFFICER PARTICULARLY WHEN THE ASSESSING O FFICER WHILE ITA.NO.295/H/2010 M/S SOMANI BROTHERS, HYDERABAD 2 COMPLETING THE REASSESSMENT CONSIDERED THE CLAIM OF THE ASSESSEE AND ALLOWED THE SAME. 3. THERE WAS A DELAY OF 229 DAYS IN FILING ITS APPEAL BY THE ASSESSEE, AND THE ASSESSEE ALSO FILED A PETITION FOR CONDONATION OF THE DELAY WHICH IS PLACED ON RECORD FOR WHICH THE LEARNED DEPARTMENTAL REPRESENTATIVE EXPRESSED NO OBJECTION. WE HAVE GONE THROUGH THE REAS ONS ADVANCED BY THE ASSESSEE FOR THE DELAY IN FILING ITS APPEAL, WE A RE SATISFIED AND THE SAME IS CONDONED AND THE APPEAL OF THE ASSESSEE IS ADMITTED . 4. BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE ORIGI NAL ASSESSMENT WAS COMPLETED U/S 143(3) ON 27/2/2004 AND LATER A NOTI CE U/S 148 WAS ISSUED ON 17.3.2006 FOR THE PURPOSE OF VERIFYING THE CO RRECTNESS OF ACCOUNTING OF CONTRACT RECEIPTS RECEIVED. ACTUALLY, THE A SSESSEE HAS RECEIVED CONTRACT RECEIPTS AT RS.8,11,224/- FROM M/S NATIO NAL FERTILIZERS LTD. HOWEVER, AN AMOUNT OF RS.1,98,265/- WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT. ON REASSESSMENT, THE ASSESSING OFFICER WHILE COMPLETING REASSESSMENT VERIFIED THE CASH BOOK, LEDGER, PURCHASE BOOK, SHARES BOOK AND GENERAL LEDGER AND MADE AN ADDITION O F RS.25,000/- TOWARDS PERSONAL USAGE OF CAR ON DEPRECIATION. ON SCRUTIN Y OF THE ASSESSMENT RECORDS, THE CIT IS OF THE OPINION THAT AN EX PENDITURE OF RS.5,08,226/- ALLEGED TO BE PAID TO SHRI. SRINIVAS RA MNIVAS SARDA ARE SAID TO BE NOT SUPPORTED BY PROPER VOUCHERS AND THE ASSESSI NG OFFICER HAS NOT MADE PROPER ENQUIRY WHILE COMPETING THE REASSE SSMENT AND ALSO NOT APPLIED HIS MIND. HENCE THE CIT SET ASIDE THE ASSESSMENT AND DIRECTED THE ASSESSING OFFICER TO VERIFY IN THE LIGHT OF HIS OBSERVATIONS MADE THEREIN THE ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE REASSESSMENT WAS COMPLETED U/S 143(3) OF T HE INCOME ITA.NO.295/H/2010 M/S SOMANI BROTHERS, HYDERABAD 3 TAX ACT, 1961. THE ASSESSMENT WAS REOPENED FOR THE SPECIFI C PURPOSE OF EXAMINING THE ISSUE RELATING TO THE CONTRACT RECEIPTS FROM M/S NATIONAL FERTILIZERS LTD., AT RS.8,11,224/-. THE ASSE SSING OFFICER AFTER EXAMINING THE SAME ACCEPTED THE ISSUE AS CORRECT. THE ASSESSI NG OFFICER AT THE TIME OF ASSESSMENT EXAMINED THE ISSUE, THOUGH NOT MENTIONED THE DETAILS OF ENQUIRY MADE BY HIM. BUT THE FACT IS T HAT ON ENQUIRY, HE WAS SATISFIED BY THE TREATMENT GIVEN TO THE CONTRACT RECE IPTS AND OPTED NOT TO MAKE ADDITION ON THIS ACCOUNT. THIS IS A CONSCIOUS DECISION OF HIM. IF AN ITO ACTING IN ACCORDANCE WITH LAW MAKES CERTA IN ASSESSMENT THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE CIT SIMPL Y BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN M ORE ELABORATELY. THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF TH E JUDGEMENT OF THE CIT FOR THAT OF THE ITO, WHO PASSED THE ORDER, UN LESS THE DECISION IS HELD TO BE ERRONEOUS. THE ASSESSING OFFICER WHILE MAKIN G ASSESSMENT EXAMINED THE ACCOUNTS, MADE ENQUIRIES, APPLIED HIS MIND TO FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINED THE INCOME. THE C IT, ON PERUSAL OF RECORDS, MAY BE OF THE OPINION THAT THE ADD ITION TO BE MADE BY THE ASSESSING OFFICER TOWARDS CONTRACT RECEIPTS AND THE CI T WAS OF THE OPINION HAD HE LEFT WITH THAT ASSESSMENT HE WOULD HAVE ESTIMATED THE INCOME BY MAKING AN ADDITION TOWARDS THIS AMOUNT AND I T WOULD HAVE RESULTED IN HIGHER INCOME. THIS IS NOT POSSIBLE AS PER SECT ION 263 SINCE LD. CIT WOULD NOT VEST WITH THE POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME AT HIGHER FIGURE. THIS IS BECAUSE, THE ITO HAS EXERCISED THE QUASI JUDICIAL POWER VESTED IN HIM IN ACCORD ANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT B E TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL SATISFIE D WITH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPI NION OF THE CIT THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS O F THE REVENUE. BUT THAT BY ITSELF WOULD NOT BE ENOUGH TO VEST THE CIT WI TH THE POWER OF SUO ITA.NO.295/H/2010 M/S SOMANI BROTHERS, HYDERABAD 4 MOTU REVISION BECAUSE THE FIRST REQUIREMENT, NAMELY, T HAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY IF AN ORDER IS ERRONEO US BUT NO PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THEN THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS O RDER CANNOT BE THE SUBJECT MATTER OF REVISION BECAUSE THE SECOND REQUIREM ENT MUST BE FULFILLED. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IM POSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE, ON AN INCORRECT OR INCOMPLETE INTERPRETATION, A LESSER TAX THAN WHAT WAS JUST HAS BEE N IMPOSED. WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTE NCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH PO WER MUST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. HENCE , IN OUR OPINION, NO FRESH INQUIRY CAN BE MADE AT THE INSTANCE OF THE LD. CI T UNLESS EARLIER DECISION OF THE ASSESSING OFFICER IS ERRONEOUS OR PREJUDICIA L TO THE INTERESTS OF THE REVENUE. THE LD. CIT CANNOT PUT HIS W ORDS IN THE MOUTH OF THE ASSESSING OFFICER. IN THE PRESENT CASE, THE A SSESSING OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER THE LAW AND IF IT RESULTED IN LOSS AND WHERE TWO VIEWS ARE POSSIBLE AND ITO HAS TAKEN ONE VIEW WITH WHICH THE CIT, DOES NOT AGREE, IT CANNOT BE TREATED AS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENU E UNLESS VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. MERELY BECAUSE DIFF ERENT VIEW IS POSSIBLE, IT IS NOT ENOUGH TO HOLD THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICE TO THE INTEREST OF THE REVEN UE. 6. ADMITTEDLY, IN THIS CASE, THE ASSESSEE HAS RECEIVED A T RS.8,11,224/- AS CONTRACT RECEIPTS FROM M/S NATIONAL FERTI LISERS LTD. OUT OF THIS AMOUNT, THE ASSESSEE HAS PAID RS.5,08,226.50 TO SHRI RAMNIVAS SRINIVAS SARDA WHICH WERE MADE THROUGH A/C PAYEE CHEQ UE. OUT OF THIS TRANSACTION, THE ASSESSEE HAS EARNED INCOME AT RS.1,98,265/ - AND SHRI RAMNIVAS SRINIVAS SARDA HAD ADMITTED INCOME AT RS.2,92 ,738/- FROM ITA.NO.295/H/2010 M/S SOMANI BROTHERS, HYDERABAD 5 THE GROSS RECEIPTS OF RS.5,06,226.50. WE HAVE ALSO GONE THROUGH THE STATEMENT OF INCOME OF PROFIT AND LOSS ACCOUNT OF SHRI RA MNIVAS SRINIVAS SARDA. THE CIT IS FINDING FAULT THAT, ON DEPOSIT OF CHEQUE IN THE BANK ACCOUNT OF SHRI SRINIVAS RAMNIVAS SARDA WITH AP MAHESH COOPERATIVE URBAN BANK LTD., BEGUM BAZAR, HYDERABAD, THERE WAS I MMEDIATE WITHDRAWAL OF THE MONEY AND THE CIT IS OF THE OPINIO N THAT THIS MONEY HAS BEEN TRANSFERRED TO THE ASSESSEES ACCOUNT. HOWEVER, NO POSITIVE MATERIALS HAVE BEEN BROUGHT ON RECORD TO SHOW THAT THE AMOUNT FROM SHRI SRINIVAS RAMNIVAS SARADA INDEED TRANSFERRED TO TH E ASSESSEES ACCOUNT. MORE SO, THE ASSESSEE DECLARED AN INCOME OF RS.1,98 ,265/- FROM THE GROSS RECEIPTS OF RS.8,11,224/- AFTER PAYMENT O F RS.5,08,226.50 TO SHRI SRINIVAS RAMNIVAS SARDA. THE I NCOME DECLARED BY THE ASSESSEE OUT OF THESE RECEIPTS IS COMPARATIVELY HIG H IN THIS LINE OF BUSINESS. FURTHER, THE DEPARTMENTAL REPRESENTATIVE SUB MITTED BEFORE US THAT THERE WAS NO GRIEVANCE IF THE ASSESSING OFFICER RE-EX AMINED THE ISSUE, SINCE WHILE COMPLETING THE REASSESSMENT, THE ASSESSING OFFICER HAS NOT ENQUIRED ABOUT THE IMPUGNED ISSUE AND THE ORD ER IS CRYPTIC ONE AND PAYMENT WAS MADE TO RELATIVES ONLY. THIS ARGUME NT OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS HAVING NO MERIT. SIN CE THE ASSESSEE IS A SMALL ASSESSEE, THE ISSUE IS RELATING TO ASSESSMENT YEARS 2001- 02, CONSIDERABLE TIME HAS BEEN ELAPSED, AND ONCE THE ORIGINA L ASSESSMENT WAS COMPLETED U/S 143(3), LATER THERE WAS RE-ASSESSMENT AN D ONCE AGAIN THE ASSESSEE WAS SUBJECTED TO REVISION U/S 263. THIS IS NOTHING BUT FISHING ENQUIRY OF THE AUTHORITIES WHICH CANNOT BE ALLOWED AGAIN AND AGAIN AND IT IS ALSO NOT FAIR TO CARRY ON SUCH ENQUIRY A FTER LAPSE OF SUCH A LONG TIME. IN OUR OPINION, NO USEFUL PURPOSE WILL BE SERVED BY SETTING ASIDE THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER. ACCO RDINGLY, THE ORDER OF THE CIT PASSED U/S 263 IS BAD IN LAW AND THE SA ME IS CANCELLED. ITA.NO.295/H/2010 M/S SOMANI BROTHERS, HYDERABAD 6 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT 13.8.2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 13 TH AUGUST, 2010 COPY FORWARDED TO: 1. SHRI S. RAMA RAO, ADVOCATE, 102, SHRIYAS ELEGANCE, DOOR NO.3-6-643, ST. NO.9, HIMAYATNAGAR, HYDERABAD 2. THE ACIT, CIRCLE 7(1), HYDERABAD 3. CIT-IV HYDERABAD. 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP