Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 2622 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-10-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
-
Assessment Year
2015-2016
Appeal Filed On
04-08-2020
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI R.L NEGI, JUDICIAL MEMBER ./ ITA NO. 306/CHD/2020 / ASSESSMENT YEAR : 2015-16 TENZIN CONSTRUCTION CO P LTD. C/O K.N. CHANDLA & CO., C.AS, 169, BLOCK NO. 6, SDA COMPLEX, KUSUMPTI, SHIMLA PRINCIPAL COMMISSIONER OF I.TAX - 1, SHIMLA ./PAN NO: AABCT 4026 H / APPELLANT HEARING THROUGH VIDEO CONFERENCING /ASSESSEE BY : SH. SUDHIR SEHGAL, ADVOCATE / REVENUE BY : SH. SANDEEP DAHIYA, CIT (DR) # /DATE OF HEARING : 05.08.2021 # / DATE OF PRONOUNCEMENT : 27.10.2021 / ORDER PER R.L. NEGI, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 19.02.2020 PASSED BY PRINCIPAL COMMISSIONER OF INCO ME TAX, SHIMLA [FOR SHORT THE PCIT] FOR THE ASSESSMENT YEAR 2015 -16, WHEREBY THE LD. PCIT HAS SET ASIDE THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 [FOR SHORT THE ACT] BY EXERCISING J URISDICTION U/S 263 OF THE ACT AND DIRECTED THE AO TO RE-ASSESS THE INCOME OF THE ASSESSEE. 2. THE BRIEF FACTS EMANATING FROM THE RECORD AND PL EADINGS OF THE PARTIES ARE THAT THE ASSESSEE FILED ITS RETURN OF I NCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING INCOME OF RS. 1, 13,13,134/- THE CASE ITA NO.306-CHD-2020- TENZIN CONSTRUCTION CO PVT. LTD., SHIMLA 2 WAS SELECTED FOR LIMITED SCRUTINY FOR EXAMINING THE SALES TURNOVER MISMATCH AND EXPENDITURE OF PERSONAL NATURE. ACCORD INGLY, THE AO ISSUED NOTICE U/S 143(2) AND 142(1) OF THE ACT. IN RESPONSE THEREOF THE AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE APPE ARED BEFORE THE AO AND FURNISHED THE DOCUMENTS / DETAILS CALLED FOR. ON THE BASIS OF THE DETAILS FILED AND THE EXPLANATION GIVEN ON BEHALF O F THE ASSESSEE, THE AO ACCEPTED THE RETURN OF THE ASSESSEE. 3. SUBSEQUENTLY, THE LD. PCIT ISSUED NOTICE U/S 263 OF THE ACT INTER ALIA ASKING THE ASSESSEE TO EXPLAIN ABOUT INTEREST FREE LOANS AND ADVANCES TO RELATED PARTIES AND CLAIM OF EXPENDITUR E ON INTEREST ON TAX. SINCE THE LD. PCIT DID NOT RECEIVE ANY RESPONSE TO THE NOTICE U/S 263 OF THE ACT, THE LD. PCIT PASSED ORDER UNDER SECTION 26 3 OF THE ACT ON THE BASIS OF MATERIAL ON RECORD AND SET ASIDE THE ASSES SMENT ORDER PASSED U/S 143(3) OF THE ACT HOLDING THE SAME ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRECTED THE AO TO PASS ASSESSMENT ORDER AFRESH AFTER MAKING VERIFICATION REGARDING INTEREST FREE LOANS AND ADVANCES AND CLAIM OF EXPENDITURE ON INTEREST ON TA X. AGAINST THE SAID FINDINGS OF THE LD. PCIT, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 4. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER P ASSED BY THE LD. PCIT ON THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX (HERE AFTER, 'THE PR. CIT') HAD NO OCCASION TO INITIATE PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (HEREAFTER, 'THE ACT') AS THE ASSESSMENT ORDER SOUGHT TO BE REVISED IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE ITA NO.306-CHD-2020- TENZIN CONSTRUCTION CO PVT. LTD., SHIMLA 3 2. THE IMPUGNED ORDER OF THE LEARNED PRINCIPAL COMMISS IONER OF INCOME TAX IS BAD IN LAW AS THERE IS NO SPECIFIC FI NDING IN THE ORDER THAT THE ORDER OF ASSESSMENT IS ERRONEOUS INSOFAR A S IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE IN RESPECT OF ANY OF THE I SSUES RAISED. 3. THE LEARNED PR. CIT ACTED WITHOUT JURISDICTION IN P ASSING AN ORDER IN RESPECT OF INTEREST FREE ADVANCES TO RELATED PARTIE S AND VERIFICATION OF INTEREST ON TAX WHICH WAS OUTSIDE THE LIMITED SCOPE FOR SELECTION OF CASE FOR SCRUTINY. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED PR. CIT MAY BE QU ASHED AND THE APPEAL ALLOWED. THE APPELLANT CRAVES LEAVE TO ADD T O, OR, AMEND/ ALTER/ WITHDRAW ANY OF THE ABOVE GROUNDS OF APPEAL. ALL THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE LEGAL GROUND RAISED BY THE ASSESSEE IN THI S CASE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CHAND IGARH BENCH OF THE TRIBUNAL IN THE CASE OF TEJ PAUL BHARDWAJ VS. PCIT REPORTED IN (2021) 88 ITR 352 (CHD. TRIB.) THE LD. COUNSEL FURTHER SUB MITTED THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR LIMITED SCRUTINY T O VERIFY THE SALES TURNOVER MISMATCH AND EXPENDITURE OF PERSONAL NATUR E. ACCORDINGLY, THE AO ISSUED NOTICE U/S 143(2) AND 142(1) OF THE ACT. THE AO AFTER EXAMINING THE DOCUMENTS/ DETAILS FURNISHED BY THE A SSESSEE IN RESPONSE TO THE SAID NOTICES, ACCEPTED THE RETURN AND PASSED ORDER U/S 143(3) OF THE ACT. 6. THE LD. COUNSEL FURTHER SUBMITTED THAT THE LD. PCIT THEREAFTER INITIATED PROCEEDINGS U/S 263 OF THE ACT, ON THE GR OUND THAT THE AO HAS NOT EXAMINED THE ISSUE RELATING TO INTEREST FREE L OANS AND ADVANCES AND CLAIM OF EXPENDITURE ON INTEREST ON TAX. IN THE L IGHT OF THE SAID FACTS, ITA NO.306-CHD-2020- TENZIN CONSTRUCTION CO PVT. LTD., SHIMLA 4 THE LD. COUNSEL CONTENDED THAT SINCE, THESE ISSUES WERE NOT THE SUBJECT MATTER OF THE LIMITED SCRUTINY CONDUCTED BY THE AO, THE LD. PCIT HAD NO JURISDICTION TO REVISE THE ASSESSMENT ORDER AND DIR ECT THE AO TO CONDUCT VERIFICATION ON THE ISSUES WHICH WERE NOT EXAMINED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THE LD. COUNSEL FURTHE R SUBMITTED THAT THE CHANDIGARH BENCH OF THE TRIBUNAL HAS DECIDED THE ID ENTICAL ISSUE IN THE CASE OF TEJ PAUL BHARDWAJ VS DCIT (SUPRA) IN THE LIGHT OF THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF NAYEK PAPER CONVERTORS VS. ACIT (2005) 93 ITD 44 (KOL.) AND THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GIFT LAND HANDICRAFTS VS CIT (2008) 108 TTJ 312(ITAT-DELHI) AND IN THE CASE OF AJIT GUPTA VS ITO (2007) 108 TTJ 301(DEL.) WHEREIN THE SAID BENCHES HAVE HELD THAT T HE COMMISISONER OF INCOME TAX WAS NOT JUSTIFIED IN INVOKING JURISDICTI ON U/S 263 ON THE ISSUES OTHER THAN THOSE DECIDED IN THE LIMITED SCRU TINY ASSESSMENT. THE LD. COUNSEL ACCORDINGLY SUBMITTED THAT THE LEGAL GR OUND RAISED BY THE ASSESSEE MAY BE ALLOWED AND THE ORDER PASSED BY THE LD. PCIT MAY BE SET ASIDE. 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE (DR) SUPPORTING THE ORDER PASSED BY THE LD. PCIT SUBMITT ED THAT SINCE THE AO HAD NOT EXAMINED THE ISSUES RAISED IN THE IMPUGNED ORDER, THE LD. PCIT HAS RIGHTLY INVOKED THE JURISDICTION U/S 263 OF THE ACT AND DIRECTED THE AO TO MAKE ENQUIRIES ON THE ISSUES MENTIONED IN THE ORDER. HOWEVER, THE LD. DR DID NOT BRING TO OUR NOTICE ANY DECISION TO CONTROVERT THE ITA NO.306-CHD-2020- TENZIN CONSTRUCTION CO PVT. LTD., SHIMLA 5 CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DECISION OF THE B BENCH OF T HE ITAT, CHANDIGARH IN THE CASE OF TEJ PAUL BHARDWAJ VS PCIT (SUPRA) AND OTHER CASES RELIED UPON BY THE LD. COUNSEL. ADMITTEDLY, THE ASSESSEES CASE WAS SELECTED FOR LIMITED SCRUTINY FOR THE REASON THAT THE ASSESS EE HAD REPORTED HIGHER TURNOVER IN SERVICE TAX RETURN AS COMPARED THE ITR; THE ASSESSEE HAD DEPOSITED LARGE AMOUNT OF CASH IN SAVING BANK ACCOU NT AND THERE WAS MISMATCH IN EXPENDITURE OF PERSONAL NATURE. AS POI NTED OUT BY THE LD. COUNSEL IN THE PRESENT CASE, THE AO ACCEPTED THE RE TURN OF INCOME FILED BY THE ASSESSEE AFTER EXAMINING THE SUBMISSIONS MAD E BY THE AR IN THE LIGHT OF THE DOCUMENTS AND DETAILS PLACED ON RECORD . FURTHER AS POINTED OUT BY THE LD. COUNSEL THE ISSUES EXAMINED BY THE A SSESSEE DURING THE LIMITED SCRUTINY WERE DIFFERENT FROM THE ISSUES RAI SED BY THE LD. PCIT IN THE IMPUGNED ORDER. THIS BENCH OF THE TRIBUNAL HAS ALREADY HELD IN THE CASE OF TEJ PAUL BHARDWAJ VS PCIT (SUPRA) THAT THE LD. PCIT HAS EXCEEDED JURISDICTION U/S 263 OF THE ACT BY DIRECTI NG THE AO TO MAKE FRESH ASSESSMENT ON THE ISSUES WHICH WERE NOT THE S UBJECT MATTER OF ASSESSMENT FRAMED IN LIMITED SCRUTINY. SINCE THE I SSUE INVOLVED IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE INVOLVED I N THE CASE OF TEJ PAUL BHARDWAJ VS PCIT (SUPRA), WE DO NOT FIND ANY REASON FOR TAKING A DIFFERENT VIEW IN THIS CASE. HENCE, CONSISTENT WIT H OUR FINDINGS IN THE AFORESAID CASE, WE HOLD THAT THE LD. PCIT HAS EXCEE DED HIS JURISDICTION ITA NO.306-CHD-2020- TENZIN CONSTRUCTION CO PVT. LTD., SHIMLA 6 UNDER SECTION 263 OF THE ACT BY DIRECTING THE AO TO CONDUCT ENQUIRY ON THE ISSUES WHICH WERE NOT THE SUBJECT MATTER OF LIM ITED SCRUTINY. WE THEREFORE ALLOW THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER PASSED BY THE LD. PCIT U/S 263 OF THE ACT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED ON 27 TH OCTOBER, 2021. SD/- SD/- ( N.K. SAINI) (R.L.NEGI) / VICE PRESIDENT / JUDICIAL MEMBER DATED : 27.10 .2021 .. * +,-, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. *. / THE RESPONDENT 3. / / CIT 4. / ( )/ THE CIT(A) 5. ,* 2 , #2 , 4 / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR
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