The Jammu Cooperative Wholesale Ltd, Jammu V. The Dy. Commissioner of Income-tax, Jammu

ITA 31/ASR/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80613 (ITAT-AMRITSAR)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 02-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: O P GARG
• Keywords: Opportunity of being heard; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 31(ASR)/2014 ASSESSMENT YEAR: 2007-08 PAN: AAAJJ0397H THE JAMMU COOPERATIVE VS. DY. COMMISSIONER OF WHOLESALE LTD., SUPER BAZAR, INCOME TAX, CIRCLE -2, OLD HOSPITAL ROAD, JAMMU JAMMU (APPELLANT) (RESPONDENT) APPELLANT BY: SH. O.P. GARG, CA RESPONDENT BY: SH. TARSEM LAL, DR DATE OF HEARING: 02.09.2014 DATE OF PRONOUNCEMENT: 11.09.2014 ORDER PER A.D. JAIN, J.M. 1. THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2007-08 AGAINST THE ORDER DATED 18.11.2013, PASSED BY THE L EARNED CIT(A), JAMMU. 2. THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL HAVE B EEN TAKEN BY THE ASSESSEE: I. THAT THE FULL AMOUNT OF SALARY OF RS. 45,67,533.00 PERTAINING TO THE PERIOD UNDER ASSESSMENT, IN THE FIRST PLACE DISALLO WED BY THE LEARNED ASSESSING OFFICER (AO) WAS WITHOUT LEGAL SA NCTITY AS THE 2 I.T.A. NO. 31(ASR)/2014 ASSESSMENT YEAR: 2007-08 LEGITIMATE EXPENSES OF THE ASSESSEE INCURRED FOR TH E CARRYING ON OF BUSINESS AND PERTAINING TO A PARTICULAR PERIOD ARE ALLOWABLE IN FULL. II. THAT THE ASSESSMENT WAS FRAMED BY WRONGLY RELYING A ND WRONGLY INTERPRETING THE JUDGMENT TITLED AS GOETZ (INDIA) LTD VS. CIT, 284 ITR 323, WHICH ALREADY STOOD DISTINGUISHED IN OTHE R PRONOUNCEMENTS; III. THAT THE LEARNED CIT(A), JAMMU, WHILE SUSTAINING TH E DISALLOWANCE MADE IN THE ASSESSMENT, HAS ALSO RELIE D UPON THE SAME JUDGMENT WITHOUT LOOKING INTO THE FACTS OF THE CASE AS WELL AS OTHER DIFFERENT JUDICIAL PRONOUNCEMENTS, CITED AND SUBMITTED BEFORE HIM, BUT SIMPLY UPHELD THE VIEW OF THE LEARNED A.O. ; IV. THAT THE ASSESSMENT ORDER AS WELL AS ORDERS FROM TH E FIRST APPELLATE AUTHORITY ARE IN VIOLATION TO ARTICLED 265 OF THE C ONSTITUTION OF INDIA AND HENCE, ADDITION MADE IN THE ASSESSMENT AN D UPHELD IN THE APPEAL, IS LIABLE TO BE QUASHED. 3. THE AUTHORITIES BELOW REJECTED THE ADDITIONAL CL AIM OF THE ASSESSEE REGARDING AN AMOUNT OF RS. 45,67,533.00 ON ACCOUNT OF SALARY NOT BOOKED IN THE ASSESSEES BOOKS OF ACCOUNT. IT W AS OBSERVED THAT THE ASSESSEE HAD NOT BOOKED THIS SALARY EXPENDITURE IN ITS BOOKS OF ACCOUNT; THAT NOR WAS IT SHOWN IN THE RETURN OF INCOME FILED ; AND THAT THE ASSESSEE HAD ALSO NOT FILED ANY REVISED RETURN, CLAIMING SUC H EXPENSES. THE JUDGMENT IN GOETZ (INDIA) LTD. VS. CIT , (2006) 2 84 ITR 323 (SC), WAS RELIED ON, OBSERVING THAT THEREIN, IT HAD BEEN HELD THAT THE ASSESSEE COULD NOT MAKE AN ADDITIONAL CLAIM BEFORE THE ASSESSING A UTHORITIES OTHERWISE THAN BY WAY OF A REVISED RETURN. 3 I.T.A. NO. 31(ASR)/2014 ASSESSMENT YEAR: 2007-08 4. BEFORE US, ON BEHALF OF THE ASSESSEE, IT HAS BEE N CONTENDED THAT THE AUTHORITIES BELOW HAVE ERRED IN DISALLOWING THE LEGITIMATE CLAIM OF THE ASSESSEE, INASMUCH AS THE LEGITIMATE EXPENSES OF TH E ASSESSEE INCURRED FOR CARRYING ON OF ITS BUSINESS AND PERTAINING TO A PAR TICULAR PERIOD ARE ALLOWABLE IN FULL; THAT GOETZ (INDIA) LTD. (SUPRA ) HAS WRONGLY BEEN RELIED ON, THE SAME HAVING BEEN DISTINGUISHED IN OT HER CASES; THAT THE ASSESSEE IS A COOPERATIVE SOCIETY BEING RUN AND MAN AGED FOR THE PAST MORE THAN 30 YEARS BY A BOARD HEADED BY DISTRICT DE VELOPMENT COMMISSIONER, JAMMU, AND OTHERS WITH CHIEF EXECUTIV E OFFICER DEPUTED BY THE GOVERNMENT OF JAMMU AND KASHMIR; THAT EVER S INCE THE MID- 1990S , THERE HAVE BEEN HUGE CASH LOSSES TO THE SA ID INSTITUTION, RESULTING INTO A SEVERE CASH CRUNCH, TO THE EXTENT THAT EVEN THE MONTHLY STAFF SALARY COULD ALSO NOT BE PAID IN TIME; THAT DURING THE PER IOD RELEVANT TO THE APPEAL, THE STAFF SALARY AND A FEW OTHER STAFF EXPE NSES, FOR ALMOST 2 YEARS, WERE IN ARREARS FOR PAYMENT; THAT THE SOCIETY DID N OT HAVE ANY PROFESSIONALLY QUALIFIED ACCOUNTING AND LEGAL STAFF TO UNDERSTAND THE INTRICACIES OF ACCOUNTING SYSTEMS AND THUS, WHILE D RAFTING THE BALANCE- SHEET AND PROFIT & LOSS ACCOUNT FOR THE PERIOD UNDE R APPEAL, THE SALARY AND A FEW OTHER EXPENSES COULD NOT BE ACCOUNTED FOR ON ACCRUAL BASIS AND THUS, REMAINED NEITHER PAID, NOR ACCOUNTED FOR IN T HE ACCOUNTING 4 I.T.A. NO. 31(ASR)/2014 ASSESSMENT YEAR: 2007-08 STATEMENTS AS PAYABLE; THAT WHILE THE ASSESSMENT WA S TAKEN UP FOR SCRUTINY DURING THE PERIOD NOVEMBER, 2009, THIS FAC T CAME TO THE NOTICE OF THE ASSESSEE SOCIETY AND SUBMISSIONS WERE MADE B EFORE THE ASSESSING OFFICER TO ALLOW FOR THESE EXPENSES, AS THESE EXPEN SES GENUINELY PERTAINED TO THE PERIOD UNDER ASSESSMENT BEFORE HIM ; THAT WHILE MAKING THESE SUBMISSIONS, EVEN THE EXPENSES OF THE SAME NA TURE, PERTAINING TO THE PERIOD PRIOR TO ASSESSMENT AT HAND, WERE ALSO O FFERED FOR WRITE BACK; THAT WHILE THE EXPENSES NOT PERTAINING TO THE PERIO D WERE DULY WRITTEN BACK IN THE ASSESSMENT ORDER, THE EXPENSES GENUINEL Y PERTAINING TO THE PERIOD UNDER ASSESSMENT WERE NOT ALLOWED ON THE GRO UND THAT THE SAME COULD NOT BE CLAIMED OTHERWISE THAN THROUGH A REVIS ED RETURN, BASED ON THE VIEW TAKEN IN THE CASE OF GOETZ (INDIA) LTD VS . CIT (2006) 284 ITR 323 (SC); THAT BEFORE SUCH VIEW WAS TAKEN, THE ASSE SSING OFFICER NEITHER AFFORDED ANY OPPORTUNITY TO THE ASSESSEE TO REVISE THE RETURN, NOR DID HE RAISE ANY QUESTION ON THE CLAIM MADE BY THE ASSESSE E DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR ALLOWING OR DISALLOW ING SUCH EXPENSES; THAT EVEN THE CBDT CIRCULAR NO. 14 (XL-35), DATED 1 1.04.1955, WHICH IS FULLY OPERATIONAL EVEN TILL TODAY, SPECIFIES THE DU TY OF THE ASSESSING OFFICERS TO FREELY ADVISE AND ALLOW THE ASSESSEES GENUINE CLAIMS, EVEN IF NOT MADE BY HIM, BUT NO COGNIZANCE OF THIS FACT WAS ALSO TAKEN BY THE 5 I.T.A. NO. 31(ASR)/2014 ASSESSMENT YEAR: 2007-08 ASSESSING OFFICER; THAT IN SPITE OF SUCH INSTRUCTIO NS, THE GENUINE CLAIM OF EXPENSES PERTAINING TO THE PERIOD UNDER ASSESSMENT WERE DISALLOWED WITHOUT AFFORDING ANY OPPORTUNITY OF BEING HEARD AN D THE DISALLOWANCE WAS MADE UNILATERALLY AND HASTILY, WITHOUT ISSUANCE OF EVEN A SHOW CAUSE ON THIS ACCOUNT; AND THAT THE MATTER WAS AGAIN RAIS ED IN APPEAL PROCEEDINGS BEFORE THE LEARNED CIT(A), JAMMU, WHERE ALSO, THE VIEW TAKEN BY THE LEARNED AO WAS UPHELD, WITHOUT LOOKING INTO THE FACT THAT THE GENUINE EXPENSES PERTAINING TO A PARTICULAR PER IOD OUGHT TO HAVE BEEN ALLOWED. 5. THE LEARNED DR, ON THE OTHER HAND, HAS SOUGHT TO PLACE RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT T HE AUTHORITIES BELOW HAVE CONCURRENTLY FOUND THE CLAIM OF THE ASSESSEE T O HAVE NOT BEEN MADE IN ACCORDANCE WITH LAW, SINCE SUCH CLAIM WAS NEITHE R MADE IN THE RETURN OF INCOME FILED, NOR MADE BY FILING ANY REVISED RET URN, NOR EVEN BOOKED IN THE BOOKS OF THE ASSESSEE. IT IS SUBMITTED THAT GOETZ (INDIA) LTD. (SUPRA) HAS RIGHTLY BEEN RELIED ON INASMUCH AS IT C LEARLY HOLDS THAT THE ASSESSEE CANNOT MAKE ANY ADDITIONAL CLAIM BEFORE AN ASSESSING AUTHORITY OTHERWISE THAN BY WAY OF A REVISED RETURN. 6. HAVING CONSIDERED THE RIVAL CONTENTIONS IN THE L IGHT OF THE MATERIAL PLACED ON RECORD, WE FIND THAT IT IS UNDIS PUTED THAT THE CLAIM OF 6 I.T.A. NO. 31(ASR)/2014 ASSESSMENT YEAR: 2007-08 SALARY EXPENDITURE OF RS. 45,67,533.00 WAS NOT MADE BY THE ASSESSEE EITHER IN THE RETURN OF INCOME, OR BY FILING ANY RE VISED RETURN. THE SAME WAS MADE ONLY BY WAY OF A REQUEST LETTER FILED BEFO RE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE ISSU E IS AS TO WHETHER SUCH A CLAIM IS MAINTAINABLE. 7. GOETZ (INDIA) LTD (SUPRA), WHEREIN IT HAS BEEN HELD THAT NO ASSESSEE CAN MAKE ANY ADDITIONAL CLAIM BEFORE THE A SSESSING AUTHORITY OTHERWISE THAN BY WAY OF A REVISED RETURN, STANDS D ISTINGUISHED IN CHICAGO PNEUMATIC INDIA LTD. VS. DY. CIT, (2007) 15 SOT 252 (MUM.). CHICAGO PNEUMATIC INDIA LTD. (SUPRA) WAS FOLLOWED IN EMERSON NETWORKS POWER INDIA PVT. LTD. VS. ACIT, 122 TTJ (MUMBAI) 67, WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER IS OBLIGED TO GIVE DUE RELIEF TO THE ASSESSEE, OR TO ENTERTAIN IT S CLAIM, IF ADMISSIBLE AS PER LAW, EVEN THOUGH THE ASSESSEE HAS NOT FILED REV ISED RETURN, AND THAT THE LEGITIMATE CLAIM OF THE ASSESSEE SHOULD NOT BE REJECTED ON TECHNICAL GROUNDS. 8. IT FOLLOWS, AS RIGHTLY CONTENDED ON BEHALF OF TH E ASSESSEE, THAT GOETZ (INDIA) LTD. (SUPRA) DOES NOT RESTRICT THE APPELLATE AUTHORITIES FROM CONSIDERING FRESH CLAIMS, IF GENUINE, AND ALLO W THEM ON MERIT. 7 I.T.A. NO. 31(ASR)/2014 ASSESSMENT YEAR: 2007-08 9. IT IS SEEN THAT AS PER THE STAND TAKEN BY THE AS SESSEE, FOR LONG YEARS, THE ASSESSEE CO-OPERATIVE SOCIETY, WHICH IS RUN BY A BOARD HEADED BY THE DISTRICT DEVELOPMENT COMMISSIONER, JAMMU, AN D OTHERS, WITH ITS CHIEF EXECUTIVE OFFICER BEING DEPUTED BY THE GOVERN MENT OF JAMMU AND KASHMIR, HAD TO INCUR HUGE LOSSES, RESULTING IN A S EVERE CASH CRUNCH TO THE ASSESSEE. SO MUCH SO, EVEN THE MONTHLY STAFF SA LARY COULD NOT BE PAID IN TIME. THE ASSESSEE DID NOT HAVE ANY PROFESSIONAL LY QUALIFIED ACCOUNTING AND LEGAL STAFF. IT WAS FOR THIS REASON THAT THE CLAIM OF RS. 45,67,533.00 PERTAINING TO SALARY REMAINED FROM BE ING MADE IN THE RETURN OF INCOME. EVEN NO REVISED RETURN WAS FILED AND THE CLAIM WAS MADE IN THE ASSESSMENT PROCEEDINGS ONLY, BY WAY OF A REQUEST LETTER. UNDER THESE FACTS AND CIRCUMSTANCES, AS PER CHICA GO PNEUMATIC INDIA LTD. (SUPRA) AND EMERSON NETWORKS POWER INDIA PVT . LTD. (SUPRA), WHEREIN GOETZ (INDIA) LTD. (SUPRA) STANDS DISTING UISHED, THIS CLAIM OF THE ASSESSEE REQUIRES TO BE TAKEN ON RECORD AND DEA LT WITH IN ACCORDANCE WITH LAW. FOR THIS PURPOSE, WE HEREBY REMIT THE MAT TER TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL TAKE THIS CLAIM ON RECORD, PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE AS SESSEE WITH REGARD THERETO AND THEREAFTER DECIDE THE ISSUE OF THE ALLO WABILITY OF SUCH CLAIM OF 8 I.T.A. NO. 31(ASR)/2014 ASSESSMENT YEAR: 2007-08 THE ASSESSEE. THE ASSESSEE, NO DOUBT, SHALL COOPERA TE WITH THE ASSESSING OFFICER IN THE REMAND ASSESSMENT PROCEEDINGS. ORDER ED ACCORDINGLY. 10. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL OF THE ASSESSEE STANDS ALLOWED, AS INDICATED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2014 SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH SEPTEMBER, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S THE JAMMU COOPERATIVE WHOLESALE LTD., SUPER BAZAR, OLD HOSPITAL ROAD, JAMMU 2. DCIT, CIRCLE-2, JAMMU 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.