M/s Krishi Upaj Mandi Samiti, Indore V. The CIT- I, Indore

ITA 31/IND/2011

• Counselvise Citation: 3122714 RSA 2011
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KESHAV SAXENA
• Assessee Lawyers: MANISH VAIDYA
• Keywords: Set aside
• Section: 143(3); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 31/IND/2011 A.Y. 2006-07 KRISHI UPAJ MANDI SAMITI GAUTAMPURA INDORE PAN AAAJS-2043M :: APPELLANT VS COMMISSIONER OF INCOME TAX-I INDORE PAN AAAAN-4936A :: RESPONDENT APPELLANT BY : SHRI AJAY TULSIYAN AND SHRI MANISH VAIDYA RESPONDENT BY : SHRI KESHAV SAXENA DATE OF HEARING : 20.12.2011 DATE OF PRONOUNCEMENT : 28.12.2011 O R D E R PER JOGINDER SINGH AGAINST THE ORDER DATED 30.3.2011 OF THE LEARNED C IT THE ASSESSEE IS IN APPEAL BEFORE US ON THE GROUND THAT THE LEARNED CIT WAS NOT JUSTIFIED PASSING THE ORDER U/S 263 OF THE ACT 2 HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFI CER U/S 143(3) OF THE ACT WAS ERRONEOUS INSOFAR AS IT WAS P REJUDICIAL TO THE INTEREST OF THE REVENUE AND HE ALSO ERRED IN SE TTING ASIDE THE ASSESSMENT ORDER. 2. DURING HEARING, WE HAVE HEARD SHRI AJAY TULSIYAN WITH SHRI MANISH VAIDYA AND SHRI KESHAV SAXENA, LEARNED CIT DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSE E IS IN SUPPORT TO THE ASSESSMENT ORDER BY FURTHER SUBMITTI NG THAT DUE INQUIRY WAS MADE BY THE ASSESSING OFFICER, BOOKS OF ACCOUNT AND OTHER DETAILS WERE DULY EXAMINED BY HIM AND ONE OF THE POSSIBLE VIEW WAS TAKEN BY HIM, THEREFORE, THE ORDE R IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E. INVOCATION OF REVISIONAL JURISDICTION U/S 263 WAS ARGUED TO BE BASED ON SURMISES AND CONJECTURE. ON THE OTHER HAND, THE L EARNED CIT DR DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT T HE VERACITY AND GENUINENESS OF ELECTION EXPENSES WAS N OT EXAMINED BY THE ASSESSING OFFICER, THEREFORE, THE L EARNED CIT RIGHTLY INVOKED THE REVISIONAL JURISDICTION. 3 3. BRIEF FACTS OF THE CASE ARE THAT IN THIS CASE TH E ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT BY THE ASSESSING O FFICER. THE LEARNED CIT ON EXAMINATION OF RECORD FOUND THAT THE ASSESSING OFFICER ALLOWED EXPENDITURE OF RS. 10,33,775/- DEBI TED BY THE ASSESSEE UNDER THE HEAD ELECTION EXPENDITURE. ON VERIFICATION, THE LEARNED CIT FOUND THAT THE ABOVE EXPENDITURE WAS NOT INCURRED BY THE ASSESSEE RATHER CONTRIBUTED TO MANDI BOARD. HE WAS, THEREFORE, OF THE OPINION THAT THE ASSESSING OFFICER WAS NOT RIGHT TO ALLOW ELECTION EXPENSES. HE, THEREFORE, HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE LEARNED CIT, THEREFORE, ISSUED NOTICE U/S 263 OF TH E ACT IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED DETAILED SUBMISSIONS. IN RESPECT OF ELECTION EXPENSES, IT WA S SUBMITTED BY THE ASSESSEE THAT THESE PAYMENTS HAD BEEN MADE T O M.P. STATE AGRICULTURAL MARKETING BOARD WHICH WERE IN TH E NATURE OF CONTRIBUTION WHICH IS A STATUTORY PAYMENT MADE TO MANDI SAMITI AS PER SECTION 43(1) OF M.P. KRISHI UPAJ MAN DI 4 ADHINIYAM. IN THIS VIEW OF THE MATTER, IT WAS SUBM ITTED THAT THE LEARNED CIT WAS NOT JUSTIFIED IN INITIATING PROCEED INGS U/S 263 OF THE ACT AND SETTING ASIDE THE ASSESSMENT ORDER WHIC H WAS RIGHTLY FRAMED BY THE ASSESSING OFFICER. THE LEARN ED CIT AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AT LENG TH, DID NOT AGREE WITH THE SAME AND ACCORDINGLY SET ASIDE THE A SSESSMENT FRAMED BY THE ASSESSING OFFICER TO THE FILLE OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. IN THE IMPUGNED OR DER, THE MAJOR OBJECTION OF THE LEARNED CIT IS THAT THE VERACITY O F ELECTION EXPENSES HAS NOT BEEN EXAMINED BY THE ASSESSING OFF ICER. IN PARA 15 OF THE ORDER OF LEARNED CIT, THE MODE OF EL ECTION HAS BEEN DISCUSSED AS PER WHICH THE GOVERNING BODY OF K RISHI UPAJ MANDI SAMITI IS ELECTED BY FARMERS AND THE MANDI VYAPARI ALSO ELECT THEIR OWN REPRESENTATIVE THEN TH E OTHER OFFICE BEARERS ARE ELECTED BY THE MEMBERS AND THIS GOVERNI NG BODY RUNS THE ASSESSEE SAMITI. THERE IS A FINDING THAT T HE MAGNITUDE OF THESE ELECTIONS IS VERY HUGE AND NOT LESS THAN A SSEMBLY 5 ELECTION. AS PER THE ASSESSEE THE EXPENSES INCURRED ON THESE ELECTIONS ARE PAID TO STATE AGRICULTURAL MARKETING BOARD, THEREFORE, THERE IS NO QUESTION OF DISALLOWANCE. WE FIND THAT EVEN IF THE ELECTION EXPENSES ARE PAID TO THE STATE BOARD, STILL THE ASSESSING OFFICER IS DUTY BOUND TO EXAMINE THE GENUINENESS AND VERACITY OF THESE EXPENSES, WHICH H AS NOT DONE IN THE ASSESSMENT ORDER. THE EXPRESSION PREJU DICIAL TO THE INTEREST OF REVENUE AS UNDERSTOOD IN ITS ORDINA RY MEANING IS OF WIDE IMPORT. AN INCORRECT ASSUMPTION OF FACT OR ANY INCORRECT APPLICATION OF LAW WOULD SATISFY THE REQUIREMENT OF ORDER BEING ERRONEOUS U/S 263. IF THE PROCEDURE ADOPTED BY THE ITO BRINGS LESSER REVENUE THEN SOME OTHER PROCEDURE, THE ORDER PASSED BY THE ITO WOULD OBVIOUSLY BE PREJUDICIAL TO THE IN TEREST OF THE REVENUE AND WOULD GIVE JURISDICTION TO THE LEARNED CIT U/S 263 OF THE ACT. OUR VIEW IS SUPPORTED BY THE DECISION IN CIT V. PUSHPA DEVI; 164 ITR 639 (PAT). ADMITTEDLY, THERE ARE DIVERGENT VIEWS AND THE WORD PREJUDICE MUST BE JU DICIALLY EXAMINED WHICH HAD BEEN A MATTER OF JUDICIAL DEBATE . ONE VIEW IS THAT PREJUDICIAL TO THE INTEREST OF REVENUE DOES NOT 6 NECESSARILY MEAN LOSS OF REVENUE AND THE EXPRESSION IS NOT TO BE CONSTRUED IN A PETTIFOGGING MANNER BUT MUST BE G IVEN A DIGNIFIED CONSTRUCTION MEANING THEREBY THE INTEREST OF REVENUE CANNOT BE EQUATED TO RUPEES AND PAISE MERELY. ANOT HER VIEW IS THAT EVEN IF ONE ITEM IS FOUND PREJUDICIAL TO TH E REVENUE, THE ORDER CAN BE REVISED AS WAS HELD IN INDIAN TEXTILES V. CIT; 157 ITR 112 (MAD.) AND THE RATIO LAID DOWN IN PUSHPADEV I (SUPRA). IN THE CASE OF GEE VEE ENTERPRISES V. ADDITIONAL CI T; 99 ITR 375, THE HON'BLE DELHI HIGH COURT HELD THAT OMISSIO N TO MAKE FURTHER INQUIRIES IS AN ERROR. THE HON'BLE GUJARAT HIGH COURT IN CIT V. M.M. GHAMBHATWALA; 198 ITR 144 WENT TO THE E XTENT THAT THE POWERS U/S 263 CAN BE EXERCISED EVEN WHEN THE ISSUE IS DEBATABLE. 5. UNDER THE AFOREMENTIONED FACTS IT CAN BE SAID TH AT BEFORE THE LEARNED CIT IS EXPECTED TO POINT OUT EXACT ERRO R AND AFFORD OPPORTUNITY TO THE ASSESSEE QUA SUCH ERROR. WE FIND THAT OPPORTUNITY HAS BEEN AFFORDED TO THE ASSESSEE. WE F URTHER FIND THAT VERACITY AND GENUINENESS OF THE ELECTIONS HAS BEEN EXAMINED BY THE ASSESSING OFFICER, THEREFORE, THE L D. CIT HAS 7 NOT RIGHTLY CONSIDERED THE SAME TO BE ERRONEOUS INS OFAR AS PREJUDICIAL TO THE INTEREST OF REVENUE AND SET ASID E THE ASSESSMENT ON THE LIMITED ISSUE OF ADMISSIBILITY OF ELECTION EXPENSES. IT IS NOT THE CASE THAT THE WHOLE ASSESSM ENT ORDER HAS BEEN SET ASIDE WHERE DUE INQUIRIES WERE MADE BY THE ASSESSING OFFICER. ON EXAMINATION OF THE ASSESSMENT ORDER, WHEREVER THE LEARNED CIT FINDS THAT THE ISSUE HAS B EEN DEALT WITH IN THE REQUIRED MANNER OR IS COVERED BY THE DE CISION OF ANY HIGHER FORUM, THAT HAS NOT BEEN TOUCHED. THEREFOR E, THE STAND OF THE LEARNED CIT IS AFFIRMED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28TH DECEMBER, 2011. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH .12.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN