Gujarat Laxmi Majur Kamgar Sahakari Mandli Ltd., Gandhinagar V. The Income tax Officer,Ward-2, Gandhinagar

ITA 3207/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2288 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 30-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Difference of opinion; Change of opinion; Set aside
• Section: 143(3); 80P; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND N.S. SAINI, ACCOUNTANT MEMBER) ITA NO.3207/AHD/2009 [ASSTT. YEAR : 2005-2006] DICTATED ON: 19-01-2011 GUJARAT LAXMI MAJUR KAMGAR SAHAKARI MANDLI LTD. C/O. CA. MANOJ LEKINWALA PLOT NO.289, NR.GH-6 SECTOR 29, GANDHINAGAR 382 026. VS. COMMISSIONER OF INCOME TAX GANDHINAGAR. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N.DIVETIA REVENUE BY : SHRI SHELLEY JINDAL O R D E R PER BHAVNESH SAINI, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX, GANDHINAGAR DATED 20- 3-2009 FOR THE ASSESSMENT YEAR 2005-2006 CHALLENGIN G THE ORDER PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF JOB WORK OF DRAINAGE AND WATER SUPPLY LINE FOR THE GOVERNMENT OF GUJARAT. THE ASSESSMENT ORDER UNDER SECTION 143(3) WAS FINALISED ON 19-12-2007 ON A TOTAL INCOME OF RS.2,4 2,353/- AGAINST THE RETURNED NIL INCOME. THE LEARNED COMMISSIONER ON GOING THRO UGH THE RECORD NOTICED THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF THE REVENUE, BECAUSE THE ORDER WAS PASSED WITHOUT MAKIN G RELEVANT INQUIRIES WITH REFERENCE TO THE METHOD OF ACCOUNTING OF THE ASSESS EE. THEREFORE, THE CORRECTNESS OF THE METHOD OF ACCOUNTING IS CONSIDER ED ON ROUTINE BASIS. THE LEARNED COMMISSIONER REFERRED TO SOME OF THE DECISI ONS IN SUPPORT OF HIS INVOKING JURISDICTION UNDER SECTION 263 OF THE INCO ME TAX ACT AND ISSUED SHOW CAUSE NOTICE. CONTENTS OF THE SAME ARE REPROD UCED IN PARA-8 OF THE IMPUGNED ORDER IN WHICH THE LEARNED CIT NOTED THAT THE AO ALLOWED DEDUCTION UNDER SECTION 80P(2)(A)(VI) OF THE IT ACT AT RS.1,4 9,507 AND RS.50,000/- UNDER SECTION 80P(2). IT WAS ALSO NOTED THAT SUCH CLAIM WAS REJECTED IN EARLIER YEARS ITA NO.3207/AHD/2009 -2- AND THE CIT(A) ALLOWED THE CLAIM IN ASSESSMENT YEAR 1994-95 AND 1997-98. THE DEPARTMENT PREFERRED APPEAL BEFORE THE TRIBUNAL WHICH HAS BEEN DISMISSED VIDE ORDER DATED 27-2-2004. BUT THE AO HAS NOT VER IFIED WHETHER THE DEPARTMENT ACCEPTED THE SAID DECISION RELIED UPON B Y THE ASSESSEE AND MECHANICALLY ACCEPTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION. THE AO DENIED THE DEDUCTION UNDER THE ABOVE SECTION IN RESPECT OF INTEREST EARNED ON THE DEPOSITS IN FDR TREATING THEM AS INCOME FROM OTHER SOURCES AND DISALLOWED RS.2,92,353/-. THE LEARNED CIT NOTED IN THE SHOW C AUSE NOTICE THAT THE AO SHOULD NOT HAVE ALLOWED DEDUCTION UNDER SECTION 80P (2)(A)(VI) FOR THE CO- OPERATIVE SOCIETY IN THE STATUS OF AOP. THE REPLY OF THE ASSESSEE WAS CALLED FOR. THE ASSESSEE FILED SUBMISSIONS WHICH ARE INCO RPORATED IN THE IMPUGNED ORDER AND IT WAS EXPLAINED THAT THE ASSESSEE IS COO PERATIVE SOCIETY, BUT THE AO ONLY IN THE FRONT PORTION WRONGLY MENTIONED AS AOP BUT IN THE ASSESSMENT ORDER, THE ASSESSEE WAS CONSIDERED AS CO-OPERATIVE SOCIETY AND DEDUCTION UNDER SECTION 80P(2)(A)(VI) WAS ALLOWED, THEREFORE, IT WA S A MISTAKE APPARENT ON RECORD WHICH COULD BE RECTIFIED. IT WAS ALSO EXPLA INED EARLIER THAT THE ASSESSEE WAS GRANTED DEDUCTION AND INTEREST WOULD ALSO BE CO VERED BY THE PROVISION. THEREFORE, THE INCOME OF THE ASSESSEE IS EXEMPT. T HE LEARNED CIT HOWEVER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND NOTED THAT THE AO HAS COMPLETED ASSESSMENT IN A CAVALIER MANNER WITHOUT VERIFYING W HETHER THE DECISION OF THE ITAT IN A.Y.1994-95 AND 1997-98 WERE ACCEPTED, WHER EIN THE DEDUCTION UNDER SECTION 80P(2)(A)(VI) HAVE BEEN ALLOWED. THE LEARNED CIT HAS ALSO NOTED THAT THE EXEMPTION SHOULD NOT BE ALLOWED TO THE ASS ESSEE, ACCORDINGLY, THE ASSESSMENT ORDER WAS FOUND TO BE ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE AND THE AO WAS DIRECTED TO MAKE FRESH A SSESSMENT ACCORDINGLY AFTER VERIFYING THE FACTS ON RECORD. 3. THE LEARNED COUNSEL FOR THE ASSESSEE ASSAILED TH E ORDER OF THE LEARNED CIT AND REITERATED THE SUBMISSIONS MADE BEFORE HIM AND SUBMITTED THAT IN A.Y.1994-95, THE DEDUCTION SECTION 80P(2)(A)(VI) HA S BEEN ALLOWED TO THE ASSESSEE BY THE LEARNED CIT(A) AND THE DEPARTMENT P REFERRED APPEAL BEFORE THE ITA NO.3207/AHD/2009 -3- TRIBUNAL IN ITA NO.1917/AHD/1998 AND THE TRIBUNAL D ISMISSED THE DEPARTMENTS APPEAL VIDE ORDER DATED 27-2-2004. IN THE SAME ORDER, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE FOR A.Y .1997-98 ON THE IDENTICAL GROUND IN ITA NO.761/AHD/2003. HE HAS SUBMITTED TH AT FACT WERE BROUGHT TO THE NOTICE OF THE AO AT THE ASSESSMENT STAGE AND TH AT THE AO CONSIDERING THE ORDER OF THE TRIBUNAL AND CORRECTLY ALLOWED THE CLA IM OF THE ASSESSEE. AS REGARD THE INTEREST INCOME TREATING THEM FROM OTHER SOURCES BY THE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WHO HAS DISMISSED THE SAME VIDE ORDER DATED 11-7-2008, BUT THE TRIBUNAL IN ITA NO.3 575/AHD/2008 ALLOWED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 4-9-2009. COPIES OF THE ORDERS ARE PLACED ON RECORD. HE THEREFORE SUBMITTED THAT THE AO PASSED ASSESSMENT ORDER AFTER VERIFYING THE FACTS AND TOOK ONE OF THE POSSI BLE VIEWS AS PER THE ORDER OF THE TRIBUNAL, THEREFORE, THE JURISDICTION UNDER SEC TION 263 SHOULD NOT HAVE BEEN EXERCISED IN THE MATTER. 4. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDER UNDER SECTION 263 OF THE LEARNED CIT. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAX INDIA LTD., 295 ITR 282 CONSIDERING ITS EARLIER DEC ISION IN THE CASE OF MALABAR INDUSTRIES COMPANY LTD., 243 ITR 83 HELD AS UNDER: THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE IN SECTION 263 OF THE INCOME-TAX ACT, 1961, HAS TO BE READ IN CONJ UNCTION WITH THE EXPRESSION ERRONEOUS ORDER PASSED BY THE ASSESSIN G OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE. FOR EXAMPLE, WHEN THE ASSESSING OFFICER ADOPTS ONE OF T WO COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF R EVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TA KEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ITA NO.3207/AHD/2009 -4- ERRONEOUS ORDER PREJUDICIAL TO THE REVENUE, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. R.K. CONSTRUCTION COMPANY, 313 ITR 65 HELD AS UNDER: ...DISMISSING THE APPEAL, THAT SINCE ALL THE NECES SARY DETAILS WERE FURNISHED TO THE ASSESSING OFFICER, THERE WAS NO RE ASON FOR THE COMMISSIONER TO INVOKE THE REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT. THE ASSESSING OFFICER HAD TAKEN A PARTICUL AR VIEW ON THE BASIS OF THE EVIDENCE PRODUCED BEFORE HIM. ON THE BASIS O F THE EVIDENCE BEFORE THE ASSESSING OFFICER AND MATERIALS WHICH WERE COLL ECTED BY THE COMMISSIONER IN REVISIONAL PROCEEDINGS, THE COMMISS IONER HAD TAKEN A DIFFERENT VIEW. HOWEVER, IN THE REVISIONAL PROCEEDI NGS UNDER SECTION 263, IT WAS NOT OPEN FOR THE COMMISSIONER TO TAKE S UCH A DIFFERENT VIEW. THERE WAS NOTHING ON RECORD TO SUGGEST THAT THE VIE W TAKEN BY THE ASSESSING OFFICER WAS UNSUSTAINABLE IN LAW. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF CIT VS. DEEPAK MITTAL, 324 ITR 411 HELD AS UNDER: CHANGE OF OPINION BY REAPPRAISING THE EVIDENCE IS N OT WITHIN THE PARAMETERS OF REVISIONAL JURISDICTION OF THE COMMIS SIONER UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961. HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL HAD FOUND THAT THE ASSESSING OFFICER HAD GIVEN A CATEGORICAL FINDING T HAT THE ASSESSEE WAS ENGAGED IN THE PROCESS OF MANUFACTURING OF PROD UCTS AND ACCORDINGLY HE HAD GRANTED CONCESSION UNDER SECTION 80-IB. THE CLAIM OF THE ASSESSEE HAD BEEN FOUND TO BE GENUINE. THE ASSESSING OFFICER HAD ALSO EXAMINED THE VARIOUS WORKERS OF TH E ASSESSEE AND THEN RECORDED THE FINDING. THE ASSESSING OFFICER WA S JUSTIFIED IN ITA NO.3207/AHD/2009 -5- GRANTING THE SPECIAL DEDUCTION UNDER SECTION 80-IB. THE ORDER OF REVISION DISALLOWING THE SPECIAL DEDUCTION WAS NOT VALID. CONSIDERING THE FACTS OF THE CASE, IN THE LIGHT OF THE ABOVE DECISIONS, WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER SHOULD NOT H AVE EXERCISED JURISDICTION UNDER SECTION 263 OF THE I.T.ACT ON THE MATTER IN I SSUE, BECAUSE THE ORDER OF THE AO IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS ADMITTED FACT THAT IN A.Y.1994-95, THE CIT(A) ALLOW ED THE CLAIM OF THE ASSESSEE UNDER THE SAME PROVISION AND THE TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE VIDE ORDER DATED 27-2-2004. BY THE SAME OR DER, THE APPEAL OF THE ASSESSEE ON THE SAME MATTER IN ISSUE IS ALLOWED FOR A.Y.1997-98. THUS, THE DECISION OF THE TRIBUNAL WAS IN FAVOUR OF THE ASSES SEE FOR GRANTING THE RELIEF UNDER THE ABOVE PROVISIONS OF LAW. THE AO THEREFOR E CONSIDERING THE IDENTICAL FACTS ON THE SAME MATTER IN ISSUE, RIGHTLY ALLOWED DEDUCTION UNDER SECTION 80P(2)(A)(VI) OF THE I.T.ACT. IN FAVOUR OF THE ASSE SSEE. THE AO TOOK ONE OF THE POSSIBLE VIEWS ON THE MATTER IN ISSUE, THEREFORE, T HE LEARNED CIT SHOULD NOT HAVE SUBSTITUTED THE VIEW OF THE AO WITHOUT POINTIN G OUT AS TO HOW THE VIEW OF THE AO WAS SUSTAINABLE IN LAW. AS REGARDS THE INT EREST INCOME, ULTIMATELY, THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E IN THE SAME ASSESSMENT YEAR 2005-2006 VIDE ORDER DATED 4-9-2009. THUS, TH E ENTIRE MATTER IS SET TO REST. THE LEARNED COMMISSIONER HAS NOT POINTED OUT AS TO HOW THE ORDER OF THE AO WAS NOT IN ACCORDANCE WITH LAW. EVEN THE LEARNE D COMMISSIONER HAS NOT POINTED OUT IN THE IMPUGNED ORDER AS TO WHAT IS STA ND OF THE DEPARTMENT IN THE PRECEDING ASSESSMENT YEAR FOR FILING ANY APPEAL BEF ORE THE HONBLE HIGH COURT OR HONBLE SUPREME COURT. THE AO CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE CASE AND THE MATERIAL ON RECORD RIGHTLY FOLLOWE D THE ORDER OF THE TRIBUNAL FOR THE PURPOSE OF GIVING RELIEF TO THE ASSESSEE. WE THEREFORE DO NOT FIND ANY PERVERSITY IN THE APPROACH OF THE AO IN ALLOWING RE LIEF TO THE ASSESSEE UNDER SECTION 80P(2)(A)(VI) OF THE I.T.ACT. WE THEREFORE DO NOT SUBSCRIBE TO THE VIEW OF THE LEARNED COMMISSIONER IN THE IMPUGNED ORDER. THE IMPUGNED ORDER ITA NO.3207/AHD/2009 -6- UNDER SECTION 263 OF THE I.T.ACT IS SET ASIDE AND H IS QUASHED. RESULTANTLY, THE ASSESSMENT ORDER DATED 19-12-2007 IS RESTORED. 6. IN RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 21 ST JANUARY, 2011 SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 21-01-2011 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : DEPARTMENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD