M/s Monga Metal Pvt. Ltd., Kanpur V. ACIT-4, Kanpur

ITA 326/LKW/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70527 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Revised return; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO.326/LKW/2013 ASSESSMENT YEAR:2005-06 M/S MONGA METAL PVT. LTD. KANPUR V. ACIT-4 KANPUR PAN:AAACM9522C (APPELLANT) (RESPONDENT) A PP ELLANT B Y :SHRI. RAKESH GAR G , ADVOCATE RESPONDENT BY: SHRI. ALOK MITRA, D.R. DATE OF HEARING: 04.06.2013 DATE OF PRONOU NCEMENT: 07.08.2013 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY TH E ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) ON VARIOUS GROU NDS, WHICH ARE AS UNDER:- 1. BECAUSE THE CIT(A) HAS ERRED ON FA CTS AND IN LAW IN ENHANCING THE INCOME WITHOUT GIVING OP PORTUNITY IN TE RMS OF SECTION 251(2) OF THE ACT, 1961. FAILURE TO GIVE OPPORT UNITY VITIATES TH E ASSESSMENT AS WELL AS THE APPELLATE ORDER. TH E APPELLATE ORDER BE QUASHED. 2. BECAUSE THE CIT(A) HAS, ERRED ON FACTS AND IN LAW IN HOLDING THAT - 'THAT THE ASSESSEE HAS CONCEA LED ITS INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME,' WHICH OBSERVATION IS CONTRARY TO FACTS AND BE DELETED. 3. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT THERE IS NO 'FURNISHING OF INACCURATE PARTICULAR S OF INCOME' IN AS MUCH AS IF THERE WAS ANY ERROR IT WAS PURELY A 'COMPUTATION ERROR' OF INCOME :-2-: AND NOT FURNISHING OF INACCURA TE PARTICULARS OF INCOME. 4. BECAUSE THE CIT(A) HAS WRONGLY RELIE D UPON THE DECISION OF ORISSA RURAL HOUSING DEVELOPMENT CORPORAT ION LTD. VS ACIT IN 247 CTR 137 WHICH IS NOT APPLICABLE TO THE FACTS OF THE CASE, IGNORING THE DECISION OF THE JURISDICTIONAL HIGH CO URT IN THE CASE OF SMT. RAJ RANI GULATI VS CIT DT.19.10.2011. 5. BECAUSE THE CIT(A) HAS FAILED TO A PPRECIATE THE DIFFERENCE BETWEEN A 'REVISED RETURN' AND A 'CORRECTIO N OF RETURN' AND HENCE ERRED IN HOLDING THAT THE APPELLANT HAS FURN ISHED INACCURATE PARTICULARS OF INCOME, WHICH OBSERVATION BEI NG BAD IN LAW BE DELETED. 2. DURING THE COURSE OF HEARING, TH E LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE FACT THAT THE LD. CI T(A) HAS ENHANCED THE INCOME BY ` 2,05,987 WITHOUT ISSUING ENHANCEME NT NOTICE TO THE ASSESSEE. THE OTHER CALCULATIONS MADE BY THE AS SESSING OFFICER WAS APPROVED BY THE LD. CIT(A). AS PER PROVISIONS OF SECT ION 251(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'), THE LD. CIT(A) SH ALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORT UNITY OF SHOWING CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION. THEREFORE, THE ENHANC EMENT MADE BY THE LD. CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW. 3. THE LD. D.R., ON THE OTHER HAND, HAS SUBMITTED THAT BEFORE ENHANCING THE INCOME ASSESSED, THE LD. CIT(A) HAS EXAMINED ALL ASPECTS OF THE MATTER. SINCE THE A SSESSEE WAS NOT ENGAGED IN ANY BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION, THE REVENUE EXPENDITURES CLAIMED BY THE ASSESSEE WERE DISALLOWED BY THE LD . CIT(A). IN DOING SO THE INCOME WAS FURTHER ENHANCED BY ` 2,05,987. SINCE IT WAS DO NE IN THE PRESENCE OF THE ASSESSEE, NO NOTICE WAS REQUIRED TO BE SPECIFICALLY SERVED UPON THE ASSESSEE IN THIS REGARD. 4. HAVING HEARD THE RIVAL SUBMISSION S AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND THAT UNDISPUTEDLY TH E INCOME ASSESSED BY THE ASSESSING :-3-: OFFICER WAS FURTHE R ENHANCED BY ` 2,05,987 BY THE LD. CIT(A) BY MAKING DISALLOWANCE OF REVENUE EXPENDITURE S CLAIMED BY THE ASSESSEE ON THE GROUND THAT NO BUSINESS ACTIVITY WAS UNDERTAKEN BY THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR. THE LD. CIT(A) HAS NOT MENTIONED ANYWHERE IN HIS ORDER WITH REGARD TO THE NOTICE OF ENHANCEMENT EVER SERVED UPON THE ASSESSEE. PROVISIONS OF SECTION 251(2) OF THE ACT CATEGORICALLY SAYS THAT THE COMMISSIONER (APPEALS) SHALL NOT ENHA NCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF RE FUND UNLESS THE APPELLAN T HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINS T SUCH ENHANCEMENT OR REDUCTION. THEREFORE, IT IS INCUMB ENT UPON THE LD. CIT(A) FOR AFFORDING A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST EN HANCEMENT TO THE A SSESSEE. IF HE FAILS TO AFFORD AN OPPORTUNITY TO THE ASSESSEE, ENHANCEMEN T MADE BY HIM IS NOT SUSTAINABLE IN THE EYES OF LAW. IN THE LIGHT OF THESE FACTS, ENHANCEMENT MADE BY THE LD. CIT(A) IS NOT SUSTAINA BLE AS IT WAS DONE WITHOUT ISSUING A SHOW CAUSE AGAINST ENHANCEMENT TO THE ASSESSEE. WE, THEREFORE, FIND NO MERIT IN THE ADDITIONS. ACCO RDINGLY, WE DELETE THE SAME. 5. THE OTHER GROUNDS RAISED WITH REGARD TO THE FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME, ARE TOTALLY IRRELEVANT AT THIS STAGE AS IT CAN ONLY BE CONSID ERED WHILE DEALING WITH THE ISSUE OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THEREFORE, WE FIND NO MERIT IN THESE GROUNDS AND REJECT THE SAME. 6. ACCORDINGLY APPEAL OF THE AS SESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN TH E OPEN COURT ON 7.8.2013. SD/- SD/- [PRAMOD KUMAR] [S UNIL KUMAR YADAV] ACCOUN T ANT MEMBER JUDICIAL MEMBER DATED:7.8.2013 JJ:0507 :-4-: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR