Shri Chhitar Singh Shekhawat, JODHPUR V. ITO, SUMERPUR

ITA 333/JODH/2014

• Counselvise Citation: 33323314 RSA 2014
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: N R MERTIA
• Keywords: Opportunity of being heard
• Section: 143(3); 263

Judgement Text

IN THE INCOMETAX APPELLATE TRIBUNAL JODHPUR BENCH: J ODHPUR ( BEFORE SHRI H ARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ) I.T.A. NO. 333 /JODH/201 4 (A.Y. 200 9 - 10 SHRI CHHITAR SINGH SHEKHAWAT, VS ITO, C/O. M/S. MERTIA & COMPANY , SUMERPUR. 244, KAMLA NEHRU NAGAR, OPP. PRAKARTIC CHIKITSA KENDRA, JODHPUR. PAN NO. AOVPS9583D (APPELLANT) (RESPONDENT) ASSESSEE BY : - SHRI N.R. MERTIA . DEPARTMENT BY : - SHRI N.A. JOSHI - D.R. DATE OF HEARING : 12 /0 8 /201 4 DATE OF PRONOUNCEMENT : 18 / 0 9 /2014 O R D E R P E R HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE, FOR A.Y. 2009 - 10, IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME - TAX, JODHPUR, PASSED U/S 263 OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT). 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME (ROI) FOR A.Y. 2009 - 10 ON 30.09.2009, DECLARING TOTAL INCOME OF RS. 8,97,380/ - . THE ASSESSMENT WAS COMPLETED U/S 143 ( 3) OF THE ACT ON 31.10.2011, AT A T OTAL INCOME OF RS. 9,66,500/ - . THE A.O. HAS MADE LUMP SUM ADDITION OF RS. 50,000/ - INVOLVING SECTION 145(3). HE HAS ADDED A SUM OF RS. 19,120/ - BY APPLY INTEREST OF 8% BY ESTIMATING INTEREST INCOME. ON NATIONAL SAVING CERTIFICATE (NSCS) WORTH RS. 2,39,000/ - . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF A CIVIL CONTRACTOR. SUBSEQUENTLY, THE COMMISSIONER CALLED FOR THE RECORDS OF THIS ASSESSMENT ORDER AND NOTICED THAT THE ASSESSEE HAS DEBITED RENT OF RS. 3,05,800/ - FOR MIXTURE AND RS. 3,10,000/ - IN THE PROFIT AND LOSS ACCOUNT RELATING TO A.Y. 2009 - 10 BUT HAS NOT DEDUCTED TAX AT SOURCE IN TERMS OF S EC . 194I AND S. 40(A)(IA) OF THE ACT ALTHOUGH THIS PROVISION APPLIED TO THE FACTS OF THIS CASE. ACCORDINGLY, A SHOW CAUSE NOTICE WAS SENT TO THE ASSESSEE U/S 263 OF T HE ACT ON 13.12.2011 TREATING THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSEE FILED A WRITTEN SUBMISSION IN RESPONSE TO THIS NOTICE STATING THEREIN THAT THE A.O. HAS TAKEN ONE OF THE POSSIBLE VIEW OUT OF THE T WO LEGAL VIEWS AND HAS DECIDED IT U/S 143 ( 3) AFTER MAKING COMPLETE AND REQUISITE VERIFICATION. IT WAS ALSO STATED THAT THE CASE WAS SELECTED FOR CASS FOR MAKING SPECIFIC ENQUIRIES REGARDING PAYMENT 3 RECEIVED FROM DFO (DISTT. FOREST OFFICER, UDAIPUR) OF RS. 2,78,833/ - AND FROM THE NAGARPALIKA, SADRI, OF RS. 10,01,075/, AND THAT AS PER THE CBDTS GUIDELINES OF A.O. IS NOT COMPETENT TO MAKE ANY FURTHER ENQUIRY OTHER THAN THE ISSUE(S) REFERRED WHEN ONCE BOOKS OF ACCOUNT CANNOT BE RELIED UPON. IN THIS BACKDROP, I T WAS SUBMITTED THAT THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE, AND HENCE NO ACTION U/S 263 IS JUSTIFIED. 2.1 AFTER CONSIDERING ASSESSEES VERSION, THE LD. COMMISSIONER WAS NOT SATISFIED AND HAS REVISED THE ORDER DIRECTING THE A.O. TO MAKE A FRESH ORDER AFTER ACCORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE HAS FILED APPEAL AGAINST THIS ORDER DATED 20.03.2014, BY RAISING THE FOLLOWING GROUNDS OF HIS APPEAL : - 1 THAT IN THE FACTS AND CIRCUM STANCES OF THE CASE, THE LD. CIT - I, JODHPUR ERRED IN LAW AND IN FACTS IN INVOKING SEC. 263 OF THE I.T. ACT, 1961 AND THEREBY ERRED IN SETTING ASIDE THE ASSESSMENT TO BE MADE AFRESH BY ITO. HE ALSO ERRED IN ACQUIRING JURISDICTION U/S 263, WHEN THE IMPUGNED ASSESSMENT MADE U/S 143(3) WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE IN ANY MANNER. THE ORDER WAS FRAMED AFTER DUE AND DILIGENT ENQUIRY BY THE LD. ASSESSING OFFICER IN RELATION TO PAYMENT OF HIRE CHARGES OF RS. 6,15,800/ - ON MIXTURE S AND ROLLERS. 4 2.2 BEFORE US BOTH THE PARTIES HAVE REITERATED THEIR EARLIER STAND. WE HAVE CAREFULLY CONSIDERED THE ORAL AS WELL AS WRITTEN SUBMISSIONS MADE BEFORE US. WE HAVE ALSO PERUSED CAREFULLY THE ENTIRE EVIDENCES AVAILABLE ON RECORD. IT IS TRITE THAT AN ORDER CAN BE REVISED ONLY AND ONLY IF TWIN CONDITIONS OF ERROR IN THE ORDER AND PREJUDICE CAUSED TO THE REVENUE CO - EXIST. T HE SUBJECT OF REVISION UNDER SECTION 263 HAS BEEN VASTLY EXAMINED AND ANALYZED BY VARIOUS COURTS INCLUDING THAT OF HO NBLE APEX COURT. THE REVISIONAL POWER CONFERRED ON THE CIT VIDE SECTION 263 IS OF VIDE AMPLITUDE. IT ENABLES THE CIT TO CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDING UNDER THE ACT. IT EMPOWERS THE CIT TO MAKE OR CAUSE TO BE MADE SUCH AN ENQUIRY AS HE DEEMS NECESSARY IN ORDER TO FIND OUT IF ANY ORDER PASSED BY ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE ONLY LIMITATION ON HIS POWERS IS THAT HE MUST HAVE SOME MATERIAL(S) WHICH WOULD ENABLE HIM T O FORM A PRIMA FACIE OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ONCE HE COMES TO THE ABOVE CONCLUSION ON THE BASIS OF THE MATERIAL THAT THE ORDER OF THE ASSESSING O FFICER IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE CIT IS EMPOWERED TO PASS AN ORDER AS THE CIRCUMSTANCES OF THE CASE MAY WARRANT. HE MAY PASS AN ORDER 5 ENHANCING THE ASSESSMENT OR HE MAY MODIFY THE ASSESSMENT. HE IS ALSO EMPOWE RED TO CANCEL THE ASSESSMENT AND DIRECT TO FRAME A FRESH ASSESSMENT. HE IS EMPOWERED TO TAKE RECOURSE TO ANY OF THE THREE COURSES INDICATED IN SECTION 263. SO, IT IS CLEAR THAT THE CIT DOES NOT HAVE UNFETTERED AND UNCHEQU E RED DISCRETION TO REVISE AN ORDE R. THE CIT IS REQUIRED TO EXERCISE REVISIONAL POWER WITHIN THE BOUNDS OF THE LAW AND HAS TO SATISFY THE NEED OF FAIRNESS IN ADMINISTRATIVE ACTION AND FAIR PLAY WITH DUE RESPECT TO THE PRINCIPLE OF AUDI ALTERAM PARTEM AS ENVISAGED IN THE CONSTITUTION OF IN DIA AS WELL AS IN SECTION 263. AN ORDER CAN BE TREATED AS ERRONEOUS IF IT WAS PASSED IN UTTER IGNORANCE OR IN VIOLATION OF ANY LAW; OR PASSED WITHOUT TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS OR BY TAKING INTO CONSIDERATION IRRELEVANT FACTS. TH E PREJUDICE THAT IS CONTEMPLATED UNDER SECTION 263 IS THE PREJUDICE TO THE INCOME TAX ADMINISTRATION AS A WHOLE. THE REVISION HAS TO BE DONE FOR THE PURPOSE OF SETTING RIGHT DISTORTIONS AND PREJUDICES CAUSED TO THE REVENUE IN THE ABOVE CONTEXT. THE FUN DAMENTAL PRINCIPLES WHICH EMERGE FROM THE SEVERAL CASES REGARDING THE POWERS OF THE CIT UNDER SECTION 263 MAY BE SUMMARIZED BELOW: 6 (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF THE REVENUE. BOTH THE CONDITIONS MUST BE FULFILLED. (II) SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTR ACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SUFFICE FOR THE REQUIREMENT OR ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOU S ORDER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IF THE ASSESSING OFFICER HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAK EN ONE VIEW UNDER WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE UNDER THE LAW. (VI) IF WHILE MAKING THE ASSESSMENT, THE ASSESSING OFFICER EXAMINES THE AC COUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS 7 AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME, THE CIT, WHILE EXERCISING HIS POWER UNDER SECTION 263, IS NOT PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIMATED BY THE ASSESSING OFFICER. (VII) THE ASSESSING OFFICER EXERCISE QUASI - JUDICIAL POWER VESTED IN HIM AND IF HE EXERCISE SUCH POWER IN ACCORDANCE WITH LAW AND ARRIVES AS A CONCLUSION, SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOE S NOT FEEL SATISFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISDICTION UNDER SECTION 263, MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION. (IX) IF THE ASSESSING OFFICER HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCE EDINGS ON THE RELEVANT ISSUES AND THE ASSESSEE HAS GIVEN DETAILED EXPLANATION BE A LETTER IN WRITING AND THE ASSESSING OFFICER ALLOWED THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE DECISION OF THE ASSESSING OFFICER CANNOT BE HELD T O BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 8 2.3 ADVERTING TO THE FACTS OF THE GIVEN CASE, WE ARE CONVINCED THAT THIS CASE WAS SELECTED FOR SCRUTINY UNDER CASS (SCHEME) F OR A LIMITED PURPOSE. HOWEV ER, HE HAS MADE HIS ORDER U/S 143(3) AFTER MAKING NECESSARY ENQUIRIES AND INVESTIGATION. THE A.O. HAS TAKEN ONE OF THE TWO POSSIBLE VIEW REGARDING TDS PROVISIONS. WHEN THE A.O. ADOPTED ONE OF THE POSSIBLE VIEWS, HIS ORDER DOES NOT SUFFER FROM ANY ERROR. TH EREFORE, IN VIEW OF THE AFORESTATED ESSENCE OF PRECEDENTS ON THE ISSUE OF REVISION U/S 263, THE TWIN CONDITIONS THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE, DONT CO - EXIST IN THIS CASE. ACCORDINGLY, WE SET ASIDE THE IMPUGNED REVISIONAL ORDER AND RESTORE THE ASSESSMENT ORDER. 3. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 18 TH SEPTEMBER , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18 TH SEPTEMBER , 2014 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5 . THE DR SR. PRIVATE SECRETARY ITAT, JODHPUR