M/s The Mithra Agencies (Automobile Division), Hyderabad V. THE CIT, Vijayawada

ITA 337/VIZ/2013

• Counselvise Citation: 33725314 RSA 2013
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: SHRI C P RAMASWAMY
• Keywords: Opportunity of being heard
• Section: 143(3); 263

Judgement Text

ITA NO.337/VIZAG/2013 M/S. THE MITHRA AGENCIES, HYDERABAD IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.337/VIZAG/2013 ASSESSMENT YEAR : 2008-09 M/S. THE MITHRA AGENCIES HYDERABAD VS. CIT VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.AABFT 6695B ASSESSEE BY: SHRI SHRI C.P. RAMASWAMY, CA REVENUE BY : SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 07.03.2014 DATE OF PRONOUNCEMENT : 02.04.2014 ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER:- THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE CIT, VIJAYAWADA DATED 22.3.2013 PASSED U/S 263 OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEAR 2008-09. 2. FACTS IN BRIEF. ASSESSEE IS A FIRM AND DERIVES ITS INCOME FROM PURCHASE AND SALE OF MARUTI CARS. IT FILED ITS RETURN OF INC OME ON 28.9.2009 DECLARING TOTAL INCOME OF RS.3,29,380/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 16.12.2010. THE CIT CALLED FOR THE ASSE SSMENT RECORDS AND ON EXAMINATION OF THE SAME FOUND THE FOLLOWING DEFICIE NCIES: I. AS PER THE BALANCE SHEET, AN AMOUNT OF RS.85,44,005 /- WAS SHOWN AS OTHER ASSETS BUT AS PER SCHEDULE 13 OF THE BALANCE SHEET IT WAS MENTIONED AS RS.48,18,581/-. THUS THE RE IS A CLEAR DIFFERENCE OF RS.37,25,423/-. II. IT IS ALSO EVIDENT FROM THE SCHEDULE 13 OF THE BALAN CE SHEET, THAT AN AMOUNT OF RS.32,06,654/- WAS SHOWN LOAN GIV EN TO SRI M. VENUGOPAL AND SRI M. SRINIVAS, ON WHICH INTEREST @ 12% AMOUNTING TO RS.3,84,798/- WAS NOT CHARGED. BUT TH E FIRM IS PAYING HUGE AMOUNT OF INTEREST ON VARIOUS BANKS AND ON OTHER UNSECURED LOANS. ITA NO.337/VIZAG/2013 M/S. THE MITHRA AGENCIES, HYDERABAD 2 3. THE SHOW CAUSE NOTICE WAS GIVEN DATED 29.11.2012 , PROPOSING REVISION U/S 263 OF THE INCOME-TAX ACT. AFTER HEAR ING THE CONTENTIONS OF THE ASSESSEE, THE CIT AT PARA 6 CONCLUDED AS FOLLOWS: IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS OF THE HONBLE APEX COURT, THE ORDER PASSED BY THE AO WITHOUT APPLICATI ON OF MIND AND WITHOUT ANY INQUIRY IS ERRONEOUS AND PREJUDICIAL TO THE INT ERESTS OF REVENUE WITHIN THE AMBIT OF THE PROVISIONS OF SECTION 263 OF THE I.T. A CT. HENCE, THE ASSESSMENT ORDER PASSED BY THE AO UNDER SECTION 143(3) OF THE I.T. ACT HAS BEEN SET ASIDE FOR REDOING THE ASSESSMENT DENOVO AFTER GIVIN G THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL ON THE FOLL OWING GROUNDS: 1) THE ORDER OF THE COMMISSIONER OF INCOME-TAX, VI JAYAWADA, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF T HE APPELLANT, IS AGAINST LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2) THE LEARNED COMMISSIONER OF INCOME-TAX ERRED IN REVISING THE ASSESSMENT ORDER PASSED U/S.143(3), WHICH IS NE ITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HE OUGHT TO HAVE DROPPED THE PROCEEDINGS INITIATED U/S. 263 AFTER GO ING THROUGH THE DETAILED REPLY TO THE SHOW CAUSE NOTICE. 3)(A) THE LEARNED COMMISSIONER OF INCOME-TAX FAILED TO APPRECIATE THAT WHEN TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFIC ER HAD TAKEN ONE OF THE VIEWS (ON THE ISSUES AT HAND) THEN SUCH AN ORDER CANNOT BE CALLED AS ERRONEOUS, AS WELL LAID DOWN BY THE HON'B LE APEX COURT. (B) THE LEARNED COMMISSIONER OF INCOME-TAX FAILED T O APPRECIATE THAT THE AMOUNT SHOWN UNDER OTHER ASSETS HAS NOT BEEN GIVEN UP. NOR AMOUNTS PAID OUT OF INTERNAL ACCRUALS COULD BE TREA TED AS DIVERSION OF BORROWED FUNDS IN THE ABSENCE OF ANY NEXUS BETWEEN BORROWED FUNDS AND PAYMENTS. CONSEQUENTLY, THE LEARNED COMMISSIONER OF INCOME- TAX ERRED IN REVISING THE SCRUTINY ASSESSMENT ORDER FOR ASSESSMENT EAR 2008-09. (C) THE LEARNED COMMISSIONER OF INCOME-TAX FAILED T O APPRECIATE THAT DETAILED ENQUIRIES WERE MADE BY THE ASSESSING OFFIC ER AND DETAILED REPLIES GIVEN FORMED PART OF THE RECORD CLARIFYING ON ALL T HE POINTS SCRUTINIZED, PROVING DUE APPLICATION OF MIND AND ENQUIRIES CONDU CTED ITA NO.337/VIZAG/2013 M/S. THE MITHRA AGENCIES, HYDERABAD 3 BY THE ASSESSING OFFICER. CONSEQUENTLY, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX U/S.263 IS UNSUSTAINABLE IN LAW. 4) FOR THE ABOVE GROUNDS AND SUCH OTHER GROUNDS TH AT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEA L BE ALLOWED. 5) THE APPELLANT CRAVES LEAVE TO ADD TO, AMEN D OR MODIFY THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING O F THE APPEAL, IF IT IS CONSIDERED NECESSARY. 5. THE LD. COUNSEL FOR THE ASSESSEE MR. C.P. RAMASW AMY SUBMITTED THAT THE EXERCISE OF POWER U/S 263 OF THE ACT IS WRONG A S IN THE ORIGINAL ASSESSMENT ORDER, THE ASSESSING OFFICER EXERCISED H IS MIND AND AFTER CONSIDERING ALL THE SUBMISSIONS OF THE ASSESSEE HAD PASSED AN ORDER, HENCE, THERE IS NO ERROR, MUCH LESS PREJUDICE THAT IS CAUS ED TO REVENUE IN THE ASSESSMENT ORDER. HE DREW THE ATTENTION OF THE BEN CH TO PAGE 14 OF THE PAPER BOOK AND POINTED OUT THAT THE AO HAS ASKED FO R DETAILS OF 9 ITEMS AND AFTER CONSIDERING ALL THE POINTS AND HEARING THE AS SESSEE ON 7 CONSEQUENT OCCASIONS PASSED AN ORDER. HE SUBMITS THAT (A) NON -MENTIONING OF THE ENQUIRIES MADE AND THE RESULT OF THE ENQUIRY IN THE ASSESSMENT ORDER, DOES NOT LEAD TO A CONCLUSION THAT THERE IS NON-APPLICAT ION OF MIND. (B) THAT AFTER THE INITIATION OF THE PROCEEDINGS U/S 263 OF THE AC T, THE ASSESSEE GAVE DETAILED REPLY ON 24.8.2012, TO THE QUERIES RAISED ON 17.8.2012 AND A PERUSAL OF THESE DETAILED EXPLANATIONS, WOULD LEAD TO A CON CLUSION THAT THE REVISIONARY PROCEEDINGS SHOULD HAVE BEEN DROPPED. 6. THE LD. D.R. MR. K.V.N. CHARYA, CIT(DR) SUPPORTE D THE ORDER OF THE CIT U/S 263 OF THE ACT AND SUBMITTED THAT MERE CALL ING FOR DETAILS SUCH AS BALANCE SHEET, ETC. DOES NOT LEAD TO A CONCLUSION T HAT THE ASSESSING OFFICER APPLIED HIS MIND ON THE ISSUES ON HAND AND PASSED AN ASSESSMENT ORDER. HE DREW THE ATTENTION OF THE BENCH TO THE ASSESSMENT O RDER AND SUBMITTED THAT THIS IS A NON-SPEAKING ORDER AND IT IS CLEAR THAT T HERE WAS NO ENQUIRY MADE AND THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND. ON THE SECOND ARGUMENT OF THE LD. COUNSEL OF THE ASSESSEE, HE SUB MITTED THAT THE CIT HAS ITA NO.337/VIZAG/2013 M/S. THE MITHRA AGENCIES, HYDERABAD 4 MADE AN OPEN REMAND TO THE ASSESSING OFFICER AND UN DER THOSE CIRCUMSTANCES, THERE IS NO PREJUDICE CAUSED TO THE ASSESSEE. 7. IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THIS IS NO AN OPEN REMAND AND THE ASSESSING OFFICER WOULD GET INF LUENCED BY THE OBSERVATIONS OF THE LD. CIT. 8. AFTER HEARING RIVAL CONTENTIONS WE HOLD AS FOLLO WS. 9. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY DEMONS TRATES THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THESE ISSUES WHICH THE CIT HAS CONSIDERED IN HIS ORDER U/S 263 OF THE ACT. THERE WAS TOTAL LACK OF ENQUIRY, MUCH LESS APPLICATION OF MIND BY THE AO IN HIS ORDE R PASSED U/S 143(3) OF THE ACT DATED 16.12.2010. IT IS WELL SETTLED THAT WHEN AN ORDER IS PASSED BY AN ASSESSING OFFICER WITHOUT MAKING ANY ENQUIRIES AND WITHOUT APPLICATION OF MIND, IS ERRONEOUS AND TO THAT EXTENT PREJUDICIAL T O THE INTEREST OF REVENUE. MERE CALLING FOR CERTAIN DETAILS SUCH AS BALANCE SH EET, ETC. DOES NOT DEMONSTRATE THAT THE ISSUE WAS CONSIDERED. THUS ON THE ISSUE OF JURISDICTION, WE UPHOLD THE ORDER OF THE CIT, VIJAYAWADA PASSED U /S 263 OF THE ACT ON 22.3.2013. 10. WITH REGARD TO THE SECOND GRIEVANCE OF THE ASSE SSEE, WE FIND THAT THERE ARE CONTRADICTIONS IN THE ORDER OF THE CIT VI JAYAWADA. WHILE IN PARA 6 HE DIRECTS THE AO TO DO A DE-NOVO ASSESSMENT, AT PA RA 4.2, HE STATES OTHERWISE. THE LD. COUNSEL FOR THE ASSESSEE SUBMIT S THAT SIMILAR EXPENSES WERE ALLOWED BY THE REVENUE AUTHORITIES IN THE EARL IER YEARS ON THE VERY SAME FACTS AND THAT THE DIFFERENCES IN OTHER ASSETS HAVE ALSO BEEN EXPLAINED DURING THE 263 PROCEEDINGS. IN VIEW OF THE ABOVE SUBMISSI ON, WE VACATE ALL THE SPECIFIC DIRECTIONS GIVEN BY THE CIT, VIJAYAWADA. WE DIRECT THE ASSESSING OFFICER NOT TO GET INFLUENCED BY ANY OF THE OBSERVA TIONS OF THE CIT VIJAYAWADA WHILE FRAMING AN ASSESSMENT U/S 143 (3) R.W.S. 263 OF THE ACT. THE SUBMISSIONS OF THE ASSESSEE SHOULD BE CONSIDERED JU DICIALLY, IN ACCORDANCE WITH LAW AND IN CASE SIMILAR CLAIMS HAVE BEEN ALLOW ED IN THE EARLIER YEARS BY ITA NO.337/VIZAG/2013 M/S. THE MITHRA AGENCIES, HYDERABAD 5 THE APPELLATE AUTHORITIES, THEN THE ASSESSING OFFIC ER IS BOUND TO FOLLOW THE SAME. 11. WITH THESE DIRECTIONS, WE DISMISS THIS APPEAL O F THE ASSESSEE. PRONOUNCED IN THE OPEN COURT ON 2 ND APRIL, 2014. SD/- SD/- (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VG/SPS VISAKHAPATNAM, DATED 2 ND APRIL, 2014 COPY TO 1 M/S. THE MITHRA AGENCIES, HYDERABAD 2 THE CIT, VIJAYAWADA 3 THE CIT (A) , VIJAYAWADA 4 THE DR, ITAT, VISAKHAPATNAM. 5 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM