M/s Darshan Medicos, Chandigarh V. CIT-1, Chandigarh

ITA 338/CHANDI/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0818 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-04-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 27-11-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; Period of limitation; Assessment record; Time period of passing order; Condonation of delay; Set aside
• Section: 263; 143(3); 142(1); 143(1); 143(2); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI R.L NEGI, JUDICIAL MEMBER ./ ITA NO. 338/CHD/2020 / ASSESSMENT YEAR : 2015-16 M/S DARSHAN MEDICOS, PREM GARG & ASSOCIATES, SCO 2461, SECTOR 22C CHANDIGARH THE CIT-1, CR BUILDING, HIMALAYA MARG, SECTOR 17E, CHANDIGARH ./PAN NO: AAIFD7905M / APPELLANT /RESPONDENT HEARING THROUGH VIDEO CONFERENCING /ASSESSEE BY : SHRI NIKHIL GOYAL, ADVOCATES & SH. ASHOK GOYAL, CA / REVENUE BY : SMT. C. CHANDTRAKANTA, CIT % /DATE OF HEARING : 15.04.2021 % / DATE OF PRONOUNCEMENT : 06.07.2021 / ORDER PER R.L. NEGI, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 16.3.2020 PASSED BY COMMISSIONER OF INCOME TAX -1, CHANDIGARH [FOR SHORT THE CIT] U/S 263 OF THE ACT, WHEREBY THE LD . CIT(A) HAS SET ASIDE THE ASSESSMENT ORDER PASSED BY THE AO U/S 143 (3) OF THE INCOME TAX ACT, 1961 [FOR SHORT THE ACT] FOR THE ASSESSM ENT YEAR 2015-16 AND DIRECTED THE AO TO FRAME ASSESSMENT ORDER AFRESH. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM ENGAGED IN RETAIL BUSINESS OF PHARMACEUTICALS, DRUGS AND MEDICINES IN PGI COMPLEX, FILED ITA NO. 338-CHD-202 0- M/S DARSHAN MEDICOS, CHANDIGARH 2 ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR CONSID ERATION DECLARING TOTAL INCOME OF RS. 4,05,410/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY A ND THE AO ISSUED NOTICE U/S 143(2) AND 142(1) OF THE ACT. IN RESPONS E TO THE SAID NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTEN DED THE PROCEEDINGS AND FILED THE DETAILS CALLED FOR AND ALSO DISCUSSED THE CASE FROM TIME TO TIME. THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 31, 94,193/- ON ACCOUNT OF RENT PAID TO PGI. SINCE IT WAS NOTICED THAT THE ASSESSEE HAD PAID THE SAID AMOUNT IN CASH, THE AO ISSUED NOTICE ASKING TH E ASSESSEE TO SHOW CAUSE AS TO WHY THE RENT PAID IN CASH IN VIOLATION OF PROVISIONS OF SECTION 40A (3) OF THE ACT SHOULD NOT BE DISALLOWED AND ADDED TO THE TAXABLE INCOME. THE ASSESSEE INTER ALIA CONTENDED THAT IT HAD NOT MADE CASH PAYMENT TO PGI BUT DEPOSITED THE AMOUNT IN THE ACCOUNT OF THE PGI IN ORDER TO AVOID CARRYING THE CASH TO SECTOR 16 BR ANCH OF PNB FOR PREPARING DRAFT. THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND MADE DISALLOWANCE OF THE SAID AMOUNT. FURTHER THE A SSESSEE HAD CLAIMED EXPENDITURE OF RS. 23,660/- AS INTEREST ON LATE PAY MENT OF RENT PAID TO PGI. THE AO MAKING DISALLOWANCE OF THE SAID AMOUNT ADDED THE INCOME OF THE ASSESSEE. ACCORDINGLY, THE AO DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 36,23,263/- SUBSEQUENTLY, THE LD. C IT INITIATED PROCEEDINGS U/S 263 OF THE ACT ON THE GROUND THAT T HE AO HAS NOT TAKEN ANY ADVERSE VIEW IN RESPECT OF PAYMENT MADE TO RETI RED PARTNER SH. SHAILESH SANWARIA AT THE RATE OF 65,100/- PER MONTH , WHO HAD NOT ITA NO. 338-CHD-202 0- M/S DARSHAN MEDICOS, CHANDIGARH 3 RENDERED ANY SERVICE TO THE FIRM. THE LD. PR. CIT R EJECTING THE EXPLANATION/REPLY FILED BY THE AUTHORIZED REPRESENT ATIVE OF THE ASSESSEE, CANCELLED THE ASSESSMENT ORDER HOLDING THE ORDER ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRE CTED THE AO TO FRAME ASSESSMENT ORDER AFRESH AFTER CARRYING OUT NECESSAR Y ENQUIRIES ON THE POINTS DISCUSSED IN THE ORDER. THE ASSESSEE IS IN A PPEAL AGAINST THE SAID ORDER PASSED BY THE LD. PR. CIT. 3. THE APPELLANT/ASSESSEE HAS CHALLENGED THE IMPUGN ED ORDER ON THE FOLLOWING GROUNDS: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT HAS EXCEEDED LEGISLATIVE JURISDICT ION UNDER SECTION 263 OF THE ACT THUS ORDER PASSED IS BAD IN LAW. 2. THAT THE LD. CIT HAS ERRED IN PASSING ORDER UNDE R SECTION 263 IN THE ABSENCE OF ANY ERRONEOUS POSITION PREJUDICIAL T O THE INTEREST OF REVENUE IN THE ORIGINAL ASSESSMENT ORDER PASSED BY LD. ITO UNDER SECTION 143(3) OF THE ACT. 3. THAT THE LD. CIT HAS ERRED IN SUBSTITUTING AN AL TERNATIVE VIEW AS AGAINST THE FIRM VIEW ADOPTED BY THE LD. ITO AT THE TIME OF ORIGINAL ASSESSMENT UNDER SECTION 143(3) 4. THAT THE LD. CIT HAS ERRED IN CONCLUDING PROCEED INGS UNDER SECTION 263 OF THE ACT WITHOUT PROPER PERUSAL OF TH E ASSESSMENT RECORD. 4. THERE IS A DELAY OF 196 DAYS IN FILING THE PRES ENT APPEAL. THE LD. COUNSEL FIRST OF ALL SUBMITTED THAT THE ASSESSEE HA S FILED AN APPLICATION FOR CONDONATION OF DELAY ALONG WITH AN AFFIDAVIT. I N THE LIGHT OF THE SAID APPLICATION THE LD. COUNSEL SUBMITTED THAT THE IMPU GNED ORDER WAS PASSED ON 16.03.2020, WHICH WAS UPLOADED ON INCOME TAX PORTAL, HOWEVER, THE ASSESSEE DID NOT RECEIVE ANY INTIMATIO N IN THIS REGARD. ITA NO. 338-CHD-202 0- M/S DARSHAN MEDICOS, CHANDIGARH 4 THEREAFTER, DUE TO LOCKDOWN IN THE WAKE OF COVID-19 PANDEMIC THE ASSESSEE COULD NOT DISCUSS THE ISSUE WITH ITS TAX C ONSULTANT. IN THE MONTH OF NOVEMBER, THE CONSULTANT DOWNLOADED THE COPY OF ORDER AND AFTER COLLECTING THE RELEVANT DOCUMENTS, THE APPEAL WAS F ILED ON 27.11.2020. SH. PAWAN KUMAR GARG, PARTNER M/S. DARSHAN MEDICOS HAS SUBMITTED AN AFFIDAVIT IN SUPPORT OF THE SAID CONTENTION. THE LD . COUNSEL FURTHER SUBMITTED THAT SINCE THE DELAY IS NEITHER INTENTION AL NOR DUE TO INACTION ON THE PART OF THE ASSESSEE, THE APPLICATION MAY BE ALLOWED AND THE DELAY MAY BE CONDONED. 5. THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSE THE APPLICATION ON THE GROUND THAT THE REASONS STATED BY THE APPLICANT/ASS ESSEE ARE NOT SUFFICIENT TO CONDONE THE DELAY. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE B Y THE PARTIES AND PERUSED THE MATERIAL ON RECORD. FROM THE FACTS AND THE CIRCUMSTANCES STATED IN THE APPLICATION, WE ARE CONVINCED THAT TH E ASSESSEE COULD NOT FILE THE PRESENT APPEAL WITHIN LIMITATION PERIOD DU E TO COUNTRYWIDE LOCK DOWN AND RESTRICTIONS IMPOSED IN THE WAKE OF COVID- 19. THEREFORE, IN OUR CONSIDERED VIEW, THE REASONS STATED BY THE APPE LLANT/ASSESSEE ARE SUFFICIENT TO CONDONE THE DELAY IN FILING THE PRESE NT APPEAL. HENCE, WE ALLOWED THE APPLICATION FILED BY THE ASSESSEE AND C ONDONED THE DELAY. ACCORDINGLY, WE ALLOWED THE LD. COUNSEL TO ARGUE TH E APPEAL ON MERIT. 7. THE LD. COUNSEL SUBMITTED BEFORE US THAT IN T HIS CASE AO PASSED THE ITA NO. 338-CHD-202 0- M/S DARSHAN MEDICOS, CHANDIGARH 5 ASSESSMENT ORDER U/S 143(3) OF THE ACT AFTER MAKING CERTAIN ADDITIONS. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) AND THE LD. CIT(A) AFTER HEARING THE ASSESSEE DELETED T HE ADDITIONS MADE BY THE AO. THEREAFTER THE ASSESSEE RECEIVED NOTICE U/S 263 OF THE ACT FROM THE LD. CIT. THE ASSESSEE FILED DETAILED REPLY AND CONTENDED THAT THE AO HAS PASSED THE ASSESSMENT ORDER AFTER CONDUCTING PR OPER ENQUIRY WITH REGARD TO THE PAYMENT MADE TO THE RETIRING PARTNER. HOWEVER, THE LD. CIT REJECTING THE CONTENTION OF THE ASSESSEE PASSED THE IMPUGNED ORDER. THE LD. COUNSEL CONTENDED THAT SINCE THE AO HAD EXA MINED THE ISSUE RELATING TO SALARY/PENSION PAID TO MR. SHAILESH, TH E LD. CIT HAS WRONGLY EXERCISED THE JURISDICTION U/S 263 OF THE ACT ON TH E GROUND THAT THE AO HAS NOT TAKEN ANY ADVERSE VIEW IN RESPECT OF THE PA YMENT MADE TO MR. SHAILESH. THE LD. COUNSEL INVITED OUR ATTENTION TO THE COPY OF LETTER DATED 03.08.2017 IN WHICH THE AO HAS RAISED THE QUE RY REGARDING PAYMENT MADE TO SH. SHAILESH AND ASKED TO FURNISH T HE REASONS AND RECONCILE THE SAME WITH SUPPORTING DOCUMENTS. THE L D. COUNSEL INVITED OUR ATTENTION TO THE COPY OF REPLY FURNISHED BY THE ASSESSEE IN RESPONSE TO THE SAID QUERY, WHICH IS AVAILABLE IN THE PAPER BOOK. THE LD. COUNSEL FURTHER SUBMITTED THAT THE SAID PAYMENT WAS MADE IN TERMS OF THE PARTNERSHIP DEED DATED 10.12.2012. THEREFORE, THIS IS NEITHER A CASE OF NO ENQUIRY NOR A CASE OF INSUFFICIENT ENQUIRY. MORE OVER, DURING THE 263 PROCEEDINGS THESE FACTS WERE BROUGHT TO THE NOTICE OF THE LD. CIT. FURTHER, IT WAS SUBMITTED BEFORE THE LD. CIT THAT D URING ASSESSMENT ITA NO. 338-CHD-202 0- M/S DARSHAN MEDICOS, CHANDIGARH 6 PROCEEDINGS QUERY IN THIS REGARD WAS RAISED BY THE AO AND THE AO ALLOWED THE SAID EXPENSES TOWARDS SALARY/REMUNERATI ON OF RETIRING PARTNER AFTER GOING THROUGH THE REPLY AND CONDUCTIN G VERIFICATION OF THE DOCUMENTS SUBMITTED TO JUSTIFY THE SAME. THE LD. CO UNSEL RELYING ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F PRINCIPAL CIT VS. DHANNA READY & COMPANY 2018 100 TAXMANN.COM 358 (SC ) , JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NIRAV MODI VS. CIT 201971 TAXMANN.COM272 (BOM) , JUDGMENTS OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. KRISHNA CAPBOX 2015 60 TAXMANN.COM 243 (ALL) AND MEERUT ROLLER FLOUR MILLS (P) LTD 2019 71 TAXMANN.C OM 170 (ALL) , JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. RAJSHYAMA CONSTRUCTIONS (P) LTD 2012 20 TAXMANN .COM 251(DEL) AND THE DECISION OF THE COORDINATE BENCH IN THE CASE OF CIT VS. PAWAN KUMAR 2015 ITAT (CHANDIGARH) 62. TAXMANN.COM 260, SUBMITTED THAT SINCE THE IMPUGNED ORDER IS CONTRARY TO THE RATIO L AID DOWN IN THE ABOVE REFERRED CASE, THE SAME IS LIABLE TO BE QUASHED. 8. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRE SENTATIVE (DR) SUPPORTING THE ORDER PASSED BY THE LD. PR. CIT, SUB MITTED THAT SINCE THE AO HAD WRONGLY ALLOWED THE CLAIM OF THE ASSESSEE, T HE LD. PR. CIT HAS RIGHTLY EXERCISED THE JURISDICTION U/S 263 OF THE A CT. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE LD. COUNSEL. ITA NO. 338-CHD-202 0- M/S DARSHAN MEDICOS, CHANDIGARH 7 THE ONLY GRIEVANCE OF THE APPELLANT/ASSESSEE IS THA T THE LD. PR. CIT HAS WRONGLY EXERCISED THE JURISDICTION U/S 263 OF THE A CT DIRECTED THE AO TO PASS THE ASSESSMENT ORDER AFRESH. AS POINTED OUT B Y THE LD. COUNSEL, THIS IS NEITHER THE CASE OF NO ENQUIRY NOR THE CASE OF INSUFFICIENT ENQUIRY. THE LD. COUNSEL DEMONSTRATED BEFORE US THA T DURING THE ASSESSMENT PROCEEDINGS AO RAISED THE SPECIFIC QUERY REGARDING THE PAYMENT TO THE RETIRING PARTNER AND THE ASSESSEE FI LED DETAILED REPLY ALONG WITH THE SUPPORTING DOCUMENTS. THE AO AFTER G OING THROUGH THE REPLY AND DUE VERIFICATION OF THE DOCUMENTS, ALLOWE D THE SAID EXPENDITURE. UNDER SECTION 263 OF THE ACT, THE CIT HAS JURISDICTION TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING U NDER THE ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED BY THE AO IS ERR ONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, TO P ASS ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSME NT AND DIRECTING A FRESH ASSESSMENT AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SO, AS PER THE SETTLED LAW, IN ORDER TO E XERCISE JURISDICTION U/S 263 OF THE ACT, THE CIT HAS TO BE SATISFIED OF TWIN CONDITIONS THAT THE ORDER SOUGHT TO BE REVISED IS ERRONEOUS AND THAT TH E ORDER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. INDO GERMAN FABS IT AP PEAL NO 248 OF 2012 HAS INTER ALIA HELD THAT UNDER SECTION 263 THE CIT HAS POWER TO EXAMINE AN ASSESSMENT ORDER TO ASCERTAIN AS TO WHET HER IT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, BUT DOES NOT CONFER ITA NO. 338-CHD-202 0- M/S DARSHAN MEDICOS, CHANDIGARH 8 JURISDICTION TO SUBSTITUTE HIS OPINION FOR THE OPIN ION OF THE AO. THEREFORE, U/S 263 OF THE ACT CIT HAS POWER TO REVI SED ONLY THOSE ORDERS WHICH ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE, THE LD. CIT HAS REVISED THE ASSES SMENT ORDER ON THE GROUND THAT THE AO HAS NOT TAKEN ANY ADVERSE VIEW I N RESPECT OF THE PAYMENT MADE TO THE RETIRING PARTNER, WITHOUT POINT ING OUT AS TO HOW THE ASSESSMENT ORDER IS ERRONEOUS. IT IS APPARENT FROM THE RECORD THAT THE AO HAS ALLOWED THE CLAIM OF THE ASSESSEE AFTER COND UCTING PROPER ENQUIRIES. IN THE CASE OF MEERUT ROLLER FLOUR MILLS (P) LTD. VS. CIT (SUPRA) THE HONBLE ALLAHABAD HIGH COURT HAS HELD T HAT WHERE THE ASSESSMENT OFFICER HAD ALREADY MADE DETAILED ENQUIR IES IN RESPECT OF LOAN RECEIVED BY THE ASSESSEE, REVISIONAL ORDER UND ER SECTION 263 OF THE ACT DIRECTING THE AO TO EXAMINE THE MATTER RELATING TO UNSECURED LOANS RECEIVED BY THE ASSESSEE DESERVES TO BE SET ASIDE. 10. FURTHER, IN THE CASE OF NIRAV MODI VS. CIT (SUPRA), THE HONBLE BOMBAY HIGH COURT HAS HELD THAT WHERE THE AO AFTER MAKING PROPER AND DETAILED ENQUIRIES, TAKES A POSSIBLE VIEW, INTERFER ENCE U/S 263 OF THE ACT IS NOT PERMISSIBLE. IN OUR CONSIDERED VIEW IN THE P RESENT CASE SINCE THE AO HAS TAKEN A POSSIBLE VIEW AFTER MAKING PROPER EN QUIRY, THE LD. CIT HAS WRONGLY EXERCISED THE JURISDICTION U/S 262 OF T HE ACT. SIMILARLY, IN THE CASE OF PRINCIPAL CIT VS. DHANNA READY & CO (SUPRA), THE HONBLE SUPREME COURT HAS HELD THAT WHERE THE AO HAS TAKEN A PLAUSIBLE VIEW AFTER MAKING ENQUIRY, REVISIONAL ORDER DIRECTING TH E AO TO TAKE ANOTHER ITA NO. 338-CHD-202 0- M/S DARSHAN MEDICOS, CHANDIGARH 9 POSSIBLE VIEW IS NOT JUSTIFIED. 11. IN THE CASE OF CIT VS. KRISHNA CAPBOX (P) LTD .(SUPRA) THE HONBLE ALLAHABAD HAS HELD THAT WHERE THE ASSESSING OFFICER PASSES ASSESSMENT ORDER AFTER RAISING QUERIES FROM THE ASSESSEE, MERE NON DISCUSSION OR NON-MENTION THEREOF IN ASSESSMENT ORDER COULD NOT L EAD TO THE ASSUMPTION THAT THE AO DID NOT APPLY HIS MIND. INVO KING OF REVISIONAL JURISDICTIONAL ON THE SAID GROUND WAS HELD UNJUSTIF IED. 12. IN THE LIGHT OF THE FACTS OF THE CASE AND THE R ATIO LAID DOWN BY THE HONBLE SUPREME COURT AND THE HONBLE HIGH COURTS D ISCUSSED ABOVE, WE HOLD THAT THE IMPUGNED ORDER IS NOT IN CONSONANC E WITH THE LAW LAID DOWN BY THE HONBLE COURTS DISCUSSED ABOVE. SINCE T HE AO HAD PASSED THE ASSESSMENT ORDER AFTER MAKING PROPER ENQUIRY, T HE LD. CIT HAS WRONGLY EXERCISED THE JURISDICTION U/S 263 OF THE A CT IN THIS CASE. WE ACCORDINGLY ALLOW THE APPEAL OF THE ASSESSEE AND SE T ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED ON 6 TH JULY,2021. SD/- SD/- ( N.K. SAINI) (R.L.NEGI) / VICE PRESIDENT / JUDICIAL MEMBER DATED : 06.07.2021 .. ,-.- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT ITA NO. 338-CHD-202 0- M/S DARSHAN MEDICOS, CHANDIGARH 10 2. / THE RESPONDENT 3. / / CIT 4. / ( )/ THE CIT(A) 5. - 2 , %2 , 4 / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR