Anand Prasad Jaiswal, Cuttack V. Principal CIT, Cuttack

ITA 343/CTK/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2217 (ITAT-CUTTACK)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 11-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAAD KIDWAI
• Assessee Lawyers: K K BAL
• Keywords: Difference of opinion; Condonation of delay; Change of opinion
• Section: 143(3); 142(1); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ITA NO. 343 /CTK/201 7 ( [ [ / ASSESSMENT YEAR : 20 12 - 20 13 ) ANAND PRASAD JAISWAL, PROP - ANAND ST EEL & PIPES, AT - PILIGRIM ROAD, COLLEGE SQUARE, CUTTACK - 753003 VS. PRINCIPAL COMMISSIONER OF INCOME TAX, CUTTACK - 753008 ./ ./ PAN/TAN NO. : A GGPJ 3815 K ( / APPELLANT ) .. ( / RESPONDENT ) [ /AS SES SEE BY : SHRI K.K.BAL, AR /REVENUE BY : SHRI SAAD KIDWAI, CITDR / DATE OF HEARING : 2 1 / 0 8 /201 8 / DATE OF PRONOUNCEMENT 06/09 /201 8 / O R D E R PER SHRI PAVAN KUMAR GADALE, J M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PR. CIT, CUTTACK, PASSED U/S.263 OF THE ACT, DATED 07.03.2017 . 2. AS PER THE OFFICE NOTE, THERE IS A DELAY OF 125 DAYS IN FILING OF THE APPEAL . LD. AR OF THE ASSESSEE HAS FILED AN APPLICATION STATING THE REASONS FOR CONDONATION OF DELAY ALONG WITH AFFIDAVIT. LD. DR DID NOT OBJECT TO CONDONE THE DELAY IN FILING THE APPEAL. ACCORDINGLY, WE CONDONE THE DELAY OF 125 DAYS IN FILING THE PRESENT APPEAL AND THE APPEAL IS HEARD ON MERITS. 3 . THE ASSESSEE HAS RA ISED THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE ORDER OF THE FORUM BELOW IS ARBITRARY, UNJUST IN AND ILLEGAL IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND LIABLE TO BE QUASHED. 2. FOR THAT LD. COMMISSIONER OF INCOME TAX ERRED IN HOLDING THE T RADE CREDITORS AS CASH CREDITORS. THEREFORE THE ORDER PASSED ITA NO. 343 /1 7 2 U/S 263 OF THE INCOME TAX IS NON APPLICATION OF MIND AND LIABLE TO BE QUASHED. 3. FOR THAT IN COURSE OF ASSESSMENT LD ITO CALLED FOR INFORMATION FROM EACH AND EVERY TRADE CREDITORS AS PER THE DE TAILS PROVIDED BY THE ASSESEE AND THEREAFTER LD. A.O HAS PASSED THE ORDER AFTER CONSIDERING THE DETAILS RECEIVED FROM THE CREDITORS, WITHOUT NARRATING THE DETAILS. THEREFORE LDAO'S SILENCED IN THE ASSESSMENT ORDER DOES NOT MEAN THAT HE HAS NOT APPLIED HIS MIND SO AS TO JUSTIFY EXERCISE OF JURISDICTION U/S 263 OF THE IT ACT. 4. FOR THAT LD CIT INTENDS TO REFRAME THE ASSESSMENT BY SUBSTITUTING HIS SUBJECTIVE OPINION IN PLACE OF THE AO, WHICH IS NOT PERMISSIBLE UNDER THE LAW. 5. FOR THE LD A.O HAS MADE ENQ UIRY AND EVEN IF IT IS INADEQUATE THAT WOULD NOT BY ITSELF GIVE RISE AN OCCASION TO THE CIT TO PASS AN ORDER U/S 263 OF THE INCOME TAX. THEREFORE THE PRESENT ORDER IS WITHOUT JURISDICTION AND LIABLE TO BE QUASHED. 6. FOR THAT THE FACT WHICH HAS ALREADY B EEN EXAMINED BY THE AO THE DIRECTION OF CIT TO RE - EXAMINE AMOUNTS TO CHANGE OF OPINION, WHICH IS IMPERMISSIBLE UNDER THE LAW. 7. FOR THAT OTHER GROUNDS IF ANY WILL BE URGED AT THE TIME OF HEARING. 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF WHOLESALE TRADING AND FILED RETURN OF INCOME ON 19.12.2012 FOR THE A.Y.20 12 - 20 13 DECLARING TOTAL INCOME OF RS. 8,03,950/ - . SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S.143(2) & 142(1) OF THE ACT WERE ISSU ED. IN COMPLIANCE OF THE SAME, LD. AR APPEARED BEFORE THE AO AND CASE WAS DISCUSSED. THEREAFTER THE AO COMPLETED THE RE ASSESSMENT ASSESSING TOTAL INCOME AT RS. 8,62,570/ - AND PASSED ORDER U/S. 143(3) OF THE ACT, DATED 23.03.2015 AND MADE VARIOUS DISALLOWANCE S. 5. THE PR. CIT FOUND THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND ISSUED NOTICE. FURTHER THE PR.CIT AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND FINDINGS OF THE ITA NO. 343 /1 7 3 AO HAS SET ASIDE THE ASSESSMENT ORDER U /S.143(3) OF THE ACT TO THE AO FOR FRESH ADJUDICATION. 6. AGGRIEVED BY THE ORDER OF THE PR. CIT THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 7. LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE ORDER PASSED BY THE PR. CIT IS CONTRARY TO LAW AND T HE FACTS AND ALSO CANNOT BE ACCEPTED. LD. AR SUBMITTED THERE IS ADEQUATE ENQUIRY MADE BY THE AO IN THE ASSESSMENT PROCEEDINGS BY ISSUING NOTICE U/S.142(1) OF THE ACT AND THE ASSESSEE COMPLIED WITH QUESTIONNAIRES AND ALSO SUBMITTED FOLLOWING JUDICIAL DECISI ONS : - I) CIT VS. ANIL KUMAR SHARMA, ITA NO.820/2009 (DELHI HIGH COURT) II) CIT VS. INTERNATIONAL TRAVEL HOUSE LTD., ITA NO.94/2010 (DELHI HIGH COURT); AND IV) CIT VS. SUNBEAM AUTO LTD., I.T.APPEAL NO.1399 OF 2006 (DELHI HIGH COURT) 8. ON THE OTHER HAN D, LD. DR RELIED ON THE ORDER OF PR. CIT. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE SOLE DISPUTED ISSUE IS WITH RESPECT TO THE ORDER PASSED BY THE PR. CIT U/S.263 OF THE ACT. LD. AR SUBMITTED THAT IN THE ASSESSME NT PROCEEDINGS U/S.143(3) OF THE ACT, THE AO ISSUED NOTICE U/S.142(1) OF THE ACT AND REFERRED TO THE PAPER BOOK ALONG WITH QUESTIONNAIRE AT PARA 4 WHERE THE AO HAS CALLED FOR THE DETAILS AND SUNDRY CREDITORS AND IN REPLY TO THE NOTICE , THE ASSESSEE HAS FIL ED ANNEXURE ALONG WITH DETAILS OF SUNDRY CREDITORS IN SUPPORT OF SUBMISSIONS. THE CONTENTION OF LD. AR IS THAT THE AO HAS MADE AN ENQUIRY AND THE ITA NO. 343 /1 7 4 PR. CIT AGAIN CALLED FOR THE NECESSITY OF ENQUIRY IN RESPECT OF SUNDRY CREDITORS AND ALSO THE ORDER PASSED BY THE PR. CIT DOES NOT SATISFY TWIN CONDITIONS I.E. ERRONEOUS OR PREJUDI CIAL TO THE INTEREST OF REVENUE . T HE AO HAS PASSED ASSESSMENT ORDER AFTER CONDUCTING INQUIRY AND ON DUE APPLICATION OF MIND AND NOW THE PR. CIT CANNOT NOT ASSUME JURISDICTION TO REVISE S UCH AN ORDER . HOWEVER, IN THE REVISION PROCEEDINGS, THE PR.CIT FOUND THE CONFIRMATIONS SUBMITTED IN THE ASSESSMENT PROCEEDINGS BEFORE THE AO OF SU NDRY CREDITORS ARE NOT SATISFACTORY AND THE AO HAS NOT EXAMINED AND ENQUIRED REGARDING S UNDRY CREDITORS TO TH E EXTENT OF RS.17,38,511/ - AND HAS NOT RECORDED HIS FINDINGS IN THE ASSESSMENT ORDER. THE OBSERVATIONS OF THE PR. CIT AT PAGE 3 OF THE REVISION ORDER READ AS UNDER : - I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE CONTENTION OF BEHALF OF THE ASSESSEE F ILED BY THE A/R HAS BEEN CAREFULLY CONSIDERED. IT APPEARS THAT THE SUBMISSION OF THE A/R IS NOT FACTUALLY CORRECT IN SO FAR AS THE CLAIM OF CONFIRMATIONS GIVEN TO THE AO IN RESPECT OF ALL THE SUNDRY CREDITORS DURING THE ASSESSMENT PROCEEDINGS. IN CERTAIN C ASES OF SUNDRY CREDITORS AMOUNTING TO RS. 17,38,511/ - , THE AO IS FOUND NOT TO HAVE EXAMINED OR CONDUCTED ANY ENQUIRY. EVEN IN RESPECT OF THOSE CREDITORS WHERE CONFIRMATION LETTERS AND OTHER DETAILS ARE AVAILABLE TO THE AO, HE HAS NOT RECORDED HIS FINDINGS TO THAT EFFECT IN THE ASSESSMENT ORDER. IT IS WORTHWHILE TO MENTION HERE THE DECISION OF THE CONSTITUTIONAL BENCH OF THE HON'BLE APEX COURT IN THE CASE OF S.N. MUKHERJEE VS UNION OF INDIA , AIR 1990, SC, 1984 WHICH HAS BEEN REITERATED BY THE HON'BLE ITAT ' A' BENCH, CHENNAI (ITA NO. 1288/MDS/2015 DATED 22.01.2016) IN THE CASE OF M/S MEDAL HEALTHCARE PVT. LTD VS. PR. CIT AND HELD THAT IN INCOME TAX PROCEEDINGS, THE ASSESSING OFFICER IS EXPECTED TO RECORD HIS OWN REASON FOR THE CONCLUSIONS REACHED. ACCORDINGLY , I AM OF THE VIEW THAT THE ASSESSMENT ORDER IN QUESTION IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN THIS REGARD, REFERENCE CAN BE MADE TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RAMAPYARI DEVI SAROGI (1968) 67ITR84 AND IN THE CASE OF SMT TARADEVI AGARWAL VS CIT 88 ITR 323 WHEREIN THE HON'BLE APEX COURT HELD THAT LACK OF ENQUIRY OR VERIFICATION AT THE RELEVANT TIME BY THE AO WOULD CONSTITUTE PREJUDICE TO THE INTEREST OF REVENUE AND WOULD INVOLVE ERROR OF FACT ITA NO. 343 /1 7 5 AND LAW. SIMILARLY , THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF UMA SHANKAR RICE MILLS VS. CIT (187 ITR 638) HAVE OBSERVED THAT WHERE THE COMMISSIONER FELT THAT PROPER ENQUIRY 'WAS NOT MADE BY THE AO DURING THE ASSESSMENT PROCEEDING, HE WAS JUSTIFIED IN INVOKING TH E PROVISION OF SECTION 263 IN RESPECT OF TIRE ORDER PASSED BY THE AO. EVEN INCOME TAX ACT HAS BEEN AMENDED AND EXPLANATION 2 HAS BEEN INSERTED U/S 263(1) WHEREIN IT IS CLARIFIED THAT AN ORDER PASSED BY THE AO SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER/ COMMISSIONER, THE ORDER IS PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE. MOREOVER, IN CIT V. INFOSYS TECHNOLOGIES LTD. (KAR) 341 IT R 293, ORDER PASSED U/S.263 WAS UPHELD EVEN THOUGH THE ORDER DOES NOT MAKE IT EXPLICIT AS TO THE MANNER IN WHICH IT IS ERRONEOUS OR PREJUDICIAL SINCE REVISIONARY POWER CAN BE EXERCISED IF THE CIT CONSIDERS THE SUBJECT ORDER TO BE REVISED - ASSESSING OFFICE R PERFORMS A QUASI - JUDICIAL FUNCTION AND THE REASON FOR HIS CONCLUSIONS AND FINDINGS SHOULD BE FORTHCOMING IN THE ASSESSMENT ORDER - WHEN CIT SET - SIDE THE ASSESSMENT ORDER TO ASSESSING OFFICER TO DECIDE IT AFRESH, TRIBUNAL SHOULD NOT INTERFERE SINCE NO DAM AGES IS CAUSED TO THE ASSESSEE. IN VIEW OF THE ABOVE, THE ASSESSMENT ORDER FRAMED U/S 143(3) OF IT ACT DATED 23.03.2015 PASSED BY THE AO FOR THE A.Y. 2012 - 13 IS HEREBY SET ASIDE TO THE AO FOR ADJUDICATION OF THE ISSUES AFRESH TO THAT EXTENT AND REFRAME TH E ASSESSMENT AFTER PROPER APPRECIATION OF FACTS AND APPLICATION OF LAW AND AS PER THE OBSERVATION AND DIRECTION GIVEN ABOVE. NEEDLESS TO SAY WHILE REFRAMING THE ASSESSMENT ORDER, THE AO SHOULD PROVIDE ADEQUATE OPPORTUNITY TO THE ASSESSEE. IN THE HEARING PROCEEDINGS BEFORE US LD. AR FILED COPY OF CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER IN PROCEEDINGS U/S.143(3)/263 OF THE ACT, DATED 22.12.2017, WHERE THE AO HAS CONDUCTED THE ENQUIRY AS PER THE DIRECTION S OF THE PR. CIT IN THE REVISION ORDER DATE D 7.3.2017 AND CALLED FOR INFORMATION OF CREDITORS AND HAVING SATISFIED WITH THE SUBMISSION S OF THE LD. AR WITH EVIDENCE HAS RESTRICTED THE ADDITION OF SUNDRY CREDITORS TO RS.2,41,505/ - AS NO EXPLANATION WAS SUBMITTED BY THE ASSESSEE IN THE RESPECT OF SUNDR Y CREDITORS. 10. WE FIND THAT THE ASSESSING OFFICER HAS FOLLOWED THE DIRECTIONS OF PR. CIT ON THE DISPUTED ISSUE OF VERIFICATION OF SUNDRY CREDITORS AND THE LD. AR ITA NO. 343 /1 7 6 OF THE ASSESSEE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND FILED THE DETAILS AND ALS O INFORMATION WAS CALLED FOR U/S.133(6) OF THE ACT IN RESPECT OF SUNDRY CREDITORS AND FINALLY THE AO HAS PASSED THE ORDER U/S.143(3) R.W.S 263 OF THE ACT. THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSEE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND AS ENVISAGED BY THE LD. AR THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF AO PASSED U/S.143(3)/263 OF THE ACT. 11 . WE FIND THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF KAILASH PRASAD JAIN VS. CIT, [2011] 202 TAXMAN 244 (CALCUTTA) HAS OBSERVED I N PARA 18 OF THE ORDER WHICH READS AS UNDER : - 18. DR. PAL'S CLIENT APPROACHED THE TRIBUNAL CHALLENGING THE ORDER PASSED UNDER SECTION 263 AND EVEN DID NOT PRAY FOR ANY INTERIM RELIEF FOR STAY OF OPERATION OF THE SAID ORDER AND ALLOWED THE ORDER OF ASSESS MENT TO BE PASSED. ULTIMATELY AN APPEAL WAS ALSO PREFERRED. THE LEGAL PROPOSITION EXPLAINED BY DR. PAL WOULD BE APPROPRIATE WHEN IT WOULD BE FOUND THAT THE AUTHORITY CONCERNED LACK INHERENT JURISDICTION IN THE SUBJECT - MATTER. IN THIS CASE IT CANNOT BE HELD CIT HAD NO JURISDICTION. THE QUESTION IS WHETHER ASSUMPTION OF JURISDICTION IS DONE BY THE SAID AUTHORITY ON BEING SATISFIED WITH THE TWIN CONDITIONS MENTIONED THEREIN. THIS QUESTION COULD AND CAN BE EXAMINED IN MANY WAYS. WHEN ASSESSEE DID NOT TAKE ANY S TEP FOR STAY OF THE ORDER OF THE ASSESSING OFFICER PURSUANT TO THE IMPUGNED ORDER OF THE CIT UNDER SECTION 263 AND AFTER HAVING PARTICIPATED IN THE HEARING OF THE ASSESSMENT PROCEEDINGS AND CONSEQUENTLY PREFERRING APPEAL, WE THINK IT WOULD NOT BE PROPER FO R THIS COURT AT THIS STAGE TO DECIDE ISSUE RAISED BEFORE US. 1 2 . SIMILARLY, THE HONBLE SUPREME COURT IN THE CASE OF DEN IEL MERCHANTS P. LTD. & ANR. V S. ITO, S LP (C) NO(S). 23976/2017 , DATED 29.11.2017, WHEREIN THE HONBLE APEX COURT HAS HELD AS UNDER : - DELAY CONDONED. IN ALL THESE CASES, WE FIND THAT THE COMMISSIONER OF INCOME TAX HAD PASSED AN ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 WITH THE OBSERVATIONS THAT THE ASSESSING OFFICER DID NOT MAKE ANY PROPER INQUIRY WHILE MAKING THE ASSESSME NT AND ACCEPTING THE EXPLANATION OF THE ASSESSEE(S) INSOFAR AS RECEIPT OF SHARE APPLICATION MONEY IS CONCERNED. ON THAT BASIS THE COMMISSIONER OF ITA NO. 343 /1 7 7 INCOME TAX HAD, AFTER SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER, SIMPLY DIRECTED THE ASSESSING OFFICER TO CARRY THOROUGH AND DETAILED INQUIRY. IT IS THIS ORDER WHICH IS UPHELD BY THE HIGH COURT. WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE HIGH COURT. THE SPECIAL LEAVE PETITIONS ARE DISMISSED. PENDING APPLICATION(S), IF ANY, STANDS DISPOSED OF AC CORDINGLY . 1 3 . WE CONSIDERING THE FACT S AND CIRCUMSTANCES OF THE CASE AND JUDICIAL DECISION, FOUND THAT THE PR. CIT HAS DEALT ON THE DISPUTED ISSUE AND CONSIDERED THE JUDICIAL DECISION AND PASSED A REASONED ORDER. ACCORDINGLY, WE ARE NOT INCLINED TO INTER FERE WITH THE ORDER OF THE PR. CIT AND THE SAME IS UPHELD AND THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED. 14 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 06/09 /201 8 . S D/ - (N. S. SAINI) SD/ - ( PAVAN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 06/09 /2018 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - ANAND PRASAD JAISWAL, PROP - ANAND STEEL & PIPES, AT - PILIGRIM ROAD, COLLEGE SQUARE, CUTTACK - 753003 2. / THE RESPONDENT - PRINCIPAL COMMISSIONER OF INCOME TAX, CUTTACK - 753008 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. [ / GUARD FILE. //TRUE COPY//