Infrastructure Logistics Pvt. Ltd., Goa V. The Principal Commissioner of Income Tax, Panaji., Panaji

ITA 36/PAN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2071 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-06-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 02-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK RATKAL LD
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI NARENDRA S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO.36 /PAN/2016 : (ASST. YEAR : 2012 - 13) INFRSTRUCTURE LOGISTICS PVT. LTD., VS. PRINCIPAL COMMISSIONER OF INCOME TAX C IDADE DE GOA , VAINGUINIM BEACH, PANAJI GOA. DONAPAULA , GOA. 403 004 PAN : AA AC19107R ( APPELLAN T) (RESPONDENT) A PPELLANT BY : SHRI JASMIN AMALSADVALA, ADV. RESPONDENT BY : SHRI ABHISHEK RATKAL, LD. D.R. DATE OF HEARING : 0 9 /06 /2016 DATE OF ORDER : 0 9 / 06 /2016 O R D E R PER GEORGE MATHAN , J.M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED U/S 263 BY THE LD.PRINCIPAL( CIT ) , PANAJI IN F. NO. 19/263/PR.CIT /PNJ/ 20 1 5 - 1 6 , DATED 1 7 .12.2015 FOR THE ASSESSMENT YEAR 2012 - 13. 2. SHRI P ERCY J. PARDIWALA, SR. ADVOCATE AND SHRI JASMIN AMALSADVALA, ADVOC A TE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI ABHISHEK RATKAL, LD. D.R REPRESENTED ON BEHALF OF THE REVENUE . 3. IT WAS SUBMITTED BY THE LD. A.R ON BEHALF OF THE ASSESS E THAT FOR THE ASSES SMENT YEAR 2012 - 13 THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 28.09.2012 DECLARING TOTAL INCOME OF RS.22.20 CRORES AND THE ASSESSMENT CAME TO 2 ITA NO . 36 /PAN/20 16 (ASST. YR: 2012 - 13 ) BE COMPLETED U/S 143(3) ON 10.03.2015 ON AN INCOME OF RS. 23.42 CRORES. IT WAS SUBMISSION THAT THE LD. PR.(CIT) HAD ISSUED A SHOW CAUSE NOTICE U/S 263 ON 01.12.2015 ON THE BASIS OF AN INFORMATION FROM THE DRI THAT THE ASSESSEE HAD NOT RECEIVED THE FULL VALUE OF THE EXPORT IN INDIA AND THAT THE OVERSEAS BUYERS HAD APPOINTED PROTECT IVE AGEN TS , THE COST OF WHOM WAS ADJUSTED IN THE FOB VALUE PAYABLE TO THE ASSESSEE. IT WAS A SUBMISSION THAT THE ASSESSEE HAD REPLIED VIDE ITS LETTER DATED 10.12.2015. IT WAS A SUBMISSION THAT BY AN ORDER DATED 17.12.2015 THE LD.PR.(CIT) HAD SET ASIDE THE ASSESS MENT ORDER DATED 10.3.2015 WITH THE DIRECTION TO THE ASSESSING OFFICER TO DO THOROUGH AND DETAIL ENQUIRY IN RESPECT OF THE COMMISSION PAID BY THE OVERSEAS BUYERS TO THE PROTECT IVE AGENTS APPOINTED BY THE BUYERS ON BEHALF OF THE ASSESSEE. IT WAS A SUBMISSI ON THAT THE LD.PR.(CIT) HAD NOT MADE ANY DISCUSSION IN RESPECT OF THE REPLY FILED BY THE ASSESSE E BUT HAS BLINDLY REJECTED THE SAME. IT WAS A SUBMISSION THAT IN THE REPLY ALSO, IT WAS SPECIFICALLY SUBMITTED THAT THE PROTECT IVE AGENTS ARE APPOIN TED BY THE OVERSEAS BUYERS AND THEY RAISED INVOICES DIRECTLY ON THE OVERSEAS BUYERS AND THE PAYMENTS TO THEM ARE ALSO MADE DIRECTLY BY THE OVERSEAS BUYERS. IT WAS ALSO A SUBMISSION THAT THE DRI INFORMATION WAS ONLY IN THE CONTEXT OF THE EXPORT DUTY AND ARRIVING AT A DEEM ED VALUE OF THE EXPORT FOR THE PURPOSE OF THE CUSTOMS ACT AND HAS NO RELEVANCE UNDER INCOME TAX ACT, 1961. IT WAS ALSO THE SUBMISSION THAT THERE WAS NO LOSS OF REVENU E IN SO FAR AS ASSESSEE COMPANY HAS NOT RECEIVED ANY SALE CO NSIDERATION OVER AND A BO VE THE SALES VALUE, N OR THE COMPANY HAD PAID ANY COMMISSION TO ANY AGENT ABROAD . E VEN IF IT IS ALLEGE D THAT THE ASSESSEE HAS SUP PRESSED THE VALUE OF THE INVOICE RECEIVED FROM THE PROTECTIVE AGENTS STILL NO ADDITION ON TH AT C AN BE MADE AS AN EQUAL W OULD HAVE TO B E REDUC ED IN RESPECT OF THE EXPENSES BEING THE PAYMENT TO THE PROTECTIVE AGENTS. IT WAS A SUBMISSION THAT THE ORDER PASSED U/S 263 BY THE LD.PR.(CIT) WAS LIABLE TO BE QUASHED. 4. IN REPLY, THE LD. D.R SUBMITTED THAT THE ASSESSE E HAS ACCEP TED THE DRIS ORDER AND CONSEQUENTLY THE ORDER U/S 263 WAS LIABLE TO BE SUSTAINED. IT WAS A 3 ITA NO . 36 /PAN/20 16 (ASST. YR: 2012 - 13 ) SUBMISSION THAT THE TRIBUNAL MUST CALL FOR AN D EXAMIN E THE ORDER OF THE DRI AND THE STATEMENTS RECORDED FROM THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET, A PERUSAL OF THE PROVISIONS OF SECTION 263 CLEARLY SHOWS THAT THE LD.PR.(CIT) IS TO CONDUCT THE NECESSARY ENQUIRIES AS HE DEEMS NECESSARY AFTER HEARING THE ASSESSEE AND BEFORE PASSING THE ORDER. IN THE PRESENT CASE A PERUSAL OF THE ORDER PASSED U/S 263 DOES NOT SHOW OF ANY ENQUIRY HAVING BEEN DONE BY THE LD.PR.(CIT). IN FACT THE SHOW CAUSE NOTICE TALKS OF THE JIST OF THE INFORMATION RECEIVED FROM THE DRI. THE ORDER U/S 263 THOUGH RECOGNIZES THE DE TAIL ARGUMENTS OF THE ASSESSEE , THE SAME HAS BEEN REJECTED AS NOT ACCEPTABLE. NO REASONING HAS BEEN GIVEN BY THE LD.PR.(CIT) FOR REJECTING THE REPLY. THIS BEING SO WE ARE OF THE VIEW THAT THE ORDER PASSED U/S 263 BY THE LD.PR.(CIT) IS UNSUSTAINABLE AND WE QUASH THE SAME. THIS VIEW OF OURS FINDS SUPPORT FROM THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL, MUMBAI BENCH IN THE CASE OF SHRI NARAYAN TATU RANE IN I.T.A NO.2690 AND 2691/MUM/2016 DATED 6.5.2016 FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 WHEREIN IT HAS BEEN HELD AS FOLLOWS : - THE LAW INTERPRETED BY THE HIGH COURTS MAKES IT CLEAR THAT THE CIT, BEFORE HOLDING AN ORDER TO BE ERRONEOUS, SHOULD HAVE CONDUCTED NECESSARY ENQUIRIES OR VERIFICATION IN ORDER TO SHOW THAT THE FINDING GIVEN BY THE ASSESSING OFFICER IS ERRONEOUS, THE CIT SH OULD HAVE SHOWN THAT THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. IN THE INSTANT CASE, THE CIT HAS FAILED TO DO SO AND HAS SIMPLY EXPRESSED THE VIEW THAT THE ASSESSING OFFICER SHOULD HAVE CONDUCTED ENQUIRY IN A PARTICULAR MANNER AS DESIRED BY HIM. SUC H A COURSE OF ACTION OF THE CIT IS NOT IN ACCORDANCE WITH THE MANDATE OF THE PROVISIONS OF SEC. 263 OF THE ACT. THE CIT HAS TAKEN SUPPORT OF THE NEWLY INSERTED EXPLANATION 2(A) TO SEC. 263 OF THE ACT. EVEN THOUGH THERE IS A DOUBT AS TO WHETHER THE SAID EXP LANATION, WHICH WAS INSERTED BY FINANCE ACT 2015 W.E.F. 1.4.2015, WOULD BE APPLICABLE TO THE YEAR UNDER CONSIDERATION, YET WE ARE OF THE VIEW THAT THE SAID EXPLANATION CANNOT BE SAID TO HAVE OVER RIDDEN THE LAW INTERPRETED BY HONBLE DELHI HIGH COURT, REFE RRED ABOVE. IF THAT BE THE CASE, THEN THE CIT CAN FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER, WITHOUT CONDUCTING ANY ENQUIRY OR VERIFICATION IN ORDER TO ESTABLISH THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW AND ORDER FOR REVISION. HE CAN ALSO FORCE THE AO TO CONDUCT THE ENQUIRIES IN THE MANNER PREFERRED BY CIT, THUS PREJUDICING THE INDEPENDENT APPLICATION OF MIND OF THE AO. DEFINITELY, THAT COULD NOT BE THE INTENTION OF THE LEGISLATURE IN INSERTING EXPLANATION 2 TO SEC. 263 OF THE ACT, SINCE IT WOULD LEAD TO UNENDING LITIGATIONS AND THERE WOULD NOT BE ANY POINT OF FINALITY IN THE 4 ITA NO . 36 /PAN/20 16 (ASST. YR: 2012 - 13 ) LEGAL PROCEEDINGS. THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD VS. ITO (1977) (106 ITR 1) THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS AND THE STALE ISSUES SHOULD NOT BE REACTIVITATED BEYOND A PARTICULAR STAGE AND THE LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI - JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. 6. IN T HESE CIRCUMSTANCES THE ORDER PASSED U/S 263 BY THE LD.PR.(CIT) STANDS QUASHED. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 0 9 .06 .2016. SD/ - (NARENDRA S. SAINI) ACCOUNTANT MEMBER SD/ - (GEORGE MATHAN) JUDICIAL MEMBER PLACE : PANAJI - GOA DATED : 0 9 /06 /2016 *A* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY O RDER ASSISTANT REGISTRAR ITAT, PANAJI BENCH, PANAJI