Narayan Das Kubba, Srivijaynagar V. Income Tax Officer, Suratgarh

ITA 378/JODH/2019

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9722 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 13-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K.C. BADHOK LD.
• Assessee Lawyers: RAJENDRA JAIN LD
• Keywords: Revision of order; Business expenditure
• Section: 6; 263; 143(3); 44AB

Judgement Text

1 ITA NO.378/JODH/2019 SHRI NARAYAN DAS KUBBA ASSESSMENT YEAR: 2015-16 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR , , BEFORE HONBLE SHRI SANDEEP GOSAIN, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) 1. ./ I.T.A. NO.378/JODH/2019 ( / ASSESSMENT YEAR: 2015-16) SHRI NARAYAN DAS KUBBA C/O. RAJENDRA JAIN ADVOCATE 106, AKSHAY DEEP COMPLEX 5 TH B ROAD, SARDARPURA, JODHPUR RAJASTHAN-342 001. / VS. INCOME TAX OFFICER SURATGARH RAJASTHAN ./ ./PAN/GIR NO. ACMPK-6987-A ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI RAJENDRA JAIN (ADVOCATE)-LD. AR REVENUE BY : SHRI K.C. BADHOK- LD. CIT- DR / DATE OF HEARING : 02/11/2020 / DATE OF PRONOUNCEMENT : 21/12/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. BY WAY OF THIS APPEAL, THE ASSESSEE CHALLENGES T HE VALIDITY OF REVISIONAL JURISDICTION U/S. 263 AS EXERCISED BY LE ARNED PR. COMMISSIONER OF INCOME-TAX, BIKANER, [IN SHORT REFE RRED TO AS PR.CIT], FOR ASSESSMENT YEAR [IN SHORT REFERRED T O AS AY] 2015-16, 2 ITA NO.378/JODH/2019 SHRI NARAYAN DAS KUBBA ASSESSMENT YEAR: 2015-16 VIDE ORDER DATED 09/10/2019. THE EFFECTIVE GROUNDS TAKEN BY THE ASSESSEE READ AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ORDER U/S 263 PASSED BY ID CIT, BIKANER IS BAD IN LAW AND BAD IN FACTS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ID CIT, BIKANER ERRED IN NOT RECORDING OWN SATISFACTION IN RESPECT OF ASSESSMENT ORDER PASSED BY THE ID AO IS ERRONEOUS SO AS IT PREJUDICIAL THE INTEREST OF REVENUE AS PER PROVISION OF SECTION 263 OF THE ACT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ID CIT, BIKANER GROSSLY ERRED IN SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE U/S 143(3) WITHOUT ANY FINDING AS TO HOW THE ASSESSMENT ORDER PASSED BY THE LD. AO IS ERRONEOUS SO AS IT PREJUDICIAL THE INTEREST OF REVE NUE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ID CIT, BIKANER ERRED IN RECORDING VARIOUS FINDING IN THE ORDER ARE CONTRARY TO THE MATERIAL AVAILABLE ON RECORD. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING SUBMISSIONS M ADE DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING REVISIONAL PROCEEDINGS. THE JUDICIAL PRECEDENTS AS CITED DURING THE COURSE OF HEARING HAVE DULY BEEN DELIBERATED UPON. OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPH S. 3.1 THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING RESIDENT INDIVIDUAL WAS ASSESSED U/S. 143(3) ON 27/11/2017 W HEREIN IT HAS BEEN SADDLED WITH ADDITION OF RS.2.50 LACS ON ACCOU NT OF UNVERIFIABLE BUSINESS EXPENDITURE. THE ASSESSEE EAR NED INCOME OF RS.13.78 LACS FROM PROPRIETORSHIP CONCERN NAMELY M/ S THAKARDAS RAJENDRA KUMAR WHICH IS STATED TO BE DEALING IN AGR ICULTURAL PRODUCTS, ACTING AS COMMISSIONS AGENT, TRADING OF P ESTICIDES & FERTILIZERS ETC. THE ASSESSMENT ORDER TAKES NOTE OF THE FACT THAT TH E ASSESSEES BOOKS OF ACCOUNTS WERE DULY AUDITED AS PER THE PROV ISIONS OF 3 ITA NO.378/JODH/2019 SHRI NARAYAN DAS KUBBA ASSESSMENT YEAR: 2015-16 SEC.44AB. IT HAS ALSO TAKEN NOTE OF THE FACT THAT T HE ASSESSEE HAD FILED REQUISITE DOCUMENTS I.E. BANK DETAILS, FINANC IAL STATEMENTS, INTEREST ACCOUNT, BOOKS OF ACCOUNT VOUCHERS ETC. WH ICH WERE TEST CHECKED DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE DETAILS OF OPENING STOCK, CLOSING STOCK, SALE & PURCHASE UN DER EACH HEAD WAS FILED WHICH WAS ALSO TEST CHECKED. 3.2 SUBSEQUENTLY, LEARNED PR.CIT, UPON PERUSAL OF C ASE RECORDS AND INVOKING THE PROVISIONS OF SEC.263 OPINED THAT THE ORDER WAS PASSED WITHOUT MAKING PROPER ENQUIRY ON CERTAIN POI NTS AND THEREFORE THE SAME WOULD REQUIRE EXERCISE OF REVISI ONAL JURISDICTION U/S. 263. ONE OF THE POINT ON WHICH JURISDICTION HA S BEEN EXERCISED IS THE FACT THAT THE ASSESSEE HAD OPENING STOCK OF RS.1.74 LACS OF BIO-FERTILIZERS AS WELL AS OPENING STOCK OF RS.12.87 LACS OF SEEDS. HOWEVER, THE SAME WERE NOT SHOWN IN THE QUANTITATIV E DETAILS. FURTHER, THE STOCK OF SUPER-KHAD WAS UNDERVALUED BY RS.61/- PER BAG. THESE POINTS WERE NOT DULY INQUIRED TO AS WELL AS EXPLAINED BY THE ASSESSEE. ANOTHER POINT OF REVISION WAS THAT ASSESSEES REPLY AGAINST LOANS TAKEN FROM M/S HARVINDER SINGH KISHAN SINGH, M/S DE EPAK TRADERS & SH. RAM KUMAR WAS NOT SATISFACTORY. THE CORRECT I NFORMATION WAS NOT SUPPLIED DURING ASSESSMENT PROCEEDINGS AND NO F URTHER INQUIRY WAS MADE BY LD. AO WHICH MAKES THE ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3.3 THE ASSESSEE DEFENDED THE ASSESSMENT ORDER BY S UBMITTING THAT THE VALUATION OF CLOSING STOCK OF SUPER-KHAD WAS DONE @RS.270/- PER BAG WHICH WAS AFTER CONSIDERING THE D ISCOUNT / CREDIT 4 ITA NO.378/JODH/2019 SHRI NARAYAN DAS KUBBA ASSESSMENT YEAR: 2015-16 NOTE ISSUED BY THE SUPPLIER. IN SUPPORT, THE PURCHA SE BILL OF VARIOUS SUPPLIERS WAS SUBMITTED ALONG WITH THE REPLY WHICH WOULD JUSTIFY THE VALUATION THUS MADE BY THE ASSESSEE. REGARDING UNSE CURED LOANS, THE ASSESSEE SUBMITTED THAT IT HAD DULY FILED THE C ONFIRMED COPIES OF ACCOUNTS, BANK STATEMENT OF THE LENDERS AS WELL AS THEIR RESPECTIVE INCOME TAX RETURNS DURING ASSESSMENT PROCEEDINGS WH ICH WERE DULY VERIFIED AS WELL AS INQUIRED TO BY LD. AO. 3.4 HOWEVER, NOT CONVINCED LD. PR.CIT SET-ASIDE THE ASSESSMENT ORDER AND DIRECTED LD. AO TO REDO THE ASSESSMENT IN THE LIGHT OF OBSERVATIONS AS GIVEN IN THE REVISIONAL ORDER. AGGRIEVED AS AFORESAID, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US CHALLENGING THE VALIDITY OF REVISIONAL JURISDICTION AS EXERCISED BY LD. PR.CIT U/S 263. 4. UPON PERUSAL OF ASSESSEES SUBMISSIONS AS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS EVIDENT THA T NUMBER OF QUERIES WAS RAISED BY LD.AO DURING ASSESSMENT PROCE EDINGS WHICH WERE DULY REPLIED-TO BY THE ASSESSEE VIDE ITS SUBMI SSIONS DATED 20/06/2017, 17/08/2017, 05/09/2017 & 20/11/2017. IN THE SAID SUBMISSIONS, THE ASSESSEE FILED COMPLET E DETAILS OF UNSECURED LOANS TAKEN DURING THE YEAR. IN SUPPORT, THE DOCUMENTARY EVIDENCES IN THE SHAPE OF LEDGER CONFIRMATION, BANK STATEMENTS, AND INCOME TAX RETURNS ETC. OF THE LENDERS WERE ALS O FILED. IT IS APPARENT FROM THE ASSESSMENT ORDER THAT LD.AO WAS C LINCHED WITH THE ISSUE OF UNSECURED LOANS AND AFTER CONSIDERING ASSESSEES SUBMISSIONS, LD. AO CHOSE TO ACCEPT THE SAME AND NO T TO MAKE 5 ITA NO.378/JODH/2019 SHRI NARAYAN DAS KUBBA ASSESSMENT YEAR: 2015-16 ANY ADDITIONS, ON THIS ACCOUNT. THE ATTENTION TO A LL THESE FACTS WAS ALSO DRAWN BY THE ASSESSEE DURING REVISIONAL PROCEE DINGS. SO FAR AS THE ISSUE OF CLOSING STOCK IS CONCERNED, IT IS OBSERVED THAT THE VALUATION OF CLOSING STOCK WAS FILED BY THE ASS ESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NOT ONLY THIS, CO MPLETE BOOKS OF ACCOUNTS AS WELL AS BILLS/ VOUCHERS WERE PRODUCE D FOR VERIFICATION WHICH WERE TEST CHECKED. THE BOOKS WERE DULY AUDITE D U/S 44AB AND NO ADVERSE REMARKS WERE MADE BY THE TAX AUDITOR IN HIS REPORT REGARDING VALUATION OF STOCK. IT IS QUITE EVIDENT T HAT THE ISSUE OF VALUATION OF CLOSING STOCK WAS ALSO UNDER ACTIVE CO NSIDERATION OF LD. AO. AFTER CONSIDERING THE MATERIAL /EXPLANATION ON RECORD, HE CHOSE TO ACCEPT THE SAME. EVEN DURING REVISIONAL PROCEEDI NGS, THE ASSESSEE EXPLAINED THE METHOD OF VALUATION OF CLOSI NG STOCK AND FILED REQUISITE DOCUMENTARY EVIDENCES. OH THE BASIS OF FORGOING, IT COULD VERY WELL BE SAI D THAT THE ISSUES AS POINTED OUT BY LD. PR.CIT WERE UNDER DUE CONSIDERAT ION OF LD.AO DURING ASSESSMENT PROCEEDINGS. AFTER CONSIDERING AS SESSEES EXPLANATION AS WELL AS MATERIAL ON RECORD, HE CHOSE TO ACCEPT THE SAME AND DID NOT MAKE ANY ADDITIONS ON ALL THESE IS SUES. THERE IS NOTHING ON RECORD WHICH WOULD SUGGEST ANY PERVERSIT Y ON THE PART OF LD. AO WHILE TAKING THAT VIEW. ONCE A POSSIBLE VIEW HAS BEEN TAKEN BY LD. AO, THE REVISIONAL JURISDICTION U/S 263 WOUL D NOT BE VALID. MERELY BECAUSE THE INQUIRIES WERE NOT DONE IN A PAR TICULAR MANNER, THE SAME WOULD NOT MAKE ASSESSMENT ORDER EXPOSE TO REVISIONAL JURISDICTION U/S 263. 6 ITA NO.378/JODH/2019 SHRI NARAYAN DAS KUBBA ASSESSMENT YEAR: 2015-16 5. THEREFORE, ON THE FACTS AND CIRCUMSTANCES, WE A RE INCLINED TO QUASH THE REVISIONAL ORDER DATED 09/10/2019. THE AS SESSEE SUCCEEDS ON LEGAL GROUNDS. 6. RESULTANTLY, THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED U/R 34(4) OF INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. SD/- SD/- (SANDEEP GOSAIN) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 21/12/2020 SR.PS:-JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$' / THE RESPONDENT 3. % ( ) / THE CIT(A) 4. % / CIT CONCERNED 5. &'#( ) , ) , ) / DR, ITAT, JODHPUR 6. '+,-! / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, JODHPUR.