M/s. J.K. Construction Co., BIKANER V. ITO, BIKANER

ITA 379/JODH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78254 (ITAT-JODHPUR)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Business income; Difference of opinion; Change of opinion
• Section: 143(3); 10; 154

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO S . 379 & 380 /JODH/2013 (A.Y S . 2009 - 10 & 20 1 0 - 11 ) M/S. J.K. CONSTRUCTION CO. , VS. ITO , WARD - 1(2), NAYA BAZAR, NOKHA, BIKANER. BIKANER. PAN NO. AAEFJ 1676 P (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 22 / 0 7 /201 4 . DATE OF PRONOUNCEMENT : 23 /0 7 /201 4 . O R D E R PER N.K. SAINI, A.M TH ESE TWO APPEAL S BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S EACH DATED 30 /0 5 /201 4 OF L D . CIT(A), BIKANER . COMMON IS S UES ARE INVOLVED IN THESE APPEALS, WHICH WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . 2 FIRST WE WILL DEAL WITH I.T.A.NO. 379/JODH/2014 . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 2 1. ON THE FACT & CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN CONFIRMING THE ORD ER PASSED BY THE LD. AO U/S 154 OF THE I.T. ACT, 1961 AS ORDER U/S 154 WAS NOT WARRANTED IN THIS CASE . 2. ON THE FACT & CIRCUMSTANCES OF THE CASE LD. AO HAS ERRED IN MAKING ADDITION OF RS. 379483/ - ON THE ACCOUNT OF INCOME FROM OTHER SOURCE AS AGAINST DECLARED BY THE APPELLANT IN THE HEAD OF BUSINESS AND DISALLOWING THE REMUNERATION CLAIM ON THIS INCOME. THE AO HAS COMPLETELY ERRED IN MAKING THIS ADDITION BECAUSE THESE INTEREST RECEIPT WAS TOTALLY BELONGING TO BUSINESS FDR HENCE IT CANT BE TREATED UND ER INCOME FROM OTHER SOURCES. 3. ON THE FACT & CIRCUMSTANCES OF THE CASE LD. AO HAS ERRED IN NOT KEEPING PAST HISTORY OF THE CASE AS WELL AS OF SISTER CONCERN CASES. INTEREST INCOME OF FDR WAS SHOWN IN THE CREDIT SIDE OF PROFIT AND LOSS ACCOUNT AS USUAL A ND ADDITION AGAIN ON THIS POINT MEET DOUBLE TAXATION ON ONE SOURCE. INTEREST INCOME SHOULD NOT BE ADDED EXCEPT TO BUSINESS INCOME. 4. ON THE FACT & CIRCUMSTANCES OF THE CASE LD. AO HAS ERRED IN CHAGRINING INTEREST U/S 234 B & 234C. 5. THE APPELLANT MAY PLEASE BE PERMITTED TO RAISE ANY ADDITIONAL OR ALTERNATIVE GROUNDS AT OR BEFORE HEARING. 3. FACTS RELATING TO THE CASE , IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 29/09/2009 DECLARING TOTAL INCOME OF RS. 3,73,300/ - . CASE WAS SELE C TED FOR SCRUTINY AND THE ASSESSMENT WAS FRAMED AT AN INCOME OF RS. 11,84,640/ - BY MAKING TRADING ADDITION OF RS. 8,12,307/ - VIDE ORDER DATED 14/11/2011. LATER ON, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN FDR INTEREST OF RS. 4,27,672/ - WHI CH WAS TO BE ADDED SEPARATELY IN THE DECLARED RETURN INCOME . THE ASSESSING OFFICER ALLOWED BANK INTEREST PAYMENT OF RS. 4 8,189/ - AND ADDED RS. 3,79,483/ - 3 BY PASSING THE ORDER U/S 154 OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) . 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER COULD NOT BE PERMITTED TO REVISE OR REVIEW HIS EARLIER ORDER , WHEN THERE BEING NO CHANGE IN FACTS OR CIRCUMSTANCES AND ENTIRE MATERIAL WAS BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHETHER COMPLETED U/S 143(3) OR U/S 250 OF THE ACT. IT WAS FURTHER SUBMITTED THAT RECTIFICATION WAS NOT POSSIBLE IF THE QUESTION WAS DEBATABLE . RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. HERO CYCLES PVT. LTD. REPORTED AT 228 ITR 463. IT WAS STATED THAT THE RECTIFICATION CARRIED OUT BY THE ASSESSING OFFICER WAS NOT A MISTAKE APPARENT FROM RECORD AND WAS ONLY A CHANGE OF OPINION WHICH COULD N OT BE DONE U/S 154 OF THE ACT . RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF T.S. BALARAM, ITO VS. M/S. VOLKART BROTHERS REPORTED AT 8 2 ITR 50 . IT WAS FURTHER STATED THAT THE FDRS MADE BY THE ASSESSEE HAD BEEN MORTGAGED IN THE DEPARTMENT AS A SECURITY S O, THE BUSINESS FUND WERE UTILIZED BY MAKING THESE FDRS AND THE SAME WERE REFUNDED BY THE DEPARTMENT AFTER FINAL WORK . THEREFORE, THE INCOME COULD NOT BE TREATED AS INCOME FROM 4 OTHER SOURCES. RELIANCE WAS PLACED ON THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. GOPALRAM PEMARAM IN I.T.A.NO. 499/JD/99 AND SHRI PAREEK CONTRACTORS VS. ITO IN I.T.A.NO. 311/JD /2001 . 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THERE WAS NOT A DEBATABLE POINT OR CASE OF CHANGE OF OPINION AS CONTENDED BY THE ASSESSEE. ON THE CONTRARY, THE ASSESSING OFFICER HAD GIVEN SPECIFIC SHOW CAUSE NOTICE BEFORE CARR YING OUT THE PROPOSED RECTIFICATION. HE THEREFORE, REJECTED THE PLEA OF THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. HE ALSO OBSERVED THAT THE ASSESSING OFFICER HAD ONLY TAKEN THE INTEREST ON I NCOME TAX R E FUND AS INCOME FROM OTHER SOURCES. NOW THE ASSESSEE IS IN APPEAL. 6 . NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE, HOWEVER, WRITTEN SUBMISSION HAS BEEN FURNISHED BY THE LEARNED COUNSEL FOR THE ASSESSEE WHICH WE HAVE CONSIDERED. IN THE WRITTEN SUBMISSIONS THE L EARNED COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS M ADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAD TAKEN A CONSCIOUS VIEW WHILE FRAMING A REGULAR ASSESSMENT AND ALSO MADE 5 CERTAIN ADDITIONS. THEREFORE, THE ASSESSING OFFICER WAS NOT EMPOWERED TO TAKE A CONTRARY VIEW. I T H AS FURTHER BEEN STATED THAT THE FDR S WERE MADE UNDER COMPULSION SITUATION, SO THE AIM OF THE ASSESSEE WAS NOT TO EARN INCOME, THEREFORE, THE INTEREST INCOME FROM THE FDR SHOULD NOT BE TREATED AS INCOME FROM OTHER SOURCES. IT WAS ALSO STATED THAT THE ITAT AND CIT(A) HAD TREATED THIS TYPE OF INCOME AS INCOME FROM BUSINESS IN ASSESSEES CASE AS WELL AS IN THE CASE S OF SISTER CONCERN S . 7 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW . 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE , IT IS AN ADMITTED FACT THAT THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT AND THE ASSESSING OFFICER HAS APPLIED HIS MIND WHILE FRAMING THE ASSESSMENT. LATER ON, HE CONSIDERED THE INTEREST ON FDRS ETC. AS INCOME FROM OTHER SOURCES AND RECTIFIED HIS EARLIER ASSESSMENT. IT IS NOTICED THAT A CONSISTENT VIEW HAS BEEN TAKEN BY THIS BENCH OF THE TRIBUNAL THAT THE INTEREST ON FDR WHICH WERE MADE IN THE COMPULSION FOR THE BUSINESS PURPOSE S IS TO BE TREATED AS A BUSINESS INCOME . THEREFORE, THE ISSUE RELATING TO THE INTEREST ON FDR CAN BE SAID TO BE A DEBATABLE ISSUE. IT IS 6 WELL SETTLED THAT O N A DEBATABLE ISSUE, RECTIFICATION U/S 154 OF THE ACT IS NOT PERMISSIBLE. WE THEREFORE, SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE . 9 . IN I.T.A.NO. 380/JODH/2014 , THE FACTS ARE SAME AS WERE IN I.T.A.NO. 379/JODH/2014 (SUPRA) . THEREFORE, OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER SHALL APPLY MUTATIS - MUTANDIS FOR THIS ASSESSMENT YEAR I.E. 2010 - 11 ALSO. 10 . IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE ALLOWED. ( ORDER PRONOUNCED IN THE COURT ON 23 RD JULY , 201 4) . SD/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD JULY , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR .