M/s. Shree Govindam Prime Foods (P) Ltd., Sri Ganganagar V. ACIT, Circle, Sri Ganganagar

ITA 391/JODH/2019

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9983 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 23 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: 28-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K.C. BADHOK LD.
• Keywords: Business income; Revision of order
• Section: 263; 143(3); 145(3)

Judgement Text

1 ITA NO.391/JODH/2019 SHREE GOVINDAM PRIME FOODS (P) LTD. 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.391/JODH/2019 ( / ASSESSMENT YEAR: 2015-16) SHREE GOVINDAM PRIME FOODS (P) LTD. C/O. RAJENDRA JAIN ADVOCATE 106, AKSHAY DEEP COMPLEX 5 TH B ROAD, SARDARPURA, JODHPUR RAJASTHAN-342 001. / VS. A CIT CIRCLE SRI GANGANAGAR RAJASTHAN ./ ./PAN/GIR NO. AALCS-9788-D ( /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 LD. PR. COMMISSIONER OF INCOME-TAX, BIKANER, (PR. CIT), FOR ASSESSMENT Y EAR (AY) 2015- 2 ITA NO.391/JODH/2019 SHREE GOVINDAM PRIME FOODS (P) LTD. ASSESSMENT YEAR: 2015-16 16 VIDE ORDER DATED 24/10/2019. THE EFFECTIVE GROUN DS 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 IS PREJUDICIAL T HE 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 LD. ASSESSING OFFICER U/S 143(3) WITHOUT ANY FINDING AS TO HOW THE ASSESSMENT ORDER PASSED BY THE LD. AO IS ERRONEOUS SO AS IT PR EJUDICIAL THE INTEREST OF REVENUE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT, BIKANER ERRED IN INVOKING THE PROVISIO NS OF SECTION 263 OF THE ACT BY HOLDING THAT THE ASSESSING OFFICER ACCEPTED ALL THE CLAIMS OF THE APPELLANT WITHOUT FURTHER ENQUIRIES OF THE MATTERS REFERRED I N THE DIRECTIONS ISSUED UNDER SECTION 144A OF THE ACT. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT, BIKANER ERRED IN SETTING ASIDE THE ASSESSMENT ORDER PASSED BY LD. AO PARTICULARLY WHEN THE LD.AO PASSED THE ASSESSMENT O RDER AFTER EXAMINATION OF DOCUMENTS PRODUCED BY THE ASSESSEE. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. 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 BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS AS WELL AS D URING 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 PARAGRAPHS. 3. THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING R ESIDENT CORPORATE ASSESSEE WAS ASSESSED U/S. 143(3) ON 30/1 2/2017 WHEREIN THE RETURNED INCOME OF RS.55.90 LACS WAS DE TERMINED AT RS.70.79 LACS. THE ASSESSEE WAS RUNNING A ROLLER FL OUR MILL AND IT 3 ITA NO.391/JODH/2019 SHREE GOVINDAM PRIME FOODS (P) LTD. ASSESSMENT YEAR: 2015-16 WAS SUBJECTED TO SURVEY PROCEEDINGS ON 08/10/2014. THE ASSESSEE VOLUNTARILY OFFERED AN INCOME OF RS.55 LACS FOR STO CK & CASH DISCREPANCIES. THE SAID AMOUNT WAS CREDITED TO PROF IT & LOSS ACCOUNT WHICH WAS ASSESSED AS INCOME FROM OTHER SOURCES . THE LD. AO, INVOKING THE PROVISIONS OF SEC. 145(3) REJE CTED BOOKS OF ACCOUNT AND ESTIMATED THE BUSINESS INCOME @RS.11.43 LACS ON SALES OF RS.47.83 CRORES. THE ASSESSEE WAS SADDLED WITH SOME OTHER MINOR DISALLOWANCES AND ACCORDINGLY, THE ASSE SSMENT WAS FRAMED AT RS.70.79 LACS. 4.1 HOWEVER, LD. PR. CIT, UPON PERUSAL OF CASE RECO RDS AND INVOKING THE PROVISIONS OF SEC.263, OPINED THAT THE ORDER WAS PASSED WITHOUT MAKING PROPER INQUIRIES OR VERIFICAT ION AND THEREFORE, THE SAME WOULD REQUIRE EXERCISE OF REVISIONAL JURIS DICTION IN TERMS OF SEC.263. ACCORDINGLY, A SHOW CAUSE NOTICE WAS ISSUE D TO THE ASSESSEE WHEREIN IT WAS STATED THAT DURING THE YEAR THE ASSESSEE REFLECTED SALE OF RS.47.64 CRORES AND INCOME FROM O THER SOURCES FOR RS.60.72 LACS WHICH INCLUDE A SUM OF RS.55 LACS AS SURRENDERED BY THE ASSESSEE DURING SURVEY PROCEEDIN GS. AGAINST GROSS RECEIPTS OF RS.48.25 CRORES, THE ASSESSEE REF LECTED GROSS PROFIT OF RS.4.29 CRORES AS AGAINST THE FACT THAT A T THE TIME OF SURVEY ON 08/10/2014, THE ASSESSEE HAD GROSS PROFIT OF RS. 5.36 CRORES ON GROSS SALES OF RS.28.03 CRORES. POST SURVEY, THE AS SESSEE ACHIEVED SALES OF RS.19.61 CRORES WHICH WAS CONSIDE RABLY LESS THAN SALES DURING PRE-SURVEY PERIOD. HOWEVER, THE A SSESSEE CLAIMED EXPENDITURE OF RS.47.79 CRORES FOR THE WHOL E YEAR. THE EXPENSES DURING PRE-SURVEY PERIOD WERE RS.31.96 CRO RES WHEREAS 4 ITA NO.391/JODH/2019 SHREE GOVINDAM PRIME FOODS (P) LTD. ASSESSMENT YEAR: 2015-16 THE EXPENSES FOR THE POST SURVEY PERIOD WERE RS.15. 82 CRORES. THEREFORE, THE ASSESSEE MADE EXCESS CLAIM OF EXPEND ITURE WHICH WAS NOT VERIFIED BY LD. AO AT THE TIME OF ASSESSMEN T PROCEEDINGS. 4.2 ANOTHER REASON TO INVOKE REVISIONAL JURISDICTIO N WAS THE FACT THAT CERTAIN DIRECTIONS WERE ISSUED U/S 144A TO EXA MINE VARIOUS ASPECTS OF THE MATTER LIKE EXAMINATION OF NEW LOANS TAKEN BY THE ASSESSEE, ELECTRICITY CONSUMPTION, EXAMINATION OF P URCHASES, YIELD AND VERIFICATION OF SUNDRY CREDITORS ETC. IT WAS ALLEGED THAT LD.AO DID NOT CARRY OUT THE AFO RESAID EXAMINATION AS PER THE DIRECTIONS ISSUED U/S 144A. 4.3 IN REPLY, THE ASSESSEE CONFRONTED THE STAND OF LD. PR.CIT ON BOTH THE ISSUES. IT WAS ASSERTED THAT VERIFICATION OF EXCESS EXPENDITURE AS WELL AS OTHER ASPECTS AS DIRECTED U/ S 144A WOULD NOT HAVE ANY IMPACT ON THE TOTAL INCOME SINCE THE A SSESSMENT HAS BEEN FRAMED BY INVOKING THE PROVISIONS OF SEC.145(3 ) WHEREIN THE ASSESSEES BOOKS OF ACCOUNTS HAVE BEEN REJECTED AND INCOME HAS BEEN DETERMINED BY APPLYING ESTIMATED NET PROFIT RA TE. 4.4 ANOTHER PERTINENT SUBMISSIONS WERE THE FACT THA T APPELLATE PROCEEDINGS AGAINST THE ASSESSMENT ORDER ALREADY ST OOD CONCLUDED ON 18/02/2019. IT WAS POINTED OUT THAT THE ASSESSEE HAD CHALLENGED THE ASSESSMENT ORDER BEFORE LEARNED FIRST APPELLATE AUTHORITY. HOWEVER, LD. CIT(A) SUSTAINED THE APPLICATION OF SE C.145(3) BUT ALLOWED MARGINAL RELIEF ON ESTIMATION ASPECT. THERE FORE, THE DOCTRINE OF MERGER WOULD APPLY WHICH WOULD VITIATE THE REVIS IONAL JURISDICTION. 4.5 HOWEVER, LD. PR. CIT REJECTED THE SUBMISSIONS M ADE BY THE ASSESSEE BY OBSERVING THAT THE MAIN ISSUE WAS TO VE RIFY THE YIELD 5 ITA NO.391/JODH/2019 SHREE GOVINDAM PRIME FOODS (P) LTD. ASSESSMENT YEAR: 2015-16 SHOWN BY THE ASSESSEE. FURTHER, THE DIRECTIONS ISSU ED U/S 144A WERE NOT COMPLIED WITH WHICH WOULD MAKE THE ORDER E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDI NGLY, LD. AO WAS DIRECTED TO REDO THE ASSESSMENT IN TERMS OF REVISIO NAL DIRECTIONS. 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. 5. UPON PERUSAL OF FACTUAL MATRIX AS ENUMERATED IN PRECEDING PARAGRAPHS, IT IS QUITE EVIDENT THAT THE ASSESSMENT HAS BEEN FRAMED BY REJECTING THE ASSESSEES BOOKS OF ACCOUNTS U/S 1 45(3). THE LD. AO ESTIMATED THE INCOME BY APPLYING NET PROFIT RATE ON THE SALES ACHIEVED BY THE ASSESSEE DURING THE YEAR. THIS BEIN G THE CASE, THE SHORTCOMING AS POINTED OUT BY THE LD. PR. CIT WOULD NOT HAVE ANY IMPACT ON ASSESSEES TOTAL INCOME AND THE ASSESSMEN T ORDER COULD NOT BE SAID TO BE PREJUDICIAL TO THE INTEREST OF TH E REVENUE, ON THIS POINT. FOR THE VERY SAID REASON, THE ALLEGATIONS TH AT THE ASSESSEE CLAIMED EXCESS EXPENDITURE WOULD ALSO NOT HAVE ANY IMPACT ON THE TOTAL INCOME OF THE ASSESSEE. 6. ANOTHER PERTINENT FACT IS THAT THE ASSESSMENT OR DER WAS ALREADY UNDER CHALLENGE BEFORE LEARNED FIRST APPELL ATE AUTHORITY. THE APPELLATE PROCEEDINGS STOOD CONCLUDED ON 18/02/2019 I.E. MUCH BEFORE THE INVOCATION OF REVISIONAL JURISDICTION U/ S 263. THE REJECTION OF BOOKS U/S 145(3) WAS UPHELD BUT CERTAIN MARGINAL RELIEF WAS PROVIDED AGAINST ESTIMATION OF BUSINESS INCOME. THE REFORE, THE DOCTRINE OF MERGER WAS APPLICABLE TO THE FACTS OF T HE CASE. 6 ITA NO.391/JODH/2019 SHREE GOVINDAM PRIME FOODS (P) LTD. ASSESSMENT YEAR: 2015-16 THE RATIO LAID DOWN BY HONBLE HIGH COURT OF RAJAST HAN IN THE CASE OF CIT V/S JAIN CONSTRUCTION CO. (257 CTR 336) IS CLEARLY APPLICABLE TO THE FACT OF THE CASE. 7. THEREFORE, FOR BOTH THE ABOVE STATED REASONS, TH E REVISIONAL JURISDICTION IS UNSUSTAINABLE IN THE EYES OF LAW. B Y QUASHING THE ORDER DATED 24/10/2019, WE ALLOW THE APPEAL. 8. 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.