Sri. V.V.Manojan, Kasargode V. ITO, Kasargode

ITA 401/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61504 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-04-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 17-06-2010
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: K SRINIVAS SHENOY
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 401/COCH/2010 ASSESSMENT YEAR : 2006-07 SHRI V.V. MANOJAN, SAJEEVA NILAYAM, THAIKADAPURAM, NILESHWAR, VS. THE INCOME TAX OFFICER, WARD-1, KASARAGOD. (ASSESSEE-APPELLANT) (REVENUE- RESPONDENT) ASSESSEE BY SHRI K. SRINIVAS SHENOY, CA REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 18 /04/2012 DATE OF PRONOUNCEMENT 01/06/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31-03-2010. PASSED BY THE LD. CIT, KANNUR U/S. 263 OF THE ACT A ND IT RELATES TO THE ASSESSMENT YEAR 2006-07. THE APPEAL IS BARRED BY LIMITATION BY 12 DAYS. THE ASSESSEE HAS MOVED A PETITION PRAYING THAT THE DELAY BE CONDONED. HAVIN G REGARD TO THE SUBMISSIONS MADE IN THE PETITION, WE CONDONE THE DELAY AND ADMIT THE AP PEAL. 2. THE ASSESSEE IS ASSAILING THE VALIDITY OF INI TIATION OF REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT. THE FACTS RELATING TO THE ISSUE ARE STATED IN BRIEF. THE ASSESSEE IS A CIVIL CONTRACTOR. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED U/S. 143(3) OF THE ACT BY MAKING A SMALL ADDITION O F RS. 23,000/- TO THE TOTAL INCOME DECLARED BY THE ASSESSEE. SUBSEQUENTLY, IN THE COU RSE OF EXAMINATION OF THE RECORD, THE LD. CIT NOTICED THAT THE ASSESSEE HAS DECLARED GROSS RECEIPTS FROM CONTRACT BUSINESS AT RS. 83,82,456/- WHILE THE SAME WAS RS. 88,82,456/- AS PER TDS CERTIFICATES. THE LD. CIT ALSO NOTICED THAT THE ASSESSEE HAS NOT SHOWN ANY EMD, CLOSING STOCK AND I.T.A.NO. 401/COCH/2010 2 WORK-IN-PROGRESS IN HIS FINANCIAL STATEMENTS. THOU GH THE ASSESSEE HAD CLAIMED DEPRECIATION ON JCB AND TIPPER, NO INCOME THERE FRO M WAS DECLARED. IT WAS ALSO NOTICED THAT THE ASSESSEE DID NOT DECLARE INTEREST INCOME ON FIXED DEPOSITS AND THE CASH BALANCE IN THE BALANCE SHEET WAS MUCH LESS AS AT TH E YEAR END. HENCE, THE LD. CIT NOTICED THAT THE AO DID NOT EXAMINE ALL THE ABOVE A SPECTS DURING THE COURSE OF ASSESSMENT PROCEEDING AND HENCE HE INITIATED REVISI ON PROCEEDINGS U/S. 263 OF THE ACT. 3. IN RESPONSE TO THE NOTICE ISSUED BY LD CIT, THE ASSESSEE FILED WRITTEN SUBMISSIONS BUT DID NOT APPEAR IN PERSON BEFORE THE LD. CIT. T HE ADMINISTRATIVE CIT NOTICED THAT THE SUBMISSIONS MADE BY THE ASSESSEE IN HIS WRITTEN SUBMISSIONS WERE NOT EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN VIEW OF THE FOREGOING, THE LD. CIT CONSIDERED THE ASSESSMENT ORDER AS ERRONEOUS AN D PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY, HE SET ASIDE THE ASSESSM ENT ORDER AND DIRECTED THE AO TO COMPLETE THE ASSESSMENT AFRESH AFTER MAKING NECESSA RY EXAMINATION OF THE ISSUES DISCUSSED ABOVE AND AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS OFFERED NECESSARY EXPLANATIONS IN THE WRITTEN SUBMISSIONS F ILED BEFORE THE LD. CIT, WHICH WERE NOT CONSIDERED BY THE LD. ADMINISTRATIVE COMMISSION ER BEFORE PASSING ORDER U/S. 263 OF THE ACT. ON THE CONTRARY, THE LD. DR SUBMITTED THA T THE ASSESSING OFFICER DID NOT EXAMINE THE VARIOUS POINTS NOTICE BY THE LD. CIT AN D HENCE, THE IMPUGNED REVISIONARY ORDER HAS BEEN RIGHTLY PASSED BY THE LD. ADMINISTRA TIVE COMMISSIONER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. BEFORE GOING INTO THE MERITS OF THE ISSUE, WE WOULD LIKE T O DISCUSS ABOUT THE LEGAL POSITION WITH REGARD TO THE POWER OF LEARNED CIT TO INVOKE REVISI ON PROCEEDINGS UNDER SECTION 263 OF THE ACT. THE SCOPE OF REVISION PROCEEDINGS INITIAT ED UNDER SECTION 263 OF THE ACT WAS CONSIDERED BY HON'BLE BOMBAY HIGH COURT, IN THE CAS E OF GRASIM INDUSTRIES LTD. V CIT (321 ITR 92) BY TAKING INTO ACCOUNT THE LAW LAID DO WN BY THE HON'BLE SUPREME COURT. THE RELEVANT OBSERVATIONS ARE EXTRACTED BELOW: I.T.A.NO. 401/COCH/2010 3 SECTION 263 OF THE INCOME-TAX ACT, 1961 EMPOWERS TH E COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN, BY THE ASS ESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER A N ENQUIRY AS IS NECESSARY, ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE KE Y WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORDER MUST BE CONSIDERE D BY THE COMMISSIONER TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THIS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMENTS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83, THE SUPREME COURT HELD THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ON LY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. THE SUPREME COURT HELD THAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APP LICATION OF LAW, WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APP LICATION OF MIND, WOULD BE AN ORDER FALLING IN THAT CATEGORY. THE EXPRESSION PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE SUPREME COURT HELD, IT IS OF W IDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX. WHAT IS PREJUDICIAL TO T HE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMENT OF THE SUPREME COURT (HEA DNOTE) : THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A SSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS T AKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF T HE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR I NDUSTRIAL CO. LTD. [2000] 243 ITR 83 (SC) HAS BEEN FOLLOWED AND EXPLAI NED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA L TD. [2007] 295 ITR 282. 6. WE NOTICE THAT THE ASSESSING OFFICER HAS PAS SED THE ASSESSMENT ORDER IN A SHORT MANNER WITHOUT DISCUSSING MUCH. IT WAS ALSO NOT SHO WN TO US THAT THE ASSESSING OFFICER DID EXAMINE THE VARIOUS POINTS RAISED BY THE LD. CI T DURING THE COURSE OF ASSESSMENT I.T.A.NO. 401/COCH/2010 4 PROCEEDINGS AND HE HAS TAKEN A POSSIBLE VIEW ON THO SE POINTS. IT IS A WELL SETTLED PROPOSITION OF LAWS THAT LACK OF ENQUIRY ON IMPORTA NT POINTS WOULD RENDER THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE I NTERESTS OF THE REVENUE. IN THE INSTANT CASE, APPARENTLY THE AO DID NOT EXAMINE THE ISSUES RAISED BY LD CIT AND HENCE THE ASSESSMENT ORDER PASSED BY HIM IS RENDERED ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE, WE DO NOT FIND ANY INF IRMITY IN THE REVISION ORDER PASSED BY THE ADMINISTRATIVE COMMISSIONER. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED ACCORDINGLY O N 01-06-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 1ST JUNE, 2012 GJ COPY TO: 1. SHRI V.V. MANOJAN, SAJEEVA NILAYAM, THAIKADAPURA M, NILESHWAR. 2.THE INCOME TAX OFFICER, WARD-1, KASARAGOD. 3.THE COMMISSIONER OF INCOME-TAX, KANNUR. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN