ITO, Ward-2(1), Bhubaneswar, Bhubaneswar V. Mahendra Kumar Sutar, Bhubaneswar

ITA 407/CTK/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3830 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 11-07-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Keywords: Principle of natural justice
• Section: 143(3); 142(1); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAV AN KUMAR GADALE, JUDICIAL MEMBER ITA NO407/CTK/2013 ASSESSMENT YEAR : 2009 - 10 INCOME TAX OFFICER, WARD 2(1), BHUBANESWAR. VS. SHRI MAHENDRA KUMAR SUTAR, PROP. M/S. R.C.METAL INDUSTRIES, BHUBANESWAR. PAN/GIR NO. ADQPS 3946 N (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 22 /05/ 2017 DATE OF PRONOUNCEMENT : 24 /05/ 2017 O R D E R PER PAVAN KUMAR G ADALE, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - II , BHUBANESWAR , DATED 30.3.2013 , FOR THE ASSESSMENT YEAR 2009 - 10 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT JUSTIFIED IN ALLOWING THE EXEMPTION U/S.10B CLAIMED BY THE ASSESSEE AT RS.41,58,228/ - WHEN THE ASSESSEE DID NOT FULFIL THE ESSENTIAL CONDITIONS AS FOUND BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS NOT JUSTIFIED IN ACCEPTING THE CONTENTIONS OF THE ASSESSEE AND NOT ACCEPTING THE FINDINGS OF THE AO IN VIOLATION OF RULE 46A OF THE IT RULES. 2 ITA NO.407/CTK/2013 ASSESSMENT YEAR : 200 9 - 10 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM PR OCESSING AND SALE OF CHROME CONCENTRATE AND FILED THE RETURN OF INCOME ON 16.11.2009 DISCLOSING TOTAL INCOME OF RS.3,52,025/ - . THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY T HROUGH CASS AND NOTICES U/S.143( 2) AND 142(1) WERE ISSUED TO THE ASSESSEE. IN COMPLIANCE THERETO, LD A.R. OF THE ASSESSEE APPEARED FROM TIME TO TIME. THE ASSESSING OFFICER, DURING ASSESSMENT PROCEEDINGS, FOUND THAT THE ASSESSEE HAS CLAIMED CERTAIN EXPENSES DEBITED TO PR OFIT AND LOSS ACCOUNT. THE ASSESSEE P RODUCED THE BOOKS OF ACCOUNT, B ILLS AND VOUCHERS. THE ASSESSING OFFICER AFTER VERIFYING THE FINANCIAL STATEMENT FIND THAT THE ASSESSEE HAS THE EXPORT SALES OF RS.6,71,87,431/ - AND INCOME FROM THE EXPORT BUSINESS HAS B EEN WORKED OUT AT RS.41,58,228/ - FOR CLAIMING U/S. 10B OF THE AC T. THE ASSESSING OFFICER CALLED FOR THE AUDIT REPORT IN THE FORM NO.56G AND THE LD A.R. OF THE ASSESSEE EXPLAINED THAT THE ASSESSEE HAS EARLIER FILED THE RETURN OF INCOME ON 30.7.2009 AND PRODUCED A PHOTOCOPY OF ACKNOWLEDGEMENT , WHEREAS THE ASSESSEE HAS TO FILE THE RETURN OF INCOME FOR CLAIM OF DEDUCTION U/S.10B ALONGWITH AUDIT REPORT. THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME ELECTRONICALLY ON 30.7.2009 AND, THEREFORE, ACCORDING TO THE ASSESSING OFFICER, THE SAME IS NOT A VALID RETURN. WHEREAS THE CONTENTION OF THE LD A.R. THAT THE ASSESSEE HAS COMPLIE D WITH THE PROVISIONS FOR CLAIMING DEDUCTIO N U/S.10B OF THE ACT, AND SAME SHOULD BE ALLOWED . BUT THE ASSESSING OFFICER FOUN D THE ASS ESSEES B OOKS OF ACCOUNT ARE A UDITED U/S.44AB OF THE ACT AND THE ASSESSEE HAS NOT FURNISHED AUDIT REPORT 3 ITA NO.407/CTK/2013 ASSESSMENT YEAR : 200 9 - 10 ALONGWITH RETURN OF INCOME . WITH THESE OBSERVATIONS, THE ASSESSING OFFICER DISCUSSED THE CASE WITH THE PROVISIONS OF SECTION 10B AND FINALLY CONCLUDE D THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITION OF SUBMITTING THE AUDIT REPORT ON OR BEFORE THE DUE DATE U/S.139(1) OF THE ACT AND DENIED THE DEDUCTION U/S.10B FOR RS. 41,58,2 28/ - , ALONGWITH OTHER ADDITIONS PASSED ORDER UNDER SECTION 143(3) OF THE ACT ON 26.12.2011. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD A.R. ARGUED ON THE DISPUTED ISSUE AND SUBMITTED THAT THE ASSESSEE H AS OBTAINED AUDIT REPORT IN FORM 56G AND ON FILING THE MANUAL RETURN OF INCOME , THE ASSESSEE HAS SATISFIED THE CONDITIONS TO CLAIM U/S.10B OF THE ACT WHEREAS THE ASSESSING OFFICER HAS NOT ACCEPTED THE CLAIM . THE CIT (A) RELIED ON CBDT CIRCULAR AND THE DEC ISION OF ITAT CHENNAI BENCH IN ITA NO.1252/MAD2012 FOR ASSESSMENT YEAR 2008 - 09 IN THE CASE OF GEMINI COMMUNICATION LTD VS ACIT REFERRED AT PAGES 6 TO 7 OF THE ORDER AND OBSERVED THAT IT IS NOT MANDATORY FOR THE ASSESSEE TO FILE AUDIT REPORT TO CLAIM DEDUC TION U/S.10B OF THE ACT AND THE ASSESSEE HAS FILED THE AUDIT REPORT IN THE COURSE OF ASSESSMENT PROCEEDINGS . FURTHER, THE CIT(A) CONSIDERED THE FACT THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 30.7.2009 WITHIN DUE DATE U/S.139(1) OF THE ACT. THE CIT (A) RELIED ON THE SUBM ISSIONS OF THE ASSESSEE AND OBSERVED THA T THE ASSESSEE HAS COMPLIED THE CONDITION S OF FILING THE RETURN OF INCOME BEFORE DUE DATE IRRESPECTIVE OF THE FACT THAT THE ASSESSEE HAS FILED RETURN OF INCOME ELECTRONI CALLY ON 16.11.2009. CONSIDE RING THE LEGAL POSITION AND THE PROVISIONS FOR FILING THE RETURN, THE CIT(A) FOUND THAT THE ASSESSEE HAS 4 ITA NO.407/CTK/2013 ASSESSMENT YEAR : 200 9 - 10 OBTAINED THE AUDIT REPORT IN FORM 56G AND HAS FULFILLED THE CONDITIONS U/S.10B OF THE ACT AND FINALLY CONSIDERED THE MANUAL RETURN OF INCOME FILED U/S.139(1) OF THE ACT AS VALID IRRESPECTIVE OF THE FACT THAT NO AUDIT REPORT WAS FILED. AND THE ASSESSEE CANNOT BE DENIED THE BENEFIT AND PARTLY ALLOWED THE APPEAL. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REV ENUE HAS FILED APPEAL WIT H THE TRIBUNAL. THE LD D.R. ARGUED THAT THE CIT(A) ERRED IN ALLOWING EXEMPTION U/S.10B OF THE ACT AS THE ASSESSEE HAS NOT COMPLIED THE CONDITIONS AS REFERRED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE CIT(A) HAS CONSIDERED THE SUBMISSIONS OF THE ASSESSEE WHICH WERE NOT PUT BEFORE THE ASSESSING OFFICER AND VIOLATING THE PROVISIONS OF RULE 46A OF ITAT RULES, 1962 AND PRAYED THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 6 . WE HEARD THE LD D. R. AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSEE UNDER THE PROVISIONS OF SECTION 10B OF THE ACT, IS REQUIRED TO FILE RETURN OF INCOME WITHIN DUE DATE U/S.139(1) OF THE ACT AND FURNISHED AUDIT REPORT BEING ONE OF THE CRITERIA FOR ALLOWING THE CLAIM U/S.10B OF THE ACT. IN THE PRESENT CASE, THE ASSESSEE HAS FILED RETURN OF INCOME MANUALLY ON 30.7.2009 AND ALSO FILED RETURN ELECTRONICALLY ON 16.11.2009, WHICH WAS TREATED AS NON - EST BY THE ASSESSING OFFICER. PRIMA FACIE, THE ASSESSEE HAS SUBMITTED DETAILS BEFORE THE CIT(A) AND RELIED ON THE JUDICIAL DECISION S AND CONTESTED ON THE DISALLOWANCE . W HEREAS THE FACTS WERE NOT SUBMITTED BEFORE THE ASSESSING 5 ITA NO.407/CTK/2013 ASSESSMENT YEAR : 200 9 - 10 OFFICER. WE FIND THE CIT(A) HAS RELIED ON THE SUBMISSIONS OF THE ASSESSEE AND JUDICIAL DECISIONS AND INTERPRETATION OF LEGAL PROVISIONS AND OBSERVED THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.10B OF THE ACT. LD D.R. SUBMITTED THAT T HE ASSESSING OFFICER WAS DEPRIVED TO VERIFY THE SUBMISSIONS AND EVIDENCES FILED DURING THE APPELLATE PROCEEDINGS AND THERE IS GROSS VIOLATION OF PRINCI PLES OF NATURAL JUSTICE AND THE PROVISIONS OF RULE 4 6A OF I.T.RULES . WE CONSIDERING THE APPARENT FACTS AND PROVISIONS OF LAW, AND THE CLAIM OF DEDUCTION U/S. 10B OF THE ACT BY T HE ASSESSEE ON EXPORT TURNOVER, FOUND THAT THE CIT(A) HAS DEA LT EXHAUSTIVELY ON THE FACTS, JUDICIAL DECISION, CBDT CIRCULARS BUT THE CIT(A) HAS NOT CALLED FOR THE COMMENTS OF THE ASSESSING OFFICER IN THE REMAND REPORT BEFORE ADJUDICATING THE ISSUE ON MER ITS. WE ARE OF THE CONSIDERED VIEW THAT THE AS SESSING OFFICER SHOULD BE GIVEN REASO NABLE OPPORTUNITY TO VERIFY THESE FACT S AND SUBMISSIONS OF THE ASSESSEE AND ALSO LD D.R.S CONTENTION THAT NO PROPER OPPORTUNITY WAS PROVIDED TO THE ASSESSING OFFICER TO E XAMINE THE GENUINENESS EXCEPT THE CIT(A) HAS RELIED SOLELY ON FINDINGS AND SUBMISSI ONS OF THE ASSESSEE. ACCORDINGLY , IN THE INTEREST OF JUSTICE AND TO COMPLY WITH THE PROVISIONS OF RULE 46A, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE DISPUTED I SSUE TO THE FILE OF THE ASSESSING OFFICER FOR LIMITED PURPOSE TO VERIFY AND EXAMINE THE CLAIM IN RESPECT OF MATERIALS AND SUBMISSIONS FILED IN THE APPELLATE PROCEEDINGS AND THE ASSESSEE SHALL BE PROVIDE ADEQUATE OPPORTUNITY OF HEARING BEFORE PASSING A SPEAKING ORDER ON MERITS. 6 ITA NO.407/CTK/2013 ASSESSMENT YEAR : 200 9 - 10 9 . IN THE RESULT, THE APPEAL F ILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 /05/2017 IN THE PRESENCE OF PARTIES. SD/ - SD/ - ( N.S SAINI ) ( PAVAN KUMAR GADALE) A CCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 24 /05/2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : INCOME TAX OFFICER, WARD 2(1), BHUBANESWAR 2. THE RESPONDENT. SHRI MAHENDRA KUMAR SUTAR, PROP. M/S. R.C.METAL INDUSTRIES, BHUBANESWAR. 3. THE CIT(A) - II, BHUBANESWAR 4. PR.CI - II , BHUBAN E SWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//