Dr. P. R. Venugopal, Thalassery V. ACIT, Kannur

ITA 432/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52199 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 01-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-07-2009
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: A KUMARA BHAT
• Keywords: Opportunity of being heard; Assessment record
• Section: 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO.432/COCH/2009 ASSESSMENT YEAR:2006-07 DR.P.R.VENUGOPAL,MBBS,DGO MITHILA, CHETTAMCOON, PALLIKUNNU ROAD,TELLICHERRY. PA NO.ABNPV 4962A VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), KANNUR. (APPELLANT) ( RESPONDENT ) APPELLANT BY SHRI A KUMARA BHAT , C.A RESPONDENT BY MS. VIJAYAPRABHA, JR.D.R. O R D E R PER N.VIJAYAKUMARAN,J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME-TAX, KANNUR , PASSED U/S.263 OF THE I.T.ACT, DATED 22-06-2009. THE ASS ESSMENT YEAR INVOLVED IS 2006-07. 2. THE LD. C.I.T. WAS OF THE VIEW THAT ON EXAMINATI ON OF ASSESSMENT RECORDS, IT WAS FOUND THAT THE ASSESSEE HAD MAINTAINED BOOKS OF ACCOUNTS ON MERCANTILE SYSTEM B UT COLLECTION OF FEE WAS SHOWN ON CASH BASIS. THIS PO INT WAS NOT ENQUIRED BY THE ASSESSING OFFICER. FURTHER ON SEEING ITA NO. 432/COCH/2009 2 THE STATEMENT OF HDFC BANK IN THE FILE OF THE ASSES SING OFFICER, THERE WAS A DEPOSIT WHICH WAS ALLEGED AS F EES COLLECTION DURING THE PERIOD 04-10-2005 TO 27-03-20 06 BUT THERE WAS NO DEPOSIT FOR THE PERIOD 01-04-2005 TO 0 4-10- 2005. THE LD. C.I.T. WAS OF THE VIEW THAT THE AO FAILED TO EXAMINE THIS ASPECT. FURTHER, THE LD. ASSESSING O FFICER HAS NOT EXAMINED THE CAPITAL GAIN AS WELL AS INVESTMENT S MADE IN LIS BESIDES THE OTHER FACTS. ACCORDINGLY, THE L D. COMMISSIONER SET ASIDE THE ORDER OF THE ASSESSING O FFICER WITH A DIRECTION TO MAKE WHOLE ASSESSMENT AFRESH AF TER MAKING PROPER ENQUIRIES AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. TAKING OBJECTION TO THE ORDER OF THE COMMISSIONE R, THE LD. COUNSEL FOR THE ASSESSEE WOULD SUBMIT THAT THE LD. COMMISSIONER FAILED TO UNDERSTAND THAT THE ASSESSEE HAS ACCOUNTED COLLECTION FOR ALL THE 12 MONTHS OF THE Y EAR FULLY AND CORRECTLY; THE STATISTICS OF AVERAGE APPLIED IS WRONG; COMMISSIONER ERRED IN ESTIMATING POSSIBLE INTEREST AS NO INTEREST WAS PAID BY THEM, THERE WAS NO INCOME BEAR ING INVESTMENT WITH LIS, THE ASSUMPTION OF INTEREST IS ONLY NOTIONAL. THEREFORE, THE ORDER OF THE AO IS JUSTIF IED WHICH REQUIRES NO INTERFERENCE, IS THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. ITA NO. 432/COCH/2009 3 4. ON THE OTHER HAND, THE LD. JR.D.R. WOULD SUBMIT THAT THIS IS A PERFECT CASE FOR INITIATION OF ACTION U/S .263 AS THE ASSESSING OFFICER HAS PASSED A FOUR LINE ORDER U/S. 143(3) WITHOUT GOING INTO THE MERITS, THERE WAS NO VERIFI CATION BY THE ASSESSING OFFICER AND NO ENQUIRY HAS BEEN CONDU CTED. ONLY OUT OF 263 ORDER, ASSESSEE CAME WITH THE CAPIT AL GAIN ON SALE OF SHARES WHICH WAS NOT EVEN DELIBERATED IN THE ASSESSMENT ORDER. THUS, 263 ACTION WAS JUSTIFIED IS THE ARGUMENT OF THE LD. JR. D.R. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS. ACTION U /S.263 CAN BE INVOKED FOR THE PURPOSE OF CORRECTING THE MA CHINERY, I.E. TO AVOID THE LOSS OR PREJUDICE TO THE INTEREST OF THE REVENUE. FOR THAT, ASSESSMENT ORDER SHOULD BE ERR ONEOUS. THE TWIN CONDITIONS FOR ACTION U/S. 263 ARE THAT TH E ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE SHOULD BE PRESENT IN THE ASSESSMENT ORDER A ND IN SUCH CIRCUMSTANCES JURISDICTION U/S.263 CAN BE ASSU MED. IN THIS CASE, THE 143(3) ORDER WHICH THE ASSESSING OFF ICER PASSED ON 25-7-2008 CLEARLY SHOWS THAT THERE IS NO DELIBERATION OF FACTS AND NO ENQUIRY HAS BEEN CONDU CTED AND THERE WAS NO VERIFICATION WITH RELEVANCE TO THE ENT RIES. THIS WILL GO TO SHOW THE CURSORY APPROACH ON THE PART OF THE ASSESSING OFFICER. THEREFORE THIS IS A FIT CASE F OR ASSUMING ITA NO. 432/COCH/2009 4 JURISDICTION U/S.263 AS THE ORDER IS NOT AS PER THE LAW AND THERE IS CLEAR ERROR AND IT IS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE. THE CONTENTION OF THE LD . COUNSEL IS THAT ALL HAS BEEN PROPERLY LOOKED INTO AT THE LE VEL OF THE ASSESSING OFFICER AND HENCE ACTION U/S. 263 IS NOT JUSTIFIED AS THERE IS NO ERROR ON THE PART OF THE ASSESSING O FFICER. HENCE, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. - 243 ITR 83 IS DIRECTLY APPLICABLE, IS THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT IN THE DECISION RELIED UPON BY THE LD . COUNSEL IN THE CASE OF MALABAR INDUSTRIAL CO. LTD., CITED SUPRA , THE PRINCIPLE LAID DOWN IS THAT THE ORDER SHOULD BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSUMPTION OF JURISDICTION AND CONDI TIONS REQUIRED FOR EXERCISE OF 263 ACTION, THERE SHOULD B E A PROCEEDING UNDER THE ACT AND IN SUCH PROCEEDING, TH E ASSESSING OFFICER MUST HAVE PASSED AN ORDER, THE COMMISSIONER OF INCOME-TAX SHOULD HAVE CONSIDERED THAT THE SAID ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. UNDER SECTION 263, THE ITA NO. 432/COCH/2009 5 COMMISSIONER CAN REVISE THE ORDER PASSED BY THE ASSESSING OFFICER WHEN IT IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF THE REVENUE. IT IS A SUO MOTU POW ER OF THE COMMISSIONER AND THERE MUST BE MATERIAL FOR THE LD. COMMISSIONER TO CONSIDER THAT THE ORDER PASSED BY T HE ASSESSING OFFICER WAS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE REVISIONAL POWER OF THE COMMISSIONER U/S.263 IS TO AVOID THE AMPLITUDE WHICH ENABLE THE COMMISSIONER TO CALL FOR AND EXAMINE ANY PROCEEDINGS. IT EMPOWERS THE COMMISSIONER TO MAKE OR CAUSE TO MAKE SUCH ENQUIRY AS HE DEEMS NECESSARY IN ORDER TO FIND OUT WHETHER THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REV ENUE. AFTER EXAMINING THE RECORDS AND AFTER MAKING OR CAU SE TO BE MAKING AN ENQUIRY IF HE CONSIDERS THAT THE OR DER IS ERRONEOUS, THEN THE COMMISSIONER CAN PASS AN ORDER THEREOF AS THE CIRCUMSTANCES OF THE CASE JUSTIFY. 7. IN THE CASE OF AZHIMALA BEACH RESORTS PVT. LTD. VS. CIT 325 ITR 419 THE JURISDICTIONAL HIGH COURT HAS OBSERVED THAT WHEN AN OPEN REMAND IS MADE BY THE COMMISSIONER UND ER ITA NO. 432/COCH/2009 6 SECTION 263, IT IS FOR THE ASSESSING OFFICER TO CON DUCT A DETAILED ENQUIRY AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE AND HE IS FREE TO RESTORE THE ORIGINAL ASSESSMENT PARTLY OR I N FULL EVEN AFTER THE ORDER ISSUED UNDER SECTION 263. APPLYING THE ABOVE DECISION, WE SEE THAT THE LD. COMMISSIONER CAN DIRE CT THE ASSESSING OFFICER TO MAKE THE ASSESSMENT AFRESH AFTER MAKING PROPER ENQUIRIES AND AFTER GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. BY THIS DIRECTION, A DEVELOPMENT CAME AS ADMITTE D BY THE PARTIES THAT THE ASSESSEE HAS ALSO GIVEN SOM E DECLARATION REGARDING THE CAPITAL GAIN ON SALE OF SHARES, WHICH WAS NOT AT ALL ADVERTED BY THE LD. ASSESSING OFFICER IN THE EARLIER 143(3) ASSESSMENT ORDER. T HIS ITSELF WILL GO TO SHOW THAT THERE IS A FAILURE ON T HE PART OF THE ASSESSING OFFICER TO MAKE PROPER AND DETAILED ENQUIRY. UNDER THE ABOVE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSUMPTION OF JURISDICTION U/S.263 BY THE LD. COMMISSIONER IS QUITE JUSTIFIED AND IN ACCORDAN CE WITH LAW. THEREFORE, WE DECLINE TO INTERFERE WIT H THE IMPUGNED ORDER OF THE LD. COMMISSIONER. THUS, THE APPEAL OF THE ASSESSEE DESERVES TO BE DISMISSED AND ACCORDINGLY DISMISSED. ITA NO. 432/COCH/2009 7 9. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM, DATED THE 03 RD AUGUST,2011. PM. COPY FORWARDED TO: 1. DR.P.R.VENUGOPAL, MBBS,DGO., MITHILA, CHETTAMCOON, PALLIKUNNU ROAD,TELLICHERRY. 2. THE ASST. CIT., CIRCLE-1(1), KANNUR. 3. CIT, KANNUR. 4. D.R.