M/s. Jagdish &Co., Anand V. The Income tax Officer,Ward-1, Anand

ITA 435/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85754 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Assessee Lawyers: M G PATEL
• Keywords: Opportunity of being heard
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO. 435 / AHD/ 20 1 3 (A SSESSMENT YEAR: 2008 - 09) M/S. JAGDISH & CO. 2, BALKRISHNA SOCEITY, NR. SHIKOD TALAV, NR. NEW BUS STAND, ANAND V/S INCOME TAX OFFICER, WARD - 1, ANAND ( APPELLANT) (RESPONDENT) PAN: AABFJ 4181C APPELLANT BY : SHRI M.G. PATEL, A.R. RESPONDENT BY : MS. VIBHA BHALLA, CIT/DR ( )/ ORDER DATE OF HEARING : 24 - 12 - 2014 DATE OF PRONOUNCEMENT : 0 4 - 03 - 2015 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 21.12.2012 PASSED BY CIT, BARODA U/S 263 OF THE ACT FOR A.YS. 2008 - 09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED AS CIVIL CONTRACTOR. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 08 - 09 ON 30.9.2008 DECLARING TOTAL INCOME AT RS. NIL AFTER SET OFF OF BROUGHT FORWARD LOSS OF EARLIER YEARS. THE CASE WAS ITA NO 435/AHD/2013 . A.Y. 2008 - 09 2 SELECTED FOR SCRU TINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 30.11.2010 AND THE TOTAL LOSS WAS DETERMINED AT RS. 15,880/ - AFTER SET OFF OF BROUGHT FORWARD ADJUSTMENT OF EXPENSES U/S 40(A)(IA). SUBSEQUENTLY, ON EXAMINATION OF RECORDS OF ASSESSMENT, LD. CIT NOTICED THAT AS PER SECTION 80 OF THE ACT, THE CARRY FORWARD OF LOSS CAN ONLY BE ALLOWED ON FULFILLMENT OF THE CONDITIONS SPECIFIED THEREIN. HE NOTICED THAT IN THE ORIGINAL RETURN OF INCOME FOR AY 2007 - 08 THAT WAS FILED BY THE ASSESS EE, NO CARR IED FORWARD LOSS WAS SHOWN TO HAVE BEEN CARRIED FORWARD TO SUBSEQUENT ASSESSMENT YEAR AND THEREFORE THE ASSESSEE WAS NOT ENTITLED TO CLA IM THE LOSS FOR AY 2007 - 08 FOR SET OFF AGAINST THE INCOME FOR AY 2008 - 09. HE ACCORDINGLY ISSUED NOTICE AND CA LLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE ORDER U/S 263 OF THE ACT NOT BE PASSED AND IN RESPONSE TO WHICH ASSESSEE INTERALIA OBJECTED TO THE INITIATION OF PROCEEDINGS U/S 263 AND ON MERITS MADE ITS SUBMISSIONS. THE SUBMISSION OF THE ASSESSEE WAS N OT FOUND ACCEPTABLE TO THE L D . CIT AS HE WAS OF THE VIEW THAT BY ALLOWING THE SET OFF OF BROUGHT FORWARD LOSS IN THE YEAR UNDER CONSIDERATION HAS RESULTED INTO A ERRONEOUS AND PREJUDICIAL ASSESSMENT ORDER BEING PASSED BY THE AO. HE ACCORDINGLY CANCELLED TH E ASSESSMENT ORDER DATED 30.11.2010 OF THE AO FRAMED U/S 143(3) AND DIRECTED THE A.O TO MAKE THE FRESH ASSESSMENT OF THE TOTAL INCOME OF THE ASSESSEE AFTER VERIFYING THE GENUINENESS OF THE CLAIM AND APPLICABILITY OF THE PROVISIONS OF THE ACT. 4. AGGRIEVED BY THE ORDER OF LD. CIT, ASSESSEE IS NOW IN APPEAL BEFORE US . 5. BEFORE US, THE ID. A.R. REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT A ND FURTHER SUBMITTED THAT THE A.O WHILE FRAMING THE ASSESSMENT FOR AY 2005 - 06 HELD, THE INCOME OF RS 10 , 58 , 460/ - WHICH WAS SHOWN BY THE ASSESSEE IN AY ITA NO 435/AHD/2013 . A.Y. 2008 - 09 3 2006 - 07 T O BE THE INCOME OF AY 2005 - 06 AND THEREFORE I N VIEW OF THE ASSESSMENT ORDER FOR AY 20 05 - 06 THAT WAS PASSED BY AO, ASSESSEE REVISED THE RETURN OF INCOME FOR AY 2006 - 07 BY REDUCING THE INCOME OF RS 10 , 58 , 460/ - WHICH WAS C ONSIDERED BY AO IN AY 2005 - 06 AND ACCORDINGLY CLAIMED LOSS OF RS 12 , 29 , 292/ - . ASSESSEE ALSO REVISED THE RETURN OF INCOME FOR AY 2007 - 08 WHEREIN IT CLAIMED THE LOSS OF RS 12 , 29 , 292 PURSUANT TO THE REVISING OF RETURN OF INCOME FOR AY 2006 - 07 AND ALSO CLAIMED THE BALANCE LOSS OF RS 8,89,397 / - TO BE CARRIED FORWARD TO SUBSEQUENT YEARS. AO WHILE FINALIZING THE ASSESSMENT FOR AY 2006 - 07 MADE DISALLOWANCE OF RS 14,95,834 / - U/S 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TDS AND OF WHICH RS 3 , 39 , 900 / - WAS ALLOWED BY T HE AO WHILE FINALIZING THE ASSESSMENT FOR AY 2007 - 08 AND THE BALANCE OF RS 11 , 53 , 934 / - WAS ALLOWED IN AY 2008 - 09. THE LD AR THEREFORE SUBMITTED THAT BY ADJUSTING THE AMOUNT OF CARRIED FORWARD 40(A)(IA) DISALLOWANCE NO ERROR HAS BEEN COMMITTED BY THE AO. HE FURTHER SUBMITTED THAT PROVISIONS OF S. 80 DOES NOT APPLY TO THE PRESENT FACTS AS IT IS NOT A CASE OF CARRY FORWARD AND SET OFF OF LOSSES BUT WAS ON ACCOUNT OF PROVISIONS OF S. 40(A)(IA). HE THEREFORE SUBMITTED THAT THE ORDER OF LD. CIT(A) BE QUASHED. HE FURTHER SUBMITTED THAT THE ERROR ENVISAGED BY S. 263 IS NOT ONE WHICH DEPENDS ON POSSIBILITY OR GUESSWORK BUT IT SHOULD BE AN ACTUAL ERROR EITHER OF FACTS OR OF LAW. HE FURTHER SUBMITTED THAT WHEN TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH W HICH THE LD. CIT DOES NOT AGREE, THE ORDER OF THE AO CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. 6. THE ID. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF LD. CIT . ITA NO 435/AHD/2013 . A.Y. 2008 - 09 4 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOVE THE INVOKING OF PROVISIONS OF SECTION 263 BY LD. CIT. 8. S ECTION 263(1) OF THE ACT, THE POWERS UNDER WHICH LD. CIT HAS ASSUMED POWER FOR REVISION READS AS UNDER: 'THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ITO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CAN CELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT.' 9. THE READING OF THE ABOVE PROVISIONS MAKES IT VERY CLEAR THAT THE POWER OF SUO MOTU REVISION U/S 263(1) IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMS TANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION U/S 263, NAMELY (I) THE ORDER IS ERRONEOUS (II) BY VIRTUE OF BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. 10. I N THE CASE OF CIT VS GABRIEL INDIA LTD (1993) 203 ITR 108 (BOM), THE HON'BLE BOMBAY HIGH COURT HAS HELD AS UNDER: 'AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN ITO ACTING IN ACCORDANCE WITH LAW MAKES CERTAIN ASSESSM ENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE ACCORDING TO HIM THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ITO , WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS.' 11. IN THE PRESENT CASE IT IS ASSESSEE S SUBMISSION THAT WHILE FRAMING THE ASSESSMENT FOR AY 2006 - 07 DISALLOWANCE ON ACCOUNT OF NON DEDUCTION OF ITA NO 435/AHD/2013 . A.Y. 2008 - 09 5 TDS WAS MADE U/S 40(A) (IA) OF THE ACT. IN S UBSEQUENT YEAR AND IN THE YEAR UNDER CONSIDERATION (I.E. IN AY 2008 - 09) ON PAYMENT OF THE TDS, THE PAYMENT WHICH WAS DISALLOWED ON ACCOUNT OF NON DEDUCTION OF TDS THAT WAS DISALLOWED IN AY 2006 - 07 WAS ALLOWED BY THE AO. AS PER THE PROVISIONS OF S. 40(A)(IA ) THE AMOUNT IS ALLOWED IN THE YEAR IN WHICH THE TDS AMOUNT IS DEPOSITED TO THE GOVERNMENT ACCOUNT. BEFORE US, LD DR HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE SUBMISSIONS OF THE LD AR. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT LD CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF S. 263 OF THE ACT. WE THEREFORE SET ASIDE THE ORDERS OF CIT FOR AY 2008 - 09 SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) OF THE ACT. THUS THE GROUND OF ASSESSEE IS ALLOWED . 12. IN THE RES ULT, THE APPEAL OF THE AS SESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 04 - 0 3 - 201 5 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD