G.S. Filaments Pvt. Ltd., Kolkata V. ITO, Ward - 10 (1), Kolkata, Kolkata

ITA 446/KOL/2011

• Counselvise Citation: 44623514 RSA 2011
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 21-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-03-2011
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: SOMNATH GHOSH

Judgement Text

1 , B , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- B, KOL KATA [ , . .. . ! ! ! !. .. . , , , , '# ] BEFORE SRI N.VIJAYAKUMARAN, JUDICIAL MEMBER & SRI C.D. RAO, AC COUNTANT MEMBER $ $ $ $ / ITA NO. 446 (KOL) OF 2011 %& '( / ASSESSMENT YEAR 2006-07 G.S. FILAMENTS PVT. LTD., KOLKATA. (PAN-AAACG9605J) INCOME-TAX OFFICER, WARD-10(1), KOLKATA. (+, / APPELLANT ) - - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 '/ FOR THE APPELLANT: / SRI SOMNATH GHOSH /0+, 1 2 ' / FOR THE RESPONDENT: / SRI NIRAJ KUMAR 3 1 !# / DATE OF HEARING : 24/11/2011 4' 1 !# / DATE OF PRONOUNCEMENT : 25/11/2011 '5 / ORDER ( ), (N. VIJAYAKUMARAN), JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER-IV, KOLKATA PASSED U/S.263 OF THE I.T.ACT DT. 14/01/201 1 FOR THE ASSESSMENT YEAR 2006-07. 2. WHILE ATTEMPTING TO EXERCISE THE REVISIONARY PO WER U/S. 263 OF THE ACT, THE LD. COMMISSIONER WAS OF THE VIEW THAT THE LD. A.O. HAS NOT CHECKED AND CONFIRMED THE FOLLOWING ISSUES :- (A) ASSESSEE HAD RECEIVED CONTRACT RECEIPTS OF RS. 42,61,079/- FROM DIAMOND CEMENTS WHICH WAS NOT DISCLOSED AS ITS INCOME. (B) ASSESSEE HAD RECEIVED CONTRACT RECEIPTS OF RS.27,350/- FROM CATHEY PACIFIC AIRWAYS LTD. WHICH WAS NOT DISCLOSED AS ITS INCOME. (C) LOANS OF RS.2,15,000/- FROM DISCOVERY 21 ST CENTURY AGENCY PVT. LTD. WERE NOT VERIFIED. (D) LOAN OF RS.5,00,000/- FROM PARAGON FINANCE LTD. WAS NOT VERIFIED. HOWEVER, WHILE FINALIZING AND PASSING THE ORDER U/S .263 OF THE ACT, THE LD. COMMISSIONER HAS DISCARDED THE ISSUES AT (B) TO (D) ABOVE AND TH E ONLY ISSUE WHICH HE HAS DEALT WITH IS ON THE RECEIPT OF CONTRACT IN THE SUM OF RS.42,61,0 79/- FROM ONE DIAMOND CEMENTS WHICH, ACCORDING TO THE LD. COMMISSIONER, WAS NOT D ISCLOSED AS INCOME OF THE ASSESSEE. 2 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE RETURN FOR THIS ASSESSMENT YEAR 2006-07 WAS ORIGINALLY PROCESS ED U/S. 143(1) OF THE ACT ON 16/10/2007. SUBSEQUENTLY, AIR (CASS) INFORMATION O N ITR DATA BASE REVEALS THAT THE ASSESSEE HAS RECEIVED SOME INCOME BY WAY OF COMMISS ION, BROKERAGE AND CONTRACTUAL RECEIPT FROM DIFFERENT PARTIES DURING THE YEAR. TH E LD. A.O. SELECTED THE CASE FOR SCRUTINY AS PER THE NORMS PRESCRIBED BY THE CBDT AN D NOTICES WERE FOLLOWED AND SERVED ON THE ASSESSEE. THE ASSESSEE-COMPANY WAS ASKED BY THE LD. A.O. VIDE LETTER DATED 17/03/2008 TO EXPLAIN WHETHER THE SAID COMMISSION, BROKERAGE AND CONTRACTUAL RECEIPTS WERE SHOWN AS INCOME DURING THE YEAR AND TO SUBSTAN TIATE WITH EVIDENCE. THE ASSESSEES A/R FILED DETAILS OF RELEVANT DOCUMENTS IN SUPPORT OF THE SAME. AFTER DELIBERATION, THE LD. A.O. FOUND THE DETAILS TO BE CORRECT AND ACCEPT ED THE SAME. THIS WAS NOT ACCEPTABLE TO THE LD. COMMISSIONER AND ACCORDING TO THE LD. CO UNSEL, IT IS NOT JUSTIFIED ON THE PART OF THE LD. COMMISSIONER TO ASSUME JURISDICTION U/S. 26 3 OF THE ACT. HE SUBMITTED THAT THE LD. A.O. ALREADY FORMED THE OPINION BASED ON THE EX PLANATION OF THE ASSESSEE WITH RESPECT TO THE COMMISSION INCOME IN RESPECT OF THE SPECIFIC PAYMENT FROM DIAMOND CEMENTS. 3.1. THE LD. COUNSEL FURTHER SUBMITTED THAT THE A SSESSEE BASICALLY IS A COMMISSION AGENT BESIDES TRADING IN YARN AND TRAVEL AGENT AND WHATEVER INCOME/RECEIPT AS COMMISSION EARNED DURING THE YEAR HAS BEEN SHOWN IN THE ACCOUNTS UNDER THE HEAD COMMISSION. THE LD. A.O. VERIFIED THE BOOKS AND ALREADY CAME TO THE CONCLUSION THAT IT HAS BEEN SHOWN. THE ASSESSEES PAPER BOOK PAGES 10 8 AND 115 WILL CLEARLY GIVE THE DETAILS AND BREAK-UP. THE RELEVANT PAGE-122 OF THE PAPER B OOK, WHICH IS COPY OF ORDER SHEET, CLEARLY GIVES THE DETAILS OF INCOME AND IT IS NOTED THEREIN THAT MR. ASHOK KR. SINGH, LD. A/R OF THE ASSESSEE-COMPANY, APPEARED AND SUBMITTED DETAILS OF COMMISSION, BROKERAGE AND CONTRACT RECEIPTS ALONG WITH TDS DETAILS. THE LD. A/R WAS FURTHER REQUESTED TO RECONCILE ALL THE RECEIPTS IN CONNECTION WITH BROKE RAGE, COMMISSION AND CONTRACT PAYMENTS. THE TIME WAS GIVEN BY THE A.O. UPTO 12/0 8/2008 AND THE NOTING IS DATED 16/07/2008. AFTER ANALYZING THE TDS DETAILS AND AF TER DUE ENQUIRY, THE LD. A.O. CAME TO A FACTUAL FINDING THAT THIS COMMISSION INCOME HAS B EEN SHOWN CORRECTLY AND IT IS NOT THE CONTRACT SUB-CONTRACT ACCOUNT AS ASSUMED BY THE LD. COMMISSIONER. THE LD. COUNSEL FURTHER SUBMITTED THAT ONLY ON THE WRONG ANALOGY, T HE LD. COMMISSIONER ASSUMED 3 JURISDICTION U/S. 263 OF THE ACT, WHICH IS UNTENABL E IN LAW. HE IN SUPPORT OF HIS SUBMISSIONS RELIED ON THE DECISIONS OF HONBLE SUPR EME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT [243 ITR 83 (SC)] AND I N THE CASE OF CIT VS. MAX INDIA LTD. [295 ITR 282 (SC)]. HE ALSO RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DEVELOPMENT CREDIT BANK LTD. [323 I TR 206 (BOM)]. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE HEAVILY RELIED ON THE ORDER OF THE LD. COMMISSIONER PASSED U/S. 263 OF TH E ACT AND CONTENDED THAT THE ASSUMPTION OF POWER IS JUSTIFIED AS THE LD. A.O. HA S NOT MADE PROPER VERIFICATION OF THE ACCOUNTS. THEREFORE, ORDER PASSED U/S. 263 OF THE ACT IS JUSTIFIED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE PRECEDENTS. THE LD. COMMISSIO NER ASSUMED POWER U/S. 263 OF THE ACT IN RESPECT OF ALLEGED CONTRACT RECEIPTS OF RS.4 2,61,079/- FROM ONE DIAMOND CEMENTS. THIS, AS RIGHTLY ARGUED BY THE LEARNED COUNSEL, HAS SHOWN AS COMMISSION AS ASSESSEES BUSINESS IS ONE OF COMMISSION ALSO. IT IS REFLECTE D IN THE P/L ACCOUNT. THE DETAILS OF RELEVANT DOCUMENTS IN RESPECT OF COMMISSION, BROKER AGE AND CONTRACTUAL RECEIPTS WERE ALREADY FILED WITH THE LD. A.O. AND THE SAME WERE S HOWN IN THE ACCOUNTS IN THE YEAR RELEVANT. THE BREAK-UP FIGURES ARE AVAILABLE AT PA GE-115 OF THE ASSESSEES PAPER BOOK. THE PARTICULAR DIRECTION OF THE LD. A.O. TO THE ASS ESSEE ON 16/07/2008 WILL GO TO SHOW THAT THE LD. A.O. HAS VERIFIED ALL THE DETAILS WITH REGARD TO THE INFORMATION COLLECTED FROM AIR (CASS) INFORMATION ON ITR DATA BASE AND HE HAS TAKEN DUE CARE WHILE EXAMINING THE ISSUE IN THE ASSESSMENT PROCEEDINGS. THAT BEING THE CASE, THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DE VELOPMENT CREDIT BANK LTD., CITED SUPRA, IS DIRECTLY APPLICABLE, WHEREIN IT HAS BEEN HELD AS UNDER :- HELD, DISMISSING THE APPEAL, THAT THERE WAS NO BAS IS OR JUSTIFICATION FOR THE COMMISSIONER TO INVOKE THE PROVISIONS OF SECTION 26 3. THE ASSESSING OFFICER AFTER MAKING AN ENQUIRY AND ELICITING A RESPONSE FR OM THE ASSESSEE CAME TO THE CONCLUSION THAT THE ASSESSEE WAS ENTITLED TO DEPREC IATION ON THE VALUE OF SECURITIES HELD ON THE TRADING ACCOUNT. THE COMMISS IONER COULD NOT HAVE TREATED THIS FINDING TO BE ERRONEOUS OR TO BE PREJUDICIAL T O THE INTERESTS OF THE REVENUE. THE OBSERVATION OF THE COMMISSIONER THAT THE ASSESS ING OFFICER HAD ARRIVED AT A FINDING WITHOUT CONDUCTING AN ENQUIRY WAS ERRONEOUS , SINCE AN ENQUIRY WAS SPECIFICALLY HELD WITH REFERENCE TO WHICH A DISCLOS URE OF DETAILS WAS CALLED FOR BY THE ASSESSING OFFICER AND FURNISHED BY THE ASSESSEE . THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT RECOURSE TO THE POWERS UNDER SECTIO N 263 WAS NOT WARRANTED IN THE FACTS AND CIRCUMSTANCE OF THE CASE. 4 THE LD. COMMISSIONER CANNOT SUBSTITUTE HIS OPINION TO THAT OF THE LD. A.O. LAW IS WELL SETTLED THAT FOR ASSUMPTION OF JURISDICTION U/S. 26 3 OF THE ACT, IT SHOULD BE ESTABLISHED THAT THE ASSESSMENT ORDER SHOULD BE ERRONEOUS AND I T SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN OUR OPINION, THE VIEW TAKEN BY THE LD. A.O. IS JUSTIFIED. HE PERUSED ALL THE MATERIALS REQUIRED AND MADE AVAILAB LE TO HIM AND FOUND THAT THE TDS MATCHES WITH THE INCOME BY WAY OF COMMISSION, BROKE RAGE AND CONTRACTUAL RECEIPTS AND ON VERIFICATION OF ALL THESE DETAILS ACCEPTED THE P LEA OF THE ASSESSEE, THAT TOO IN THE SCRUTINY ASSESSMENT. HENCE WE HAVE NO HESITATION I N SETTING ASIDE THE ORDER OF THE LD. COMMISSIONER AND ALLOWING THE APPEAL OF THE ASSESSE E. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED . 6 '5 #' 7 8 69 THIS ORDER IS PRONOUNCED IN THE COURT ON 25/11/XI SD/- SD/- ( . .. . ! ! ! !. .. . ) '# ( ) (C.D. RAO), ACCOUNTANT MEMBER (N.VIJAYAKUMARAN) JUDICIAL MEMBER ( (( (!# !# !# !#) )) ) DATE: 25-11-2011 '5 1 /%% :'';- COPY OF THE ORDER FORWARDED TO: 1. +, / THE APPELLANT : G.S.FILAMENTS PVT. LTD., 13, WOODBURN PARK ROAD, KOLKATA-700 020. 2 /0+, / THE RESPONDENT : I.T.O., WARD-10(1), KOLKATA 3. %5 / THE C.I.T., KOL IV, KOLKATA. 4. ?%8 /% / DR, ITAT, KOLKATA BENCHES, KOLKATA 5 GUARD FILE . 0 /%/ TRUE COPY, '5/ BY ORDER, (DKP) @ / DY/ASSTT. REGISTRAR .