Ashok Kumar Makhija, Kanpur V. Commissioner of Income Tax-I, Kanpur

ITA 455/LKW/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9083 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIVEK MISHRA
• Keywords: Principle of natural justice; Corroborative evidences
• Section: 143(3); 142(1); 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.455/LKW/2014 ASSESSMENT YEAR:2009 - 10 C.I.T. - I, KANPUR. VS SHRI ASHOK KUMAR MAKHIJA, 108/49, GANDHI NAGAR, KANPUR. PAN:ADQPM8226M (RESPONDENT) (APPELLANT) SHRI P. K. KAPOOR, C.A. APPELLANT BY SHRI VIVEK MISHRA, C.I.T., D. R. RESPONDENT BY 02/03/2015 DATE OF HEARING 23 /03/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT - I, KANPUR DATED 27/12/2011 U/S 263 FOR ASSESSMENT YEAR 2009 - 10. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE 'CIT' HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSMENT ORDER DATED 27.12.2011 PASSED BY THE ASSTT. CIT - 3, KANPUR UNDER SECTION 143(3) 'IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE' AND IN SET ASIDING THE SAME 'TO BE FRAMED DENOVO'. 2. BECAUSE THE ASSESSMENT ORDER DATED 27.12.2011 (PASSED BY THE ASSTT. CIT - 3, KANPUR) ACCORDED FULLY WITH THE PROVISIONS OF LAW AND THE SAME COULD NOT HAVE BEEN HELD TO BE ERRONEOUS WITHIN THE MEANING OF SAID TERM AS ENVISIONED UNDER SECTION 263 OF THE ACT AN D THE 'CIT' COULD NOT HAVE EXERCISED HIS REVISIONARY JURISDICTION UNDER SECTION 263 IN RELATION TO THE SAID ASSESSMENT ORDER. 2 3. BECAUSE THE 'CIT', WHILE EXERCISING HIS REVISIONARY JURISDICTION UNDER SECTION 263, HAS COMPLETELY FAILED TO APPRECIATE THAT : ( A ) ON THE ISSUE RAISED IN THE SHOW CAUSE NOTICE THE ASSESSING OFFICER HAD MADE ALL SUCH ENQUIRIES AS WERE CALLED FOR ON THE FACTS OF THE CASE (BEFORE COMPLETION OF ASSESSMENT); ( B ) NOT ONLY THAT, THE ASSESSING OFFICER HAD MADE ENQUIRIES AND THE 'APPELLANT' HAD R ESPONDED TO THE SAME BY SUBMITTING DETAILED REPLY WITH FACTS AND FIGURES; ( C ) IN SUPPORT OF THE SAID REPLY SUBMITTED BY THE 'APPELLANT' DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS, BOOKS OF THE ACCOUNT AND ALL OTHER RECORDS (AS WERE RELEVANT FOR THE PU RPOSES) HAD DULY BEEN PRODUCED; AND ( D ) SUCH BOOKS OF ACCOUNT AND ALL OTHER DETAILS HAD DULY BEEN EXAMINED BY THE ASSESSING OFFICER AS HAS BEEN CLEARLY STATED BY HIM IN PARA 02 OF THE ASSESSMENT ORDER READING AS: ' .....IN RESPONSE TO THE NOTICES SHRI RAVI MOHLA, FCA/A.R. OF THE ASSESSEE ATTENDED. REQUIRED DETAILS WERE FILED, DISCUSSED AND PLACED ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE REQUIRED BOOKS OF ACCOUNTS WERE ALSO PRODUCED WHICH WERE SUBJECTED TO TEST CHECK.' AND ACCORDINGLY IT COULD NOT HAVE BEEN SAID/HELD THAT THERE WAS 'LACK OF ENQUIRY' BY THE ASSESSING OFFICER SO AS TO CALL FOR REVISION UNDER SECTION 263. 4. BECAUSE SECTION 263 ITSELF POSTULATES AN ENQUIRY BY THE COMMISSIONER AND IN THE INSTANT CASE NO SUCH ENQUIRY HAVING BEEN MADE BY THE ' CIT', THE ORDER PASSED BY HIM IN HIS REVISIONARY JURISDICTION UNDER SECTION 263 IS VITIATED. 5. BECAUSE THE CASE LAWS REFERRED TO AND RELIED UPON BY HIM ARE DISTINGUISHABLE ON FACTS, AS IS READILY BORNE OUT FROM AN ANALYSIS OF THE SAME HAS BEEN GIVEN IN ANNEXURE - I HERETO AND THE ORDER PASSED BY THE 'CIT' IS EVEN IN VIOLATION OF WELL LAID RULE OF 'FOLLOWING A PRECEDENCE'. 6. BECAUSE WHOLLY WITHOUT PREJUDICE TO THE PLEADINGS RAISED IN THE FOREGOING GROUNDS, THE SCOPE OF REVISION UNDER S ECTION 263 WAS STRICTLY CIRCUMSCRIBED BY THE ISSUE RAISED IN THE 'SHOW 3 CAUSE NOTICE' AND THE DIRECTION TO THE EFFECT THAT ASSESSMENT BE REFRAINED DENOVO HAS THE EFFECT OF VITIATING THE IMPUGNED ORDER. 7. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO T HE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE, THE ORDER PASSED BY LEARNED CIT U/S 263 IS WITHOUT JURISDICTION. HE SUBMITTED THAT ON PAGES 20 TO 24 OF THE PAPER BOOK IS THE COPY OF NOTICE ISSUE D BY ASSESSING OFFICER U/S 142(1) ON 09/10/2011 ALONG WITH THE COPY OF QUESTIONNAIRE OF THE SAME DATE ISSUED BY THE ASSESSING OFFICER. HE ALSO SUBMITTED THAT THE REPLIES WERE FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND THE COPIES OF THE SAME ARE AVAILABLE ON PAGES 25 TO 31 AND 32 TO 34 OF THE PAPER BOOK. HE SUBMITTED THAT AS PER THE IMPUGNED ORDER PASSED BY LEARNED CIT, TH IS IS THE ONLY ALLEGATION OF CIT THAT THERE WAS DRASTIC DECREASE IN THE RATE OF GROSS PROFIT AND NET PROFIT AS COMPARED TO IMMEDIATELY PRECEDING ASSESSMENT YEAR. HE SUBMITTED THAT AS PER THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER, IT CAN BE SEEN TH AT AS PER CLAUSE NO. 13 AND 14 OF THIS QUESTIONNAIRE, THE ASSESSING OFFICER ASKED THE ASSESSEE TO GIVE COMPARATIVE CHART OF GROSS PROFIT AND NET PROFIT FOR PRESENT YEAR ALONG WITH THE PRECEDING THREE YEARS AND THE ASSESSING OFFICER ALSO ASKED THE ASSESSEE TO EXPLAIN THE REASONS FOR VARIATION IN GROSS PROFIT AS WELL AS NET PROFIT COMPARED TO EARLIER ASSESSMENT YEARS WITH SUPPORTING EVIDENCE/DOCUMENTS. HE FURTHER SUBMITTED THAT SINCE THE QUERY WAS RAISED AND REPLY WAS SUBMITTED AND OPINION WAS FORMED BY THE ASSESSING OFFICER AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE CIT CANNOT HAVE ANY JURISDICTION FOR ACTION U/S 263 OF THE ACT. HE PLACED RELIANCE ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS. SUNBEAM AUTO LTD. [2011] 332 ITR 167 (DEL) AND ALSO ON ANOTHER JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS. VIKAS POLYMERS [2010] 194 TAXMAN 57 (DEL). HE ALSO PLACED RELIANCE ON A TRIBUNAL DECISION IN THE CASE 4 OF MEHTAB ALAM VS. ACIT IN I.T.A. NO.288 TO 294/L KW/2014 DATED 18/11/2014. HE SUBMITTED COPY OF THE TRIBUNAL DECISION. 4. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT. HE PLACED RELIANCE ON A JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. SH RI BHAGWAN DAS [2005] 272 ITR 367 (ALL). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE NOTICE ISSUED BY LEARNED CIT U/S 263 DATED 10/03/2014, COPY AVAILABLE ON PAGE NO. 1 & 2 OF THE PAPER BOOK, IT IS THE ALLEGATION OF CIT THAT THE GROSS PROFIT AND NET PROFIT RATE DECREASED DRASTICALLY AS COMPARED TO IMMEDIATELY PRECEDING ASSESSMENT YEAR. LEARNED CIT HAS ALSO COMMENTED IN THE NOTICE THAT QUERY WAS RAISED BY THE ASSESSING OFFICER AND REPLY WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER REGARDING DECREASE IN GROSS PROFIT AND NET PROFIT RATE. THERE AFTER , IT IS STATED BY THE CIT IN THE NOTICE THAT THE SUBMISSION OF THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFFICER WITHOUT ANY FURTHER ENQUIR Y AND HENCE, THIS IS ADMITTED POSITION THAT ENQUIRY WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF DECREASE IN GROSS PROFIT AND NET PROFIT RATE BUT THE STAND OF THE CIT IS THAT AFTER RECEIVING THE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER SHOULD HAVE M ADE FURTHER QUERIES BEFORE ACCEPTING THE EXPLANATION GIVEN BY THE ASSESSEE REGARDING FALL IN GROSS PROFIT AND NET PROFIT RATE. IN THE LIGHT OF THESE FACTS, NOW WE EXAMINE THE APPLICABILITY OF VARIOUS JUDGMENTS CITED BY BOTH THE SIDES. 6. AS PER THE JUDGMENT, CITED BY LEARNED D.R. OF THE REVENUE, BEING THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SHRI BHAGWAN DAS (SUPRA), IT IS NOTED BY HON'BLE ALLAHABAD HIGH COURT THAT THE CIT INITIATED PROCEEDINGS U/S 263 OF THE ACT ON THE GROUND THAT IN MAKING THE ASSESSMENT, THE ASSESSING OFFICER DID NOT MAKE ANY ENQUIRY OR INVESTIGATION AS REGARDS THE NATURE, SOURCE OR EXTENT OF INCOME DERIVED FROM AGRICULTURE AND POULTRY 5 FARMING OR INVESTMENT FROM WHICH THESE INCOMES AROSE. HENCE, IT IS SEEN THAT IN THAT CASE, NO ENQUIRY WAS MADE BY THE ASSESSING OFFICER BUT IN THE PRESENT CASE, IT IS ADMITTED BY LEARNED CIT ALSO THAT ENQUIRY WAS MADE BY THE ASSESSING OFFICER AND REPLY WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER BUT T HE CASE OF CIT IS THAT NO FURTHER ENQUIRY WAS MADE BY THE ASSESSING OFFICER. HENCE, IN OUR CONSIDERED OPINION, THIS JUDGMENT IS NOT APPLICABLE BECAUSE THE FACTS ARE DIFFERENT. 7. NOW WE EXAMINE THE APPLICABILITY OF JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 8. THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS A JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF SUNBEAM AUTO LTD. (SUPRA). IN THIS CASE, IT WAS HELD BY HON'BLE DELHI HIGH COURT THAT THERE IS DISTINCTION BETWEEN LAC K OF ENQUIRY AND INADEQUATE ENQUIRY. IT WAS HELD THAT IF THERE IS AN ENQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE CIT TO PASS ORDER U/S 263 MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MATTER. IT WAS HELD THAT SUCH A COURSE OF ACTION IS OPEN ONLY IN CASES OF LACK O F ENQUIRY. IN THE PRESENT CASE , WE HAVE SEEN THAT IT IS NOT A CASE OF LACK OF ENQUIRY. EVEN AS PER CIT, IT IS A CASE OF INADEQUATE ENQUIRY AND NOT LACK OF ENQUIRY. HENCE, AS PER THIS JUDGMENT OF HON'BLE DELHI HI GH COURT, THERE IS NO OCCASION FOR CIT TO PASS THE IMPUGNED ORDER U/S 263 OF THE ACT. 9. NOW WE CONSIDER THE APPLICABILITY OF THE SECOND JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF VIKAS POLYMERS (SUPRA). IN THIS CASE, IT WAS HELD THAT I F A QUERY IS RAISED DURING THE COURSE OF SCRUTINY BY THE ASSESSING OFFICER, WHICH WAS ANSWERED TO THE SATISFACTION OF THE ASSESSING OFFICER BUT NEITHER THE QUERY NOR THE ANSWER WAS REFLECTED IN ORDER OF THE ASSESSING OFFICER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER CALLED FOR INTERFERENCE AND REVISION . IN THE PRESENT CASE ALSO, QUERY WAS RAISED DURING SCRUTINY ASSESSMENT AND QUERY WAS 6 ANSWERED ALSO BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND IT APPEARS T HAT THE ASSESSING OFFICER WAS SATISFIED WITH THE REPLY OF THE ASSESSEE AND THEREFORE, AS PER THIS JUDGMENT ALSO, THE ACTION OF LEARNED CIT TO PASS REVISION ORDER IS NOT JUSTIFIED. 10. AS PER THE ABOVE DISCUSSION, WE FIND THAT IN THE PRESENT CASE, THE JUDG MENT ON WHICH RELIANCE HAS BEEN PLACED BY LEARNED D.R. OF THE REVENUE, IS NOT APPLICABLE WHEREAS THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THESE TWO JUDGMENTS OF HON'BLE DELHI HIGH COURT ON WHICH RELIANCE HAS BEEN PLACED BY LEAR NED A.R. OF THE ASSESSEE. WE HAVE ALREADY SEEN THAT EVEN AS PER LEARNED CIT, THERE IS NO CASE OF LACK OF ENQUIRY AND IT MAY BE A CASE OF INADEQUATE ENQUIRY BUT DEFINITELY NOT LACK OF ENQUIRY AND THEREFORE, THE CIT DOES NOT HAVE JURISDICTION U/S 263 FOR RE VISION AS PER THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF SUNBEAM AUTO LTD. (SUPRA). THEREFORE, BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE DELHI HIGH COURT, WE HOLD THAT THE ORDER PASSED BY LEARNED CIT IS WITHOUT JURISDICTION AND WE QUASH THE SAME. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23 /03/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR