Rajesh Kumar Ranka, Hyd, Hyderabad V. DCIT, Circle-9(1), Hyd, Hyderabad

ITA 462/HYD/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2954 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 23-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KONDA RAMESH
• Keywords: Assessment record
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.462/HYD/2015 ASSESSMENT YEAR 2011-2012 MR. RAJESH KUMAR RANKA, HYDERABAD. PAN ACHPR8913L VS. DCIT, CIRCLE - 9(1) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. K.C. DEVDAS FOR REVENUE : MR. KONDA RAMESH DATE OF HEARING : 2 0. 0 1.201 6 DATE OF PRONOUNCEMENT : 05 . 0 2 .201 6 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2011- 2012. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. CIT UNDER SECTION 263 OF THE I.T. ACT, 1961 DATED 18.02.2015 DIRECTING THE A.O. TO RE-DO T HE ASSESSMENT, AS PER THE OBSERVATIONS OF THE CIT UNDE R SECTION 263, AFTER VERIFYING ALL THE DETAILS, AS PE R LAW AND AFTER PROVIDING A REASONABLE OPPORTUNITY TO THE ASS ESSEE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL AND PROPRIETOR OF M/S. D.D. JEWELLERS, F ILED HIS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR O N 29.09.2011 DECLARING TOTAL INCOME OF RS.79,45,705. THE 2 ITA.NO.462/HYD/2015 MR. RAJESH KUMAR RANKA, HYDERABAD. CASE WAS SELECTED FOR SCRUTINY UNDER CASS. DURING T HE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT, THE ASSESSEE, REPRESENTED BY ITS AUTHORISED REPRESENTATIVE, SUBMITTED THE INFORMATION CALLED FO R BY THE A.O. AFTER VERIFICATION OF THE SAID INFORMATION , THE A.O. COMPLETED THE ASSESSMENT BY ASSESSING THE TAXABLE INCOME AT RS.80,45,710. THEREAFTER, THE LD. CIT BY ASSUMING JURISDICTION UNDER SECTION 263 OF THE I.T. ACT, PERUSED THE ASSESSMENT RECORD AND OBSERVED THAT AN AMOUNT OF RS.18 LAKHS HAS BEEN PAID TOWARDS SALARY OF MR. S.K. RANKA WITHOUT DEDUCTION OF TAX AND ALSO TH AT THE DETAILS OF CLOSING STOCK HAS NOT BEEN PROPERLY VERI FIED BY THE A.O. AND THEREFORE, THERE IS AN ESCAPEMENT OF I NCOME ON ACCOUNT OF THESE TWO ISSUES. ACCORDINGLY, HE ISS UED A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE I.T. ACT ON 19.01.2015. THEREAFTER, HE ISSUED A REVISED SHOW CA USE NOTICE DATED 10.02.2015 BY OBSERVING THAT AS PER TH E ITS DETAILS OF AIR TRANSACTIONS, THE ASSESSEE HAS DEPOS ITED CASH OF RS.10 LAKHS AND MORE IN A SAVING BANK ACCOU NT TO THE TUNE OF RS.1,39,25,000 IN ADDITION TO THE OTHER TWO ISSUES RAISED IN THE SHOW CAUSE NOTICE DATED 19.01. 2015 AND HELD THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE TO THAT EXTENT. 2.1. IN RESPONSE TO THIS NOTICE, ASSESSEE FILED HI S DETAILED SUBMISSIONS VIDE LETTER DATED 30.01.2015 BRINGING TO THE NOTICE OF THE CIT THAT THE A.O. HAD CALLED FOR AND CONSIDERED ALL THE ISSUES ON WHICH THE ASSE SSMENT ORDER IS SOUGHT TO BE REVISED. THE LD. CIT, HOWEVER , HELD 3 ITA.NO.462/HYD/2015 MR. RAJESH KUMAR RANKA, HYDERABAD. THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIA L TO THE INTERESTS OF THE REVENUE AND DIRECTED THE A.O. TO RE-DO THE ASSESSMENT AFTER VERIFYING ALL THE DETAILS. AGG RIEVED BY THE ORDER OF THE LD. CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE, MR. K.C. DEVDAS, WHILE REITERATING THE SUBMISSIONS MADE BY T HE ASSESSEE BEFORE THE LD. CIT, HAS DRAWN OUR ATTENTIO N TO THE SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE A. O. WHICH IS PLACED AT PAGES 46 TO 47 AND 48 TO 65 OF T HE PAPER BOOK TO DEMONSTRATE THAT THE ASSESSEE HAS GIV EN FULL DETAILS RELATING TO THE SALARY PAID TO MR. S.K . RANKA WITHOUT DEDUCTION OF TAX AT SOURCE AND THE REASON A S TO WHY SUCH DEDUCTION WAS NOT MADE AND ALSO THAT THE ASSESSEE HAS FILED ALL THE COPIES OF THE BANK STATE MENTS BEFORE THE A.O. HE SUBMITTED THAT WHEN ALL THE DETA ILS HAVE BEEN FILED BEFORE THE A.O, THE PRESUMPTION TO BE DRAWN IS THAT THE A.O. HAS APPLIED HIS MIND TO ALL SUCH DETAILS BEFORE CONCLUDING THE ASSESSMENT. HE FURTHE R DREW OUR ATTENTION TO THE FACT THAT THE A.O. HAD MADE CE RTAIN DISALLOWANCES AFTER CONSIDERING ASSESSEES CONTENTI ONS. HE HAS SUBMITTED THAT IT IS THE USUAL PRACTICE THAT TH E A.O., WHEREVER HE WAS SATISFIED WITH THE CONTENTION OF TH E ASSESSEE, DOES NOT USUALLY MAKE ANY MENTION OF THE SAME IN THE ASSESSMENT ORDER BUT MERE SILENCE IN THE ASSESSMENT ORDER DOES NOT MEAN THAT THE A.O. HAS NO T APPLIED HIS MIND TO THE SAID FACTS. IN SUPPORT OF T HIS CONTENTION, HE PLACED RELIANCE UPON THE DECISION OF THE 4 ITA.NO.462/HYD/2015 MR. RAJESH KUMAR RANKA, HYDERABAD. JURISDICTIONAL HIGH COURT IN THE CASE OF SPECTRA SH ARES & SCRIPS P. LTD., VS. CIT-III (2013) 354 ITR 35 (AP). FURTHER HE HAS ALSO PLACED RELIANCE UPON THE JUDGMENT OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. M. CHA NDRA SEKHAR (151 ITR 133) WHEREIN IT WAS HELD THAT THE PRESUMPTION THAT A.O. HAS CONSIDERED THE DETAILS FI LED BY THE ASSESSEE WAS FOUNDED ON THE PRINCIPLE THAT AN OFFICER ENTRUSTED WITH A JUDICIAL OR QUASI JUDICIAL DUTY MU ST BE PRESUMED TO HAVE DISCHARGED HIS DUTIES IN A PROPER AND BONAFIDE MANNER. 3.1. AS REGARDS THE VALUATION OF CLOSING STOCK, TH E LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEES BOOKS OF ACCOUNT WERE DULY AUDITED AND T HE TAX AUDIT REPORT UNDER SECTION 44 HAS BEEN FILED BEFORE THE AUTHORITIES BELOW. HE HAS SUBMITTED THAT THE ASSESS EE IS FOLLOWING REGULAR METHOD OF ACCOUNTING FOLLOWED FRO M THE EARLIER YEARS AND THERE WAS NO CHANGE OF METHOD DUR ING THE RELEVANT ASSESSMENT YEAR. THUS, ACCORDING TO HI M, A.O. HAS CONSIDERED ALL THE ISSUES BEFORE COMPLETIN G THE ASSESSMENT AND HENCE, THE ASSESSMENT ORDER IS NOT ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE RE VENUE AND THE REVISION ORDER UNDER SECTION 263 IS NOT SUSTAINABLE. 4. THE LD. D.R., ON THE OTHER HAND, SUPPORTED THE ORDER OF THE LD. CIT AND SUBMITTED THAT THE ASSESSM ENT ORDER IS TOTALLY SILENT ON THE ISSUES POINTED OUT B Y THE LD. CIT AND THEREFORE, IT CANNOT BE PRESUMED THAT THE A .O. 5 ITA.NO.462/HYD/2015 MR. RAJESH KUMAR RANKA, HYDERABAD. HAS APPLIED HIS MIND TO THE MATERIAL ON RECORD BEFO RE COMPLETING THE ASSESSMENT, MAKING THE ASSESSMENT OR DER BOTH ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE I.T. ACT, THE ASSESSEE HAD FILED THE DETAILS ABOUT THE S ALARY PAID TO MR. S.K. RANKA WITHOUT DEDUCTION OF TAX AT SOURCE AND THE REASON FOR THE SAME. THIS IS EVIDENT FROM T HE ORDER OF THE LD. CIT UNDER SECTION 263 ITSELF, WHER EIN IN PARA 6.2 OF THE ORDER, IT IS SO RECORDED. AS REGARD S THE DEPOSITS OF RS.10 LAKHS MADE INTO THE ASSESSEES S. B. ACCOUNT, WE FIND THAT THE ASSESSEE HAS FILED DETAIL S OF ALL THE BANK ACCOUNTS AND ALSO COPIES OF THE RESPECTIVE BANK STATEMENTS BEFORE THE A.O. AND THEREFORE, THE A.O. IS PRESUMED TO HAVE LOOKED INTO THOSE DETAILS. THE JUD GMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. M. CHANDRA SEKHAR (CITED SUPRA), CLEARLY APPLIES TO TH E FACTS OF THE CASE BEFORE US. UNLESS AND UNTIL IT IS PROVE D THAT THE A.O. HAS NOT APPLIED HIS MIND TO THE DETAILS FI LED BY THE ASSESSEE, IT HAS TO BE PRESUMED THAT HE HAS GON E THROUGH THE MATERIAL AND HAS TAKEN A CONSCIOUS DECI SION. FURTHER AS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SPECTRA SHARES & SCRIPS P. LTD., VS . CIT-III (CITED SUPRA), IT IS NOT THAT THE A.O. WOULD RECORD HIS FINDINGS ON THE ISSUES HE ACCEPTS AND MERELY BECAUS E THERE IS NO MENTION OF THE ACCEPTANCE OF THE ISSUE, IT DO ES NOT 6 ITA.NO.462/HYD/2015 MR. RAJESH KUMAR RANKA, HYDERABAD. MEAN THAT THE A.O. HAS NOT CONSIDERED THE SAME. AS REGARDS THE VALUATION OF CLOSING STOCK ALSO, WE FIN D THAT ASSESSEE HAS BEEN FOLLOWING THE REGULAR METHOD OF ACCOUNTING FOLLOWED BY IT IN THE EARLIER YEARS AND THE LD. CIT HAS ALSO NOT BROUGHT OUT AS TO HOW THE VALUATIO N OF THE CLOSING STOCK IS ERRONEOUS AS COMPARED TO THE E ARLIER YEARS AND HOW IT HAS RESULTED IN ANY PREJUDICE TO T HE REVENUE. WHEN ALL THE ISSUES ON WHICH THE LD. CIT S EEKS TO REVISE THE ASSESSMENT ORDER HAVE BEEN CONSIDERED BY THE A.O. DURING THE ASSESSMENT COMPLETED UNDER SECT ION 143(3) OF THE ACT, SUCH AN ASSESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS. UNDER SECTION 263 OF THE ACT, UNTIL AND UNLESS, THE ASSESSMENT ORDER IS ERRONEOUS AS WE LL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IT IS NOT AMENABLE TO THE REVISION PROCEEDINGS. AS BROUGHT OU T ABOVE, ALL THE FACTS RELATING TO THE ABOVE ISSUES W ERE BEFORE THE A.O. AND WERE CONSIDERED BY HIM. TAKING THE ABOVE INTO CONSIDERATION, WE HOLD THAT THE REVISION ORDER PASSED BY THE LD. CIT UNDER SECTION 263 OF THE I.T. ACT, IS NOT SUSTAINABLE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 05.02.2016. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 05 TH FEBRUARY, 2016 VBP/- 7 ITA.NO.462/HYD/2015 MR. RAJESH KUMAR RANKA, HYDERABAD. COPY TO : 1. MR. RAJESH KUMAR RANKA, H.NO.23 - 6 - 928/1, SHAH ALI BANDA, HYDERABAD 500 065. 2. THE DCIT, CIRCLE - 9(1), I - FLOOR, B BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 3. PR. COMMISSIONER OF INCOME TAX - 7, HYDERABAD (I/C). 4 . ADDL. CIT, RANGE - 9, HYDERABAD. 5 . D.R. ITAT B BENCH, HYDERABAD. 6 . GUARD FILE