Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 5523 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-09-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
14-09-2021
Assessment Year
2015-2016
Appeal Filed On
30-07-2020
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH, KOLKATA (BEFORE: SRI ABY T. VARKEY, JUDICIAL MEMBER & SRI MANISH BORAD, ACCOUNTANT MEMBER) I.T.A. NO. 463/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S. BMR COMMERCIAL PVT. LTD...............................APPELLANT. [PAN: AABCB 9876 B] VS. PCIT-5, KOLKATA....................................................................RESPONDENT APPEARANCES BY: SH. DEVESH PODDAR, A/R, APPEARED ON BEHALF OF THE ASSESSEE. SH. SANDEEP CHAUBE, CIT(D/R), APPEARED ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 14 TH , 2021 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 17 TH , 2021 ORDER PER MANISH BORAD, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE PERTAINING TO THE ASSESSMENT YEAR (IN SHORT AY) 2015-16 IS DIRECTED AGAINST THE ORDER OF LD. PR. COMMISSIONER OF INCOME-TAX- 5, KOLKATA [IN SHORT LD. PR. CIT] U/S. 263 OF THE ACT DATED 22.06.2020. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IS ENGAGED IN TRANSPORTATION BUSINESS. RETURN OF INCOME FOR AY 2015-16 WAS E-FILED ON 29.09.2015 DECLARING TOTAL INCOME AT RS. 11,98,348/-. CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. WRITTEN SUBMISSIONS WERE FILED BY THE ASSESSEE. CERTAIN OTHER INFORMATION WERE ALSO CALLED FOR VERIFICATION. NOTICE U/S 142(1) OF THE 2 I.T.A. NO.: 463/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S. BMR COMMERCIAL PVT. LTD. ACT WAS ALSO ISSUED TO VERIFY THE TRANSPORTATION CHARGES. THE ASSESSEES CASE WAS SCRUTINIZED FOR LIMITED SCRUTINY FOR THE LARGE OTHER EXPENSES CLAIMED IN THE PROFIT & LOSS ACCOUNTS, LOW PROFIT SHOWN BY THE TRANSPORTERS AND MISMATCH OF AMOUNTS. THE LD. ASSESSING OFFICER (IN SHORT LD. AO) ON EXAMINING THE INFORMATION BROUGHT ON RECORD AS WELL AS THE EXAMINATION OF VARIOUS EXPENSES CLAIMED IN THE P&L ACCOUNTS, CONCLUDED ASSESSMENT AFTER DISALLOWING FUEL EXPENSES OF RS. 1,98,520/-, DISALLOWANCE OF PRINTING & STATIONERY EXPENSES OF RS. 41,600/- AND DISALLOWANCES U/S 14A OF THE ACT OF RS. 14,636/-, THEREBY, ASSESSING INCOME AT RS. 14,53,100/-. SUBSEQUENT TO THAT, THE LD. PR. CIT DREW HIS POWER U/S 263 OF THE ACT AND CALLED FOR ASSESSMENT RECORDS AND OBSERVED THAT THE LD. AO HAS NOT EXAMINED THE LARGE OTHER EXPENSES CLAIMED IN P&L ACCOUNTS PROPERLY. ACCORDINGLY, FOLLOWING SHOW-CAUSE NOTICE DATED 12.12.2019 WAS ISSUED WHICH IS REPRODUCED FOR READY REFERENCE: RELATED TO THE A. Y.2015-16, YOUR CASE WAS COMPLETED U/S. 143(3) OF THE INCOME TAX ACT. 1961 ON 28 12.2017 AT AN INCOME OF RS. 14,53,100/- AGAINST THE RETURNED INCOME OF RS. 11.98.348/-. YOUR CASE WAS ASSESSED MAKING THE FOLLOWING ADDITIONS. (I) EXCESSIVE FUEL CHARGE RS.L,98,520/- (II) PRINTING & STATIONARY RS.24,200/- (III) DISALLOWANCE U/S. 14A RS.10,000/- IN ORDER TO JUDGE THE MERITS OF THE ORDER PASSED BY THE ASSESSING OFFICER, THE ASSESSMENT RECORDS WERE PERUSED. THE RECORDS AVAILABLE REVEALED THAT ONE OF THE CRITERIA FOR SELECTION OF THE CASE WAS 'LARGE OTHER EXPENSES CLAIMED IN THE P&L A/C.' THE SAME WAS NOT EXAMINED OR ENQUIRED INTO AT ALL BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER U/S. 143(3/ OF THE INCOME TAX ACT. 1961. 3 I.T.A. NO.: 463/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S. BMR COMMERCIAL PVT. LTD. IN VIEW OF THE ABOVE FACTS, THE ORDER PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961 ON 28/12/2017FOR THE ASSESSMENT YEAR 2015-16 APPEARS TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THIS POINT. IN ORDER TO ELICIT YOUR REACTION, YOUR CASE IS FIXED FOR HEARING U/S.263 OF THE INCOME TAX ACT, 1961 AT MY CHAMBER AT AAYAKAR BHAWAN POORVA, 6 TH FLOOR, ROOM NO-601 ON 23.12.2019 AT 11.45 A.M./PM. YOU ARE, THEREFORE, REQUESTED TO APPEAR EITHER IN PERSON OR THROUGH YOUR AUTHORISED REPRESENTATIVE TO EXPLAIN THE CASE WITH SUPPORTING DOCUMENTARY EVIDENCES. AS THE PROCEEDING IS GETTING BARRED BY LIMITATION ON31.03.2020, YOUR FAILURE TO RESPOND TO THIS NOTICE WILL COMPEL THE UNDERSIGNED TO TAKE DECISION ON MERITS OF THE CASE AND PAPER AVAILABLE WITH THE DEPARTMENT. 3. IN RESPONSE TO THE SHOW-CAUSE NOTICE DETAILED REPLY WAS FILED ON BEHALF OF THE ASSESSEE STATING THAT ALL DETAILS WERE FILED BEFORE THE LD. AO WHO HAS THOROUGHLY EXAMINED ALL THE EXPENDITURE DEBITED IN THE PROFIT & LOSS ACCOUNT. IT WAS ALSO STATED THAT THE LD. AO ISSUED NOTICE U/S 133(6) OF THE ACT AND THERE WAS A COMPLETE APPLICATION OF MIND BY THE AO WHO EXAMINED ALL THE ISSUES REFERRED IN THE LIMITED SCRUTINY CASE. RELIANCE WAS PLACED ON JUDICIAL PRONOUNCEMENTS REFERRED IN THE IMPUGNED ORDER INCLUDING THAT OF MALABAR INDUSTRIAL CO. LTD. VS. CIT REPORTED IN 243 ITR 83 (SC), CIT VS. RATLAM COAL ASH COMPANY REPORTED IN 171 ITR 141 (MP), CIT VS. GABRIEL INDIA LTD. REPORTED IN 203 ITR 108 (BOMBAY HC). HOWEVER, THE LD. PR. CIT WAS NOT CONVINCED AND HELD THAT THE ORDER OF THE LD. AO IS ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE AO DID NOT EXAMINE THE ISSUE OF LARGEOTHER EXPENSES CLAIMED IN THE P&L ACCOUNTPROPERLY AND ACCORDINGLY CANCELLED THE ORDER DATED 28.12.2017 FRAMED U/S 143(3) OF THE ACT DIRECTING TO REFRAME THE 4 I.T.A. NO.: 463/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S. BMR COMMERCIAL PVT. LTD. ASSESSMENT IN THE LIGHT OF THE DISCUSSIONS MADE IN THE IMPUGNED ORDER. 4. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL CHALLENGING THE ORDER U/S. 263 OF THE ACT. 5. LD. COUNSEL FOR THE ASSESSEE STATED THAT LD. PR. CIT ERRED IN ASSUMING THE JURISDICTION U/S 263 OF THE ACT IGNORING THE FACT THAT THE ISSUE RAISED IN THE IMPUGNED ORDER HAS BEEN THOROUGHLY EXAMINED BY THE LD. AO. HE REFERRED TO THE PAPER BOOK CONTAINING PAGE NOS. 1-59 AND SPECIFICALLY DREW OUR ATTENTION TO PAGE NO. 11 OF THE PB SHOWING COPIES OF ORDER SHEET TO INDICATE THAT SUFFICIENT ENQUIRY WAS UNDERTAKEN. OUR ATTENTION WAS ALSO DRAWN TO THE INFORMATION CALLED FOR U/S 133(6) OF THE ACT FROM VARIOUS TRANSPORTERS CONFIRMING THE PAYMENT OF THE TRANSPORTATION CHARGES RECEIVED FROM ANYWHERE. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX (CENTRAL), LUDHIANA VS. MAX INDIA LTD. REPORTED IN [2008] 166 TAXMAN 188 (SC), CIT VS. VODAFONE ESSAR SOUTH LTD. REPORTED IN ITA NO. 119/2012 (DELHI HIGH COURT) DATED 20.11.2012 AND CIT VS. ASHISH RAJPAL REPORTED IN 320 ITR 674 (DEL) . THE LD. D/R VEHEMENTLY RELIED ON THE ORDER OF THE LD. PR. CIT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS AND CAREFULLY GONE THROUGH THE DOCUMENTS FILED BEFORE US. THROUGH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE ASSUMPTION OF JURISDICTION U/S 263 OF THE ACT BY THE PR. CIT. WE FIND THAT THE IMPUGNED ORDER OF THE LD. PR. CIT HAS ONLY REFERRED TO THE SOLE ISSUE OF LARGE OTHER EXPENSES CLAIMED IN THE P&L ACCOUNT BEEN NOT EXAMINED PROPERLY BY THE LD. AO DURING ASSESSMENT PROCEEDINGS BY CONDUCTING NECESSARY ENQUIRY. LD. PR. CIT OBSERVED THAT THE LD. AO 5 I.T.A. NO.: 463/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S. BMR COMMERCIAL PVT. LTD. HAS NOT EXAMINED THE ORIGINAL EVIDENCES NOR HAS ISSUED ANY SUMMON U/S 131 OF THE ACT. 7. PROVISION OF SECTION 263 OF THE ACT READS AS FOLLOWS: THE [PRINCIPAL COMMISSIONER OR 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 2[ASSESSING OFFICER] 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 CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. 8. HONBLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA) WHILE EXAMINING THE ISSUE U/S 263 OF THE ACT HAS HELD THAT: THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVER Y LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT HE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TUX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME- TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT HE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE, UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW 9. FURTHER, WE FIND THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD. HAS HELD THAT: THE INCOME-TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEES. THE ASSESSEES HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PAN OF THE 6 I.T.A. NO.: 463/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S. BMR COMMERCIAL PVT. LTD. RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. SUCH DECISION OF THE INCOME-TAX OFFICER CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN IDS ORDER, BE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 10. THIRDLY, THE HONBLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF RATLAM COAL ASH COMPANY (SUPRA) HAS HELD THAT: IN THE INSTANT CASE, THE TRIBUNAL HAS FOUND THAT THE ASSESSEE HAD FURNISHED ALL THE REQUISITE INFORMATION AND THAT THE INCOME TUX OFFICER, CONSIDERING ALL THE FACTS, HAD COMPLETED THE ASSESSMENT THE TRIBUNAL FURTHER HELD THAT IN THE CIRCUMSTANCES OF THE CASE, IT COULD NOT HE HELD THAT THE INCOME TAX OFFICER HAD MADE THE ASSESSMENT WITHOUT MAKING PROPER ENQUIRIES. IN VIEW OF THESE FINDINGS, THE TRIBUNAL, IN OUR OPINION WAS JUSTIFIED IN LAW IN REVERSING THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX. 11. IN LIGHT OF THE PROVISIONS OF SEC. 263 OF THE ACT AND ABOVE STATED JUDICIAL PRONOUNCEMENTS AND EXAMINING THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR LIMITED SCRUTINY IN WHICH ONE OF THE CRITERIA WAS LARGE EXPENSES CLAIMED IN THE P&L ACCOUNT. WE FIND THAT NOTICE U/S 142(1) OF THE ACT WAS ISSUED TO THE ASSESSEE BY THE AO CALLING VARIOUS INFORMATION FROM THE ASSESSEE WHICH LD. PR. CIT HAS HIMSELF REFERRED IN THE IMPUGNED ORDER. THE ASSESSEE HAVING FILED A REPLY HAS ALSO BEEN ACCEPTED BY THE PR. CIT. FURTHER, LD. PR. CIT HAS ALSO APPRECIATED THAT NOTICES U/S 133(6) OF THE ACT WERE ISSUED IN THE CASE OF FOUR PARTIES TO VERIFY THE GENUINENESS OF TRANSPORT EXPENDITURE. 12. FROM A PERUSAL OF P&L ACCOUNT PLACED AT PAGE 6 OF THE PB WE FIND THAT THE TRANSPORTATION CHARGES INCURRED DURING THE YEAR ARE RS. 9,64,97,865/- WHEREAS IN THE IMMEDIATELY PRECEDING YEAR THE TRANSPORTATION CHARGES WERE AT RS. 4,17,92,836/-. THE FIGURE SHOWS 7 I.T.A. NO.: 463/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S. BMR COMMERCIAL PVT. LTD. THAT THE TRANSPORTATION CHARGES HAVE DOUBLED IN THE INSTANT YEAR. HOWEVER, THE TURNOVER OF THE ASSESSEE HAS ALSO DOUBLED DURING THE YEAR HAVING REACHED TO 10.98 CR. APPROX FROM 5.52 CR. IN THE PRECEDING YEAR. ALSO AUDITED P&L ACCOUNT SHOWS THAT IN THE INSTANT YEAR THE ASSESSEE HAS SHOWN NET PROFIT RS. 9,49,781/- AS AGAINST THE LOSS OF RS. 1,75,123/- DURING AY 2013-14. WE NOTICE THAT EXPENSE OF TRANSPORTATION HAVE DOUBLED, BUT THERE INCREASE IS IN CONSONANCE TO THE INCREASE IN TURNOVER. 13. NOW, COMING TO THE ISSUE THAT WHETHER LD. AO HAS EXAMINED THE LARGE EXPENSES, WE FIND THAT THE ORDER SHEET OF THE ASSESSMENT RECORD IS PLACED IN PAGE 9-11 OF THE PB. FROM GOING THROUGH THE ORDER SHEET, IT TRANSPIRES THAT IN REPLY TO THE NOTICE U/S 142(1) OF THE ACT, THE LD. AO HAS MENTIONED THAT THE DETAILS HAVE BEEN FILED, SOME OTHER DETAILS WERE ASKED TO BE FILED INCLUDING PARA-WISE DETAILS OF TRANSPORTATION CHARGES PAID, COPY OF PAN CARD. THIS QUERY OF THE LD. AO WAS SATISFIED BY THE ASSESSEE BY FILING THE NECESSARY DETAILS. LD. AO HAS ALSO ISSUED NOTICES U/S 133(6) OF THE ACT TO SOME OF THE PERSONS TO WHOM THE ASSESSEE HAS PAID THE TRANSPORTATION CHARGES. ALL THESE EXERCISES AT THE END OF THE AO ARE SUFFICIENT ENOUGH TO SHOW THAT SPECIFIC INFORMATION WERE ASKED BY THE LD. AO REGARDING LARGE EXPENSES. REPLY WAS FILED BY THE ASSESSEE. THEREAFTER, SOME MORE INFORMATION WAS CALLED FOR BY THE LD. AO. AGAIN THERE WAS A DETAILED REPLY FILED BY THE ASSESSEE. FURTHER, LD. AO HAS CONDUCTED ENQUIRY BY ISSUING NOTICE U/S 133(6) OF THE ACT. LD. AO ALSO MADE DISALLOWANCE OF EXPENSES APPEARING IN THE P&L ACCOUNT. ALL THESE EXERCISES INDICATE THAT THERE IS PROPER APPLICATION OF MIND BY THE AO ON THE ISSUE REFERRED IN THE IMPUGNED NOTICE. IT CANNOT BE SAID TO BE A CASE OF NO 8 I.T.A. NO.: 463/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S. BMR COMMERCIAL PVT. LTD. ENQUIRY. THE DOCUMENTS PLACED BEFORE USWHICH REMAINS UNCONTROVERTED AT THE END OF THE LD. D/R ARE SUFFICIENT ENOUGH TO SHOW THAT SUFFICIENT ENQUIRY WAS CONDUCTED BY THE AO FOR EXAMINING THE ISSUE OF LARGE EXPENSES CLAIMED IN THE P&L ACCOUNT. 14. UNDER THESE GIVEN FACTS AND CIRCUMSTANCES AND FOLLOWING THE JUDICIAL PRONOUNCEMENTS AND ALSO THE RATIO LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF MAX INDIA LTD. (SUPRA) AND THE HONBLE DELHI HIGH COURT IN THE CASE OF ASHISH RAJPAL (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT SINCE THE ISSUE REFERRED IN THE IMPUGNED NOTICE FORMING BASIS OF INVOKING PROVISION OF SECTION 263 OF THE ACT HAS BEEN THOROUGHLY EXAMINED BY THE AO LEAVE NO ROOM FOR LD. PR. CIT TO ASSUME JURISDICTION U/S 263 OF THE ACT WITHOUT UNDERTAKING ANY ENQUIRY AT ITS END TO SHOW THAT THE ORDER OF THE LD. AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WE ARE OF THE VIEW THAT THE PROCEEDINGS U/S 263 OF THE ACT DESERVES TO BE SQUASHED. WE ACCORDINGLY ORDER SO AND QUASH THE IMPUGNED PROCEEDING U/S. 263 OF THE ACT AND RESTORE THE ASSESSMENT ORDER DATED 28.12.2017 U/S 143(3) OF THE ACT AND ALLOW THE GROUNDS TAKEN BY THE ASSESSEE. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 17 TH SEPT., 2021 SD/- SD/- [ABY T. VARKEY] [MANISH BORAD] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17.09.2021 BIDHAN (P.S.) 9 I.T.A. NO.: 463/KOL/2020 ASSESSMENT YEAR: 2015-16 M/S. BMR COMMERCIAL PVT. LTD. COPY OF THE ORDER FORWARDED TO: 1. M/S. BMR COMMERCIAL PVT. LTD., 141, B.T. ROAD, KOLKATA-700 018. 2. PCIT-5, KOLKATA. 3. CIT(A)- 4. CIT- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. (SENT THROUGH MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR/DDO ITAT, KOLKATA BENCHES
