M/s. Delhi Magazine Distributors Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5067/DEL/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6899 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Revised return
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH B NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5067/DEL./2012 ASSTT. YEAR : 2009 - 10 DELHI MAGAZINE DISTRIBUTORS PVT. LTD., VS. D.C.I.T., CIRCLE 10(1), 110, BANGLA SAHIB MARG, NEW DELHI. NEW DELHI. (PAN: AAACD 0072G). (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SALIL AGARWAL, ADVOCATE RESPONDENT BY : SH. SHAILESH GUPTA, ADVOCATE DATE OF HEARING : 23.01.2017 DATE OF PRONOUNCEMENT : 27 .01.2017 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - XIII, NEW DELHI DATED 02.08.2012 FOR THE ASSESSMENT YEAR 2009 - 10 ON THE FOLLOWING GROUNDS : 1 . THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING AN ORDER OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT AT AN INCOME OF RS.71, 71, 520/ - AS AGAINST RETURNED INCOME OF RS. 31,54,129 / - . 2 . THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS. 40,17,387/ - BY REJECTING THE REVISED RETURN FILED BY THE APPELLANT COMPANY AND ASSESSING THE INCOME AS WAS DECLARED IN T HE ORIGINAL RETURN OF INCOME. ITA NO. 5067/DEL./2012 2 2.1 . THAT IN DOING SO, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IGNORED THE BASIC FACT THAT APPELLANT INADVERTENTLY BOOKED SALES IN RESPECT OF SALES RETURNS IN THE ORIGINAL RETURN OF INCOME, WHICH MISTAKE WAS RECTIFIE D BY FILING A REVISED RETURN OF INCOME. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN COMING TO A CONCLUSION THAT SINCE THE CORRESPONDING CHANGES HAVE NOT BEEN MADE IN THE BOOKS OF ACCOUNTS AND HAS NOT PRODUCED THE REVISED BALANCE SHEET, THUS, THE CONTENTION OF APPELLANT CANNOT BE ACCEPTED. 3.1 . THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THE BASIC FACT THAT THE SAID MISTAKE OF BOOKING OF SALES IN RESPECT OF SALES RETURNS WAS REALIZED BY THE APPELLANT AFTER THE BALANCE SHEET WAS FINALIZED AND THE RETURN OF INCOME WAS FILED, AND IN CASE OF PRIVATE LIMITED COMPANIES THE BALANCE SHEET ONCE ADOPTED IN ANNUAL GENERAL MEETING CANNOT BE REVISED. THUS, THE APPELLANT COMPANY RECTIFIED THE SAID M ISTAKE THROUGH ONLY OPTION AVAILABLE TO IT I.E. BY SHOWING THE SAME AS PRIOR PERIOD ITEM IN THE BALANCE SHEET FOR THE SUCCEEDING YEAR ENDED ON 31ST MARCH 2010, WHICH IS AS PER THE PROVISIONS OF COMPANIES ACT, 1956 AND PREVALENT ACCOUNTING STANDARDS. 4. TH AT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER FAILED TO APPRECIATE THE FACT THAT IT IS NOT POSSIBLE TO FURNISH THE CONFIRMATIONS FROM DEBTORS AS THE SAME CONSTITUTED OF ROADSIDE HAWKERS AND KIOSKS OWNERS AND THE AMOUNT OF ADJUSTMENT WAS LARGE ON ACCOUNT OF THE VOLUME OF DEBTORS WHO WERE 3000 IN NUMBER. 5 . THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED SUSTAINING THE LEVY OF INTEREST U/S 234A, 234B AND 234C OF THE ACT, WHICH IS NOT LEVIABLE ON THE FACTS OF THE APPELLAN T. 2. THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL, BUT ALL THE ABOVE GROUNDS ARE RELATED TO THE ADDITION OF RS.40,17,387/ - WITH RESPECT TO REJECTING THE REVISED RETURN FILED BY THE APPELLANT COMPANY. THE STATUS OF THE ASSESSEE IS COMPANY REGISTERED WI TH ROC . THE ASSESSEE COMPANY FILED ITS RETURN OF ITA NO. 5067/DEL./2012 3 INCOME ON 30.09.2009 DECLARING INCOME OF RS.71,71,520/ - . THE CASE WAS SELECTED FOR SCRUTINY AND SCRUTINY PROCEEDINGS WERE COMPLETED ON 20.12.2011. THE COMPANY FILED ITS REVISED RETURN ON 25.01.2011 BY REDUCING ITS RETURNED INCOME BY RS.40,17,387/ - AND DECLARED THE INCOME OF RS.31,54,129/ - IN THE REVISED RETURN. THE ASSESSEE MADE JUSTIFICATION BEFORE THE ASSESSING OFFICER FOR REVISING HIS RETURN OF INCOME, WHICH IS AT PAPER BOOK, BUT THE ASSESSING OFFICE R WAS NOT AGREED ON THE SUBMISSIONS MADE AND DISALLOWED THE REVISED RETURN AND MADE THE ASSESSMENT ON THE BASIS OF INCOME DECLARED IN THE ORIGINAL RETURN. AGGRIEVED BY THE ORDER OF THE ASSESSING, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A) AND THE CIT(A) C ONFIRMED THE ACTION OF THE ASSESSING OFFI C ER. THE LD. CIT(A) ALSO NOTED THAT THE CLAIM OF T H E APPELLANT IS NOT SUPPORTED BY COGENT REASONING AND CONFIRMATIONS FROM THE PUBLISHERS AS WELL AS DISTRIBUTORS AND WITHOUT GIVING THE EFFECT IN THE ACCOUNT OF THE A PPELLANT COMPANY AND HE REJECTED THE APPEAL OF THE ASSESSEE. AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 3. THE LD. AR SUBMITTED THAT DUE TO MISTAKE, INVOICES RAISED ON FULL VALUE WERE RECORDED IN THE BOOKS OF ASSESSEE AND LATER ON WHEN HE CAME TO KNOW THAT THE EFFECT OF FREE DISTRIBUTION AND SUBSCRIPTION COPIES WERE NOT RECORDED, THEN AFTER MAKING DETAILED CALCULATIONS (PAPER BOOK PAGES 73 TO 99), THE ITA NO. 5067/DEL./2012 4 ASSESSEE FILED REVISED RETURN OF INCOME AND THE NET EFFECT OF RS.40,1 7,387/ - HAS BEEN TREATED AS PRIOR PERIOD ITEM AND THE EFFECT OF THIS HAS BEEN GIVEN IN F.Y. 2009 - 10 WHICH IS AT PAPER BOOK PAGE 114 AND THE CORRESPONDING EFFECT HAS ALSO BEEN GIVEN IN THE ACCOUNT BOOKS. THE AO HAS NOT CONSIDERED THE CALCULATIONS SUBMITTED BEFORE HIM AND THE LD. CIT(A) HAS ALSO UP H ELD THE ACTION OF THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT THERE IS NO CHANGE IN THE BUSINESS MODEL AND ACCOUNTING PROCEDURE IN THE EA R LIER AND SUBSEQUENT YEARS. HE ALSO PRODUCED ASSESSMENT ORDER FOR THE AS SESSMENT YEAR 2010 - 11. 4. THE LD. DR RELIED ON THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE AO HAS MADE REASONED ORDER AND DOES NOT REQUIRE ANY INTERFERENCE. THE APPELLANT COULD NOT PRODUCE ANY CONFIRMATION FROM THE PUBLISHERS AND DEBTORS WIT H REGARD TO THE EXTRA COPIES. THEREFORE, THE ASSESSING OFFICER HAS MADE ASSESSMENT ON THE BASIS OF ORIGINAL RETURN AND THE ASSESSEE COULD NOT PRODUCE ANY COGENT MATERIAL IN REVISING THE RETURN OF INCOME. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE ASSESSEE DREW OUR ATTENTION ON THE DETAILED CALCULATIONS MADE WHICH IS AT PAPER BOOK PAGE 73 TO 99 AND HIS EARLIER AND SUBSEQUENT SUBMISSIONS. HE SUBMITTED THAT THE SALES OF SPECIMEN COPIES, ADVERTISEMENT ITA NO. 5067/DEL./2012 5 COPIES AND SUBSCRI PTION COPIES ARE REQUIRED TO BE REDUCED FROM THE TURNOVER WHICH WERE BOOKED ON THE FULL VALUE OF THE INVOICES. THE ASSESSEE HAS GIVEN ADJUSTMENT OF THE PRIOR PERIOD ITEMS OF RS.40,17,387/ - IN THE SUBSEQUENT YEAR S PROFIT AND LOSS ACCOUNT. THE STATUTORY AUD ITOR OF THE COMPANY HAS REPORTED UNDER THE SIGNIFICANT ACCOUNTING POLICY UNDER THE REVENUE RECOGNITION WHICH IS ON PAPER BOOK AT PAGE 20 FOR THE ASSESSMENT YEAR 2009 - 10 AND PAGE 122 FOR A.Y. 2010 - 11 AS UNDER : SALES ARE RECOGNIZED WHEN GOODS ARE SUPPLIED AND ARE RECORDED NET OF TRADE DISCOUNTS . FURTHER THE TAX AUDITORS OF THE COMPANY HAVE REPORTED IN FORM 3CB IN SL. NO. 22(B) WHICH IS AT PAPER BOOK PAGE 133. THE CONTENTS OF REPORTING ARE AS UNDER: PARTICULARS OF INCOME OR EXPENDITURE OF PRIOR PERIOD CREDITED OR DEBITED TO THE PROFIT & LOSS ACCOUNT - NIL 6. THE ASSESSEE IS A COMPANY REGISTERED WITH ROC AND FILING HIS REGULAR RETURN OF INCOME ON THE BASIS OF AUDITED ACCOUNTS ALONG WITH THEIR REPORT AND COMMENTS. THE STATUTORY AUDITOR TAX AUDITOR HAS REPORTED AS STATED ABOVE WHICH REPORTS ARE USED FOR THE STATUTORY PURPOSE. THERE ARE CONTRADICTION BETWEEN THE AUDITORS REPORT AND THE SUBMISSIONS OF THE ASSESSEE. THE LD. AR HAS ALSO SUBMITTED THAT THE MISTAKE OF ACCOUNTING PROCEDURE ADOPTED DURING T HE YEAR WAS A BONA FIDE MISTAKE AND WHEN IT CAME TO THE KNOWLEDGE OF THE ITA NO. 5067/DEL./2012 6 ASSESSEE THEN HE IMMEDIATELY REVISED HIS RETURN BEFORE COMPLETION OF ASSESSMENT AS PER SECTION 139(5). THEREFORE, THE MATTER IS SENT BACK TO THE FILE OF THE AO FOR LIMITED PURPOSE OF VERIFICATION AND THE AO SHALL PASS FRESH ORDER AFTER CONSIDERING THE SUBMISSIONS MADE BEFORE US AND THE STATUTORY AUDITOR S REPORT AND TAX AUDITOR S REPORT SUBMITTED BEFORE US. THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27.01.2017 . SD/ - SD/ - ( H.S. SIDHU ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 27.01.2017 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI