The DCIT, Central Circle-1, Vadodara V. Shri Chimanlal H Soni, Vadodara

ITA 527/AHD/2020

AI Insights

The case involves an appeal by the revenue against the order of the Learned Commissioner of Income Tax (Appeals)-1, Vadodara, which arose from an assessment order passed under sections 143 read with section 263 of the Income Tax Act, 1961, for the Assessment Year 2009-10. The primary contention was that the revision order under section 263, which formed the basis of the assessment, had been previously quashed by the ITAT. The assessee argued that the current appeal by the revenue was not maintainable due to this prior quashing. The ITAT agreed with the assessee's argument, leading to the dismissal of the revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134527 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-06-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 26-10-2020
• Other Referred Cases: CIT Vs. Nirma Chemical Works Pvt Ltd [(2009) 309 ITR 67 (Guj.)]
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order
• Section: 263; 2(A)

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ B’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER आयकर अपील सं./ITA No. 527/AHD/2020 िनधाᭅरण वषᭅ/Asstt. Year: 2009-10 D.C.I.T, Central Circle, Vadodara Vs. Shri Chimanlal H. Soni, Prop. C.H. Jewellers, 8,Alkapuru concord Lane, R.C.Dutt Road, Vadodara-390007. PAN: AJKPS6990C (Applicant) (Respondent) Revenue by : Shri Durga Dutt, CIT D.R Assessee by : Shri Bandish Soparkar, with Shri Parin Shah, A.Rs सुनवाई कᳱ तारीख/Date of Hearing : 22/06/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 30/06/2023 आदेश/O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-1, Vadodara, (in short “Ld. CIT(A)”) arising in the matter of assessment order passed under s. 143 r.w.s. 263 of the Income Tax Act 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2009-10. ITA no.527/AHD/2020 Asstt. Year 2009-10 2 2. At the outset, the Ld. counsel for the assessee before us submitted that this appeal is arising in consequence to the direction issued by the Ld. PCIT u/s 263 of the Act. It was further submitted that the order passed by the Ld. PCIT u/s 263 of the Act, has already been quashed by the ITAT in ITA No. 1514/Ahd/2014 vide order dated 23/04/2018. Accordingly, it was contended by the Ld. AR that the appeal filed by the revenue is not maintainable for the reason that the basis of which the assessment was framed has been quashed. 3. On the contrary, the Ld. DR could not controvert the argument advanced by the Ld. AR for the assessee. 4. We have heard the rival contentions of both the parties and perused the materials available on record. Considering the facts stated above, we note that the appeal preferred by the revenue is not maintainable as the order u/s 263 of the Act, has already been quashed by the ITAT in ITA No.1514/Ahd/2014 vide order dated 23/04/2018. The relevant extract of the order is reproduced as under: 5. The assessee is aggrieved and is in appeal before us. 6. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 7. We have noted that a co-ordinate bench of this Tribunal, in assessee's own case for the assessment year 2006-07, has categorically accepted the same method of accounting, as accepted by the Assessing Officer in the impugned assessment order, for of closing stock. It was also noted that this method is "in consonance with the statutory provisions and the Accounting Standards prescribed by the ICAI" and has also been used for "arriving at the cost of goods sold". When Tribunal has approved the method, after detailed discussions on the same, it cannot be said that, at the minimum, it is a reasonably possible view of the matter. It is also elementary that in the garb of exercising powers under section 263, Commissioner cannot substitute one possible view of the matter by the other possible view of the matter. 8. We have also noticed that the CIT has exercised his powers on a ground which is altogether different from the ground on which revision proceedings were initiated and the assessee was not at all heard on the ground on which revision was eventually subjected to. In the show-cause notice, learned Commissioner started with alleged undervaluation of closing stock by Rs.4,64,79,103/-, but then, in the operative portion, he has simply directed that "the AO to pass a fresh order de novo after getting and verifying detailed month-wise break up of opening stock, closing stock, converted stock, sale and purchase ITA no.527/AHD/2020 Asstt. Year 2009-10 3 and other details of 24ct, 22ct and 18ct gold after affording reasonable opportunity of being heard". There is nothing on record to suggest, nor has that been demonstrated to us by the learned Departmental Representative, that the Commissioner heard the assessee on the point of inadequate inquiry, which at best is his case. This aspect of the matter, regarding correctness of closing stock valuation, has been examined at length by the Assessing Officer and the detailed questions on the issue, as also reply thereto, have been placed before us in the paper-book pages 49 to 63. In any case, the impugned revision order was passed on 28.03.2014, i.e. much before the Explanation 2(a) to section 263 came into force on 1 June, 2015. Under these circumstances, exercising the revision powers on the ground that the order was passed without making such enquiries and verifications, which should have been made in the opinion of the Commissioner, was simply not permissible. 9. We may also mention that the Assessing Officer has asked the questions, accepted the explanations but has not discussed the issue in great detail in the assessment order. This, however, cannot be put against the assessee for the reason that, in the esteemed opinion of Hon'ble Gujarat High Court, the absence of detailed discussions in the body of the assessment order does not imply that the Assessing Officer has not applied his mind - CIT Vs. Nirma Chemical Works Pvt Ltd [(2009) 309 ITR 67 (Guj.)]. In fact, Hon'ble Gujarat High Court has observed that "an assessment order cannot incorporate reasons for making/granting a claim.... if it does so, an assessment order will cease to be an order and become an epic....". When such are the views of Their Lordship, it can be safely assumed that absence of a specific discussion about reasons of accepting explanation cannot, by itself, be reason enough for exercise of powers under section 263. That precisely, however is the case. 10. In view of the above discussions, as also bearing in mind entirety of the case, we uphold the plea of the assessee, and, therefore, quash the impugned revision order. 5. In view of the above, we hold that the assessment order passed in consequence to the direction u/s.263 of the Act, is not maintainable and liable to be quashed. Accordingly, we dismiss the appeal filed by the revenue. 6. In the result, the appeal filed by the revenue is hereby dismissed. Order pronounced in the Court on 30/06/2023 at Ahmedabad. Sd/- Sd/- (T.R SENTHIL KUMAR) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 30/06/2023 Manish