THE ITO-1, Harda V. M/s. ADIM JATI SEVA SAHKARI SAMITI MARYADIT, Harda

ITA 528/IND/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1369 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-11-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV JAIN
• Assessee Lawyers: S N AGRAWAL
• Keywords: Tax effect
• Section: 143(3); 154

Judgement Text

ADIM JATI SEVA SAHKARI SAMITI MARYADIT I.T.A.NO.528/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 528 /IND/2016 ASSESSMENT YEAR 2008-09 REVENUE BY SHRI RAJEEV JAIN , SR. DR ASSESSEE BY S HRI S.N. AGRAWAL, CA . DATE OF HEARING 26.11 .2018 DATE OF PRONOUNCEMENT 2 9 . 1 1 .2018 O R D E R PER SHRI MANISH BORAD,AM THIS APPEAL OF REVENUE PERTAINING TO A.Y. 2008-09 I S DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, BHOPAL (IN SHORT CIT(A)), DATED 26.02.2016 WHICH IS ARISING OUT OF THE ORDER U/S 154 OF THE INCOME TAX ACT 1961(HEREIN AFTER CALLED AS THE ACT) FRAMED ON 18.02.2003 BY ITO-1(2), BHOPA L. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APP EAL; INCOME TAX OFFICER - I , HARDA VS. ADIM JATI SEVA SAHKARI SAMITI MARYADIT, VILLAGE ALAMPUR, DIST. HARDA (M.P) (APPELLANT) (RESPONDENT ) PAN NO. AAAAA 2836R ADIM JATI SEVA SAHKARI SAMITI MARYADIT I.T.A.NO.528/IND/2016 2 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.21,64, 474/- MADE BY THE AO ON ACCOUNT OF UNPAID INTEREST U/S 154 OF THE I.T.ACT B ECAUSE THE DISALLOWANCE WAS MADE ON THE BASIS OF ENTRIES MADE IN THE TAX AU DIT REPORT BY THE ASSESSEE ITSELF, WHICH IS A MISTAKE APPARENT FROM T HE RECORD. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DELETING THE DISALLOWANCE OF RS.21,64,474/- MADE BY THE AO WITHOUT AFFORDING AN OPPORTUNITY TO THE A SSESSEE AS REQUIRED UNDER RULE 46A OF THE IT ACT. 3. EVEN THOUGH, TAX EFFECT INVOLVED IN THE CASE IS BELOW THE MONETARY LIMIT PRESCRIBED BY THE BOARDS CIRCULAR NO.21/2015 DATED 10.12.2015 FOR FILING SECOND APPEAL, APPEAL IS BEING FILED SINCE THE CASE FALLS IN ONE OF THE EXCEPTIONS IN THE SAID CIRCULAR (RAP OBJECTION). 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY. THE E-RETURN O F INCOME WAS FILED ON 30.09.2008 DECLARING LOSS AT RS.15,73,161/-. TH E CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 31.12.2010 ACCEPTING THE INCOME DECLARED BY THE SOCIETY. SUBSEQUENTLY LEARNED ASSESSING OFFICER (IN SHORT LD .A.O) ON OBSERVING THAT ASSESSEE HAS CLAIMED EXPENDITURE FOR UNPAID INTEREST AT RS.21,64,474/- PASSED AN ORDER U/S 154 OF THE AC T AND ASSESSED THE INCOME AT RS.5,91,313/- AFTER DISALLOWING THE A LLEGED UNPAID INTEREST OF RS.21,64,474/-. ADIM JATI SEVA SAHKARI SAMITI MARYADIT I.T.A.NO.528/IND/2016 3 4. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD.CI T(A) AND SUCCEEDED. 5. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE TR IBUNAL. 6. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D AND SUPPORTED THE ORDER OF LD.A.O AND PLEADED FOR QUASH ING THE FINDINGS OF LD.CIT(A). 7. PER CONTRA LD. COUNSEL FOR THE ASSESSEE SUPPORTI NG THE FINDING OF LD.CIT(A) IN FAVOUR OF THE ASSESSEE AND PLEADED FOR SUSTAINING THE SAME. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. REVENUE IS AGGRIEVED WITH THE FI NDING OF LD.CIT(A) DELETING THE DISALLOWANCE OF UNPAID INTEREST OF RS. 21,64,474/-. THE ALLEGED ADDITION WAS MADE BY THE LD.A.O WHEN IT REV EALED TO HIM THAT THE ASSESSEE SOCIETY WHICH IS ALLEGED TO BE FO LLOWING CASH SYSTEM OF ACCOUNTING HAS CLAIMED UNPAID INTEREST EX PENDITURE AMOUNTING TO RS.21,64,474/-. WE FIND THAT THE LD.C IT(A) DELETED THE IMPUGNED DISALLOWANCE OBSERVING AS FOLLOWS; 4.5 I HAVE CONSIDERED THE WRITTEN SUBMISSIONS OF T HE APPELLANT AND THE ORDER U/S 154. IT IS SEEN THAT THE 0 TOOK INTO ACCO UNT COLUMN 11 (A) OF THE TAX AUDIT REPORT AND MADE IT THE SOLE BASIS OF THE ORDER U/S 154. IF ADIM JATI SEVA SAHKARI SAMITI MARYADIT I.T.A.NO.528/IND/2016 4 SO, IT WAS EQUALLY RELEVANT TO TAKE INTO ACCOUNT CO LUMN 11 (B) OF THE REPORT WHERE IT WAS MENTIONED THAT THERE IS NO CHAN GE IN THE METHOD OF ACCOUNTING FROM THE EARLIER YEAR. IN THE INCOME TAX RETURN, PART-A-OL, COLUMN 2, TOO IT WAS MENTIONED THAT THERE WAS NO CH ANGE IN THE METHOD OF ACCOUNTING. THERE IS ALSO MERIT IN THE SUBMISSION OF LD AR THAT SINCE IT IS REGULARLY FOLLOWING THE MERCANTILE METHOD OF ACCOUNTING, IT H AS SHOWN BOTH INCOME AND EXPENDITURE ON ACCRUAL BASIS IN EACH ASSESSMENT YEAR INCLUDING THE ASSESSMENT YEAR UNDER REFERENCE. WHILE THE AO HAS D ISALLOWED INTEREST ON ACCRUAL BASIS, THE INCOME SHOWN ON ACCRUAL HAS N OT BEEN EXCLUDED FROM ITS INCOME. FURTHER, SUCH AN ADDITION WAS OUTSIDE THE PURVIEW O F SECTION 154 SINCE THE ORIGINAL ASSESSMENT IN THIS CASE STOOD COMPLETE D U/S 143(3). UPON CONSIDERATION OF THE TOTALITY OF FACTS, IT IS HELD THAT THE AO WAS NOT JUSTIFIED TO MAKE THE IMPUGNED ASSESSMENT U/S 154. THE ADDITION MADE IN THE ASSESSMENT ORDER IS DELETED. THE GROUND OF APPEAL IS ALLOWED. 9. THE ABOVE FINDING OF FACT GIVEN BY LD.CIT(A) HAS NOT BEEN CONTROVERTED BY LD. DEPARTMENTAL REPRESENTATIVE. I T IS DISCERNABLE FROM THE RECORDS THAT THE ASSESSEE SOCIETY IS REGUL ARLY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING BUT DUE TO INADVERT ENCE ON THE PART OF THE AUDITOR, IN THE TAX AUDIT REPORT, CASH SYSTEM OF ACCOUNTING WAS MENTIONED. THE LD. A.O FAILED TO AP PRECIATE THE ADIM JATI SEVA SAHKARI SAMITI MARYADIT I.T.A.NO.528/IND/2016 5 FACT THAT IN THE IMMEDIATELY PRECEDING FINANCIAL YE AR ASSESSEE HAS SHOWN TO HAVE FOLLOWED MERCANTILE SYSTEM OF ACCOUNT ING AND IN TAX AUDIT REPORT FOR THE YEAR UNDER APPEAL IN CLAUSE NO .11(B) OF THE TAX AUDIT REPORT AT FORM NO.3CD WHICH REQUIRES THE COMM ENTS OF THE TAX AUDITOR ABOUT THE CHANGE IN METHOD OF ACCOUNTIN G THE COMMENT MENTIONED IS NO CHANGE. 10. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTAN CES OF THE CASE AND IN VIEW OF OUR DISCUSSIONS ABOVE ARE OF THE CON SIDERED VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE FINDINGS OF LD .CIT(A). WE UPHOLD THE SAME AND DISMISS THE REVENUES APPEAL. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.11.20 18. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 29.11.2018 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER ASSTT. REGISTRAR