M/s. Radhe Sham Ravi Prakash Timber Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5956/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4253 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 03-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Keywords: Revised return
• Section: 143(3); 142(1)

Judgement Text

1 ITA NO. 5956/DEL/2014 IN THE INCOME TAX APPELLA TE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT ME MBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO . 5956/DEL/2014 (ASSESSMENT Y EAR: 2010-11) RADHE SHAM RAVI PRAKASH TIMBER PVT. LTD. 1/3732, LONI ROAD NEW DELHI AADCR3706N (APPELLANT) VS DCIT CIRCLE-15(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. VED JAIN, ADV RESPONDENT BY SMT. PARAMITA TRIPATHY, CIT(DR) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 19/8/2014 PASSED BY CIT(A)-XVIII, NEW DELHI FOR ASSESSMENT YE AR 2010-11. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2.(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE A CTION OF THE AO IN DATE OF HEARING 12.10.2017 DATE OF PRONOUNCEMENT 03.01.2018 2 ITA NO. 5956/DEL/2014 CONSIDERING THE ADDITIONAL INCOME OFFERED THROUGH R EVISED RETURN TO BE AMOUNTING TO RS. 1,15,12,494/- INSTEAD OF RS.95,58, 102/-. (II) THAT THE ABOVESAID WAS DONE IGNORING THE FACT THAT THE ASSESSEE ITSELF HAS ADDED THE SAID INCOME AMOUNTING TO RS.1 ,15,12,497/- ON THE BASIS OF RETURN OF INCOME OF A.Y. 2009-10 WHILE AS PER THE ASSESSMENT ORDER FINALIZED FOR A.Y. 2009-10, THE DEDUCTION BEI NG RESTRICTED TO ONLY RS.95,58,102/-, THE ADDITIONAL INCOME IN THE RELEVA NT ASSESSMENT YEAR SHOULD ALSO BE RESTRICTED TO RS.95,58,102/-. 3 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE DI SALLOWANCE OF AN AMOUNT OF RS.37,007/- MADE BY THE AO ON ACCOUNT OF TELEPHONE AND TRAVELLING EXPENSES. (II) THAT THE DISALLOWANCE HAS BEEN CONFIRMED DESPITE TH E SAME BEING MADE AT THE RATE OF 10% WITHOUT THERE BEING ANY BASIS FOR T HE SAME IGNORING THE FACT THAT IN CASE OF A COMPANY THERE CANNOT BE ANY PERSONAL ELEMENT IN THE EXPENSES INCURRED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND O R ALTER ANY OF THE GROUNDS OF APPEAL. THE LD. AR ALSO MADE ADDITIONAL GROUND AS UNDER: 5.(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN NOT ADMITTING THE GROUND RELATING TO THE VALUE OF OPENING STOCK TO BE REVISED IN CONSEQUENCE S OF EARLIER YEAR ORDER. (II) THAT THE CLOSING STOCK OF THE PRECEDING YEA R HAVING BEEN REVALUED BY THE AO AT RS. 271,28,665/-, THE OPENING STOCK OF TH E CURRENT YEAR HAS TO BE VALUED AT RS.271,28,665/-. 3. THE LD. AR SUBMITTED THAT GROUND NO. 1 IS GENERA L IN NATURE AND 3(I) AND 3(II) ARE NOT PRESSED. THEREFORE WE HOLD THAT AS GR OUND NO. 1 IS GENERAL IN NATURE NEED NOT BE ADJUDICATED, HENCE DISMISSED. GR OUND NO. 3(I) AND 3 ITA NO. 5956/DEL/2014 3(II) NOT PRESSED, HENCE DISMISSED. 4. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF PROCESSING AND TRADING OF WOOD AND TIMBER. THE RETURN OF INCOME DE CLARING INCOME OF RS.67,83,360/- WAS FILED ON 09.09.2010 WHICH WAS PR OCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. THE CASE WAS SELECTED FOR SCR UTINY, ACCORDINGLY, NOTICE U/S 143(2) WAS ISSUED ON 23.09.2011 WHICH WAS DULY SERVED UPON THE ASSESSEE. SUBSEQUENTLY, NOTICE U/S 142(1) ALONGWITH QUESTIONNAIRE AND NOTICE U/S 143(2) WERE ISSUED TO THE ASSESSEE ON 18.10.201 2 WHICH WERE ALSO DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THESE NOTI CES, THE CHARTERED ACCOUNTANT/ASSESSEES REPRESENTATIVE OF THE ASSESSE E COMPANY ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND FURNIS HED THE DETAILS. THE SAME WAS TAKEN ON RECORD BY THE ASSESSING OFFICER. THE A SSESSING OFFICER MADE ADDITION ON TELEPHONE AND TRAVELLING EXPENSES OBSER VING THAT PERSONAL USE IN TELEPHONE AND TRAVELLING EXPENSES CANNOT BE RULED O UT AND THUS, 1/10 TH OF EXPENSES OUT OF TELEPHONE AND TRAVELLING WERE DISAL LOWED. 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. BEFORE THE CIT(A), THE ADDITIONAL GROUNDS WERE TAKEN BY THE AS SESSEE AND THE SAME WAS ADMITTED BY THE CIT(A). THE ADDITIONAL GROUND IS AS UNDER: IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF I. TAX ACT FOR AY 2009-10 ADDITION OF RS. 7,25,117/- HAS BEEN MADE BEING DIFF ERENCE IN VALUATION OF STOCK AS ON 31.3.2009. ASSESSEE VALUED STOCK AT RS. 264,03,548/- WHEREAS, AS PER AO VALUE OF STOCK SHOULD BE RS. 2,7 1,28,665/- AND DIFFERENCE OF RS. 7,25,117/- (2,71,28,665 - 2,64,03 ,548) HAS BEEN ADDED IN INCOME FOR AY 2009-10. THE ASSESSE HAS MOVED APP LICATION FOR CONSIDERING ADDITIONAL GROUND TO GIVE CONSEQUENTIAL EFFECT BY WAY OF ALLOWING DEDUCTIONS OF LIKE AMOUNT IN CURRENT YEAR. THE CIT(A) HELD THAT AS THIS GROUND OF APPEAL IS CO NNECTED WITH THE ORIGINAL 4 ITA NO. 5956/DEL/2014 GROUND OF APPEAL, THE SAME WAS ADMITTED FOR ADJUDIC ATION. 6. AS REGARDS GROUND NO. 2(I) AND 2(II), THE LD. AR SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS REFUNDED BACK ADDITIONAL CUSTOM DUTY (PAID ON IMPORT TIMBER LOGS) OF RS. 1,15,12,49 4/- TO THE CUSTOM DEPARTMENT AND DEBITED THE SAME IN THE P& L ACCOUNT . AT THE TIME OF FILING OF RETURN FOR THE AY 2010-11 ASSESSEE ADDED BACK THE E NTIRE AMOUNT OF RS. 1,15,12,494/- AND CORRESPONDINGLY CLAIMED THE SAME IN AY 2009-10 BY FILING ITS REVISED RETURN ON 09.07.2010. THEREAFTER, AY 20 09-10 COME UNDER THE SCRUTINY ASSESSMENT AND THE ASSESSING OFFICER RESTR ICTED THE CLAIM OF THE ASSESSEE OF RS. 1,15,12,494/- TO RS.95,58,102/- AND BALANCE OF RS.19,54,392/- WAS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER HAD NOT GIVEN THE CO NSEQUENT IMPACT OF DISALLOWANCE OF THE CLAIM OF RS.19,54,392/- IN THE YEAR UNDER CONSIDERATION I.E., AY 2010-11 WHILE MAKING THE ASSESSMENT U/S 14 3(3) OF THE ACT SINCE THE ADDITIONAL INCOME OF RS.1,15,12,294/- WAS OFFERED F OR TAX DURING THE CURRENT YEAR CONSEQUENT TO THE DEDUCTION OF RS.1,15,12,294/ - CLAIMED AS PER THE REVISED RETURN FILED FOR ASSESSMENT YEAR 2009-10. A GGRIEVED BY THE ORDER OF THE ASSESSING OFFICER OF THE AY 2010-11 ASSESSEE PREFER RED AN APPEAL BEFORE THE CIT(A) AND CIT(A) DECIDED THIS ISSUE IN PARA 10 PAGE 4 OF HIS ORDER WHEREIN ASSESSING OFFICER WAS DIRECTED TO ALLOW THE CLAIM A FTER THE VERIFICATION AND GIVE CREDIT ACCORDINGLY. HOWEVER, TILL DATE NO ACTION WA S TAKEN BY THE AO IN THIS REGARD. THUS, THE LD. AR PRAYED THAT THE ASSESSING OFFICER BE DIRECTED TO PROVIDE THE CLAIM OF RS. 19,54,392/- TO THE ASSESSE E IN AY 2010-11. 7. AS REGARDS THE ADDITIONAL GROUND I.E. GROUND NO. 5(I) AND 5(II), THE LD. AR SUBMITTED THAT EFFECT OF ADDITION OF CLOSING STOCK IN AY 2009-10 HAS TO BE GIVEN IN AY 2010-11. IN THE ORDER PASSED U/S 143(3) FOR THE AY 2009-10 THE 5 ITA NO. 5956/DEL/2014 ASSESSING OFFICER MADE THE ADDITION OF RS. 7,25,117 /- ON ACCOUNT OF DIFFERENCE IN THE VALUATION OF CLOSING STOCK. HOWEVER, CORRESP ONDING EFFECT WAS NOT GIVEN IN AY 2010-11 BY THE ASSESSING OFFICER WHILE PASSIN G ORDER FOR THE AY 2010-11 MEANING THEREBY OPENING STOCK OF AY 2010-11 WAS NOT INCREASED BY RS. 7,25,117/-. BEFORE THE CIT(A), ASSESSEE HAD TAKEN T HE ADDITIONAL GROUND WHICH WAS NOT ADJUDICATED. SINCE THE ADDITION WAS MADE I N THE CLOSING STOCK OF AY 2009-10 BY RS. 7,25,117/- CORRESPONDING EFFECT SHAL L ALSO BE GIVEN IN THE OPENING STOCK OF AY 2010-11 AND THUS OPENING STOCK OF AY 2010-11 SHALL BE REVALUED AND INCREASED BY RS. 7,25,117/-. 8. THE LD. DR RELIED UPON THE ORDER OF THE CIT(A) A ND ASSESSMENT ORDER. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RECORDS. AS REGARDS GROUND NO. 2(I) AND 2(II) OF THE APPEAL, AT THE TIM E OF FILING OF RETURN FOR THE AY 2010-11 ASSESSEE ADDED BACK THE ENTIRE AMOUNT OF RS . 1,15,12,494/- AND CORRESPONDINGLY CLAIMED THE SAME IN AY 2009-10 BY F ILING ITS REVISED RETURN ON 09.07.2010. THEREAFTER, AY 2009-10 COME UNDER THE S CRUTINY ASSESSMENT AND THE ASSESSING OFFICER RESTRICTED THE CLAIM OF THE A SSESSEE OF RS. 1,15,12,494/- TO RS.95,58,102/- AND BALANCE OF RS.19,54,392/- WAS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. HOWEVER, THE AS SESSING OFFICER HAD NOT GIVEN THE CONSEQUENT IMPACT OF DISALLOWANCE OF THE CLAIM OF RS.19,54,392/- IN THE YEAR UNDER CONSIDERATION I.E., AY 2010-11 WHILE MAKING THE ASSESSMENT U/S 143(3) OF THE ACT SINCE THE ADDITIONAL INCOME O F RS.1,15,12,294/- WAS OFFERED FOR TAX DURING THE CURRENT YEAR CONSEQUENT TO THE DEDUCTION OF RS.1,15,12,294/- CLAIMED AS PER THE REVISED RETURN FILED FOR ASSESSMENT YEAR 2009-10. THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM AFTER THE VERIFICATION AND GIVE CREDIT ACCORDINGLY WHICH IS Y ET NOT DECIDED BY THE ASSESSING OFFICER. THEREFORE, WE DIRECT THE ASSESSI NG OFFICER TO ALLOW THIS CLAIM AFTER VERIFICATION AND GIVE CREDIT ACCORDINGLY TO T HE ASSESSEE. THIS GROUND NO. 6 ITA NO. 5956/DEL/2014 2(I) AND 2(II) ARE ALLOWED. 10. AS RELATES TO ADDITIONAL GROUND NO. 5(I) AND 5( II), THE CIT(A) HAS NOT ADJUDICATED THIS ISSUE DESPITE ADMITTING THE SAME. SINCE THE ADDITION WAS MADE IN THE CLOSING STOCK OF AY 2009-10 BY RS. 7,25 ,117/- CORRESPONDING EFFECT HAS TO BE GIVEN IN THE OPENING STOCK OF AY 2 010-11 AND THUS OPENING STOCK OF AY 2010-11 HAS TO BE REVALUED. THE ASSESSI NG OFFICER IS DIRECTED TO VERIFY THIS ISSUE. HENCE, THIS ISSUE IS REMANDED BA CK TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPP ORTUNITY OF HEARING. 11. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD JANUARY, 2018 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 03/01/2018 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NO. 5956/DEL/2014 DATE 1. DRAFT DICTATED ON 14/11/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 14/11/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 11.01.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 1 .01.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.