DEEPAK CHOUDHARY, Jaipur V. ITO, Jaipur

ITA 633/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87520 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 21-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROLEE AGARWAL
• Assessee Lawyers: MANISH AGARWALCA
• Section: 40A(3); 143(3); 263

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 633/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 SHRI DEEPAK CHOUDHARY 32, JOSHI COLONY, TONK PHATAK, JAIPUR. CUKE VS. THE C.I.T. (ADM.), JAIPUR-II, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: ABIPC 8350 N VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI MANISH AGARWAL,CA JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROLEE AGARWAL, (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 11/12/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 09/02/2015 VKNS'K @ ORDER PER: R.P. TOLANI, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 09/01/2013 BY THE LEARNED CIT, JAIPUR-II, JAIPUR FOR A.Y. 2008-09. RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE COMMISSIONER OF INCOME TAX (ADM.), JAIPUR-II, JAIPUR HAS ITA 633/JP/2013_ DEEPAK CHAUDHARY VS. CIT-II 2 GROSSLY ERRED IN PASSING THE IMPUGNED ORDER U/S 263 OF THE I.T. ACT, 1961 WITHOUT CONSIDERING THE SUBMISSIONS MA DE AND THE FACTS ON RECORD, THUS THE IMPUGNED ORDER DE SERVES TO BE QUASHED AND BE HOLD AS BAD IN LAW. 1.1 THAT THE LEARNED CIT(ADM.) HAS FURTHER ERRED IN H OLDING THAT THE PAYMENT MADE TO THE VARIOUS PARTIES IN VIO LATION OF PROVISIONS OF SECTION 40A(3) AND THEREBY HOLDING T HE ASSESSMENT ORDER PASSED U/S 143(3) AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHOUT APPRECIATING THE FACT THAT TRADING ADDITION OF RS. 50,000/- WAS ALREADY MADE AFTER INVOKING THE PROVISIONS OF SE CTION 145(3) OF THE INCOME TAX ACT, 1961 AND THE ADDITION/DISALLOWANCE PROPOSED U/S 40A(3) IN RESPECT OF PURCHASES STOOD COVERED IN THE TRADING ADDITION MAD E, THUS THE ACTION OF THE LEARNED CIT(ADM.) DESERVES TO BE HOLD BAD IN LAW. 2. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELET E OR ABANDON THE GROUND OF THIS APPEAL AT THE TIME OR BE FORE THE ACTUAL HEARING OF THE CASE. 2 THIS APPEAL IS FILED LATE BY 100 DAYS, FOR WHICH A CONDONATION PETITION IS FILED, ADVERTING THERETO, THE LEARNED C OUNSEL FOR THE ASSESSEE CONTENDS THAT THE ASSESSEE WAS ADVISED TO FILE THE A PPEAL AGAINST THE IMPUGNED 263 ORDER, FOR WHICH NECESSARY PAPERS WERE SUBMITTED BY THE ASSESSEE DULY SIGNED TO HIS COUNSEL. BY AN INADVER TENCE, THE OFFICE CLERK OF THE COUNSEL MISTAKABLY PLACED THE PAPERS I N SOME OTHER FILE. ITA 633/JP/2013_ DEEPAK CHAUDHARY VS. CIT-II 3 2.1 WHEN THIS FACT WAS FOUND OUT, THE ASSESSEES APP EAL WAS IMMEDIATELY FILED. IT IS PLEADED THAT WHILE INTERPRE TING THE LAW ABOUT CONDONATION A LIBERAL VIEW MAY BE TAKEN, RELIANCE IS PLACED ON FOLLOWING JUDGMENTS: (I) CIT VS. KHEMRAJ LAKSHMICHAND 114 ITR 75 (MP) FO R THE PROPOSITION THAT IF THE DELAY HAS CORRECT DUE TO TH E MISTAKE OF THE COUNSEL THEN THE ASSESSEE DID NOT SUFFER FOR THE SA ME. (II) STERLITE INDUSTRIES (INDIA) LTD. VS. ADDL.CIT /JCIT 6 SOT 497/102 TTJ 53 (MUM.) FOR THE PROPOSITION THAT, MEAN ING OF SUFFICIENT CAUSE SHOULD RECEIVE A LIBERAL CONSTRUCTION SO AS T O ADVANCE THE CAUSE OF SUBSTANTIAL JUSTICE. WHILE CONSIDERING THE LIBER AL CONSTRUCTION, THE LENGTH OF DELAY IS IMMATERIAL. 3. THE LEARNED DR OPPOSED THE CONDONATION OF DELAY. 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE FA CT ABOUT THE ASSESSEE HAVING PROVIDED, SIGNED PAPER TO THE COUNS ELS OFFICE HAS BEEN DISPUTED, IN THESE CIRCUMSTANCES, RELYING ON THE DE CISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. KH EMRAJ LAKSHMICHAND (SUPRA), WE CONDONE THE DELAY. ITA 633/JP/2013_ DEEPAK CHAUDHARY VS. CIT-II 4 5. ADVERTING TO THE CHALLENGE TO THE CIT ACTION U/S 263 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT THE IMPUGNED ASSESSMENT WAS M ADE U/S 143(3) BY THE ASSESSING OFFICER AFTER CARRYING OUT THE NEC ESSARY INQUIRIES AND VERIFICATION OF RECORD. THIS IS EVIDENT FROM THE FAC T THAT THE LEARNED ASSESSING OFFICER AFTER CONSIDERING THE BOOKS OF AC COUNTS THEY WERE REJECTED AND ON THAT BASIS, A LUMP SUM ADDITION OF RS. 50,000/- WAS MADE TO THE TRADING RESULTS. THE ISSUE OF OTHER EXPE NDITURE WAS ALSO CONSIDERED BY THE ASSESSING OFFICER AND IN THIS BEH ALF, A FURTHER ADDITION OF RS. 20,000/- WAS MADE. THUS, THE ASSESSMENT IN QUE STION WAS FRAMED AFTER DUE APPLICATION OF MIND AND AFTER COND UCTING PROPER ENQUIRIES. RELIANCE IS PLACED ON THE HONBLE ANDHRA PRADESH HIGH COURT JUDGMENT IN THE CASE OF INDWELL CONSTRUCTIONS VS. CO MMISSIONER OF INCOME TAX 232 ITR 0776 (1998) WHEREIN THE HONBLE C OURT HAS HELD THAT IF BOOKS OF ACCOUNTS ARE REJECTED THEN NO SEPA RATE ADDITIONS U/S 40A(3) SHOULD BE MADE BY FOLLOWING OBSERVATIONS: INCOME-ADDITIONS TO INCOMEINCOME ESTIMATEDALL DED UCTIONS UNDER SECTION 29 DEEMED TO HAVE BEEN TAKEN INTO ACC OUNT WHILE MAKING ESTIMATE INCLUDING DISALLOWANCE UNDER SECTION 40 REJECTION OF BOOKS OF ACCOUNTREVENUE CANNOT RELY ON SAME BOOKS FOR DISALLOWANCE AND ADDITION OF SPECIFIC ITEM S OF ITA 633/JP/2013_ DEEPAK CHAUDHARY VS. CIT-II 5 EXPENDITUREASSESSEE FIRM DOING CONTRACT BUSINESSBO OKS REJECTED AND INCOME ESTIMATEDSEPARATE ADDITION MADE OF INTEREST AND REMUNERATION PAID TO PARTNERS TO INCOM E ALREADY ESTIMATED AND ASSESSED FROM CONTRACTSNOT JUSTIFIEDI NCOME TAX ACT, 1961, SS. 29,40(B),145. FURTHER RELIANCE IS PLACED IS AS FOLLOWS: (I) 58 DTR 368 ITO VS. SADHWANI BROTHERS (JPB) (II) TEJA CONSTRUCTION VS. ACIT 5 TAXMANN.COM 61 (HYD -ITAT) 6. IN VIEW OF THESE CASE LAWS, ONE OF THE LEGAL VIEW A DOPTED IS TO THE EFFECT THAT IF THE BOOKS OF ACCOUNT ARE REJECTE D AND A LUMP SUM ADDITION IS MADE, SEPARATE ADDITION U/S 40A(3) OF T HE ACT CANNOT BE MADE. THUS THE VIEW ADOPTED BY THE ASSESSING OFFICER IS ONE OF THE POSSIBLE VIEW BACKED BY THESE CASE LAWS. IN VIEW THE REOF, THE ORDER OF THE ASSESSING OFFICER CANNOT BE HELD TO ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF THE REVENUE. FURTHER RELIANCE IS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. VS. CIT 243 ITR 83. 7. LEARNED D.R. IS HEARD, WHO SUPPORTS THE ORDER OF THE LEARNED CIT. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSMENT IN QUESTION HAS BEEN FRAMED U/S 143(3) OF THE ACT WHILE CONSIDERING THE BOOKS AC COUNT OF OTHER ITA 633/JP/2013_ DEEPAK CHAUDHARY VS. CIT-II 6 RECORDS. IT IS EVIDENT FROM THE FACT THAT BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN REJECTED. PERUSAL OF BOOKS WILL I NCLUDE THE PERUSAL ABOUT CASH PAYMENTS U/S SECTION 40A(3) ALSO. LD. AO , INSTEAD OF RECOURSING TO SEPARATE ADDITIONS, REJECTED THE BOOK S OF ACCOUNT AND MADE A LUMP SUM ADDITION. THUS, THE VIEW ADOPTED BY T HE ASSESSING OFFICER IS ONE OF THE POSSIBLE VIEWS CONSEQUENTLY TH E ASSESSMENT ORDER CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE IN THIS BEHALF. RESPECTFULLY FOLLOWING THE J UDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT(SUPRA) WE HOLD THAT THE ORDER OF THE ASSESSING OFFICER BEIN G NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE, IS UPHELD. ACTION U/S 263 OF THE ACT IS QUASHED. 9. IN THE RESULT, THE ASSESSEE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/02/2015. SD/- SD/- VH-VKJ-EHUK VKJ-IH-RKSYKUH (T.R. MEENA) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 09 TH FEBRUARY, 2015 *RANJAN ITA 633/JP/2013_ DEEPAK CHAUDHARY VS. CIT-II 7 VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI DEEPAK CHAUDHARY, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE CIT(ADM), JAIPUR-II, JAIPUR. 3. VK;DJ VK;QDR @ CIT, JAIPUR 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 5. XKMZ QKBZY @ GUARD FILE (ITA NO. 633/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR