Smt. Chitra Gupta, Ahmedabad V. The Pr. CIT, Ahmedabad-5, Ahmedabad

ITA 644/AHD/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5102 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 12-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Keywords: Transfer pricing
• Section: 143(3); 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL COURT] BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 644/AHD/2019 (ASSESSMENT YEAR: 2014-15) SMT. CHITRA GUPTA 604, 6 TH FLOOR, ATLANTA TOWER, GULBAI TEKRA, AHMEDABAD- 380006 VS. PR. COMMISSIONER OF INCOME TAX, AHMEDABAD-5, 1 ST FLOOR, NARAYAN CHAMBERS, NR. PATANG HOTEL, AHMEDABAD [PAN NO. ACV PG1 174 C] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI VINIT MOONDRA, CA RESPONDENT BY : SHRI O. P. SHARMA , CIT D.R. DATE OF HEARING 16.07.2020 DATE OF PRONOUNCEMENT 12.10.2020 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 12.03.2019 PASSED BY THE PR. COMMISSION ER OF INCOME TAX 5, AHMEDABAD ARISING OUT OF THE ORDER DATED 07.12.2 016 PASSED BY THE ACIT, CIRCLE-5(2), AHMEDABAD UNDER SECTION 263 OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) FOR ASS ESSMENT YEAR 2014-15 WHEREBY AND WHEREUNDER THE LD. AO HAS DIRECTED TO M AKE A FRESH ASSESSMENT, DE-NOVO UPON MAKING ALL NECESSARY PROPE R ENQUIRIES IN RESPECT OF ALL RELEVANT ASPECTS AS IDENTIFIED IN TH E ORDER IMPUGNED. ITA NO.644/AHD/2019 SMT. CHITRA GUPTA VS. PCIT ASST. YEAR 2014-15 - 2 - 2. THE ASSESSEE CONDUCTING TRADING BUSINESS FILED I TS RETURN OF INCOME THROUGH ELECTRONIC MEDIA ON 07.10.2014 DECLARING TO TAL INCOME AT RS. 95,29,040/- FOR ASSESSMENT YEAR UNDER CONSIDERATION WHICH WAS FINALIZED UNDER SECTION 143(3) OF THE ACT ON 07.12.2016. IT IS RELEVANT TO MENTION THAT THE ASSESSEE SHOWN INCOME FROM BUSINESS OR PRO FESSION AND CAPITAL GAIN. SUCH ASSESSMENT ORDER WAS FINALIZED BY MAKIN G DISALLOWANCE OF RS. 4,141/- UNDER SECTION 14A OF THE ACT AND RS. 1, 20,866/- ON ACCOUNT OF LATE PAYMENT OF PF & ESIC. SUBSEQUENTLY UPON PERUSAL OF THE RECORDS CERTAIN D ISCREPANCIES WERE FOUND IN RENDERING ASSESSMENT ORDER DATED 07.1 2.2016 WHICH WAS CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF THE REVENUE. ONE OF THE VALID REASONS FOR MAKING THE ASSESSMENT ORDER ERRONEOUS IS THIS THAT DURING THE COURSE OF ASSESSMENT PROCEEDIN G UPON REQUISITION FROM THE AO, THE ASSESSEE HAD SUBMITTED THE AUDIT R EPORT OF M/S. RACHNA UMESH SUROTIA, PROP. OF AERO ENGINEERS INSTE AD OF THE ASSESSEES TAX AUDIT REPORT. IN FACT, THE ASSESSMENT WAS COMP LETED CONSIDERING THE SAID AUDIT REPORT IS OF THE ASSESSEE ITSELF. AFTER THE ORDER PASSED BY THE LD. AO ON 07.12.2016, ON 26.12.2016 IT WAS INTIMATE D BY THE LD. C.A. OF THE ASSESSEE THAT INSTEAD OF ASSESSEE, SOME OTHERS REPORT HAS BEEN FILED BY MISTAKE AND THUS THE ASSESSEES TAX AUDIT REPORT WAS THEN SUBMITTED ON 26.12.2016. 3. UPON VERIFICATION OF THE CORRECT AUDIT REPORT IT WAS FOUND THAT THE ASSESSEE HAS MADE PAYMENT OF RS. 33,29,62,451/- TO PERSONS SPECIFIED UNDER SECTION 40A(2)(B) OF THE ACT FOR PURCHASE OF GREY CLOTH, WHICH ITA NO.644/AHD/2019 SMT. CHITRA GUPTA VS. PCIT ASST. YEAR 2014-15 - 3 - FALLS UNDER THE DEFINITION OF SPECIFIED DOMESTIC TR ANSACTIONS. AS PER INSTRUCTION NO. 3/2016 & F. NO. 500/9/2015-APA-II D ATED 10.03.2016 ON THIS SPECIAL FACTS IT WAS MANDATORY FOR THE ASSESSI NG OFFICER TO REFER THE MATTER TO THE TPO FOR DETERMINATION OF CORRECT ARM S LENGTH PRICE OF SPECIFIED DOMESTIC TRANSACTION. HOWEVER, SUCH REFE RENCE COULD NOT BE MADE SINCE THE ACTUAL AUDIT REPORT OF THE ASSESSEE WAS NOT FILED BEFORE THE LD. AO. HAD THERE BEEN TRANSFER PRICING REPORT IN FORM 3CEB WAS FILED THE CASE COULD HAVE BEEN REFERRED TO THE TPO IN TERMS OF THE CBDT INSTRUCTION AS MENTIONED HEREINABOVE, AS THE CASE M ADE OUT BY THE REVENUE. SINCE AUDIT REPORT OF THE ASSESSEE WAS NO T FILED THE SAME WAS NOT EXAMINED DURING THE ASSESSMENT PROCEEDING. 4. AT THE TIME OF THE HEARING OF THE INSTANT APPEAL THE LD. REPRESENTATIVE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE IS HAVING TWO PROPRIETARY FIRMS ANUJ ENTER PRISE AND ANUJ SYNTHETICS ENGAGED IN THE BUSINESS OF TRADING AND M ANUFACTURING OF GRAY AND FINISHED FABRICS. SINCE THE AMOUNT IN QUESTION WAS PAID TOO FROM ONE TO THE OTHER PROPRIETORSHIP OF THE ASSESSEE FOR PUR CHASE OF GRAY, THE SAME DOES NOT COME UNDER THE PURVIEW OF RELATED PERSON N EITHER FALLS UNDER THE DEFINITION OF SPECIFIED DOMESTIC TRANSACTION IN TER MS OF SEC. 40A(2)(B) OF THE ACT. HENCE, THE MATTER IS NOT REQUIRED TO BE RE FERRED TO THE TRANSFER PRICING OFFICER FOR DETERMINATION OF CORRECT ARMS LENGTH PRICE OF SPECIFIED DOMESTIC TRANSACTION. HOWEVER, HE HAS SU BMITTED THAT THE ACTUAL AUDIT REPORT WRONGLY MENTIONED SUCH PAYMENT MADE TO PERSON SPECIFIED UNDER SECTION 40A(2)(B) OF THE ACT. SO F AR AS THE FACT OF SUBMISSION OF WRONG AUDIT REPORT BEFORE THE LD. AO IS CONCERNED IT WAS ITA NO.644/AHD/2019 SMT. CHITRA GUPTA VS. PCIT ASST. YEAR 2014-15 - 4 - ARGUED THAT THE AUDIT REPORT WAS ALREADY FURNISHED ON 30.09.2014 THROUGH ELECTRONIC MEDIA, MUCH PRIOR TO THE ORDER P ASSED BY THE ASSESSING OFFICER AND HENCE THE SAME WAS VERY MUCH AVAILABLE WITH THE AO. 5. ON THE CONTRARY, THE LD. DR MR. SHARMA VEHEMENTL Y ARGUED REFERRING THE CONDUCT OF THE ASSESSEE IN NOT FURNIS HING THE ACTUAL AUDIT REPORT THOUGH REQUISITIONED BY THE LD. AO. IT IS, THEREFORE, AT THE SUBSEQUENT STAGE UPON PERUSAL OF THE ACTUAL AUDIT R EPORT IN THE FORM OF 3CB-3CD, SUCH FACT OF PAYMENT TO THE PERSON SPECIFI ED UNDER SECTION 40A(2)(B) OF THE ACT REVEALED. RELYING UPON THE CB DT INSTRUCTION AS MENTIONED HEREINABOVE THE LD. DR, THEREFORE, ARGUED THE NECESSITY OF REFERRING THE MATTER TO THE TPO. SINCE, THE LD. AO FAILED TO EXERCISE SUCH POWER BY CONDUCTING NECESSARY ENQUIRY, THE ORD ER OF ASSESSMENT REMAINED ERRONEOUS SO FAR AS IT IS PREJUDICIAL TO T HE INTEREST OF REVENUE. HE, THEREFORE, SUPPORTS THE ORDER PASSED BY THE LD. PCIT. 6. WE HAVE HEARD THE RESPECTIVE PARTIES, WE HAVE AL SO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. ADMITTEDLY FOR SOME REASON OR THE OTHER THE ACTUAL AUDIT REPORT OF THE ASSESSEE IN FORM 3CB-3CD WAS NOT MADE AVAILABLE BEFORE THE LD. AO AND, THUS, THE FACT OF MAKING PAYMENT OF RS. 33, 29,62,451/- TO THE PERSONS SPECIFIED UNDER SECTION 40A(2)(B) OF THE AC T FOR PURCHASE OF GRAY AS MENTIONED IN THE SAID AUDIT REPORT COULD NO T BE CONSIDERED. CONSEQUENTIALLY THE MATTER COULD NOT BE REFERRED TO THE LD. TPO IN TERMS ITA NO.644/AHD/2019 SMT. CHITRA GUPTA VS. PCIT ASST. YEAR 2014-15 - 5 - OF THE CBDT INSTRUCTION. NEEDLESS TO MENTION THAT THE AO HAS NOT CONSIDERED THE REASON FOR SCRUTINY SELECTION AS PER CASS AND FAILED TO CONDUCT NECESSARY ENQUIRY FOR THE REASON AS NARRATE D HEREINBEFORE. WE, THEREFORE, FIND SUBSTANCE IN THE ARGUMENT ADVANCED BY THE LD. DR. MR. SHARMA. 7. ON THE OTHER HAND, WE DO NOT APPRECIATE THE SUBM ISSION MADE BY THE LD. AR IN SUPPORT OF HIS CASE. THOUGH THE SAID 3CB-3CD REPORT WAS SUBMITTED THROUGH ELECTRONIC MEDIA ON 30.09.2014 WE HAVE TO CONSIDER THAT DURING THAT RELEVANT POINT OF TIME WHEN FILING OF DOCUMENTS THROUGH ELECTRONIC MEDIA WAS INTRODUCED IT IS QUITE NATURAL THAT WITHOUT HAVING EXPERTISE KNOWLEDGE EVERY PERSON IN THE DEPARTMENT IS EXPECTED TO ACT ACCORDINGLY. WHEN THE LD. AO HAS REQUISITIONED THE SAID AUDIT REPORT OF THE ASSESSEE, WE FAILED TO UNDERSTAND AS TO HOW AUDIT REPORT OF OTHER PERSONS CAN BE MADE AVAILABLE TO THE AO INSTEAD OF THE ASSESSEES. IT IS EXPECTED THAT THE ASSESSEE WOULD ALSO COOPERATE WIT H THE ASSESSING OFFICER BY FILING PROPER DOCUMENT WHENEVER IT IS RE QUESTED FOR IRRESPECTIVE OF THE FACT OF THE SAME BEING FILED AL READY BY ELECTRONIC MEDIA FOR PROPER ADJUDICATION OF THE MATTER. NEEDL ESS TO MENTION THAT NO ENQUIRY HAS BEEN DONE BY THE LD. AO AND IF ANY ENQU IRY HAS BEEN CLAIMED TO HAVE BEEN DONE THE SAME WAS ACTED ON THE BASIS OF THE WRONG 3CB-3CD REPORT WHICH VITIATES THE ENTIRE PROCEEDING . WE, THEREFORE, FIND NO INFIRMITY IN THE OBSERVATION MADE BY THE LD . PCIT IN SETTING- ASIDE THE ASSESSMENT ORDER CONSIDERING IT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND IN PASSING DIRECTION UPON T HE CONCERNED AO TO COMPLETE PROPER ENQUIRIES AND VERIFICATION DE-NOVO SO AS TO WARRANT ITA NO.644/AHD/2019 SMT. CHITRA GUPTA VS. PCIT ASST. YEAR 2014-15 - 6 - INTERFERENCE. HENCE, THE APPEAL PREFERRED BY THE A SSESSEE IS FOUND TO BE DEVOID OF ANY MERIT AND THUS DISMISSED. 8. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 12 / 1 0 /20 20 SD/- SD/- (AMARJIT SINGH) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 12/10/2020 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 16.07.2020 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 17.07.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 11 .09.2020 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 11.09.20 20 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 12.10.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 12.10.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER