M/s. Liliput Kidswear Ltd., New Delhi V. DCIT, New Delhi

ITA 650/DEL/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8039 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 08-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA
• Keywords: Opportunity of being heard; Audit objection
• Section: 147; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 650/DEL/2016 650/DEL/2016 650/DEL/2016 650/DEL/2016 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2007 2007 2007 2007 - -- - 08 0808 08 M/S LILIPUT KIDSWEAR LIMITED, M/S LILIPUT KIDSWEAR LIMITED, M/S LILIPUT KIDSWEAR LIMITED, M/S LILIPUT KIDSWEAR LIMITED, D DD D- -- -95, OKHLA INDUSTRIAL AR 95, OKHLA INDUSTRIAL AR 95, OKHLA INDUSTRIAL AR 95, OKHLA INDUSTRIAL AREA, EA, EA, EA, PHASE PHASE PHASE PHASE- -- -1, 1,1, 1, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 020. 110 020. 110 020. 110 020. PAN : AAECA3031E. PAN : AAECA3031E. PAN : AAECA3031E. PAN : AAECA3031E. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -4(1), 4(1), 4(1), 4(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHASHWAT BAJPAI, ADVOCATE. RESPONDENT BY : SHRI RAMESH CHANDRA, CIT - DR. DATE OF HEARING : 11.04.2016 11.04.2016 11.04.2016 11.04.2016 DATE OF PRONOUNCEMENT : 27.04.2016 27.04.2016 27.04.2016 27.04.2016 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-0 8 IS DIRECTED AGAINST THE ORDER OF LEARNED PRINCIPAL COMM ISSIONER OF INCOME TAX, DELHI-05, NEW DELHI DATED 13 TH MARCH, 2015. 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEAL. HOW EVER, THEY ARE ALL AGAINST THE INVOKING OF JURISDICTION UND ER SECTION 263 OF THE INCOME-TAX ACT, 1961 BY THE CIT. 3. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES AND HA VE PERUSED THE MATERIAL PLACED BEFORE US. THE RELEVANT PORTION OF THE ORDER PASSED U/S 263 READS AS UNDER:- ITA-650/DEL/2016 2 THE ASSESSING OFFICER HAS MADE A PROPOSAL U/S 263 OF THE I.T. ACT, FOR REVISITING ASSESSMENT ORDER DATED 15.10.20 09 BY REJECTING THE CLAIM OF ASSESSEE SUBMITTED DURING THE COURSE OF PROCEEDINGS U/S 147 OF THE ACT. THE AO HAS H ELD THE ORDER AS ERRONEOUS AND PRE-JUDICIAL TO THE INTERE STS OF REVENUE. THE FIRST GROUND TAKEN UP BY THE AO RELATE S TO ARITHMETIC ERROR IN OTHER INCOME IN THE SCHEDULE J OF THE ORIGINAL AUDIT REPORT AND THE REVISED AUDIT REPORT. SECOND GROUND OF THE PROPOSAL RELATES TO ARITHMETICAL DIFFER ENCE OF EXCISE DUTY ON INCREASE/DECREASE IN STOCK IN REVISED SCHEDULE K OF THE AUDIT REPORT. BASED ON THE PROPOSAL OF THE AO, A SHOW-CAUSE NOTICE U/ S 263 OF THE ACT DATED 14.01.2015 WAS ISSUED AND ASSESSEE FILED REPLY OF THE NOTICE ON 27.01.2015. VIDE LETT ER DATED 27.02.2015, ASSESSEE REITERATED ITS EARLIER STAND THAT I T IS TYPOGRAPHICAL ERROR AND OTHER INCOME HAS BEEN CORR ECTLY DECLARED AS WELL AS EXCISE DUTY TREATMENT HAS BEEN DISCLOSED PROPERLY AS PER ACCOUNTING STANDARD 14 NOTIF IED BY THE ICAI. SUBMISSIONS MADE BY THE ASSESSEE HAVE CAREFULLY BEEN CONSIDERED. AFTER CONSIDERING THE ALL FACTS AND CIRCUMSTANCES, THE AO IS DIRECTED TO RE-EXAMINE THE I SSUES RELATED TO ARITHMETIC DIFFERENCES IN OTHER INCOME AND EXCISE DUTY TREATMENT AS PROPOSED U/S 263 OF THE ACT AND PASS THE NECESSARY ORDER AFTER GIVING DUE OPPORTUNITY O F HEARING TO THE ASSESSEE. 4. FROM THE ABOVE, IT IS EVIDENT THAT LEARNED CIT HA S SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER AS PER THE PROPOSAL U /S 263 SUBMITTED BY THE ASSESSING OFFICER. SECTION 263 READS A S UNDER:- 263. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDI NG UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSE D THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY , AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ITA-650/DEL/2016 3 ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING T HE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. 5. FROM THE ABOVE, IT IS EVIDENT THAT THE COMMISSIONER MAY CALL FOR AND EXAMINE RECORD OF ANY PROCEEDING UNDER THE ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OF FICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS O F THE REVENUE, HE MAY PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING CANCELLING THE ASSESSMENT AND DIRECTING A FRE SH ASSESSMENT. THUS, THE APPLICATION OF MIND BY THE CIT BEFORE INIT IATING PROCEEDINGS U/S 263 IS AN ESSENTIAL CONDITION. HOWEVER, IN THIS CASE , THE CIT HIMSELF IN HIS ORDER HAS WRITTEN THAT THE ASSESSING OFFICER HAS MA DE A PROPOSAL U/S 263 FOR REVISITING THE ASSESSMENT ORDER DATED 15 TH OCTOBER, 2009. BASED ON SUCH PROPOSAL OF THE ASSESSING OFFICER, A SHOW CA USE NOTICE U/S 263 OF THE ACT WAS ISSUED. THUS, AS ADMITTED BY THE CIT HIMSELF IN HIS ORDER, THERE WAS NO APPLICATION OF MIND BY HIM TI LL THE ISSUE OF NOTICE U/S 263. IN OUR OPINION, IN THIS CASE, THE PRI MARY CONDITION OF THE BELIEF OF THE CIT THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE IS MISSING. HE INITIAT ED THE PROCEEDINGS SIMPLY ON THE BASIS OF PROPOSAL OF THE ASSESSING OFFICER A ND FINALLY HE SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OF FICER TO RE-EXAMINE THE ISSUE AFRESH. IT WOULD WORTHWHILE TO M ENTION THAT IN THIS CASE, ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3). THEREAFTER, IT WAS REOPENED ON THE BASIS OF AUDIT OBJECTION AND A FRE SH ASSESSMENT ORDER U/S 147/143(3) WAS PASSED. NOW, THE REVENUE WANT S TO EXAMINE THE SAME THING AGAIN FOR THE THIRD TIME, THAT TOO, W ITHOUT POINTING OUT HOW THE ASSESSMENT ORDER PASSED U/S 147/143(3) IS ERRONEOU S AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE C IT INITIATED THE PROCEEDINGS U/S 263 ON THE BASIS OF PROPOSAL OF THE ASSESSIN G OFFICER AND, WITHOUT CONSIDERING THE SUBMISSION OF THE ASSESSEE, SI MPLY SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICE R TO RE- ITA-650/DEL/2016 4 EXAMINE THE ISSUE AFRESH. IN OUR OPINION, NEITHER THE ASSUMPTION OF JURISDICTION BY THE CIT FULFILS THE CONDITION PRESCRIB ED U/S 263 NOR THE FINAL ORDER PASSED BY HIM IS WITHIN THE AMBIT OF SECTI ON 263 BECAUSE NOWHERE IN THE ORDER U/S 263, HE HAS POINTED OUT THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S 147/143(3) IS ERRONEOUS AS WEL L WE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN VIEW OF THE ABOVE, WE QUASH THE ORDER PASSED U/S 263 OF THE ACT AND RESTORE THE ORDER OF THE ASSESSING OFFICER PASSED U/S 147/143(3). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 27.04.2016. SD/- SD/- (SUCHITRA KAMBLE (SUCHITRA KAMBLE (SUCHITRA KAMBLE (SUCHITRA KAMBLE ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S LILIPUT KIDSWEAR LIMITED, M/S LILIPUT KIDSWEAR LIMITED, M/S LILIPUT KIDSWEAR LIMITED, M/S LILIPUT KIDSWEAR LIMITED, D DD D- -- -95, OKHLA INDUSTRIAL AREA, 95, OKHLA INDUSTRIAL AREA, 95, OKHLA INDUSTRIAL AREA, 95, OKHLA INDUSTRIAL AREA, PHASE PHASE PHASE PHASE- -- -1, NEW DELHI 1, NEW DELHI 1, NEW DELHI 1, NEW DELHI 110 020. 110 020. 110 020. 110 020. 2. RESPONDENT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -4(1), NEW DELHI. 4(1), NEW DELHI. 4(1), NEW DELHI. 4(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR