M/s Ambica Jute Mills Ltd., Kolkata V. CIT, (CENTRAL-1), KOLKATA, Kolkata

ITA 691/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87638 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2014
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Depreciation; Opportunity of being heard
• Section: 143(3); 115JB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE HON BLE SRI MAHAVIR SINGH, JM& HON BLE SRI SHAMIM YAHYA , A M ] ITA NO.691 /KOL/2014 ASSESSMENT YEAR : 2009 - 10 ( A PPELLANT ) (RESPONDENT) M/S. AMBICA JUTE MILLS LTD. - VS - C.I.T., (CENTRAL - I), KOLKATA KOLKATA (PAN: AAGCS 5288 R) FOR THE APPELLAN T SHRI SOUMITRA CHOWDHURY, ADVOCATE FOR THE RESPONDENT SHRI VARINDER MEHTA, CIT (DR) DATE OF HEARING : 29.01.2015. DATE OF PRONOUNCEMENT : 29.01.2015. ORDER PER SHRI SHAMIM YAHYA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF L D. C.I.T. - (CENTRAL - I), KOLKATA PASSED U/S 263 OF THE I.T.ACT DT. 28.03.2014 AND PERTAIN S TO ASSESSMENT YEAR 2009 - 10. 2. IN THIS CASE THE LD. CIT PASSED ORDER U/S 263 OF THE ACT. THE OPERATIVE PART OF THE ORDER U/S 263 OF THE ACT ARE AS UNDER : - IT HAS BEEN STATED IN THE WRITTEN SUBMISSION THAT THERE WAS TYPOGRAPHICAL MISTAKE OCCURRED IN THE TAX AUDIT REPORT BY SHOWING ADDITIO N OF ENTIRE FACTORY BUILDING OF RS.6,23,50,158/ - (OUT OF WHICH RS.1,30,235/ - WAS ABOVE 180 DAYS AND RS.6,22,19,923/ - WAS BELOW 180 DAYS) UNDER THE HEAD RESIDENTIAL BUILDING. ALTHOUGH CALCULATION WAS RIGHTLY MADE @ 10% & (50% OF 10% FOR BELOW 180 DAYS) BUT DISCLOSURE WAS WRONGLY MADE IN THE TAX AUDIT REPORT AS RESIDENTIAL BUILDING. A CERTIFICATE FROM THE STATUTORY AUDITOR OF THE COMPANY M/S. S.S.KOTHARI & ASSOCIATES, DATED 8 TH JUNE, 2012 ADMITTING THE MISTAKE ALONG WITH RECTIFIED ANNEXURE D OF THE TAR SHOW ING ENTIRE ADDITION OF RS.6,23,50,158/ - UNDER THE HEAD MILL BUILDING HAS BEEN ENCLOSED. IT HAS BEEN FURTHER STATED THAT THE OPENING STOCK OF RS.8,54,84,245/ - WAS THE SUM TOTAL OF LAST YEAR S CLOSING STOCK OF R S.8,26, 60,771/ - OF FINISHED GOODS AND RS.28,23, 534/ - OF STOCK OF SHARES PROPERLY SHOWN IN THE LAST YEAR FIGURES AS APPEARING IN THE P.L A/C. IN THE TAX AUDIT REPORT ANNEXURE I ALSO OPENING STOCK IS MENTIONED AS RS.8,54,84,245/ - AND NOT RS.8,26,60,711/ - . AS SUCH THERE WAS NO UNDER ASSESSMENT OF ITA.NO.691 /K/2014 M/S. AMBICA JUTE MILLS LTD. A.YR. 2009 - 10 2 TOTAL INCOME IN THE ASSESSMENT ORDER PASSED U/S 143(3) DT. 20.12.2011 BY THE DCIT, CIR - 1, KOL. THEREFORE, TAX U/S 115JB ON THE BOOK PROFIT OF RS.1,57,55,590/ - AS COMPUTED IN THE ASSESSMENT ORDER IS TO BE CALCULATED AS PER LAW AND EXCESS DEPOSIT OF INCOME TAX BY WAY OF TDS/ADVANCE TAX MAY KINDLY BE REFUNDED. THE SUBMISSION AND THE EVIDENCES FURNISHED BY THE AR OF THE ASSESEE WAS CAREFULLY PERUSED AND CONSIDERED. THE SUBMISSION THAT THERE WAS TYPOGRAPHICAL ERROR BY THE AUDITOR HAS NO MERIT BECAUSE ERROR MAY BE IN RESPECT OF ONE OR TWO WORDS BUT MILL BUILDING CANNOT BE TYPED AS RESIDENTIAL BUILDING. IT IS CLEARLY AN AFTERTHOUGHT AND THE CERTIFICATE ISSUED BY THE AUDITOR OF THE ASSESSEE COMPANY CANNOT BE RELIED UPON. IT IS EVIDENT FROM THE TAR THAT CLOSING STOCK OF FINISHED GOODS AS ON 31.03.2008 WAS VALUED AT RS.8,26,60,711/ - WHEREAS IN THE P&L A/C THE OPENING STOCK AT RS.8,54,84,245/ - HAS BEEN DEBITED. DUE TO EXCESS DEBIT OF RS.28,23,534/ - THE NET PROFIT HAS BEEN BROUGHT DOWN BY THE AFORESAID AMOUNT. IT IS EVIDENT THAT THE A/O DID NOT COMPUTE TAX U/S 115JB ON THE BOOK PROFIT. IN VIEW OF THE DISCUSSION MADE IN THE PRECEDING PARAGRAPH, IT IS CONCLUDED THAT THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE I.T.ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. T HE SAID ASSESSMENT ORDER IS, THEREFORE SET ASIDE. THE A.O. IS DIRECTED TO COMPLETE THE ASSESSMENT DENOVO AFTER AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD BO TH THE COUNSEL AND CAREFULLY PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE FIRST GROUND ON WHICH THE LD. CIT HAS INVOKED HIS JURISDICTION U/S 263 OF THE ACT IS THAT THE DEPRECIATION OF THE BUILDING WAS CLAIMED @10% IN PLACE OF 5 % APPLICABLE FOR RESIDENTIAL BUILDING AS THE BUILDING WAS SHOWN AS RESIDENTIAL BUILDING IN THE TAX AUDIT REPORT . IN THIS REGARD THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSEE IS RUNNING A JUTE MILL. IT WAS THE JUTE MILL BEING THE FACTORY WHICH WAS WRONGLY SHOWN AS RESIDENTIAL BUILDING IN THE TAX AUDIT REPORT. IN THIS REGARD THE LD. COUNSEL SUBMITTED THAT A CERTIFICATE FROM THE CONCE RNED AUDITOR WAS ALSO SUBMITTED, WHICH THE LD. CIT HAS NOT ACCEPTED. THE LD.COUNSEL SUBMITTED THAT THERE IS NO REASON WH Y THIS MISTAKE WHICH HAS BEEN DULY ACCEPTED BY THE AUDITOR SHOULD NOT BE TAKEN COGNIZANCE OF. IN THIS REGARD THE LD. COUNSEL OF THE ASSESSEE TOOK US TO THE PAPER BOOK WHEREIN THE CERTIFICATE FROM THE CONCERNED AUDITOR ACKNOWLEDGING HIS MISTAKE IS AVAILA BLE. WE FIND THAT THERE IS NO REASON MENTIONED IN THE LD. CIT S REPORT AS TO WHY HE IS NOT ACCEPTING THE CLARIFICATION ISSUED BY THE AUDITOR. IN OUR CONSIDERED OPINION THE ASSESSEE IS RUNNING A JUTE MILL AND THE FACTORY BUILDING WAS WRONGLY SHOWN AS RESIDE NTIAL BUILDING. THE MISTAKE WAS DULY ACCEPTED ITA.NO.691 /K/2014 M/S. AMBICA JUTE MILLS LTD. A.YR. 2009 - 10 3 BY THE AUDITOR. THE LD. COUNSEL SUBMITTED THAT THIS CERTIFICATE HAS ALSO BEEN PRODUCED BEFORE THE LD. CIT. THERE IS NO REASON WHATSOEVER AS TO WHY THIS SHOULD NOT BE ACCEPTED. THE LD.DR IN THIS REGARD RELIED UPON THE ORDER OF THE LD. CIT. IN OUR CONSIDERED OPINION, THIS PLANK OF INVOKING THE JURISDICTION TO SECTION 263 OF THE ACT BY THE LD. CIT IS DEVOID OF COGENCY. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT ON THIS ISSUE. 4. THE LD. COUNSEL FURTHER SU BMITTED THAT ANOTHER PLANK ON WHICH THE LD. CIT HAS INVOKED HIS JURISDICTION IS IN RESPECT OF CL OSING STOCK OF FINISHED GOODS. AS PER THE LD. CIT T HE CLOSING ST OCK AS ON 31.03.2008 IN THE TAX AUDIT REPORT WAS MENTIONED AT RS.8,26,60,711/ - WHEREAS IN THE P ROFIT AND LOSS ACCOUNT THE OPENING STOCK OF SUCH FINISHED GOODS WAS DEBITED AT RS.8,54,84,245/ - THUS THE LD. CIT OBSERVED THAT THERE WAS A DIFFERENCE OF RS.28,23,534/ - . IN THIS REGARD THE LD. COUNSEL TOOK US TO PAGE NO.8 OF THE PAPER BOOK WHEREIN PROFIT AN D LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2009 AND 31 ST MARCH, 2008 WERE REFLECTED. THE LD. COUNSEL POINTED THAT IN THE CLOSING STOCK AS ON 31 ST MARCH, 2008 THE FOLLOWING STOCKS WERE MENTIONED : STOCK OF SHARES RS. 28,23,534/ - CLOSING STOCK RS.8,26 ,60,711/ - TOTAL RS.8,54,84,245/ - T HE LD. COUNSEL SUBMITTED THAT THE ABOVE TOTAL FIGURE RS.8,54,84,245/ - WAS REFLECTED AS OPENING STOCK FOR THE YEAR ENDED 31 ST MARCH, 2009. HENCE THE LD. COUNSEL PLEADED THAT THE LD. CIT(A) HAS ERRED IN FINDING THAT THE N ET PROFIT HAS BEEN BROUGHT DOWN BY THE FIGURE OF RS.28,23,534/ - . THE LD. DR IN THIS REGARD RELIED UPON THE ORDER OF THE LD. CIT. 5. UPON CAREFUL CONSIDERATION WE AGREE THAT THE OPENING STOCK AS REFLECTED IN THE ACCOUNTS FOR THE YEAR ENDED 31 ST MARCH, 20 09 WAS THE TOTAL FIGURE OF THE STOCK OF SHARE AND CLOSING STOCK AS MENTIONED IN THE STOCK AT THE END OF THE PRECEDING YEAR HENCE WE FIND THAT THIS WAS A MATTER OF ARITHMATICS WHICH THE LD. CIT HAS FAILED TO APPRECIATE. IN OUR CONSIDERED OPINION IT CANNOT BE SAID TO BE A GROUND FOR INVOKING HIS JURISDICTION U/S 263 OF THE IT ACT. ACCORDINGLY IN THE BACKGROUND OF THE AFORESAID DISCUSSION WE ITA.NO.691 /K/2014 M/S. AMBICA JUTE MILLS LTD. A.YR. 2009 - 10 4 FIND THAT THERE IS NO COGENT BASIS FOR INVOKING OF SECTION 263 OF THE ACT BY THE LD. CIT. THE ASSESSEE S EXPLANATION AR E ACCEPTABLE. HENCE WE QUASH THE ORDER PASSED BY THE LD. CIT U/S 263 OF THE IT ACT. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 29.01.2015. SD/ - SD/ - [ MAHAVIR SINGH ] [SHAMIM YAHY A] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 29.01.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . M/ S. AMBICA JUTE MILLS LTD., 5, MIDDLETON STREET, KOLKATA - 700071. 2 C.I.T., (CENTRAL - I) , KOLKATA 3 . CI T(DR) KOLKATA BENCHES, KOLKATA. TRUE COPY, BY ORDER, ASST. REGISTRAR , ITAT, KOLKATA BENCHES