Shri Vinod Kumar Jain, Kota V. Pr. Commissioner Of Income Tax, Kota

ITA 726/JPR/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9748 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRAVAN KR GUPTA
• Keywords: Opportunity of being heard; Assessment record
• Section: 143(3); 147; 148; 263; 63

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 FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 726/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2008-09 SHRI VINOD KUMAR JAIN, 320, TRANSPORT NAGAR, ANANTPURA, KOTA. CUKE VS. PR.C.I.T., KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABLPJ 8219 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SHRAVAN KR. GUPTA (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI K.C. MEENA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/09/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 25/09/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE REVISION ORDER DATED 22/03/2018 OF LD. PR. CIT, KOTA U/S 263 OF T HE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR THE A.Y. 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE IMPUGNED ORDER U/S 263 DATED 22.03.20 18 IS BAD IN LAW AND ON FACTS OF THE CASE FOR WANT OF JURISDICTION A ND FOR VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUAS HED. 2.1 THAT THE ID. PCIT KOTA IS ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN INVOKING S. 263 OF THE ACT. THE SAME IS BEI NG PURELY CONTRARY TO THE PROVISIONS OF LAW, THEREFORE, THE IMPUGNED O RDER U/S 263 OF THE ACT KINDLY BE QUASHED. ITA 726/JP/2018_ VINOD KR. JAIN VS PR.CIT 2 2.2 THAT THE ID. PCIT KOTA IS ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN TAKING THE ACTION U/S 263 OF THE ACT ON THE ALLEGATION THAT THE RECEIPTS OF RS. 538025/- HAVE BEEN UNDER STATED ACCORDING TO 26AS AND APPLY THE NP RATE OF 13.27% ON SUCH UNDISC LOSED RECEIPTS AND MADE ADDITION FOR RS. 71394/- ONLY. ACCORDING T O LEARNED PCIT KOTA, THE ENTIRE RECEIPTS OF RS. 538025/- TO BE INC LUDED IN THE TOTAL INCOME OF THE ASSESSEE. WHICH IS CONTRARY TO THE FACTS AND SUCH A FINDING BEING PERVERSE, THE IMPUGNED ACTION IS BAD IN LAW WITHOUT JURISDICTION AND BEING VOID AB INITIO, THE IMPUGNED ORDER U/S 263 OF THE ACT KINDL Y BE QUASHED. 3. THAT THE ID. PCIT KOTA IS ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN SETTING ASIDE THE ASSESSMENT TO BE MADE AFR ESH WITH THE DIRECTION TO RE-EXAMINE THE ISSUE IN THE LIGHT OF H IS OBSERVATION. THE SAME IS BEING PURELY CONTRARY TO THE PROVISIONS OF LAW, THEREFORE, THE IMPUGNED ORDER U/S 263 OF THE ACT KINDLY BE QUASHED . 4. THE APPELLANT PRAYS YOUR HONOURS INDULGENCE TO A DD, AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFOR E THE DATE OF HEARING. 2. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT T HE ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICER U/S 143(3) READ WITH SECTION 147 OF THE ACT ON 22/06/2015. THE ASSESSING OFFICER WHILE IS SUING THE NOTICE U/S 148 OF THE ACT PROPOSED TO ASSESSEE THE INCOME OF T HE ASSESSEE ON ACCOUNT OF CONTRACT RECEIPTS AND FURTHER THE ASSESS ING OFFICER HAS ALSO MADE AN ADDITION ON ACCOUNT OF DIFFERENCE IN CONTRA CT RECEIPTS DECLARED BY THE ASSESSEE AND CONTRACT RECEIPTS SHOWN AS PER 26AS . THUS, THE ASSESSING OFFICER AFTER EXAMINATION OF THE ISSUE, H AS MADE THE ADDITION @ 13.27% NET PROFIT ON CONTRACT RECEIPTS FOUND TO BE NOT DECLARED BY THE ASSESSEE TO THE EXTENT OF RS. 5,38,025/-. THE ASSESS MENT WAS COMPLETED ITA 726/JP/2018_ VINOD KR. JAIN VS PR.CIT 3 AFTER ALL THE RELEVANT DETAILS AND EVIDENCE HAVE EX AMINED AND ANALYZED BY THE ASSESSING OFFICER. THE LD. PR.CIT HAS PROPOSED TO REVISE THIS ASSESSMENT BY ISSUING SHOW CAUSE NOTICE DATED 07/3/ 2018 ON THE GROUND THAT INSTEAD OF APPLYING THE NET PROFIT RATE OF 13. 27% ON THE UNDISCLOSED RECEIPTS, THE ENTIRE AMOUNT SHOULD HAVE BEEN ADDED TO THE INCOME OF THE ASSESSEE. THUS, THE LD AR HAS SUBMITTED THAT WHEN THE ASSESSING OFFICER HAS TAKEN A VIEW AND THE FACT WHICH IS NOT IN DISPUTE THAT THE SAID ADDITIONAL RECEIPT FOUND AS PER 26AS IS CONTRACT RE CEIPTS THEN THE ENTIRE RECEIPTS CANNOT BE TREATED AS INCOME OF THE ASSESSE E. THE ELEMENT IN THE SAID RECEIPT CAN BE ADDED TO THE INCOME OF THE ASSE SSEE. THUS, THE LD. AR HAS SUBMITTED THAT WHEN THE ASSESSING OFFICER HAS TA KEN A VIEW ON THIS ISSUE WHICH IS THE CORRECT VIEW THEN THE PR. COMMISS IONER, THOUGH, MAY NOT AGREE WITH THE VIEW TAKEN BY THE ASSESSING OFFICE R, IS NOT PERMITTED TO REVISE THE ASSESSMENT U/S 263 OF THE ACT. HENCE, THE ACTION OF THE PR.CIT IS INVALID AND WITHOUT JURISDICTION AS THE ORD ER OF THE ASSESSING OFFICER IS NOT ERRONEOUS OR PREJUDICIAL TO THE INTE REST OF THE REVENUE. THE LD AR HAS REFERRED TO THE EXPLANATION-2 TO SECTION 263(1) OF THE ACT AND SUBMITTED THAT NONE OF THE CONDITIONS PROVIDED UNDE R CLAUSES (A) TO (D) OF EXPLANATION-2 ARE SATISFIED, WARRANTING INVOKING TH E PROVISIONS OF SECTION 263 OF THE ACT. THEREFORE, THE INITIATION AS WELL AS THE IMPUGNED ORDER ITA 726/JP/2018_ VINOD KR. JAIN VS PR.CIT 4 PASSED U/S 263 IS NOT VALID AND LIABLE TO BE QUASHE D. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE FOLLOWING DECISIO NS: (1) CIT VS. INDEO AIRWAYS PVT. LTD. (2012) 349 ITR 08 5 (DELHI) (2) CIT VS. BALCHAND AJIT KUMAR (2003) 263 ITR 0610. (3) CIT VS PRESIDENT INDUSTRIES (2002) 258 ITR 0654 3. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDER OF THE LD. PR.CIT PASSED U/S 263 OF THE ACT AND SUBMITTED THAT WHEN THE ASSESSEE HAS NOTED THE RECEIPTS WHICH WAS FOUND FROM 26AS THEN THE ENTIRE UNDISCLOSED RECEIPTS HAS TO BE ADDED AS INCOME OF T HE ASSESSEE BECAUSE ALL THE QUESTIONS HAVE ALREADY BEEN DETECTED AND CL AIMED BY THE ASSESSEE 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THIS IS A CASE OF REOPENING OF THE ASSESSMENT U/S 148 OF THE ACT WHEREBY THE ASSESSING OFFICER PROPOSED TO REASSESS THE INCOME OF THE ASSESSEE BASED ON THE AIR INFORMATION REGARD ING THE CONTRACT RECEIPTS OF RS. 15,90,221/- ON WHICH THE TDS OF RS. 34,902/- WAS DEDUCTED BY THE PAYER. DURING THE COURSE OF REASSES SMENT PROCEEDINGS, THE ASSESSING OFFICER FURTHER NOTED THAT AS PER 26A S STATEMENT OF THE ASSESSEE, THE CONTRACT RECEIPTS IN RESPECT OF M/S C ATTLE FEED PLANT, AJMER AS WELL AS M/S JAPFA CONFEED INDIA LIMITED, CHANDIGA RH ARE AMOUNTING TO RS. 8,76,561/- WHEREAS THE ASSESSEE HAS DECLARED TH E RECEIPTS FROM THESE TWO PARTIES TOTAL OF RS. 3,38,536/-. HENCE, THE ASSE SSING OFFICER FOUND ITA 726/JP/2018_ VINOD KR. JAIN VS PR.CIT 5 THAT THERE IS A DIFFERENCE OF RS. 5,38,025/- WHICH WA S NOT DECLARED BY THE ASSESSEE ON ACCOUNT OF CONTRACT RECEIPTS FROM THESE TWO PARTIES. HOWEVER, THE SAME IS REFLECTED IN THE 26AS STATEMENT . ACCORDINGLY, THE ASSESSING OFFICER APPLIED THE NET PROFIT RATE OF TH E ASSESSEE BUSINESS @ 13.27% AND MADE ADDITION OF RS. 71,394/- TO THE TOT AL INCOME OF THE ASSESSEE ON ACCOUNT OF UNDECLARED CONTRACT RECEIPTS . SUBSEQUENTLY, THE LD. PR.CIT NOTED THAT THE ORDER PASSED BY THE ASSESS ING OFFICER IS ERRONEOUS SO FAR AS THE ASSESSING OFFICER HAS MADE ADDITION BY APPLYING N.P. RATE @ 13.27% ON UNDECLARED RECEIPTS INSTEAD OF THE ENTIRE AMOUNT OF RS. 5,38,025/- TO BE INCLUDED IN THE INCOME OF T HE ASSESSEE. THE LD. PR.CIT, ACCORDINGLY ISSUED SHOW CAUSE NOTICE U/S 263 OF THE ACT ON 07/3/2018. THE ASSESSEE FILED HIS REPLY TO THE SHOW C AUSE NOTICE AND SUBMITTED THAT THE ASSESSING OFFICER HAS DULY CONDU CTED THE ENQUIRY AND APPLIED THE NET PROFIT RATE AS PER NORMAL BUSINESS ACTIVITY OF THE ASSESSEE AND THEREFORE, THERE IS NO ERROR IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. THE LD. PR.CIT DID NOT ACCEPT THI S CONTENTION OF THE ASSESSEE AND SET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTION TO THE ASSESSING OFFICER TO FRAME THE ASSESSMENT DE NOVO. THE RELEVANT PART OF THE ORDER OF THE PR.CIT IN PARA 4 IS AS UNDER: 4. ON EXAMINATION OF THE ASSESSMENT RECORD, IT IS SEEN THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT IN A ROUTINE MANNE R WITHOUT ITA 726/JP/2018_ VINOD KR. JAIN VS PR.CIT 6 INVESTIGATING THE ISSUES AND/OR MAKING PROPER ENQUI RIES REGARDING APPLYING THE NP RATE ON UNDISCLOSED RECEIPTS. THE A .O. HAS NOT GIVEN SPECIFIC REASONS WHY THE ENTIRE UNDISCLOSED RECEIPT S OF RS. 5,38,025/- OF THE ASSESSEE WERE NOT INCLUDIBLE IN THE ASSESSEES T OTAL TAXABLE INCOME, WHEREAS THE ASSESSEE HAD ALREADY CLAIMED ALL THE EX PENSES RELATING TO HIS BUSINESS IN THE INCOME AND EXPENDITURE ACCOUNT. MOREOVER, THE ASSESSEE HAS NOT SUBMITTED ANY WRITTEN SUBMISSIONS ON THE STIPULATED DATE OF HEARING IN COMPLIANCE TO THE SHOW CAUSE NOT ICE ISSUED UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961. THUS, IN T HE ABSENCE OF ANY COUNTER AVERMENT ON THE PART OF THE ASSESSEE, THE D ISCREPANCY POINTED OUT ABOVE GOES UNCONTESTED. IT IS CLEAR FROM THE FAC TS APPARENT FROM RECORD THAT THE ASSESSING OFFICER HAD PASSED THE AS SESSMENT ORDER UNDER SECTION 143(3)/147 OF THE ACT DATED 22/06/201 5 WITHOUT TAKING INTO ACCOUNT ON RECORD THE FACTS AND APPLYING THE R ELEVANT PROVISIONS OF THE ACT. PRIMA FACIE, EXPENSES HAVE BEEN ALLOWED MOR E THAN ONCE. SUCH LAPSE ON THE PART OF THE ASSESSING OFFICER RENDERS THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. I, THEREFORE, IN THE FACTS AND CIRCUMSTANCES AS DISCUSSED ABOVE, CONSIDER IT FIT TO SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO THE ASSESS ING OFFICER TO FRAME IT DE NOVO IN RESPECT OF THE ABOVE ISSUE AFTER AFFOR DING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, IT IS CLEAR THAT THE LD. PR.CIT HAS SET ASIDE T HE ASSESSMENT ORDER ON THE GROUND THAT THE ASSESSMENT WAS COMPLETED IN ROUT INE MANNER WITHOUT INVESTIGATING THE ISSUE OR MAKING PROPER ENQUIRY RE GARDING APPLYING THE NP RATE ON UNDISCLOSED RECEIPTS. IT IS PERTINENT TO NOTE THAT THE ASSESSMENT WAS REOPENED TO ASSESS THE CONTRACT RECEI PTS AND FURTHER THE ASSESSING OFFICER DETECTED FROM 26AS STATEMENT THAT THE ASSESSEE HAS NOT ITA 726/JP/2018_ VINOD KR. JAIN VS PR.CIT 7 DISCLOSED THE CORRECT CONTRACT RECEIPTS IN THE RETU RN OF INCOME AND ACCORDINGLY, THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF NON- DECLARATION OF THE CONTRACT RECEIPTS TO THE EXTENT OF RS. 5,38,025/- FROM TWO PARTIES NAMELY M/S CATTLE FEED PLANT, AJMER AND M/S JAPFA COMFEED INDIA LTD., CHANDIGARH. IT IS CLEAR FROM THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS FROM THE ASSESSMENT ORDER THAT THE A SSESSING OFFICER HAS DULY EXAMINED THE ISSUE OF NON-DISCLOSURE OF THE CO RRECT CONTRACT RECEIPTS BY THE ASSESSEE AND ACCORDINGLY MADE THE ADDITION B Y APPLYING THE NP RATE OF 13.27% WHICH WAS DECLARED BY THE ASSESSEE ON THE OTHER RECEIPTS. THOUGH, THE N.P. RATE APPLIED BY THE ASSESSING OFFIC ER MAY NOT BE PERFECTLY CORRECT, HOWEVER, IT IS NOT A CASE OF COMP LETE LACK OF ENQUIRY ON THE PART OF THE ASSESSING OFFICER SO AS TO RENDER T HE ASSESSMENT ORDER ERRONEOUS, SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSING OFFICER HAS TAKEN A VIEW ON THE ISSUE AND WE FIND THAT THE VIEW TAKEN BY THE ASSESSING OFFICER IS A POSSIBLE VIEW MA Y NOT BE PERFECT VIEW. HOWEVER, ONCE THE ASSESSING OFFICER HAS TAKEN A VIEW ON THE ISSUE AFTER CONDUCTING OF ENQUIRY AND EXAMINATION THEN THE SAID ORDER CANNOT BE HELD AS ERRONEOUS ON THE GROUND OF LACK OF ENQUIRY. THE L D. PR.CIT CAN INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT EVEN IN TH E CASE WHERE THE ASSESSING OFFICER HAS PASSED ORDER AFTER CONDUCTING A DUE ENQUIRY IF THE ORDER PASSED BY THE ASSESSING OFFICER IS FOUND TO B E CONTRARY TO THE ITA 726/JP/2018_ VINOD KR. JAIN VS PR.CIT 8 PROVISIONS OF LAW OR THE ISSUE DECIDED BY THE ASSESS ING OFFICER IN ALLOWING THE CLAIM, IS NOT PERMISSIBLE UNDER THE LAW. IN THE CASE IN HAND, THE LD. PR.CIT HAS NOT DECIDED THIS ISSUE OR GIVEN THE FINDI NG THAT THE DECISION TAKEN BY THE ASSESSING OFFICER IS ABSOLUTELY IMPERM ISSIBLE UNDER THE LAW. FURTHER EVEN IF IN THE VIEW OF THE LD. PR.CIT, THE OR DER PASSED BY THE ASSESSING OFFICER WAS CONTRARY TO THE PROVISIONS OF LAW IN CONTEXT OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THEN THE LD. P R.CIT OUGHT TO HAVE GIVEN THE CONCLUSIVE FINDING ON THE ISSUE INSTEAD O F SETTING ASIDE THE ISSUE BACK TO THE ASSESSING OFFICER FOR FURTHER ENQUIRY, EXAMINATION AND ADJUDICATION OF THE SAME DE NOVO. HENCE, IT IS NOT A CASE OF LACK OF ENQUIRY ON THE PART OF THE ASSESSING OFFICER AND TH E ASSESSING OFFICER HAS TAKEN A VIEW ON THE ISSUE, WHICH IS ONE OF THE POSSI BLE VIEWS KEEPING IN THE MIND THE FACT THAT THE RECEIPTS IN QUESTION ARE CONTRACT RECEIPTS AND THEREFORE, THE ENTIRE RECEIPTS CANNOT BE TREATED AS INCOME OF THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER APPLYING THE NP RATE ON THE CONTRACT RECEIPTS IS CERTAINLY A POSSIBLE VIEW TAKEN BY THE ASSESSING OFFICER, WHICH CANNOT BE FAULTED WITH MERELY ON THE G ROUND THAT THE LD. PR.CIT DID NOT AGREE WITH THE VIEW TAKEN BY THE ASSES SING OFFICER. HENCE, WE FIND THAT THE ORDER PASSED BY THE LD. PR.CIT U/S 2 63 OF THE ACT IS NOT SUSTAINABLE AND THE SAME IS QUASHED. ITA 726/JP/2018_ VINOD KR. JAIN VS PR.CIT 9 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/09/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 TH SEPTEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI VINOD KUMAR JAIN, KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE PR.C.I.T., KOTA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 726/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR