Appeal details
Counselvise Citation
[2013] 120 COUNSELVISE.COM (IT) 1383 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 7 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-01-2013
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
11-07-2011
Assessment Year
2005-2006
Appeal Filed On
24-05-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, J.M. AND SHRI B.R.BASKARAN, A.M. ITA NO.768/HYD/2010 : ASSESSMENT YEAR 2005-06 ITA NO.769/HYD/2010 : ASSESSMENT YEAR 2006-07 ITA NO.966/HYD/2011 : ASSESSMENT YEAR 2007-08 M/S. AHMED SHERIF & BROS HYDERABAD ( PAN - AAIFA 7599 J ) V/S. INCOME-TAX OFFICER CIRCLE 9(2), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI C. P.RAMASWAMY RESPONDENT BY : S HRI D.SUDHAKARA RAO, CIT - DR DATE OF HEARING 26.12 .2012 DATE OF PRONOUNCEMENT 04.01.2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: ALL THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE REVISION ORDERS PASSED BY LEARNED COMMISSIONER OF INCOME-TAX-VI HYDERABAD AND THEY RELATE TO THE ASSESSMENT YEAR 2 005-06 TO 2007-08. 2. THE ASSESSEE IS CHALLENGING THE VALIDITY OF REV ISION ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX UNDER S.2 63 OF THE ACT. SINCE THE REVISION ORDERS HAVE BEEN PASSED BY CONSIDERING COMMON SET OF FACTS, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.768/HYD/2010 & 2 ORS M/S. AHMED SHERIF & BROS., HYDERABAD 2 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BRIEF: THE ASSESSEE IS A TRADER IN LEMON AND ALSO ACTS AS COMMISSION AGENT LEMON. THE DEPARTMENT CARRIED OUT A SURVEY OPERATION UNDER S.133A OF THE ACT ON 29.6.2006 AT THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COUR SE OF SURVEY, A STATEMENT WAS RECORDED FROM ONE OF THE PARTNERS OF THE ASSESS EE. DURING THE COURSE OF STATEMENT, A SPECIFIC QUERY WAS RAISED WITH REGARD TO THE PERCENTAGE OF COMMISSION DERIVED BY THE ASSESSEE FIRM ON SALE OF LEMON TO FARMERS. THE SAID QUERY AND ANSWER GIVEN BY THE ASSESSEE ARE EXT RACTED BELOW- Q.11. WHAT IS THE PERCENTAGE OF COMMISSION DER IVED BY YOUR FIRM ON SALE OF LEMON OF FARM ERS? ANS. WE CHARGED 11% OF COMMISSION. THIS WOULD BE H ANDLED BY OUR FATHER SRI AHMED SHARIF. OUT OF 11%, 4% IS OUR COMMISSION, 2% TO MIDDLEMEN, 3% TO PURCHASER, 1% TO MARKETING COMMITTEE AND 1% EXPENSES. THEREAFTER, IT WAS STATED THAT THE ASSESSEE HAD BEE N DECLARING COMMISSION AT THE RATE OF 2% IN ITS RETURNS OF INCOME. SUBSEQUEN T TO THE SURVEY, THE ASSESSEE FILED, REVISED RETURNS OF INCOME FOR THE A SSESSMENT YEARS 2005-06 AND 2006-07, WHEREIN IT ADMITTED ADDITIONAL INCOME AS DETAILED BELOW- __________________________________________ ______________ ASSESSMENT YEAR COMMISSION INCOME ADDITIONAL INCOME ORIGINALLY ADMITTED OFFERED ___________________________________________________ 2005-06 2,91,469 5,00,000 2006-07 4,13,404 15,00,000 THE ASSESSEE OFFERED THE AFORESAID AMOUNTS UNDER TH E HEAD INCOME FROM OTHER SOURCES, WITH THE NOTING, WHICH READS AS FOL LOWS- OTHER INCOME VOLUNTARILY ACCEPTED AS ADDITIONAL IN COME VIDE OUR LETTER DT.24.07.06 (AS DISCUSSED) TO COVER UP THE O MISSIONS IN THE BOOKS OF ACCOUNTS AND MATERIALS SEIZED IN THE SURVE Y OPERATION ITA NO.768/HYD/2010 & 2 ORS M/S. AHMED SHERIF & BROS., HYDERABAD 3 4. FOR ASSESSMENT YEAR 2007-08, THE ASSESSEE OFF ERED ADDITIONAL INCOME OF RS.20 LAKHS IN THE RETURN OF INCOME FILED BY IT AFTER THE DATE OF SURVEY OPERATIONS. 5. THE LEARNED COMMISSIONER OF INCOME-TAX, BY PLAC ING RELIANCE ON THE QUESTION NO.11 AND ANSWER THERETO (SUPRA) TOOK THE VIEW THAT THE ASSESSING OFFICER HAS COMMITTED AN ERROR IN ACCEPTI NG THE COMMISSION INCOME DECLARED BY THE ASSESSEE WITHOUT MAKING PROPER SCRU TINY. ACCORDINGLY, THE LEARNED COMMISSIONER OF INCOME-TAX SET ASIDE THE IMPUGNED ASSESSMENT ORDERS AND DIRECTED THE ASSESSING OFFICER TO VERIF Y THE COMMISSION INCOME DECLARED BY THE ASSESSEE VIS--VIS THE REPLY GIVEN TO QUESTION NO.11 EXTRACTED ABOVE. 6. AGGRIEVED BY THE ORDERS PASSED BY THE COMMISSI ONER OF INCOME- TAX, THE ASSESSEE HAS FILED THESE APPEALS BEFORE US . 7. THE LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD OFFERED ADDITIONAL INCOME OF RS.40 LAKHS DURING THE YEARS UNDER CONSIDERATION TO COVER UP THE DEFICIENCIES IN THE BOOKS OF ACCOUNTS, WHICH INCLUDES THE IMPUGNED COMMISSION INCOME. THE ASSESSING OFFICER HAS DULY CONSIDERED THE ADDITIONAL OFFER MADE BY THE AS SESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN ALL THE THREE YEAR S, THE ASSESSING OFFICER, BY APPLYING HIS MIND, HAS ADDED A SUM OF RS.50,000 IN THE ASSESSMENT YEAR 2005-06. THE LEARNED COUNSEL SUBMITTED THAT THE AS SESSING OFFICER HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE THAT THE ADDITIONAL INCOME HAS BEEN OFFERED TO COVER UP THE DIFFERENCE IF ANY IN T HE COMMISSION INCOME. ACCORDINGLY, THE VIEW ENTERTAINED BY THE VIEW IS ON E OF THE POSSIBLE VIEW, AND HENCE, THE LEARNED COMMISSIONER OF INCOME-TAX DOES NOT HAVE JURISDICTION TO INTERFERE WITH THE IMPUGNED ORDERS PASSED BY THE AS SESSING OFFICER. ITA NO.768/HYD/2010 & 2 ORS M/S. AHMED SHERIF & BROS., HYDERABAD 4 8. ON THE CONTRARY, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO MAKE ENQUIRIES WITH REFERENCE TO THE PERCENTAGE OF COMMISSION AS DISCLO SED BY THE ASSESSEE IN QUESTION NO.11 OF THE SAID STATEMENT TAKEN FROM IT. FURTHER, THE ASSESSEE HAS OFFERED THE ADDITIONAL INCOME UNDER THE HEAD I NCOME FROM OTHER SOURCES HENCE, IT WOULD NOT BE CORRECT TO TAKE THE INCOME S O OFFERED AS THE BUSINESS 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE RECORDS. THE SCOPE FOR REVISION UNDER S.263 HAS B EEN SUCCINCTLY EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (SUPRA) AS UNDER- 6. A BARE READING OF THIS PROVISION MAKES IT CLEAR THAT THE PRE- REQUISITE TO EXERCISE OF JURISDICTION BY THE COMMIS SIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE ITO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CO MMISSIONER HAS TO BE SATISFIED WITH TWIN CONDITIONS, NAMELY, ( I ) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND ( II ) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE ITO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVE NUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOU RSE CANNOT BE HAD TO SECTION 263(1). 7. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COM MITTED BY THE ASSESSING OFFICER; IT IS ONLY WHEN AN ORDER IS ERRO NEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLIC ATION OF MIND. THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REV ENUE IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UN DERSTOOD IN ITS ORDINARY MEANING, IT IS OF WIDE IMPORT AND IS NOT C ONFINED TO LOSS OF TAX. THE HIGH COURT OF CALCUTTA IN DAWJEE DADABHOV & CO. V. S.P. JAIN [1957] 31 ITR 872, THE HIGH COURT OF KARNATAKA IN CIT V. T. NARAYANA PAI [1975] 98 ITR 422, THE HIGH COURT OF BOMBAY IN CIT V. GABRIEL INDIA LTD. [1993] 203 ITR 208 AND THE HIGH COURT OF GUJARAT I N CIT V. ITA NO.768/HYD/2010 & 2 ORS M/S. AHMED SHERIF & BROS., HYDERABAD 5 SMT. MINALBEN S. PARIKH [1995] 215 ITR 81/79 TAXMAN 184 TREATED LOSS OF TAX AS PREJUDICIAL TO THE INTERESTS OF THE REVEN UE. . THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REV ENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY TH E ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN ITO ADOPTED ONE OF TH E COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF R EVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW W ITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED A S AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE U NLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. IT HAS BEEN HEL D BY THIS COURT THAT WHERE A SUM NOT EARNED BY A PERSON IS ASSESSED AS I NCOME IN HIS HANDS ON HIS SO OFFERING, THE ORDER PASSED BY THE ASSESSI NG OFFICER ACCEPTING THE SAME AS SUCH WILL BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE - RAMPYARI DEVI SARAOGI V. CIT [1968] 67 ITR 84 (SC) AND IN SMT. TARA DEVI AGGARWAL V. CIT [1973] 88 ITR 323 (SC) . IN THE FACTS OF THE PRESENT CASE, AS ALREADY NOTED ABOVE, THE ASSESSING OFFICER, IN THE COURSE OF ASSESSMENT, HAS EXAMINED THE ISSUE IN RELATION TO WHICH THE COMMISSIONER HAS EXERCISED HIS JURISDICTI ON UNDER S.263, VIZ. ADDITIONAL INCOME OFFERED TO TAX BY THE ASSESSEE SU BSEQUENT TO THE SURVEY OPERATION UNDER S.133A OF THE ACT, AND HAS TAKEN ON E OF THE POSSIBLE VIEWS IN THE MATTER BY ACCEPTING THE ASSESSMENT OF THE SAME UNDER THE HEAD OTHER SOURCES, AS DECLARED BY THE ASSESSEE. EVEN THOUGH, AS ACCORDING TO THE COMMISSIONER OF INCOME-TAX, IT MAY BE LIABLE TO BE TAXED UNDER THE HEAD BUSINESS, THE SAID ADDITIONAL INCOME WAS OFFERED TO COVER UP ANY DEFICIENCIES IN THE BOOKS OF ACCOUNTS FOR THE YEARS UNDER APPEAL . IN THIS VIEW OF THE MATTER, SINCE THE ASSESSING OFFICER HAS TAKEN ONE O F THE POSSIBLE VIEWS, PERMISSIBLE UNDER LAW, IMPUGNED ORDERS OF ASSESSMEN T CANNOT BE SAID TO BE EITHER ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. CONSEQUENTLY, IN OUR CONSIDERED VIEW, EXERCISE OF R EVISIONARY JURISDICTION UNDER S.263 OF THE ACT IN THESE CASES IS NOT PERMIS SIBLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. WE ACCORDINGLY, SET ASIDE THE IMPUGNED ITA NO.768/HYD/2010 & 2 ORS M/S. AHMED SHERIF & BROS., HYDERABAD 6 ORDERS OF THE COMMISSIONER OF INCOME-TAX, PASSED UN DER S.263 OF THE ACT, ALLOWING THE GROUNDS OF THE ASSESSEE IN THESE APPEA LS. 9. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 04.01.2013 SD/- SD/- ( ASHA VIJAYARAGHAVAN) ( B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED/- 04 TH JANUARY, 2013 COPY FORWARDED TO: 1. M/S. AHM ED SHERIF & BROS , C/O. DR.C.P.RAMASWAMY, ADVOCATE, FLAT NO.303, GITANJALI APTS., PLOT NO.108, SRINAGAR COLONY, HYDERABAD-500 072. 2. 3. 4. INCOME - TAX OFFICER, WARD 9(2), HYDERABAD COMMISSIONER OF INCOME-TAX VI, HYDERABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.
