Shri Inderchand Amarchand Chopda, Manmad V. Commissioner of Income-tax, Nashik

ITA 792/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56522 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 26-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Keywords: Audit objection; Difference of opinion; Change of opinion; Set aside
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C.SUDHIR, JUDICIALMEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.792/PN/2010 (ASSESSMENT YEAR: 2005-06) SHRI INDERCHAND AMARCHAND CHOPDA .. APPEL LANT TARA NIWAS, MALEGAON ROAD, MANMAD : 423104 PAN AANPC4423C VS. CIT,- II, NASHIK, .. RESPOND ENT APPELLANT BY: SHRI PRAMOD S HINGTE, AR RESPONDENT BY: SHRI S.K.SINGH, DR ORDER PER D.KARUNAKARA RAO, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (A)-II, NASHIK U/S. 263 OF ACT DATED 30/03/2010 FOR THE ASSESSMENT YEAR 2003-04. 2. THE GROUNDS OF APPEAL, AS RAISED BY THE ASSES SEE, READ AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX II, NASHIK ERRED IN PASSING THE ORDER U/S.263 OF THE INCOME TAX ACT, 1961, AND IN S ETTING ASIDE THE ASSESSMENT ORDER PASSED U/S.143(3) BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX II, NASHIK ERRED IN PASSING THE ORDER U/S.263 ESPECIALLY IN THE LIGHT OF THE FACT T HAT FOR THE REASON SET OUT IN THE NOTICE EXPLANATION HAS BEEN OFFERED COMPLETELY, HOWEVER ASSESSMENT ORDER IS SET ASIDE BY RAISING AN OTHER ISSUES WHICH WERE NOT RAISED IN THE INITIAL NOTICE AND THE REFORE SUCH ACTION WHICH IS BASED ON MERE CHANGE OF OPINION DURING THE COURSE OF PROCEEDINGS, NEED TO BE QUASHED IN THE EYES OF LAW. 3. AT THE VERY OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE MENTIONED THAT THE THIS IS A CASE WHERE ASSESSMENT WAS COMPLE TED U/S. 143 (3) OF THE ACT. SUBSEQUENTLY, AN AUDIT OBJECTION WAS RAISED BY THE REVENUE AUDIT AND THEN THE AO SOUGHT CLARIFICATIONS ON THE SAID OBJEC TION WHICH IS EVIDENT FROM THE DOCUMENT AT PAGE NO.45 OF THE PAPERBOOK. AS PER THE SAID LETTER BY THE AO, HE SOUGHT CLARIFICATION ON THE ISSUE OF ADDITIO NAL INCOME OF RS.41,95,490/- ITA NO.792/PN/2010 (ASSESSMENT YEAR: 2005-06) SHRI INDERCHAND AMARCHAND CHOPDA WHICH INCLUDES EXCESS STOCK OF RS.22,97,843/- VIDE LETTER DATED 11.08.2008. IN RESPONSE TO THE SAME, THE ASSESSEE REPLIED AND PROVIDED THE DETAILED CLARIFICATION ON THE ISSUE RAISED BY THE A SSESSING OFFICER. THE RELEVANT REPLY IS PLACED IN THE PAPERBOOK. AS PER THE ASSESSEE, ASSESSING OFFICER WAS SATISFIED WITH THE CLARIFICATIONS ON TH IS ISSUE OF EXCESS STOCK ORIENTED INCOME AMOUNTING TO RS.22,97,843/-. IT IS A FACT THAT THE AO DID NOT INITIATE ANY ACTION AFTER THE RECEIPT OF THE EXPLAN ATION OF THE ASSESSEE ON THIS ACCOUT. HOWEVER, THE CIT INITIATED PROCEEDINGS U/S. 263 OF THE ACT BY ISSUING SHOW CAUSE NOTICE LETTER DATED 16/12/2009 ON THE SAID SOLITARY ISSUE RELATING TO ADDITIONAL INCOME OF RS.22,97,843/-. COPY OF TH E SHOW CAUSE NOTICE IS PLACED IN PAPERBOOK ON PAGE NO.1. EVENTUALLY THE C IT PASSED AN ORDER U/S.263 ON 30.03.2010. 4. IN THIS REGARD, BEFORE US, LEARNED COUNSEL FOR T HE ASSESSEE MENTIONED THAT THE CIT(A) ERRONEOUSLY ASSUMED THE JURISDICTIO N U/S. 263 OF THE ACT. AS THE ASSESSING OFFICER HAS ALREADY APPLIED HIS MIND TOWARDS THE ISSUE RAISED BY THE CIT(A) IS CONSEQUENT TO THE AUDIT OBJECTION. HE HAD ALSO DEMONSTRATED THE WAY ASSESSING OFFICER WAS SATISFIED BY EXPLANAT ION GIVEN BY THE ASSESSEE ON THIS ISSUE. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE MENTIONED THAT THE IDENTICAL AND THE TECHNICAL ISSUE CAME UP FOR A DJUDICATION IN THE CASE OF B AND A PLANTATION AND INDUSTRIES LTD VS. CIT, 209 ITR 395 GOUHATI AND HONBLE HIGH COURT HELD THAT THE INVOKING OF JURISD ICTION U/S 263 IN SUCH IDENTICAL FACTS IS BAD IN LAW IN THE SAID CASE. IN THAT CASE, THE RELEVANT FACTS ARE THAT RECTIFICATION PROCEEDING WERE INITIATED TO GIVE EFFECT TO THE AUDIT OBJECTION AND THE SAME WAS DROPPED ON HAVING SATISFIED EXPLA NATION OF THE ASSESSEE. ON THE SAME ISSUE, THE CIT INVOKED THE P ROVISIONS OF SECTION 263 OF THE ACT AND THE SAME IS NOT HELD VALID BY THE HONB LE HIGH COURT. CONSIDERING THE HOMOLOGY THE FACTS AND PROCEEDINGS INVOLVED IN THE INSTANT CASE, WE ARE OF THE OPINION THAT THE CIT ERRED IN ASSUMING JURIS DICTION U/S. 263 OF THE ACT, AS THE PROCEEDINGS INITIATED BY THE ASSESSING OFFIC ER TO GIVE EFFECT TO THE AUDIT OBJECTION DURING THE POST ASSESSMENT PROCEEDINGS OF GET MERGED WITH ASSESSING OFFICER ORDER PASSED U/S. 143(3) OF THE A CT. THEREFORE, ON THIS PRELIMINARY ISSUE, WE ARE OF THE OPINION THAT THE A SSESSEE SHOULD GET RELIEF ON THE GROUNDS RAISED IN THE APPEAL. ACCORDINGLY GROUN DS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO.792/PN/2010 (ASSESSMENT YEAR: 2005-06) SHRI INDERCHAND AMARCHAND CHOPDA 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 05 -10-2011. SD/- SD/- (I.C.SUDHIR) (D.KARUNAKARA RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 05-10-2011 ASHWINI COPY TO:- 1) ASSESSEE 2) THE CIT -II,NASHIK 3) THE DY.CIT, CIR.3 , MALEGAON 4) THE CIT CONCERNED 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T .A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., PUNE