Ankit Agrawal, Janjgir Champa V. Pr. Commissioner of Income tax, Bilaspur

ITA 84/RPR/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3720 (ITAT-RAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 31-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 263; 143(3); 142(1); 133(6); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI N. K. CHOUDHRY, JUDICIAL MEMBER ./ I.T.A. NO. 84/RPR/2020) ( ASSESSMENT YEAR : 2015-16) ANKIT AGRAWAL KORBA ROAD, AGRASEN CHOWK CHAMPA JANJGIR CHAMPA, CHHATTISGARH - 495671 / VS. PR. COMMISSIONER OF INCOME TAX BILASPUR, CHHATTISGARH - 495001 ./ ./PAN/GIR NO. : ASIPA6207H ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL AGRAWAL, A.R. / RESPONDENT BY : SHRI P. K. MISHRA, CIT.DR DATE OF HEARING 29/07/2021 !'# / DATE OF PRONOUNCEMENT 12/10/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE PRINCIPAL COMMISS IONER OF INCOME TAX, BILASPUR (PCIT IN SHORT), DATED 31.03.2020 P ASSED UNDER S.263 OF THE INCOME TAX ACT, 1961 (THE ACT) WHEREBY THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (AO) DATED 15 .11.2017 UNDER S. 143(3) OF THE ACT CONCERNING AY 2015-16 WAS SOUG HT TO BE SET ASIDE FOR REFRAMING ASSESSMENT IN TERMS OF SUPERVISORY DIRECTIONS. ITA NO. 84/RPR/2020 (ANKIT AGRAWAL VS. PCIT) A.Y. 2015-16 - 2 - 2. AS PER ITS GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE REVISIONAL ACTION OF THE PCIT WHEREBY THE ASSESSING OFFICER (A.O.) WAS DIRECTED TO PASS THE ASSESSMENT ORDER DE NOVO AFTER MAKING ENQUIRIES ON THE POINTS SET OUT IN THE NOTICE WHICH HAS ALREADY EXAMINED AND CONSIDERED DURING THE ORIGINAL ASSESSM ENT PROCEEDINGS CONCERNING A.Y. 2015-16. THE ASSESSEE HAS CHALLENG ED THE ASSUMPTION OF JURISDICTION BY THE PCIT UNDER SECTIO N 263 OF THE ACT ON THE GROUND THAT THE ASSESSMENT ORDER UNDER REVIS ION IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE. 3. BRIEFLY STATED, THE ASSESSEE CLAIMS TO BE DERIVI NG INCOME IN THE CAPACITY OF VEHICLES SELLING AGENT OF M/S. VISH AL AUTOMOBILES. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE DECL ARING TOTAL INCOME OF RS.4,19,440/-. THE RETURN OF THE ASSESSE E WAS SELECTED FOR LIMITED SCRUTINY ASSESSMENT THROUGH CASS ON THE REASONS OF CASH DEPOSITS IN SAVINGS BANK ACCOUNT. NOTICE UNDE R SECTIONS 143(2) AND 142(1) OF THE ACT WAS ISSUED IN THIS REGARD FOR COMPLIANCE OF THE DETAILS. IN RESPONSE THERETO, THE ASSESSEE FIL ED HIS REPLY AND EXPLANATIONS BEFORE THE AO ON THE ISSUE OF CASH DEP OSITS IN TO THE BANK. ALL THE BANK STATEMENTS OPERATED BY THE ASSE SSEE WERE STATED TO BE FILED BEFORE THE AO. AS STATED, THE AO VERIF IED AND EXAMINED ALL THE CASH DEPOSITS IN SUCH BANK ACCOUNT OF THE A SSESSEE WHICH FACT HAS BEEN RECORDED IN THE ASSESSMENT ORDER ITSELF. THE AO IN THE ASSESSMENT ORDER HAS ALSO RECORDED THE FINDINGS OF FACT IN PARA 3 OF THE ASSESSMENT ORDER THAT ASSESSEE WAS ASKED TO EXP LAIN THE SOURCE OF CASH DEPOSITS MADE BY HIM ON VARIOUS DATES DURIN G F.Y. 2014-15 RELEVANT TO A.Y. 2015-16 IN QUESTION. IT IS FURTHE R NOTED THAT PARTICULARS/DETAILS FILED BY THE ASSESSEE IN THIS R EGARD WERE EXAMINED. AN ENQUIRY WAS ALSO CARRIED OUT WITH VIS HAL AUTOMOBILES BY ISSUE OF NOTICE UNDER S.133(6) OF TH E ACT. HAVING WEIGHED THE FACTS AVAILABLE BEFORE HIM, THE AO FINA LLY HELD THAT THE ITA NO. 84/RPR/2020 (ANKIT AGRAWAL VS. PCIT) A.Y. 2015-16 - 3 - COLLECTION CHARGES OF RS.300/- PER VEHICLE SOLD THR OUGH VISHAL AUTOMOBILES REQUIRES TO BE ENHANCED TO RS.500/- PER VEHICLE. AN ADDITION OF RS.2,03,000/- WAS ACCORDINGLY MADE AFTE R ACCEPTING THE NATURE AND SOURCE OF CASH DEPOSITS. 4. AFTER COMPLETION OF THE ASSESSMENT, THE PCIT IN EXERCISE OF REVISIONARY POWERS ISSUED SHOW CAUSE NOTICE DATED 2 7.02.2020 PROPOSING REVISIONARY PROCEEDINGS UNDER S.263 OF TH E ACT. AS PER SHOW CAUSE NOTICE, THE PCIT ESSENTIALLY ALLEGED THA T THE AO HAS FAILED TO VERIFY THE SOURCE OF DEPOSIT OF CASH IN T HE BANK OF ACCOUNT OF THE ASSESSEE. IT IS FURTHER NOTED THAT DESPITE THE AVERMENTS MADE BY VISHAL AUTOMOBILES IN RESPONSE TO NOTICE UNDER S .133(6) OF THE ACT THAT NO COMMISSION HAS BEEN PAID TO THE ASSESSE E, THE ASSESSMENT WAS MADE DISREGARDING SUCH ASSERTIONS. THE PCIT FINALLY ALLEGED THAT THE ASSESSMENT ORDER IS ERRONE OUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON TH E GROUND THAT THE AO HAS COMPLETED THE ASSESSMENT ON THE BASIS OF INA DEQUATE ENQUIRIES IN RELATION TO CASH DEPOSITS IN THE BANK. THE PCIT ACCORDINGLY SET ASIDE THE ASSESSMENT ORDER ON THE A FORESAID ISSUE AND RESTORED THE MATTER FOR FRESH ASSESSMENT BY PAS SING THE REVISIONAL ORDER IN EXERCISE OF POWERS CONFERRED UN DER S.263 OF THE ACT. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED COUNSEL FOR THE ASSESSEE SUBMITTED, AT THE OUTSET, THAT THE PCIT HAS WRONGLY PROCEEDED TO INVOKE SECTION 263 OF THE ACT WITHOUT APPRECIATING THE FACTS IN RIGHT PERSPECTIVE. GIVING THE BRIEF HISTO RY OF THE CASE, THE LEARNED COUNSEL SUBMITTED THAT THE CASE WAS SELECTE D FOR LIMITED SCRUTINY THROUGH CASS ON THE REASONS OF CASH DEPOS ITS IN THE SAVING BANK ACCOUNT. IN THE COURSE OF THE ASSESSME NT PROCEEDINGS, ITA NO. 84/RPR/2020 (ANKIT AGRAWAL VS. PCIT) A.Y. 2015-16 - 4 - THE RELEVANT COPIES OF THE BANK ACCOUNTS WERE CALLE D FOR AND EXAMINED. IT WAS SUBMITTED THAT THE ASSESSEE IS EN GAGED AS A COLLECTION CENTER FOR VISHAL AUTOMOBILES AND MOSTLY THE AMOUNTS RECEIVED TOWARDS SALE OF VEHICLE ARE IN THE FORM OF CASH WHICH ARE DEPOSITED IN HIS BANK ACCOUNT AND ULTIMATELY GETS T RANSFERRED TO VISHAL AUTOMOBILES. THE CASH DEPOSITS IN THE BANK ACCOUNTS REPRESENT THE CASH RECEIVED FROM CUSTOMERS OF THE V EHICLE WHICH ARE ULTIMATELY TRANSFERRED TO THE APEX SELLER I.E. VISH AL AUTOMOBILES. THE ASSESSEE HAS EARNED RS.300/- BY WAY OF COLLECTI ON CHARGES WHICH WAS OFFERED FOR TAXATION AFTER MAKING ENQUIRY WITH VISHAL AUTOMOBILES UNDER S.133(6) OF THE ACT. IN THE COUR SE OF ASSESSMENT, THE AO OBSERVED THAT QUANTUM OF COLLECTION CHARGES INCOME DECLARED BY ASSESSEE IS NOT SATISFACTORY. THE LEAR NED AR SUBMITTED THAT THE AO SUBSTITUTED THE INCOME @ RS.500/- PER V EHICLE IN PLACE OF RS.300/- PER VEHICLE HAVING REGARD TO THE FACTS VIEWED BY THE AO AND THE ADDITION OF RS.2,03,000/- WAS MADE BY THE A O ON THIS SCORE. IN THIS FACTUAL BACKGROUND, THE LEARNED COUNSEL SUB MITTED THAT THE PCIT MIS-DIRECTED HIMSELF IN LAW AND ON FACTS IN SE TTING ASIDE THE ASSESSMENT ORDER UNDER S.263 OF THE ACT ON THE PREM ISE THAT NONE OF THE BILLS ISSUED BY VISHAL AUTOMOBILES SHOWS THE NA ME OF THE ASSESSEE IN ANY MANNER ETC. AND THERE IS NO WRITTEN AGREEMENT OR TERMS AND CONDITIONS AVAILABLE TOWARDS COLLECTION C HARGES ETC. THE LEARNED COUNSEL SUBMITTED THAT THE PCIT HAS IGNORED THE VITAL FACT THAT THE CASH DEPOSITS COLLECTED ON SALE OF VEHICLE ARE TRANSFERRED TO VISHAL AUTOMOBILES AND ONLY COLLECTION CHARGES ARE RETAINED THE EVIDENCES TOWARDS TRANSFER OF MONEY TO VISHAL AUTOM OBILES ETC. CORROBORATES THE CASE OF THE ASSESSEE TOGETHER WITH OTHER RELEVANT FACTS. THE AO HAS MADE ALL REASONABLE ENQUIRY AND COLLECTED INFORMATION FROM VISHAL AUTOMOBILES AND HAS COME TO A CONCLUSION WHICH IS RATIONAL IN THE FACTS AND COULD NOT HAVE B EEN DISTURBED BY THE REVISIONAL COMMISSIONER TO SUBSTITUTE HIS VIEWS . THE LEARNED ITA NO. 84/RPR/2020 (ANKIT AGRAWAL VS. PCIT) A.Y. 2015-16 - 5 - COUNSEL THUS URGED FOR SETTING ASIDE AND CANCELLATI ON OF REVISIONAL ORDER AND RESTORATION OF THE ASSESSMENT ORDER. 7. LEARNED CIT-DR, ON THE OTHER HAND, SUPPORTED THE REVISIONAL ACTION OF THE PCIT AND SUBMITTED IN FURTHERANCE THA T THE PCIT WAS JUSTIFIED IN THE ABSENCE OF PROPER ENQUIRY ON CASH DEPOSITS IN THE LIGHT OF EXPLANATION (2) TO SECTION 263 OF THE ACT APPLICABLE TO THE ASSESSMENT YEAR IN QUESTION. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS ON THE ISSUE . 9. AS POINTED OUT ON BEHALF OF THE ASSESSEE, THE CA SE WAS SELECTED FOR LIMITED SCRUTINY ON THE VERY POINT OF VERIFICAT ION OF SOURCE OF CASH DEPOSITS IN THE SAVINGS BANK ACCOUNT OF THE AS SESSEE. ALL THE BANK ACCOUNTS OPERATED BY THE ASSESSEE WERE PLACED BEFORE THE AO WHICH THE AO ADMITS IN THE ASSESSMENT ORDER. THE A O HAS FURTHER OBSERVED IN THE ASSESSMENT ORDER THAT THE SOURCE OF CASH DEPOSITS IN THE VARIOUS BANK ACCOUNTS WERE ENQUIRED AND ENQUIRY WAS ALSO CARRIED OUT WITH VISHAL AUTOMOBILES UNDER S. 133(6) OF THE ACT AS THE ASSESSEE HAS CLAIMED TO WORK AS A COLLECTION CE NTER FOR VISHAL AUTOMOBILES. AFTER MAKING SUCH ENQUIRIES, THE AO D ID NOT AGREE WITH THE QUANTUM OF COMMISSION INCOME CLAIMED TO HA VE BEEN EARNED BY THE ASSESSEE ON SALE OF VEHICLE AND ADJUS TED UPWARD FROM RS.300/- PER VEHICLE TO RS.500/- PER VEHICLE. IT W AS FOUND AS A MATTER OF FACT THAT THE AMOUNT OF CASH DEPOSITS WAS TRANSFERRED TO VISHAL AUTOMOBILES AGAINST THE SALE OF VEHICLES. ON APPRECIATION OF THESE FACTS, IN TOTALITY, THE AO ADMITTED THE CLAIM OF THE ASSESSEE TOWARDS TRANSACTING CASH RECEIPT OF CASH DEPOSITS A GAINST SALE OF VEHICLE. THE AMOUNTS WERE TRANSFERRED TO VISHAL AU TOMOBILES AGAINST THE DELIVERY OF VEHICLE AND THE ASSESSEE, I N THE PROCESS, HAS EARNED COMMISSION INCOME. THE VIEW TAKEN BY THE AO ON ITA NO. 84/RPR/2020 (ANKIT AGRAWAL VS. PCIT) A.Y. 2015-16 - 6 - APPRECIATION OF FACTS OF THE CASE CANNOT BE OUTRIGH TLY REJECTED AND CONDEMNED AS LACKING IN PLAUSIBILITY. THE VIEW TAK EN BY THE AO APPEARS TO BE A FAIR AND REASONABLE VIEW HAVING REG ARD TO THE FACTS AVAILABLE ON RECORD. IN SUCH CIRCUMSTANCES, THE VI EW TAKEN BY THE AO ON APPRAISAL OF FACTS AND CIRCUMSTANCES IN DISCH ARGE OF QUASI JUDICIAL FUNCTION CANNOT, IN OUR VIEW, BE DISREGARDED IN A LIGHT HEARTED MANNER MERELY ON THE GROUND THAT VISHAL AUT OMOBILES HAS NOT ACCEPTED THE FACTS OF THE SHARING COMMISSION WI TH THE ASSESSEE. IT IS A MATTER OF RECORD THAT CASH DEPOSITS WERE TR ANSFERRED TO VISHAL AUTOMOBILES REGULARLY. THUS, APPARENTLY THE ASSESS EE WAS ACTING AS A COLLECTION CENTER FOR VISHAL AUTOMOBILES NOTWITHS TANDING ABSENCE OF ANY FORMAL ARRANGEMENT FOR DOING SO. THIS KIND OF INFORMAL ARRANGEMENT OF EARNING MONEY IS NOT UNCOMMON. THE ACTION OF THE AO IN TAXING ESTIMATED COMMISSION INCOME BASED ON S UCH CASH TRANSACTIONS IN NO SENSE CAN BE ASSAILED AS WHOLLY UNTENABLE. THE AO, IN OUR VIEW, HAD GOOD REASON TO ACCEPT THE VERS ION OF THE ASSESSEE IN TOTALITY OF FACTS. THE PCIT BEFORE COM ING TO CONCLUSION ADVERSE TO THE ASSESSEE OUGHT TO HAVE NOTED THE FAC T THAT WHY A PERSON WILL TRANSFER THE CASH DEPOSITS TO THE AUTOM OBILE DEALER WITHOUT ANY CONSIDERATION. THE CONSIDERATIONS WERE SUPPLY OF VEHICLE AND SOME COMMISSION INCOME TO THE ASSESSEE WORKING IN FRINGES. NEEDLESS TO SAY, THE REVISIONAL AUTHORITY IS EXPECTED TO EXERCISE ITS POWERS UNDER THE ACT WITH DILIGENCE, D EXTERITY AND REASONABLENESS TO ACHIEVE AND ADVANCE THE OBJECT OF PROVISION. THE PCIT WHILE ALLEGING INADEQUACY IN ENQUIRY HAS HIMSE LF FAILED TO CONDUCT ANY MINIMAL ENQUIRY EXPECTED OF HIM BEFORE SETTING ASIDE THE ISSUE BACK TO FILE OF THE AO. THERE ARE NO YAR DSTICKS AVAILABLE TOWARDS THE EXTENT OF ENQUIRY IN THE FACTS PECULIAR TO A GIVEN CASE. THE TEST OF REASONABLENESS HAS TO BE WEIGHED FROM T HE PERSPECTIVE OF A PRUDENT PERSON INSTRUCTED IN LAW. EXPLANATION (2) CANNOT BE INVOKED BASED ON AN ARBITRARY OPINION BUT ITS APPLI CABILITY IS ITA NO. 84/RPR/2020 (ANKIT AGRAWAL VS. PCIT) A.Y. 2015-16 - 7 - ESSENTIALLY CONTEXTUAL. IN THE LIGHT OF DELINEATIO NS, THE REVISIONAL ORDER, IN THE INSTANT CASE, DOES NOT MEET THE REQUI REMENT OF LAW AND DESERVES TO BE SET ASIDE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. SD/- SD/- (N. K. CHOUDHRY) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S. K. SINHA / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 / DR, ITAT, RAIPUR 5. 267 8 / GUARD FILE. BY ORDER 4 SR. PRIVATE SECRETARY ITAT 4 RAIPUR (ON TOUR) ORDER PRONOUNCED ON 12 / 1 0/2021 BY PLACING THE RESULT ON THE NOTICE BOARD AS PER RULE 34(4 ) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULE, 1963.