M/s. Parin Furniture Ltd. Rajkot, Rajkot V. The Pr. CIT-1, Rajkot, Rajkot

ITA 86/RJT/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5364 (ITAT-RAJKOT)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 04-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority
• Section: 148; 263; 132; 143(3); 142(1); 133(6); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI PRAMOD M JAGTAP, VICE PRESIDENT & Ms. MADHUMITA ROY, JUDICIAL MEMBER I .T .A . N o s . 8 6 t o 8 9 / Rj t/2 02 2 ( A s s e s s me nt Y ea r s : 2 0 12 -1 3 to 2 01 5 - 1 6) Pa r in F u r n i tu r e Lt d . G o n d al R o ad N a t io na l H ig hw a y, O p p . Ja y G a n e s h A uto C e n tr e , V il la g e V av di , R aj k ot - 3 6 0 00 1 V s . The P r i nc ip al C o m mi s s i on e r o f In c o me Ta x , A a ya k a r B h av a n , R ac e C o u r s e R in g R o a d, R aj ko t- 3 6 00 01 [ P A N N o . A A E C P 1 8 7 0C ] (Appellant) .. (Respondent) Appellant by : Shri D. M. Rindani, A.R. Respondent by : Shri Sanjeev Jain, CIT D.R. D a t e of H ea r i ng 08.06.2022 D a t e of P r o no u n ce me nt 20.07.2022 O R D E R PER MADHUMITA ROY, JM:- The bunch of appeals preferred by the assessee are directed against the orders all dated 15.02.2022 passed by the Ld. Pr. CIT-1, Rajkot under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) arising out of the orders passed by the ACIT, Circle-1(1), Rajkot dated 22.12.2019 under Section 143 (3) r.w.s. 147 of the Income Tax Act, 1961(hereinafter referred to as “the Act”) for A.Ys. 2012-13 to 2015-16 respectively. All the appeals are related to the same assessee and the issues involved therein are identical. Thus, all are heard analogously and are being disposed of by a common order for the sake of convenience. ITA Nos.86to89/Rjt/2022 Parin Furniture Ltd. vs. Pr.CIT Asst.Year –2012-13 to 2015-16 - 2 - ITA No. 86/Rjt/2022 (A.Y. 2012-13):- 2. The brief facts leading to the case is this that the assessee engaged in the furniture trading business had initially filed its regular return of income on 26.09.2012 declaring total income at Rs. 49,75,500/-. Subsequently, certain information was received from ADIT (Inv.)-II, Rajkot that a search action under Section 132 of the Act was carried out on the group of Angadiyas and Shroffs who were found to be indulging in providing bogus billing through their dummy concerns, receiving proceeds of under-invoiced sale in cash in their bank accounts and also indulging in issuing Cheque/DD in lieu of cash to many business parties in and around Rajkot. On the basis of alleged incriminating documents found during the course of search, the beneficiaries of their modus operandi were identified by the Investigation Wing where the assessee was also found one of the beneficiaries of the claim of bogus billing receiving proceeds of under-invoiced sale and receive Cheque/DD in lieu of cash. 3. Upon taking prior approval from the competent authority, a notice under Section 133(6) of the Act dated 26.02.2019 was issued to the assessee requesting him to furnish the detail of evidences to prove the genuineness of the transaction alongwith documentary evidences, copy of all bank account statements and other relevant documents/details mentioned therein. Since the assessee had not made any compliance in response to the said notice issued under Section 133(6) of the Act, notice under Section 148 of the Act dated 30.03.2019 was issued upon taking ITA Nos.86to89/Rjt/2022 Parin Furniture Ltd. vs. Pr.CIT Asst.Year –2012-13 to 2015-16 - 3 - necessary sanction separately from the concerned authority as per provision of Section 151 of the Act. Thereafter, the assessee filed its return of income on 30.09.2019 in response to the said notice issued under Section 148 of the Act declaring total income at Rs. 49,75,500/-. Notice under Section 143(2) of the Act dated 03.10.2019 was duly served followed by notice under Section 142(1) alongwith detailed questionnaire was issued on 05.10.2019 and was served upon the assessee in response whereof the assessee submitted its reply on 16.10.2019, 21.10.2019 & 19.11.2019. On the basis of the information as regards receiving of amount of Rs. 1,00,000/- from M/s. National Shroff Group during the year under consideration as notice under Section 142(1) of the Act was issued to the assessee on 05.10.2019 & 30.11.2019 calling for various details, the assessee duly submitted the bank statements, copy of cash book, details of expenses incurred, details of purchases alongwith copy of ledgers, copy of sales ledgers etc. Upon verification and analyzing of the same with the documents/details/information available with the office it was found that the transaction details received by the Revenue are not reflected in the books of accounts of the assessee. A show-cause thereafter, on 05.12.2019 was issued in the following manner: “2. In connection with the ongoing assessment proceedings for the Assessment Year 2012-13 you have submitted the return of income in response to a notice u/s. 148 of the Income Tax Act, 1961 on 30.09.2019. Your case was re-opened u/s 147 of the Act and accordingly statutory notice u/s 143(2) of the Act was issued on 03.10.2019 which was served upon you by online mode through e-mail On verification of details filed by you during the course of assessment proceedings and details available on record, following discrepancies have been noticed: ITA Nos.86to89/Rjt/2022 Parin Furniture Ltd. vs. Pr.CIT Asst.Year –2012-13 to 2015-16 - 4 - 2.1 On the basis of the incriminating documents found during the course of search on Angadias and Shroff it was found that you are also one of the beneficiary of the scam of bogus billing, receiving proceeds of under -invoiced sale and receiving Cheque/DD in lieu of cash and for the year under consideration you have received such benefit amounting to Rs. 1,00,000/-from M/s National Shroff which was engaged in the business of shroff/angadiya and various bank account controlled by these group. Cheques/DDs were issued in lieu of cash and also cash was delivered to the beneficiaries which have been deposited in the bank account from locations spread across the country. The details of the transactions mentioned above are as under: Bank Date Particul ars Depo sit Branch Code/Pl ace of Deposit- for cash deposit Name Name, Address of entity 22-EAGLE- AXIS- 91102000438 8635 01/02/20 12 BY CASH 1000 00 1182- poona. Nilesh zinjuvad iya Parin Furniture Private Limited, Gondal Road Highway, Vavdi, Rajkot : 360004, Land Mark: Opposite Jay Ganesh Auto Center, 02813300777, 09916191226, Rajkot@parinfurnit ure.com, www.parinfurniture .com, Amitbhai 2.2 Hence, during the course of assessment proceedings cash book, purchase register, expense ledger, cash sales register, etc. were called for to verify and to arrive at a true picture of the affairs of the business activity carried out by you. The details submitted by you were duly considered, verified and tallied with the information received as above to verify the common entries of such amounts. However, no matching entries were found on verification. Thus, it is evident that the above amount has not been recorded in your books of accounts and constitutes your unrecorded transaction. 3. You are, therefore, requested to show cause as to why the above incriminating entries amounting to Rs. 1,00,000/- should not be brought to tax accordingly. Please submit your explanations alongwith all the evidences on any day on or before 10.12.2019 upto 06.00 P.M. Please it may be noted that no adjournment will be granted in any circumstances. Kindly note if no information or ITA Nos.86to89/Rjt/2022 Parin Furniture Ltd. vs. Pr.CIT Asst.Year –2012-13 to 2015-16 - 5 - explanation is received by the due date, it will be presumed that you have no explanation to offe and assessment order will be passed accordingly.” 4. Since assessee did not reply to the show-cause issued to it, taking into consideration the incriminating entry amount of Rs. 1,00,000/- has been treated as unaccounted and unrecorded business transaction of the assessee and accordingly, considering the average gross profit at 30% of the turn over the income of the assessee from such unaccounted and unrecorded transaction was worked out at Rs. 30,000/- which was finally added to the total income of the assessee by the Ld. AO on 22.12.2019. 5. Being aggrieved by and/or dissatisfied with the addition made by the Ld. AO and appeal has been preferred before the First Appellate Authority by the assessee. 6. On the other hand, during the pendency of the appeal before the First Appellate Authority the Ld. PCIT, Rajkot-I, initiated a proceeding dated 21.01.2022 under Section 263 of the Act and a show-cause was issued to the assessee on the self-same cause of action holding the order passed by the Ld. AO under Section 147 of the Act as erroneous and prejudicial to the interest of the Revenue and the said needs to be revised. The relevant portion of the said show-cause is as follows: “2.2 On the verification of the assessment order, it is noticed from the details/ books of accounts submitted by the assessee and the details/ books of accounts as available with the office ,it is seen that the transaction details received by the office are not reflected in the books of accounts of the assessee. Hence, the amount of Rs. 1,00,000/- received from M/s National Shroff Group during the year are unrecorded transactions of the assessee and the entire amount should have been added to the assessed income. Instead the AO added 30% of the GP ratio which was incorrect as the transactions were not recorded in the books of accounts. ITA Nos.86to89/Rjt/2022 Parin Furniture Ltd. vs. Pr.CIT Asst.Year –2012-13 to 2015-16 - 6 - 3. In view of the facts mentioned above, it is clear that the amount of Rs. 1,00,000/- received from M/s National Shroff group during the year are unrecorded transactions of the assessee and one of the beneficiary of the scam of bogus billing, and the same has not been added by the AO during the- Assessment proceedings. Therefore, 100% of an amount of Rs.1,00,000/- is required to be added as;, unexplained expenses u/s.69A to the total income of the assessee. 4. In view of the above and in the light of facts and circumstances of the case, the order passed by the AO, u/s 143(3) of the IT Act is erroneous and prejudicial to the interest of revenue and therefore needs to be revised u/s 263 of the IT Act. Therefore, I hereby initiate proceedings u/s 263 of the Act with a view to pass a suitable order. Before passing of such order, you are hereby given an opportunity of being heard in the matter. In this connection you are requested to furnish your reply / submission / explanation or objection if any by mail address id [e-mail] / speed post to this office on or before 31-01-2022. Due to pandemic condition, physical presence is not required.” 7. The said proceeding was culminating into the final order dated 15.02.2022 under Section 263 of the Act passed by the Ld. PCIT, Rajkot- 1, holding the order passed by the Ld. AO is erroneous and prejudicial to the interest of Revenue observing that the AO has not conducted any enquiry in the source of the transaction made for M/s. National Shroff and to the above extent the cash transaction remained unexplained. Hence, the instant appeal before us. 8. At the time of hearing of the appeal the Ld. Counsel appearing for the assessee at the very threshold submitted before us that when the appeal is pending before the First Appellate Authority against the order passed by the Ld. AO finalizing the re-assessment under Section 143 r.w.s. 147 of the Act dated 22.12.2019 upon making addition of Rs. 30,000/- on account of average gross profit of the assessee, assumption of jurisdiction under Section 263 of the Act by the Ld. PCIT would be barred. It is the case of the assessee that the Ld. AO considered the very same issue in the re-assessment proceeding under Section 147 of the Act ITA Nos.86to89/Rjt/2022 Parin Furniture Ltd. vs. Pr.CIT Asst.Year –2012-13 to 2015-16 - 7 - and all the documents relating to the issue has duly been furnished by the assessee before him. On this issue he has relied upon a judgment passed by the Allahabad High Court in the matter of CIT, Meerut vs. Vam Resorts & Hotels (P.) Ltd., reported in (2019)111 taxmann.com 62 (Allahabad). 9. On the other hand, the Ld. Counsel appearing for the Revenue relied upon the order passed by the Ld. PCIT. 10. It appears from the records that Ld. AO has examined each and every aspect of the matter after analyzing the entire set of documents submitted by the assessee as demanded by Revenue which is reflecting in the order passed by the Ld. AO. In that view of the matter we do not justify the remand order to be sustainable particularly when the appeal has been preferred by the assessee against the said order passed by the Ld. AO. We further note that the Ld. CIT(A) is yet to decide the order either way and therefore, we do not find any reason to initiate and proceed against the said order passed by the Ld. AO under Section 147 of the Act taking recourse of the provision of law under Section 263 of the Act by holding the order passed by the Ld. AO erroneous and prejudicial to the interest of Revenue. In our considered opinion, the same is premature. In this regard, we have also considered the judgment passed by the Allahabad High Court in the case of CIT, Meerut vs. Vam Resorts & Hotels Pvt. Ltd., reported in (2019) 111 taxmann.com 62 (Allahabad) as relied upon by the Ld. A.R. We find that on the identical situation the Hon’ble Court was pleased to quash the order passed under Section 263 ITA Nos.86to89/Rjt/2022 Parin Furniture Ltd. vs. Pr.CIT Asst.Year –2012-13 to 2015-16 - 8 - of the Act. During the pendency of the appeal preferred by the assessee under Section 250 of the Act while upholding the order passed by the Tribunal in holding the order exercising power under Section 263 was barred by Clause (c) of Explanation 1 of Section 263 of the Act the Hon’ble Court observed as follows: “25. As, Clause (c) of Explanation 1 to Section 263 of the Act provides that when an appeal is pending before the Commissioner, the exercise of jurisdiction under Section 263 of the Act by CIT is barred. Thus, in the present case, the CIT wrongly exercised jurisdiction under Section 263 of the Act by remanding back the matter to assessing authority on 25.3.2013, while the appeal was decided by CIT (A) on 5.6.2013. Thus, the order passed by the ITAT does not suffer from any irregularity and needs no interference. 26. As far as the word "record" appearing in Clause (b) of Explanation-1 to Section 263 is concerned, it means the record available at the time of examination by the Commissioner of Income Tax and not any material or record available subsequent to his examination or exercise of power under Section 263. Thus, any order passed by the AO in the assessment proceedings after the remand by the CIT cannot be looked upon and the argument made by the counsel for the revenue for relying upon the fresh assessment order made on 7.3.2004 under Section 263/143(3) of the Act cannot be accepted in view of the above provision of law. 27. In the present case, the Tribunal had recorded specific finding of fact that the assessing authority had examined each and every aspect of the case on which the remand order hinges, as such the remand order was not sustainable in the eyes of law. 28. Considering the facts and circumstances of the case, we are of the considered opinion, that the revenue has failed to make any case for interference in the order of the ITAT, as the CIT had proceeded to remand the matter back to the assessing authority while the appeal of the assessee was pending under Section 250 and the power of exercise under Section 263 was barred by Clause (c) to Explanation 1 of Section 263 of the Act. Further, the remand order by the CIT was based merely on suspicion and presumption. 29. The appeal is devoid of merit and is hereby dismissed. The question of law is, therefore, answered against the revenue and in favour of the assessee.” Hence, respectfully relying upon the same we do not find any reason/basis of the impugned proceeding under Section 263 of the Act ITA Nos.86to89/Rjt/2022 Parin Furniture Ltd. vs. Pr.CIT Asst.Year –2012-13 to 2015-16 - 9 - when the appeal preferred by the assessee under Section 250 of the Act before the CIT(A) is pending against the order passed by the Ld. AO under Section 147 of the Act which has been sought to be revised by the Ld. PCIT in the garb of the provision of Clause (c) of Explanation 1 of Section 263 of the Act. The same is, thus, found to be unsustainable and therefore, quashed. Assessee’s appeal is, therefore, allowed. ITA Nos. 87 to 89/Rjt/2022 (A.Ys. 2013-14 to 2015-16):- 11. The identical issue involved in the case has already been dealt with by us in ITA No. 86/Rjt/2022 for A.Y. 2012-13 and in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the appeals preferred by the assessee are allowed. 12. In the combined results, appeals filed by the assessee are allowed. This Order pronounced in Open Court on 20/07/2022 Sd/- Sd/- (PRAMOD M JAGTAP) (Ms. MADHUMITA ROY) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 20/07/2022 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, राजोकट / ITAT, Rajkot