SHRI SANTOSH JAIN, RAIPUR (CG) V. CIT, RAIPUR (CG)

ITA 87/BIL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1396 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Assessee Lawyers: R B DOSHI
• Keywords: Opportunity of being heard; Retrospective amendment; Assessment record
• Section: 143(3); 6; 263; 2

Judgement Text

ITA NO . 87 / RPR /201 4 ASSESS MEN T Y EAR: 2009 - 10 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, SMC , RAIPUR [CORAM : PRAMOD KUMAR AM ] ITA NO . 87 / RPR /201 4 AS SESSMENT Y EAR : 20 09 - 10 SANTOSH JAIN , .APPELLANT PROP. O F ARIHANT MINING COMPANY KUSUM COMPLEX, SHANKAR NAGAR RAIPUR [C .G] [ PAN : ACMPJ 5971 BUSINESS] VS. C OMMISSIONER OF INCOME TAX RAIPUR . ... . RESPONDENT APPEARANCES BY: R.B. DOSHI , FOR THE A PPELLANT R.K. SINGH , F OR THE RE SPONDENT DATE OF CONCLUDING THE HEARING : JUNE 2 1 ST , 201 6 DATE OF PRONOUNCING THE ORDE R : JUNE 21 ST , 201 6 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 18 TH MARCH , 201 4 , PASSED BY THE L EARNED CIT UNDER SECTION 263 READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER), FOR THE ASSESSMENT YEAR 20 0 9 - 10 , ON THE FOLLOWING GROUNDS : - 1. THAT THE NOTICE U/S 263 IS ILLEGAL, INVALID AND WITHOUT JURISDICTION. 2. THE NOTICE ISSUED U/S 263 OF THE I.T. ACT, 1961 IS WITHOUT PROPER EXAMINATION/CONSIDERATION /PERUSAL OF THE ASSESSEE S ASSESSMENT RECORD BY THE LD. CIT AND THEREFORE, THERE WAS NO APPLICATION OF MIND AS WELL AS EXERCISE OF QUASI JUDICIAL DISCRETION AND JUDGMENT BY CIT AND CONSEQUENTLY THE ORDER U/S 263(1) DATED 18.3.2014 IS BAD IN LAW AND VOID AB INITIO. . 3. THAT THE LD. CIT ERRED IN SETTING ASIDE THE ASSESSMENT ORDER PASSED U/S 143(3) BY ACIT - 2(1), RAIPUR DATED 12.12.2011 BY RESORTING TO SECTION 263 AS ITA NO . 87 / RPR /201 4 ASSESS MEN T Y EAR: 2009 - 10 PAGE 2 OF 3 THE ORDER PASSED BY THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENU E. . 2. TO ADJUDICATE ON THIS APPEAL ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THE SHORT REASON FOR WHICH THE LEARNED COMMISSIONER HAS SUBJECTED THE ASSESSMENT ORDER TO REVISION PROCEEDINGS IS THAT THE ASSESSING OFFICER DID NOT EXAMINE DISALL OWANCE UNDER SECTION 40(A)(IA) OF RS.70,68,580/ - ON ACCOUNT OF FINANCE CHARGES PAID TO VARIOUS BANKS AND NBFCS. DURING THE COURSE OF PROCEEDINGS BEFORE THE LEARNED COMMISSIONER, IT WAS INTER ALIA CONTENDED B Y THE ASSESSEE THAT THE INTEREST/FINANCE CHARGES SO PAID, IN RESPECT OF WHICH DISALLOWANCE UNDER SECTION 40(A)(IA) IS SOUGHT TO BE INVOKED , HAVE ALREADY BEEN OFFERED TO TAXATION BY THE RECIPIENTS. IT WAS ALSO SUBMITTED, AS EVIDENT FROM THE EXTRACT OF SUBMISSION REPRODUCED AT PAGE NO. 15 OF THE PAPER BOO K, THAT INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) SHOULD BE GIVEN RETROSPECTIVE EFFECT AND THAT AS A RESULT , AS LONG AS THE RECIPIENT OF INCOME EMBEDDED IN PAYMENT HAS OFFERED THE SAME TO TAX, DISALLOWANCE UNDER SECTION 40(A)(IA) CANNOT BE INVOKED . LEARNED COMMISSIONER NEVERTHELESS DISREGARDED THESE SUBMISSIONS AND PROCEEDED TO EXERCISE HIS POWERS UNDER SECTION 263 OF THE ACT BY DIRECTING THE ASSESSING OFFICER TO MAKE ASSESSMENT REGARDING DISALLOWANCE OF FINANCE CHARGES UNDER SECTION 40(A)(IA) OF T HE IT ACT, 1961 AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . T HE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE ME. 3 . I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL POSITION . I FIND THAT THE PLEA OF THE LD . COUNSEL WITH REGARD TO RETROSPECTIVITY OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WAS INDEED WELL TAKEN. HON'BLE DEL HI HIGH COURT IN THE CASE OF CI ` T VS. ANSAL LAND MARK TOWNSHIP ( P) L IMITED (2015) 377 ITR 635 HAS APPROVED A ITA NO . 87 / RPR /201 4 ASSESS MEN T Y EAR: 2009 - 10 PAGE 3 OF 3 DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF RAJ EE V KUMAR AGARWAL V S. ACIT , 149 ITD 363 HOLDING SO. THEIR LORDSHIPS HAVE HELD THAT REASONING OF THE AGRA B ENCH OF ITAT (IN THE ABOVE CASE) AS RE GARDS THE RATIONALE BEHIND THE INS ERTION OF THE SECOND PROVISO TO SECTION 40(A)IA) OF THE ACT AND ITS CONCLUSION THAT THE SAID PROVISO IS DECLARATORY AND CURATIVE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL 2005, MERIT ACCEPTANCE . IN THIS VIEW OF THE MA TTER AND HAVING REGARD TO THE UNCONTROVERTED CONTENTION OF THE ASSESSEE THAT THE RECEIPTS OF THESE INTEREST AND FINANCE CHARGES IN THE HANDS OF THE RECIPIENTS HAVE BEEN DULY OFFERED TO TAX, I AM OF THE CONSIDERED VIEW THAT THE LEARNED COMMISSIONER WAS CLEA RLY IN ERROR IN EXERCISING HIS POWERS UNDER SECTION 263 OF THE ACT ON THE FACTS OF THIS CASE. I THEREFORE, QUASH THE IMPUGNED REVISION ORDER UNDER SECTION 263. ASSESSEE GETS THE RELIEF ACCORDINGLY. 4. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF JUNE , 2016. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: THE 21 ST DAY OF JUNE, 2016 . PBN/* COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4 ) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR