M/s. Anant Enterprises, Pune V. Dy. CIT, Circle-8, Pune

ITA 871/PUN/2013

• Counselvise Citation: 87124514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.871/PN/2013 (ASSESSMENT YEAR : 2008-09) M/S ANANT ENTERPRISES, FLAT NO.11, PLOT NO.4/1, MIDC, PIMPRI, PUNE 411 018. PAN : AACFA0876G . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE- 8, PUNE. . RESPONDENT ASSESSEE BY : MR. M. K. KULKARNI DEPARTMENT BY : MR. A. K. MODI DATE OF HEARING : 16-04-2014 DATE OF PRONOUNCEMENT : 27-05-2014 ORDER PER G. S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX-V, PUNE (IN SHORT THE C OMMISSIONER) DATED 13.03.2013 PASSED U/S 263(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WHEREBY AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT DATED 28.12.2010 HAS BEEN HELD TO BE ERRONE OUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. 2. IN THIS APPEAL, ALTHOUGH, THE ASSESSEE HAS RAISE D MULTIPLE GROUNDS OF APPEAL BUT ESSENTIALLY THE GRIEVANCE IS DIRECTED AG AINST THE ACTION OF THE COMMISSIONER IN SETTING-ASIDE THE ASSESSMENT ORDER DATED 28.12.2010 (SUPRA) AND DIRECTING THE ASSESSING OFFICER TO RE-DO THE AS SESSMENT ON THE ISSUE RELATING TO THE ALLOWABILITY OF AN EXPENDITURE OF R S.8,15,394/- DEBITED IN THE PROFIT & LOSS ACCOUNT UNDER THE HEAD PRIOR PERIOD EXPENDITURE. ITA NO.871/PN/2013 A.Y. : 2008-09 3. IN BRIEF, THE FACTS ARE THAT ASSESSEE, BEING A P ARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURE OF DG SET, ALUMINUM RAW CASTING, AUTOMOBILE PARTS, FILED ITS RETURN OF INCOME FROM ASSESSMENT Y EAR 2008-09 DECLARING TOTAL INCOME OF RS.17,98,686/- WHICH WAS SUBJECT TO SCRUT INY ASSESSMENT U/S 143(3) OF THE ACT DATED 28.12.2010 WHEREBY THE TOTAL INCOM E WAS DETERMINED AT RS.19,98,690/-. SUBSEQUENTLY, THE COMMISSIONER INV OKED HIS REVISIONARY JURISDICTION U/S 263 OF THE ACT BY SHOW-CAUSING THE ASSESSEE ON 29.01.2013 AS TO WHY THE ASSESSMENT ORDER DATED 28.12.2010 (SUPRA ) BE NOT CONSIDERED AS ERRONEOUS IN SO FAR AS ITS PREJUDICIAL TO THE INTER ESTS OF THE REVENUE FOR THE REASON THAT THE ASSESSING OFFICER FAILED TO ADD BAC K THE AMOUNT OF PRIOR PERIOD EXPENDITURE TO THE EXTENT OF RS.8,15,394/- DEBITED IN THE PROFIT & LOSS ACCOUNT DESPITE THE ASSESSEE MAINTAINING ITS ACCOUNTS ON A MERCANTILE BASIS. 4. IN RESPONSE TO THE NOTICE ISSUED BY THE COMMISSI ONER, ASSESSEE FURNISHED A REPLY DATED 14.02.2013 WHEREIN IT WAS C ONTENDED THAT THERE WAS NO ERROR IN THE ASSESSMENT ORDER ON ACCOUNT OF ALLO WABILITY OF THE AFORESAID EXTENT SINCE THE LIABILITY OF SUCH EXPENDITURE CRYS TALLIZED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDER ATION. IT WAS THEREFORE CONTENDED THAT THERE WAS NO ERROR ON THE PART OF TH E ASSESSING OFFICER IN ALLOWING THE CLAIM IN QUESTION. THE COMMISSIONER, HOWEVER, CAME TO CONCLUDE THAT THE ASSESSMENT WAS COMPLETED BY THE A SSESSING OFFICER IN A PERFUNCTORY MANNER BY ONLY MAKING AN AD-HOC ADDITIO N OF RS.1,00,000/- OUT OF SUNDRY CREDITORS AND THERE WAS NO APPLICATION OF MI ND IN RESPECT OF INFORMATION AVAILABLE ON RECORD RELATING TO THE ISSUE OF PRIOR PERIOD EXPENDITURE DEBITED IN THE PROFIT & LOSS ACCOUNT. THE COMMISSIONER RECORD ED THAT THOUGH HE WAS NOT CONVINCED WITH THE CLAIM OF THE ASSESSEE ABOUT THE ACCRUAL OF EXPENSES IN THE CURRENT YEAR, HOWEVER, HE DIRECTED THE ASSESSIN G OFFICER TO ALLOW APPROPRIATE OPPORTUNITY TO THE ASSESSEE AND DECIDED THE ISSUE ON MERITS. FOR THE AFORESAID PURPOSE, THE COMMISSIONER SET-ASIDE T HE ASSESSMENT AND FURTHER DIRECTED THE ASSESSING OFFICER TO RE-DO THE SAME ON THE ABOVE ISSUE, ITA NO.871/PN/2013 A.Y. : 2008-09 AFTER ALLOWING AN OPPORTUNITY TO THE ASSESSEE OF BE ING HEARD. BEFORE US, THE LEARNED COUNSEL VEHEMENTLY POINTED OUT THAT BEFORE THE COMMISSIONER, ASSESSEE HAD DULY FURNISHED THE DETAILS AND ALSO PO INTED OUT THAT THOUGH THE EXPENDITURE RELATED TO EARLIER PERIOD, YET THE LIAB ILITY FOR THE SAME CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION SINCE THE RESPE CTIVE BILLS/DUES WERE RAISED BY THE RESPECTIVE PARTIES AND RECEIVED BY THE ASSES SEE DURING THE YEAR UNDER CONSIDERATION. IN THIS CONNECTION, REFERENCE HAS A LSO BEEN MADE TO THE REPLY FURNISHED TO THE COMMISSIONER DATED 12.02.2013 WHIC H IS PLACED IN THE PAPER BOOK FILED BEFORE US. IN SUPPORT, COPIES OF THE BI LLS RAISED BY THE SOME OF THE CONCERNS/SUPPLIERS, HAVE ALSO BEEN PLACED IN THE PA PER BOOK TO SHOW THAT THEY HAVE BEEN RAISED DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL ALSO RELIED UPON A JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MAHANAGAR GAS LTD., (2014) 42 TAXMANN.COM 40 (B OM) FOR THE PROPOSITION THE PRIOR PERIOD EXPENDITURE WHICH CRYSTALLIZED DUR ING THE YEAR UNDER CONSIDERATION WAS ALLOWABLE AS EXPENDITURE. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS DEFENDED THE ORDER OF THE COMMI SSIONER BY POINTING OUT THAT THE PRIOR PERIOD EXPENDITURE, THE DETAILS WHIC H WAS AVAILABLE ON RECORD, WERE NOT EXAMINED BY THE ASSESSING OFFICER AND THIS LEAD TO AN ERRONEOUS ASSESSMENT, AS SUCH EXPENSES COULD NOT HAVE BEEN AL LOWED DURING THE YEAR UNDER CONSIDERATION, AS THE ASSESSEE WAS MAINTAININ G IT ACCOUNTS ON MERCANTILE BASIS. WITH REFERENCE TO THE SUBMISSION S OF THE ASSESSEE, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSMENT ORDER HAS BEEN MERELY SET-ASIDE AND THE MATTER RESTORED B ACK TO THE ASSESSING OFFICER TO RE-DO AND IN THE ENSUING SET-ASIDE PROCE EDINGS, IT WAS OPEN FOR THE ASSESSEE TO PUT-FORTH HIS CLAIM ON THE MERITS OF TH E ISSUE. IN THIS MANNER, THE ORDER OF THE COMMISSIONER IS SOUGHT TO BE DEFENDED. ITA NO.871/PN/2013 A.Y. : 2008-09 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE ISSUE RAISED BY THE COMMISSIONER IS THAT THE ASSESSING OFFICER F AILED TO ADD BACK THE AMOUNT OF PRIOR PERIOD EXPENDITURE DEBITED IN THE PROFIT & LOSS ACCOUNT, WHILE COMPLETING THE SCRUTINY ASSESSMENT EVEN THOUG H, ASSESSEE WAS MAINTAINING ITS ACCOUNTS ON MERCANTILE BASIS. IN O UR CONSIDERED OPINION, THE COMMISSIONER IN THE PRESENT CASE HAS FAILED TO ESTA BLISH AS TO HOW THE ASSESSMENT ORDER WAS UNSUSTAINABLE IN LAW QUA THE A FORESAID ISSUE. WE SAY SO FOR THE REASON THAT ON BEING SHOW-CAUSED, ASSESS EE POINTED OUT TO THE COMMISSIONER THAT THE PRIOR PERIOD EXPENDITURE OF RS.8,15,394/- IN QUESTION COMPRISED OF EXPENSES WHICH RELATED TO THE PRIOR PE RIOD, BUT THE LIABILITY FOR THE SAME CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATI ON ON RECEIPT OF BILLS, ETC. FROM THE RESPECTIVE CONCERNS/SUPPLIERS AND, THEREFO RE THE EXPENDITURE WAS ALLOWABLE DURING THE YEAR UNDER CONSIDERATION. IN THE IMPUGNED ORDER, THE COMMISSIONER HAS NOT CONTROVERTED THE AFORESAID ASS ERTION MADE BY THE ASSESSEE WHICH IS SUPPORTED BY THE MATERIAL PLACED IN THE PAPER BOOK. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MAHANAGAR GAS LTD. (SUPRA) HAS ALSO UPHELD THE PROPOSITION THAT PRIOR PERIOD EXPEN DITURE WHICH WAS CRYSTALLIZED DURING THE PREVIOUS YEAR RELEVANT TO T HE ASSESSMENT YEAR UNDER CONSIDERATION, WAS AN ALLOWABLE EXPENDITURE IN THE YEAR OF CRYSTALLIZATION. IN ABSENCE OF ANY CREDIBLE REASON TO NEGATE THE ASSERT ION OF THE ASSESSEE, WE DO NOT FIND THAT ANY JUSTIFICATION FOR THE COMMISSI ONER TO HOLD THE ORDER ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT QUA THE IMPUGNED ISSUE. AS A RESULT, WE SET-ASIDE THE ORDER OF THE COMMISSIONER AND RESTORE THE ASSESSMENT ORDER DATED 28.12.2010 (SUPRA) PASSED BY THE ASSESSING OF FICER. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ITA NO.871/PN/2013 A.Y. : 2008-09 ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MAY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 27 TH MAY, 2014 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT-V, PUNE; 4) THE DR B BENCH, I.T.A.T., PUNE; 5) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE