Vraj Enterprises, Pune V. CIT-III, Pune

ITA 875/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79749 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2014
• 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
• Keywords: Principle of natural justice; Wrong claim
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.875/PN/2013 (A.Y: 2008-09) VRAJ ENTERPRISES 1198, HARI FUTURA, SHUKRAWAR PETH, SUBHASH NAGAR, LANE NO.3, PUNE 411002 PAN: AAEFV8110C APPELLANT VS. ACIT, CIRCLE 5, PUNE RESPONDENT APPELLANT BY : SHRI PRAMOD SHINGTE RESPONDENT BY : SHRI A.K . MODI DATE OF HEARING: 10.04.2014 DATE OF ORDER : 28.04.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX-III, [IN SHORT CIT] P UNE, DATED 25.03.2013 FOR A.Y. 2008-09 ON THE FOLLOWING GROUND S. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT-III PUNE, HAS ERRED IN PASSING THE ORDER UNDER SECTION 263 OF THE INCOME TAX ACT 1961, ESPECIALLY WHEN, ORDER PASSED BY LEARNED ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT-III PUNE, HAS ERRED IN PRESUMI NG THE CORRECT ACCOUNTING ENTRIES AS INCORRECT ONE AND THE REBY ERRED IN INCORRECT UNDERSTANDING OF LAW RESULTING I NTO DIRECTION TO MAKE FRESH ASSESSMENT. 2 THE APPELLANT CRAVES FOR TO LEAVE, ADD, ALTER, MODI FY, DELETE, AND ALTER ABOVE GROUND OF APPEAL BEFORE OR AT THE T IME HEARING, IN THE INTEREST OF NATURAL JUSTICE. 2. AT THE OUTSET OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE HAS POINTED OUT THAT A SIMILAR ISSUE AROSE IN A.Y. 2007-08 WHEREIN, THE TRIBUNAL ON SIMILAR FACTS, HAS GRANTED RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE ORDER PASSED U/S.263 BY THE LD.CIT AND THE PAPER BO OK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT IN THE INSTANT CASE THE LD.CIT ISSUED THE SHOW CAUSE N OTICE U/S.263 ON THE BASIS OF A PROPOSAL BY THE ACIT, CIR CLE-5, PUNE ON THE GROUND THAT THE ASSESSMENT ORDER PASSED U/S. 143(3) SUFFERS FROM CERTAIN DEFICIENCIES. HE ACCORDINGLY HELD THAT THE ORDER PASSED U/S.143(3) BY THE AO IS ERRONEOUS IN S O FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FROM T HE VARIOUS DETAILS FURNISHED BY THE ASSESSEE WE FIND THE ASSES SEE IS A PARTNERSHIP FIRM DOING ARBITRAGE AND JOBBING THROUG H PSC SECURITIES PVT. LTD., CROWN CONSULTANTS AND KASAT S ECURITIES AND THEREFORE THE VERY FIRST OBSERVATION OF THE LD.CIT THAT THE ASSESSEE IS A BROKER IS ERRONEOUS. 7.1 WE FIND THE ASSESSEE HAS NOT DEBITED ANY SECURI TY TRANSACTION TAX WHICH HAS BEEN PAID AND HAS SHOWN U NDER THE HEAD CURRENT ASSETS, LOANS AND ADVANCES IN THE BA LANCE SHEET AS ON 31-03-2007 AND THE SAME HAS BEEN SHOWN AS WIT HDRAWAL FROM THE PARTNERS CAPITAL ACCOUNT IN THE SUBSEQUENT YEAR. SINCE FOR A.Y. 2007-08 THE STT WAS ALLOWED TO BE CLAIMED IN THE FORM OF REBATE FROM INCOME TAX, THEREFORE, WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SAME HAS TO BE TREATED AT PAR WITH TDS AND WAS NOT AN AL LOWABLE EXPENDITURE AND THEREFORE THE ASSESSEE HAD SHOWN TH E SAME UNDER THE HEAD CURRENT ASSETS, LOANS AND ADVANCES IN THE BALANCE SHEET AS ON 31-03-2007. 7.2 IN OUR OPINION, THE LD.CIT IN THE INSTANT CASE HAS NOT PROPERLY APPLIED HIS MIND AND INVOKED JURISDICTION U/S.263 IN A MECHANICAL MANNER ON THE BASIS OF A PROPOSAL BY THE SUCCESSOR AO. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO COULD NOT CONTROVERT THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT DURING A.Y. 2005-06 SUCH CLAIM WAS ALLOWED U/S .143(1) AND FOR A.Y. 2006-07 SUCH CLAIM WAS ALLOWED U/S.143(3). WE FIND 3 THE LD. CIT PROCEEDED ON THE BASIS THAT THE ASSESSE E IS A SHARE BROKER AND THEREFORE THE STT AMOUNT SHOWN IN THE BA LANCE SHEET REPRESENTS THE AMOUNT RECOVERABLE FROM THE CL IENTS, I.E. IN THE INSTANT CASE RECOVERABLE FROM THE PARTNERS AND THEREFORE THE ASSESSEE HAS MADE A WRONG CLAIM. HOWEVER, THE SUBM ISSION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE I S NOT A BROKER AND IS DOING ARBITRAGE AND JOBBING THROUGH DIFFEREN T BROKER FIRMS COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. IN THE INSTANT CASE, WE FIND THE A SSESSEE HAS SUBMITTED FULL DETAILS, SUCH AS CONTRACT NOTES, BIL LS OF RESPECTIVE BROKERS ETC. BEFORE THE ASSESSING OFFICER WHO AFTER DUE VERIFICATION HAS ALLOWED THE CLAIM OF THE ASSESSEE. 7.3 IT HAS BEEN HELD BY THE VARIOUS JUDICIAL PRONOU NCEMENTS THAT THE PRE-REQUISITES FOR THE EXERCISE OF JURISDI CTION BY THE CIT SUO-MOTO UNDER SECTION 263 IS THAT THE ORDER OF THE ASSESSMENT MUST BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F THE REVENUE. THE ABOVE TWIN CONDITIONS MUST BE SATISFIED AND IN ABSENCE OF ANY ONE RECOURSE CANNOT BE TAKEN U/S.263(1) OF THE ACT. IN THE INSTANT CASE, WE FIND THE ASSESSING OFFICER AFTER D UE CONSIDERATION OF RELEVANT DETAILS HAS ALLOWED THE C LAIM OF DEDUCTION U/S.88E. THE LD.CIT ON THE BASIS OF WRON G NOTION THAT THE ASSESSEE IS A BROKER INVOKED THE JURISDICT ION U/S.263 WHEREAS THE ASSESSEE IS NOT A BROKER AND DOING HIS BROKERAGE THROUGH VARIOUS OTHER FIRMS. THEREFORE, THE VERY B ASIS ON WHICH THE JURISDICTION WAS ASSUMED IS WRONG. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT HAD WRONGLY ASS UMED JURISDICTION U/S.263, THAT TOO, ON THE BASIS OF A P ROPOSAL SENT BY THE SUCCESSIVE ASSESSING OFFICER. IN THIS VIEW OF THE MATTER, WE SET-ASIDE THE ORDER OF THE CIT AND ALLOW THE GROUND S TAKEN BY THE ASSESSEE. 2.1 NOTHING CONTRARY HAS BEEN BROUGHT TO OUR KNOWLE DGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWI NG THE SAME REASONING, WE ARE NOT INCLINED TO CONCUR WITH THE F INDING OF CIT PASSED U/S.263 BECAUSE THE ASSESSING OFFICER AFTER DUE CONSIDERATION OF RELEVANT DETAILS HAS ALLOWED THE D EDUCTION U/S.88E. THE CIT ON THE BASIS OF WRONG PRESUMPTION THAT THE ASSESSEE IS A BROKER, INVOKED THE JURISDICTION U/S. 263, WHEREAS, THE ASSESSEE IS NOT A BROKER AND DOING HIS BROKERAG E THROUGH VARIOUS OTHER FORMS. THEREFORE, VERY BASIS OF WHIC H THE JURISDICTION WAS ASSUMED WAS WRONG, SO, THE CIT WAS NOT JUSTIFIED IN ASSUMING THE JURISDICTION U/S.263 THAT TOO ON THE BASIS OF PROPOSALS SENT BY CONCERNED ASSESSING OFFI CER. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT. 4 3. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 28 TH OF APRIL, 2014. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 28 TH APRIL, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT-III, PUNE 4) THE DR, B BENCH, I.T.A.T., PUNE. 5) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE