M/s. Ravi Bajaj Design Pvt. Ltd., New Delhi V. ITO (CPC), Bangalore

ITA 926/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4181 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 24-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAHUL K SRIVASTAVA
• Section: 154

Judgement Text

ITA 926/DEL/2012 ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 926/DEL /2012 ASSESSMENT YEAR: 2009-10 RAVI BAJAJ DESIGN PVT. LTD., N-205, GREATER KAILASH-I, NEW DELHI-110048 (PAN: AABCR7849G) VS ITO (CPC) , POST BAG NO.1, ELECTRONIC CITY, BANGALORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAHUL K. SRIVASTAVA, CA RESPONDENT BY: SHRI ATIQ AHMAD, SR. DR DATE OF HEARING : 05.09.2017 DATE OF PRONOUNCEMENT: 04.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD. CIT(A)-XVIII, N EW DELHI WHEREIN VIDE DATED 1.12.2011, THE LD. CIT(A) HAS DISMISSED THE ASSESSEES APPEAL CHALLENGING THE PRI MA FACIE ADJUSTMENT MADE BY THE CENTRAL PROCESSING CEN TRE (CPC) BANGALORE U/S 143(1) OF THE INCOME TAX ACT, 1 961 BY MAKING AN ADDITION OF RS. 8,31,925/- TO THE DECL ARED I.T.A. 1937/DEL/2017 ASSESSMENT YEAR 2013-14 2 INCOME OF RS. 10,84,781/- WITHOUT SPECIFYING THE NA TURE AND DETAILS OF ADDITION MADE. THE GROUNDS OF APPEA L PREFERRED BY THE ASSESSEE READ AS UNDER:- 1. THE APPELLANT PRAYS THAT THE INTIMATION FRAMED UNDER SECTION 143(1) OF THE ACT BE AMENDED SINCE IT IS NO T BASED ON FACTS COMPLETELY. 2. INCOME TAX OFFICER (CPC) ERRED IN DISREGARDING THE BASIC CONDITIONS PRESCRIBED FOR MAKING AN INTIMATIO N UNDER SECTION 143(1) AND THE RELEVANT INTIMATION IS NOT BASED COMPLETELY AS PER ITR FILED; 3. AO (CPC) ALSO ERRED IN EXCEEDING HIS POWERS, AU THORITY AND JURISDICTION U/S 143(1) OF THE INCOME TAX ACT, 1961 IN PROCESSING THE RETURN BY MAKING ADDITION OF RS.8,31,925/- TO THE DECLARED INCOME OF RS. 10,84,7 81/- WITHOUT SPECIFYING THE NATURE AND DETAIL OF ADDITIO N MADE. 4. THE LD.CIT (A) HAS CONFIRMED THE ADDITION OF RS.8,31,925/-AFTER IGNORING THE FACTS THAT :THE APP ELLANT COMPANY HAS DECLARED INCOME OF RS.10,84,781 IN THE ITR-6. 5. APPELLANT IS A PRIVATE LIMITED COMPANY AND EN GAGED IN THE BUSINESS OF FABRICATION & SALE OF DESIGNED READYMADE GARMENTS. THE COMPANY FILED ITS RETURN ON 28 TH SEPTEMBER-2009 DECLARING NET TAXABLE INCOME OF RS. 10,84,781/-. THE RETURN HAS BEEN PROCESSED BY CENTR AL PROCESSING CENTRE, BANGALORE VIDE ORDER DATED 18 N SEPTEMBER-2010 BY ASSESSING THE INCOME FROM BUSINES S AT RS. 19,16,706.00 AS AGAINST INCOME OF RS.10,84,781.00. AO (CPC) HAS PICKED UP FIGURE OF RS.8,31,926/- FOR ADDITION WHEREAS IT HAS BEEN SHOWN AS DEFERRED TAX LIABILITY IN THE PROFIT & LOSS ACCOUNT OF THE A.YE AR 2009- 10. THEREFORE, OUR CONTENTION IS THAT DEFERRED TAX LIA BILITY OF RS.8,31,926.00 CAN NEITHER BE ADDED TO THE DECLA RED I.T.A. 1937/DEL/2017 ASSESSMENT YEAR 2013-14 3 INCOME OF RS.10,84,781.00 NOR TREATED AS TAXABLE INCOME. LD.CIT(A) AND ASSESSING AUTHORITY HAS NOT EXAMINED CAREFULLY PROFIT & LOSS ACCOUNT, AUDITED BALANCE SH EET AND ALSO IGNORED ALL THE ABOVE TRUE FACTS & DISMISS ED THE APPEAL. 6. THE APPELLANT PRAYS THAT THE SAID ADDITION OF RS.8,31,926/-BE DELETED. 7. THE APPELLANT CRAVES TO ADD TO ALTER OR AMEND THE ABOVE GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURIN G THE HEARING OF THIS APPEAL. 2. AT THE OUTSET, THE LD. AR SUBMITTED AN APPLICATI ON FOR ADJOURNMENT WHICH WE HAVE REJECTED AND WE PROCEED T O HEAR BOTH THE PARTIES ON MERITS. 3. THE LD. AR SUBMITTED THAT THE ASSESSEE COMPANY H AD FILED ITS RETURN OF INCOME ONLINE ON 29.09.2009 DECLARING A TAXABLE INCOME OF RS. 1,08,4781/- AND THE RETURN WAS PROCES SED U/S 143(1) OF THE ACT ON 18.9.2010 BY COMPUTING THE INC OME AT RS. 19,16,706/-. HE DREW OUR ATTENTION TO THE INTIMATI ON U/S 143(1) RECEIVED FROM CPC BANGALORE AND SUBMITTED THAT THE ADDITION HAD BEEN MADE WITHOUT SPECIFYING THE NATURE AND DET AILS OF THE ADJUSTMENT MADE. IT WAS SUBMITTED THAT AS PER THE SCHEME OF THE ACT, ONLY PRIMA FACIE ADJUSTMENT WAS PERMISSIBL E AND THAT TOO, IN RESPECT OF ANY ARITHMETICAL ERROR IN THE RE TURN OR IN RESPECT OF ANY CLAIM, THE INCORRECTNESS OF WHICH WA S APPARENT I.T.A. 1937/DEL/2017 ASSESSMENT YEAR 2013-14 4 FROM ANY INFORMATION IN THE RETURN. IT WAS ALSO SU BMITTED THAT IF THERE WERE ANY DEBATABLE CLAIMS, THEY CANNOT BE MAD E THE SUBJECT MATTER OF ANY PRIMA FACIE ADJUSTMENT. IT W AS ALSO SUBMITTED THAT IF THE ASSESSING AUTHORITY WAS NOT I NCLINED TO ACCEPT THE RETURN SUBMITTED BY THE ASSESSEE, THE PR OPER COURSE SHOULD HAVE BEEN TO ISSUE A NOTICE TO THE ASSESSEE U/S 143(2) OF THE ACT. IT WAS SUBMITTED THAT IN VIEW OF THE SETT LED LEGAL POSITION, THE ADJUSTMENT MADE WITHOUT SPECIFYING TH E NATURE OF THE ADJUSTMENT WAS PATENTLY WRONG AND LIABLE TO BE DELETED. 4. LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E ORDER OF THE LD. CIT (A) BUT COULD NOT REFUTE THE ASSERTI ON OF THE LD. AR THAT THE NATURE AND DETAILS OF THE ADJUSTMENT MADE WERE NOT DISCERNIBLE FROM THE INTIMATION U/S 143(1). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. A BARE PERU SAL OF SECTION 143(1) MAKES IT ABUNDANTLY CLEAR THAT ONLY TWO TYPE S OF ADJUSTMENTS ARE PERMITTED U/S 143(1) OF THE ACT AND THEY ARE: I) ANY ARITHMETICAL ERROR IN THE RETURN AND; II) AN INCORRECT CLAIM, IF SUCH INCORRECT CLAIM IS APPARENT FROM ANY INFORM ATION IN THE RETURN FILED BY THE ASSESSEE IN THIS CASE. PAGE 1 OF THE INTIMATION SHOWS INCOME FROM BUSINESS OR PROFESSION AS PROVIDE D BY THE I.T.A. 1937/DEL/2017 ASSESSMENT YEAR 2013-14 5 TAXPAYER IN RETURN OF INCOME AT RS. 10,84,781/- AND THE INCOME FROM BUSINESS OR PROFESSION AS COMPUTED U/S 143(1) AT RS. 19,16,706/- BUT NO FURTHER INFORMATION OR THE NATUR E OF ADJUSTMENT IS DISCERNIBLE FROM THE SAID INTIMATION. THE ITAT INDORE BENCH IN THE CASE OF ACIT VS. SOM DISTILLERI ES & BREWERIES LTD. IN ITA NO. 248/IND/2012 DEALT WITH A SIMILAR I SSUE AND ADJUDICATED AS UNDER: ..AS RIGHTLY SUBMITTED ON BEHALF OF THE APPELLANT IN THE IMPUGNED INTIMATION U/S 143(1) OF THE ACT, THE REAS ONS FOR NOT ALLOWING THE AFOREMENTIONED CLAIM, WERE NOT ASSIGNE D. FROM THE RETURN OF INCOME AND ITS ACCOMPANYING DOCUMENTS , IT IS SEEN THAT THE APPELLANT HAD CORRECTLY COMPUTED THE TOTAL INCOME AT NIL FIGURE AND THE ITO, CPC HAD NOT ASSIG NED ANY JUSTIFICATION FOR NOT ALLOWING SET OFF OF THE BROUG HT FORWARD LOSSES OF RS. 7,95,38,033/- TO BE SET OFF AGAINST T HE INCOME OF THE CURRENT YEAR. THE FACTUAL INFIRMITY, IF THERE B E ANY, IN THE COMPUTATION OF TOTAL INCOME FILED BY THE APPELLANT, WAS ALSO NOT SPECIFIED BY THE A.O. SECTION 143(1) DOES NOT A UTHORISE MAKING SUCH NON SPEAKING UNILATERAL ADJUSTMENTS. IT IS TRITE THAT U/S 143(1)(A) PRIMA FACIE ADJUSTMENTS IS PERMI SSIBLE ONLY IN RESPECT OF CLAIMS, THE INCORRECTNESS OF WHICH IS APPARENT FROM INFORMATION IN THE RETURN. DEBATABLE CLAIMS AR E NOT LIABLE TO SUCH PRIMA FACIE ADJUSTMENTS. IN THE CASE OF THE APPELLANT, UNDER CONSIDERATION, THERE IS NOTHING IN THE RETURN OR IN THE COMPUTATION OF TOTAL INCOME TO SUGGEST THAT THE IMP UGNED I.T.A. 1937/DEL/2017 ASSESSMENT YEAR 2013-14 6 CLAIM OF SET OFF OF BROUGHT FORWARD LOSSES, WAS PRI MA FACIE INCORRECT. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, THE DENIAL OF THE IMPUGNED CLAIM, IN MY CONSIDERED VIEW, COULD BE DONE ONLY AFTER ISSUE OF NOTICE TO THE APP ELLANT, SINCE THE NON- SPEAKING UNILATERAL DENIAL OF THE IMPUGNED CLAIM WAS CLEARLY OUTSIDE THE AMBIT OF PRIMA FACIE ADJUST MENTS ENVISAGED IN SECTION 143(1)(A) OF THE ACT AND THAT THE A.O. DID NOT HAVE SUFFICIENT MATERIAL TO HOLD THAT THE IMPUG NED CLAIM WAS PRIMA FACIE INADMISSIBLE. UNDER THE PROVISIONS OF SECTION 143(1)(A) OF THE ACT, THE A.O. WAS NOT ENTITLED TO ALLOW OR DISALLOW THE CLAIM BUT COULD ONLY MAKE ADJUSTMENT O N A PRIMA FACIE SCRUTINY OF THE RETURN AND THE ACCOMPAN YING DOCUMENTS FILED BY THE APPELLANT. AS ALREADY STATED , SINCE THE IMPUGNED NON-SPEAKING UNILATERAL DENIAL OF THE APPELLANT'S CLAIM, WAS WITHOUT ISSUE OF NOTICE TO T HE APPELLANT, IN MY CONSIDERED VIEW, THE A.O. TRAVELLE D BEYOND THE SCOPE OF THE POWERS CONFERRED UPON HIM BY SECTI ON 143(1)(A) AND THUS WRONGLY DISALLOWED THE IMPUGNED CLAIM WHICH BY NO STRETCH OF IMAGINATION COULD COME WITHI N THE AMBIT OF PRIMA FACIE ADJUSTMENTS U/S 143(1)(A) OF T HE ACT. 1.2 THE RELEVANCE OF SECTION 143(1)(A), UNDER WHICH THE A.O. WAS ACTING, COULD NOT HAVE BEEN OVERLOOKED. THE IMP ORTANCE OF SCOPE OF POWERS U/S 143(1)(A) LIES IN SEVERE LIM ITATION OF POWERS OF THE A.O. UNDER THIS SECTION. ANY RELIEF T HAT HE CAN GRANT OR THE DISALLOWANCE HE CAN MAKE, UNDER THIS S ECTION MUST BE SOLELY ON THE BASIS OF MATERIAL ON RECORD. TO THAT EXTENT I.E. 'DETERMINATION OF LIABILITY AS ASCERTAI NABLE FROM THE I.T.A. 1937/DEL/2017 ASSESSMENT YEAR 2013-14 7 RETURN FILED', THIS SECTION HAS BEEN HELD TO BE SOM EWHAT ANALOGOUS TO SECTION 154 OF THE ACT. IN KHATAU JUNK AR LTD. & ANR. VS. K.S.PTHANIA, DCIT & ANR. (1992) 196 ITR 55 (BOM), THE BOMBAY HIGH COURT EXPLAINED THE SCOPE OF THESE POWERS AS FOLLOWS : 'IN FACT THE WORDING OF THIS PROVISION ITSELF MAKES THIS VERY CLEAR. UNDER CLAUSE (II) OF THE PROVISO T O SECTION 143(1)(A), ANY LOSS CARRIED FORWARD, DEDUCTION ALLO WANCE OR RELIEF HAS TO BE ALLOWED ON THE BASIS OF THE INFORM ATION AVAILABLE IN SUCH RETURN OR ACCOUNTS OR DOCUMENTS ACCOMPANYING IT. SIMILARLY, UNDER CLAUSE (III) OF T HE PROVISO, TO DISALLOW ANY DEDUCTION, ALLOWANCE OR RELIEF CLAIMED , SUCH DEDUCTION, ALLOWANCE OR RELIEF MUST BE SUCH AS IS, ON THE BASIS OF THE INFORMATION AVAILABLE IN THE RETURN, A CCOUNTS OR DOCUMENTS, PRIMA FACIE INADMISSIBLE. THE A.O., THER EFORE, HAS NO POWER TO GO BEYOND OR BEHIND THE RETURN, ACCOUNT S OR DOCUMENTS, EITHER IN ALLOWING OR IN DISALLOWING ANY SUCH DEDUCTION, ALLOWANCE OR RELIEF. 1.3 IN VIEW OF THE ABOVE ANALYSIS, IN MY CONSIDERED VIEW, THE A.O. COULD NOT HAVE MADE THE IMPUGNED PRIMA FACIE ADJUSTMENT CANVASSED BY THE APPELLANT WITHIN THE LI MITED SCOPE OF HIS POWERS U/S 143(1)(A) OF THE ACT. FROM THE RETURN AND ITS ACCOMPANYING DOCUMENTS, THE IMPUGNED CLAIM OF THE APPELLANT WAS CORRECT AND HENCE WAS NOT PRIMA FACIE DISALLOWABLE. THE A.O. IS ACCORDINGLY DIRECTED TO A LLOW THE IMPUGNED CLAIM OF THE APPELLANT BY DELETING THE AFOREMENTIONED UNLAWFUL PRIMA FACIE ADJUSTMENT AND CONSEQUENTLY TO ACCEPT THE INCOME RETURN AT NIL.' I.T.A. 1937/DEL/2017 ASSESSMENT YEAR 2013-14 8 6. ALTHOUGH THE LD. CIT (A) HAS, DURING THE COURSE OF APPELLATE PROCEEDINGS, EXAMINED THE ISSUE AND HAS ALSO DISCUS SED SOME ERRORS IN THE COMPUTATION OF INCOME FILED BY THE AS SESSEE BUT IT IS VERY MUCH EVIDENT THAT THESE ERRORS ARE NOT ERRORS OR MISTAKES WHICH WERE APPARENT FROM ANY INFORMATION IN THE RET URN AND, THEREFORE, THE ACTION OF THE CPC IN MAKING THESE PR IMA FACIE ADJUSTMENT IS PATENTLY WRONG. WE AGREE WITH THE CO NTENTIONS OF THE LD. AR THAT PROPER RECOURSE WOULD HAVE BEEN TO ISSUE A NOTICE U/S 143(2) OF THE ACT IN CASE FURTHER CLARIFICATION /EXPLANATION WAS REQUIRED FROM THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DIRECT THE ASSESSING O FFICER TO DELETE THIS ADDITION. 7. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALLO WED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 4 TH OCTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 4 TH OCTOBER, 2017 GS I.T.A. 1937/DEL/2017 ASSESSMENT YEAR 2013-14 9 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR