West Bengal Agro Industries Corporation Ltd., Kolkata V. Principal CIT - 6, Kolkata, Kolkata

ITA 963/KOL/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4436 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 10-05-2018
• Court: TRIBUNAL

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.963/KOL/2018 ASSESSMENT YEAR: 2013-14 WEST BENGAL AGRO INDUSTRIES CORPORATION LTD., 23 B.N.S. ROAD, 3 RD FLOOR, KOLKATA-700 001 [ PAN NO.AAACW 3323 M ] / V/S . PRINCIPAL COMMISSIONER OF INCOME TAX-6, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI V.N. DUTTA, ADVOCATE /BY RESPONDENT SHRI RADHEY SHYAM, CIT-DR /DATE OF HEARING 18-09-2019 /DATE OF PRONOUNCEMENT 27-11-2019 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2013-14 ARISES AGAINST THE PRINCIPAL COMMISSIONER OF INCOME TAX-4, KOLKATAS ORDER DATED 28.03.2018 PASSED IN CASE M.NO.PR.CIT-2/HQRS.-2/KOL/U/S.263/WB AGRO IND. CORP .LTD/2017-18.1177/73 INVOLVING PROCEEDINGS 263 OF THE INCOME TAX ACT, 19 61; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. WE ADVERT TO THE BASIC RELEVANT FACTS. THIS ASSE SSEE IS A COMPANY TRADING IN FERTILIZERS, SEEDS & PESTICIDES, AGRICULTURE MACHIN ERIES IMPLEMENTS, SPARE PARTS ETC. TO FARMER BASE INDIVIDUALS AND GOVT. SCHEMES. IT FILED ITS RETURN ON 29.09.2013 STATING NIL ITA NO.963/KOL/2018 ASSESSMENT YEAR 2 013-14 W.B.AGRO INDS. CORPN.. LTD. VS PCIT-6, KOL. PAGE 2 INCOME ALONGWITH LOSS OF 997,21,463/-. THE ASSESSING OFFICER FRAMED REGULAR ASSESSMENT IN ISSUE IN ITS CASE DATED 18.03.2016 DI SALLOWING PROVISIONS OF LEAVE SALARY AND GRATUITY INVOLVING SUMS OF 47.65 LAKHS AND 50.42 LAKHS; RESPECTIVELY TOTALING TO 98.07 LAKHS. 3. CASE FILE SUGGESTS THAT THE PCIT THEREAFTER ISSU ED SHOW CAUSE DATED 08.03.2018 FOR THE REASON THAT THE ASSESSMENT RECORDS REVEALED AN AMOUNT OF PRIOR PERIOD EXPENSES OF 629 LAKHS DEBITED / SHOWN IN THE OTHER EXPENSES F OR THE FINANCIAL YEAR 2012-13. HE WAS OF THE VIEW THAT SUCH PRIOR PERIOD EXPENSE I S NOT AN ALLOWABLE HEAD WHICH RESULTED IN UNDERSTATEMENT OF CORRESPONDING TAXABLE INCOME RESULTING IN ERROR CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. THE ASSES SEE FILED ITS REPLY CONTESTING THE SAID REVISION PROPOSAL ON THE GROUND THAT ITS PRIOR PERI OD EXPENSES ARE VERY MUCH ALLOWABLE AS THE SAME WAS MADE BY WAY OF AN ACCOUNTING ADJUST MENT MADE BY THE CAG, GOVERNMENT OF WEST BENGAL AFTER VERIFICATION OF ACC OUNTANT GENERAL BENGAL. THE PCIT HAS DECLINED THE SAME IN HIS REVISIONS DIRECTI ON UNDER CHALLENGE READING AS FOLLOWS;- 4. I HAVE CAREFULLY CONSIDERED AND PERUSED THE MAT ERIAL ON RECORD. IT IS OBSERVED THAT THE ASSESSEE COMPANY HAS FAILED TO FU RNISH THE RELEVANT DETAILS, EVIDENCES AND EXPLANATION IN REGARD TO PRIOR PERIOD EXPENSES SHOWN IN THE OTHER EXPENSES WHICH WAS DEBITED TO THE PROFIT & LOSS A/C OF THE FINANCIAL YEAR UNDER CONSIDERATION AMOUNTING TO RS.6.29 LAKHS . SINCE RELEVANT AND TANGIBLE MATERIAL WAS NOT PLACED BEFORE THE AO BY T HE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, THE OPINION FORMED BY THE AO COULD NOT HAVE BEEN PROPER IN THE ABSENCE OF RELEVANT MATERIAL ON RECORD AS THE AO COULD NOT HAV E MADE P0ROPPER VERIFICATIONS. THIS HAS CERTAINLY RENDERED THE ASSE SSMENT ORDER AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE AND THUS AMENABLE TO INTERFERENCE BY PR. CIT BY INVOCATION OF REVISIONARY POWERS U/S/ . 263 OF THE ACT DESPITE BEING ABSENCE OF RELEVANT AND TANGIBLE MATERIAL ON RECORD BEFORE THE AO. THE VIEW WHICH WAS ADOPTED BY THE AO BASED ON MATERIAL AVAILABLE ON RECORD COULD NOT HAVE BEEN ADOPTED BY THE AO AS MATERIAL W AS NOT SUFFICIENT TO COME TO SUCH CONCLUSION AS NO PROPER ENQUIRY/ VERIFICATI ONS WERE CONDUCTED Y THE AO THEREBY MAKING THE ASSESSMENT ORDER ERRONEOUS SO FA R AS PREJUDICIAL TO THE INTEREST OF REVENUE AMENABLE TO EXERCISE OF REVISIO NARY POWERS BY PR. CIT U/S. 263 OF THE ACT. THEREFORE I AM OF THE CONSIDERED VI EW THAT IN THE INSTANT CASE CIRCUMSTANCES DO EXIST FOR INVOCATION OF REVISIONAR Y POWERS BY THE PR. CIT U/S. 263 OF THE ACT. MOREOVER, EXPLANATION 2 TO SECTION 263 IS IN PLACE NOW WITH THE ITA NO.963/KOL/2018 ASSESSMENT YEAR 2 013-14 W.B.AGRO INDS. CORPN.. LTD. VS PCIT-6, KOL. PAGE 3 AMENDMENT BROUGHT IN THE STATUTE BY FINANCE ACT, 2 015 WITH EFFECT FROM -01- 06-2015. 5. AFTER HAVING CONSIDERED THE POSITION OF LAW AND FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, THE ASSESSMENT ORDER PASSED BY TH E AO IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E IN ACCORDANCE WITH THE EXPLANATION 2 BELOW SECTION 263(1) OF THE ACT. AS A RESULT, THE ASSESSMENT ORDER PASSED BY THE AO IS SET ASIDE IN RESPECT OF O NLY THE POINT STATED IN PARA-2 ABOVE. THE ASSESSING OFFICER IS DIRECTED TO INITIAT E FRESH ASSESSMENT PROCEEDINGS & CARRY OUT NECESSARY VERIFICATION & TA KE ACTION ACCORDINGLY AFTER VERIFICATION OF THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE COMPANY. THE ASSESSING OFFICER MUST ALSO PROVIDE REASONABLE OPPO RTUNITY TO THE ASSESSEE COMPANY TO PRODUCE DOCUMENTS & EVIDENCES WHICH IT M AY CHOSE TO RELY UPON FOR SUBSTANTIATING ITS OWN CLAIM. THEREAFTER A FRES H ASSESSMENT ORDER MAY BE PASSED IN ACCORDANCE WITH THE RELEVANT PROVISIONS O F LAW. 4. WE HAVE GIVEN OUR THOUGHT CONSIDERATION TO RIVAL PLEADINGS AGAINST AND IN SUPPORT OF THE PCITS EXERCISE OF HIS REVISION JUR ISDICTION VESTED U/S 263 OF THE ACT. WE MAKE IT CLEAR THAT HE PROPOSED TO REVISE THE ABO VE REGULAR ASSESSMENT ON THE GROUND THAT PRIOR PERIOD EXPENSES ARE NOT AN ALLOWA BLE EXPENDITURE WHEREAS IN HIS FINDINGS UNDER CHALLENGE, THE PCIT HAS TREATED THE ABOVE REGULAR ASSESSMENT IN ISSUE AS ERRONEOUS CAUSING PREJUDICE TO THE INTEREST OF R EVENUE AS PER U/S263(1) EXPLANATION(2) IN VIEW OF THE ASSESSING OFFICERS F AILURE IN CARRYING OUT NECESSARY ENQUIRIES. WE PROCEED IN THESE BACKDROP OF FACTS TH AT VARIOUS JUDICIAL PRECEDENTS (1958) 33 ITR 681 (BOM) COMMISSIONER OF INCOME TAX VS. NAGRI MILLS , (2014) 221 TAXMANN 80 (BOM) COMMISSIONER OF INCOME TAX VS. MAHANGAR GAS LTD. AND HON'BLE GUJARAT HIGH COURTS TAX APPEAL NO.685 OF 2 019 DATED 16.09.2019 PCIT VS. ADANI ENTERPRISES INTER ALIA HOLD THAT WHEN AN ASSESSEE IS ASSESSED AT A UNIFOR M RATE OF TAX YEAR OF RAISING AN EXPENDITURE CLAIM IS OF NO C ONSEQUENCE, PRIOR PERIOD EXPENDITURE CRYSTALLIZED IN THE RELEVANT ACCOUNTING PERIOD IS A LLOWABLE AS A BUSINESS EXPENDITURE IN SUBSEQUENT YEAR AND SUCH AN ISSUE IS A REVENUE NEUT RAL CASE; RESPECTIVELY. LEARNED CIT-DR IS FAIR ENOUGH IN NOT DISPUTING THE CLINCHIN G STATUS OF THE ASSESSEE-COMPANY TO HAVE BEEN ASSESSED AT THE SAME RATE OF TAX IN AL L THESE ASSESSMENT YEARS. THERE IS NO FURTHER QUARREL BETWEEN THE PARTIES ABOUT GENUINENE SS OF THE ASSESSEES PRIOR PERIOD EXPENSES CLAIMED AS EVIDENT FROM THE PCITS ORDER U NDER CHALLENGE. WE THEREFORE HOLD THAT THE IMPUGNED ASSESSMENT NOT DISALLOWING T HE ASSESSEES PRIOR PERIOD EXPENSES IS NEITHER ERRONEOUS NOR DOES IT CAUSE PRE JUDICE TO INTEREST OF THE REVENUE AS ITA NO.963/KOL/2018 ASSESSMENT YEAR 2 013-14 W.B.AGRO INDS. CORPN.. LTD. VS PCIT-6, KOL. PAGE 4 PER HON'BLE APEX COURTS LANDMARK JUDGMENT IN MALABAR INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME TAX (2000) 243 ITR 83 (SC) THAT THE SAME HAVE TO BE SATISFIED SIMULTANEOUSLY BEFORE AN ASSESSMENT IS SO UGHT TO BE REVISED U/S. 263 OF THE ACT. WE ACCORDINGLY REVERSE PCITS ORDER UNDER CHAL LENGE. 5. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 27/11/2019 SD/- SD/- ( &) (( &) (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS ) - 27/11/2019 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-WEST BENGAL AGRO INDUSTRIES CORPORATION LTD., 23B, N.S. ROAD, 3 RD FLOOR, KOLKATA-700001 2. /RESPONDENT-PCIT-6, P-7, CHOWRINGHEE SQUARE, KOLKAT -69 3. , - / CONCERNED CIT 4. - - / CIT (A) 5. . ((, , , /DR, ITAT, KOLKATA 6. 2 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ ,,