M/s Baldev Electricals, Ludhiana V. ITO, W-II(I), Ludhiana

ITA 989/CHANDI/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9914 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 17-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K DHIR
• Assessee Lawyers: MONVIKA KAUSHALCA
• Keywords: Audit objection; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH SMC CHANDIGARH !', # BEFORE: SMT. DIVA SINGH, JM !./ ITA NO. 989/CHD/2018 ASSESSMENT YEAR : 2012-13 M/S BALDEV ELECTRICALS, B-542/2, B-VII, BOOKS MARKET, LUDHIANA. VS THE ITO, WARD-II(1), LUDHIANA. PAN NO: AAAFB98971C APPELLANT RESPONDENT ! ASSESSEE BY : MS.MONVIKA KAUSHAL,CA ' ! REVENUE BY : SHRI A.K.DHIR, SR.DR # $ % DATE OF HEARING : 13.05.2019 &'() % D ATE OF PRONOUNCEMENT : 30.05.2019 &'/ ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 06.06.2018 OF CIT(A) -1, LUDHIANA PERTAINING TO 2012-13 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : 1. THAT THE LD. CIT (A) HAS ERRED IN LAW AND FACTS OF THE CASE, WHILE CONFIRMING THE ADDITION RS 293864/- WITHOUT EXAMINING THE FACTS , EVIDENCE AND DOCUMENTS ON RECORD . 2. THAT THE LD. CIT(A), HAS ERRED IN LAW AND FACTS OF THE CASE AS THE INITIATION OF THE REASSESSMENT PROCEEDINGS IS BASED ON MERE CHANGE OF OPINION AND THE ORDER HAS BEEN PASSED IN HASTE WITHOUT SATISFACTORILY DISPOSING TH E GROUNDS FILED AT THE TIME OF THE APPELLATE PROCEEDINGS. THEREFORE, ORDER PASSED U/S 143(3) W.R .T 147 OF THE IT ACT IS ILLEGAL, ARBITRARY AND CONTRARY TO THE LAW AND FACTS ON RECORDS. 3. THAT THE LD. CIT(A), HAS ERRED IN LAW, WHILE NOT CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT THE ALLOWABILITY OF DEDUCTION REGARDI NG THE LOSS ON ACCOUNT OF FIRE WAS DULY DISCUSSED AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS AT THE TIME OF AUDIT OBJECTION RAISED BY THE AUDIT PARTY. 4. THAT THE LD. CIT(A) HAS ERRED IN NOT RELYING ON THE VARIOUS JUDGEMENTS OF HON'BLE SUPREME COURT AND HIGH COURTS EVEN WITHOUT DISCUSSI NG AND DISTINGUISHING THE JUDGEMENTS CITED IN THE WRITTEN SUBMISSIONS. 5. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, AMEND OR DELETE ANY GROUNDS OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. ITA 989/CHD/2018 A.Y. 2012-13 PAGE 2 OF 4 2. THE LD. AR INVITING ATTENTION TO THE ASSESSMENT ORDER DATED 30.07.2014 PASSED U/S 143(3) OF THE ACT SUBMITTED T HAT NO DOUBT IN THE SAID ASSESSMENT ORDER, THERE IS NO DISCUSSION ON TH E ISSUE, HOWEVER, BEFORE PASSING OF THE SAID ORDER, SPECIFIC QUERIES WERE RAISED BY THE AO. FOR THE SAID PURPOSE, ATTENTION WAS INVITED TO PAGE 37 OF THE PAPER BOOK WHICH IS LETTER ADDRESSED BY THE AO DATED 21.07.201 4 REQUIRING THE MANAGER OF UNITED INDIA INSURANCE CO. LTD., LUDHIAN A TO GIVE DETAILS OF THE AMOUNT OF CLAIM SETTLED IN THE CASE OF THE ASSE SSEE ON ACCOUNT OF LOSS BY FIRE DURING THE F.Y. 2011-12 RELEVANT TO THE A.Y . 2012-13. THE DETAILS AS TO WHAT CRITERIA WAS ADOPTED TO CALCULATE THIS F IGURE WITH DOCUMENTARY EVIDENCE HAD BEEN SOUGHT. IT WAS SUBMITTED THAT THE ASSESSEE WAS ALSO REQUIRED TO MAKE THESE DETAILS AVAILABLE BY SPECIFI C QUERIES RAISED BY THE AO AND THESE DETAILS ARE AVAILABLE AT PAGE 33 TO 36 WHEREIN VIDE TWO SPECIFIC LETTERS DATED 02.03.2014 AND 24.07.2014, THE ASSESSEE GAVE DETAILS THAT THE LOSS ON ACCOUNT OF FIRE AMOUNTING TO RS. 41,81,788/- WAS CLAIMED. IT WAS REDUCED TO RS. 38 LACS BY THE INSU RANCE COMPANY AND THE SPECIFIC FACTS WHICH WARRANTED REDUCTION ARE SE T OUT IN PARA 2 OF THE ASSESSEE'S REPLY AVAILABLE AT PAGES 35 AND 36. FOR READY REFERENCE THE SAID REPLY IS EXTRACTED HEREUNDER : 1. THAT THE BUSINESS PREMISES OF THE ASSESSEE I.E. GOD OWN WHICH WAS SET ON FIRE IN THE ASSESSMENT YEAR 2012-13 AND GOODS WORTH RS. 41,81.7 88/- WERE DESTROYED. THE ASSESSEE MADE CLAIM TO INSURANCE COMPANY FOR RS.418 I788/-AGAINST WHICH THE CLAIM RECEIVED FROM THE UNITED INSURANCE COMPANY WA S RS. 2473375/- WHICH HAS DULY BEEN CREDITED TO OUR BANK ACCOUNT. COPY OF BAN K STATEMENT HAS ALREADY BEEN SUBMITTED. 2. AS REGARDS THE DIFFERENCE OF LOSS LODGED TO UNITED INSURANCE COMPANY RS.3800000/- AND CLAIM MADE IN BOOKS OF ACCOUNTS I. E. RS.41,81,788/-, IT IS DUE TO THE FACT THAT STOCK STATEMENT GIVEN TO UNITED INSUR ANCE COMPANY IS EXCLUSIVE OF VAT THE DETAILS ARE AS FOLLOWS: STOCK TOTAL AMOUNT (INCLUDING VA T) VAT AMOUNT EXCLUDING VAT 13.75% RS.3001415/- RS.362808/- RS. 2638607/- 5.5% RS. 1180373/- RS. 61536/- RS. 1118837/- TOTAL RS. 4181788/- RS. 424344/- FROM THE ABOVE TABLE IT IS CLEAR THAT RS.424344/- I S THE AMOUNT OF VAT WHICH IS INCLUDED IN THE AMOUNT DEBITED TO PROFIT & LOSS ACC OUNT RS.4181788/-.HENCE THERE IS NO DIFFERENCE IN THE AMOUNT OF STOCK FILED WITH INSURANCE COMPANY AND THE ITA 989/CHD/2018 A.Y. 2012-13 PAGE 3 OF 4 ACCOUNT OF MATERIAL DAMAGED IN FIRE ACCOUNT AS SHOW N IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 2.1 ACCORDINGLY, IT WAS HER SUBMISSION THAT RE-OP ENING IN THE SAID BACKGROUND WAS NOT WARRANTED AND EVEN OTHERWISE, TH E SAID EXPLANATION HAVING BEEN MADE AVAILABLE TO THE AO IN THE SECOND ROUND ALSO CANNOT BE REJECTED WITHOUT GIVING ANY FINDING. THE IMPUGNED O RDER CONFIRMING THE ADDITION MADE AS INCOME HAVING ESCAPED ASSESSMENT, IT WAS SUBMITTED, ON FACTS HAS BEEN WRONGLY CONFIRMED. 3. THE LD. SR.DR THOUGH RELIED UPON ORDERS OF THE AUTHORITIES BELOW HOWEVER, WAS UNABLE TO GIVE ANY REASON AS TO WHY IT HAS BEEN LEFT UNADDRESSED. IT IS SEEN THAT IDENTICAL EXPLANATION WAS OFFERED TO THE AO IN THE FIRST ROUND (COPY AT PAGE 33-37) WHICH IS SIMILAR T O THE EXPLANATION AT PAGE 6 BEFORE AO IN THE SECOND ROUND. FOR READY REFERENCE, THE EXPLANATION EXTRACTED IN THE SECOND ROUND BEFORE THE AO IS REPRODUCED FRO M PAGE 6 OF THE ASSESSMENT ORDER PASSED U/S 147 HEREUNDER : DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE IN I TS LETTER DATED 24.07.2017 FOR CLAIM OF ITS LOSS OF RS.41,81,788/- HAD SUBMITTED AS UNDER: ' THAT THE BUSINESS PREMISE OF THE ASSESSEE I.E. GO DOWN WHICH WAS SET ON FIRE IN THE ASSESSMENT YEAR 2012-13 AND GOODS WORTH RS. 41,81,7 88/- WERE DESTROYED. THE ASSESSEE MADE CLAIM TO INSURANCE COMPANY FOR RS.41,81,788/-A GAINST WHICH THE CLAIM RECEIVED FROM THE UNITED INSURANCE COMPANY WAS RS.2473375/- WHICH HAS DULY BEEN CREDITED TO OUR BANK ACCOUNT. COPY OF BANK STATEMENT HAS ALREADY BEEN SU BMITTED. AS REGARDS THE DIFFERENCE OF LOSS LODGED TO UNITED INSURANCE COMPANY RS.3800000/- AND CLAIM MADE IN BOOKS OF ACCOUNTS I.E. RS.41,81,788/- , IT IS DUE TO THE FACT THAT STOCK STATEMENT GIVEN TO UNITED INSURANCE COMPANY IS EXCLUSIVE OF V AT. THE DETAILS ARE AS FOLLOWS STOCK TOTAL AMOUNT (INCLUDING VAT) VAT: AMOUNT EXCLUDING VAT 13.75% RS.3001415/- RS. 362808/- RS.2638607/- 5.5% RS. 1180373/- RS. 61536/- RS. 1 118837/- TOTAL : RS. 4181788/- RS. 424344/- FROM THE ABOVE TABLE IT IS CLEAR THAT RS.4.24.344/- IS THE AMOUNT OF VAT WHICH IS INCLUDED IN THE AMOUNT DEBITED TO PROFIT & LOSS ACCOUNT RS.4181 788/- . HENCE THERE IS NO DIFFERENCE IN THE AMOUNT OF STOCK FILED WITH INSURANCE COMPANY AN D THE ACCOUNT OF MATERIAL DAMAGED IN FIRE ACCOUNT AS SHOWN IN THE BOOK OF ACCOUNTS OF TH E ASSESSEE.' 4. ACCORDINGLY, IN THE PECULIAR FACTS AND CIRCUMSTA NCES OF THE PRESENT CASE, I FIND MYSELF UNABLE TO CONFIRM THE ORDER OF THE CI T(A) EITHER ON RE-OPENING OR ON MERITS. IN THE LIGHT OF THE THIRD PARTY QUERIES RAISED BY THE ASSESSING OFFICER IN THE FIRST ROUND WHICH HAVE BEEN REPLIED TO AND ON A READING THEREFROM, IT IS EVIDENT THAT THE EXPLANATION OFFER ED BEFORE THE AO IN THE SECOND ROUND OF HIS ORDER BEING A REPETITION OF TH E EXPLANATION OFFERED IN THE ITA 989/CHD/2018 A.Y. 2012-13 PAGE 4 OF 4 FIRST ROUND WHICH HAD BEEN ACCEPTED AND REMAINS UN- ASSAILED IN THE PRESENT PROCEEDINGS ALSO. I FIND THAT IN THE FACTS AS THEY STAND, THE EXPLANATION OFFERED CANNOT BE OUSTED WITHOUT ANY JUSTIFICATION. ON CONS IDERING THE SAME, I FIND THAT THE CLAIMS OF THE ASSESSEE ARE ALLOWABLE. IN THE ABSENCE OF ANY REBUTTAL ON FACTS, I FIND THAT THERE IS NO BASIS FOR RE-OPEN ING IN THE FACTS OF THE PRESENT CASE AS THE ISSUE IS ONE ON WHICH THE AO HAD ALREAD Y MADE QUERIES AND EXAMINED THE ISSUE. NO DOUBT THE SAID ISSUE HAS NO T BEEN DISCUSSED IN THE ORDER BUT THE MERE LACK OF DISCUSSION IN THE ORDER PER-SE CANNOT LEAD TO THE CONCLUSION THAT THE ISSUE IN THE FACTS OF THE PRESE NT CASE CAN BE SAID TO HAVE REMAINED UNEXAMINED. IT IS SEEN THAT THE RE-OPENIN G HAS BEEN DONE BY THE AO ON THE BASIS OF AN AUDIT OBJECTION AND THE EXPLA NATION EXTRACTED BY THE AO IN THE SECOND ROUND FOR REASONS BEST KNOWN TO THE A O HAS BEEN LEFT UNADDRESSED. ACCORDINGLY, I FIND THAT EVEN ON MERIT S, THE ADDITION CANNOT BE SUSTAINED. ACCORDINGLY, GROUNDS RAISED BY THE ASSE SSEE ARE ALLOWED. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30.05. 2019. SD/- ( !' ) (DIVA SINGH) # / JUDICIAL MEMBER * +', -. /. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT -3. + + # 0 / CIT 4. + + # 0 ( )/ THE CIT(A) 5. .1 3 , + % +3 , 4567 / DR, ITAT, CHANDIGARH 6. 6 8$ / GUARD FILE +', # / BY ORDER, 9 ' / ASSISTANT REGISTRAR