HANDMADE PAPER & BOARD IND., Jaipur V. ACIT, Jaipur

ITA 996/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54193 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 29-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Assessee Lawyers: HANIF KHAN; Z A K HAN
• Keywords: Depreciation; Corroborative evidences
• Section: 143(3); 194C; 263; 2

Judgement Text

1 ITA 996(2)-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 996/JP/2010 ASSTT. YEAR : 2007-08. M/S. HANDMADE PAPER & BOARD IND., VS. COMMISSIONER OF INCOME-TAX, 1/282, GRAMODYOG ROAD, JAIPUR-III, SANGANER, JAIPUR. JAIPUR. ITA NO. 111/JP/2011 ASSTT. YEAR : 2007-08. M/S. HANDMADE PAPER & BOARD IND., VS. THE ACIT, CI RCLE-7, 1/282, GRAMODYOG ROAD, BABA SIDHNATH BHAWAN, SANGANER, JAIPUR. BEHIND NEW VIDHAN SABHA, JAIP UR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HANIF KHAN & SHRI Z.A. K HAN RESPONDENT BY : SHRI SUBHASH CHANDRA DATE OF HEARING : 22.09.2011 DATE OF PRONOUNCEMENT : 30.09.2011 ORDER DATE OF ORDER : 30/09/2011. PER R.K. GUPTA, J.M. THESE ARE TWO APPEALS BY ASSESSEE AGAINST THE ORDE R UNDER SECTION 263 AND AGAINST ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 20 07-08 RESPECTIVELY. WE WILL TAKE FIRST APPEAL UNDER SECTION 263. 2. THE ASSESSMENT IN THIS CASE WAS COMPLETED ON 24. 12.2009 UNDER SECTION 143(3) OF THE IT ACT. CERTAIN ADDITIONS BY INVOKING PROVISIO NS OF SECTION 145(3) WERE MADE AT RS. 2 12,25,525/- AND RENTAL INCOME FROM HOUSE PROPERTY A T RS. 20,40,000/-. ASSESSEE FILED APPEAL AGAINST THE ORDER OF AO. THE LD. CIT (A) ALL OWED THE APPEAL IN PART AND AGAINST SUSTAINING THE ADDITION, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL WHICH IS LISTED AS ITA NO. 111/JP/2011. 3. ON EXAMINATION OF RECORDS, THE LD. CIT FOUND THA T ORDER OF AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE . THE LD. CIT NOTED THAT AUDIT REPORT UNDER SECTION 44AB WAS NOT FURNISHED IN PRESCRIBED FORM NO. 3CD, NO TDS WAS MADE ON ACCOUNT OF DISCOUNT AND COMMISSION PAID OF RS. 27 L ACS OR ODD. THE LD. CIT NOTED THAT ASSESSEE FIRM HAS PAID RS. 41 LACS OR ODD ON ACCOUN T OF DESIGNING AND PRINTING CHARGES AND THE ASSESSEE IS LIABLE TO MAKE TDS AS PER SECTI ON 194C OF THE IT ACT AND, THEREFORE, PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPL ICABLE. THE LD. CIT FURTHER NOTED THAT ASSESSEE FIRM HAD PAID INTEREST OF RS. 1.21 CRORES OR ODD AGAINST RS. 11.08 CRORES OR ODD BUT HAS NOT CHARGED ANY INTEREST ON ADVANCES MADE T O VARIOUS PARTIES AMOUNTING TO RS. 1.51 CRORES OR ODD. THE LD. CIT FURTHER NOTED THAT ASSESSEE HAS CLAIMED DEPRECIATION WHICH HAS NOT BEEN CONSIDERED BY AO WHETHER THE SAM E WAS RIGHTLY CLAIMED OR NOT. SIMILARLY, SOME MORE DEFECTS HAVE BEEN POINTED BY T HE LD. CIT. IN VIEW OF THESE FACTS, A SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE. AFTER CONSIDERING THE SHOW CAUSE, THE LD. CIT DISCUSSED THE OBJECTIONS RAISED BY ASSESSEE AND FOUND THAT AO HAS NOT MADE PROPER ENQUIRY FOR THE PURPOSE OF EXAMINING THE MATTER. AC CORDINGLY, THE LD. CIT SET ASIDE THE ORDER OF AO AND DIRECTED TO REASSESS OR AMEND THE A SSESSMENT ORDER IN VIEW OF POINTS DISCUSSED ABOVE AFTER GIVING OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. 4. THE LD. COUNSEL OF THE ASSESSEE WHO APPEARED, ST ATED THAT ALL THE OBJECTIONS RAISED BY LD. CIT ARE NOT CORRECT. THE ASSESSEE HAS FILED ALL THE DETAILS BEFORE AO WHICH WERE 3 ASKED FOR AND THEREAFTER THE LD. AO HAS PASSED A SP EAKING ORDER AND CERTAIN ADDITIONS WERE MADE WHICH WERE CHALLENGED BEFORE LD. CIT (A). THEREFORE, THE LD. CIT WAS NOT JUSTIFIED IN INITIATING PROCEEDINGS UNDER SECTION 2 63. IT WAS FURTHER SUBMITTED THAT OBJECTIONS RAISED BY LD. CIT WERE MET WITH AND COMP LETE DETAILS ALONG WITH SUPPORTING EVIDENCE WERE FILED. HOWEVER, THEY HAVE BEEN BRUSHE D ASIDE BY LD. CIT BY MAKING HIS OBSERVATIONS. CERTAIN RECEIPTS WERE EXEMPT AND EXE MPTION CERTIFICATE WAS FILED. IN THIS REGARD IT HAS BEEN STATED THAT BUT LD. CIT THAT THE CERTIFICATE IS NOT VALID. THEREFORE, LD. CIT WAS NOT JUSTIFIED IN DIRECTING THE AO TO PASS A FRESH ORDER OR MODIFY THE ORDER IN VIEW OF THE OBSERVATIONS MADE BY HIM. ALTERNATIVEL Y IT WAS SUBMITTED THAT THE AO SHOULD BE DIRECTED TO PASS A FRESH ORDER WITHOUT DRAWING A NY INFLUENCE FROM THE OBSERVATION OF LD. CIT. 5. ON THE OTHER HAND, THE LD. D/R FIRST PLACED RELI ANCE ON THE ORDER OF LD. CIT. IT WAS FURTHER SUBMITTED THAT THE LD. CIT HAS DISCUSSED TH E ISSUE IN DETAIL, WHATEVER THE OBJECTIONS WERE RAISED BY HIM THEY WERE CORRECT AS THE AO HAS NOT DISCUSSED ABOUT THOSE FACTS NOTED BY LD. CIT. THE ORDER OF AO DOES NOT S PELL OUT ANYTHING ABOUT THE OBJECTIONS NOTED BY LD. CIT. THEREFORE, IN VIEW OF PROVISIONS OF SECTION 263, THE LD. CIT WAS JUSTIFIED IN SETTING ASIDE THE ORDER OF ASSESSMENT MADE THE AO. HOWEVER, IT WAS FURTHER SUBMITTED THAT THE LD. CIT HAS SET ASIDE THE ORDER OF AO TO PASS A FRESH ORDER. THEREFORE, THE AO WILL PASS A FRESH ORDER AFTER GIVING OPPORTU NITY TO THE LD. A/R. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED T HEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERI AL ON RECORD, WE FIND THAT LD. CIT WAS JUSTIFIED IN INITIATING THE PROCEEDINGS UNDER SECTI ON 263 AS VARIOUS DEFECTS AND POINTS NOTED BY LD. CIT WERE NOT CONSIDERED BY THE AO. ON A QUERY FROM THE BENCH, THE LD. A/R 4 HAS FAIRLY ACCEPTED THAT NO QUESTIONNAIRE WAS ISSUE D BY AO, THEREFORE, IT IS CLEAR THAT ON THE POINTS WHICH HAS BEEN NOTED BY LD. CIT, NO ENQU IRY WAS MADE BY AO. THEREFORE, THE ORDER OF AO CAN BE EASILY TERMED AS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, WITHOUT GOING INTO DETAIL FURTHER, WE HO LD THAT LD. CIT WAS JUSTIFIED IN INITIATING PROCEEDINGS UNDER SECTION 263 AND SETTIN G ASIDE THE ORDER OF AO FOR PASSING A FRESH ORDER. HOWEVER, WE WOULD LIKE TO MAKE IT CLEA R HERE THAT THE AO WILL NOT BE INFLUENCED BY THE OBSERVATIONS/FINDINGS OF LD. CIT AS HE IS SUPPOSED TO PASS A FRESH ORDER AFTER APPLYING HIS MIND AND AFTER AFFORDING OPPORTU NITY OF BEING HEARD TO THE ASSESSEE, THOUGH HE WILL CONSIDER THE POINTS OF ISSUE NOTED B Y LD. CIT ON WHICH NO ENQUIRY WAS MADE BY THE AO WHILE PASSING ORIGINAL ORDER. IT IS FOR FURTHER CLARIFICATION THAT THE LD. CIT HAS SET ASIDE THE ASSESSMENT ORDER, THEREFORE, THE ENTIRE ASSESSMENT WILL BE COMPLETED AFRESH. WHATEVER THE ADDITIONS WERE MADE EARLIER, THEY ARE ALSO BEING SET ASIDE. THEREFORE, THE ENTIRE ASSESSMENT ORDER HAS TO BE CO MPLETED AFRESH. WE ORDER ACCORDINGLY. 7. NOW WE WILL TAKE UP THE APPEAL IN ITA NO. 111/JP /2011 AGAINST THE ORDER OF LD. CIT (A). 8. THE ASSESSEE HAS OBJECTED IN SUSTAINING THE TRAD ING ADDITION OF RS. 12,25,525/- INVOKING THE PROVISIONS OF SECTION 145(3) AND CONFI RMING THE ADDITION OF RS. 20,40,000/- IN RESPECT OF RENTAL INCOME. 9. WE HAVE ALREADY DISPOSED OFF THE APPEAL AGAINST THE ORDER UNDER SECTION 263 BY WHICH THE ENTIRE ASSESSMENT ORDER WAS SET ASIDE BY THE LD. CIT, AND WE HAVE CONFIRMED THE FINDING OF LD. CIT. THEREFORE, IN A WAY, THIS A PPEAL OF THE ASSESSEE HAS BECOME INFRUCTUOUS AS THE ENTIRE ORDER HAS BEEN SET ASIDE BY LD. CIT. HOWEVER, FOR THE SAKE OF CLARIFICATION, IT IS PRESUMED THAT LD. CIT HAS SET ASIDE THE ASSESSMENT TO COMPLETE 5 ASSESSMENT ON THE POINTS OF ISSUE NOTED BY HIM, THE N IN THAT CASE WE ARE OF THE VIEW THAT THESE TWO ISSUES SHOULD BE SET ASIDE TO THE FILE OF AO TO PASS A FRESH ORDER INCLUDING THE POINT OF ISSUE NOTED BY LD. CIT WHILE PASSING ORDER UNDER SECTION 263. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE SHOULD BE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 10. IN THE RESULT, APPEAL AGAINST ORDER UNDER SECTI ON 263 IS DISMISSED AND THE APPEAL AGAINST THE ORDER OF LD. CIT (A) FOR THE SAME ASSES SMENT YEAR IS ALLOWED FOR STATISTICAL PURPOSE. 11. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 .09.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- M/S. HANDMADE PAPER & BOARD IND., SANGANER, JAIPUR. THE CIT, JAIPUR-III, JAIPUR. THE ACIT, CIRCLE-7, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 996(2)/JP/2010) BY ORDER, AR ITAT JAIPUR.