PALIWAL JEWELLERS, Jaipur V. ACIT, Jaipur

MA 128/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6494 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Business income; Rectification of order
• Section: 40(b)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM M.A. NO. 128/JP/2018 (ARISING OUT OF ITA NO. 83/JP/2017) FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 M/S PALIWAL JEWELLERS, B-360, HIMMAT NAGAR, TONK ROAD, JAIPUR CUKE VS. ITO, CIRCLE-6(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AANFP2974M VIHYKFKHZ@ APPEL LANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J. C. KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 26/10/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 18/01/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE PRESENT MISC. APPLICATION HAS BEEN FILED BY THE ASSESSEE AGAINST THE DECISION OF THE CO-ORDINATE BENCH IN IT A NO. 83/JP/2017 DATED 15.06.2018. IN ITS APPLICATION, THE ASSESSEE HAS SUBMITTED AS UNDER:- 4.1 THAT THE HONBLE BENCH HAS ACCEPTED THAT THE IN VESTMENT IN THE EXCESS STOCK HAS THEREFORE TO BE BROUGHT TO TAX UNDER THE HEAD BUSINESS INCOME AND NOT UNDER THE HEAD INCOME FRO M OTHER SOURCES BY FOLLOWING THE DECISION OF THIS HONBLE B ENCH IN THE CASE OF M/S BAJRANG TRADERS WHICH HAS BEEN CONFIRMED BY THE HONBLE M.A. NO. 128/JP/2018 M/S PALIWAL JEWELLERS, JAIPUR VS. ITO, JAIPUR 2 RAJ. HIGH COURT VIDE IN CASE OF PR. CIT, ALWAR VS. BAJRANG TRADERS IN DBIT NO. 258/2017 DT. 12.09.2017 AND THE HONBLE ITA T HAS FOLLOWED THE JUDGMENT OF HONBLE RAJ. HIGH COURT. 5. THAT HOWEVER THE HONBLE ITAT AT THE SAME TIME HA S STATED AND HELD AT THE SAME TIME, THE PROVISIONS OF SEC. 115BBE NEED TO BE EXAMINED IN THE INSTANT CASE. AND ALSO HELD THAT THESE TWO GROUNDS ARE ALSO SET-ASIDE TO THE FILE OF THE AO FO R LIMITED PURPOSE OF DETERMINING THE QUANTUM OF REMUNERATION ALLOWABL E U/S 40(B) OF THE ACT TAKING INTO CONSIDERATION THE PROVISIONS OF SEC. 115BBE OF THE ACT. 6.1 THAT THERE IS A MISTAKE BECAUSE THE HONBLE BENC H HAS ADDED A NEW PROVISION OR ISSUE IN THE ORDER WHICH IS NEIT HER THE PART OF THE ASSESSMENT ORDER NOR THE PART OF CIT(A) ORDER N OR ANY GROUNDS OR PLEA BY THE REVENUE REGARDING THE PROVISION OF S EC. 115BBE. 6.2 FURTHER THE CASE OF THE ASSESSEE IS FOR AY 2013 -14 AND THE JUDGMENTS OF M/S BAGRANG TRADERS IS ALSO FOR SAME A Y 2013-14 AND IN SUCH JUDGMENT NEITHER THE HONBLE ITAT NOR TH E HONBLE RAJ. HIGH COURT HAS DIRECTED TO THE LD. AO TO EXAMINE TH E ISSUE WITH REFERENCE TO THE PROVISIONS OF SEC. 115BBE. 6.3 THAT IT IS THE SETTLED LAW THAT THE HONBLE ITAT HAS TO DECIDE THE ONLY ISSUE WHICH IS BEFORE THEM AND CANNOT DECI DE THE ISSUE WHICH IS NOT BEFORE THEM AND AS PER ALL THE RECORD THE ISSUE OF PROVISION OF SEC. 115BBE WAS NOT BEFORE THE HONBLE ITAT NOR IN THE ORDERS OF THE LOWER AUTHORITIES. M.A. NO. 128/JP/2018 M/S PALIWAL JEWELLERS, JAIPUR VS. ITO, JAIPUR 3 6.4 THAT THE ISSUE WAS ONLY TO BE DECIDED THAT THE EXCESS CLOSING STOCK IS TO BE BROUGHT TO BE TAXED UNDER THE HEAD INCOME FROM BUSINESS OR INCOME FROM OTHER SOURCES AND THE SAM E HAS BEEN DECIDED BY THE HONBLE RAJ. HIGH COURT AND ACCEPTED BY YOUR HONOR. HENCE IN OUR VIEW THE SAME IS NOT REQUIRED T O BE SET ASIDE BECAUSE THERE IS NO DISPUTE REGARDING THE QUANTUM O F REMUNERATION. AND ONCE IF IT IS HELD THAT EXCESS CL OSING STOCK IS TO BE BROUGHT TO BE TAXED UNDER THE HEAD INCOME FROM BUSINESS. THEN THE ADDITION IS LIABLE TO BE DELETED. 7. THUS IT IS SUBMITTED THAT THE ABOVE MISTAKES AR E APPARENT ON THE RECORD AND MAY KINDLY BE RECTIFIED U/S 254(2 ) OF THE I.T. ACT BY PASSING A SUITABLE RECTIFICATION ORDER. 8. IT IS SUBMITTED THAT CONSIDERATION OF A NEW ISS UES WHICH ARE NOT PART OF NEITHER ASSESSMENT ORDER NOR OF THE CIT (A) OR NOT A GROUNDS OR PLEA OF THE RESPONDENT PARTY, CONSTITUTE A MISTAKE, RECTIFIABLE U/S 254(2) OF THE ACT. HENCE SUITABLE R ECTIFICATION MAY KINDLY BE CALLED FOR BY RECTIFYING THIS PART OF THE SUBJECTED ITAT ORDER AND OBLIGE. 2. THE LD. AR FURTHER RELIED ON THE DECISION OF HON BLE DELHI HIGH COURT IN CASE OF MARUBENI INDIA (P) LTD. VS. JT. CI T (2006) 104 TTJ (DEL) 911. M.A. NO. 128/JP/2018 M/S PALIWAL JEWELLERS, JAIPUR VS. ITO, JAIPUR 4 3. IN THIS REGARD, WE REFER TO THE FINDINGS OF THE CO-ORDINATE BENCH WHICH IS REPRODUCED AS UNDER:- 9. IN THE PRESENT CASE, THE ASSESSEE IS IN THE BUS INESS OF MANUFACTURING AND TRADING OF GOLD/DIAMOND JEWELLERY AND THE EXCESS STOCK SO FOUND DURING THE COURSE OF SURVEY I S OF GOLD AND DIAMOND JEWELLERY. THEREFORE, THE INVESTMENT IN PRO CUREMENT OF SUCH STOCK OF GOLD AND DIAMOND JEWELLERY IS CLEARLY IDENTIFIABLE AND RELATED TO THE REGULAR BUSINESS STOCK OF THE ASSESS EE. THE INVESTMENT IN THE EXCESS STOCK HAS THEREFORE TO BE BROUGHT TO TAX UNDER THE HEAD BUSINESS INCOME AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES FOLLOWING THE DECISION OF THE H ONBLE RAJASTHAN HIGH COURT IN CASE OF BAJARGAN TRADERS (SUPRA). FUR THER, THE DECISION OF THE CO-ORDINATE BENCH IN CASE OF SP EQU IPMENT & SERVICES (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE WHERE THERE IS NO DISTINCTION IN BOOK PROFITS REGARDING THE HEAD O F INCOME FOR THE PURPOSES OF COMPUTATION OF PARTNERS REMUNERATION. AT THE SAME TIME, THE PROVISIONS OF SECTION 115BBE NEED TO BE E XAMINED IN THE INSTANT CASE. GIVEN THAT THE GROUND NO. 1 OF THE AS SESSEES APPEAL REGARDING THE QUANTUM OF THE EXCESS STOCK IS SET AS IDE TO THE FILE OF THE AO, THESE TWO GROUNDS ARE ALSO SET ASIDE TO THE FILE OF THE AO FOR THE LIMITED PURPOSES OF DETERMINING THE QUANTUM OF REMUNERATION ALLOWABLE U/S 40(B) OF THE ACT TAKING INTO CONSIDERATION THE PROVISIONS OF SECTION 115BBE OF T HE ACT. 4. WE FIND THAT THE ISSUE BEFORE THE CO-ORDINATE BE NCH WAS THE HEAD OF INCOME UNDER WHICH THE INVESTMENT IN THE EXCESS STOCK SO FOUND DURING THE COURSE OF SURVEY CAN BE BROUGHT TO TAX. THE CO-ORDINATE BENCH, FOLLOWING THE DECISION OF RAJASTHAN HIGH COU RT IN CASE OF PR. CIT, M.A. NO. 128/JP/2018 M/S PALIWAL JEWELLERS, JAIPUR VS. ITO, JAIPUR 5 ALWAR VS. BAJRANG TRADERS IN DBIT NO. 258/2017 DT. 12.09.2017 HAS HELD THAT INVESTMENT IN THE EXCESS STOCK OF GOLD AND DIA MOND JEWELLERY HAS TO BE BROUGHT TO TAX UNDER THE HEAD BUSINESS INCOME. A RELATED ISSUE RELATING TO TAXABILITY OF THE SAID INVESTMENT UNDER THE HEAD BUSINESS INCOME WAS THE APPLICABILITY OF PROVISIONS OF SECT ION 115BBE OF THE ACT. GIVEN THAT THE SAID PROVISIONS WERE VERY MUCH ON TH E STATUTE BOOK AND APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR, THE CO -ORDINATE BENCH HAS SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING O FFICER TO DETERMINE THE APPLICABILITY OF THE SAID PROVISIONS. THEREFORE, WE FIND THAT THE CO- ORDINATE BENCH HAS NOT GIVEN ANY SPECIFIC FINDING A S TO WHETHER THE PROVISIONS OF SECTION 115BBE OF THE ACT ARE APPLICA BLE IN THE INSTANT CASE OR NOT, RATHER IT HAD SET ASIDE THE MATTER TO THE F ILE BY THE ASSESSING OFFICER TO EXAMINE THE SAME. A DIRECTION TO EXAMINE A PARTICULAR PROVISION AND ITS APPLICABILITY TO THE IMPUNGED TRANSACTION I S WELL WITHIN THE PURVIEW OF THE POWERS OF THE TRIBUNAL EVEN THOUGH THE SAID PROVISION HAS NOT BEEN SPECIFICALLY INVOKED BY THE ASSESSING OFFICER. ONCE THE TAXABILITY OF A PARTICULAR TRANSACTION IS SUBJECT MATTER OF APPEA L BEFORE THE TRIBUNAL, WHERE THE TRIBUNAL HAS DIRECTED TO EXAMINE A PARTIC ULAR TAXING PROVISION WHICH HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICE R BESIDES DETERMINING THE HEAD OF INCOME AND HAS THUS, ALLOWE D AN OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE BEFORE THE ASSESSI NG OFFICER, IT CANNOT BE SAID THAT THE TRIBUNAL HAS EXCEEDED ITS JURISDICTIO N UNDER SECTION 254 WHERE IT IS PROVIDED THAT THE TRIBUNAL CAN PASS SUC H ORDERS HEREON AS IT THINKS FIT. FURTHER, WE HAVE GONE THROUGH THE ORDE R OF THE HONBLE DELHI HIGH COURT IN CASE OF MARUBENI INDIA (SUPRA) AND FI ND THAT THE SAME DOESNT SUPPORT THE CASE OF THE ASSESSEE. IN THAT CASE, THE HONBLE HIGH COURT HAS HELD THAT THE TRIBUNAL CANNOT GIVE A FIND ING IN RESPECT OF ANOTHER ASSESSMENT YEAR WHICH IS NOT THE SUBJECT MA TTER OF APPEAL BEFORE M.A. NO. 128/JP/2018 M/S PALIWAL JEWELLERS, JAIPUR VS. ITO, JAIPUR 6 IT. IN LIGHT OF THE SAME, WE DO NOT FIND THAT THER E IS ANY INFIRMITY IN THE ORDER OF THE CO-ORDINATE BENCH WHICH CALLS FOR ANY INTERFERENCE IN TERMS OF SECTION 254(2) OF THE ACT. IN THE RESULT, MISC. APPLICATION FILED BY THE ASSES SEE IS HEREBY DISMISSED. PRONOUNCED IN THE OPEN COURT ON 18/01/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/01/2019. * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S PALIWAL JEWELLERS, TONK ROAD, JA IPUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD 6(3), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {M.A NO. 128/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR