DCIT, Mysore V. M. Nagaraj, Mysore

MA 58/BANG/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7672 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-03-2012
• Assessment Year: 1999-2000
• Appeal Filed On: 23-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: C R NULVI
• Keywords: Unexplained expenditure; Revised return
• Section: 143(3); 148; 154

Judgement Text

PAGE 1 OF 6 M.P.N O.58/BANG/2011 1 INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B BEFORE SHRI N K SAINI, ACCOUNANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER M.P.NO.58/BANG/2011 (IN ITA NO. 793 /BANG/2005) (ASST. YEAR 1999-2000) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(2), MYSORE. VS SHRI M NAGARAJ, M/S NAGEETHA COMPLEX, SARASWATHIPURANM, MYSORE. (APPELLANT) (RESPONDENT) DATE OF HEARING : 09.03.2012 DATE OF PRONOUNCEMENT : 09.03.2012 APPELLANT BY : SMT. SUSAN THOMAS JOSE, JCIT RESPONDENT BY : SHRI C R NULVI, C.A. O R D E R PER GEORGE GEORGE K : THIS MISCELLANEOUS PETITION OF THE REVENUE HAS AR ISEN OUT OF TRIBUNALS ORDER DATED 13/1/2012. THE RELEVANT ASS ESSMENT YEAR IS 1999- 2000. 2. THE ISSUE, IN BRIEF, IS THAT THE ASSESSEE, AN I NDIVIDUAL, FURNISHED HIS RETURN OF INCOME FOR THE AY 1999-00 ON 31.12.19 99, ADMITTING A LOSS OF RS.5.18 LAKHS WHICH INCLUDED A LOSS OF RS.9.81 LAKH S FROM HOUSE PROPERTY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED CERTAIN DISCREPANCIES WITH REGARD TO COST OF MATERIAL AND W ORK-IN-PROGRESS. IN THE MEANWHILE, THE ASSESSEE HAD FURNISHED A REVISED RET URN OF INCOME ON PAGE 2 OF 6 M.P.N O.58/BANG/2011 2 22.3.2002, ADMITTING A TOTAL INCOME OF RS.46.2 LAKH S, IN ESSENCE, HE HAD ADMITTED ADDITIONAL INCOME OF RS.51.39 LAKHS FROM CONTRACT BUSINESS WHICH WAS, ACCORDING TO THE AO, ACCEPTED IN TOTO AND, ACC ORDINGLY, CONCLUDED THE ASSESSMENT U/S 143(3) OF THE ACT DATED 28.3.2002. SUBSEQUENTLY, THE ASSESSEE HAD APPROACHED THE JURISDICTIONAL COMMISSI ONER U/S 264 OF THE ACT WITH A PRAYER TO SET-SIDE THE ASSESSMENT ORDER PASSE D IN ORDER TO CONSIDER THE ALLOWANCE OF UNACCOUNTED EXPENSES OF RS.46.72 L AKHS INCURRED TOWARDS EARNING OF ADDITIONAL CONTRACT INCOME OF RS.51,39 L AKHS WHICH WAS, HOWEVER, NOT ENTERTAINED. CONSEQUENTLY, THE AO WAS REQUESTED BY THE ASSESSEE U/S 154 OF THE ACT TO ENTERTAIN THE CLAIM WHICH WAS ALS O REJECTED, UPON WHICH, THE ASSESSEE CONTESTED THE AOS STAND BEFORE THE CI T (A) FOR RELIEF. THE CIT (A) ALSO DISMISSED THE ASSESSEES REQUEST. THE MATTER WAS ALLOWED TO REST AT THAT STAGE. 3. IN THE MEANWHILE, FOR THE REASONS RECORDED, THE ASSESSEE WAS ISSUED WITH A NOTICE U/S 148 OF THE ACT WHEREBY THE ASSESSEE WAS REQUIRED TO FURNISH A RETURN OF INCOME AFRESH. IN COMPLIANC E, THE ASSESSEE FURNISHED A RETURN OF INCOME ON 17.4.2003 WITHOUT DISCLOSING ANY ADDITIONAL INCOME, ON THE BASIS OF WHICH, THE ASSESSMENT WAS IN FACT RE-O PENED. INSTEAD, ACCORDING TO THE AO, THE ASSESSEE HAD CLAIMED A TOT AL LOSS OF RS.4.99 LAKHS AS AGAINST THE INCOME OF RS.46.2 LAKHS ADMITTED IN THE REVISED RETURN WHICH WAS BROUGHT TO TAX WHILE CONCLUDING THE ORIGINAL AS SESSMENT U/S 143(3) OF THE ACT DATED 28.3.2002. 3.1. IN THE RE-ASSESSMENT PROCEEDINGS, WHILE NOT E NTERTAINING THE ASSESSEES CLAIM FOR DEDUCTION, THE AO MADE CERTAIN ADDITIONS AND PAGE 3 OF 6 M.P.N O.58/BANG/2011 3 DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.1 .49 CRORES. WHILE DOING SO, THE APPELLANTS CLAIM OF DEDUCTION WAS DISALLOW ED ON THE GROUND THAT SUCH EXPENDITURE WAS INCURRED RELATING TO UNACCOUNTED IN COME FROM CONTRACT BUSINESS ADMITTED IN THE REVISED RETURN FILED IN T HE MIDST OF ORIGINAL ASSESSMENT PROCEEDINGS. HOWEVER, THE CLAIMS BEING PURCHASE OF RAW MATERIALS AND WAGES, AGGREGATING TO RS.71.72 LAKHS WERE DISALLOWED FOR THE REASONING THAT THE ASSESSEE HAD FAILED TO SUBSTANTI ATE HIS CLAIM. ON APPEAL, THE LD. CIT SUSTAINED THE STAND OF THE AO. ON FURT HER APPEAL, THE HONBLE TRIBUNAL, VIDE ITS ORDER DATED 21.4.2006, ACCORDING TO THE REVENUE, ALLOWED THE ASSESSEES APPEAL ON ONE GROUND AND LEAVING ANO THER TWO GROUNDS UN- ADJUDICATED. 3.2. WHILE DISPOSING OFF OF THE ASSESSEES MISC. P ETITION [M.P.NO.100], THE BENCH RECALLED THE EARLIER ORDER OF THE TRIBUNAL TO ADJUDICATE THE GROUNDS WHICH WERE NOT ADDRESSED TO BY OVER-SIGHT ETC., ACCORDINGLY, THE EARLIER BENCH HAD, IN ITS FINDINGS IN ITA NO.793/B/2005 DATED 13.1.2011, AFTER DUE CONSIDERATION OF THE ASSESSEES SUBMISSIO N, OBSERVED THUS: 8.5. IT WAS ALLEGED THAT (I) RS.14,90,599/- TOWAR DS PURCHASES WAS ORIGINALLY CLAIMED IN ITS ORIGINAL RE TURN WHICH WAS NOT CONSIDERED BY THE AO WHILE CONCLUDING THE REASSESSMENT; (II) THAT THE ASSESSEE HAD FURNISHED A LIST OF SUNDRY CREDITORS WITH THEIR ADDRESSES ON 22.5.200 3, BUT, WITHOUT CONSIDERING THE ABOVE, THE AO HAD CONC LUDE THE ASSESSMENT PROCEEDINGS IN AN ARBITRARY MANNER. 8.6. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS DISCUSSED IN THE FORE-GOING PARAGRAPHS AND ALSO THE ASSESSEES CLAIM OF UNACCOUNTED EXPENDITURE ON THE PAGE 4 OF 6 M.P.N O.58/BANG/2011 4 UNACCOUNTED CONTRACT RECEIPTS SUBJECTED TO TAXATION WAS FOUND TO BE REASONABLE AND JUST, WE ARE OF THE FIRM VIEW THAT THIS ISSUE, IN THE INTERESTS OF NATURAL JUSTIC E, SHOULD BE REMITTED BACK ON THE FILE OF THE AO TO LOOK INTO THE ENTIRE ISSUE AFRESH IN A COMPREHENSIVE MANNER IN THE BACKGROUND OF THE REASONS RECORDED BY US IN THE PRECEDING PARAGRAPHS AND TO ALLOW UNACCOUNTED EXPENSES TO COMMENSURATE WITH THE UNACCOUNTED CONTRACT RECEIPT ADMITTED BY THE ASSESSEE IN HIS RET URN OF INCOME CONSEQUENT TO THE ISSUANCE OF NOTICE U/S 148 OF THE ACT. 4. AGGRIEVED, THE REVENUE HAS COME UP WITH THE PRE SENT MISC. PETITION WITH A PLEA THAT IT IS WELL SETTLED LEGAL POSITION THAT THE ASSESSE E CANNOT MAKE USE OF THE RE-OPENED ASSESSMENT PROCEEDINGS FO R THE PURPOSE OF CLAIMING ANY DEDUCTION OR ALLOWANCE W HICH IS GOING TO REDUCE THE RETURNED INCOME/ASSESSED INC OME AS THE CASE MAY BE. THE RE-OPENING POWERS U/S 147/1 48 ARE INCORPORATED IN THE STATUE ONLY FOR THE BENEFIT OF THE REVENUE. 4.1. STRONG RELIANCE WAS PLACED ON THE RULINGS OF THE HONBLE SUPREME COURT IN THE CASES OF (I) CIT V. SUN ENGINE ERING WORKS PVT. LTD (198 ITR 297) AND (II) CHETTINAD CORPORATION PVT. L TD V. CIT (200 ITR 320). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE RELEVANT CASE RECORDS AND ALSO THE ORDER U/S 143(3) R.W.S 25 4 OF THE ACT DATED 30.12.2011. 5.1. AT THE OUTSET, WE WOULD LIKE TO REITERATE THA T WHEN THE ORIGINAL ASSESSMENT PROCEEDINGS WERE IN HALF-WAY THROUGH, AS CONCEDED BY THE PAGE 5 OF 6 M.P.N O.58/BANG/2011 5 REVENUE, THE ASSESSEE CAME UP WITH A REVISED RETURN OF INCOME, ADMITTING AN INCOME OF RS.46.20 LAKHS FROM CONTRACT BUSINESS WHI CH WAS AFTER DUE CONSIDERATION AND VERIFICATION OF FACTS, THE AO CON CLUDED THE ASSESSMENT U/S 143(3) OF THE ACT. SUBSEQUENTLY, WHEN THE RE-OP ENED ASSESSMENT PROCEEDINGS WERE CONCLUDED, THE ASSESSEES INCOME W AS DETERMINED AT RS.1.49 CRORES AS AGAINST THE ORIGINAL INCOME DETER MINED AT RS.46.26 LAKHS U/S 143(3) OF THE ACT, BY DISALLOWING HIS CLAIM OF R S.71,72,109/- PERTAINING TO PURCHASE OF RAW MATERIALS, WAGES ETC., 5.2. AFTER TAKING INTO CONSIDERATION OF ALL THE FA CTORS INCLUDING THAT OF THE ASSESSEES CONTENTIONS CITED SUPRA, THE EARL IER BENCH DIRECTED THE AO TO LOOK INTO THE ISSUE AFRESH AND TO ALLOW UNACCOUN TED EXPENSES TO COMMENSURATE WITH THE UNACCOUNTED CONTRACT RECEIPTS ADMITTED BY THE ASSESSEE. 5.3. IN THIS CONNECTION, WE WOULD LIKE TO MAKE IT CRYSTAL CLEAR THAT THE ADDITIONAL INCOME WHICH HAD SUFFERED TAX PURSUA NT TO THE ISSUANCE OF NOTICE U/S 148 OF THE ACT AND THE COMPLETION OF THE REASSESSMENT, THE EXPENDITURE PERTAINING TO THE ADDITIONAL INCOME ALO NE NEED TO BE REDUCED AS PER THE DIRECTIONS OF THE EARLIER BENCH WHICH WERE VERY CLEAR AND CATEGORICAL. WE ARE, THEREFORE, OF THE CONSIDERED V IEW THAT NO MISTAKES HAVE CREPT IN, IN THE FINDINGS OF THE EARLIER BENCH WARRANTING RECTIFICATION UNDER SECTION 254(2) OF THE ACT. WHAT HAS BEEN ASS ESSED IN THE ORIGINAL ASSESSMENT BECAME FINAL IN VIEW OF THE REJECTION OF THE ASSESSEES REQUEST U/S 264 OF THE ACT, I.E., THE TOTAL INCOME WHICH HA S BEEN ASSESSED TO TAX IN PAGE 6 OF 6 M.P.N O.58/BANG/2011 6 THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT BY ORD ER DATED: 28.3.2002 CANNOT BE REDUCED IN PURSUANCE TO THE RE-ASSESSMENT ORDER. 5.4. BEFORE PARTING WITH, WE WOULD LIKE TO REITERATE THAT THE RULINGS OF THE HONBE SUPREME COURT QUOTED BY THE REVENUE HA VE BEEN KEPT IN VIEW WHILE DEALING THIS MISC. PETITION. 6. IN THE RESULT , THE MISC. PETITION OF THE REVENUE IS DISMISSED. SD/- SD/- (N K SAINI ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DT. 09/03/2012 COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER ASST. REGISTRAR, ITAT, BANGALORE .