Shri Kushal Balmukund Agrawal, Ahmedabad v. The Pr. CIT-3, Ahmedabad

ITA 1086/AHD/2019 | 2014-2015
Pronouncement Date: 22-03-2021 | Result: Allowed

Appeal Details

RSA Number 108620514 RSA 2019
Assessee PAN AQAPA4792R
Bench Ahmedabad
Appeal Number ITA 1086/AHD/2019
Duration Of Justice 1 year(s) 8 month(s) 25 day(s)
Appellant Shri Kushal Balmukund Agrawal, Ahmedabad
Respondent The Pr. CIT-3, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 22-03-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 22-03-2021
Date Of Final Hearing 17-02-2020
Next Hearing Date 17-02-2020
Last Hearing Date 25-11-2019
First Hearing Date 20-08-2019
Assessment Year 2014-2015
Appeal Filed On 27-06-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV VICE PRESIDENT AND SHRI WASEEM AHMED ACCOUNTANT MEMBER ./ ITA NO. 1086/AHD/2019 / ASSTT. YEAR: 2014 - 2015 SHRI KUSHAL BALMUKUND AGRAWAL 14 RUDRAX BUNGLOWS B/H RAJPATH CLUB S.G. HIGHWAY BODAKDEV AHMEDABAD . PAN : AQAPA4792R VS. P .C.I.T. - 3 AHMEDABAD . (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI CHETAN AGARWAL A.R REVENUE BY : SHRI MOHD. USMAN CIT .D. R / DATE OF HEARING : 01 / 02 / 2021 / DATE OF PRONOUNCEMENT: 22 / 03 /2021 / O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE A GAINST THE ORDER OF THE PRINCIPAL COMM ISSIONER OF INCOME TAX - 3 AHMEDABAD DATED 25/02/2019 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S.263 OF THE INCOME TAX ACT 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2014 - 20 15 . ITA NO.1086/AHD/2019 ASSTT. YEAR 2014 - 15 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. LEARNED PCIT HAS ERRED IN LAW AS WELL AS ON FACTS IN PASSING ORDER U/S.263 OF THE IT ACT. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED PR. CIT UNDER SECTION 263 OF THE ACT ERRED IN HOLDING THAT THE ASSESSMENT ORDER FRAMED BY THE AO UNDER SECTION 143(3) IS ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF REVENUE. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF TEXTILE TRADING. THE CASE OF THE ASSESSEE WAS SELECTED UNDER SCRUTINY UNDER CASS ON ACCOUNT OF LARGE SPECIFIED DOMESTIC TRANSACTIONS I.E. PAYMENT MADE TO THE RELATED PARTIES AS SPECIFIED UNDER SECTION 40A(2)(B) OF THE ACT FOR AN AMOUNT OF RS. 30 67 06 860/ - ONLY. HOWEVER THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT AC CEPTING THE INCOME DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME VIDE ORDER DATED 26 TH JULY 2016. 5. SUBSEQUENTLY THE PR. CIT WAS OF THE VIEW THAT THE CASE OF THE ASSESSEE WAS SELECTED UNDER SCRUTINY UNDER TP RISK PARAMETERS AND THEREFORE IT WAS OBLI GATORY ON THE PART OF THE AO TO REFER THE MATTER TO THE TPO FOR DETERMINING THE ALP IN PURSUANCE TO THE DIRECTION OF THE CBDT IN INSTRUCTION NO. 03/2016 DATED 10 - 03 - 2016 AND INSTRUCTION NO. 15/2015 DATED 16 - 10 - 2015. BUT THE AO HAS NOT DONE SO AND FRAMED TH E ASSESSMENT ORDER WITHOUT MAKING ANY REFERENCE TO THE TPO WHICH IS IN VIOLATION OF THE CBDT DIRECTIONS. ACCORDINGLY THE LEARNED PR. CIT SET ASIDE THE ASSESSMENT ORDER FRAMED BY THE AO AS ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF REVENUE. 6 . BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.1086/AHD/2019 ASSTT. YEAR 2014 - 15 3 7 . THE LEARNED AR BEFORE US SUBMITTED THAT THE TRANSACTION INVOLVING THE EXPENDITURE IN RESPECT OF WHICH THE PAYMENT HAS BEEN MADE TO THE PERSONS REFERRED UNDER SECTION 40A(2)(B) OF THE ACT HAS BEEN OMITTED FROM THE ACT BY THE FINANCE ACT 2017. THEREFORE SUCH PROVISION DOES NOT EXIST IN RELATION TO THE PAYMENT MADE BY THE ASSESSEE TO THE PERSONS REFERRED UNDER SECTION 40A(2)(B) OF THE ACT. ACCORDINGLY THE QUESTION OF MAK ING ANY REFERENCE TO THE TPO DOES NOT ARISE. 8 . ON THE OTHER HAND THE LEARNED DR CONTENDED THAT THE CASE OF THE ASSESSEE PERTAINS TO THE ASSESSMENT A.Y. 2014 - 15 AND PAYMENT MADE TO THE SPECIFIED PERSONS WAS VERY MUCH APPEARING UNDER THE SPECIFIED DOMEST IC TRANSACTIONS PRESCRIBED UNDER SECTION 92BA OF THE ACT. AS SUCH THE PROVISIONS DURING THE RELEVANT TIME WAS VERY MUCH APPLICABLE TO THE TRANSACTION AS DISCUSSED BY THE LEARNED PR. CIT IN HIS ORDER. ACCORDINGLY THE LEARNED DR VEHEMENTLY SUPPORTED THE OR DER OF LEARNED PR. CIT. 9 . THE LEARNED AR IN HIS REJOINDER SUBMITTED THAT THE CLAUSE WITH REFERENCE TO THE EXPENDITURE IN RESPECT OF WHICH PAYMENT HAS BEEN MADE TO THE PERSONS REFERRED TO SECTION 40A(2)(B) OF THE ACT HAS BEEN OMITTED WHICH IMPLIES THAT S UCH PROVISION WAS NOT THERE SINCE ITS INCEPTION. 10 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. ADMITTEDLY THE PROVISIONS RELATING TO THE EXPENDITURE IN RESPECT OF WHICH PAYMENT WAS MADE TO THE PERSONS REFERRED TO SECTION 40A(2)(B) OF THE ACT WAS OMITTED BY THE FINANCE ACT 2017 WHICH WAS EFFECTIVE FROM 1 ST APRIL 2017 AND THE IMPUGNED ORDER WAS FRAMED BY THE LEARNED PR. CIT DATED ON 25 TH FEBRUARY 2019. 10 .1 ACCORDINGLY IT WAS VEHEMENTLY ARGUED BY THE LEARNED AR BEFORE US THAT THE IMPACT OF OMISSION OF THIS PROVISION WOULD BE CONSTRUED THAT SUCH PROVISION WAS NEVER THERE ON THE STATUTE BOOK. THE LEARNED AR FURTHER ARGUED THAT IT IS A SETTLED PRINCIPLE OF LAW THAT WHERE A PROVISION OF STATUTE IS OMITTED IT SHOULD BE DEEMED ITA NO.1086/AHD/2019 ASSTT. YEAR 2014 - 15 4 THAT SUCH PROVISION WAS NEVER BEEN PART OF THE STATUTE AT ANY POINT OF TIME. IN THIS REGARD WE FIND THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF GENERAL FINANCE COMPANY VS. ACIT REP ORTED IN (2002) 124 TAXMAN 432 (SC) WHERE THE HON'BLE APEX COURT AFTER REFERRING TO THE JUDGMENT OF THE HON'BLE CONSTITUTIONAL BENCH OF THE SUPREME COURT RENDERED IN THE CASE OF KOLHAPUR CANE SUGAR WORKS LIMITED VS. UOI (2000) (2) SCC 536 HELD AS UNDER: ' 8. THOUGH WE FIND THE SUBMISSIONS OF THE LEARNED COUNSEL TO BE FORCEFUL WE ARE CONSTRAINED TO FOLLOW THE TWO DECISIONS OF THE CONSTITUTION BENCHES OF THIS COURT IN RAYALA CORPN. (P) LTD.'S CASE (SUPRA) AND KOLHAPUR CANESUGAR WORKS LTD.'S CASE (SUPRA). THI S VIEW HAS HELD THAT FIELD FOR OVER THREE DECADES AND REITERATED EVEN AS LATE AS TWO YEARS AGO. NON - COMPLIANCE WITH SECTION 269SS ATTRACTED PROSECUTION AS WELL AS PENALTY. OMISSION OF THE PROVISION REGARDING PROSECUTION WILL NOT AFFECT THE LEVY OF PENALTY. THE ADVANTAGE ARISING OUT OF APPLICATION OF THE RATIO OF THE TWO DECISIONS RESULTING IN PROSECUTION IN CASES OF NON - COMPLIANCE WITH SECTION 269SS IS ONLY TRANSACTIONAL AFFECTING A FEW CASES ARISING PRIOR TO 1.4.1989. SUCH CASES MAY BE FEW AND FAR BETWEEN. HENCE WE FIND THIS IS NOT AN APPROPRIATE CASE FOR REFERENCE TO THE LARGER BENCH. 9. NET RESULT OF THIS DISCUSSION IS THAT THE VIEW TAKEN BY THE HIGH COURT IS NOT CONSISTENT WITH WHAT HAS BEEN STATED BY THIS COURT IN THE TWO DECISIONS AFORESAID AND THE P RINCIPLE UNDERLYING SECTION WAS SAVING THE RIGHT TO INITIATE PROCEEDINGS FOR LIABILITIES INCURRED DURING THE CURRENCY OF THE ACT WILL NOT APPLY TO OMISSION OF A PROVISION IN AN ACT BUT ONLY TO REPEAL OMISSION BEING DIFFERENT FROM REPEAL AS HELD IN THE AFO RESAID DECISIONS. IN THE ACT SECTION 276DD STOOD OMITTED FROM THE ACT BUT NOT REPEALED AND HENCE A PROSECUTION COULD NOT HAVE BEEN LAUNCHED OR CONTINUED BY INVOKING SECTION 6 AFTER ITS OMISSION.' 10 .2 RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE APE X COURT WE HOLD THAT SINCE THE PROVISION ITSELF STOOD OMITTED AT THE TIME WHEN THE ORDER WAS PASSED BY THE LD. PR. CIT WHICH IS UNDISPUTED FACT THE IMPUGNED ORDER CANNOT BE SUSTAINED. ACCORDINGLY THE QUESTION OF HOLDING THE ASSESSMENT ORDER AS ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF REVENUE DOES NOT ARISE ON ACCOUNT OF NON - REFERENCE TO THE TPO WITH RESPECT TO THE PROVISIONS FOR THE SPECIFIED DOMESTIC TRANSACTIONS PRESCRIBED UNDER SECTION 92BA OF THE ACT WHICH STOOD OMITTED . HENCE IT IS HEREBY ITA NO.1086/AHD/2019 ASSTT. YEAR 2014 - 15 5 QUASHED. THE IMPUGNED ORDER IS THUS QUASHED AND THE GROUNDS RAISED IN THE APPEAL ARE ALLOWED. 11 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE COURT ON 22 /03 / 2021 AT AHMEDABAD. SD/ - SD/ - (RAJPAL YADAV ) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (TRUE COPY ) A HMEDABAD; DATED 22 / 03 /2021 MANISH