Rajesh Garg, Bhubaneswar v. ACIT, Bhubaneswar

ITA 180/CTK/2010 | 2003-2004
Pronouncement Date: 23-07-2010 | Result: Dismissed

Appeal Details

RSA Number 18022114 RSA 2010
Bench Cuttack
Appeal Number ITA 180/CTK/2010
Duration Of Justice 2 month(s) 13 day(s)
Appellant Rajesh Garg, Bhubaneswar
Respondent ACIT, Bhubaneswar
Appeal Type Income Tax Appeal
Pronouncement Date 23-07-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 23-07-2010
Assessment Year 2003-2004
Appeal Filed On 10-05-2010
Judgment Text
( WORD TO PDF CONVERTER - UNREGISTERED ) HTTP://WWW.WORD-TO-PDF-CONVERTER.NET IN THE INCOME-TAX APPELLATE TRIBUNAL CUTTACK BENCH; CUTTACK (BEFORE S/SHRI D.K.TYAGI JM & K.K. GUPTA AM.) I.T.A.NO.180 /CTK/2010: ASSESSMENT YEAR: 2003-04 I.T.A.NO.181 /CTK/2010: ASSESSMENT YEAR: 2004-05 I.T.A.NO.182 /CTK/2010: ASSESSMENT YEAR: 2005-06 I.T.A.NO.183 /CTK/2010: ASSESSMENT YEAR: 2006-07 RAJESH GARG V. THE ACIT CIRCLE 1(2) OLD STATION BAZAR AAYAKAR BHAVAN RAJASWA VIHAR BHUBANESWAR-06 BHUBANESWAR-07. PA NO.AAUPG 2152 A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI D.K.SETH RESPONDENT BY: SHRI A.K.GAUTAM ORDER PER D.K.TYAGI JM THESE FOUR APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS U/S.263 OF THE I.T.ACT 1961 DATED 12.3.2010 OF THE COMMISSIONER OF INCOME TAX BHUBANESWAR FOR THE ASSESSMENT YEAR 2006-07. SINCE ISSUE INVOLVED IN ALL THESE APPEALS IS COMMON THEY WERE DISPOSED OF TOGETHER FOR THE SAKE OF CONVENIENCE. WE THEREFORE DISCUSS THE FACTS AS OBTAINING FROM THE ASSESSMENT YEAR 2003-04 AND THE DECISION WILL FOLLOW FOR OTHER ASSESSMENT YEARS. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE AN INDIVIDUAL DERIVED INCOME FROM PROPRIETORSHIP M/S. NARASHING ASSOCIATES AS WELL AS FROM HOUSE PROPERTY AND OTHER SOURCES. CONSEQUENT TO SEARCH OPERATION IN THE GROUP CASES OF THE ASSESSEE HIS CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.153A/143(3) OF THE I.T.ACT AT A TOTAL INCOME OF RS.2 13 636/-. ( WORD TO PDF CONVERTER - UNREGISTERED ) HTTP://WWW.WORD-TO-PDF-CONVERTER.NET 3. ON PERUSAL OF ASSESSMENT RECORDS IT WAS NOTICED BY THE COMMISSIONER THAT THE ASSESSEE IN HIS BALANCE SHEET HAD DISCLOSED INTER ALIA RS.1 98 738/- AND RS.2 66 313/- AS CREDIT BALANCE UNDER THE HEAD LOAN FROM LALITA DEVI MODI AND SANDIP AGARWAL RESPECTIVELY AS ON 31.3.2003. DURING THE ASSESSMENT PROCEEDINGS THE AO HAD CATEGORICALLY REQUESTED THE ASSESSEE TO FURNISH CONFIRMATION LETTERS FROM THOSE CREDITORS TO ASCERTAIN THE GENUINENESS OF THE ABOVE TRANSACTIONS; HOWEVER NO SUCH CONFIRMATIONS WERE FURNISHED BY THE ASSESSEE. THE AO COMPLETED THE ASSESSMENT WITHOUT DRAWING ANY INFERENCE ON THIS ISSUE. THE AO HAD CALLED FOR DETAILS OF TELEPHONE EXPENSES OF RS.43 939/- WHICH WAS DEBITED TO P&L ACCOUNT OF THE ASSESSEE. OUT OF TOTAL TELEPHONES EXPENSES BILL AMOUNTING TO RS.17 178/- WAS IN THE NAME OF THE ASSESSEE. THEREFORE THE BALANCE AMOUNT SHOULD HAVE BEEN DISALLOWED. SINCE ALL THESE ISSUES WERE NOT PROPERLY CONSIDERED BY THE AO ACTION UNDER SECTION 263 WAS INITIATED IN THE CASE OF THE ASSESSEE. IN RESPONSE TO NOTICE U/S.263 THE ASSESSEE HAD CONTENDED THAT THE ASSESSMENT HAS BEEN MADE AFTER CONSIDERING ALL ASPECTS. THE CIT HELD THAT THE AO FAILED TO PURSUE THE MATTER WITH REGARD TO LOAN CONFIRMATIONS AND TELEPHONE EXPENSES . THEREFORE HE WAS OF THE VIEW THAT THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN VIEW OF THIS HE WENT AHEAD WITH PROPOSED REVISION ORDER AND SET ASIDE THE ORDER U/S.153/143(3) OF THE AO AND RESTORED IT BACK TO THE FILE OF THE AO WITH THE DIRECTION TO RE-EXAMINE THE ISSUES IN DETAILS AND RE-DO THE ASSESSMENT. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING LD COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263. IN THE INSTANT CASE THE AO HAS PASSED THE ORDER AFTER MAKING NECESSARY ENQUIRIES AS IS EVIDENT FROM THE QUESTIONNAIRE ISSUED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. HE THEREFORE PRAYED THAT THE ORDER PASSED BY THE CIT U/S.263 MAY KINDLY BE QUASHED. ON THE OTHER HAND LD D.R. SUPPORTED THE ORDER OF THE COMMISSIONER. 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE RECORD OF THE CASE. WE FIND THAT THE C.I.T. HAS INVOKED HIS POWERS U/S. 263 MAINLY ON THE GROUND THAT THE A.O. DID NOT MAKE THE REQUISITE ENQUIRY. AT THE TIME OF HEARING BEFORE US IN THE ARGUMENTS THE REVENUE HAS CONTENDED THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE ( WORD TO PDF CONVERTER - UNREGISTERED ) HTTP://WWW.WORD-TO-PDF-CONVERTER.NET INTERESTS OF REVENUE ON THE GROUND THAT THE A.O. FAILED TO MAKE THE ENQUIRY WHICH WAS WARRANTED ON THE FACTS OF THE CASE. 5.1. IN THE CASE OF GEE VEE ENTERPRISES VS. ADDL. CIT [99 ITR 375] THE HONBLE DELHI HIGH COURT HELD AS UNDER :- IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER INQUIRIES BEFORE CANCELING THE ASSESSMENT ORDER OF THE INCOME-TAX OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE INCOME-TAX OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. THE POSITION AND FUNCTION OF THE INCOME-TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENTS MADE IN A PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDENCE MAY BE ADOPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COMES BEFORE IT. THE INCOME-TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHICH THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. IT IS BECAUSE IT IS INCUMBENT ON THE INCOME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT THAT THE WORD ERRONEOUS IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. SIMILAR VIEW WAS REITERATED BY THEIR LORDSHIPS OF HONBLE DELHI HIGH COURT IN THE CASE OF DUGGAL & CO. VS. CIT [220 ITR 456]. 5.2. IN THE CASE OF TARAJAN TEA CO. PVT. LTD. VS. CIT [205 ITR 45] THE HONBLE GAUHATI HIGH COURT HELD AS UNDER :- THAT IT WAS NOT QUITE CERTAIN WHETHER THE TRESS SOLD IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR WERE TREES STANDING AT THE TIME OF ACQUISITION OR TREES WHICH GREW ON ROOTS AND TRUNK EXISTING ON THE DATE OF ACQUISITION OR ON ROOTS AND TRUNKS OF TREES EXISTING AT THE TIME OF ACQUISITION AND CUT SUBSEQUENTLY. THIS WAS A MATTER WHICH HAD TO BE INVESTIGATED BY THE INCOME-TAX OFFICER AFTER CALLING UPON THE ASSESSEE TO FURNISH RELEVANT DATA. THE INSPECTING ASSISTANT COMMISSIONER HAD NO SUCH DATA BEFORE HIM IN ORDER TO ENABLE HIM TO CONCLUDE THAT THERE WAS NO COST OF ACQUISITION. IT WAS ALSO TO BE CONSIDERED WHETHER THE SPONTANEOUS GROWTH REQUIRED ANY CARE OR ATTENTION BY WAY OF PROTECTION FROM ANIMALS AND THE LIKE AND IF SO WHETHER THE ASSESSEE DID NOT INCUR ANY COST IN THAT REGARD. ANY DECISION EITHER WAY WITHOUT CONSIDERING THESE ASPECTS WOULD CERTAINLY BE ERRONEOUS AND ANY DECISION IN FAVOUR OF THE ASSESSEE WITHOUT CONSIDERING THESE ASPECTS WOULD BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ( WORD TO PDF CONVERTER - UNREGISTERED ) HTTP://WWW.WORD-TO-PDF-CONVERTER.NET THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX AND THE ORDER PASSED BY THE TRIBUNAL SUSTAINING THE SAME AS A WHOLE WERE VALID. 5.3. IN THE CASE OF ADDL. CIT VS. MUKUR CORPORATION [111 ITR 312] HONBLE GUJARAT HIGH COURT HELD AS UNDER :- THAT THE WORDS PREJUDICIAL TO THE INTERESTS OF THE REVENUE IN SECTION 263 HAVE NOT BEEN DEFINED BUT THEY MUST MEAN THAT THE ORDERS OF ASSESSMENT CHALLENGED ARE SUCH AS ARE NOT IN ACCORDANCE WITH LAW IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALIZED OR CANNOT BE REALIZED. IN THE PRESENT CASE IT WAS OBVIOUS THAT THE INCOME-TAX OFFICER HAD COMMITTED AN ERROR IN NOT MAKING ENQUIRY INTO THE DETAILS AS REGARDS BOTH THE DEDUCTIONS AND ALSO THAT WANT OF SUCH ENQUIRY HAD RESULTED IN PREJUDICE TO THE INTERESTS OF THE REVENUE. TO THIS EXTENT THE INITIATION OF ACTION UNDER SECTION 263 BY THE COMMISSIONER WAS QUITE PROPER. 5.4. IN THE CASE OF CIT VS. SOUTH INDIA SHIPPING CORPN. LTD. [233 ITR 546] HONBLE MADRAS HIGH COURT HELD AS UNDER :- EVEN ASSUMING THAT THE INCOME-TAX OFFICER HAD CALLED FOR THE PARTICULARS WHICH WERE ALSO FURNISHED BY THE ASSESSEE IF THE INCOME-TAX OFFICER WITHOUT PROBING INTO THE MATTER FURTHER HAD ALLOWED THE CLAIM OF THE ASSESSEE FOR WEIGHTED DEDUCTION AND IF THE COMMISSIONER ON THE BASIS OF MATERIALS FORMED AN OPINION THAT THE GRANT OF ALLOWANCE MADE BY THE OFFICER WAS ERRONEOUS AND NOT WARRANTED BY LAW THE JURISDICTION OF THE COMMISSIONER UNDER SECTION 263 OF THE ACT WAS NOT OUSTED. THE COMMISSIONER MAY NOT HAVE RECORDED HIS FINAL CONCLUSION BUT THE QUESTION FOR EXERCISING THE POWER OF REVISION BY THE COMMISSIONER IS WHETHER THE ORDER OF THE ASSESSING OFFICER CAN BE REGARDED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT MAY BE ERRONEOUS IN LAW OR IN FACT. IT MAY BE ERRONEOUS IN THE SENSE THAT THE INCOME-TAX OFFICER HAD PASSED THE ORDER WITHOUT PROPERLY CONDUCTING THE INQUIRY IN COMPLETION OF THE ASSESSMENT AND THE ORDER MAY ALSO BE ERRONEOUS WHEN THE EXPENDITURE ALLOWED WAS AGAINST THE PROVISIONS OF LAW. 5.5. WE FURTHER FIND THAT THE SPECIAL BENCH OF I.T.A.T. CHENNAI HAS ALSO DECIDED THE IDENTICAL ISSUE IN THE CASE OF RAJALAKSHMI MILLS LTD. VS. ITO [121 ITD 343 (CHENNAI-SB)] WHEREIN THE I.T.A.T. HELD AS UNDER :- IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER ENQUIRIES BEFORE CANCELING THE ASSESSMENT ORDER OF THE ASSESSING OFFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. UNLIKE THE CIVIL COURT WHICH IS NEUTRAL TO GIVE A DECISION ON THE BASIS OF EVIDENCE PRODUCED BEFORE IT AN ASSESSING OFFICER IS NOT ONLY AN ADJUDICATOR BUT IS ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER ENQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO ( WORD TO PDF CONVERTER - UNREGISTERED ) HTTP://WWW.WORD-TO-PDF-CONVERTER.NET PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGES OUT OF THIS CONTEXT. THE WORD ERRONEOUS IN THAT SECTION INCLUDES CASES WHERE THERE HAS BEEN FAILURE TO MAKE THE NECESSARY INQUIRIES. IT IS INCUMBENT ON THE ASSESSING OFFICER TO INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES MAKE SUCH AN INQUIRY PRUDENT AND THE WORD ERRONEOUS IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN ENQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. IN THE INSTANT CASE THE ASSESSING OFFICER FAILED TO MAKE ANY ENQUIRY IN REGARD TO THE ALLOWABILITY OF THE PROVISION FOR GRATUITY. AS SUCH THE ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THEREFORE THE CONDITIONS PRECEDENT FOR ASSUMING JURISDICTION UNDER SECTION 263 DID EXIST IN THE FACTS OF THE INSTANT CASE. 5.6 THE APEX COURT IN THE CASE OF SMT. TARA DEVI AGGARWAL VS. CIT 88 ITR 323 (SC) HAS HELD THAT THE CIT MAY CONSIDER AN ORDER OF THE AO TO BE ERRONEOUS NOT ONLY IT CONTAINS SOME APPARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT BUT ALSO BECAUSE IT IS A STEREO TYPED ORDER WHICH SIMPLY ACCEPTS WHAT THE ASSESSEE HAS STATED IN HIS RETURN AND FAILS TO MAKE ENQUIRIES WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CASE. THE AO IS NOT ONLY AN ADJUDICATOR BUT IS ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. THE MEANING TO BE GIVEN TO THE WORD ERRONEOUS IN SECTION 263 EMERGES OUT OF THIS CONTEXT. 5.7 NO CONTRARY DECISION IS BROUGHT TO OUR KNOWLEDGE. IN VIEW OF THE ABOVE WE UPHOLD THE ORDER OF LD CIT. 6. IN THE RESULT APPEALS FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 23 RD JULY 2010 SD/- SD/- (K.K.GUPTA) (D.K.TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23 RD JULY 2010 PARIDA COPY TO : 1. ASSESSEES- 2. ASSESSING OFFICER 3. CIT 4. D.R. ITAT CUTTACK. ( WORD TO PDF CONVERTER - UNREGISTERED ) HTTP://WWW.WORD-TO-PDF-CONVERTER.NET TRUE COPY BY ORDER SR. PVT. SECRETARY