M/s. Central Financiers, Kottayam v. The ITO, Kottayam

ITA 240/COCH/2016 | 2008-2009
Pronouncement Date: 28-09-2016 | Result: Allowed

Appeal Details

RSA Number 24021914 RSA 2016
Assessee PAN AACFC5739N
Bench Cochin
Appeal Number ITA 240/COCH/2016
Duration Of Justice 4 month(s) 5 day(s)
Appellant M/s. Central Financiers, Kottayam
Respondent The ITO, Kottayam
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 28-09-2016
Date Of Final Hearing 27-09-2016
Next Hearing Date 27-09-2016
Assessment Year 2008-2009
Appeal Filed On 23-05-2016
Judgment Text
ITA NO. 2 4 0 / C/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/ SHRI B P JAIN AM & GEORGE GEORGE K JM ITA NO 2 4 0 /COCH/2016 (A SST YEAR 20 0 8 - 09 ) M/S. CENTRAL FINANCIERS ROOM NO.11/544 PATTANIKAROTTU BUILDING KURAVILANGAD KOTTAYAM - 686633 VS THE INCOME TAX OFFICER WARD 1 KOTTAYAM . ( APPELLANT) (RESPONDENT) PAN NO. AACFC 5739N ASSESSEE BY SHRI C.B.M.WARRIER C.A REVENUE BY SH A DHANARAJ SR DR DATE OF HEARING 27 TH SEPT 2016 DATE OF PRONOUNCEMENT 28 TH SEPT 2016 ORDER PER GEORGE GEORGE K JM : THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE CIT(A)S ORDER DATED 18 . 3.2016. THE RELEVANT ASSESSMENT YEAR IS 20 0 8 - 09. 2 THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE ASSESSING OFFICER WHILE PA SSING AN INTIMATION UNDER SECTION 143(1) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) IS JUSTIFIED IN CHANGING THE STATUS OF THE ASSESSEE FROM AOP TO THAT OF A FIRM. 3. BRIEFLY STATED THE FACTS OF THE CARE ARE AS FOLLOWS: - ITA NO. 2 4 0 / C/2016 2 THE ASSESSEE WAS ASSESSE D IN THE PAST YEARS IN THE STATUS OF AOP. FOR THE RELEVANT ASSESSMENT YEAR NAMELY ASSESSMENT YEAR 2008 - 09 THE RETURN OF INCOME WAS FILED IN THE STATUS OF AOP. THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT ON 30/3/2010 UNDER THE STATUS OF A FIRM. THE ASSESSEE FILED A RECTIFICATION APPLICATION REQUESTING THAT THE STATUS IS TO BE CHANGED TO AOP. THE RECTIFICATION APPLICATION WAS REJECTED BY THE ASSESSING OFFICER VIDE HIS LETTER DATED 01/09/2010. 3. AGGRIEVED BY THE LETTER OF THE ASSESSING OFFICER REJECT ING THE RECTIFICATION APPLICATION ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. THE CIT(A) WAS PRIMARILY OF THE VIEW THAT THE ASSESSEE HAD PAN IN THE STATUS OF A FIRM AND HENCE NOT P OSSIBLE TO CHANGE THE STATUS TO THAT OF AOP. THE RELEVANT FINDING OF THE CIT(A) READ AS UNDER: - 9. THE ASSESSEE IS A PARTNERSHIP FIRM BUT HAS BEEN ASSESSED AS AOP FOR MANY YEARS. THE PAN HAS BEEN OBTAINED IN THE STATUS OF A FIRM. THIS CHANGE IN STATUS WORKED SMOOTHLY AS LONG AS THE INCOME TAX RETURNS WERE PROCESSED MANUALLY. NOW AFTER INTRODUCTION OF FULL - FLEDGED COMPUTERIZED PROCESSING THE CHANGE IN STATUS IS NOT POSSIBLE. BUT ASSESSEE WANTS THIS OLD PRACTICE TO BE CONTINUED FOR SOME REASON WHICH IS NOT LOGICALLY CORRECT. I DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE ASSESSEE. IF ASSESSEE WANTS TO CHANGE THE STATUS TO AOP HE SHOULD APPLY TO THE AUTHORITY ISSUING PAN NUMBERS. ASKING THE ASSESSING OFFICER TO CHANGE EVERY TIME IS NOT CORRECT. FOR THE ABOVE SAID REASONS HE APPEAL IS DISMISSED. 4. AGGRIEVED BY THE ORDER OF THE CIT(A) ASSESSEE IS IN APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES. ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF ASSESSING OFFICER AND CIT(A). ITA NO. 2 4 0 / C/2016 3 5. WE HAVE HEARD T HE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMARILY IN THIS CASE ASSESSEE FOR THE PAST MANY YEARS HAVE BEEN ASSESSED IN THE STATUS OF AOP. FOR THE C URRENT ASSESSMENT YEAR ALSO RETURN OF INCOME WAS FILED IN THE STATUS OF AOP. COPY OF THE RETURN FILED FOR RELEVANT ASSESSMENT YEAR IS PLACED ON RECORD AT PAGE - 40 OF THE PAPER BOOK FILED BY THE ASSESSEE. THEREFORE THE CIT(A)S REASONING THAT ASSESSEE HAD FILED RETURN FOR THE ASSESSMENT YEAR 2008 - 09 IN THE STATUS OF A FIRM IS WRONG AND INCORRECT. 5.1. WHILE PASSING AN INTIMATION U/S 143 (1) OF THE ACT THE ADJUSTMENT SHALL BE LIMITED TO THE FOLLOWING ITEMS. WHERE A RETURN HAS BEEN MADE UNDER SECTI ON 139 OR IN RESPONSE TO A NOTICE UNDER SUB - SECTION (1) OF SECTION 142 SUCH RETURN SHALL BE PROCESSED IN THE FOLLOWING MANNER NAMELY : - A) THE TOTAL INCOME OR LOSS SHALL BE COMPUTED AFTER MAKING THE FOLLOWING ADJUSTMENTS NAMELY : - I. ANY ARITHMETICAL ERROR IN THE RETURN; [OR] II. AN INCORRECT CLAIM IF SUCH INCORRECT CLAIM IS APPARENT FROM ANY INFORMATION IN THE RETURN; III. DISALLOWANCE OF LOSS CLAIMED IF RETURN OF THE PREVIOUS YEAR FOR WHICH SETOFF OF LOSS IS CLAIMED WAS FURNISHED BEYOND THE DUE DATE SPECIFIED UNDER SUB - SECTION (1) OF SECTION 139; IV. DISALLOWANCE OF EXPENDITURE INDICATED IN THE AUDIT REPORT BUT NOT TAKEN IN TO ACCOUNT IN COMPUTING THE TOTAL INCOME IN THE RETURN; V. DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTIONS10AA 80 - IA 80 - LAB 80 - IB 80 - IC 80 - LDOR SECTION 80 - IE IF THE RETURN IS FURNISHED BEYOND THE DUE DATE SPECIFIED UNDER SUB - SECTION (1) OF SECTION 139; OR VI. ADDITION OF INCOME APPEARING IN FORM 26AS OR FORM 16A OR FORM 16 WHICH HAS NOT BEEN INCLUDED IN COMPUTING TH E TOTAL INCOME IN THE RETURN: PROVIDED THAT NO SUCH ADJUSTMENTS SHALL BE MADE UNLESS AN INTIMATION IS GIVEN TO THE ASSESSEE OF SUCH ADJUSTMENTS EITHER IN WRITING OR IN ELECTRONIC MODE: PROVIDED FURTHER THAT THE RESPONSE RECEIVED FROM THE ASSESSE IF ANY SHALL BE CONSIDERED BEFORE MAKING ANY ADJUSTMENT AND IN A CASE WHERE NO RESPONSE IS RECEIVED WITHIN THIRTY DAYS OF THE ISSUE OF SUCH INTIMATION SUCH ADJUSTMENTS SHALL BE MADE; ITA NO. 2 4 0 / C/2016 4 B) THE TAX AND INTEREST IF ANY SHALL BE COMPUTED ON THE BASIS OF THE TOTAL INCOME COMPUTED UNDER CLAUSE (A); C) THE SUM PAYABLE BY OR THE AMOUNT OF REFUND DUE TO THE ASSESSE SHALL BE DETERMINED AFTER ADJUSTMENT OF THE TAX AND INTEREST IF ANY COMPUTED UNDER CLAUSE (B) BY ANY TAX DEDUCTED AT SOURCE ANY TAX COLLECTED AT SOURC E ANY ADVANCE TAX PAID ANY RELIEF ALLOWABLE UNDER AN AGREEMENT UNDER SECTION 90 OR SECTION 90A OR ANY RELIEF ALLOWABLE UNDER SECTION 91 ANY REBATE ALLOWABLE UNDER PART A OF CHAPTER VIII ANY TAX PAID ON SELF - ASSESSMENT AND ANY AMOUNT PAID OTHERWISE BY WAY OF TAX OR INTEREST; D) AN INTIMATION SHALL BE PREPARED OR GENERATED AND SENT TO THE ASSESSEE SPECIFYING THE SUM DETERMINED TO BE PAYABLE BY OR THE AMOUNT OF REFUND DUE TO THE ASSESSE UNDER CLAUSE (C); AND E) THE AMOUNT OF REFUND DUE TO THE ASSESSE IN PURSUANCE OF THE DETERMINATION UNDER CLAUSE (C) SHALL BE GRANTED TO THE ASSESSE: PROVIDED THAT AN INTIMATION SHALL ALSO BE SENT TO THE ASSESSEE IN A CASE WHERE THE LOSS DECLARED IN THE RETURN BY THE ASSESSE IS ADJUSTED BUT NO TAX OR INTEREST IS PAYABLE BY OR NO REFUND IS DUE TO HIM: PROVIDED FURTHER THAT NO INTIMATION UNDER THIS SUB - SECTION SHALL BE SENT AFTER THE EXPIRY OF ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS MADE. 5.2 THE ASSESSING OFFICER HAS NOT GIVEN ANY NOTICE OR PROPOSAL TO CHANGE THE STATUS OF THE ASSESSE AS PER THE RETURN OF INCOME FILED. THE ASSESSING OFFICER IS NOT AUTHORIZED TO MAKE ANY CHANGES OTHER THAN WHAT IS PROVIDED IN THE PROVISIONS OF THE ACT AND HENCE THE CHANGE IN THE STATUS OF THE ASSESSEE WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE CASE IS WITHOUT JURISDICTION . 5.3 THE CIT (APPEAL) IS FUNDAMENTALLY WRONG SINCE HE PROCEEDED WITH THE WRONG UNDERSTANDING THAT THE ASSESSEE FILED THE RETURN OF INCOME WITH THE STATUS OF FIRM. T HE ASSESSEE ALSO SUBMIT TED THAT THE INCOME FROM BUSINESS IS COMPUTED WITHOUT CLAIMING THE REMUNERATION OR INTEREST TO THE PARTNERS BECAUSE THE STATUS IS ADOPTED AS AOP. THIS IS EVIDENT FROM THE STATEMENT OF TOTAL INCOME FOR THE A. Y. 2008 - 09 FILED ALO NG WITH THE RETURN OF INCOME. (PAGE - 83 OF THE PAPER BOOK FILED BY THE ASSESSEE) ITA NO. 2 4 0 / C/2016 5 5.4 IN VIEW OF THE ABOVE REASONING THE CHANGE OF STATUS OF THE ASSESSEE FROM THAT OF AOP TO FIRM IS NOT JUSTIFIED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS ORDERED A CCORDINGLY. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF SEPT 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 28T H SEPT 2016 VM SR. PS COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT COCHIN ITA NO. 2 4 0 / C/2016 6