THE AKHTAR HUSSAIN KHAN, v. M/S. CIT CEN-I,

ITA 3769/MUM/2008 | 2003-2004
Pronouncement Date: 27-07-2011 | Result: Dismissed

Appeal Details

RSA Number 376919914 RSA 2008
Assessee PAN AEMPK0686E
Bench Mumbai
Appeal Number ITA 3769/MUM/2008
Duration Of Justice 3 year(s) 1 month(s) 29 day(s)
Appellant THE AKHTAR HUSSAIN KHAN,
Respondent M/S. CIT CEN-I,
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 27-07-2011
Date Of Final Hearing 19-07-2011
Next Hearing Date 19-07-2011
Assessment Year 2003-2004
Appeal Filed On 29-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI P.M. JAGTAP (AM) & SHRI VIJAY PAL RAO (JM) I.T.A.NO.3769/MUM/2008 (A.Y. 2003-04) SHRI AKHTAR HUSSAIN KHAN A-101/102 1 ST FLOOR SARINA APARTMENT NR. HOME GUARD CENTRE SALFA GHATKOPAR (W) MUMBAI-400 084. PAN: AEMPK0686E VS. COMMR. OF INCOME-TAX CENTRAL-I OLD CGO BLDG. ROOM NO.1001 1 ST FLOOR ANNEX M.K. ROAD MUMBAI-400 020. APPELLANT RESPONDENT APPELLANT BY SHRI JAYANT BHATT. RESPONDENT BY SHRI G OLI SRINISAS RAO. O R D E R PER VILAY PAL RAO JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E REVISION ORDER PASSED U/S.263 OF CIT CENTRAL-I MUMBAI DATED 19-03-2008 FOR THE ASSTT. YEAR 2003- 04. 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THIS APPEAL. HOWEVER THE ONLY ISSUE WHICH ARISES FOR OUR CONSIDERATION AND ADJUDI CATION IS WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT IS JUS TIFIED IN INVOKING THE PROVISIONS OF SEC. 263 AND SETTING ASIDE THE ASSESSMENT WITH A DIRECTION TO THE AO TO MAKE FRESH ASSESSMENT IN RESPECT OF INFLATION OF EXPEND ITURE. 3. THERE WAS A SEARCH & SEIZURE ACTION U/S.132 OF T HE I.T. ACT ON 15-10-2003 WHICH WAS FINALLY CONCLUDED ON 02-12-2003. SURVEY O PERATIONS U/S.133 OF THE I.T. ACT WERE ALSO CARRIED OUT AT THE BUSINESS PREMISES OF THE GROUP CONCERNS OF THE ITA NO.3769/M/08 AKHTAR HUSSAIN KHAN 2 ASSESSEE. DURING THE SEARCH & SURVEY ACTION A FLOP PY DRIVE WAS FOUND AND SEIZED CONTAINING THE ACCOUNTS OF THE ASSESSEE. THE ASSESS MENT WAS FAMED U/S.153A READ WITH SEC.143(3) ON 27-03-2006 BY DETERMINING T HE TOTAL INCOME OF THE ASSESSEE AT 33 55 326/-. SUBSEQUENTLY THE CIT PROP OSED TO REVISE THE ASSESSMENT PRIMARILY ON THE GROUND THAT IN THE SECO ND SET OF BALANCE-SHEET & PROFIT & LOSS ACCOUNT IN RESPECT OF GROUP CONCERNS FOR THE FINANCIAL YEAR 2002-03 FOUND DURING THE COURSE OF SEARCH AND COMPARISON OF THE SAME WITH THE FINAL ACCOUNTS OF THE ASSESSEE REVEALED INFLATION OF EXPE NSES OF RS.54 40 261/-. ACCORDINGLY THE CIT HAS ISSUED A SHOW CAUSE NOTIC E U/S. 263. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE CONTENDED THAT THE FLOPPY DRIVE CONTAINED INCOMPLETE DATA WHICH REPRESENTED ONLY PRIMARY DATA ENTERED BY THE CLERK AND FED IN TALLY PACKAGE. THUS THE SAME CANNOT BE COMP ARED WITH THE AUDITED ACCOUNTS. IT WAS ARGUED BEFORE THE CIT THAT THE BOO KS OF ACCOUNT PRESENTED BEFORE THE AO WERE DULY AUDITED AND THE AO DID NOT FIND ANY INFIRMITY IN THE ACCOUNTS OF THE ASSESSEE. THE CIT AFTER CONSIDERIN G THE CONTENTIONS AS WELL AS THE SEIZED MATERIAL HAS HELD THAT THE ASSESSMENT U /S.153A READ WITH SEC. 143(3) FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS ERRO NEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE INASMUCH AS DISALLOWANCE ON ACCOUNT OF INFLATION OF EXPENSES IS INVOLVED. ACCORDINGLY HE SET ASIDE THE ASSESSMENT AND DIRECTED THE AO TO MAKE A FRESH ASSESSMENT WHILE PA SSING THE IMPUGNED ORDER. 4. BEFORE US THE LD. A.R. OF THE ASSESSEE HAS REIT ERATED THE CONTENTIONS AS RAISED BEFORE THE CIT AND SUBMITTED THAT THE DATA F OUND IN THE FLOPPY DRIVE IS INCOMPLETE AS THE SAME WAS FED IN TALLY PACKAGE AND THE INCOME CANNOT BE ASSESSED ON THE BASIS OF INCOMPLETE DATA IN THE TAL LY PACKAGE OF SOFTWARE ACCOUNTING AS ON THE DATE OF SEARCH. IT WAS FURTHER POINTED OUT THAT CERTAIN EXPENSES ARE ACCOUNTED ONLY AT THE END OF THE YEAR AND THEREFORE THE DATA FOUND IN THE FLOPPY DRIVE AT THE TIME OF SEARCH CAN NOT BE COMPARED WITH THE FINAL ITA NO.3769/M/08 AKHTAR HUSSAIN KHAN 3 AUDITED ACCOUNTS OF THE ASSESSEE. THE LD. A.R. HAS FORCEFULLY CONTENDED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS BEFORE THE A O DURING THE ASSESSMENT PROCEEDINGS AND THE AO DULY VERIFIED ALL THE EXPEN SES AND OTHER DETAILS FILED WITH THE RETURN OF INCOME. HE HAS REFERRED TO PARA 4 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE AO HAS ACKNOWLEDGED THE FACT OF FILING THE DETAILS PRODUCTION OF BOOKS OF ACCOUNT AND EXPLANATION BY THE ASSESSEE . THE LD. A.R. HAS ASSERTED THAT ONCE THE AO HAS DULY EXAMINED THE CLAIM OF THE ASSESSEE AND PARTICULARLY EXPENDITURE FROM THE RECORD PRODUCED BY THE ASSESSE E THEN THE CIT CANNOT INVOKE THE JURISDICTION U/S.263 BY TAKING A DIFFERE NT VIEW THAN THAT OF THE AO. THE ORDER PASSED U/S.143(3) BY THE AO CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE WHEN THE AO HAS TAKEN A VIEW ON THE ISSUE. HE HAS FURTHER CONTENDED THAT THE CIT HAS NOT POINTED OUT ANY POSITIVE MATERIAL IN SUPPORT OF REVISING THE ASSESSMENT. U/S.263 THE CI T CANNOT CONDUCT A FISHING AND ROVING ENQUIRY. HE HAS RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD. (2 03 ITR 108) AND SUBMITTED THAT WHEN THE AO ACTING IN ACCORDANCE WITH LAW MAKES T HE ASSESSMENT THE SAME CANNOT BE HELD AS ERRONEOUS BY THE CIT SIMPLY BECAU SE THE CIT WAS OF THE VIEW THAT THE AO SHOULD HAVE GIVEN MORE DETAILS AND EXAM INED THE MATTER PROPERLY. HE HAS REFERRED TO THE PROCEEDINGS OF DESEALING CO MPUTER BACK-UP SEIZED DURING THE SEARCH ACTION. THE PROCEEDINGS IN THIS RESPECT ARE PLACED AT PAGE 137 OF THE PAPER BOOK. THUS THE LD. A.R. HAS SUBMITTED THAT W HEN THE AO HAS TAKEN INTO CONSIDERATION THE FLOPPY DRIVE CONTAINING THE DATA THEN THE CIT CANNOT RE- APPRECIATE THE SAME WHILE EXERCISING JURISDICTION U/S.263. 5. ON THE OTHER HAND THE LD. D.R. HAS SUBMITTED TH AT THE AO HAS NOT AT ALL EXAMINED OR DISCUSSED THE ISSUE INVOLVED IN THE 263 ORDER. THERE IS NOT EVEN AN IOTA OF FINDING OR DISCUSSION BY THE AO ON THE ISSU E OF INFLATED EXPENDITURE. THE CIT HAS RELIED UPON AND CONSIDERED THE SEIZED MATER IAL ANNEXURE A-6 WHILE ITA NO.3769/M/08 AKHTAR HUSSAIN KHAN 4 PASSING THE IMPUGNED ORDER. THE LD. D.R. HAS FORCEF ULLY CONTENDED THAT THE SEIZED MATERIAL IS VERY MUCH POSITIVE MATERIAL ON THE POIN T AND THEREFORE THE CIT HAS CONSIDERED A RELEVANT AND POSITIVE EVIDENCE/MATERIA L WHILE PASSING THE IMPUGNED ORDER. HE HAS RELIED UPON THE IMPUGNED ORDER. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY PERUSED THE RECORDS. IN THE ASSESSMENT ORDER THE AO HAS RECORD ED THAT THE A.R. OF THE ASSESSEE APPEARED IN RESPONSE TO THE NOTICE FROM T IME TO TIME AND FILED DETAILS CALLED FOR PRODUCED THE BOOKS OF ACCOUNT AND EXPLA NATION. AS FAR AS THE ISSUE OF INFLATION OF THE EXPENDITURE WHICH IS THE SUBJECT MATTER OF THE REVISION ORDER IS CONCERNED IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE AO HAS NOT DISCUSSED THIS ISSUE AT ALL. THERE IS NO TRACE OF A NY EXAMINATION OF THIS ISSUE BY THE AO WHILE PASSING THE ASSESSMENT ORDER. THERE IS NO DOUBT THAT WHEN TWO VIEWS ARE POSSIBLE ON AN ISSUE AND THE AO HAS TAKE N ONE OF THE POSSIBLE VIEWS THEN WHILE EXERCISING THE JURISDICTION U/S. 263 T HE CIT CANNOT TAKE A DIFFERENT VIEW ON THE ISSUE. WHILE FRAMING THE ASSESSMENT TH E AO HAS NOT DISCUSSED ANYTHING WITH REGARD TO ADDRESSING THE ISSUE OF INF LATED EXPENDITURE. EVEN FROM THE RECORDS IT IS CLEAR THAT THE AO HAS NOT EVEN M ADE ANY ENQUIRY ON THIS ISSUE. THE RECORDS AND DETAILS FILED BY THE ASSESSEE ALSO DO NOT DIRECT TO EXPLAIN OR REPLY ON THE ISSUE OF INFLATION OF EXPENDITURE. IT IS NOT THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAS FURNISHED ANY EXPLANATION OR PRODUCED THE RELEVANT RECORDS TO SATISFY THE REASONS OF DIFFERENCE IN THE EXPENDITUR E RECORDED IN THE FLOPPY DRIVE AND IN THE FINAL BOOKS OF ACCOUNT OF THE ASSESSEE. THE CIT HAS CATEGORICALLY RECORDED THE FACT THAT THE ASSESSEE IN THE FINAL BO OKS OF ACCOUNT IN COMPARISON TO THE SEIZED DOCUMENTS OF ANNEXURE-6 INFLATED THE EXP ENDITURE IN RESPECT OF TOWING EXPENSES OF RS.31 81 403/- SALARY WAGES & LABOUR EXPENDITURE AT RS.16 79 163/-. WHEN THE EMPLOYEES WORKING AT THE S ITE WERE BEING PAID ON DAILY BASIS AND THE EXPENSES WERE DEBITED AT THE EN D OF EACH DAY THEN THERE IS ITA NO.3769/M/08 AKHTAR HUSSAIN KHAN 5 NO JUSTIFICATION IN THE CLAIM OF THE ASSESSEE THAT TOWING SALARY WAGES & LABOUR EXPENSES ARE BOOKED ONLY AT THE END OF THE FINANCIA L YEAR. THE NATURE OF THE EXPENSES IS SUCH THAT THEY ARE INCURRED ON DAY TO D AY BASIS OF THE BUSINESS TRANSACTIONS AND THEREFORE THEY ARE RECORDED ON D AY TO DAY BASIS. THEREFORE WHEN THESE EXPENSES WERE NOT FOUND RECORDED AT THE TIME OF SEARCH THERE IS SUFFICIENT GROUND WITH THE CIT IN HOLDING THAT IN T HE ABSENCE OF ANY ENQUIRY AND VERIFICATION BY THE AO THE ASSESSMENT ORDER IS ERR ONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE. WHEN THE A O HAS NOT AT ALL DISCUSSED OR GIVEN ANY FINDING ON THESE ISSUES AND THERE IS NOT HING IN THE ASSESSMENT TO SUGGEST OR EXHIBIT ANY THOUGHT PROCESS ON THE PART OF THE AO IN ADDRESSING THE ISSUES IN QUESTION THEN UNDOUBTEDLY THERE IS NO APPLICATION OF MIND ON THE PART OF THE AO AS REGARDS THE ISSUES ON WHICH THE REVISI ON ORDER HAS BEEN PASSED. WHEN THE AO PASSED AN ORDER WITHOUT APPLICATION OF MIND THE ORDER SO PASSED BY HIM IS ERRONEOUS AND EXERCISE OF JURISDICTION BY THE CIT U/S. 263 IS PROPER AND JUSTIFIED. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO ERROR OR ILLEGALITY IN THE IMPUGNED ORD ER OF CIT PASSED WHILE EXERCISING JURISDICTION U/S.263. THE CASE RELIED UPON BY THE L D. A.R. DOES NOT HELP THE CASE OF THE ASSESSEE BECAUSE IN THE CASE IN HAND THE A O HAS NOT MADE EVEN AN ATTEMPT TO VERIFY AND ADJUDICATE THE ISSUE. FURTHER THE ASSESSEE HAS ALSO NOT BEEN ABLE TO SHOW THAT THE RELEVANT RECORD OR EXPLA NATION HAS BEEN PRODUCED BEFORE THE AO ON THIS ISSUE. ACCORDINGLY THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE APPEAL OF THE ASSESS EE IS DEVOID OF MERITS. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ITA NO.3769/M/08 AKHTAR HUSSAIN KHAN 6 ORDER PRONOUNCED ON THE 27TH DAY OF JULY 20 11. SD/- SD/- (P.M. JAGTAP) (VIJAY PAL RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 27TH JULY 2011. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT CENTRAL-I MUMBAI. 4 ADDL. CIT C.R.3 MUMBAI.. 5.DR H BENCH MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER ASST.REGISTRAR ITAT MUMBAI. ITA NO.3769/M/08 AKHTAR HUSSAIN KHAN 7 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 19-07-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 20-07-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER