Shri Bhailal Shah, Shajapur v. The CIT, Ujjain

ITA 61/IND/2011 | 2006-2007
Pronouncement Date: 11-11-2011 | Result: Allowed

Appeal Details

RSA Number 6122714 RSA 2011
Bench Indore
Appeal Number ITA 61/IND/2011
Duration Of Justice 5 month(s) 10 day(s)
Appellant Shri Bhailal Shah, Shajapur
Respondent The CIT, Ujjain
Appeal Type Income Tax Appeal
Pronouncement Date 11-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted Not Allotted
Tribunal Order Date 11-11-2011
Assessment Year 2006-2007
Appeal Filed On 31-05-2011
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO.61/IND/2011 A.Y. 2006-07 SHRI BHAILA SHAH AKODIA DISTT. SHAJAPUR PAN BFRPS-7291J ... APPELLANT VS INCOME TAX OFFICER UJJAIN ... RESPONDENT APPELLANT BY : SHRI S.S. DESHPANDE RESPONDENT BY : SHRI KESHAV SAXENA DATE OF HEARING : 11.11.2011 DATE OF PRONOUNCEMENT : 11..11.2011 O R D E R PER JOGINDER SINGH THIS APPEAL IS BY THE ASSESSEE CHALLENGING THE ORD ER OF LEARNED COMMISSIONER OF INCOME TAX DATED 29.3.2011 ON THE 2 GROUND THAT THE LEARNED CIT ERRED IN PASSING THE OR DER U/S 263 ON THE GROUND THAT THE ASSESSMENT ORDER IS ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2. DURING HEARING OF THIS APPEAL WE HAVE HEARD SHR I S.S. DESHPANDE LEARNED COUNSEL FOR THE ASSESSEE AND SHR I KESHAV SAXENA LEARNED CIT DR. MR. DESHPANDE INVITED OUR ATTENTION TO THE ASSESSMENT ORDER FRAMED U/S 143(3) AND THE R ELEVANT DISCUSSION MADE THEREIN. OUR ATTENTION WAS ALSO IN VITED TO THE IMPUGNED ORDER SPECIFICALLY PARA 2 ON THE ISSUE OF PAYMENT OF INTEREST TO RELATIVES AND SISTER CONCERN. HOWEVER THE LEARNED CIT DR DEFENDED THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. THE GIST OF THE IM PUGNED ORDER ON THE BASIS OF WHICH SECTION 263 OF THE ACT WAS IN VOKED IS THAT THE ASSESSMENT ORDER WAS FRAMED WITHOUT PROPER AND SUFFICIENT INQUIRY THEREFORE IT IS ERRONEOUS AS WELL AS PREJ UDICIAL TO THE INTEREST OF REVENUE. HOWEVER WE FIND THAT THE AS SESSEE FILED ITS RETURN ON 26.10.2006 DECLARING TOTAL INCOME AT RS.2 88 930/- 3 BY CLAIMING THE SAME AS INCOME FROM BUSINESS OF WHO LESALE TRADING IN GRAINS ETC. THE ASSESSEE ALSO FILED TAX AUDIT REPORT ALONG WITH THE RETURN. THE CASE WAS SELECTED FOR SC RUTINY THEREFORE NOTICES U/S 142(1) AND 143(2) WERE ISSUE D TO THE ASSESSEE ALONG WITH QUESTIONNAIRE IN RESPONSE TO WH ICH THE ASSESSEE ATTENDED THE PROCEEDINGS AND ALSO PREFERRE D WRITTEN SUBMISSIONS. THE ASSESSMENT WAS FRAMED AFTER DUE DELIBERATION AND ON CONSIDERATION OF DETAILS SUBMIT TED BY THE ASSESSEE AND ALSO THE EXPLANATION FILED BY HIM. IN PARA 3 OF THE IMPUGNED ORDER THE REQUIRED DISCUSSION HAS BEEN MADE ON PAYMENT OF INTEREST TO CLOSE RELATIVES. THE DETAILS OF INTEREST WERE DULY EXAMINED BY THE ASSESSING OFFICER WITH RE FERENCE TO PREVAILING MARKET RATES. WHEREVER THE PAYMENT OF E XCESSIVE INTEREST WAS FOUND THE SAME WAS DULY DISALLOWED U/ S 40A(2)(B) OF THE ACT AND WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE PROFIT AND LOSS ACCOUNT WAS ALSO DULY VERIFIED AND 20% OF THESE EXPENSES WAS ALSO DISALLOWED AND THE INCOME W AS COMPUTED THEREFORE THE ASSUMPTION OF THE LEARNED CIT(A) THAT THE ASSESSMENT WAS FRAMED WITHOUT MAKING NECESSARY INQUIRY 4 AND INVESTIGATION IS NOT BASED UPON ANY FACTS. THE LEARNED ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIE W. THE LEARNED CIT HAS NOT PIN-POINTED AS TO HOW THE ASSES SMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE RATHER HE INVOKED THE REVISIONAL POWERS WITHOUT ASS IGNING ANY REASONS. WE FIND NO ERROR IN THE ASSESSMENT ORDER AND EVEN THE ASSESSMENT ORDER HAS NOT BEEN PASSED IN UNDUE H ASTE AND WITHOUT INQUIRY. IT IS NECESSARY FOR THE LEARNED C IT TO POINT OUT THE EXACT ERROR IN THE ORDER WHICH HE PROPOSED TO R EVISE. FOR INVOKING THE JURISDICTION U/S 263 TWO PRE-REQUISIT E CONDITIONS MUST BE PRESENT FIRST THAT THE ORDER PASSED BY THE ITO IS ERRONEOUS AND SECONDLY THE ERROR IS AS SUCH THAT IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. IF THE ORDER IS ERRONE OUS BUT IT IS NOT PREJUDICIAL TO THE INTEREST OF REVENUE THE LEARNED CIT CANNOT EXERCISE THE REVISIONAL JURISDICTION U/S 263 OF THE ACT. THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN H.H.MAHARAJA RAJA PAWAR DEWAS VS. CIT; 138 ITR 518 AND SMT. LILA CHOUDHARY V. CIT; 167 TAXMAN 1 (GAU) CIT V. R.K.METAL WORKS; 112 ITR 445 (P&H) AND CIT V. G.K. KABRA 5 COOP. INDUSTRIAL ESTATE; 75 TAXMAN 503 (AP) SUPPORT S THE CASE OF THE ASSESSEE. IN VIEW OF THE CLEAR FACT WE FIND NO JUSTIFICATION IN INVOKING THE REVISIONAL POWERS U/S 263 BY THE LD . COMMISSIONER THEREFORE THE STAND OF THE LEARNED C IT IS REVERSED CONSEQUENTLY THE APPEAL OF THE ASSESSEE IS ALLOWED. FINALLY THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE O F LEARNED REPRESENTATIVES FROM BOTH THE SIDES AT THE CONCLUSION OF THE HEARING. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3.11.2011 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE