Income Tax Appellate Tribunal - Jaipur
Saraf Export Palace, Churu vs Acit, Jhunjhunu on 26 March, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 171/JP/2017
fu/kZkj.k o"kZ@Assessment Year : 2012-13
M/s Saraf Export Palace cuke The ACIT,
RIICO Industrial Area, Vs. Circle,
Sardarshahar, Churu Jhunjhunu.
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vihykFkhZ@Appellant izR;FkhZ@Respondent
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s Assessee by : Shri Suresh Ojha (Adv.)
jktLo dh vksj ls@ Revenue by : Smt. Seema Meena (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 22/03/2018
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 26/03/2018
vkns'k@ ORDER
PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 29.12.2015 of ld. CIT(A), Jaipur for the assessment year 2012-13. There is a delay of 350 days in filing the present appeal. The assessee has filed an application for condonation of delay which is supported by the affidavit of the partner of the assessee's firm.
2. We have heard the ld. AR as well as the ld. DR on condonation of delay and carefully perused the contents of the application for ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT condonation of delay as well as supporting affidavits filed by the assessee. It was submitted by the ld. AR that the impugned order dated 29.12.2015 was received by the assessee on 15.01.2016. The assessee approach the Advocate Shri Suresh Ojha for preparation of memorandum of appeal which was received by the assessee. Accordingly, the assessee deposited as a sum of Rs. 10,000/- towards the payment of appeal fees on 09.02.2016. It was further submitted that the memorandum of appeal was dispatched to the office of the Tribunal however, no proof of dispatched is available with the assessee. Only during the course of appeal filed against the order passed by the ld. CIT(A) u/s 154 the assessee realized that the appeal is not filed and not pending in the Tribunal and consequently the assessee has filed the present appeal which is barred by limitation. Hence, the assessee is seeking condonation of delay. The ld. AR has submitted that the delay in filing the appeal is neither intentional nor deliberate but due to the bonafide and inadvertent mistake. He has relied upon the decision of Hon'ble Supreme Court in case of Vedabai alias Vaijayanatabai Baburao Patil v. Shantaram Baburao Patil 253 ITR 798 and submitted that while deciding the condonation of delay the court should adopt a pragmatic and liberal approach. The ld. AR has also relied upon 2 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT the decision Hon'ble Supreme court in case of Collector, land Acquisition vs. Mst Katiji & Ors 167 ITR 471.
3. On the other hand, the ld. DR has vehemently opposed to the condonation of delay and submitted that the assessee has not explained any reasonable cause for not filing the appeal within the period of limitation merely because the assessee claimed to have paid the appeal free would not explain the cause of delay in filing the present appeal.
4. We have considered the rival submissions as well as the relevant material on record. There is a delay of 350 days in filing the present appeal which shows that the delay is not an ordinary delay but it is an inordinate delay. The assessee has explained the cause of delay as stated in the application and affidavit that after doing the needful for preparing the memo of appeal and payment of fee the official of the assessee was directed to dispatch the appeal to the office of ITAT, Jaipur Bench. Thus, the assessee was under impression that the appeal has been filed and pending before the Tribunal. It is pertinent to note that the payment of appeal fee on 09.02.2016 would show the intention of the assessee to file the appeal however, until and unless the appeal is presented and duly filed in the registry of the Tribunal, the mere payment of the fee by the assessee at its place through bank challan 3 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT would not explain the delay in filing the appeal after about one year. The contents of the affidavits are reproduced as under:-
"I, Janardan Saraf S/o. Late Devkinandan Saraf R/o Ralan Marg Sardarshahar declare on oatch as under:-
That I am partner of M/s Saraf Export Palace, Sardarshahar fully conversant with the affairs of the firm, related Taxation as well as business.
That for filing appeal in Tribunal, form No. 36 was prepared and verified on 25.01.2016 and an amount of Rs. 10000.00 towards appeal fee of Tribunal was also deposited on 09.02.2016. That after doing needful our official was directed to dispatch the appeal to the office of ITAT, Jaipur Bench, Jaipur. That we were under the impression that the appeal has been submitted and pending before Hon'ble Tribunal, but only came to know, when the office of Tribunal Bench, Jaipur as well as as Jodhpur made known that no such appeal is pending. That there was no intention for not filing or late filing of appeal against the order of Commissioner of Income Tax Appeals-III, Jaipur, dated 29.12.2015.
That what has been stated is true to the best of knowledge."
Neither in the affidavit nor in the application for condonation of delay the assessee has given the exact particulars when the appeal papers were handed over and to whom those were given for dispatching. Further when the appeal was not finally dispatched to the office of the Tribunal then, the assessee was also supposed to verify the status of the appeal even if the assessee was under impression that the same 4 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT has been filed. The present appeal was filed only when the Tribunal asked the counsel of the assessee during the another appeal of the assessee about the status of the appeal against the impugned order passed by the authorities below and then only the assessee has filed the present appeal. Thus, the cause as stated by the assessee is very vague and do not disclose any reasonable explanation for such inordinate delay in filing the present appeal. There is no quarrel that while interpreting the expression sufficient cause for delay in filing the present appeal the courts should take a pragmatic and liberal approach however, in case where the delay is inordinate then a more cautious approach is required to be taken. The present appeal has been filed by the assessee without seeking any substantive relief but to criticise the impugned order of the ld. CIT(A). Therefore, in the facts and circumstances of the case when the cause as explained by the assessee is very general and vague without giving specific details then we are not satisfied with the said vague explanation of the assessee for abnormal delay in filing the present appeal. Accordingly, we decline to condone the delay in filing the present appeal.
5. On merits the assessee has raised the following grounds:- 5 ITA No. 171/JP/2017
M/s Saraf Export Palace vs. ACIT "1. That the order passed by the Assessing Authority and sustained by the Commissioner of Income-Tax (Appeals-III), Jaipur, is illegal and against the law.
2. That the Commissioner of Income-Tax (Appeals-III), Jaipur should have appreciated that without rejection of books of account there cannot be any addition.
3. That the order passed by the Commissioner of Income-Tax (Appeals-III), Jaipur is illegal and against the law because all grounds were not disposed off, as per the judgment of Hon'ble Rajasthan High Court each ground should have been disposed of by the Commissioner of Income-Tax, (Appeals-III), Jaipur.
4. That the Commissioner of Income-Tax (Appeals-III), Jaipur should have follow the judicial decorum and discipline in respect of the following the judicial pronouncement referred before him.
5. That the Commissioner of Income-Tax (Appeals-III), Jaipur should have rectified the mistake committed by the assessee as per the natural justice because the assessee himself come forward for surrendering of amount by way of furnishing revised return.
6.That the Commissioner of Income- Tax (Appeals-III), Jaipur should have accepted the return submitted before him by withdrawing of the deduction so claimed.
7. That the act of the CIT(A) is not correct in respect of not accepting the return submitted by him in course of hearing and should have adjudicated thereupon.
8. That the order is against the principle of natural justice and is not as per the law, therefore, not sustainable.6 ITA No. 171/JP/2017
M/s Saraf Export Palace vs. ACIT The grounds raised by the assessee in this appeal are again very vague and only in the nature of criticizing the order without seeking any specific relief or claim by the assessee.
6. We have heard the ld. AR as well as the ld. DR and considered the relevant material on record. The ld. AR has filed the written submissions as under:-
"Reference to above it is submitted as under:-
That the appeal in question is against the order passed by the Commissioner of Income Tax (Appeals) III, Jaipur, In this respect it is submitted as under grounds wise.
First ground in the appeal is in respect of the fact that the order passed by the Commissioner of Income Tax (Appeals) is illegal and against the law. In this respect it is submitted that the order passed by the Commissioner of Income Tax (Appeals) is illegal and against the law in all respect. I will submit about illegality, related to this ground in the subsequent argument also.
First illegality is that the Commissioner of Income Tax (Appeals) should have decided that each ground. In this respect I want to draw your kind attention towards the judgment delivered by the Jurisdictional High Court in case of Ram Chand Khatri, reported in 249 ITR page 323.Though the judgment is in respect of the fact that if the ground of appeal not decided in that case it shall be covered as mistake apparent from record. But same judgment is applicable here also because all grounds were not decided.
It will be worthwhile to submit here that beside in the above referred judgment the Hon'ble Jurisdictional High Court also observed in case of Sh. Ram & Co. having the DBIT appeals No. 101/2008 wherein the Hon'ble Tribunal Rajasthan High Court also 7 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT observed that each ground taken in the appeal should been decided, specifically the question whether each ground of grounds of appeal should be dealt with or not has been decided by the Hon'ble Rajasthan high Court in case of M/s Sri Ram & Company DBIT No. 101/2008 dated 28.07.2008. The relevant portion of the order of Hon'ble High court is reproduced as under:-
"Thue it is that learned Tribunal has not recorded the findings ground wise."
"What is important is that the learned Tribunal should have deiscussed the contention, and should have decided it, this way or that way. Of course, the learned counsel is right when he submits that learned Tribunal should have decided the ground, as raised."
Though the author mention that all ground has been decided, but the fact mention is not correct. Just for the sake of example I want to submit that there is a ground that without rejection of books of account no addition can be made but you will find no place in the order in the respect. In these fact and circumstance you will observe that each ground has not been decided, this is one of the illegality.
The second illegality is that the CIT (A) not followed the binding nature judgment In this respect I want to first draw your attention towards the list of case law referred before the CIT (A) which is at page 25 of the paper book.
I want to draw your kind attention towards the submission, submitted before the CIT (A). In this respect I want to draw your kind attention towards the fact that before the Commissioner of Income-tax (Appeals) the assessee have relied upon various judicious pronouncement, including the judgment of Hon'ble Supreme Court, Hon'ble Rajasthan High Court as well as the order of the Income-tax Appellate Tribunal, it will not be out of base 8 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT mentioned here that the CIT (A) without considering and adjudicating deciding the order. Therefore, in these facts and circumstances you will observe that this illegality in the order of CIT (A),If the judgment of binding nature, not followed is very well covered under the definition of illegality and also falling under the definition of contempt of court. It is therefore submitted that the order passed may kindly be declared as illegal. The third illegality is that the argument of the assessee was not considered, in this respect it will be worthwhile to mention here that the appeal in question was argued at length in person besides this summarily written submissions were also submitted before the CIT (A), vide submission dated 15.11.2015 and 25.12.2015 The order of the CIT (A) is having reproduction of the submission before the CIT(A). From the perusal of the same you will observe that the reproduction is only letter dated 15.11.2015 and there is no even reference that the assessee submitted submission dated 25.12.2015 this itself is sufficient so as to prove that the argument of the assessee was not consider.
The Third illegality is that the argument was not considered while deciding the appeal will also tantamount to the illegality. In this respect I want to draw your kind attention towards the judgment reported in 188 ITR 398.Though the judgment is on rectification but this is applicable in appeal also. The relevant portion thereof is being reproduced hereunder also:
The learned counsel for the assessee relied upon the decision of the Supreme Court in CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589. In this decision, the Supreme Court enunciated the situations in which questions of law can be said to arise from the order of the Tribunal. One of the situations mentioned by the Supreme Court is where a point were urged before the Tribunal, but not dealt with by it. Even in such a situation, it was held that a question of law to that effect must be deemed to arise from the order of the Tribunal. We do not see the 9 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT proposition in this decision militating against the power of the Tribunal to rectify its mistakes. As stated hereinbefore, where the Tribunal fails or omits to deal with an important contention affecting the maintainability/merits of the appeal, it must be deemed to be a mistake apparent from the record, which empowers the Tribunal to reopen the appeal and rectify the same if it is so satisfied - see ITO v. ITAT [1965] 58 ITR 634 (All.), a decision of a learned single Judge of this Court and ITO v. S.B. Singar Singh & Sons [1970] 75 ITR 646 (All.) and CIT v. ITAT [1988] 172 ITR 158/40 Taxman 59 (MP). In view of above mentioned facts and circumstances you will observe that the argument not considered by the CIT (A) while deciding the appeal. The written submission is part of the paper book at serial No. 3 and 4 subjects to verification, therefore.
The Fourth illegality is that the AO used the case law reported in 289 ITR page 195 against the assessee, in the return submission dated 15.11.2015 at page 8, in the submission it has been stated that use of case law behind the back is illegal. The CIT (A) not adjudicated on this submission of the assessee therefore this too is illegality in the order of the CIT (A).
The Fifth illegality that the CIT (A) not passed reasoned and speaking order therefore the order passed by the CIT (A) is illegal.
In these fact and circumstances you will observe that the order by the CIT (A) is illegal and against the law.
As regards ground number 2, it is submitted without rejection of books of account no addition can be made. This ground was before CIT (A) also, but this ground was not decided at all. In this connection it is submitted that without rejecting the books of account no addition can be made. In this connection it is stated that the Hon'ble Income Tax Appellate Tribunal, Jaipur Bench, Jaipur in case of the Income-tax Officer V/s Mewar Textile 10 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT Mill reported in 64 TTJ page 502 have held as under. The relevant portion is being reproduced here under:
6.2 In case of CIT v. Maharaja Shree Umaid Mills Ltd. [1991] 96 CTR (Raj.) 72 : [1991] 192 ITR 565 (Raj.), the Hon'ble Rajasthan High Court has held that the Tribunal was justified in holding that since books of account had not been rejected, the mere fact that there had been a fall in the g.p. rate would not lead to the inference that the expenditure had been inflated. 6.3 In case of CIT v. Padamchand Ram Gopal [1970] 76 ITR 719 (SC), the Hon'ble Supreme Court has held that no addition is justified if the books of account are not rejected. 6.4 We have also seen the other case law relied upon by the learned authorised representative and we find that the book results cannot be ignored if the books of account are not rejected or any defect were not pointed out by the Assessing Officer.
Therefore, we do not see any infirmity in the order of the CIT(A). On the reasons given by CIT(A) and on the reasons given here by us, the order of the CIT(A) is confirmed here by us. The judgment of Hon'ble Supreme Court reported in 76 ITR Page 719 held that without rejection of the books of account no addition whatsoever can be made. The relevant portion is being reproduced here under:
76 ITR Page 719 Commissioner Of Income-Tax, West Bengal.
VS Padamchand Ramgopal.
Facts The assessee, a HUF carrying on business in various items including money-lending produced his account books. The ITO rejected those accounts as unreliable and assessed the assessee 11 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT on the basis of best judgment by adding to the income returned by him various sums ranging from Rs. 17,951 for the asst. yr. 1956-57 to Rs. 21,536 for the asst. yr. 1954-55. The five assessments years are 1953-54, 1954-55, 1955-56, 1956-57 and 1957-58. The ITO in his order did not give any reason for not relying on the accounts submitted.
Issue Whether the Tribunal was justified in holding that the ITO had rightly added income in the subsequent assessment years.
Findings Appeal dismissed. Reasoning
It was not justified in holding that the additions made by the ITO were in accordance with law. Those additions were arbitrarily made. No reasons were given to reject the accounts relating to the asst. yrs. 1954-55, 1955-56, 1956-57, and 1957-58. Further, the method adopted for determining the escaped income appears to be highly capricious From the perusal of entire order you will observe that books of accounts have not been rejected therefore in absence of rejection of books of accounts the addition made by the Income-Tax Officer is illegal and against the law.
The judgment of Supreme Court and order of Tribunal is having the character of binding nature therefore requested that the entire addition made may kindly be deleted and order passed by the Assessing Officer may kindly be declared as illegal. As regards grounds no.03 in this respect the attention was also drawn towards the judgment of Hon'ble Rajasthan High Court 12 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT referred above in case of Ramesh Chandra Khatri and Sri Ram and Company.
From the memo you will observe that all grounds taken in the memo of appeal was not decided by the Commissioner of Income Tax (Appeals) while passing the order. As per the law The Commissioner of Income Tax (Appeals) is suppose to decide each grounds taken in the memo of appeal otherwise also. The judgments are the judgment of Jurisdictional High Court referred in the submission, therefore, were having the character of binding in nature. In this respect your attention is invited towards 249 ITR 323 (Raj), Sri Ram and Company (Raj) 275 ITR 247 (Allahabad) and 199 ITR 771 (Allahabad). The copies of judgment are at paper of book of case law at serial No. 1 to 4.The principal lay down is applicable in all respect.
As regards ground No 4 which is in respect of the declaring the order of Commissioner of Income Tax (Appeals) as against the judicial decorum and judicial discipline, in this respect I want to draw your kind attention towards the fact that the order of Tribunal, judgment of jurisdictional High Court and the judgment of the Supreme Court is having the character of binding in nature. If the order of Tribunal, judgment of jurisdictional High Court and the judgment of the Supreme Court is not followed, is rather also covered under the definition contempt of court, in this case there is a direct contempt of court because the Commissioner of Income Tax (Appeals) III, Jaipur fails to follow the judgment of Jurisdictional High Court etc which were referred in the application itself even without adjudicating anything. In these facts and circumstances you are requested that contempt against Commissioner of Income Tax (Appeals) III, Jaipur may kindly be referred to the Hon'ble Jurisdictional High Court for not following the judgment of Tribunal and Hon'ble High Court.
13 ITA No. 171/JP/2017
M/s Saraf Export Palace vs. ACIT In this respect I want to draw you kind attention towards the judgment /order of Income Tax Appellate Tribunal in respect of the following the order of Income Tax Appellate Tribunal by the Commissioner of Income Tax (Appeals). The Hon'ble Tribunal commenting upon CIT (A) when the order of Tribunal was not followed by the CIT (A), here in case of mine the matter is having much more gravity. This time the Commissioner of Income Tax (Appeals) not followed the order of Hon'ble Rajasthan High Court. Your kind attention is invited towards the order of Tribunal delivered in case of Avon Apparels V/s ITO, in which it was held that in Rajasthan, the department is bound to follow the decisions of Jaipur Bench of the Tribunal and that the CIT (A) has committed a mistake which is not curable, reported in 22 Tax Word 399. In this case the Hon'ble Tribunal said about the order of Tribunal only.
It will be worthwhile to draw the kind attention towards the fact that even the judgment of Rajasthan High Court is binding upon the Income Tax Appellate Tribunal, therefore, requested to kindly declare the order as against the judicial decorum and discipline as well as also requested to kindly passed structure against the Commissioner of Income Tax (Appeals), III, Jaipur and refer the matter of contempt of court to the Hon'ble Rajasthan High Court. There are so many judgment on this subject but I want to draw your kind attention towards the order of Tribunal delivered in case of DCIT, Chandigarh Vs. Sh. Shyam Sundar Sharma ITA No. 966/Chd /2014 Assessment Year: 2007-08 relevant para no. 11 page no. 13 or 14 of the order is being reproduced here under.
" Considering the facts of the case in the light of the findings of the learned CIT (Appeals) in the impugned order ,we are of the view that the order of the learned CIT (Appeals)cannot be sustained in law and is 14 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT passed by the learned CIT(Appeals) clearly in defiance of the order of the Tribunal .Since it is a first matter reported to us during the course of arguments by the learned D.R for the Revenue that the order of the learned CIT (Appeals) shows complete defiance of the order of the Tribunal , therefore, we do not propose at stage to initiate contempt proceedings against the learned CIT (Appeals), however, we warn him to be careful in future in following the order of the Tribunal in accordance with law and should not show any defiance to the order of the Tribunal . In this view of the matter, we set aside the impugned order of the learned CIT (Appeals), Chandigarh and restore the matter in issue to his file with direction to re-decide the appeal of the assessee strictly in accordance with law and in following the earlier order of the Tribunal dated 23.11.2011. The learned CIT (Appeals) shall give reasonable sufficient opportunity of being heard to the assessee and shall decide the appeal of the assessee within two months from the receipt of this order.12. In the result, departmental"
The case of the assessee is fit and covered by the above mention judgment therefore requested to kindly take action against the Commissioner of Income Tax (Appeal) III, Jaipur following the above judgment.
If allowed in the last year cannot rejected in subsequent year The brief fact of the case is that the claim of 80 IA of the Income Tax Act was claimed by the assessee in the year under 15 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT consideration. The claim was rejected in the special circumstances that when in the last year the deduction was allowed, cannot be disallowed in the subsequent year. The rejection of the deduction in the subsequent year is illegal there for the assessee submitted his argument on the line on the date of hearing on 15.11.2015, the copy of the submissions is in the paper book at serial No. 3.
As far as the issue in respect of the fact, in which if in the initial year, the deduction has been allowed in the subsequent year same cannot be changed. In this respect I want to draw your kind attention towards the order of Income tax Appellate Tribunal delivered in case of Tyco Valves & Controls (India) ... vs Department Of Income Tax on 23 August, 2012 the relevant few portion are being reproduced hereunder:
"Therefore, the start point of the limitation for claiming the benefit flowing from section 10B would commence from the year of manufacture or production of the undertaking. If the conditions prescribed in the section are not satisfied in the year of commencement of production, we hold that in the absence of any disturbance in respect of relief granted in initial year, there was no legal justification to disturb the continuous deduction of section 10B in any of the subsequent assessment year."
The above order of the Hon'ble Tribunal is crystal clear in respect of fact that if in the initial year the deduction has been claimed cannot be disturbed in the succeeding year. The ratio of the order of the Tribunal is applicable in Toto.
16 ITA No. 171/JP/2017
M/s Saraf Export Palace vs. ACIT I further want to draw your kind attention towards the order of Tribunal in case of Samruddhi Industries Ltd. delivered by the ITAT Pune bench in which the Hon'ble bench is also of the same view. I am reproducing hereunder the relevant portion of the order of Tribunal (Para 14) as under for your ready reference:
"Assessee and without any changed circumstances, the said claim was sought to be denied in a subsequent year, and such an attempt was negated by the Hon'ble High Court. In the instant case, as we have noted earlier the circumstances have changed after the initial assessment year and therefore, the claim is sought to be denied on valid grounds and without disturbing the claim in the initial year because the circumstances in the initial year have not undergone any change."
I want to also draw your kind attention towards the judgment delivered by Karnataka High Court in case of ACE multi Axes System Ltd. the relevant portion thereof is being reproduced hereunder:
"Industrial growth which is required to be achieved, if two interpretations are possible, the courts have to learn in favour of extending the benefit of deduction to an assessee who has availed the opportunity given to him under law and has grown in his business. Therefore we are of the view, if a small scale industry, in the course of 10 years, stabilizes early, makes further investments in the business and it results in it's going outside the purview of the definition of a small scale industry, that should not come in the way of 17 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT its claiming benefit under sec. 80IB for 10 consecutive years, from the initial assessment year. Therefore the approach of the authorities runs counter to the scheme and the intent of the Legislature. Thereby they have denied the legitimate benefit, an incentive granted to the assessee. Both the said orders cannot be sustained. Therefore the substantial question of law is answered in favour of the assessee and against the Revenue. Hence we pass the following."
The ratio of the judgment is also applicable in case of the assessee.
From the perusal of above you will observe that it is a rule of law that if the exemption / deduction have been allowed is last year in that case same cannot be disturbed in the subsequent year. The basic principle of the act is that the initial year is the very important so as to allow the deduction in respect of the claim. It is a principle of law that if in the initial year deduction has been allowed; same cannot be changed or withdrawn in the subsequent year, in the same set of circumstances. Furthermore law of consistency is also applicable while deciding any issue as per law by the quasi judicial authority or any authority. The assessee submitted the submission on 15.11.2015, there seems to be some conversation just after filing written submission and the assessing officer took action under section 147 of Income Tax Act in the last year on 18.11.2015, therefore the circumstances changed.
The assessee revised his ITR, submitted originally, and withdraws the claim therefore return for the year under consideration was also revised and revised computation was submitted before the CIT (A) along with letter dated 25.12.2015. The CIT (A) was also 18 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT requested in these fact and circumstances so as to consider the revised Computation of Income submitted before the CIT (A) on the biases of the return submitted before the assessing officer, but the CIT (A) even without appreciating the fact in respect of initial year and without considering the submission rejected this issue.
As regards ground No 5 to 7. The Commissioner of Income Tax (Appeal) should have accepted the request, the assessee in the submission of ground no 5 of form No. 35, submitted before the CIT (A). The assessee in the submission, submitted before the CIT (A) dated 25.12.2015 clearly stated in this respect and also come forward with the entire fact in respect of the action under section 147 /148 of Income Tax Act and the revised computation of income which was submitted before the CIT (A). Though the matter was before the CIT (A), hence this revised computation was submitted before the CIT (A), should have been accepted by him.
The assessee in the changed circumstance revised the return and submitted Computation of Income before the Commissioner of Income Tax (Appeals) stating full fact in the letter dated 25.12.2015. The Commissioner of Income Tax (Appeals) rejected the request stating, that the 148 of the Income Tax Act, is not for the benefit and rejected the claim, where as the return submitted u/s 148 of Income Tax Act was accepted by the A.O. and copy thereof is being enclosed herewith.
In the letter dated 02.03.2015 address to ACIT it was also stated that if mistake is rectifying there is no objection if corrected in the last year, copy thereof is at serial No. 2 of the paper book. In these fact and circumstance not accepting the revised return is not at accordance with the law.
As regards the ground No. 8 it is submitted that the principal of natural justice provides that the assessee should have been heard 19 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT before deriving adverse inference. The judgment of Vijay Hemant Finance and Estates Limited, reported in 238 ITR 282 (Mad) decided this issue that even if there is no provision in the statue even than opportunity should have been allowed. The act of the CIT (A) is against the principle of natural justice. In view of above mention fact and circumstance you will observe that the order passed by the CIT (A) is illegal and against the law. More over the order is against the judicial decorum and discipline You are therefore requested to kindly accept the appeal of the assessee."
The assessee has filed its return of income declaring total income of Rs. 80,69,060/-. During the scrutiny assessment u/s 143(3) of the Act the AO noted that the assessee in the P&L account has credited income from sale of electricity/energy from wind mill amount to Rs. 43,46,710/- on which the assessee has claimed deduction u/s 80IA of the Act. The AO issued a show cause notice vide letter dated 10.12.2014 asked the assessee as to why the deduction u/s 80IA of the Act should not be disallowed. The AO has specifically pointed out that no separate trading account of such business has been furnished along with the Audit Report in form No. 3CB. In reply vide letter dated 10.12.2014 the assessee has annexed a corrigendum of audit report wherein the assessee has shown the actual sale proceeds of wind mill energy of Rs. 44,24,430/- as against Rs. 43,46,710 shown in the P & L account. 20 ITA No. 171/JP/2017
M/s Saraf Export Palace vs. ACIT Further, the AO noted that the assessee has claimed depreciation amounting to Rs. 1,68,60,767/- on wind mill plant and machinery which is more than the total receipt as provided vide corrigendum filed by the assessee. The relevant para of the AO are in para 3.4 as under:-
"3.4 The contention of the assessee raised vide above reply is fake and baseless because section 80IA of the Act clearly shows that where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section(4), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred percent of the profits and gains derived from such business for ten consecutive assessment years. It is clear from the above interpretation of law that assessee is given opportunity to claim such deduction for 10 years out of prescribed 15 years. It is why because assessee may not derive any gain or profit from such eligible business, in the initial stage of setting up of the business as the assessee has to invest huge amount in infrastructure development of the business for which claiMing of huge amount of depreciation. In the instant case the assessee has claimed depreciation amounting to Rs. 1,68,60,767/- on windmill plant and machinery which is more than the total receipt as provided vide corrigendum of the balance sheet as on 31/03/2012 amounting to Rs. 44,24,430/-. It is clear, therefore, that the assessee has not derived any gain or profits from such eligible business after giving the effect of the depreciation so claimed by the assessee. Furthermore, the assessee vide order sheet entry dated 13/01/2015 was asked to file separate account of windmill business but the assessee has neither filed any details of 21 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT account of the windmill business nor has produced books of accounts maintained for such business so far."
The assessee again submitted before the AO that if deduction/s 80IA is not allowable in this year then, assessee may be allowed to withdraw the claim of deduction u/s 80IA of the Act. The AO finally held that when the income of the assessee from eligible undertaking is negative then, deduction u/s 80IA is not allowable for the year under consideration. The assessee challenged the action of the AO before the ld. CIT(A) and filed a revised computation of income wherein the claim of deduction u/s 80IA of the Act was withdrawn. The ld. CIT(A) accordingly, confirmed the order of the AO and dismissed the appeal of the assessee. As it is clear from the grounds as well as the submissions filed by the ld. AR that the assessee is not disputing the fact that the income from windmill plant for the year under consideration is negative and therefore, no deduction u/s 80IA of the Act is allowable for the year under consideration. The Only grievance of the assessee is that the ld. CIT(A) should have accepted the return of income submitted by the assessee for withdrawing the deduction so claimed. It is pertinent to note that the return of income as per the provisions of section 139 of the Act can be revised only upto the stage of the order of the assessment is passed and therefore, after the assessment order is 22 ITA No. 171/JP/2017 M/s Saraf Export Palace vs. ACIT passed there is no provisions for filing the return of income. However, once the AO has already given the finding that the income from the eligible undertaking is negative for the year under consideration and the same has not been disputed by the assessee then we do not find any error or illegality in the order of the ld. CIT(A) in dismissing the appeal of the assessee as there cannot be any other result or fate of the appeal filed by the assessee before the ld. CIT(A). The assessee claimed deduction u/s 80IA of the Act first time for the assessment year 2011-12. So far as the eligibility of the business of the assessee for claim of deduction u/s 80IA of the Act, the same cannot be denied in subsequent year without disturbing the earlier order in which such claim was accepted. However, the dispute in the present case is not regarding eligibility of the assessee to claim u/s 80IA but the dispute is regarding actual deduction available to the assessee for want of any positive income of the eligible unit/undertaking. Therefore, so far as the eligibility of the assessee the said issue has not been disturbed by the authorities below and only the claim of deduction u/s 80IA was disallowed for want of any positive income from the eligible unit. Hence, we do not find any merit or substance in the appeal of the assessee and therefore the appeal of the assessee on merits also deserves dismissal. 23 ITA No. 171/JP/2017
M/s Saraf Export Palace vs. ACIT
7. From the fact and circumstances of the case, it is clear that the assessee has filed the present appeal without seeking any relief but has raised various grounds only to criticize the order of the ld. CIT(A). Accordingly, this Tribunal takes a serious view of the matter and imposes a cost of Rs. 10,000/- for filing the frivolous appeal and abusing the process of law.
In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 26/03/2018 Sd/- Sd/-
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(Vikram Singh Yadav) (Vijay Pal Rao)
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- 26/03/2018.
*Santosh.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s Saraf Export Palace, Churu.
2. izR;FkhZ@ The Respondent- ACIT. Circle, Jhunjhunu.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File {ITA No. 171/JP/2017} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 24