Income Tax Appellate Tribunal - Amritsar
The Mattewal Coop. L/C Society Ltd. , ... vs Assessee on 7 December, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL: AMRITSAR BENCH: AMRITSAR
BEFORE SHRI H L KARWA, HON'BLE VICE PRESIDENT AND
SHRI D K SRIVASTAVA, HON'BLE ACCOUNANT MEMBER
ITA No. 166/ASR/2010
Assessment year: 2006-07
The Mattewal Co-op L/C Society Ltd. Vs. The Income-tax Officer,
Amritsar. Ward IV(3), Amritsar.
PAN : AAAAT5385J
Appellant by: Shri P.N. Arora, Adv.
Respondent by: Shri Tarsem Lal, DR
Date of hearing: 07.12.2011
Date of pronouncement: 16 .12.2011
ORDER
D K Srivastava: The appeal filed by the assessee is directed against the order passed by the Ld. CIT, Amritsar u/s 263 of the Income-tax Act, 1961 on 12.3.2010, on the following grounds:-
"1. That the order of the Commissioner of Income-Tax-II, Amritsar, passed under section 263 of the Act, is illegal, invalid and void ab- initio and the same is liable to be cancelled.
2. The Ld. CIT, has grossly erred in holding/treating that the order of the AO is erroneous and prejudicial to the interest of the Revenue.
3. That the Ld. CIT did not appreciate that all the information was duly furnished alongwith the return of income and all the necessary details were filed at the time of hearing of the case under section 143(3) of the I.T.Act, 1961, and all the enquiries were met and the books of accounts alongwith other documents and vouchers were duly produced before the A.O. As such there was no justification for invoking the provisions of section 263 of the Act.
4. That the Ld. CIT wanted to invoke the provisions of section 263 of the Act on the following basis.2
"These facts indicate no books of accounts were prepared in regular course of business. Therefore, no books of accounts were produced before the AO, when the assessment order dated 03.09.2007 for the A.Y. 2006-07 was passed. Accordingly, the AO had failed to examine the books of accounts and vouchers before passing the said assessment order. Even otherwise there is no mention whatsoever in the assessment order dated 03.09.2007 or in the case records as to which vouchers were examined and found to be correct/unverifiable. This further shows that in reality no examination of any books of accounts and vouchers had taken place at the time of passing of the assessment order dated 03.09.2007, thus rendering the entire process of scrutiny assessment order to be a farce."
5. The very basis on which the Ld. CIT wanted to invoke the provisions of section 263 of the Act did not exist as the books of accounts were duly produced and were duly and thoroughly examined at the time of assessment by the A.O. The Audit Report was duly filed alongwith the return of income which report was from the CA who was an independent body who prepared the Audit Report after examining all the books of accounts and other documents and these books of accounts are still in the custody of the department.
6. That thus the provisions of section 263 of the Act, are not at all applicable in this case and as such the order of the AO is neither erroneous nor prejudicial to the interest of the Revenue. As such the order passed by the CIT u/s 263 of the Act, is bad in law and the same is liable to be cancelled.
7. That written submissions were duly furnished before the CIT during the course of hearing u/s 263 and the CIT did not appreciate the written submissions furnished before him. They are made part and parcel of the grounds of appeal. Had he appreciated the facts & circumstances of the case, as well as the written submissions, the Ld. CIT would not have invoked the provisions of section 263 of the Act. As such the order passed by the CIT u/s 263 of the Act, is illegal, invalid and void ab-initio and the same is liable to be cancelled."
2. The assessee is a civil contractor. It filed its return of income on 15.11.2006 returning total income at Rs. 2,25,080/-. The assessee also claimed 3 refund of TDS amounting to Rs.27,35,263/-. The return was processed and refund amounting to Rs.27,35,263/- was granted to the assessee alongwith interest under section 244A. Assessment u/s 143(3) was completed on 3.9.2007 assessing the total income at Rs. 3,35,080/- after making agreed disallowance of Rs. 60,000/-. Survey operations u/s 133A of the Income-tax Act, 1961 were carried out by the department at the business premises of the assessee on 27.3.2008 during which the relevant books of accounts were not found at the business premises of the assessee. The request made by the survey team for production of books of account for the assessment year 2001-02 onwards also did not yield any result. Taking note of the results of survey, the Ld. CIT called for and examined the records of the assessee. He formed prima facie belief that the assessment order passed by the AO u/s 143(3) of the Act on 3.9.2007 was erroneous and prejudicial to the interest of the Revenue. He therefore issued a show cause notice on 13.8.2009 calling upon the assessee to explain as to why the said assessment order passed by the AO should not be revised in terms of Section 263. After taking into account the submissions of the assessee, the Ld. CIT passed the impugned order on 12.3.2010 holding that the assessment order passed by the AO on 3.9.2007 was erroneous and prejudicial to the interest of the Revenue as he has not made the requisite enquiry with regard to proper maintenance of books of account before completing the assessment. He therefore cancelled the assessment order passed by the AO on 3.9.2007 and directed him to make a fresh assessment in conformity with law after giving reasonable opportunity of hearing to the assessee. 4
3. Perusal of the materials available on record shows that the assessee had reported contract receipts at Rs. 12,39,61,308/- on which it had shown net profit of 0.22%. The AO completing the original assessment, however preferred to make agreed addition of Rs. 60,000/- without any examination as to the correctness and completeness of the books of account in the light of relevant Bills and Vouchers as also the reasonableness of NP rate shown by it. As stated earlier, the original assessment u/s 143(3) was completed on 3.9.2007. Survey u/s 133A was thereafter carried out at the business premises of the assessee on 27.3.2008. Perusal of the order passed by the Ld. CIT u/s 263 of the Act shows that the books of account were not found at the time of survey. It also shows that the statement of Shri Harpal Singh Sethi, President of the assessee-society was recorded on oath during the course of survey on 27.3.2008 during which he stated that the books of account would be produced later as they were with Sh. Khurana, the Accountant of the assessee. Perusal of the impugned order under appeal further shows that Shri Harpal Singh Sethi, was specifically asked in the course of his statement to produce the books of account from Financial Year 2000-01 to 2007-08. He was also asked to state as to whether the books of account of the aforesaid year were misplaced or lost. In response, Sh. Sethi stated that no books of account were available at the business premises. but they were available with the Accountant. He confirmed that the books of account were neither lost nor misplaced. The statement of Sh. Harpal Singh Sethi, was again recorded during which he was asked to state as to whether he had brought the books of account. In response to the aforesaid query he stated that 5 no books of account were available with the assessee and that he had no further comments to offer in this regard. The statement of the wife of Sh. Navneet Khurana, accountant was also recorded in which she denied that any of the books of account of the assessee was lying with the Accountant. Sh. Harpal Singh Sethi was confronted with the aforesaid information also in response to which he stated that he had nothing to say in the matter. On 18.6.2008, another statement of Sh. Harpal Singh Sethi was recorded on oath wherein he offered additional income of Rs. 2.00 crores for assessment year following the assessment year under appeal.
4. Based on the aforesaid information available on record, the Ld. CIT came to the conclusion that the books of account together with bills and vouchers were not at all maintained by the assessee and therefore the assertion in the assessment order that the books of account were produced was incorrect. According to the Ld. CIT there was no material on record to support the finding that the books of account together with bills and vouchers in support thereof were at all maintained or produced before the AO during the course of original assessment proceedings. It is in this background that the Ld. CIT concluded that the original assessment order passed by the AO was erroneous and prejudicial to the interest of the Revenue.
5. Aggrieved by the impugned order passed by the Ld. CIT, the assessee is now in appeal before this Tribunal. In support of appeal, the Ld. Counsel for the assessee invited our attention to the original assessment order and submitted 6 that the books of account were indeed maintained and produced before the AO. He also filed copies of order sheets recorded by the AO and submitted that the books of account were produced before the AO on 28.08.2007. He submitted that the original assessment was completed by the AO after scrutiny and examination of the books of account produced before him and it was for this reason that the proposal of the Ld. CIT to invoke jurisdiction under section 263 of the Act was opposed not only by the AO but also by Sh. Ravi Sarangal, Addl. CIT. It was submitted that the same Addl. CIT, on his appointment as C.I.T, has passed the impugned order. In support of his submissions, the ld. Counsel for the assessee has relied upon several judgments, which are as under:
i) CIT vs. Sohana Woollen, 296 ITR 238
ii) CIT vs. Max India Ltd. 295 ITR 282
iii) Bongaigaon Refinery and Petrochemicals 287 ITR 120
iv) N.P. Santosh Kumar vs. ACIT 306 ITR 319
v) CIT- Shimla vs. Greenworld Corporation 181 Taxman 111
vi) Copy of order dated 29.4.2009 passed in the case of Shashi Singla vs. ITO Ward 1(3), Bhatinda, in ITA No.567(Asr)/2008.
vii) Malabar Industrial Co. Ltd., vs. CIT (2000) 243 ITR 82 (SC)
viii) CIT vs. R.K. Construction Co. (2009) 313 ITR 65 (Guj)
ix) Order of the ITAT, Chandigarh 'A' Bench in the case of Amrik Singh vs. ACIT (2010) 36 DTR (Chd) (Trib) 111
x) CIT vs. Ashish Rjpal 180 Taxman 623 7
xi) Order of ITAT Amritsar Bench, dated 16th July, 2009, in the case of M/s. TRG Industries Pvt. Ltd. vs. CIT, Jammu in ITA No. 210(Asr)/2009
xii) CMS Computers (P) Ltd & Anr. Vs. Appropriate Authority & Ors 11 DTR 236(Bom)
xiii) Calcutta Electric Supply Corporation (India) vs. ITO & Ors 207 ITR 892 (Cal.)
xiv) Order of ITAT, Delhi Bench in the case of Addl. CIT vs. Shipra Estate Ld. (2010) 35 SOT 256 (Del.)
xv) CIT vs. Deepak Mittal 324 ITR 411 (P&H) xvi) Copy of order dated 27.4.2006 of ITAT, Amritsar Bench in the case of ACIT CC-1, Amritsar vs. Raja & Co. in ITA No.369(ASR)/2002.
xvii) Order of the order of Tribunal dated 31.01.2005 in the case of Vijay Bharat Cigarette Store, Pathankot vs. ACIT, Circle, Pathankot, ITA No. 201(Asr)/2010.
xviii) Order of the Tribunal dated 31.01.2011 in the case of Roshan Lal Vegetable Products Pvt. Ltd. (Bathinda) vs. ITO Ward 1(2), in ITA No. 06(ASR)/2010 xix) CIT Vs. Vikas Polymers 194 Taxman 57 (Del.) xx) Copy of order of the ITAT, Jodhur Bench, in the case of Kwal Pro Exports vs ACIT 110 ITD 59 xxi) Copy of the order of ITAT Mumbai Bench, in the case of Mahindra & Mahindra Ltd. Vs. DCIT 122 TTJ 577 (Mum.) xxii) Copy of order of ITAT Mumbai Bench (SB), dated 31.03.2011 in the case of Synergy Entrepreneur Solutions in ITA No. 3076/Mum/10.
xxiii) Copy of order of ITAT Mumbai Bench dated 10.07.2009 in the case of Geometric Software Solutions vs ACIT Cir. 10(2), Mumbai in ITA No.3464(Mum)/2008.
85.1. The Ld. Counsel for the assessee has also filed written submissions in which he has contended that the Ld. CIT was not competent to revise the assessment order as the assessment order was passed after making agreed addition. It is also stated in the written submissions that the order passed by the Ld. CIT was based on mere change of opinion. It is also submitted that the Ld. CIT has not placed any material on record to establish that there was any omission on the part of the A.O. in completing the original assessment.
6. In reply, the Ld. DR has supported the order passed by the ld. CIT.
7. We have carefully considered the submissions made by both the parties. During the course of survey, the President of the Society himself confirmed that there were no books of account for the assessment year under appeal. He also surrendered a sum of Rs.2.00 crores as additional income of the assessee. At the time of hearing, a query was made to the Ld. Counsel for the assessee as to whether the bills and vouchers on the basis of which books of account were written, were available with the assessee. He replied in the negative. In our view, the Ld. CIT has correctly taken into account the result of survey in coming to the conclusion that the assessment framed by the AO was erroneous and prejudicial to the interest of the Revenue. The assessee has declared net profit at 0.22%. This fact itself should have provoked the AO completing the original assessment to properly examine the books of account as also the bills and vouchers on the basis of which books of account were maintained. There is no 9 indication in the assessment order that the bills and vouchers were at all maintained or produced before the AO completing the original assessment. The facts brought on record clearly establish that the assessment order as originally passed was erroneous and prejudicial to the interest of the Revenue. In our view, the Ld. CIT has rightly exercised his jurisdiction u/s 263 and cancelled the assessment order with the direction to the AO to pass a fresh assessment order in conformity with law. We see no infirmity in his action. Resultantly, the appeal filed by the assessee is dismissed.
8. In the result, the appeal of the assessee stands dismissed.
Order pronounced in the open court on 16 .12.2011 Sd/- Sd/- (H L KARWA) (D K SRIVASTAVA) VICE PRESIDENT ACCOUNTANT MEMBER Dated : 16th th December, 2011 /SKR/ Copy to:-
1. The Appellant: The Mattewal Co-operative L/C Society
2. The Ld. CIT,
3. The D.R., Income Tax Department, Amritsar