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Income Tax Appellate Tribunal - Kolkata

M/S. Chandni Commercials (P) Ltd., ... vs Ito, Ward 7(1), Kolkata, Kolkata on 16 November, 2017

     IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH : KOLKATA

      [Before Hon'ble Shri M.Balaganesh, AM & Shri S.S.Viswanethra Ravi, JM]
                                  I.T.A No. 899/Kol/2017
                               Assessment Year : 2012-13
M/s Chandni Commercial P Ltd.              -vs-       ITO, Ward-7(1), Kolkata
 [PAN: AAECA 1544 N]
(Appellant)                                           (Respondent)


                     For the Appellant : Shri Manoj Kataruka, Advocate
                    For the Respondent : Shri G. Hangshing, CIT


Date of Hearing :    16.11.2017

Date of Pronouncement : 16.11.2017



                                        ORDER

Per M.Balaganesh, AM

1. This appeal by the assessee arises out of the order of the Learned Principal Commissioner of Income Tax(Appeals)-3, Kolkata [in short the ld CIT(A)] in Memo No. Pr. CIT-3/Kol/ITO,W-7(1)/u/s 263/175/16-17 dated 15.03.2017 passed u/s 263 of the Act against the order passed by the ITO, Ward-7(1), Kolkata [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short "the Act") dated 23.03.2015 for the Assessment Year 2012-13.

2. The only issue to be decided in this appeal is as to whether the Ld. CIT was justified in invoking revisionary jurisdiction u/s 263 of the Act, in the facts and circumstances of the case.

Chandni Commercials Ltd.

A.Yr.2012-13

3. The brief facts of this appeal is that the assessee is a private limited company engaged in the business of trading of cotton knitted fabrics and iron & steel and had filed its return of income for the assessment year 2012-13 on 20.09.2012 declaring total income of Rs. NIL. The assessment was completed u/s 143(3) of the Act on 23.03.2015 reducing the loss of Rs. 9,53,26,082/- to Rs. 9,52,25,880/-. This assessment was sought to be revised by the Ld. CIT u/s 263 of the Act by treating the same as erroneous in so far as it is prejudicial to the interest of the revenue. A show cause notice was issued by the Ld. CIT on the ground that the assessee had shown total purchase of Rs. 93,36,54,725/- from M/s Coral Environment Pvt. Ltd. (in short "CEPL") whereas CEPL had shown sales of Rs. 2,42,90,500/- in its balance sheet and profit and loss account. This resulted in excess claim of purchases by the assessee. In the opinion of Ld. CIT, this aspect has not been verified/enquired by the Ld. AO. thereby making his order erroneous in so far as it is prejudicial to the interest of the revenue. The assessee was asked to appear before the Ld. CIT on 03.03.2017 . This show cause notice dated 21.02.2017 was served on the assessee only on 06.03.2017. On 06.03.2017 the assessee sought an adjournment to 15.03.2017. The Ld. AR stated before us that on 15.03.2017 the assessee took an adjournment to 24.03.2017 and detailed reply was filed by the assessee before the Ld. CIT on 24.03.2017. The reply letter filed before the Ld. CIT on 24.03.2017 is placed on record before us. Meanwhile, the Ld. CIT proceeded to pass the order u/s 263 of the Act on 15.03.2017 on the ground that the Ld. AO had not made proper enquiries with regard to purchases made by the assessee from CEPL and hence, treated the order of the Ld. AO as erroneous in so far as it is prejudicial to the interest of the revenue. Aggrieved, the assessee is in appeal before us on the following grounds:

1. That on the facts and in the circumstances of the case the action of the Ld. CIT to pass and order u/s 263 by treating the order passed by the Assessing Officer as erroneous in so far as it is prejudicial to the interest of Revenue is incorrect and bad in law.

2. That on the facts and in the circumstances of the case the action of the Ld. CIT to pass an order u/s 263 without affording reasonable opportunity of being 2 3 ITA No.899/Kol/2017 Chandni Commercials Ltd.

A.Yr.2012-13 heard is in violation of the principles of natural justice and therefore the order is bad in law.

3. That on the facts and in the circumstances of the case the notice issued u/s 263 by the Ld. CIT is erroneous and bad in law.

4. That the order of the Ld. CIT is arbitrary, excessive and illegal.

5. That the order of the Ld. CIT(A) is bad in law.

6. That the above grounds of appeal shall be argued in detail at the time of hearing and the appellant craves leave to submit, add, alter, modify, amend any grounds of appeal or submit any additional grounds of appeal at or before the time of hearing.

4. We have heard the rival submissions. We find that the Ld. AR has placed following documents in the paper book.

Sl.                                  Particulars                                    Page
No.                                                                                 Nos.
01.   Copy of the notice u/s 263(1) of the Act dated 21.02.2017                     1-2
02.   Copy of the speed post tracking consignment sheet showing delivery of         3
      the notice on 06.03.2017.
03.   Copy of the adjournment letter filed before the Ld. CIT dated 09.03.2017      4
04.   Copy of the reply to the show cause notice u/s 263(1) along with all          5-17
      annexures filed before the Ld. CIT on 24.03.2017
05.   Copy of the assessment order u/s 143(3) along with the enclosures.            18-
                                                                                    24

From the aforesaid details of the paper book we find that the assessee had purchased 1965465 kgs. of cotton knitted fabrics from CEPL, 9, Ezra Road, Top Floor, Kolkata- 700001 (PAN: AABCC 2837 P) for Rs. 93,36,54,725/-. We also find that the entire 1965465 kgs. of goods have been sold by the assessee before the end of the previous 3 4 ITA No.899/Kol/2017 Chandni Commercials Ltd.

A.Yr.2012-13 year and no stock was lying with the assessee thereon out of the said purchase. The assessee has also furnished the summary of purchases for the period ending on 31.03.2012 wherein VAT has been duly suffered for the entire purchases made during the year. We find from Page 8 of the paper book filed by the assessee that the Ld. AO had sought for the entire details of purchase and sales made by the assessee with full names and address of the suppliers and customers together with the quantity of items purchased and sold along with details of sales tax suffered on such purchases and sales, during the course of assessment proceedings. The AR of the assessee vide his reply dated 12.02.2015 furnished the same before the Ld. AO. This information was sought to be cross-verified by the assessee by issuing notice u/s 133(6) of the Act from M/s CEPL vide letter dated 16.02.2015 by the Ld.AO which is enclosed in the page 15 of the paper book referred to supra. The said supplier M/s CEPL duly responded to the information sought by the Ld. AO u/s 133(6) vide its letter dated 25.02.2015 which was filed in Tapal on 02.03.2015. This letter dated 25.02.2015 of CEPL is enclosed in page 16 of the paper book referred supra and along with this letter M/s CEPL had duly confirmed the fact that it had sold 1965465 kgs. of cotton knitted fabrics amounting to Rs. 93,36,54,725/- and had also given the ledger account of the assessee as appearing in the books of CEPL for the period of 01.04.2011 to 31.03.2012 together with its entire income tax assessment particulars. Hence, it could be concluded that the Ld. AO had duly verified all these facts during the course of assessment proceedings itself. However, we find that these details were furnished by the assessee before the Ld. CIT in response to the show cause notice issued for revising the assessment only on 24.03.2017, on which date the order u/s 263 was already passed by the Ld. CIT. Hence, the Ld. CIT could not get the benefit of all these information and details while passing the revision order u/s 263 of the Act on 15.03.2017. Since, we find that the information has been gathered by the Ld. AO u/s 133(6) of the Act from CEPL during the assessment proceedings itself, it should definitely form part of the records at the time of examination by the Ld. CIT during the revision proceedings u/s 23 of the Act.

Chandni Commercials Ltd.

A.Yr.2012-13 But we find that no finding has been given by the Ld. CIT in the order passed u/s 263 of the Act in this regard. Hence, we deem it fit and appropriate in the interest of justice and fair play, to remand this appeal to the file of the Ld. CIT with a direction to consider the details available in the paper book and decide whether it is necessary to revise the assessment order u/s 263 of the Act or not. The assessee is also at liberty to furnish further evidences in support of its contentions. Accordingly, grounds raised by the assessee are allowed for statistical purposes.

5. In the result, the appeal of the assessee is allowed for statistical purposes.

        Order pronounced in the Court on          16.11.2017



                     Sd/-                                               Sd/-
         [S.S. Viswanethra Ravi]                                  [ M.Balaganesh ]
          Judicial Member                                         Accountant Member


Dated    :   16.11.2017

SB, Sr. PS


Copy of the order forwarded to:

1. M/s Chandni Commercials (P) Ltd., (Adhirath Commercials Pvt. Ltd. since Merged) Subham Apartment, 6th Floor, 1, Sarojini Naidu Sarani, Kolkata-700017.

2. ITO, Ward-7(1), Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-69.

3..C.I.T.- 4. C.I.T.- Kolkata.

5. CIT(DR), Kolkata Benches, Kolkata.

True copy By Order Senior Private Secretary Head of Office/D.D.O., ITAT, Kolkata Benches 5