Income Tax Appellate Tribunal - Kolkata
Gouri Shankar Jain Huf , Kolkata vs P.C.I.T-11, Kolkata on 25 November, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL
KOLKATA 'A' BENCH, KOLKATA
VIRTUAL COURT HEARING
(Before Sri J. Sudhakar Reddy, Hon'ble Accountant Member & Sri S.S. Godara, Hon'ble Judicial Member)
ITA No. 1662/Kol/2019
Assessment Year: 2014-15
M/s. Gouri Shankar Jain HUF....................................................................................................Appellant
C/o. Agarwal Vishwanath & Associates
133/1A, S.N. Banerjee Road
Pushkal Bhawan
3rd Floor
Kolkata - 700 013
[PAN : AACHG 9644 L]
Vs.
Principal Commissioner of Income Tax-11, Kolkata.......................................................Respondent
Appearances by:
Shri Ankit Jalan, Advocate, appeared on behalf of the assessee.
Shri Ram Bilash Meena, CIT D/R, appearing on behalf of the Revenue.
Date of concluding the hearing : October 1st, 2020
Date of pronouncing the order : November 25th, 2020
ORDER
Per J. Sudhakar Reddy, AM :-
This appeal filed by the assessee is directed against the order of the Learned Principal Commissioner of Income Tax - 11, (hereinafter the "ld. Pr. CIT"), passed u/s. 263 of the Income Tax Act, 1961 (the 'Act'), dt. 15/03/2019, for the Assessment Year 2014-15.
2. There is a delay of 27 (twenty seven) days in filing of this appeal. After perusing the petition for condonation of delay, we are convinced that the assessee was prevented by sufficient cause in filing the appeal in time. Hence, we condone the delay and admit this appeal.
3. The assessee is a HUF and had filed its return of income for the Assessment Year 2014-15 on 29/11/2014, declaring total income of Rs.15,08,400/-. The case was selected for scrutiny under CASS for the reason that it had low net profit or loss shown from large gross receipts. The assessment was completed u/s 143(3) of the Act on 20/12/2016. Later, the ld. Pr. CIT, revised the assessment u/s 263 of the Act after issuing showcause notice on 28/02/2019. The reasons for revision are given in para 4 page 2 of the order u/s 263 of the Act, passed by the ld. Pr. CIT, which is extracted for ready reference:-
2 ITA No. 1662/Kol/2019Assessment Year: 2014-15 M/s. Gouri Shankar Jain HUF
"4. (i) Mr. Anil Kumar Tiwary, FCA and A/R, submitted a written submission on 11.03.2019 along with power of attorney, on behalf of the assessee. the submission has been considered careful carefully ly but the same has been found without merit as the TAR column 26B(b) specifically mentions "In respect of any sum referred to in clause (a), (b), (c), (d),or (f) of section 43B the liability for which was incurred in the previous year and was not paid on or before the aforesaid date." The above statement means that the Auditor has certified that the amount of Rs.1,96,26,619/ Rs.1,96,26,619/-
towards VAT liability tantamount to violation of provisions of section 43B and the same should have disallowed by the Auditor himsel himselff from the calculation of net profit of business of the assessee. further, the Trading and Profit and Loss account of the assessee for the financial year 2013 2013-14 relevant to AY 2014-15, 15, do not show any VAT input or output entries. Therefore, it is clear th that at the VAT input and output entries are included in total purchases and total sales shown in the Trading and Profit and Loss account of the audit report." 3.1. Thereafter, the ld. Pr. CIT, discussed various case-law law and came to the conclusion that the assessment order is erroneous and prejudicial to the interest of the revenue.
4. The ld. Counsel for the assessee submitted that the order passed u/s 263 of the Act is bad in law because, the reason for selection of scrutiny is "low low net profit/loss shown from large gross receipts receipts" and thus, the Assessing Officer did not have the power to verify any other aspect. He submitted that the ld. Pr. CIT cannot revise the assessment order on any other issue other than what was permitted under limited scrutiny issues. He further submitted that value added tax was not routed through the profit and loss account and hence Section 43B of the Act, does not apply. He referred to the audit report issued u/s 44A 44AB of the Act, specifically to Column lumn 26, wherein, the tax auditor had clearly stated that the indirect tax has not passed through the profit and loss account and submits that the reply to the showcause notice and the evidence shows that VAT had not been claimed aimed as a deduction by the assessee and thus no disallowance can be made u/s 44AB of the Act Act.
4.1. The ld. D/R, on the other hand, submitted that this fact required to be properly verified by the Assessing Officer and not doing so is non non-application application of mind.
m He argued that the order passed by the Assessing Officer was without enquiry and without application of mind and hence the same is an erroneous order. He vehemently contended that there is not prejudice caused to the assessee as the Assessing Officer was directed to conduct a fresh assessment on a priority basis and complete the same preferably within three months after giving the assessee adequate opportunity of being heard.
3 ITA No. 1662/Kol/2019Assessment Year: 2014-15 M/s. Gouri Shankar Jain HUF
5. After hearing rival contentions, we find that the tax auditor in the repor report issued u/s 44AB of the Act, has clearly stated that the indirect tax are not routed through the profit and loss account. This fact was stated by the assessee before the ld. Pr. CIT in its reply to the showcause notice issued u/s 263 of the Act and evidences ces in support of this fact were furnished. In our view, it was the duty of the ld. Pr. CIT to at least verify, prima facie as to whether the input and output entries have been routed through the profit and loss account or not, as certified by the tax audi auditor.
tor. Without doing so, he could not have come to the conclusion that there was an error in the assessment order passed by the Assessing Officer and that this error is prejudicial to the interest of the revenue revenue.
When VAT is not routed through the profit and loss account, the assessee could not have claimed this amount it as a deduction deduction. VAT is not debited to the profit and loss account. When VAT is not claimed as a deduction, while computing the income, the question of disallowing the same u/s 44AB of the Ac Act, t, does not arise. Thus, in our considered view, the ld. Pr. CIT has committed an error in not examining the issue by himself before coming to the conclusion that there is an error which is prejudicial to the interest of the revenue, which requires revisio revision, by invocation of powers u/s 263 of the Act. Thus, we hold that the order passed u/s 263 of the Act, is bad in law and allow this appeal of the assessee.
6. In the result, appeal of the assessee is allowed.
Kolkata, the 25th day of November, 2020
20.
Sd/- Sd/-
[S. S. Godara] [J.
J. Sudhakar Reddy]
Reddy
Judicial Member Accountant Member
Dated : 25.11.2020
{SC SPS}
4
ITA No. 1662/Kol/2019
Assessment Year: 2014-15
M/s. Gouri Shankar Jain HUF
Copy of the order forwarded to:
1. M/s. Gouri Shankar Jain HUF
C/o. Agarwal Vishwanath & Associates
133/1A, S.N. Banerjee Road
Pushkal Bhawan
3rd Floor
Kolkata - 700 013
2. Principal Commissioner of Income Tax Tax-11, Kolkata
3. CIT(A)-
4. CIT- ,
5. CIT(DR), Kolkata Benches, Kolkata.
True copy By order Assistant Registrar ITAT, Kolkata Benches