Income Tax Appellate Tribunal - Kolkata
Ashok Kumar Jindal, Howrah vs Assessee on 24 April, 2012
आयकर अपीलीय अधीकरण, Ûयायपीठ - " A ", कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- "A" , CALCUTTA
(सम¢)Before ौी सी.डȣ.राव, लेखा सदःय एवं/and
Shri C.D.Rao, Accountant Member.
ौी जॉज[ म1थान, Ûयायीक सदःय)
Shri George Mathan, Judicial Member
आयकर अपील संÉया / ITA No. 1111/Kol/2009
िनधॉरण वषॅ/Assessment Year: 2004-05
M/s. Ashok Kumar Jindal -वनाम- The CIT, Kol XVI, Kolkata
PAN: ACSPJ 6250F
-
(अपीलाथȸ/APPELLANT ) Versus-. (ू×यथȸ/RESPONDENT)
अपीलाथȸ कȧ ओर से/ ौी/Shri S.M. Surana, Advocate, ld.AR
For the Appellant:
ू×यथȸ कȧ ओर से/ ौी/Shri A.K. Pramanick, ld.CIT/DR
For the Respondent:
सुनवाई कȧ तारȣख/Date of Hearing : 24-04-2012
घोषणा कȧ तारȣख/Date of Pronouncement: ...- -2012
आदे श/ORDER
ौी जॉज[ म1थान, Ûयायीक सदःय) Shri George Mathan, Judicial Member.:
This is an appeal filed by the assessee against order of the learned Commissioner of Income-tax, Kolkata-XVI, Kolkata u/s. 263 of the Income-tax Act, 1961 for the assessment year 2004-05..
2. Shri S.M. Surana, Advocate, learned AR represented on behalf of the assessee and Shri A.K. Pramanick, learned CIT/DR represented on behalf of the revenue
3. It was submitted by the learned AR for the assessee that the original assessment has been completed for the assessment year 2004-05 u/s. 143(3) of the Act on 31-05-2006. It was the submission that the learned Commissioner of Income-tax, Kolkata-XVI had issued a show- cause notice u/s 263 of the Act in No.CIT-XVI/Kol/Tech/Revision/06-07/2077 dated 16-11-06 to the assessee on the ground that the loan transactions were not verified. No enquiry was made regarding gifts in this year and also the previous year. No enquiry was made on household expenses.
4. It was the submission that the assessee had replied of the show-cause notice and it was pointed out that the issue of gift had been verified by the Assessing Officer in the course of the assessment as also the loan transactions. It was the submission that the learned Commissioner of Income-tax passed an order u/s 263 of the Act on 17-3-09 holding that only routine basic enquiries had been done and enquiries/ investigations necessary in this case had not been conducted adequately before passing the assessment order and to that extent the assessment was erroneous in so far as it was prejudicial to the interest of revenue. It was the submission that a perusal of the assessment records more specifically the order-sheet noting of the Assessing Officer, which had been produced by the learned DR specifically showed that the issue had been considered by the Assessing Officer in the course of original assessment. It was the further submission that even on perusal the order u/s. 263 at page 2 clearly shows that learned Commissioner of Income-tax has also categorically mentioned that it cannot be fully denied that the assessee had attempted to discharge his initial onus by filing the routine documents/statements in respect of loans, gifts etc. It was the submission that in the course of the original assessment necessary enquiries having been done and the Assessing Officer having come to a conclusion, it was not open to the learned Commissioner of Income-tax to invoke his powers u/s. 263 of the Act for directing a further enquiry without there being any evidence laying doubt on the enquiry conducted by the Assessing Officer or the claim of the assessee. It was the submission that the order passed by the learned Commissioner of Income- tax u/s. 263 of the Act was liable to be quashed.
5. In reply, Shri A.K. Pramanick, learned CIT/DR has vehemently supported the order u/s.263 of the Act of the learned Commissioner of Income-tax. The learned CITDR has also filed before us a copy of the written submissions, which are extracted herein below:-
In the above case the A.O. passed order u/s.143(3)of I.T. act on 31.05.06 total income at Rs.1,53,100/- as against returned income of Rs.1,40,020/-. The A.O. made the addition on the following heads :-
i) Cartage disallowed at Rs.2,463/-
ii) Rate difference and discount disallowed at Rs.6,000/-
iii) Telephone expenses of Rs.2,448/-
iv) Conveyance expenses and Misc. expenses of Rs.833/- and Rs.1,151/-
respectively.
ITA No. 1111/Kol/09-A-GM 2
Subsequently the Ld. CIT-XVI, Kolkata, invoked the provisions of Section 263 of LT. Act and issued notice to the assessee on 16.11.2006 which was duly served on him on 24.11.2006. The reasons for invoking Section 263 of I.T. Act on the part of the CIT were :-
i) Non verification of loan transaction.
ii) Non enquiry conducted regarding gift received in the assessment year in question and the previous assessment year.
iii) No enquiry made on household expenses.
The Ld. CIT(A) has given opportunity of being heard to the assessee and has passed order u/s.263. In this case verification of records revealed that although some details regarding purchases, sales, sundry debtors and creditors etc., were filed in response to requisition made by the A.O. u/s.142(1), there was no attempt from A.O.'s side to scrutinize the statement or the documents which were simply filed on record. There has been no confirmation or verification of loan transacted during the year. In the account of Rohit Jindal (Minor) there have been claims of gifts during the year in addition to last year.
The CIT found that no enquiry has been conducted in this respect.
In course of hearing before the CIT, the assessee stated that he had discharged his onus by filing loan confirmation showing the PAN of the lenders. The assessee further stated that all new loans are from family members or closed friends. As far as gifts received by Rohit Jindal (Minor), it was stated that the amount was received by Cheque and the gift declaration copy along with Bank Statement had been filed. Regarding family expenses, it was stated by the assessee that drawing statement of family members had been placed before the A.O. who had duly verified the same.
On verification of records, it is found that the assessee has attempted to discharge his initial onus by filing the written documents! statements in respect of loan, gifts etc. However, the records do not contain anything to indicate that the A.O. has ever made any attempt to cross verify the claims made by the assessee regarding receipt of loan and or gifts. In the case of Rohit Jindal (Minor), the narration at para 9 of the assessment order at page 3 simply mentions filing of declaration /documents. The Ld. CIT in the course of hearing, found out that the Donor was Mr.Biswanath Agarwal who is a friend of the assessee (Rohit's father). The gift was allegedly given on 02.04.2003 and the reason of gifts is not known. The A.O. did not choose to question Shri Biswanath Agarwal and examine his accounts so as to verify the veracity of gifts. In nutshell, the A.O. has not caused any basic routine enquiries which is expected to be done in a scrutiny case.
ITA No. 1111/Kol/09-A-GM 3The department is relying on a few case laws to justify that 1he action of the CIT to invoke the provisions of section 263 of I.T.Act.
a. Swarup Vegetable Products Industries Ltd., 187 ITR 412 (All),
b. Uma Shankar Rice Mill v. C1T187 ITR 638 (Orissa)
c. Seshasayee Paper & Board v CIT 242 ITR 490 (Mad); -
The CIT has the power to set aside the assessment order if he is satisfied that further enquiry is necessary.
a. Ram Priaya Devi Saraogi Vs CIT 67 ITR 84(SC)
b. Taràdevi Agarwal Vs. CIT 88 ITR 323 (SC) :-
The CIT may invoke section 263 if he feels that it is a stereo type order which simply accepts what assessee has stated in his return and fails to make enquiries which are called for.
a. Duel & Co. Vs. CIT 220 ITR 456 (Delhi)
b. G.V. Enterprise Vs. CIT 99 ITR 375 (Delhi)
The gist of the above two cases is that the A.O. is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return if it is apparently in order but calls for further enquiry. It is incumbent of the A.O. to further investigate the facts stated in the return when circumstances would make such an enquiry prudent and the word erroneous u/s. 263 of l.T.Act includes the failure to make such an enquiry. The order become erroneous because such an enquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct.
K.A. Ramaswamy Chettiar Vs. CIT 220 ITR 657 (Mad) :-
When the A.O. is expected to make an enquiry of a particular item of income and if he does not make an enquiry as expected, that would be a ground for the CIT to interfere with the order of the A.O. since such an order is erroneous and prejudicial to the interest of revenue.
CIT vs. Active Traders Pvt Ltd., 214 ITR 583 (Cal) :-
Assessment of Pvt. Co. without enquiry into genuineness to the creditworthiness of the share holders CIT's action under section 263 is justified.
Smt. Renu Gupta Vs. CIT 301 ITR 45 (Raj.) :-
The CIT may consider an order of the A.O. to be erroneous not only if there is some apparent error of reasoning or of law or of fact on the face of it but also when it is a stereo type order which simply accepts what the A.O. as stated in his return and failed to make enquiries which are called for in the circumstances of the case.
Malabar Industrial Co. Vs. CIT 243 ITR 83 (SC) :- In this case, Supreme Court confirmed the order of the High Court which held that the exercise of jurisdiction by the CIT under section 263 was justified. The A.O. in this case has failed to apply his mind in all perspective and the order passed by him was erroneous.ITA No. 1111/Kol/09-A-GM 4
There are also certain orders of the ITAT which support the case of CIT passing order under section 263 of I.T.Act.
a. Shri Srinivas Ras Vs. CIT 57 lTD 185 (Balgalore) b. Gujrat Forging Pvt Ltd. Vs. CIT 56 lTD 208 (Amhadabad) c. Engineers Prestressed Structure Vs. CIT 55 Ui, 705 (Delhi) d. J.C. Jjjvri Vs. CIT 56 lTD 313 (Born) e. Ratan Trading Co. Vs. 40 ITD 164 (Delhi) Relying on the above case laws, it is humbly submitted that the Ld. A.O. has not caused any enquiry with regard to loan transactions, receipt of gifts and house hold expenditure. He has only passed a written stereo type order without causing further enquiry. The order passed by the A.O. does not indicate any application of mind.
It is humbly prayed that the Hon'b)e Bench may consider the above case laws, written submission and confirm the order passed by CIT in term of section 263 of I.T.Act."
6. We have considered the rival submissions. A perusal of the assessment order in the present case passed u/s. 143(3) of the Act on 31-05-06 clearly shows that the issue of gift received by Shri Rohit Jindal has been discussed in para 9 of the assessment order. It is also mentioned that the bank statements have been verified. A perusal of the order of the learned Commissioner of Income-tax passed u/s. 263 shows that the learned Commissioner of Income- tax has accepted that it cannot be denied that the assessee has attempted to discharge his initial onus. There is also no allegation by the learned Commissioner of Income-tax that the Assessing Officer has not conducted any enquiry. The only ground of the learned Commissioner of Income-tax is that the enquiry conducted by the Assessing Officer is not adequate. The adequacy of the enquiry is obviously a matter of opinion. How much is adequate enquiry all depends upon the facts of the case. In any case in the present case nothing has been found to show that the enquiry conducted by the Assessing Officer is erroneous or specifically inadequate. No fresh evidence has been found or discovered. The allegation of inadequacy of investigation by mere statement cannot make an order erroneous, unless any specific defect in the enquiry is pointed out. In the present case, this has not been done and consequently though the learned CIT/DR in his written submission mentioned that the records do not contain anything to show that beyond simply filing these documents that the Assessing Officer has ever tried to cross verify the claims of the assessee regarding receipt of loans/gifts, the same stand controverted by the fact that the Assessing ITA No. 1111/Kol/09-A-GM 5 Officer has examined and mentioned in the assessment order as also the order sheet that the gift was made by cheque and bank statements have also been verified. A perusal of the written submissions of the learned CIT also shows that the allegation in the written submissions is that the Assessing Officer has caused only basic routine enquiry, which is expected to be done in the scrutiny case. What is the further enquiries, which are expected to be done in a scrutiny case are yet to be placed before us in the form of notification or direction issued by the competent authority. The assessing authority is to be fair and not just as a tax collector. The facts in the present case shows that the Assessing Officer has formed a opinion on the basis of the facts as available before him and no error in regard to said finding of the Assessing Officer on the basis of fresh evidence or available evidence on record has been pointed out. In the circumstances, we are of the view that the order passed u/s.263 by the learned Commissioner of Income-tax is not sustainable and consequently, the same stands quashed. In the circumstances, the appeal of the assessee is allowed.
7. In the result, the appeal of the assessee is allowed.
यह आदे श खुले Ûयायालय मɅ सुनाया गया है THIS ORDER IS PRONOUNCED IN OPEN COURT ON Dt 07-05-2012 Sd/- Sd/-
( सी.डȣ.राव, लेखा सदःय ) ( जॉज[ म1थान, Ûयायीक सदःय ) ( C.D. Rao, Accountant Member ) (George Mathan, Judicial Member) (तारȣख) तारȣख)Date: 07-05-2012
*PP/SPSआदे श कȧ ूितिलǒप अमेǒषतः/ Copy of the order forwarded to:
1.. अपीलाथȸ / The Appellant : Shri Ashok Kumar Jindal 148/2, Madhusuadan Pal Chowdhury Lane, Howrah-711101.
2 ू×यथȸ / The Respondent- Commissioner of Income-tax, Kol XVI, Kolkata 3 Govt Place (W), Kol-1.
3 आयकर किमशनर/The CIT,
4. आयकर किमशनर (अपील)/The CIT(A) ..
5. वभािगय ूितनीधी / DR, Kolkata Bench
6. Guard file.
स×याǒपत ूित/True Copy, आदे शानुसार/ By order, सहायक पंजीकार/Asstt Registrar ITA No. 1111/Kol/09-A-GM 6