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Income Tax Appellate Tribunal, KOLKATA-PATNA‘e-COURT’, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Dr. Manish Borad
ITA No. 53/PAT/2016 Assessment Year: 2011-2012 Sajjan Bajaj, Bhagalpur IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA-PATNA‘e-COURT’, KOLKATA [Virtual Court Hearing] Before Shri Rajpal Yadav, Vice-President (KZ) & Dr. Manish Borad, Accountant Member I.T.A. No. 53/PAT/2016 Assessment Year: 2011-2012 Sajjan Bajaj,........................................ Appellant S/o. Late Narsingh Das Bajaj, Prop. Dilip Traders, Jokhi Babu, Ki Fhulwari, Bhagalpur-812002 [PAN:AGKPB7332E] -Vs.- Principal Commissioner of Income Tax,....Respondent Bhagalpur Appearances by: Shri K.N. Prasad, Advocate, appeared on behalf of the assessee Smt. Rinku Singh, CIT (DR), appeared on behalf of the Revenue Date of concluding the hearing : January 03, 2023 Date of pronouncing the order : January 05, 2023 O R D E R Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Principal Commissioner of Income Tax, Bhagalpur dated 13.03.2016 passed for Assessment Year 2011-12.
ITA No. 53/PAT/2016 Assessment Year: 2011-2012 Sajjan Bajaj, Bhagalpur 2. The solitary grievance of the assessee is that ld. CIT(Appeals) has erred in taking cognizance under section 263 and thereby setting aside the assessment order for passing a fresh assessment.
Brief facts of the case are that a survey under section 133A was conducted in the business premises of the assessee on 01.03.2011. The assessee has filed return of his income on 31.03.2012 disclosing total income of Rs.3,43,140/-. The ld. Assessing Officer has passed an assessment order under section 143(3) on 10.01.2014. The books of accounts of the assessee were rejected. An addition of Rs.16,75,000/- was made on estimate basis. This addition was made with regard to unexplained closing stock, because during the course of survey, the stock was calculated on the basis of MRP put on the items. No books of account, ledger were produced on the date of survey. Therefore, it was very difficult for the revenue to find out what was the actual physical stock available with the assessee on the basis of books.
The ld. Counsel for the assessee while impugning the order of the ld. CIT contended that this estimated addition on account of unexplained closing stock was challenged before the ld. CIT(Appeals), Thereafter the issue travelled upto the ITAT and all these issues attained finality. He submitted that now ld. CIT(Admin.)
ITA No. 53/PAT/2016 Assessment Year: 2011-2012 Sajjan Bajaj, Bhagalpur issued show-cause notice for exercising powers under section 263 on items, i.e. expenses incurred in cash in violation of section 40A(3) and from unexplained cash credit. He pointed out that once the books are rejected, then, no cognizance could be taken qua the payments made in violation to section 40A(3) and, therefore, this order is beyond the jurisdiction of the ld. Commissioner.
On the other hand, ld. CIT(DR) contended that in the assessment order, the ld. Assessing Officer failed to examine all the connected issues. He has simply estimated the income of the assessee by making an addition of closing stock. He should have gone through all other aspects discovered during course of survey. Therefore, his action is erroneous and ld. CIT has rightly treated the assessment order as erroneous, which has caused prejudice to the interest of Revenue.
We have duly considered the rival contentions and gone through the record carefully. Sub-clause (3) of section 263 puts an embargo upon the power of ld. Commissioner on the issues, which travelled to the ld. 1st Appellate Authority in an appeal against the impugned assessment orders. In the present case, there is no dispute that additions made in the assessment order were challenged before the ld. CIT(Appeals) and thereafter travelled upto the Tribunal. It is pertinent to
ITA No. 53/PAT/2016 Assessment Year: 2011-2012 Sajjan Bajaj, Bhagalpur note that ld. CIT while exercising the powers under section 263 believed that the expenditure incurred in cash in violation to section 40A(3) of the Income Tax Act ought to have been examined and should have been disallowed. The ld. Commissioner lost the site that once books are rejected, then it is to be construed that no details regarding such claim of expenditure, which can be relied upon, are available. As far as action of the ld. Assessing Officer qua rejection of books of account is concerned, once estimation of income on account of rejection of book was challenged before the ld. CIT(Appeals), then the ld. 1st Appellate Authority could have exercised co-terminus powers of the Assessing Officer for enhancement of income. The ld. CIT(Appeals) could have issued a notice to the assessee, inviting his explanation as to why the view point of the ld. Assessing Officer regarding rejection of books be not reversed and in that case, ld. CIT(Appeals) could have examined all these aspects and disallowed the expenditure. The moment this issue travelled to the file of ld. CIT(Appeals), the ld. Commissioner on administrative side under section 263 is not empowered to raise-up those very issues. Therefore, we are of the view that the impugned order is not sustainable and accordingly quashed.
ITA No. 53/PAT/2016 Assessment Year: 2011-2012 Sajjan Bajaj, Bhagalpur 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 05.01.2023.
Sd/- Sd/- (Manish Borad) (Rajpal Yadav) Accountant Member Vice-President Kolkata, the 5th day of January, 2023 Copies to :(1) Sajjan Bajaj, S/o. Late Narsingh Das Bajaj, Prop. Dilip Traders, Jokhi Babu, Ki Fhulwari, Bhagalpur-812002 (2) Principal Commissioner of Income Tax, Bhagalpur (4) Commissioner of Income Tax- , (5) The Departmental Representative (6) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.