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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
ITA No.391/Jodh/2019 Shree Govindam Prime Foods (P) Ltd. Assessment Year: 2015-16 आयकर अपीलीय अिधकरण �ायपीठ जोधपुर म�। IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR
माननीय �ी संद�प गोसांई, �ाियक सद� एवं माननीय �ी मनोज कुमार अ�वाल ,लेखा सद� के सम�। BEFORE HON’BLE SHRI SANDEEP GOSAIN, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM Hearing Through Video Conferencing Mode) 1. आयकरअपील सं./ I.T.A. No.391/Jodh/2019 (�नधा�रणवष� / Assessment Year: 2015-16) Shree Govindam Prime Foods (P) Ltd. ACIT Circle C/o. Rajendra Jain Advocate Sri Ganganagar बनाम 106, Akshay Deep Complex Rajasthan / Vs. 5th B Road, Sardarpura, Jodhpur Rajasthan-342 001. �थायीलेखासं./जीआइआरसं./PAN/GIR No.AALCS-9788-D (अपीलाथ�/Appellant) (��यथ� / Respondent) :
Assessee by : Shri Rajendra Jain (Advocate)-Ld. AR. Revenue by : Shri K.C. Badhok- Ld. CIT- DR सुनवाई क� तार�ख/ : 02/11/2020 Date of Hearing घोषणा क� तार�ख / : 21/12/2020 Date of Pronouncement आदेश / O R D E R
Manoj Kumar Aggarwal (Accountant Member): -
By way of this appeal, the assessee challenges the validity of revisional jurisdiction u/s 263 as exercised by Ld. Pr. Commissioner of Income-Tax, Bikaner, (Pr. CIT), for Assessment Year (AY) 2015-
ITA No.391/Jodh/2019 Shree Govindam Prime Foods (P) Ltd. Assessment Year: 2015-16 16 vide order dated 24/10/2019. The effective grounds taken by the assessee read as under:- 1. That on the facts and in the circumstances of the case, the order u/s 263 passed by Id CIT, Bikaner is bad in law and bad in facts. 2. That on the facts and in the circumstances of the case, the Id CIT, Bikaner erred in not recording own satisfaction in respect of assessment order passed by the Id AO is erroneous so as it is prejudicial the interest of revenue as per provision of section 263 of the Act. 3. That on the facts and in the circumstances of the case, the Id CIT, Bikaner grossly erred in setting aside the assessment order passed by the ld. Assessing Officer u/s 143(3) without any finding as to how the assessment order passed by the ld. AO is erroneous so as it prejudicial the interest of revenue. 4. That on the facts and in the circumstances of the case and in law, the Learned CIT, Bikaner erred in invoking the provisions of section 263 of the Act by holding that the Assessing Officer accepted all the claims of the Appellant without further enquiries of the matters referred in the directions issued under section 144A of the Act. 5. That on the facts and in the circumstances of the case and in law, the ld. CIT, Bikaner erred in setting aside the assessment order passed by ld. AO particularly when the ld.AO passed the assessment order after examination of documents produced by the assessee. 6. That on the facts and in the circumstances of the case, the Ld. CIT, Bikaner erred in recording various finding in the order are contrary to the material available on record. 2. We have carefully heard the rival submissions and perused relevant material on record including submissions made by the assessee during assessment proceedings as well as during revisional proceedings. The judicial precedents as cited during the course of hearing have duly been deliberated upon. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 3. The material facts are that the assessee being resident corporate assessee was assessed u/s. 143(3) on 30/12/2017 wherein the returned income of Rs.55.90 Lacs was determined at Rs.70.79 Lacs. The assessee was running a roller flour mill and it
3 ITA No.391/Jodh/2019 Shree Govindam Prime Foods (P) Ltd. Assessment Year: 2015-16 was subjected to survey proceedings on 08/10/2014. The assessee voluntarily offered an income of Rs.55 Lacs for stock & cash discrepancies. The said amount was credited to Profit & Loss Account which was assessed as ‘income from other sources’. The Ld. AO, invoking the provisions of Sec. 145(3) rejected books of account and estimated the business income @Rs.11.43 Lacs on sales of Rs.47.83 Crores. The assessee was saddled with some other minor disallowances and accordingly, the assessment was framed at Rs.70.79 Lacs. 4.1 However, Ld. Pr. CIT, upon perusal of case records and invoking the provisions of Sec.263, opined that the order was passed without making proper inquiries or verification and therefore, the same would require exercise of revisional jurisdiction in terms of Sec.263. Accordingly, a show cause notice was issued to the assessee wherein it was stated that during the year the assessee reflected sale of Rs.47.64 Crores and income from other sources for Rs.60.72 Lacs which include a sum of Rs.55 Lacs as surrendered by the assessee during survey proceedings. Against gross receipts of Rs.48.25 Crores, the assessee reflected gross profit of Rs.4.29 Crores as against the fact that at the time of survey on 08/10/2014, the assessee had gross profit of Rs.5.36 Crores on gross sales of Rs.28.03 Crores. Post survey, the assessee achieved sales of Rs.19.61 Crores which was considerably less than sales during pre-survey period. However, the assessee claimed expenditure of Rs.47.79 Crores for the whole year. The expenses during pre-survey period were Rs.31.96 Crores whereas
4 ITA No.391/Jodh/2019 Shree Govindam Prime Foods (P) Ltd. Assessment Year: 2015-16 the expenses for the post survey period were Rs.15.82 Crores. Therefore, the assessee made excess claim of expenditure which was not verified by Ld. AO at the time of assessment proceedings. 4.2 Another reason to invoke revisional jurisdiction was the fact that certain directions were issued u/s 144A to examine various aspects of the matter like examination of new loans taken by the assessee, electricity consumption, examination of purchases, yield and verification of sundry creditors etc. It was alleged that Ld.AO did not carry out the aforesaid examination as per the directions issued u/s 144A. 4.3 In reply, the assessee confronted the stand of Ld. Pr.CIT on both the issues. It was asserted that verification of excess expenditure as well as other aspects as directed u/s 144A would not have any impact on the total income since the assessment has been framed by invoking the provisions of Sec.145(3) wherein the assessee’s books of accounts have been rejected and income has been determined by applying estimated net profit rate. 4.4 Another pertinent submissions were the fact that appellate proceedings against the assessment order already stood concluded on 18/02/2019. It was pointed out that the assessee had challenged the assessment order before learned first appellate authority. However, Ld. CIT(A) sustained the application of Sec.145(3) but allowed marginal relief on estimation aspect. Therefore, the doctrine of merger would apply which would vitiate the revisional jurisdiction. 4.5 However, Ld. Pr. CIT rejected the submissions made by the assessee by observing that the main issue was to verify the yield
5 ITA No.391/Jodh/2019 Shree Govindam Prime Foods (P) Ltd. Assessment Year: 2015-16 shown by the assessee. Further, the directions issued u/s 144A were not complied with which would make the order erroneous and prejudicial to the interest of the revenue. Accordingly, Ld. AO was directed to redo the assessment in terms of revisional directions. Aggrieved as aforesaid, the assessee is in further appeal before us challenging the validity of revisional jurisdiction as exercised by Ld. Pr.CIT u/s 263. 5. Upon perusal of factual matrix as enumerated in preceding paragraphs, it is quite evident that the assessment has been framed by rejecting the assessee’s books of accounts u/s 145(3). The Ld. AO estimated the income by applying Net Profit rate on the sales achieved by the assessee during the year. This being the case, the shortcoming as pointed out by the Ld. Pr. CIT would not have any impact on assessee’s total income and the assessment order could not be said to be prejudicial to the interest of the revenue, on this point. For the very said reason, the allegations that the assessee claimed excess expenditure would also not have any impact on the total income of the assessee. 6. Another pertinent fact is that the assessment order was already under challenge before learned first appellate authority. The appellate proceedings stood concluded on 18/02/2019 i.e. much before the invocation of revisional jurisdiction u/s 263. The rejection of books u/s 145(3) was upheld but certain marginal relief was provided against estimation of business income. Therefore, the doctrine of merger was applicable to the facts of the case.
6 ITA No.391/Jodh/2019 Shree Govindam Prime Foods (P) Ltd. Assessment Year: 2015-16 The ratio laid down by Hon’ble High Court of Rajasthan in the case of CIT V/s Jain Construction Co. (257 CTR 336) is clearly applicable to the fact of the case. 7. Therefore, for both the above stated reasons, the revisional jurisdiction is unsustainable in the eyes of law. By quashing the order dated 24/10/2019, we allow the appeal. 8. Resultantly, the appeal stands allowed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.
Sd/- Sd/- (Sandeep Gosain) (Manoj Kumar Aggarwal) �ाियक सद� / Judicial Member लेखा सद� / Accountant Member मुंबई Mumbai; िदनांकDated : 21/12/2020 Sr.PS:-Jaisy Varghese आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Jodhpur 5. गाड�फाईल / Guard File 6. आदेशानुसार/ BY ORDER,
उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, जोधपुर / ITAT, Jodhpur.