SHRI VINOD KUMAR JAIN,KOTA vs. PR. COMMISSIONER OF INCOME TAX,, KOTA

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 726/JP/2018 fu/kZkj.k o"kZ@Assessment Year :2008-09 cuke Shri Vinod Kumar Jain, Pr.C.I.T., Vs. 320, Transport Nagar, Anantpura, Kota. Kota. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABLPJ 8219 Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Shravan Kr. Gupta (Adv) jktLo dh vksj ls@ Revenue by : Shri K.C. Meena (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 24/09/2018 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 25/09/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M.

This appeal by the assessee is directed against the revision order

dated 22/03/2018 of ld. Pr. CIT, Kota U/s 263 of the Income Tax Act,

1961 (in short the Act) for the A.Y. 2008-09. The assessee has raised

following grounds of appeal: “1. That the impugned order u/s 263 dated 22.03.2018 is bad in law and on facts of the case for want of jurisdiction and for various other reasons and hence the same may kindly be quashed. That the Id. PCIT Kota is erred in law as well as on the facts of the 2.1 case in invoking S. 263 of the Act. The same is being purely contrary to the provisions of law, therefore, the impugned order u/s 263 of the Act kindly be quashed.

ITA 726/JP/2018_ 2 Vinod Kr. Jain Vs Pr.CIT That the Id. PCIT Kota is erred in law as well as on the facts of the 2.2 case in taking the action u/s 263 of the Act on the allegation that the receipts of Rs. 538025/- have been under stated according to 26AS and apply the NP rate of 13.27% on such undisclosed receipts and made addition for Rs. 71394/- only. According to learned PCIT Kota, the entire receipts of Rs. 538025/- to be included in the total income of the assessee.

Which is contrary to the facts and such a finding being perverse, the impugned action is bad in law without jurisdiction and being void ab initio, the impugned order u/s 263 of the Act kindly be quashed. That the Id. PCIT Kota is erred in law as well as on the facts of the 3. case in setting aside the assessment to be made afresh with the direction to re-examine the issue in the light of his observation. The same is being purely contrary to the provisions of law, therefore, the impugned order u/s 263 of the Act kindly be quashed.

was framed by the Assessing Officer U/s 143(3) read with Section 147 of

the Act on 22/06/2015. The Assessing Officer while issuing the notice U/s

148 of the Act proposed to assessee the income of the assessee on

account of contract receipts and further the Assessing Officer has also

made an addition on account of difference in contract receipts declared by

the assessee and contract receipts shown as per 26AS. Thus, the

Assessing Officer after examination of the issue, has made the addition @

13.27% net profit on contract receipts found to be not declared by the

assessee to the extent of Rs. 5,38,025/-. The assessment was completed

ITA 726/JP/2018_ 3 Vinod Kr. Jain Vs Pr.CIT

after all the relevant details and evidence have examined and analyzed by

the Assessing Officer. The ld. Pr.CIT has proposed to revise this

assessment by issuing show cause notice dated 07/3/2018 on the ground

that instead of applying the net profit rate of 13.27% on the undisclosed

receipts, the entire amount should have been added to the income of the

assessee. Thus, the ld AR has submitted that when the Assessing Officer

has taken a view and the fact which is not in dispute that the said

additional receipt found as per 26AS is contract receipts then the entire

receipts cannot be treated as income of the assessee. The element in the

said receipt can be added to the income of the assessee. Thus, the ld. AR

has submitted that when the Assessing Officer has taken a view on this

issue which is the correct view then the Pr. Commissioner, though, may

not agree with the view taken by the Assessing Officer, is not permitted

to revise the assessment U/s 263 of the Act. Hence, the action of the

Pr.CIT is invalid and without jurisdiction as the order of the Assessing

Officer is not erroneous or prejudicial to the interest of the revenue. The

ld AR has referred to the Explanation-2 to Section 263(1) of the Act and

submitted that none of the conditions provided under Clauses (a) to (d) of

explanation-2 are satisfied, warranting invoking the provisions of Section

263 of the Act. Therefore, the initiation as well as the impugned order

ITA 726/JP/2018_ 4 Vinod Kr. Jain Vs Pr.CIT

passed U/s 263 is not valid and liable to be quashed. In support of his

contention, he has relied upon the following decisions:

(1) CIT Vs. Indeo Airways Pvt. Ltd. (2012) 349 ITR 085 (Delhi)

(2) CIT Vs. Balchand Ajit Kumar (2003) 263 ITR 0610.

(3) CIT Vs President Industries (2002) 258 ITR 0654

Pr.CIT passed U/s 263 of the Act and submitted that when the assessee

has noted the receipts which was found from 26AS then the entire

undisclosed receipts has to be added as income of the assessee because

all the questions have already been detected and claimed by the assessee

material on record. This is a case of reopening of the assessment U/s 148

of the Act whereby the Assessing Officer proposed to reassess the income

of the assessee based on the AIR information regarding the contract

receipts of Rs. 15,90,221/- on which the TDS of Rs. 34,902/- was

deducted by the payer. During the course of reassessment proceedings,

the Assessing Officer further noted that as per 26AS statement of the

assessee, the contract receipts in respect of M/s Cattle Feed Plant, Ajmer

as well as M/s JAPFA Confeed India Limited, Chandigarh are amounting to

Rs. 8,76,561/- whereas the assessee has declared the receipts from these

two parties total of Rs. 3,38,536/-. Hence, the Assessing Officer found

ITA 726/JP/2018_ 5 Vinod Kr. Jain Vs Pr.CIT

that there is a difference of Rs. 5,38,025/- which was not declared by the

assessee on account of contract receipts from these two parties.

However, the same is reflected in the 26AS statement. Accordingly, the

Assessing Officer applied the net profit rate of the assessee business @

13.27% and made addition of Rs. 71,394/- to the total income of the

assessee on account of undeclared contract receipts. Subsequently, the

ld. Pr.CIT noted that the order passed by the Assessing Officer is

erroneous so far as the Assessing Officer has made addition by applying

N.P. rate @ 13.27% on undeclared receipts instead of the entire amount

of Rs. 5,38,025/- to be included in the income of the assessee. The ld.

Pr.CIT, accordingly issued show cause notice U/s 263 of the Act on

07/3/2018. The assessee filed his reply to the show cause notice and

submitted that the Assessing Officer has duly conducted the enquiry and

applied the net profit rate as per normal business activity of the assessee

and therefore, there is no error in the assessment order passed by the

Assessing Officer. The ld. Pr.CIT did not accept this contention of the

assessee and set aside the assessment order with the direction to the

Assessing Officer to frame the assessment de novo. The relevant part of

the order of the pr.CIT in para 4 is as under:

“4. On examination of the assessment record, it is seen that the Assessing Officer completed the assessment in a routine manner without

ITA 726/JP/2018_ 6 Vinod Kr. Jain Vs Pr.CIT

investigating the issues and/or making proper enquiries regarding applying the NP rate on undisclosed receipts. The A.O. has not given specific reasons why the entire undisclosed receipts of Rs. 5,38,025/- of the assessee were not includible in the assessee’s total taxable income, whereas the assessee had already claimed all the expenses relating to his business in the income and expenditure account. Moreover, the assessee has not submitted any written submissions on the stipulated date of hearing in compliance to the show cause notice issued under section 263 of the Income-Tax Act, 1961. Thus, in the absence of any counter averment on the part of the assessee, the discrepancy pointed out above goes uncontested. It is clear from the facts apparent from record that the Assessing Officer had passed the assessment order under section 143(3)/147 of the Act dated 22/06/2015 without taking into account on record the facts and applying the relevant provisions of the Act. Prima facie, expenses have been allowed more than once. Such lapse on the part of the Assessing Officer renders the assessment order erroneous and prejudicial to the interest of revenue. I, therefore, in the facts and circumstances as discussed above, consider it fit to set aside the assessment order with a direction to the Assessing Officer to frame it de novo in respect of the above issue after affording proper opportunity of being heard to the assessee.”

Thus, it is clear that the ld. Pr.CIT has set aside the assessment order on

the ground that the assessment was completed in routine manner without

investigating the issue or making proper enquiry regarding applying the

NP rate on undisclosed receipts. It is pertinent to note that the

assessment was reopened to assess the contract receipts and further the

Assessing Officer detected from 26AS statement that the assessee has not

ITA 726/JP/2018_ 7 Vinod Kr. Jain Vs Pr.CIT

disclosed the correct contract receipts in the return of income and

accordingly, the Assessing Officer made addition on account of non-

declaration of the contract receipts to the extent of Rs. 5,38,025/- from

two parties namely M/s Cattle Feed Plant, Ajmer and M/s JAPFA Comfeed

India Ltd., Chandigarh. It is clear from the facts and circumstances of the

case as well as from the assessment order that the Assessing Officer has

duly examined the issue of non-disclosure of the correct contract receipts

by the assessee and accordingly made the addition by applying the NP

rate of 13.27% which was declared by the assessee on the other receipts.

Though, the N.P. rate applied by the Assessing Officer may not be

perfectly correct, however, it is not a case of complete lack of enquiry on

the part of the Assessing Officer so as to render the assessment order

erroneous, so far as prejudicial to the interest of the revenue. The

Assessing Officer has taken a view on the issue and we find that the view

taken by the Assessing Officer is a possible view may not be perfect view.

However, once the Assessing Officer has taken a view on the issue after

conducting of enquiry and examination then the said order cannot be held

as erroneous on the ground of lack of enquiry. The ld. Pr.CIT can invoke

the provisions of Section 263 of the Act even in the case where the

Assessing Officer has passed order after conducting a due enquiry if the

order passed by the Assessing Officer is found to be contrary to the

ITA 726/JP/2018_ 8 Vinod Kr. Jain Vs Pr.CIT

provisions of law or the issue decided by the Assessing Officer in allowing

the claim, is not permissible under the law. In the case in hand, the ld.

Pr.CIT has not decided this issue or given the finding that the decision

taken by the Assessing Officer is absolutely impermissible under the law.

Further even if in the view of the ld. Pr.CIT, the order passed by the

Assessing Officer was contrary to the provisions of law in context of the

facts and circumstances of the case, then the ld. Pr.CIT ought to have

given the conclusive finding on the issue instead of setting aside the issue

back to the Assessing Officer for further enquiry, examination and

adjudication of the same de novo. Hence, it is not a case of lack of

enquiry on the part of the Assessing Officer and the Assessing Officer has

taken a view on the issue, which is one of the possible views keeping in

the mind the fact that the receipts in question are contract receipts and

therefore, the entire receipts cannot be treated as income of the

assessee. Therefore, the Assessing Officer applying the NP rate on the

contract receipts is certainly a possible view taken by the Assessing

Officer, which cannot be faulted with merely on the ground that the ld.

Pr.CIT did not agree with the view taken by the Assessing Officer. Hence,

we find that the order passed by the ld. Pr.CIT U/s 263 of the Act is not

sustainable and the same is quashed.

ITA 726/JP/2018_ 9 Vinod Kr. Jain Vs Pr.CIT 5. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 25/09/2018.

Sd/- Sd/- ¼foØe flag ;kno½ ¼fot; iky jko½ (VIKRAM SINGH YADAV) (VIJAY PAL RAO) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 25th September, 2018 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Vinod Kumar Jain, Kota. 1. izR;FkhZ@ The Respondent- The Pr.C.I.T., Kota. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 726/JP/2018) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत