R PIYARELALL IRON & STEEL PVT. LTD.,KOLKATA vs. D.C.I.T.,CIRCLE-3(1), KOLKATA

This appeal of the assessee for the assessment year 2013-14 is directed against the order dt. 20-03-2018 passed u/s. 263 of the Income-tax Act, 1961 [ hereinafter, referred to as ‘the Act’] by the ld. Principal Commissioner of Income-tax [ in short, hereafter referred to as ‘the Ld. PCIT], Kolkata-1, Kolkata, which is arising from the

At the time of hearing the registry has informed that the present appeal is time barred by 345 days. The assessee prayed for condonation of the delay. The reasons for such delay are placed on record. In the condonation application the assessee submitted that Mr. Anurag Sharma was going through an unfortunate mental distress during this period as his son Mr. Akhil Sharma aged 21 had met with sudden unfortunate death on 01.04.2018. Therefore, due to this unfortunate incident and in the process of coping up with the loss of his son's premature and sudden death, Mr Anurag Sharma omitted to file the appeal within the due date. The appellate company had also faced acute financial crisis during this period as all its bank accounts had become NPA and hence there was no operational activities in the company. The Consultant was also followed up in respect of the appeal and at last, it was informed that he had missed out the filing of the appeal as he was mentally disturbed during that period. In the meantime when penalty notice was received for invoking penalty for the alleged concealment of income in respect of the stock, the matter was taken up and hence the appeal is being filed now. It is humbly requested that the delay of about 345 days may kindly be condoned as the delay is attributable to the unavoidable circumstances of the consultant and acute financial crisis of the company. 2. R.Piyarelall Iron & Steel Pvt.Ltd.

We, after perusing the condonation application as well as material available on record find merit in the reasonable cause stated by the assessee and in the larger interest of justice, condone the delay and admit the appeal for adjudication.

At the time of hearing none appeared on behalf of the assessee. A perusal of records shows that appeal of assessee was fixed for hearing on various dates available on record. Several opportunities have been provided to the assessee. Notice through Registered Post has been sent. But the assessee did not appear. Under these circumstances, we have no option except to proceed with the adjudication of the issues raised in this appeal ex parte qua the assessee.

The assessee has raised the following grounds of appeal:-

Brief facts of the case are that the assessee is a private limited company, engaged in trading business of iron ore fines. Nil income declared in return of income for the AY 2013-14. Case selected for scrutiny and notices u/s. 143(2) and 142(1) of the Act issued and duly served on the assessee. The ld. AO after considering the submissions of the assessee made certain additions/disallowances totalling to Rs.48,67,604/- and assessed loss at Rs.1,65,24,578/-.

Subsequently ld.PCIT called for assessment records and invoked jurisdictional revisionary power provided u/s. 263 of the Act. He observed that there was decrease in value of trade by Rs. 7,03,24,572/-, but there was no corresponding sale of trade items to this effect and thus, issued show cause notice u/s. 263 of the Act to the assessee. Reply was filed by the assessee stating that the said amount is the decrease in the value of stock, which has been claimed as a loss, but failed to satisfy the ld.PCIT by substantiating / producing with necessary evidence. The ld. PCIT accordingly held that the impugned assessment order dt. 21-03-2016 framed u/s. 143(3) of the Act is erroneous and prejudicial to the interest of the revenue and, thus, directed the ld.AO to pass fresh assessment order after considering the observations made in the impugned order of the ld.PCIT.

Aggrieved, the assessee is now in appeal before this Tribunal raising four grounds of appeal. Out of which two grounds are general in nature

We have heard the ld.DR and perused the records placed before us. Jurisdiction invoked by the ld. PCIT u/s. 263 of the Act is in challenge by the assessee before us. On perusal of the of the impugned order, we find that following is the reason for carrying out revisionary proceeding:-

Further on perusing the impugned order, we notice that the assessee has claimed that the value of stock has diminished/decreased from Rs.25,74,76,320/- (opening stock-in-trade) to Rs.18,71,51,748/- (closing stock-in-trade). Therefore, the stock-in-trade lowered/diminished by Rs.7,03,24,572/- has been claimed as loss in the return. During the course of proceeding u/s. 263 before the ld.PCIT the assessee failed to file any evidence to support/substantiate the claim of reduced value of closing 5. R.Piyarelall Iron & Steel Pvt.Ltd. stock. Perusal of assessment order reveals that no such issue came for consideration before the ld. AO. The assessee refrained from appearing and has not filed any details about the questionnaire issued by the ld.AO and whether any such information was called for by the ld.AO regarding the issue raised/referred in show cause notice u/s. 263 of the Act.

We are unable to find any such documents on record, which could show that this issue of decrease in closing stock came up before ld.AO at any point of time. It is a matter of claiming loss of Rs.7,03,24,572/- towards trading business and without complete evidence such loss claimed by the assessee cannot be allowed. Thus, ld. PCIT has rightly observed/held that the order of the AO u/s. 143(3) of the Act is erroneous and prejudicial to the interest of the revenue. We, therefore, find no infirmity in the impugned order passed u/s. 263 of the Act setting aside the assessment order dt.21- 03-2016 and directing the ld.AO to frame the assessment afresh after considering the observations/findings of the ld.PCIT. The ld.PCIT has rightly invoked jurisdiction u/s. 263 of the Act to setting aside the impugned assessment order passed u/s. 143(3) of the Act. Thus, ground nos. 1, 2 and 3 raised by the assessee are dismissed. Ground no. 4 is general in nature, which requires no adjudication.