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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy, Hon’ble & Sri S.S. Godara, Hon’ble
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA VIRTUAL COURT HEARING (Before Sri J. Sudhakar Reddy, Hon’ble Accountant Member & Sri S.S. Godara, Hon’ble Judicial Member) ITA No. 1662/Kol/2019 Assessment Year: 2014-15 M/s. Gouri Shankar Jain HUF…………….…………………................................……………….….........Appellant C/o. Agarwal Vishwanath & Associates 133/1A, S.N. Banerjee Road Pushkal Bhawan 3rd Floor Kolkata – 700 013 [PAN : AACHG 9644 L] Vs. Principal Commissioner of Income Tax-11, Kolkata…..………...…..................……………..Respondent Appearances by: Shri Ankit Jalan, Advocate, appeared on behalf of the assessee. Shri Ram Bilash Meena, CIT D/R, appearing on behalf of the Revenue. Date of concluding the hearing : October 1st, 2020 Date of pronouncing the order : November 25th, 2020 ORDER Per J. Sudhakar Reddy, AM :- This appeal filed by the assessee is directed against the order of the Learned Principal Commissioner of Income Tax - 11, (hereinafter the “ld. Pr. CIT”), passed u/s. 263 of the Income Tax Act, 1961 (the ‘Act’), dt. 15/03/2019, for the Assessment Year 2014-15. 2. There is a delay of 27 (twenty seven) days in filing of this appeal. After perusing the petition for condonation of delay, we are convinced that the assessee was prevented by sufficient cause in filing the appeal in time. Hence, we condone the delay and admit this appeal. 3. The assessee is a HUF and had filed its return of income for the Assessment Year 2014-15 on 29/11/2014, declaring total income of Rs.15,08,400/-. The case was selected for scrutiny under CASS for the reason that it had low net profit or loss shown from large gross receipts. The assessment was completed u/s 143(3) of the Act on 20/12/2016. Later, the ld. Pr. CIT, revised the assessment u/s 263 of the Act after issuing showcause notice on 28/02/2019. The reasons for revision are given in para 4 page 2 of the order u/s 263 of the Act, passed by the ld. Pr. CIT, which is extracted for ready reference:-
2 ITA No. 1662/Kol/2019 Assessment Year: 2014-15 M/s. Gouri Shankar Jain HUF “4. (i) Mr. Anil Kumar Tiwary, FCA and A/R, submitted a written submission on (i) Mr. Anil Kumar Tiwary, FCA and A/R, submitted a written submission on (i) Mr. Anil Kumar Tiwary, FCA and A/R, submitted a written submission on 11.03.2019 along with power of attorney, on behalf of the assessee. the submission 11.03.2019 along with power of attorney, on behalf of the assessee. the submission 11.03.2019 along with power of attorney, on behalf of the assessee. the submission has been considered careful has been considered carefully but the same has been found without merit as the ly but the same has been found without merit as the TAR column 26B(b) specifically mentions “In respect of any sum referred to in TAR column 26B(b) specifically mentions “In respect of any sum referred to in TAR column 26B(b) specifically mentions “In respect of any sum referred to in clause (a), (b), (c), (d),or (f) of section 43B the liability for which was incurred in (d),or (f) of section 43B the liability for which was incurred in (d),or (f) of section 43B the liability for which was incurred in the previous year and was not paid on the previous year and was not paid on or before the aforesaid date.” The above or before the aforesaid date.” The above statement means that the Auditor has certified that the amount of Rs.1,96,26,619/ statement means that the Auditor has certified that the amount of Rs.1,96,26,619/ statement means that the Auditor has certified that the amount of Rs.1,96,26,619/- towards VAT liability tantamount to violation of provisions of section 43B and the towards VAT liability tantamount to violation of provisions of section 43B and the towards VAT liability tantamount to violation of provisions of section 43B and the same should have disallowed by the Auditor himsel same should have disallowed by the Auditor himself from the calculation of net f from the calculation of net profit of business of the assessee. further, the Trading and Profit and Loss account profit of business of the assessee. further, the Trading and Profit and Loss account profit of business of the assessee. further, the Trading and Profit and Loss account of the assessee for the financial year 2013 of the assessee for the financial year 2013-14 relevant to AY 2014-15, do not show 15, do not show any VAT input or output entries. Therefore, it is clear th any VAT input or output entries. Therefore, it is clear that the VAT input and output at the VAT input and output entries are included in total purchases and total sales shown in the Trading and entries are included in total purchases and total sales shown in the Trading and entries are included in total purchases and total sales shown in the Trading and Profit and Loss account of the audit report.” Profit and Loss account of the audit report.” 3.1. Thereafter, the ld. Pr. CIT, Thereafter, the ld. Pr. CIT, discussed various case-law and came to the conclusion law and came to the conclusion that the assessment order is erroneous and prejudicial to the interest of the revenue. that the assessment order is erroneous and prejudicial to the interest of the revenue. that the assessment order is erroneous and prejudicial to the interest of the revenue.
The ld. Counsel for the assessee submitted that the order passed u/s 263 of the The ld. Counsel for the assessee submitted that the order passed u/s 263 of the The ld. Counsel for the assessee submitted that the order passed u/s 263 of the Act is bad in law because, the Act is bad in law because, the reason for selection of scrutiny is “low net profit/loss low net profit/loss shown from large gross receipts shown from large gross receipts” and thus, the Assessing Officer did not have the power and thus, the Assessing Officer did not have the power to verify any other aspect. He submitted that the ld. Pr. CIT cannot revise the to verify any other aspect. He submitted that the ld. Pr. CIT cannot revise the to verify any other aspect. He submitted that the ld. Pr. CIT cannot revise the assessment order on any other assessment order on any other issue other than what was permitted under limited than what was permitted under limited scrutiny issues. He further submitted that value added tax was not routed through the scrutiny issues. He further submitted that value added tax was not routed through the scrutiny issues. He further submitted that value added tax was not routed through the profit and loss account and hence Section 43B of the Act, does not apply. He referred to profit and loss account and hence Section 43B of the Act, does not apply. He referred to profit and loss account and hence Section 43B of the Act, does not apply. He referred to the audit report issued u/s 44A the audit report issued u/s 44AB of the Act, specifically to Column 26, wherein, the tax lumn 26, wherein, the tax auditor had clearly stated that the indirect tax has not passed through the profit and auditor had clearly stated that the indirect tax has not passed through the profit and auditor had clearly stated that the indirect tax has not passed through the profit and loss account and submits that the reply to the showcause notice and the evidence shows and submits that the reply to the showcause notice and the evidence shows and submits that the reply to the showcause notice and the evidence shows that VAT had not been claimed as a deduction by the assessee and thus no disallowance aimed as a deduction by the assessee and thus no disallowance aimed as a deduction by the assessee and thus no disallowance can be made u/s 44AB of the Act can be made u/s 44AB of the Act. 4.1. The ld. D/R, on the other hand, submitted that this fact required to be properly The ld. D/R, on the other hand, submitted that this fact required to be properly The ld. D/R, on the other hand, submitted that this fact required to be properly verified by the Assessing Officer and not doing so is non verified by the Assessing Officer and not doing so is non-application of m application of mind. He argued that the order passed by the Assessing Officer that the order passed by the Assessing Officer was without enquiry and without without enquiry and without application of mind and hence the same and hence the same is an erroneous order. He vehemently is an erroneous order. He vehemently contended that there is not prejudice caused to the assessee as the Assessing Officer contended that there is not prejudice caused to the assessee as the Assessing Officer contended that there is not prejudice caused to the assessee as the Assessing Officer was directed to conduct a fresh assessment on a priority basis and complete the same was directed to conduct a fresh assessment on a priority basis and complete the same was directed to conduct a fresh assessment on a priority basis and complete the same preferably within three months after giving the assessee adequate opportunity of being preferably within three months after giving the assessee adequate opportunity of being preferably within three months after giving the assessee adequate opportunity of being heard.
3 ITA No. 1662/Kol/2019 Assessment Year: 2014-15 M/s. Gouri Shankar Jain HUF 5. After hearing rival contentions, we find that the tax auditor in the repor After hearing rival contentions, we find that the tax auditor in the repor After hearing rival contentions, we find that the tax auditor in the report issued u/s 44AB of the Act, has clearly stated that the indirect tax are not routed through the clearly stated that the indirect tax are not routed through the clearly stated that the indirect tax are not routed through the profit and loss account. This fact was stated by the assessee before the ld. Pr. CIT This fact was stated by the assessee before the ld. Pr. CIT This fact was stated by the assessee before the ld. Pr. CIT in its reply to the showcause notice issued u/s 263 of the Act reply to the showcause notice issued u/s 263 of the Act and evidences ces in support of this fact were furnished. In our view, it was the duty of the ld. Pr. CIT to were furnished. In our view, it was the duty of the ld. Pr. CIT to at least at least verify, prima facie as to whether the input and output entries have been routed through the profit as to whether the input and output entries have been routed through the profit as to whether the input and output entries have been routed through the profit and loss account or not, as certified by the tax audi and loss account or not, as certified by the tax auditor. Without doing so, he could not tor. Without doing so, he could not have come to the conclusion that there was an error in the assessment order have come to the conclusion that there was an error in the assessment order have come to the conclusion that there was an error in the assessment order passed by the Assessing Officer and that this error is prejudicial to the interest of the revenue and that this error is prejudicial to the interest of the revenue and that this error is prejudicial to the interest of the revenue. When VAT is not routed through the profit and When VAT is not routed through the profit and loss account, the assessee could not have loss account, the assessee could not have claimed this amount it as a deduction it as a deduction. VAT is not debited to the profit and loss account. is not debited to the profit and loss account. When VAT is not claimed as a deduction, while computing the income, the question of When VAT is not claimed as a deduction, while computing the income, the question of When VAT is not claimed as a deduction, while computing the income, the question of disallowing the same u/s 44AB of the Ac disallowing the same u/s 44AB of the Act, does not arise. Thus, in our considered view, t, does not arise. Thus, in our considered view, the ld. Pr. CIT has committed an error in not examining the issue by himself before the ld. Pr. CIT has committed an error in not examining the issue by himself before the ld. Pr. CIT has committed an error in not examining the issue by himself before coming to the conclusion that there is an error coming to the conclusion that there is an error which is prejudicial to the interest of the which is prejudicial to the interest of the revenue, which requires revisio which requires revision, by invocation of powers u/s 263 of the Act. Thus, we by invocation of powers u/s 263 of the Act. Thus, we hold that the order passed u/s 263 of the Act, is bad in law and allow this appeal of the hold that the order passed u/s 263 of the Act, is bad in law and allow this appeal of the hold that the order passed u/s 263 of the Act, is bad in law and allow this appeal of the assessee.
In the result, appeal of the assessee is allowed. In the result, appeal of the assessee is allowed.
Kolkata, the Kolkata, the 25th day of November, 2020 20. Sd/- Sd/- J. Sudhakar Reddy] [S. S. Godara] [J. Sudhakar Reddy Judicial Member Accountant Member Accountant Member Dated : 25.11.2020 {SC SPS}
4 ITA No. 1662/Kol/2019 Assessment Year: 2014-15 M/s. Gouri Shankar Jain HUF Copy of the order forwarded to: 1. M/s. Gouri Shankar Jain HUF M/s. Gouri Shankar Jain HUF C/o. Agarwal Vishwanath & Associates Agarwal Vishwanath & Associates 133/1A, S.N. Banerjee Road Pushkal Bhawan 3rd Floor Kolkata – 700 013
Principal Commissioner of Income Tax Principal Commissioner of Income Tax-11, Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.