SRI SUBHAS JAISWAL,HOWRAH vs. PR. CIT - 16, KOLKATA, KOLKATA

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ITA 87/KOL/2018Status: DisposedITAT Kolkata08 May 2019AY 2008-093 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO had taken a possible view in the reassessment proceedings by considering the information regarding bank accounts and business activities. The Pr. CIT's revision under Section 263 was considered a mere change of opinion and not maintainable.

What were the facts?

The assessee filed an appeal with a delay of six days, which was condoned. The issue involved a reassessment proceeding initiated under Section 147, where the AO estimated net profit at 3% on Rs. 5.51 crores. The Pr. CIT invoked Section 263 to revise the AO's order.

What were the issues?

Whether the Pr. CIT's revision under Section 263 was justified when the AO had taken a possible view based on available information, or if it constituted a mere change of opinion.

Which sections of the Income-tax Act were involved?

Section 147,Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA BENCH “A”, KOLKATA

Hearing: 14.03.2019Pronounced: 08.05.2019

ORDER

PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER This appeal filed by the assessee against the order dated 27.10.2017 passed by Pr. CIT-16, Kolkata for AY 2008-09.

2.

We find that the appeal was filed with a delay of six days. Upon hearing both the parties and on perusal of the reasons stated by the assessee in the petition, we find the reasons stated by the assessee are bonafide which really prevented the assessee in filing the appeal within time. Therefore, the delay of six days are condoned.

3.

Heard both parties and perused material available on record. The Ld.AR submits that the details of non-disclosure of alleged bank accounts were submitted before the AO in the re-assessment proceedings initiated u/s 147 of the Income Tax Act, 1961 (in short “Act”) and referred to page No.1 of the AO’s order and submitted that the AO examined the details of the said bank accounts by summoning the bank statements from the respective banks. The AO taking into consideration the business activities of the assessee i.e. trading in iron and steel scraps from the AYs 2009-10 to 2013-14 estimated the net

1.

(ASSESSMENT YEAR-2008-09) profit @ 3% on an amount of Rs.5.51 crores as alleged to have been found by the DDIT(Investigation) which were passed on to AO to initiate proceedings u/s 147 of the Act. The Ld.AR submits that the AO has taken a possible view and the Pr. CIT u/s 263 of the Act cannot set aside the assessment order passed by the AO by taking a different view and it is mere change of opinion and on the basis of which the order of the AO cannot be held to be erroneous and prejudicial to the interest of the Revenue.

4. We find in the re-assessment proceedings that the assessee filed a letter dated 19.11.2015 by stating the profit from trading of iron scraps is nominal. Further, he contended in the iron scrap business, the disclosed income or net profits in all subsequent years were below 1% and by submitting a comparative share of net profits for AYs 2009- 10 to 2013-14 and suggested average net profit ratio @ 0.35%. It is also noted that the AO on his own taken similar style of business of other entities and compared the facts of present assessee with those entities and taken a view to adopt net profit @ 3%. We find that the AO in his order at page No.3 discussed the comparative study of other three entities which clearly shows the net profit rate of said three entities were below 3% under the same AY i.e. 2008-09. Therefore, it is clear from the AO’s order that the AO has taken a possible view in the re-assessment proceedings basing on the information passed by the DDIT(Investigation) in respect of bank accounts involving an amount of Rs.5.51 crores. Thus, initiation of proceedings u/s 263 of the Act by Pr.CIT-16 setting aside a possible view taken by the AO in the re-assessment proceedings, in our opinion is not maintainable for the reason, the direction given by the Pr.CIT-16 in the said revisional proceedings regarding non-disclosure of bank accounts and existence of business of the assessee in the names of five different proprietorship concerns were considered by the AO in the re-opening proceedings in paras 3 & 4 of his order . Therefore, the order passed by the Pr.CIT Page | 2

(ASSESSMENT YEAR-2008-09) u/s 263 proceedings is a mere possible view and the order passed by the AO in the re-assessment proceedings cannot be treated as erroneous and prejudicial to the interest of the Revenue. Therefore, the impugned order dated 27.102.2017 passed by the Pr.CIT-16, Kolkata is quashed and grounds raised by the assessee are allowed.

4.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 08.05.2019.

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