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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri A. T. Varkey, JM & Shri Waseem Ahmed, AM]
This is an appeal filed by the assessee against the order of Ld. CIT(A), Central- II, Kolkata dated 30.04.2014 for AY 2010-11. The grounds of appeal raised by the assessee read as under: “01. That the Learned Commissioner of Income Tax (Appeals) Central-Il, Kolkata was not justified in upholding the action of the Learned DCIT, Central Circle-XIII, in rejecting petition under section 154 filed by the Appellant, without considering the relevant facts i.e. the addition made while completing assessment u/s 143(3) for alleged suppressed sale of Rs. l,94,973/- was already included in the Total Sales made by the Appellant and this amounted to be a mistake apparent from records. 02.That the Learned Commissioner of Income Tax (Appeals) Central -II, Kolkata was not justified in upholding order of DCIT Central Circle- XIII in rejecting petition under section 154, on the plea that the Appellant failed to file an Appeal against order passed under section 143(3) and instead filed a petition under section 154.”
2. The only issue is as to whether the action of the AO rejecting the petition u/s. 154 of the Act was erroneous or not and whether the observation made by the Ld. CIT(A) that the assessee should have preferred an appeal against the order passed by the AO u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) and not u/s. 154 of the Act is legally valid or not.
2 Jagadamba Jewellers., AY 2010-11 3. The facts of the case as noted by the Ld. CIT(A) is that the assessee filed its return of income for assessment year 2010-11 on 24.07.2010 declaring total income of Rs.29,71,819/-. The assessment was completed u/s 143(3) of the Act on 19.12.2012 at the assessed income of Rs.31,48,500/-. In the assessment so completed, the AO has made an addition of Rs.1,94,973/- on account of suppression of sale. During the course of assessment proceedings, the AO asked the assessee to submit the details of sales in excess of Rs.5,00,000/-. In response the assessee submitted party wise details of sales made by it. On perusal of details it was observed by the AO that the assessee has shown sales aggregating to Rs.17,00,000/- to M/s Heera Panna Jewellers to Muzaffarpur. In order to verify the sale transactions, the AO called for the information from the said u/s. 133(6) of the Act. The said party submitted the information, as per which the assessee had made sales aggregating to Rs.18,94,973/- to M/s Heera Panna Jewelleers during the Financial Year 2009-10. Thus, there was difference of sales amounting to Rs.1,94,973/. On being questioned as to why addition of Rs.1,94,973/- should not be made on account of discrepancy in the sales, it was submitted before the AO that the assessee had made sales of Rs.1,79,411/- to M/s Heera Panna Jewellers on 13.09.2009 vide Memo No. JJ-0424 for which payment in advance was received on 11.09.2009 vide cheque no.361832 of HDFC Bank. Since, the sales made was immediately realized by way of receipt of payment through cheque, the sale was not routed through party ledger account and instead the sale was directly credited to sales account by depositing the cheque in the bank account. Similarly, cash sales of Rs.15,562/- were made to the party on 21.01.2010 vide Memo No.JJ-0870.The cash was recorded in the cash book and sales were credited to the sales account. Therefore, there was no difference in sales shown by the assessee vis-a-vis the purchase shown by the party M/s Heera Panna Jewellers. However, the contention of the assessee was not accepted by the AO and he made an addition of Rs.1,94,973/- on account of discrepancy in sales and also initiated penalty proceedings u/s 271(1)(c) of the Act.
On receipt of assessment order dated 19.12.2012, the assessee filed a rectification petition u/s 154 of the Act before the AO on 24.12.2012. In the said petition, it was submitted before the AO that the addition of Rs.1,94,973/- has been made on account of suppressed sales to M/s Heera Panna Jewellers which is against the 3 Jagadamba Jewellers., AY 2010-11 facts and supporting documents placed on the assessment records. In the course of assessment proceedings evidences were placed on record which shows that there was no suppression of sales and the assessee has duly recorded the sales of Rs.1,79,411/- and Rs.15,562/- aggregating to Rs.1,94,973/- in its books of accounts and credited the same to the P&L Account. The copies of bank statement, cash book and invoices were placed on record. The assessee requested to rectify the mistake which is apparent from record on account of addition of Rs.1,94,973/-. The AO did not pass an order in response to rectification petition filed by the assessee and in the meantime he started penalty proceedings u/s 271(1)( c) of the Act. In the course of penalty proceedings, the assessee reiterated its submission made in the course of assessment proceedings and subsequently in the petition filed u/s 154 of the Act. It was contended before the AO the sales amounting to Rs.1,79,411/- (Memo No.JJ-0424) made on 11.09.2009 to M/s Heers Panna Jewellers had immediately been realized by way of receipt of payment through cheque, but since the payment had been received by cheque immediately the sale had not been routed through party ledger and instead of that sales amount had been deposited into bank account. Further, sales amounting to Rs.15,562/- (Memo No.JJ- 0870) made on 21.01.2010 to M/s Heera Panna Jewellers was in cash and since the entire amount had immediately been realized the said amount had been recorded as cash sale instead of credit sale and thus the transaction had not routed through party ledger account. Therefore, in the course of penalty proceedings, the assessee requested to rectify the mistake u/s 154 which the assessee had filed on 24.12.2012 and also to drop the penalty proceedings u/s 271(1)(c) of the Act.
The contention of the assessee was not accepted by the AO and according to him M/s Heera Panna Jewellers had shown total purchase from the assessee at Rs.18,94,973/- whereas the assessee had shown sales of Rs.17,00,000/-. As per the AO, although in its rectification petition the assessee pleaded that the difference amount i.e. Rs.1,79,411/- had been deposited in bank account and Rs.15,562/- had been recorded as cash sales, actually the said amount did not reflect in total sales made by the assessee and therefore addition of Rs.1,94,973/- had been made correctly. Under the 4 Jagadamba Jewellers., AY 2010-11 circumstances, the AO rejected the petition u/s 154 of the Act filed by the assessee. He also imposed the penalty u/s 271(1)(c) of the Act at Rs.60,246/-. Since, the rectification petition filed by the assessee was disposed of by the AO in the order u/s 271(1)(c) itself, therefore, the assessee has filed two separate appeals against the one order. One appeal has been filed against the rejection of petition u/s 154 of the Act and another against the imposition of the penalty u/s. 271(1)(c) of the Act, which have been allowed and the penalty has been deleted. However, the instant appeal is against the rejection of rectification petition.
Aggrieved by the aforesaid order of the AO rejecting the application u/s. 154 of the Act filed by the assessee, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to dismiss the same vide para 5 of its order by holding as under:
5. I have considered the submission of the appellant and perused the order under appeal as well as the assessment order. On perusal of the assessment order it is observed that the AO had made an addition of Rs.1,94,973/- on account of suppressed sales. In the course of assessment proceedings, the appellant submitted its explanation and documentary evidences in support of its claim that there was no suppression of sales to the extent of Rs.1,94,973/- as observed by the AO. However, rightly or wrongly, the AO did not accept the contention of the appellant and he made the addition of Rs.1,94,973/-. The appellant, instead of filing of the appeal against the addition made by the AO, has chosen to file a rectification petition u/s. 154 of the Act before the AO. On careful consideration of the facts, I am of the opinion that the addition made by the AO was out of the purview of the provisions of section 154 of the Act and the same cannot be rectified u/s. 154 because he rejected the explanation of the appellant in the course of assessment proceedings finding it as not satisfactory. Once, the AO had rejected the explanation of the appellant, same cannot be accepted u/s. 154 of the Act. Under the circumstances, the petition u/s. 154 of the Act has rightly been rejected. The ground no. 1 and 2 are dismissed.
Aggrieved by the aforesaid order of the Ld. CIT(A), the assessee is before us.
Since the facts of the case has been elaborately discussed by the Ld. CIT(A) and which has been reproduced above for the sake of brevity, the same is not repeated and there is no dispute about the facts. The Ld. CIT(A) has dismissed the appeal on the ground that the assessee ought to have challenged the original assessment wherein the AO has made a finding of fact. Against the said finding of fact by the AO and that too after recording the contentions of the assessee and going through the materials brought to his knowledge the AO has recorded his finding and against the said factual finding then also the assessee thought it fit to file an application u/s. 154 of the Act, which is a 5 Jagadamba Jewellers., AY 2010-11 provision to correct mistake apparent on the face of the record. When the AO has decided a question of fact right or wrong that cannot be changed by him because he does not have the power to review his own order and in the instant case AO’s finding that the assessee had suppressed sale of Rs.1,94,973/- from M/s. Heera Panna Jewellers and rejected the contentions of the assessee and made addition of Rs.1,94,973/- against the assessee. Therefore, We concur with the view expressed by the Ld. CIT(A) because when there was discrepancy found in the sales made by assessee to M/s. Heera Panna Jewellers (from the 133(6) statement of M/s. Heera Panna Jewellers) the AO had in fact confronted the assessee and the assessee had given explanation and the AO has brought on record the explanations rendered by the assessee that the sales were not routed through the party ledger account since the sale was directly credited to sale account by depositing the cheque in the bank account and similarly, cash sale of Rs.15,562/- were made to the party on 21.01.2010 vide Memo No. JJ-0870. It was brought to the knowledge of the AO that cash was recorded in the cash book and sales were credited to the sales account and, therefore, there was no difference in sale shown by the assessee vis-a-vis the purchases shown by the party M/s. Heera Panna Jewellers. However, we take note that the AO did not accept the said explanation and evidence brought on record before him. In such circumstances, the assessee preferring an application u/s. 154 of the Act on a question of fact which has been decided against the assessee and if the AO entertains the application u/s. 154 of the Act will tantamount to reviewing his own decision which power the AO has not been granted by the Income- tax Act. The assessee ought to have filed an appeal as has been rightly observed by the Ld. CIT(A) and we do not find any infirmity in the order passed by the Ld. CIT(A), and, therefore, we dismiss the appeal preferred by the assessee.
In the result, appeal of assessee is dismissed.