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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ B ’
Before: SHRI VIJAY PAL RAO & SHRI INTURI RAMA RAO
Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the revision order dt.6.3.2014 of Commissioner of Income Tax passed under Section 263 of the Income Tax Act, 1961 (in short 'the Act') for the Assessment Year 2009-10.
The assessee has raised the following grounds :
“1. In the original order passed under Section 143(3) of I.T. Act, Dept. got legitimate tax on income assessed at 10.08% work receipts. This is for more than 8% of work receipts Section 44AD of I.T. Act. Further, appellant had not disputed the original order passed under Section 143(3) of I.T. Act, rather discharged the extra tax liability in full and co-operated with the Department.
2. If Hon'ble Tribunal look at last para of original order passed under Section 143(3) of I.T. Act, Hon'ble Tribunal will find that ld. A.O. has clearly stated in his order that “As the assessee has furnished the details in the fag end of the year and same could not be fully verified in details with reference to Bank Pass Sheet and contract receipts etc. the additions so made on account of disallowance under various heads will cover up any deficiency or laps if any that may arise in this case.”
3. Further, the gap between income returned by the appellant Rs.7,29,590 & income finally assessed in 143(3) order Rs.;15,24,460 MOUNRA RO Ea.7,94,870 is far more than Rs.1,28,425 the figure of additions proposed in 263 order. As this figure of additions squarely cover up the deficiency or lapse if any that may arise in this case as stated in the original order passed under Section 143(3), this order in question does not require action under Section 263 of I.T. Act.
4. On above grounds and any additional grounds that may be urged at the time of hearing, appellant most respectfully pray before Hon'ble ITAT to set aside the order passed under Section263 of I.T. Act and restore the status quo of original order passed under Section 143(3) of I.T. Act.”
The original assessment in the case of the assessee was completed under Section 143(3) on 21.11.2011. Subsequently, the CIT on verification of the record found that there were some differences in the closing balance in the bank accounts of the assessee as well as closing balances shown in the Balance Sheet. Accordingly, the Commissioner has proposed to revise the assessment by issuing a show cause notice under Section 263 on 3.1.2014. In response to the show cause notice, the assessee filed its reply as well as other submissions during the hearing of the proceedings under Section 263.
The assessee objected to the proposed revision under Section 263 and alternatively pleaded that even if there is some differences in the bank balance and the balance shown in the books of account of the assessee, the same is covered by the addition made by the Assessing Officer to the tune of Rs.7,94,867 while completing the assessment under Section 143(3) of the Act. The CIT (Appeals) did not accept the contention of the assessee and held that the Assessing Officer has not examined the issue properly and therefore the order is erroneous as well as prejudicial to the interest of revenue as the cash balance available in the bank account would have been excess of the assets over the liabilities. Accordingly, the CIT (Appeals) set aside the assessment and directed the Assessing Officer to determine the income of the assessee by including the difference in the bank accounts of the assessee to the tune of Rs.1,28,425.
We have heard the rival submissions as well as considered the relevant material on record. The learned Authorised Representative of the assessee has submitted that when the Assessing Officer has already made an addition of Rs.7,94,867, then any excess amount in the bank as held by the Commissioner of Rs.1,28,425 is covered by the said addition made by the Assessing Officer. The learned Authorised Representative has further submitted that the Assessing Officer has also taken a possible view on this point in the last para of the assessment order wherein the Assessing Officer has mentioned that the assessee furnished the details at the fag end of the year and the same could not be verified with reference to bank pass book and direct receipts. However, the Assessing Officer was of the view that the addition so made on account of disallowance
of the various heads will covered any deficiency or lapses if any that may arises in this case. Thus the learned Authorised Representative submitted that when the Assessing Officer has taken a possible view, the Commissioner is not permitted to invoke the provisions of section 263 only because he did not agree with the view taken by the Assessing Officer.
5 On the other hand, the learned Departmental Representative has submitted that since the Assessing Officer has not conducted any inquiry in respect of these issues, therefore, the assessment order is erroneous so far as prejudicial to the interest of revenue for want of enquiry. He has relied upon the impugned revision order of the Commissioner.
Having considered the rival submissions as well as the relevant material on record, we note that while completing the assessment order under Section 143(3) on 21.12.2011, the Assessing Officer has made the following addition to the total income of the assessee :
Income Returned : Rs.7,29,590. Add: Disallowance out of purchases and wages. Rs.6,82,372. Disallowance out of other expenses. Rs.1,12,495 Rs.7,94,867.
The total income of the assessee has been enhanced by the Assessing Officer by Rs.7,94,897 on account of disallowance of purchases & wages and other expenses.
Thus when the Assessing Officer has disallowed the expenses to the tune of Rs.7,94,867 then, to the extent of said amount, the source of additional cash in the bank account of the assessee stand explained. Even otherwise, the Assessing Officer while completing the assessment has taken a view on this point in the last part of the assessment order as under :
“ As the assessee ;has furnished the details in the fag end the year and same could not be fully verified in detail with reference to Bank Pass sheets and contract receipts etc. the additions so made on account of disallowances under various heads will cover up any deficiency or lapses if any that may arise in this case. on verification of the statement of accounts and after discussion with the assessee the assessment is completed as under.” Therefore, the Assessing Officer was very much conscious about the difference of the closing balance in the bank account of the assessee and the balance shown in the books of accounts / Balance Sheet and therefore was of the view that the disallowances made under other heads will be covered up the deficiency or lapses if any. Thus on the merits, of the issue, the source of the difference in the balance in the bank account to the tune of Rs.1,28,425 is covered by the addition of Rs.7,94,867 made by the Assessing Officer on account of disallowance of various expenses. Hence we are of the considered opinion that no further addition can be made due to the said difference of Rs.1,28,425 balance in the bank account when the Assessing Officer has already made an addition of Rs.7,94,867 by disallowing various expenses. Accordingly, we set aside the impugned order of the Commissioner.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 24th day of Feb., 2016.