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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
O R D E R
Per Arun Khodpia, AM :
The captioned appeal is filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, dated 17.01.2023 which in turn arises from the order by Ld. Assessing Officer u/s 143(3) r.w.s. 263 dated 30.09.2016 for A.Y.2011-12. The grounds of the appeal raised by the assessee are as under: “1. Ld. CIT (Appeals) has erred in confirming addition of Rs.1,13,20,940/- made by AO, on account of alleged suppression of production of 467.32MT. Ld. CIT(A) erred in upholding the action of AO in rejecting rectification application filed by the appellant.
2. The impugned addition made by the Ld. A.O. is bad in law, illegal, unjustified, contrary to facts & law and based upon recording of incorrect facts and finding, in violation of principles of natural justice and the same should have been quashed by the Ld. CIT (Appeals). 3. The appellant reserves the right to amend, modify or add any of the ground/s of appeal.”
Brief facts in this case, culled out from records, are that the assessee is a company engaged in the business of manufacturing Runner riser and trading and commission business. Return declaring income at NIL was filed. Assessment was made under section 143(2) on 30/03/2014 with nil demand. Thereafter, assessment proceeding was once again initiated under section 263. An order under section under section 143(3) r.w.s 263 was passed by the DCIT 2(1) Raipur. Now assessment was framed by learned A.O. after disallowing the Rs 1.13 crores in respect of yield calculation of raw material and Learned A.O. has not considered the original order which was passed by Learned A.O. on 30/03/2014, which was received by the assessee on 31/03/2014.
2.1 During the course of assessment proceeding asseseee have given its audited balance sheet along with 3CD report. All the details were produced and verified by the Learned A.O. After completion of the assessment proceedings, notice under section 263 of the Act was issued. During the course of hearing in proceedings u/s 263, assessee have once again produced the relevant details. In respect of quantities details assessee submitted, principal item details in main report and remaining items are given in enclosed Annexure with 3CD report. As per assessee, in proceeding assessee have reconciled each and every item. In respect of waste and scrap copy of ledger was furnished which is clearly showing that runner riser of 630M.T.is included in waste and scrap. It was stated by the assessee before the A.O that it had only purchased 513.298 MT of scrap from market, and it had also produced excise records. In same line reject ingot of 1.65 MT was showing in raw material column as in ward and outward was also showing. Assessee alleged that despite the above fact learned A.O. has calculated the yield of above raw material 631. 65 and added the same to the total income of the assessee.
Aggrieved the assessee had filed an application u/s. 154 of the Act to rectify both the mistake i.e., addition made by learned AO order dated- 30-09-2016 and original order dated 30/03/2014 and the same was partly considered by the A.O.
Aggrieved by the assessment order, the assessee preferred an appeal before CIT(Appeals) who dismissed the appeal of the assessee.
The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.
The Ld. AR has raised the issue that the CIT(Appeals) has erred in confirming the addition of Rs.1,13,20,940/- made by the A.O on account of alleged suppression of production of 467.32 MT, therefore, the order of the A.O is bad in law, illegal and unjustified contrary to the facts and law involved in the present case, therefore, the same should have been quashed by the CIT(Appeals). It was submitted by the Ld. AR that the A.O vide his order passed u/s. 143(3) r.w.s. 263 of the Act dated 30.09.2016 had made addition on account of suppression of production by 467.32MT, therefore, the addition of Rs.1,13,20,912/- was made. Subsequently the assessee preferred to file an application u/s.154 of the Act assailing the issue that on account of addition of Rs.1,13,08,240/- against income u/s.143(3) of Rs. (-) 12,672/-, a demand of Rs.69,11,610/- has been raised and notice of demand was issued on 30.09.2016. It was requested by the assessee that the addition made should be set off against current year loss and unabsorbed depreciation and such claim of the assessee was accepted by the department and order u/s.154 r.w.s. 263 dated 28.11.2016 was passed revising demand to Rs. Nil. The Ld. AR submitted that the order passed u/s.154 was challenged by the assessee before the CIT(Appeals) raising the issue pertaining to the addition of Rs.1,13,20,912/- alleging that the same is unreasonable and unwarranted and should be deleted. The CIT(Appeals) this issue had decided that since the appeal of the assessee is barred by limitation having been related the assessment order dated 30.09.2016 which was under appeal and as such, grounds of appeal is not bonafide. It was the contention the assessee that such addition made please be decided on merits by the Tribunal being last fact-finding authority.
The Ld. Sr. DR in response to the contention advanced by the Ld. AR has relied on the orders of the CIT(Appeals) and submitted a letter dated 26.09.2019 pertaining to the facts of the case. It was submitted by the Ld. Sr. DR that the assessee’s request for rectification of mistake u/s.154 was duly accepted by the department and demand was revised to Nil, therefore, there was no reason for the assessee to challenge the said order before the CIT(Appeals). Also, grounds pertaining to disallowance of Rs.1,13,20,940/- on account of suppression of production which was made by the A.O vide order u/s.143(3) r.w.s. 263 dated 30.09.2016, since such order was not challenged by the assessee in the present appeal, therefore, the issue emerge from the order u/ss. 143(3)/263 of the Act against which the appeal by the Ld. CIT(Appeals) was decided, therefore, such issue could not be raised against the impugned order of the Ld. CIT(Appeals). Ld Sr DR also submitted a letter dated 26.09.2023, enclosing there with copy of application of the assessee and order u/s 154, has stated that the assessee’s contention that the issue pertaining to addition of Rs. 1,13,20,940/- was not a part of application u/s 154, thus the same is false claim. copy of letter along with enclosures is extracted hereunder :-
We have heard the rival contentions and perused the material available on record. Admittedly, the addition proposed on account of suppression of production by Ld PCIT was made by the A.O vide order passed u/s.143(3) r.w.s 263 dated 30.09.2016. The order challenged before the Ld. CIT(Appeals) was the order passed u/s.154 of the Act having dispute pertaining to rectification of an apparent mistake, qua, not allowing the setoff against the current year’s loss and unabsorbed depreciation while calculating and issuing the demand notice to the assessee. The issue pertaining to the addition of Rs. 1,13,20,940/- in the present appeal which Ld CIT(A) but was not dealt with observing that the issue is barred by limitation having been related to assessment order dated 30.09.2016 passed u/s 143(3) r.w.s. 263, which was not appealed against and as such the ground was held as not bonafide. The finding of Ld CIT(A) that the issue does not emerged from the order under section 154 which was challenged before him on the contrary the same belongs to an order which is already barred by limitation for filing an appeal before Ld CIT(A), rather, no appeal against the said order was filed by the assessee, was on correct footing, thus, the issue raised before us regarding addition of Rs.1,13,20,940/- on account of suppression of production, which has no nexus with the order passed u/s 154 which was challenged before Ld the CIT(A) and not rightly not dealt with by the Ld CIT(A), the same cannot be raised before us in the wake of impugned order of Ld CIT(A). Under such facts and circumstances, we are satisfied with the finding of the Ld CIT(A) in treating an issue as not bonafide or not maintainable, when the same is not emerging from the order under dispute. The contention of the assessee that the issue pertains to addition on account of suppression of production was also raised by the assessee while making an application u/s.154 of the Act for rectification of mistake. However, such contention of the assessee was not considered by the CIT(A), was found to be incorrect claim. Since on perusal of the application of the assessee for rectification of mistake, the assessee has referred to notice dated 22.07.2016 and not order dated 30.09.2016 or original assessment order dated 30.03.2014. Since such contention was not raised
in the application for rectification u/s.154 of the Act dated 21.10.2016, the assessee’s claim that mistake pertains to yield of raw materials and suppression in the production was not dealt with in the order u/s.154 of the Act was found to be incorrect. Consequently, we are unable to accept the contention of the assessee with the observation that, whether an issue which is not emerged from the impugned order which was challenged before the CIT(Appeals), can be taken up in an appeal by ITAT, our answer to this question is in negative. Accordingly, the grounds of appeal of the assessee, which are not emerging from order u/s 154 which is the foundation of the disputes raised under appeal before the Ld CIT(A), is liable to be treated as infructuous / non-maintainable. In substance, the order of Ld CIT(A) challenged by the assessee was found reasonable, just, and proper.
In such circumstances, we do not find any infirmity in the view taken by the Ld. CIT(Appeals), thus, the same stands upheld.
In the result, appeal of the assessee is dismissed in terms of our aforesaid observations.
Order pronounced in the open court on 10 /10/2023.