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INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A” : HYDERABAD
ITA.No.462/Hyd/2015 Assessment Year 2011-2012
Rajesh Kumar Ranka (Appellant) vs. DCIT (Respondent)
Date of Order: 05-02-2016
ORDER
PER SMT. P. MADHAVI DEVI, J.M.
This is assessee’s appeal for the A.Y. 2011- 2012. In this appeal, the assessee is aggrieved by the order of the Ld. CIT under section 263 of the I.T. Act, 1961 dated 18.02.2015 directing the A.O. to re-do the assessment, as per the observations of the CIT under section 263, after verifying all the details, as per law and after providing a reasonable opportunity to the assessee.
2. Brief facts of the case are that the assessee, an individual and proprietor of M/s. D.D. Jewellers, filed his return of income for the relevant assessment year on 29.09.2011 declaring total income of Rs.79,45,705. The case was selected for scrutiny under CASS. During the assessment proceedings under section 143(3) of the I.T. Act, the assessee, represented by its Authorised Representative, submitted the information called for by the A.O. After verification of the said information, the A.O. completed the assessment by assessing the taxable income at Rs.80,45,710. Thereafter, the Ld. CIT by assuming jurisdiction under section 263 of the I.T. Act, perused the assessment record and observed that an amount of Rs.18 lakhs has been paid towards salary of Mr. S.K. Ranka without deduction of tax and also that the details of closing stock has not been properly verified by the A.O. and therefore, there is an escapement of income on account of these two issues. Accordingly, he issued a show cause notice under section 263 of the I.T. Act on 19.01.2015. Thereafter, he issued a revised show cause notice dated 10.02.2015 by observing that as per the ITS details of AIR transactions, the assessee has deposited cash of Rs.10 lakhs and more in a saving bank account to the tune of Rs.1,39,25,000 in addition to the other two issues raised in the show cause notice dated 19.01.2015 and held that the assessment order is erroneous and prejudicial to the interests of the Revenue to that extent.
2.1. In response to this notice, assessee filed his detailed submissions vide letter dated 30.01.2015 bringing to the notice of the CIT that the A.O. had called for and considered all the issues on which the assessment order is sought to be revised. The Ld. CIT, however, held the assessment order to be erroneous and prejudicial to the interests of the Revenue and directed the A.O. to re-do the assessment after verifying all the details. Aggrieved by the order of the Ld. CIT, the assessee is in appeal before us.
3. The Ld. Counsel for the assessee, Mr. K.C. Devdas, while reiterating the submissions made by the assessee before the Ld. CIT, has drawn our attention to the submissions filed by the assessee before the A.O. which is placed at pages 46 to 47 and 48 to 65 of the paper book to demonstrate that the assessee has given full details relating to the salary paid to Mr. S.K. Ranka without deduction of tax at source and the reason as to why such deduction was not made and also that the assessee has filed all the copies of the bank statements before the A.O. He submitted that when all the details have been filed before the A.O, the presumption to be drawn is that the A.O. has applied his mind to all such details before concluding the assessment. He further drew our attention to the fact that the A.O. had made certain disallowances after considering assessee’s contentions. He has submitted that it is the usual practice that the A.O., wherever he was satisfied with the contention of the assessee, does not usually make any mention of the same in the assessment order but mere silence in the assessment order does not mean that the A.O. has not applied his mind to the said facts. In support of this contention, he placed reliance upon the decision of the jurisdictional High Court in the case of Spectra Shares & Scrips P. ltd., vs. CIT-III (2013) 354 ITR 35 (AP). Further he has also placed reliance upon the judgment of the Hon’ble Supreme Court in the case of CIT vs. M. Chandra Sekhar (151 ITR 133) wherein it was held that the presumption that A.O. has considered the details filed by the assessee was “founded” on the principle that an officer entrusted with a judicial or quasi judicial duty must be presumed to have discharged his duties in a proper and bonafide manner.
3.1. As regards the valuation of closing stock, the Ld. Counsel for the assessee submitted that the assessee’s books of account were duly audited and the tax audit report under section 44 has been filed before the authorities below. He has submitted that the assessee is following regular method of accounting followed from the earlier years and there was no change of method during the relevant assessment year. Thus, according to him, A.O. has considered all the issues before completing the assessment and hence, the assessment order is not erroneous or prejudicial to the interests of the Revenue and the revision order under section 263 is not sustainable.
4. The Ld. D.R., on the other hand, supported the order of the Ld. CIT and submitted that the assessment order is totally silent on the issues pointed out by the Ld. CIT and therefore, it cannot be presumed that the A.O. has applied his mind to the material on record before completing the assessment, making the assessment order both erroneous and prejudicial to the interests of the Revenue.
5. Having regard to the rival contentions and the material on record, we find that during the course of assessment proceedings under section 143(3) of the I.T. Act, the assessee had filed the details about the salary paid to Mr. S.K. Ranka without deduction of tax at source and the reason for the same. This is evident from the order of the Ld. CIT under section 263 itself, wherein in para 6.2 of the order, it is so recorded. As regards the deposits of Rs. 10 lakhs made into the assessee’s S.B. Account, we find that the assessee has filed details of all the bank accounts and also copies of the respective bank statements before the A.O. and therefore, the A.O. is presumed to have looked into those details. The judgment of the Hon’ble Supreme Court in the case of CIT vs. M. Chandra Sekhar (cited supra), clearly applies to the facts of the case before us. Unless and until it is proved that the A.O. has not applied his mind to the details filed by the assessee, it has to be presumed that he has gone through the material and has taken a conscious decision. Further as held by the Hon’ble jurisdictional High Court in the case of Spectra Shares & Scrips P. Ltd., vs. CIT-III (cited supra), “it is not that the A.O. would record his findings on the issues he accepts and merely because there is no mention of the acceptance of the issue, it does not mean that the A.O. has not considered the same”. As regards the valuation of closing stock also, we find that assessee has been following the regular method of accounting followed by it in the earlier years and the Ld. CIT has also not brought out as to how the valuation of the closing stock is erroneous as compared to the earlier years and how it has resulted in any prejudice to the Revenue. When all the issues on which the Ld. CIT seeks to revise the assessment order have been considered by the A.O. during the assessment completed under section 143(3) of the Act, such an assessment order cannot be said to be erroneous. Under section 263 of the Act, until and unless, the assessment order is erroneous as well as prejudicial to the interests of the Revenue, it is not amenable to the revision proceedings. As brought out above, all the facts relating to the above issues were before the A.O. and were considered by him. Taking the above into consideration, we hold that the revision order passed by the Ld. CIT under section 263 of the I.T. Act, is not sustainable.
6. In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 05.02.2016.
(S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI)
ACOUNTANT MEMBER JUDICIAL MEMBER
Unless proved that AO did not applied his mind it is presumed that he has gone through details filed by the assessee and taken a conscious decision | 07-02-2016 |
