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2015 (5) TMI 848 - ITAT KOLKATA

2015 (5) TMI 848 - ITAT KOLKATA - [2015] 40 ITR (Trib) 475 (ITAT [Kolk]) - Revision u/s 263 - AO has omitted to disallow unpaid excise duty resulting in under assessment of tax - Held that:- The assessee explained before the CIT that there is no fresh provision made in respect of unpaid excise duty of ₹ 35.43 lacs. Even now before us, assessee drew our attention to annexure 9 of the Balance Sheet that this amount of unpaid excise duty of ₹ 35.43 lacs pertains to earlier years and no .....

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page 13 of assessee’s paper book, which is copy of annexure 9 as certified by Sr. Manager, (Finance, taxation) of the assessee company and the statement showing the details in respect of sum referred to in clause (a), (c) and (d) of section 43B of the Act as required under the audit provisions. Thus unpaid excise duty pertains to earlier years and no claim for this excise duty is made, the disallowance of excise duty is not possible. The AO has taken a correct view while framing assessment and r .....

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es of ledger account of raw material and stores and spares at page 14 of the assessee’s paper book where copy of schedule 12 (consumption of raw material and components including stores and spares) of the annual accounts for the FY 2007-08 relevant to AY 2008-09 are filed. We find from the arguments of Ld. Counsel of the assessee that it is consistently following this practice and there is no change in practice that the transit stock is not included in the purchases consequently value thereof wa .....

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is quashed. - Decided in favour of assesse. - I.T.A No.1601/Kol/2013 - Dated:- 15-5-2015 - Shri P. K. Bansal & Shri Mahavir Singh, JJ. For the Appellant: Shri Sanjay Bhattacharya, FCA For the Respondent: Shri Ajoy Kr. Singh, CIT, DR ORDER Per Shri Mahavir Singh, JM : This appeal by assessee is arising out of revision order of CIT, Kolkata-1 u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 28.03.2013. Assessment was framed by DCIT, Circle-1, Kolkata u/s. 143(3 .....

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ing the order passed under section 263 and even did not pray for any interim relief for stay of operation of the said order and allowed the order of assessment to be passed. Ultimately an appeal was also preferred. The legal proposition explained by Dr. Pal would be appropriate when it would be found that the authority concerned lacks inherent jurisdiction in the subject matter. In this case it cannot be held CIT had no jurisdiction. The question is whether assumption of jurisdiction is done by .....

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accept the submission of the learned counsel for the Revenue that the appeal factually has become infructuous but not legally. The provision of the appeal is very exhaustive and all points can be taken including the question of jurisdiction as taken here. We feel that considering all the aspects of the matter no decision should be rendered as if we do not accept contention of Dr. Pal, the appeal preferred by his client against subsequent order of assessment will have to be heard on merit and in .....

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assessee has participated in the hearing of assessment proceedings in consequence to revision order passed by CIT u/s. 263 of the Act. 3. On the other hand, the Ld. Counsel for the assessee drew our attention to section 253 of the Act, whereby right to appeal is a statutory right provided in the statute against the revision order passed by CIT u/s 263 of the Act. He referred to the relevant provision of section 253 of the Act, which is as under: Appeals to the Appellate Tribunal. 253.(1) Any ass .....

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under section 272A; [or]. Ld. Counsel for the assessee relied on the decision of Hon ble Calcutta High Court in the case of Indian Aluminium Co. Ltd. Vs. CIT (1986) 162 ITR 788 (Cal) wherein it has held by Hon ble High Court that right of appeal is a statutory right and which is a valuable right also. According to him, unless expressly taken away or abandoned, it cannot be said that assessee has abandoned or lost such right by implication. According to him, essential criteria of appellate jurisd .....

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r authority to a superior authority becomes vested in a party when proceedings are first initiated in and before a decision is given by the inferior authority. Ld. Counsel for the assessee also relied on the decision of Hon ble Madhya Pradesh High Court in the case of Smt. Shantibai Vs. CIT (1984) 148 ITR 49 (MP) wherein Hon ble court has observed that just as an appeal being a creature of the statute would not lie unless it is provided by the statute, the right so conferred cannot be taken away .....

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diction. The relevant reads as under: The Court: We direct the learned Tribunal to decide the appeal on all points including the question of jurisdiction which have been raised before us within a period of three months from the date of communication of this order. All parties shall act on a Xerox signed copy of this order on usual undertakings. According to him, on the issue of maintainability of the appeal, the issue is very clear that Hon ble Calcutta High Court has no where taken away the rig .....

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the proceedings before the AO in consequent to revision order u/s 263 of the Act. We are of the view that the right to appeal is a vested right which is inherent in a party from the commencement of the action in the court of first instance and such right cannot be taken away except by express provision or by necessary implication. Hon'ble Supreme Court in the case Hooseini Kasam Dada (India) Ltd. v. State of M.P. (1953) 4 STC 114 (SC) has ruled, that when the right to appeal vests, change of .....

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l granted is a conditional one. In the present case before us, assessment was framed by DCIT Circle-I Kolkata u/s.143(3) of the Act for the relevant AY 2008-09 vide his order dated 20-12-2010. Subsequently, the CIT from examination of records prima facie observed that there is error in the order of the assessment in not disallowing unpaid excise duty and not making addition of value of goods being stock in transit thereby the assessment order is prejudicial to the interest of Revenue also. The C .....

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. counsel for the assessee, wherein it is held as under:- We may, in this connection, also refer to the decision in Jaipur Udyog Ld. v. CIT (1969) 71 ITR 799 (SC), wherein the Supreme Court clearly pointed out that a provisional assessment does not bind the assessee or the Department. The quantum of tax computed and the levy thereof are not binding upon the assessee and the Revenue. Tax paid pursuant to provisional assessment is liable to be adjusted in the light of the final order in the regula .....

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in s. 141(7) did not apply to the present case, because the appeal preferred was not against the provisional assessment but against the order of the ITO at the end of the assessment proceeding, refusing to refund the amount in deposit in excess of the tax liability determined in the assessment proceeding. As a result of the aforesaid discussion, it follows that both these references must be answered in the affirmative, in favour of the assessee and against the Revenue as under: In the facts and .....

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(3) of the Act, though a proceeding under section 144B was initiated at the outset. At that stage, the assessee did not file any objection. Under section 246©, a specific right has been given to the assessee to file an appeal against an order of assessment under section 143(3), where the assessee objects to the quantum of income of the assessee or to the quantum of tax determined. The right of appeal is a valuable right and unless expressly taken away or abandoned, it cannot be held that th .....

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ation in the facts of the instant case as the said decision is on the question of allowability of a writ petition in the facts of that case. For the reasons as aforesaid, we answer question No. 3 in the affirmative and against the Revenue. 6. To sum up this issue, a right of appeal being a sustentative right, the institution of a suit carries with it the implication that all successive available with law then in force would be preserve to the parties to the suit throughout the career of the suit .....

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9 for the reason that the assessment is erroneous and prejudicial to the interest of revenue for (i) nondisallowance of unpaid excise duty u/s. 43B of the Act and (ii) goods in transit has not been including in the purchases. For this, assessee has raised following three grounds: 1) That the Commissioner of Income-tax was wrong in holding the Assessment Order for the Assessment Year 2008-09 as allegedly erroneous and prejudicial to the interest of Revenue and in setting aside the said Assessment .....

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e was no requirement of including such goods in transit in the closing stock and thus he erred in holding such non-inclusion of the goods in transit in closing stock as allegedly erroneous and prejudicial to the interest of Revenue. 8. Briefly stated facts are that the assessment was framed by DCIT, Circle-1, Kolkata u/s. 143(3) of the act vide his order dated 20.12.2010. The AO after verifying various details has required the assessee to explain the return of income and the same were filed by t .....

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.43 lacs. Even now before us, assessee drew our attention to annexure 9 of the Balance Sheet that this amount of unpaid excise duty of ₹ 35.43 lacs pertains to earlier years and no new provision is made. Ld. Counsel for the assessee now before us also filed the copy of assessment order passed in consequence to revision order u/s. 263 of the Act wherein the AO has clearly observed after verifying the records that this excise duty of ₹ 35,43,390/- was actually outstanding balance of pr .....

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ads as under: NATURE OF LIABILITY PRE-EXISTED ON THE FIRST DAY OF THE PREVIOUS YEAR BUT WAS NOT ALLOWED IN ANY PRECEDING YEAR INCURRED IN THE PREVIOUS YEAR BALANCES PAID DURING THE YEAR 2007-08 NO LONG REQUIRED NOT PAID DURING THE PREVIOUS YR NEW PROVISION PAID ON OR BEFORE DUE DT. OF FURNISHING REF. U/S 139(1) NOT PAID ON OR BEFORE DUE DT. FOR FURNISHING Ref. u/s. 139(1) EXCISEDUTY 4203003.00 614413.00 45000.00 3543590.00 NIL NIL 3543590.00 SALES TAX 18268885.00 NIL NIL 18268885.00 NIL NIL NIL .....

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in Stores-in-Transit are duly accounted for as Purchases as and when those items are received in the following Financial Year or thereafter and consequently whichever stores items are actually received any subsequent year, are debited to the Profit and Loss Account of the said year (Refer Schedule 12) to the final accounts. 3. The particular stores items contained in Stores-in-Transit as on 31.03.2008 had not been included in the Purchases of that year, viz. 2007-08 and consequently the value t .....

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ive years is enclosed. The assessee has also drawn our attention to page 14 of the assessee s paper book where copy of schedule 12 (consumption of raw material and components including stores and spares) of the annual accounts for the FY 2007- 08 relevant to AY 2008-09 are enclosed. Ld. Counsel for the assessee argued that the assessee is consistently following this practice and there is no change in practice that the transit stock is not included in the purchases consequently value thereof was .....

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der passed by the AO is erroneous and prejudicial to the interest of revenue since the AO has omitted to disallow unpaid excise duty amounting to ₹ 35.43 lacs resulting in under assessment of tax. The assessee explained before the CIT that there is no fresh provision made in respect of unpaid excise duty of ₹ 35.43 lacs. Even now before us, assessee drew our attention to annexure 9 of the Balance Sheet that this amount of unpaid excise duty of ₹ 35.43 lacs pertains to earlier y .....

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ttention to page 13 of assessee s paper book, which is copy of annexure 9 as certified by Sr. Manager, (Finance, taxation) of the assessee company and the statement showing the details in respect of sum referred to in clause (a), (c) and (d) of section 43B of the Act as required under the audit provisions. Relevant chart reads as under: NATURE OF LIABILITY PRE-EXISTED ON THE FIRST DAY OF THE PREVIOUS YEAR BUT WAS NOT ALLOWED IN ANY PRECEDING YEAR INCURRED IN THE PREVIOUS YEAR BALANCES PAID DURIN .....

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