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2016 (7) TMI 819 - ITAT KOLKATA

2016 (7) TMI 819 - ITAT KOLKATA - TMI - Revision u/s 263 - the assessee had not offered any income in terms of section 36(2) of the Act out of these advances and accordingly not entitled for deduction u/s 36(1)(vii) of the Act on the write off of the same - Held that:- AO had duly appreciated the stand of the assessee during the course of original assessment proceedings and had allowed the deduction to assessee by taking one of the possible views in the matter. When one possible view has been ta .....

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the Act. Hence the initiation of section 263 proceedings by the Learned CIT on the wrong assumption of facts is to be declared as bad in law. - With regard to the argument advanced by the Learned DR that the loss arising on account of advances written off should be construed as capital loss for which certain case laws were relied upon by him, in view of our aforesaid findings and judicial precedents relied upon hereinabove, we donít deem it fit and appropriate to get into the aspect of wheth .....

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M. No. CIT,Kol-1/263/2013-14/10885-87 dated 31.03.2014. Assessment was framed by JCIT(OSD), CIT-1, Kolkata u/s. 143(3) of the Income tax Act, 1961 (hereinafter referred to as the Act ) for AY 2009-10 vide his order dated 23.12.2011. 2. At the outset, we find that there was a delay in filing the appeal by the assessee before us by 88 days for which an affidavit from the Chief Financial Officer (CFO ) Mr Anil Kumar Agarwal and affidavit of Mr Nand Kishore Mittal have been filed by the assessee add .....

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he assessee company, who stated that the order u/s 263 was received by him , who in turn at the time of his resignation with effect from 12.4.2014, had handed over the same to Mr Debnath Mukhopadhyay, Sr.General Manager (Finance & Accounts) of the assessee for taking appropriate action. The affidavit of CFO further stated that Mr Debnath Mukhopadhyay had also thereafter resigned from the services of the assessee with effect from 5.5.2014 without properly handing over the necessary papers to .....

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this appeal before the tribunal at the earliest possible time. The Learned AR also drew our attention to the affidavit filed by Mr Nand Kishore Mittal which is also part of the records, wherein the concerned employee had admitted that the order of Ld CIT u/s 263 was received by the company s office on 3.4.2014 and he in turn had handed over to Mr Debnath Mukhopadhyay pursuant to his resignation with effect from 12.4.2014 with a clear instruction to hand over the same to the authorized representa .....

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reasons beyond the control of the assessee for the delay in filing the appeal. Accordingly, he argued that the appeal of the assessee should be dismissed as unadmitted. In response to this, the Learned AR placed reliance on the decision of the Mumbai Tribunal in the case of Prashant Projects Ltd vs DCIT reported in (2013) 145 ITD 202 (Mum Trib) dated 4.9.2013 for the expression sufficient cause . 2.1. We find that the substantial justice should prevail over technical considerations. It is true .....

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t in the case of N.Balakrishnan vs M.Krishnamurthy reported in (1998) 7 SCC 123 (SC) and Shankarrao vs Chandrasenkunwar reported in (1987) Suppl. SCC 338 (SC). We find that the Mumbai Tribunal supra had held that- i). If sufficient cause for excusing delay is shown, discretion is available to the FAAs to condone the delay and admit the appeal. ii). The expression 'sufficient cause' is not defined, but it means a cause which is beyond the control of an assessee. For invoking the aid of th .....

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re and attention. What may be sufficient cause in one case may be otherwise in another. What is of essence is whether it was an act of prudent or reasonable man.[Ashutosh Bhadra v. Jatindra Mohan Seal (AIR 1954 Cal.238) and Hisaria Plastic Products v. CST AIR 1980 (All.) 185].Subsequent decision of a Court cannot constitute sufficient cause. iii). In every case of delay, there is some lapse on the part of the assessee. If there are no mala fides and it is not put forth as part of a dilatory stra .....

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ent cause for the delay. v). Just because there is merit in the appeal filed by the assessee, any amount of delay, however, negligently caused, cannot be condoned. vi). Requirement of sufficient cause for delay cannot be ignored and it becomes very important and significant when the delay is inordinate and abnormal. vii). In the matter of J.B. Advani & Co. (P.) Ltd.(72 ITR 395) Hon ble Supreme Court had held that explanation of delay for the entire period is necessary. In other words what is .....

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easons so as to get judicial approval. In short in matters of delay it is neither practicable nor desirable to explain minute-to-minute/hour-tohour delay, but delay has to be explained. viii). When an application for condonation of delay is made; to consider whether a sufficient cause has been made out by the assessee; the order of the FAA should disclose that he had applied his mind to the question raised before it. Due exercise of judicial discretion is a pre-condition for allowing/ refusing a .....

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al before the FAA, before the end of limitation period, creates a vested right in favour of the Revenue. As a result of not filing of an appeal by an assessee, Department, gets a legitimate and undisputed right over the tax-revenue accruing to it in pursuance of the order of the AO. This right cannot be disturbed in a light-hearted manner. xiii). In the cases of belated appeals matters have to be essentially analysed in the facts of each case-no general formula can be or should be applied, so as .....

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d in this appeal is as to whether the Learned CIT is justified in invoking revisionary jurisdiction u/s 263 of the Act in the facts and circumstances of the case. 4. The brief facts of this issue is that the assessment for the Asst Year 2009-10 was completed u/s 143(3) of the Act on 23.12.2011 wherein the claim of deduction towards advances written off was allowed by the Learned AO after raising a specific query in that regard. The Learned CIT on examination of the Profit and Loss Account for th .....

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afeguard their properties. Since the mills had no operation during the last 4-5 years the advances had become irrecoverable and hence written off. The break up of above advance is given below: Titagarh Papers ltd. ₹ 66,44,083/- Bhatpara Papers Ltd. Rs.1,30,93,672/- Rs.1,97,37,755/- 5. The Learned CIT issued a show cause notice assuming jurisdiction u/s 263 of the Act by stating that the assessee had not offered any income in terms of section 36(2) of the Act out of these advances and accor .....

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- 1. For that in view of the facts and in the circumstances, the order u/s. 263 is wholly bad, illegal, unjustified and uncalled for and in view of the facts and in the circumstances such order is liable to be quashed 1 cancelled and in view of the facts and in the circumstances it may kindly be held accordingly. 2. For that in view of the facts and in the circumstances, the order of the AO being neither erroneous nor prejudicial to the interest of revenue, provisions of section 263 did not vali .....

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of the facts and in the circumstances it may kindly be quashed/cancelled and in any case without prejudice and even otherwise, the Ld. CIT is wholly unjustified in setting aside the order and directing the AO to frame assessment de-novo. 4. For that in view of the facts and in the circumstances, the AO having raised a specific query regarding write off of loans and advances of ₹ 1,97,37,755/- by letter No.ITO/Wd- 3(4)/Kol/Asst. Proceedings/2011-12/ 610 dt. 17.10.2011 dt. 23.1.2014 and all .....

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of loans and advances of ₹ 1,97,37,755/- and in view of the facts and in the circumstances it may kindly be held accordingly and the order u/s. 263 may kindly be quashed/cancelled. 5. For that without prejudice and even otherwise such loans and advances having been made in course of business and for the purposes of business and being unrealizable having been actually written off and the AO in accepting the write off of such loans and advances for ₹ 1,97,37,755/- having taken a possib .....

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ble. 6. For that your petitioner craves the right to raise additional ground or grounds of appeal on or before the date of hearing and or to alter/amend/rectify the present any ground or grounds of appeal. 6. The Learned AR argued that this issue was already examined in the original assessment proceedings and the Learned AO had raised a specific query in this regard and after examination of the reply filed by the assessee in respect of advances written off had allowed the claim of deduction in t .....

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p companies had not carried on any business whatsoever and had practically closed their operations in the last 4-5 years, there was no other option left to the assessee but to write off the advances given to them as irrecoverable. Moreover, there cannot be any better person than the assessee to come to a conscious conclusion that the advances given to group concerns had become irrecoverable as it has got a firsthand information about the future prospects of revival of the businesses that were cl .....

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argued that the show cause notice issued by the Learned CIT clearly states that the order passed by the Learned AO is erroneous and prejudicial to the interests of the revenue and the same need not be stated again in the final order passed by the Learned CIT u/s 263 of the Act. No documentary evidences were filed by the assessee in support of the claim of deduction by the assessee. The assessee has been given sufficient opportunity to represent its case by the Learned CIT. He argued that since t .....

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vailable on record including the paper book filed by the assessee comprising of copy of audited financial statements for the year ended 31.3.2009 (pages 1 to 36 of PB) ; copy of notice dated 17.10.2011 issued by the Learned AO making a specific query with regard to advances written off during original scrutiny assessment proceedings (pages 38-39 of PB) ; copy of reply filed by assessee vide letter dated 19.10.2011 (pages 40 -41 of PB) ; copy of original assessment order u/s 143(3) dt 23.12.2011 .....

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nt No. 16 whereas, in the corresponding schedule it is only stated as Old loans and advances . Please ensure to furnish all supporting documents and evidences to enable this office to allow such claim. The assessee had replied to this vide letter dated 19.10.2011 by stating as under:- 5. ₹ 1,97,37,755 - Old loans and advances After demerger of Titagarh Industries Limited into 3 units namely Titagarh Steels Ltd, Titagarh Papers Ltd and Bhatpara Papers Ltd as per Calcutta High Court Order dt .....

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ion that the claim of deduction made by the assessee towards advances written off is in order and accordingly allowed the deduction. Though there is no discussion in the order of assessment , the fact that the Learned AO raised a query and did not make any addition, only means that the explanation given by the assessee has been accepted by the Learned AO. Hence it could be safely concluded that the Learned AO had duly examined this issue and appreciated the replies submitted by the assessee afte .....

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n being satisfied with the explanation of the assessee, such decision of the ITO cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that record. From the above, it could safely be concluded that the Learned AO had duly appreciated this stand of the assessee during the course of original assessment proceedings and had allowed the deduction to assessee by taking one of the possible views in the matter. When one possible view has been taken, the sa .....

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finding that the order is erroneous. In such matters, to remand the matter to the Assessing Officer would imply the Commissioner has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the question. The order of the Assessing Officer may or may not be wrong. The Commissioner cannot direct reconsideration only when the order is erroneous. An order of remit cannot be passed by the Commissioner to ask the Assessing Officer to decide whethe .....

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e latter cases, the Commissioner has to examine the order or the decision taken by the Assessing Officer on the merits and then form an opinion on the merits that the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. In the second set of cases, the Commissioner cannot direct the Assessing Officer to conduct further enquiry to verify and find out whether the order passed is erroneous or not. 8.1.1. We also find that the Hon ble Supreme Court in th .....

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any was not placed before the Assessing Officer. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts, the conclusion that the order of the Income-tax Officer was erroneous was irresistible. The High Court had rightly held that the exercise o .....

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operation carried on by the appellant, were not questioned before it. Though the High Court was not right in holding that the said amount was paid for breach of contract, as it was paid in modification/relaxation of the terms of the contract, the High Court was justified in concluding that the said amount was a taxable receipt under the head Income from other sources . 8.1.2. We also find that the Hon ble Allahabad High Court in the case of Principal CIT vs M/s Ashok Handloom Factory Pvt Ltd in .....

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