Sanjay Kumar Mahipal v. Principal Commissioner Of Income Tax, Bikaner, Bikaner

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 7/2019 Sanjay Kumar Mahipal S/o Late Shri Sobha Chand Mahipal, AgedAbout 52 Years, R/o 3-F-10, Jawahar Nagar, Sriganganagar,Rajasthan - 335001 ----Appellant Versus Principal Commissioner Of Income Tax, Bikaner, Bikaner ----Respondent For Appellant(s) : Mr. Vineet Dave HON'BLE THE CHIEF JUSTICE S. RAVINDRA BHAT HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATIOrder 08/07/2019 1.The assessee’s appeal under Section 260A of the Income TaxAct, 1961 is that the ITAT fell into error in not interfering with theorder of the Commissioner, who had invoked powers and directedexamination of accounts and returns of the assessee for therelevant Assessment Year 2013-14. 2.The assessee deals, inter-alia in commodities and is tradingin agricultural produce and for that purpose holds its stock. Itsreturns were selected for scrutiny, pursuant to which, a noticeunder Section 143(2) and 142(1) was issued on 31.12.2015. TheAO required the assessee to produce materials in support of itsclaims. Subsequently the AO issued questionnaire, which wasanswered by the assessee. After considering the record, thereturns were scrutinized under Section 143(3) of the Act on26.02.2016. The assessee’s total income was assessed atRs.51,61,198/-. One of the significant points considered in theassessment was low rate of profit margin declared by theassessee as against increase in total turnover. The assessee explained this apparent anomaly by stating that it incurredexpenditure in respect of opening new branches. The assesseealso produced its trading account during the course ofassessment. 3.On 12.2.2018, a show-cause notice was issued by theCommissioner under Section 263 of IT Act, 1961 proposing torevise the assessment order as the CIT was of the prima facieopinion that the assessment order was erroneous and prejudicialto the interests of revenue. The assessee resisted this notice by itsreply dated 05.3.2018 and contended that all relevant materialshad been produced and were in fact taken into account by the AO.By order dated 16.3.2018, the Commissioner passed the revisionalorder setting aside the original assessment order and directingfresh examination of various issues including the four points i.e.shortage of MTP account; loss incurred on account of thetransactions with eight entities; receipt of huge commission to thetune of Rs.31,86,832/- and issue relating to ‘Guar’ sold to oneM/s. Vikas WSP Limited. 4.The assessee feeling aggrieved approached the Income TaxAppellate Tribunal and by the impugned order the ITAT hadrejected the appeal. 5.It is argued on behalf of assessee, by Mr. Vineet Dave, thatthe ITAT fell into error in not noticing the contentions urged andeven in recording the assessee’s submission on merits. It issubmitted that both the revisional order and the impugned orderare erroneous inasmuch as they proceed on assumptions. It wasargued on behalf of the assessee furthermore that there is a legalcompulsion to record every contention made, notice andsummarize every document produced in relation to any return and the order shows that the issue had received consideration and dueapplication of mind. Even a single line inferring the reason wassufficient. It is submitted, therefore, the revisional order cannot besustained. 5.It is argued on behalf of assessee, by Mr. Vineet Dave, thatthe ITAT fell into error in not noticing the contentions urged andeven in recording the assessee’s submission on merits. It issubmitted that both the revisional order and the impugned orderare erroneous inasmuch as they proceed on assumptions. It wasargued on behalf of the assessee furthermore that there is a legalcompulsion to record every contention made, notice andsummarize every document produced in relation to any return and the order shows that the issue had received consideration and dueapplication of mind. Even a single line inferring the reason wassufficient. It is submitted, therefore, the revisional order cannot besustained. 6.This Court has considered the submissions both with respectto the question of loss and with respect to the MTP transactions.The Commissioner pertinently observed that the AO did notdiscuss even the barest reason for the claim made in respect ofloss. It is evident from the record that the assessee claimedRs.6.61 Crores as loss which was sought to be setoff against theprofit of Rs. 6.54 Crores. The Assessing Officer, it is apparent didnot dealt with this aspect expressly at all. Likewise, with respectto shortage in MTP account, the Commissioner noticed that theassessee’s claim was facially not even gone into : “A perusal ofassessment record does not suggest that the issue of shortagewas even raised by the AO or the same was explained by theassessee. In these circumstances, I have no hesitation in holdingthat the acceptance of huge shortage of 4775 Qtl. worthRs.1,74,37,481/- was a serious mistake on part of the AO.” 7.This Court is of the opinion that having regard to the reasonsspecifically recorded by the CIT (Appeals), the directions issuedunder Section 263 of the Act are warranted. The lack ofsignificant discussion of every argument by the ITAT does not inour opinion constitute a substantial question of law. The appeal is,therefore, dismissed. (DR. PUSHPENDRA SINGH BHATI),J(S. RAVINDRA BHAT),CJ