Kerala Roadways Private Limited, CHENNAI V. ACIT, CHENNAI

CO 1/CHNY/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8900 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-08-2013
• Assessment Year: misc
• Appeal Filed On: 06-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S RAMESH
• Assessee Lawyers: N SANKARAN IRS
• Keywords: Search and seizure; Block assessment; Revised return
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER IT(SS)A NO.25(MDS)/2011 (BLOCK PERIOD : 1996-97 TO 2001-02 & 1.4.2002 TO 22 .1.2003) AND C.O. NO.1(MDS)/2012 IN IT(SS)A NO.25(MDS)/2011 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE II(3), CHENNAI. VS. M/S. KERALA ROADWAYS PVT. LTD., 39-WALLTAX ROAD, CHENNAI-600 079. PAN AAACK1383P. (APPELLANT) ( RESPONDENT/CROSS OBJECTOR) APPELLANT BY : SHRI N.SANKARAN, I RS, CIT RESPONDENT BY : SHRI S.RAMESH, CA. DATE OF HEARING : 13 TH AUGUST, 2013 DATE OF PRONOUNCEMENT : 13 TH AUGUST, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS IS A BLOCK ASSESSMENT APPEAL FILED BY THE RE VENUE. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COM MISSIONER OF - - IT(SS)A 25 OF 2011 & CO 1 OF 2012 2 INCOME-TAX(APPEALS)-II AT CHENNAI, DATED 14-7-2011. THE ASSESSEE HAS ALSO FILED A CROSS OBJECTION. 2. WE HEARD SHRI N.SANKARAN, THE LEARNED COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENU E, AND SHRI S.RAMESH, THE LEARNED CHARTERED ACCOUNTANT APP EARING FOR THE ASSESSEE. 3. THE FIRST GROUND RAISED BY THE REVENUE IN ITS A PPEAL IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 1,68,90,172/- MADE BY THE ASSESSING OFFICER BY TREATING THE RETURNED INCOME FOR THE ASS ESSMENT YEAR 2002-03 AS NIL. IT IS THE CASE OF THE REVENUE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) FAILED TO NOTE THAT THE ISSUE REGARDING THE TREATMENT OF ` 1,68,90,172/- RETURNED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2002-03 AS UNDISCLOSED/DISCLOSED INCOME HAS NOT BECOME FINAL A ND THAT THE DEPARTMENT HAS NOT ACCEPTED THE ORDERS OF THE HONB LE HIGH COURT OF MADRAS IN TCA NO.1409 OF 2009 DATED 5-1-20 10 AND THAT SLP IS PENDING BEFORE THE HONBLE SUPREME COUR T IN SLP(CIVIL) NO.15344 OF 2010. - - IT(SS)A 25 OF 2011 & CO 1 OF 2012 3 4. IN THIS REGARD, THE LEARNED COMMISSIONER OF INC OME- TAX APPEARING FOR THE REVENUE STATED THAT THE COMMI SSIONER OF INCOME-TAX(APPEALS), THE TRIBUNAL AND THE HONBLE H IGH COURT HAVE RELIED ON THE JUDGMENT OF THE HONBLE MADRAS H IGH COURT RENDERED IN THE CASE OF ACIT VS. A.R.ENTERPRISES, 2 74 ITR 110, WHEREIN THE HONBLE HIGH COURT HAS HELD THAT DEDUCT ION OF TAX AT SOURCE AND PAYMENT OF ADVANCE TAX WOULD MAKE OUT TH E CORRESPONDING INCOME DISCLOSED AND THE RELEVANT INC OME CANNOT BE TREATED AS UNDISCLOSED INCOME. THE LEARNED COMM ISSIONER OF INCOME-TAX EXPLAINED THAT THE SAID DECISION OF T HE HONBLE MADRAS HIGH COURT HAS SINCE BEEN REVERSED BY THE HO NBLE SUPREME COURT IN THE CASE OF ACIT VS. A.R.ENTERPRIS ES, REPORTED IN 350 ITR 489. IN THIS DECISION THE HONBLE SUPRE ME COURT HAS HELD THAT WHERE THE ASSESSEE HAS NOT FILED ITS RETU RN BEFORE THE DUE DATE AND THE RETURN WAS FILED ONLY AFTER INITIA TION OF BLOCK ASSESSMENT PROCEEDINGS, MERE PAYMENT OF ADVANCE TAX MADE EARLIER WOULD NOT AMOUNT TO DISCLOSURE OF TOTAL INC OME. THE COURT HELD THAT IN SUCH CASES THE INCOME SHOULD BE CONSID ERED IN THE BLOCK ASSESSMENT. - - IT(SS)A 25 OF 2011 & CO 1 OF 2012 4 5. IN REPLY TO THE ABOVE, THE LEARNED CHARTERED ACCOUNTANT HAS STATED THAT THE SAID DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. A.R.ENTERPRIS ES, 350 ITR 489, MENTIONED BY THE LEARNED COMMISSIONER OF INCOM E-TAX, IS NOT APPLICABLE TO THE PRESENT CASE OF THE ASSESSEE. THE LEARNED CHARTERED ACCOUNTANT HAS POINTED OUT THAT IT IS NOT ONLY THE CASE OF THE ASSESSEE THAT ADVANCE TAX AND TDS WERE MADE IN RESPECT OF THE INCOME ATTRIBUTABLE TO THE ASSESSMENT YEAR 2 002-03, BUT ALSO IT IS THE CASE OF THE ASSESSEE TO HIGHLIGHT TH E SITUATION THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 WAS COMPLETED UNDER SECTION 143(3) EVEN BEFORE PASSING THE BLOCK ASSESSMENT ORDER AND IN SUCH CIRCUMSTANCES INSPITE OF THE RECENTLY DELIVERED JUDGMENT OF THE HONBLE SUPREME COURT, THE COMMISSIONER OF INCOME-TAX(APPEALS) IS JUSTIFIED IN DELETING THE ADDITION OF ` 1,68,90,172/-. 6. WE CONSIDERED THIS MATTER CAREFULLY. IN ASSESS EES OWN CASE, AS ALREADY EXPLAINED BY THE REVENUE, THE MATTER HAS REACHED UPTO THE HONBLE SUPREME COURT FOR THE ASSE SSMENT YEAR 2002-03. THE SLP FILED BY THE REVENUE BEFORE THE HONBLE SUPREME COURT IN SLP(CIVIL) NO.15344 OF 2010 HAS BE EN - - IT(SS)A 25 OF 2011 & CO 1 OF 2012 5 DISMISSED BY THE HONBLE SUPREME COURT AND THEIR LO RDSHIPS HAVE CONFIRMED THE ORDERS OF THE HONBLE MADRAS HIG H COURT CONFIRMING THE DELETION OF THE AMOUNT OF ` 1,68,90,172/-. THEREFORE, IN THIS PARTICULAR CASE IT IS A CONCLUDE D MATTER THAT UNDER SAME CIRCUMSTANCES THE HONBLE SUPREME COURT HAS UPHELD THE DELETION OF THE AMOUNT OF ` 1,68,90,172/- FOR THE ASSESSMENT YEAR 2002-03. IT IS NOT POSSIBLE TO HOL D IN THE PRESENT CASE THAT THE CASE OF THE ASSESSEE IS INFLU ENCED BY THE FACTUM OF PAYMENT OF ADVANCE TAX ALONE. THE LEARNE D COMMISSIONER OF INCOME-TAX HAS CONTENDED THAT THE J UDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. A.R.ENTERPRISES, 350 ITR 489 WAS NOT AVAILABLE BEFO RE THEIR LORDSHIPS WHILE THE SLP FILED BY THE REVENUE IN ASS ESSEES CASE WAS CONSIDERED AND DISMISSED. BUT, IN SPITE OF THA T, WE ARE AFRAID THAT THE ABOVE JUDGMENT OF THE HONBLE APEX COURT MAY NOT DIRECTLY APPLY TO THE ASSESSEES CASE. HERE IT IS NOT THE CASE OF PAYMENT OF ADVANCE TAX ALONE. IN THE PRESENT CASE THE RETURN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2002- 03 IN NORMAL COURSE WAS SCRUTINIZED BY THE ASSESSING OFFICER AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT, - - IT(SS)A 25 OF 2011 & CO 1 OF 2012 6 BEFORE THE BLOCK ASSESSMENT ORDER. WHEN THE INCOME FOR THE ASSESSMENT YEAR 2002-03 HAS ALREADY BEEN ASSESSED B Y THE ASSESSING OFFICER UNDER SECTION 143(3), IT IS NOT P OSSIBLE TO HOLD THAT THE SAID INCOME OF THE ASSESSMENT YEAR 2002-03 COULD BE STILL TREATED AS THE UNDISCLOSED INCOME. THE FACT IS THAT THE INCOME WAS NOT ONLY DISCLOSED BUT WAS DETERMINED AS WELL. 7. IN THESE CIRCUMSTANCES WE HOLD THAT WE ARE BOUN D BY THE ORDER OF THE HONBLE SUPREME COURT IN DISMIS SING THE SLP FILED BY THE REVENUE AND AS SUCH WE DISMISS THIS GR OUND RAISED BY THE REVENUE. 8. THE SECOND ISSUE RAISED BY THE REVENUE IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DE LETING THE ADDITION OF ` 2,42,71,600/- MADE BY THE ASSESSING AUTHORITY TOWARDS DISALLOWANCE OF LOSS. IT IS THE CASE OF TH E REVENUE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS FAILED TO NOTE THAT THE ASSESSING OFFICER HAS AFFORDED OPPORTUNITY TO T HE ASSESSEE TO FILE A REVISED FORM NO.2B VIDE HIS OFFICE LETTER DATED 28-10-2010 AND THAT THE ASSESSEE HAS NOT FILED THE SAME BEFORE THE ASSESSING OFFICER. IT IS THE FURTHER ARGUMENT OF THE REVENUE THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS FA ILED TO NOTE - - IT(SS)A 25 OF 2011 & CO 1 OF 2012 7 THAT ONLY THE ASSESSING OFFICER CAN GIVE EFFECT TO THE ORDER OF THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263 AND TH AT BY ENTERTAINING FILING OF REVISED FORM NO.2B, THE COMM ISSIONER OF INCOME-TAX(APPEALS) HAS GIVEN EFFECT TO THE ORDER O F THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263, WHICH ACT IS NOT IN ACCORDANCE WITH LAW. THE REVENUES ARGUMENT IS THAT FORM NO.2B CAN BE FILED ONLY BEFORE THE ASSESSING OFFICE R AND HENCE CORRECTIONS IN FORM NO.2B SHALL ALSO BE FILED ONLY BEFORE THE ASSESSING OFFICER. 9. THE WHOLE ARGUMENT OF THE REVENUE IS BASED ON A MISCONCEPTION THAT THE ASSESSEE HAS FILED A REVISED RETURN IN FORM NO.2B BEFORE THE COMMISSIONER OF INCOME-TAX(AP PEALS). IT IS NOT CORRECT. WHAT HAS BEEN FILED BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS) IS THE CORRECTED FORM NO.2B, WH ICH DOES NOT AMOUNT TO FILING OF ANY REVISED RETURN. THE RE VISION ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX WAS MAINLY BASED ON THE MISTAKES APPARENT IN THE RETURN FILED BY THE ASSESSEE IN FORM NO.2B. IN THE ORDER PASSED BY THE ASSESSING O FFICER GIVING EFFECT TO THE ORDER OF THE COMMISSIONER OF INCOME-T AX PASSED UNDER SECTION 263, THE EXPLANATIONS OFFERED BY THE ASSESSEE - - IT(SS)A 25 OF 2011 & CO 1 OF 2012 8 REGARDING THE MISTAKES WERE NOT AT ALL CONSIDERED B Y THE ASSESSING OFFICER. THEREFORE, THE COMMISSIONER OF INCOME- TAX(APPEALS) HAD TO EXAMINE THE EXPLANATIONS OF THE ASSESSEE IN THE CONTEXT OF THE MISTAKES POINTED OUT BY THE COMM ISSIONER OF INCOME-TAX, AS A RESULT OF WHICH THE ORDER UNDER SE CTION 263 WAS PASSED AND THE CONSEQUENTIAL ORDER GIVING EFFECT TO THAT REVISION ORDER WAS PASSED BY THE ASSESSING OFFICER. THEREFO RE, IT WAS WELL WITHIN THE JURISDICTION OF THE COMMISSIONER OF INCOME- TAX(APPEALS) TO ACCEPT OR REJECT THE EXPLANATIONS O FFERED BY THE ASSESSEE REGARDING THE MISTAKES POINTED OUT BY THE COMMISSIONER OF INCOME-TAX. BY EXERCISING THAT JUR ISDICTION THE ASSESSING OFFICER ASKED THE ASSESSEE TO FILE A COPY OF THE RETURN IN FORM NO.2B AFTER MAKING NECESSARY CORRECTIONS. THE NECESSARY CORRECTIONS WERE MADE IN THE FORMAT OF FO RM NO.2B ONLY TO MAKE THE COMPREHENSION EASY. IT IS NOT POS SIBLE TO HOLD THAT THE ASSESSEE HAS FILED A REVISED RETURN BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS) AND THE COMMISS IONER OF INCOME-TAX(APPEALS) HAS ACTED UPON THAT REVISED RET URN. 10. NOW, AS FAR AS THE MERIT OF THE ISSUE IS CONCE RNED, THE ASSESSEE HAS EXPLAINED THE MISTAKES POINTED OUT BY THE - - IT(SS)A 25 OF 2011 & CO 1 OF 2012 9 COMMISSIONER OF INCOME-TAX BEFORE THE COMMISSIONER OF INCOME-TAX(APPEALS) WITH FACTS AND FIGURES. THEREF ORE, THE DECISION OF THE COMMISSIONER OF INCOME-TAX(APPEALS) ON THE QUESTION OF FACTS CANNOT BE HELD TO BE ERRONEOUS. 11. IN THESE CIRCUMSTANCES, WE FIND THAT THE SECON D GROUND RAISED BY THE REVENUE IS AGAIN LIABLE TO BE DISMISSED. 12. IN RESULT, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 13. AS THE APPEAL FILED BY THE REVENUE IS DISMISSE D, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOM E INFRUCTUOUS. 14. IN RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED . ORDERS PRONOUNCED ON TUESDAY, THE 13 TH OF AUGUST, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 13 TH AUGUST, 2013. V.A.P. - - IT(SS)A 25 OF 2011 & CO 1 OF 2012 10 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.