ACIT, CHENNAI V. M/s Tamil Nadu Steel Tubes Ltd., CHENNAI

CO 155/CHNY/2008

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 5899 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-04-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 08-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TAPAS KUMAR DUTTA
• Keywords: Bad and doubtful debts
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE DR.O.K.NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER .. ITA NO.1369/MDS./08 A SSESSMENT YEAR:1999-2000 ITA NO.1370/MDS./08 A SSESSMENT YEAR:2000-2001 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(1), 121, MAHATMA GANDHI ROAD, CHENNAI 600 034. VS. M/S.TAMIL NADU STEEL TUBES LTD., 15,KONDY CHETTY STREET, CHENNAI 600 001. ( PAN NO.AAACT 2381 C ) (APPELLANT) (RESPONDENT) C.O. NO.155/MDS./08 ASS ESSMENT YEAR:1999-2000 C.O. NO.156/MDS./08 ASS ESSMENT YEAR:2000-2001 M/S.TAMIL NADU STEEL TUBES LTD., 15,KONDY CHETTY STREET, CHENNAI 600 001. ( PAN NO.AAACT 2381 C ) VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(1), 121, MAHATMA GANDHI ROAD, CHENNAI 600 034. (CROSS OBJECTOR) (APPELLANT IN APPEAL) PAGE OF 7 ITA.1369/1370 /MDS/08 CO NO.155/156/MDS/08 2 DEPARTMENT BY : SHRI TAPAS KUMAR DUTTA ASSESSEE BY : NONE O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT: THE TWO APPEALS ARE FILED BY THE REVENUE. THE T WO CROSS OBJECTIONS ARE FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEARS ARE 1999-2000 & 2000-2001. THE APPEALS AND CROSS O BJECTIONS ARE DIRECTED AGAINST THE ORDERS OF CIT(A)-VIII AT CHENN AI, BOTH DATED 31.03.2008. THEY ARISE OUT OF THE ASSESSMENTS COMPL ETED U/S. 143(3), READ WITH SECTION 147 OF THE INCOME T AX ACT, 1961. 2. IN THE CASE OF ASSESSMENT YEAR 1999-2000, THE A SSESSING AUTHORITY ISSUED NOTICE U/S.148 FOR THE ASSESSMENT YEAR 1999-2000. BUT THE NOTICE ISSUED BY THE ASSESSING AUTHORITY ME NTIONED THE ASSESSMENT YEAR AS 2000-2001. IN FIRST APPEAL, CIT (A) HELD THAT THERE WAS NO PROPER NOTICE AND THEREFORE, ASSESSMEN T WAS VOID AB INITIO . THE INCOME ESCAPING ASSESSMENT COMPLETED WAS TH US ANNULED BY THE CIT(A). THE REVENUE IS AGGRIEVED AND THEREFORE, THE APPEAL FOR THE ASSESSMENT YEAR 1999-2000. 3. IN RESPECT OF ASSESSMENT YEAR 2000-2001, THE GR OUNDS RAISED BY THE REVENUE ARE THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` .4.18 CRORES MADE AGAINST UNDER STATEMENT OF SALES AND ALSO IN DELETING THE DISALLOWANCE OF RS. 1.37 CRORES MADE AGAINST THE EXPORT INCENTIVES WRITTEN OFF BY THE ASSESSEE. THE REVENU E HAS RAISED PAGE OF 7 ITA.1369/1370 /MDS/08 CO NO.155/156/MDS/08 3 CONTENTIONS AGAINST DELETING DISALLOWANCES OF A SU M OF ` .4.17 CRORES AGAINST THE DISCOUNTS AND REBATES CLAIMED BY THE AS SESSEE AS IRRECOVERABLE. 4. IN RESPECT OF IN THE CASE OF BOTH CROSS OBJECTI ONS, THE ASSESSEE HAS SUPPORTED THE ORDERS OF THE CIT(A). 5. WHEN THESE MATTERS WERE CALLED ON FOR HEARING, ADJOURNMENT PETITIONS WERE PLACED BEFORE US AS FROM THE SIDE OF THE ASSESSEE COMPANY. THE REASONS STATED FOR SEEKING ADJOURNMEN T IS THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE COMPANY I S SUFFERING FROM FEVER AND THEREFORE, THE ASSESSEE WANTED TIME TO CH ANGE AND TO ENGAGE ANOTHER COUNSEL TO ARGUE THE CASE BEFORE THE TRIBUNAL. THE ASSESSEE COMPANY HAS NOT BROUGHT ON RECORD ANY COUN SEL AUTHORIZED TO ARGUE THESE APPEALS BEFORE THE TRIBUNAL. THEREF ORE, WE DO NOT KNOW WHETHER THE ASSESSEE HAS ENGAGED AN AUTHORIZE D REPRESENTATIVE AT ALL OR IF SO APPOINTED WHETHER TH E AUTHORIZED REPRESENTATIVE WAS SUFFERING FROM FEVER OR NOT. IT IS SUCH A BALD STATEMENT; WE ARE NOT ABLE TO MAKE HEAD OR TAIL. T HE MOST INTERESTING FEATURE OF THE ADJOURNMENT PETITION IS THAT THE ASS ESSEE WANTS TO CHANGE THE COUNSEL FOR THE REASON THAT THE COUNSEL IS SUFFERING FROM FEVER. WE DO NOT UNDERSTAND WHY THE ASSESSEE IS CO NTEMPLATING SUCH AN EXTREME STEP TO CHANGE THE AUTHORIZED REPR ESENTATIVE FOR THE REASON THAT THE AUTHORIZED REPRESENTATIVE IS SUFFE RING FROM FEVER, AS IF IT IS THE FAULT OF THE AUTHORIZED REPRESENTATIVE . PAGE OF 7 ITA.1369/1370 /MDS/08 CO NO.155/156/MDS/08 4 6. IN SHORT, WE ARE NOT CONVINCED ON THE BONA FIDE S OF THE REASON STATED BY THE ASSESSEE FOR SEEKING ADJOURNMENT IN T HESE MATTERS. THEREFORE, THE ADJOURNMENT PETITIONS ARE REJECTED A ND THE APPEALS AND CROSS OBJECTIONS ARE HEARD EXPARTE QUA THE ASSE SSEE. 7. IT IS ALSO NECESSARY TO STATE HERE THAT THESE A PPEALS WERE POSTED FOR HEARING AT LEAST EIGHT TIMES IN THE PAST . NOBODY APPEARED FOR THE ASSESSEE AT LEAST ON FIVE TIMES. ADJOURNM ENTS WERE SOUGHT BY THE ASSESSEE ITSELF FOR THREE TIMES. THE LAST NO TICE WAS IN FACT SERVED THROUGH THE DEPARTMENT. IT SHOWS THE CALLO US ATTITUDE OF THE ASSESSEE IN ATTENDING THE CALL OF LAW. 8. AS FAR AS THE APPEAL FOR THE ASSESSMENT YEAR 19 99-2000 IS CONCERNED, THE CIT(A) HAS ANNULLED THE ASSESSMENT F OR THE REASON THAT THE NOTICE U/S.148 WAS ISSUED FOR THE ASSESSME NT YEAR 2000-01 AND NOT FOR THE ASSESSMENT YEAR 1999-2000 AS COMMUN ICATED BY THE ASSESSING AUTHORITY. DE HORS THE ARGUMENTS OF THE REVENUE, EVEN IF THAT IS THE CASE AS CONTEMPLATED BY THE CIT(A), THE SAID DEFECT DOES NOT EMPOWER THE CIT(A) TO ANNUL THE ASSESSMENT AS S UCH. THIS IS BECAUSE THE MISTAKE APPEARED IN THE NOTICE ISSUED U /S.148 IS NOT AN INCURABLE DEFECT. IT IS A CURABLE DEFECT. IT WAS MO RE THAN CLEAR IN ALL OTHER ASPECT THAT THE ASSESSING AUTHORITY WAS PROPO SING TO RE-OPEN THE ASSESSMENT FOR THE ASSESSMENT YEAR 1999-2000. PAGE OF 7 ITA.1369/1370 /MDS/08 CO NO.155/156/MDS/08 5 9. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 1999-20 00 AND REMIT BACK THE FILES TO THE ASSESSING OFFICER TO ISSUE AF RESH NOTICE U/S.148 FOR THE ASSESSMENT YEAR 1999-2000 AND TO COMPLETE T HE ASSESSMENT IN ACCORDANCE WITH LAW. 10. THE REVENUE SUCCEEDS IN ITS APPEAL FOR THE ASS ESSMENT YEAR 1999-2000. 11. REGARDING THE APPEAL FILED FOR THE ASSESSMENT YEAR 2000-2001, IT IS TO BE SEEN THAT THE CIT(A) HAS DELETED THE VA RIOUS DISALLOWANCES MADE BY THE ASSESSING AUTHORITY WITHOUT HIGHLIGHTIN G THE SPECIFIC REASONS COMING OUT OF THE RECORDS IN FAVOUR OF THE ASSESSEE. WHILE DELETING THE DISALLOWANCE OF ` .1.37 CRORES BEING EXPORT INCENTIVES WRITTEN OFF BY THE ASSESSEE, THE CIT(A) HAS NOT DI SCUSSED EVEN THE BASIC FACTOR WHETHER THE SAID ITEM RELATED TO BAD D EBT OR NOT. THE NATURE OF THE CLAIM MUST BE ESTABLISHED, WHETHER IN THE NATURE OF BUSINESS LOSS OR IN THE NATURE OF IRRECOVERABLE INC OME OR IN THE NATURE OF BAD DEBTS ETC. PROPER MIND HAS NOT BEEN APPLIED IN THIS CASE. 12. REGARDING THE ADDITION OF ` .4.18 CRORES MADE TOWARDS UNDER STATEMENT OF SALES, THE CIT(A) HAS ACCEPTED THE CON TENTION OF THE ASSESSEE THAT THE SALES WERE RECORDED EXCLUSIVE OF EXCISE DUTY AND SALES TAX PAID. THERE ARE NUMBER OF COURT DECISION S WHICH SHOW THAT SALES TURNOVER ARE INCLUSIVE OF EXCISE DUTY AS WELL AS SALES TAX. EVEN IF ANY CHANGE IS MADE IN THE ABOVE METHOD BY FORCE OF ACCOUNTING PAGE OF 7 ITA.1369/1370 /MDS/08 CO NO.155/156/MDS/08 6 STANDARD, THE CIT(A) SHOULD HAVE DISCUSSED THE ENTI RE FRAME OF THE CASE, SO THAT THE COURSE OF EVENTS ARE CLARIFIED. T HIS IS THE CASE WITH DELETION OF DISALLOWANCE OF ` .4.17 CRORES, ALSO. 13. IN SHORT, WE FIND THAT THE CIT(A) HAS ADJUDICA TED THE GROUNDS RAISED BY THE ASSESSEE ALMOST EXCLUSIVELY ON THE BA SIS OF THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM AND NOT AFTER DISCUSSING THE NECESSARY FACTS OF THE ISSUE IN AN O BJECTIVE MANNER. THEREFORE, WE FIND THAT THESE ISSUES ARE TO BE RECO NSIDERED. 14. ACCORDINGLY, THE ORDER OF THE CIT(A) FOR THE A SSESSMENT YEAR 2000-2001 IS SET ASIDE AND THE FILE IS REMITTED BAC K TO THE ASSESSING OFFICER TO CONSIDER THE ISSUES AFRESH IN THE LIGHT OF THE STATUTES AND RELEVANT CASE LAWS AND AFTER HEARING THE ASSESSEE A S REQUIRED UNDER LAW. 15. THE APPEAL FILED FOR THE ASSESSMENT YEAR 2000- 2001 IS ALSO SUCCESSFUL. 16. AS WE HAVE SET ASIDE THE ORDERS OF THE CIT(A) FOR THE IMPUGNED ASSESSMENT YEARS, THE CROSS OBJECTIONS FILED BY THE ASSESSEE HAVE BECOME INFRUCTUOUS. PAGE OF 7 ITA.1369/1370 /MDS/08 CO NO.155/156/MDS/08 7 17. IN RESULT, THE APPEALS FILED BY THE REVENUE AR E TREATED AS ALLOWED AND THE CROSS OBJECTIONS FILED BY THE ASSES SEE ARE DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED ON THURSDAY THE 21 ST OF APRIL, 2011 AT CHENNAI. SD/- SD/- ( HARI OM MARATHA ) ( DR.O.K.NARAYANAN ) JUDICIAL MEMBER VICE PRESIDENT CHENNAI, DATED THE 21 ST APRIL, 2011. KSS COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE