Shri Kollipara Subrahmanyam, Machilipatnam V. THE ITO, WARD - 1, Machilipatnam

CO 65/VIZ/2013

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2266 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 23-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Tax effect

Judgement Text

ITA NO.99/VIZAG/2013 & CO 65/VIZAG/2013 KOLLIPARA SUBRAHMANYAM, MACHILIPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.99/VIZAG/2013 ( / ASSESSMENT YEAR: 2009-10) ITO WARD - 1 MACHILIPATNAM VS. KOLLIPARA SUBRAHMANYAM MACHILIPATNAM [PAN: AJEPK 9098D ] ( % / APPELLANT) ( &'% / RESPONDENT) C.O. NO.65/VIZAG/2013 (ARISING OUT OF I.T.A.NO.99/VIZAG/2013) ( / ASSESSMENT YEAR: 2009-10) KOLLIPARA SUBRAHMANYAM MACHILIPATNAM VS. ITO WARD - 1 MACHILIPATNAM ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI M.N. MURTHY NAIK, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 21.03.2016 / DATE OF PRONOUNCEMENT : 24.03.2016 ITA NO.99/VIZAG/2013 & CO 65/VIZAG/2013 KOLLIPARA SUBRAHMANYAM, MACHILIPATNAM 2 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THESE CROSS APPEALS FILED BY THE REVENUE AND THE AS SESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A), VIJAYAWAD A DATED 21.12.12 FOR THE ASSESSMENT YEAR 2009-10. THE CROSS OBJECTION F ILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF CIT(A). ITA 99/VIZAG/2013: 2. WHEN THIS APPEAL IS TAKEN UP FOR HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS BELOW RS.10 LAKHS. AS PER THE LATEST CIRCULAR NO.2 1/2015 DATED 10.12.2015 OF CBDT BEING RETROSPECTIVE IN NATURE, T HE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. THE LD. D.R. HAS NOT RAISED ANY OBJECTION. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. HENCE, THE SAME IS DISMISSED. 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. CO 65/VIZAG/2013: 4. SO FAR AS CO FILED BY THE ASSESSEE IS CONCERNED, THE LD. D.R. HAS SUBMITTED THAT ONCE THE APPEAL IS DISMISSED ON THE GROUND OF THE TAX ITA NO.99/VIZAG/2013 & CO 65/VIZAG/2013 KOLLIPARA SUBRAHMANYAM, MACHILIPATNAM 3 EFFECT BELOW ` 10 LAKHS, ASSESSEE CANNOT RAISE A CROSS OBJECTION SEEKING A RELIEF WHERE CIT(A) DECIDED AGAINST HIM. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED THAT THE ASSESSEE HAS EVERY RIGHT TO FILE A C.O. WH ERE THE ORDER OF THE CIT(A) IS AGAINST HIM. FURTHER, HE HAS SUBMITTED T HAT IN THE CASE OF ACIT VS. AJAY KALIA IN ITA NO.245/DEL/2014 DATED 7. 1.2016, THE DELHI TRIBUNAL HAS ALREADY DECIDED THE ISSUE AND HELD THA T THE ASSESSEE HAS A RIGHT TO FILE A CROSS OBJECTION. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN RESPECT OF THE OBJECTION RAISED BY THE LD. D.R., SO FAR AS MAINTAINABILITY OF THE CROSS OBJECTION IS CONCERNED, THE VERY SIMIL AR ISSUE HAS BEEN CONSIDERED BY THE DELHI TRIBUNAL IN ITA 245 OF 2014 DATED 17.1.2016 AND WHEREIN THEY HAVE HELD THAT CROSS OBJECTION FIL ED BY THE ASSESSEE IS MAINTAINABLE. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E RELEVANT MATERIAL ON RECORD. BEFORE EMBARKING UPON THE QUESTION OF THE MAINTAINABILITY OR OTHERWISE OF THE CROSS OBJECTION FILED BY THE ASSESSEE PURSUANT TO THE REV ENUE'S APPEAL, WHICH INVOLVES TAX EFFECT OF LESS THAN RS.1 0 LAC AND HAS BEEN DISMISSED SUPRA, WE NEED TO CONCENTRATE ON THE PRESCRIPTION OF SECTION 253(4) WHICH EMPOWERS THE R ESPONDENT TO FILE CROSS OBJECTION, THE RELEVANT PART OF WHICH READS AS UNDER:- ITA NO.99/VIZAG/2013 & CO 65/VIZAG/2013 KOLLIPARA SUBRAHMANYAM, MACHILIPATNAM 4 (4) THE ASSESSING OFFICER OR THE ASSESSEE, AS THE C ASE MAY BE, ON RECEIPT OF NOTICE THAT AN APPEAL AGAINST THE ORDER OF .... THE COMMISSIONER (APPEALS) HAS BEEN PREFERRED UNDER SUB-SECTION (1) OR SUB-SECTION (2) OR SUB- SECTION (2A) BY THE OTHER PARTY, MAY, NOTWITHSTANDI NG THAT HE MAY NOT HAVE APPEALED AGAINST SUCH ORDER OR ANY PART THEREOF; WITHIN THIRTY DAYS OF THE RECEIPT OF THE NOTICE, FILE A MEMORANDUM OF CROSS OBJECTIONS, VERI FIED IN THE PRESCRIBED MANNER, AGAINST ANY PART OF THE ORDE R OF ... THE COMMISSIONER (APPEALS), AND SUCH MEMORANDUM SHALL BE DISPOSED OF BY THE APPELLATE TRIBUNAL AS I F IT WERE AN APPEAL PRESENTED WITHIN THE TIME SPECIFIED IN SUB-SECTION (3) OR SUB-SECTION (3A). 7. A BARE PERUSAL OF THE ABOVE PROVISION TRANSPIRES THAT THE AG OR THE. ASSESSEE (HEREINAFTER REFERRED TO AS THE OTHE R SIDE'), ON RECEIPT OF NOTICE OF AN APPEAL HAVING BEEN PREFERRE D BY THE APPEALING PARTY AGAINST THE ORDER PASSED BY THE CIT (A), NOTWITHSTANDING NOT HAVING FILED SEPARATE APPEAL, M AY FILE A CROSS OBJECTION 'AGAINST ANY PART OF THE ORDER OF THE ... COMMISSIONER (APPEALS).' IT IS AMPLY CLEAR FROM THE LANGUAGE OF SUB-SECTION (4) THAT THE RIGHT TO FILE CROSS OBJECTION HAS BEEN GIV EN TO THE OTHER SIDE AGAINST ANY PART OF THE ORDER OF THE CIT(A), WHETHE R OR NOT CONNECTED WITH THE ISSUES RAISED IN THE APPEAL BY T HE APPEALING PARTY. THERE CAN BE ONE POSSIBILITY WHEN THE CROSS OBJECTION IS FILED BY THE OTHER SIDE IN SUPPORT OF THE ORDER PASSED BY THE CIT(A) AND THE OTHER POSSIBILITY CAN BE OF FILING CO AGAINST T HE ISSUES DECIDED AGAINST IT IN THE IMPUGNED ORDER. THERE CAN BE STIL L ONE MORE POSSIBILITY WHEN THE OTHER SIDE, APART FROM SUPPORT ING THE IMPUGNED ORDER APPEALED AGAINST, MAY ALSO ASSAIL CERTAIN OTH ER ISSUES DECIDED AGAINST IT. THIS DIVULGES THAT THE CO CAN BE FILED BY THE OTHER SIDE, ON RECEIPT OF NOTICE OF APPEAL HAVING BEEN FILED BY TH E APPEALING PARTY, ON ANY ISSUE DE HORS THE ISSUED RAISED BY THE APPEA LING PARTY. ON FILING, A CO ASSUMES THE CHARACTER OF AN APPEAL, WH ICH IS APPARENT FROM SECTION 253(4), WHICH PROVIDES THAT: 'SUCH MEM ORANDUM SHALL BE DISPOSED OF BY THE APPELLATE TRIBUNAL AS IF IT WERE AN APPEAL PRESENTED WITHIN THE TIME SPECIFIED IN SUB-SECTION (3) OR SUB-SECTION (3A)'. RULE 22 OF THE FAT RULES, 1963 ALSO PROVIDES THAT: 'A MEMORANDUM OF CROSS-OBJECTIONS FILED UNDER SUB-SECT ION (4) OF SECTION 253 SHALL BE REGISTERED AND NUMBERED AS AN APPEAL AND ALL THE RULES, SO FAR AS MAY BE, SHALL APPLY TO SUCH APPEAL . THIS SHOWS THAT A CROSS OBJECTION IS TREATED IN NO WAY DIFFERENT FROM A SEPARATE APPEAL BY THE TRIBUNAL. 8. THE LANGUAGE OF SECTION 253(4) MAKES IT ABUNDANT LY VIVID THAT THE SCOPE OF A CROSS OBJECTION IS NOT RESTRICTED ONLY TO THE POINTS DECIDED AGAINST THE APPEALING PARTY, BUT, ALSO EXTENDS TO THE POINTS DE CIDED AGAINST THE OTHER SIDE. THE MANDATE OF THE PROVISION IS QUITE V AST AND IS UNLIKE ITA NO.99/VIZAG/2013 & CO 65/VIZAG/2013 KOLLIPARA SUBRAHMANYAM, MACHILIPATNAM 5 THE PRESCRIPTION OF RULE 27 OF THE ITAT RULES, WHIC H IS LIMITED IN ITS REALM EMPOWERING THE RESPONDENT TO SUPPORT THE IMPU GNED ORDER BY PROVIDING THAT: 'THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF TH E GROUNDS DECIDED AGAINST HIM.' 9. THE LD. DR'S CONTENTION THAT THE CROSS OBJECTION S FILED BY THE ASSESSEES SHOULD BE INVARIABLY DISMISSED IN LIMINE FOR THE REASON OF THE DISMISSAL OF THE APPEALS OF THE DEPARTMENT BECA USE OF LOW TAX EFFECT, IN OUR CONSIDERED OPINION, DOES NOT STAND T O ANY LOGIC IN ALL CIRCUMSTANCES. IN A SITUATION WHERE THE CROSS OBJEC TION IS IN SUPPORT OF THE IMPUGNED ORDER, THEN, OF COURSE, SUCH A CROS S OBJECTION HAS NO INDEPENDENT EXISTENCE AND IS LIABLE TO BE DISMIS SED AS INFRUCTUOUS PURSUANT TO THE DISMISSAL OF THE APPEAL OF THE REVE NUE. HOWEVER, IN A CASE WHERE THE CROSS OBJECTION FILED U/S 253(4) I S ON AN ISSUE INDEPENDENT OF THE APPEAL FILED BY THE REVENUE, THE N, SUCH A CROSS OBJECTION CANNOT BE DISMISSED SIMPLY ON THE GROUND OF DISMISSAL OF THE APPEAL BY THE REVENUE INVOLVING LOW TAX EFFECT. ACCEPTANCE OF THIS CONTENTION OF THE LD. DR WOULD AMOUNT TO SNATC HING A VALUABLE RIGHT GIVEN BY THE STATUTE TO THE ASSESSEE TO FILE AND PURSUE AN APPEAL BEFORE THE TRIBUNAL IRRESPECTIVE OF ANY TAX EFFECT. WE, THEREFORE, NEGATE THE CONTENTION OF THE LD. D.R. BY HOLDING THAT THE INSTANT CO CHALLENGING THE IMPUGNED ORDER, IS MAINT AINABLE. 7. WE, RESPECTFULLY FOLLOWING THE COORDINATE BENCH O F THE DELHI TRIBUNAL IN THE ABOVE CASE, THE OBJECTION RAISED BY THE LD. D.R. IS REJECTED AND HOLD THAT CROSS OBJECTION IS MAINTAINA BLE. 8. IN SO FAR AS MERITS OF THE CASE IS CONCERNED, TH E ISSUE RELATES TO TRADE CREDITORS OF RS.4,85,106/-. THE ASSESSEE IS A RICE MILLER WHO PROCURES PADDY FROM THE FARMERS OF THE NEARBY VILLA GES. IN THE BOOKS OF THE ASSESSEE, THE TRADE CREDIT BALANCE WAS SHOWN AT RS.4,85,106/- AND THE A.O. GOT VERIFICATION FROM INSPECTOR ATTACHED T O HIS OFFICE. AS PER THE REPORT OF THE INSPECTOR, THE FARMERS WERE NOT MAINT AINING ANY BOOKS AND THEIR REPLIES FOR QUERIES PUT TO THEM BY THE INSPEC TOR WERE NOT PROPER. ITA NO.99/VIZAG/2013 & CO 65/VIZAG/2013 KOLLIPARA SUBRAHMANYAM, MACHILIPATNAM 6 IN FACT ALL OF THE FARMERS TOLD THE INSPECTOR THAT THEY RECEIVED THE AMOUNT SUBSEQUENT TO THE DATE OF THE SALE. IT WAS NOT BELIEVED BY THE A.O. ACCORDINGLY, SAME WAS ADDED TO THE TOTAL INCO ME OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS NOT ABLE TO FILE A CONFIRMATION FROM THE FARMERS. ON APPEAL, CIT(A) CONFIRMED THE SAME. 9. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT THE ASSESSEE HAS FILED ALL THE DETAILS IN RESPECT OF TRADE CREDI TORS. THE A.O. BASED ON THE ENQUIRY BY THE INSPECTOR, ADDITION WAS MADE WIT HOUT GIVING OPPORTUNITY TO THE ASSESSEE. HOWEVER, HE HAS SUBMI TTED THAT REASONABLE DISALLOWANCE CAN BE MADE. 10. ON THE OTHER HAND, THE LD. D.R. HAS SUPPORTED T HE ORDER PASSED BY THE AUTHORITIES BELOW. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS A RICE MILL OWNER AND HE PURCHASED PADD Y FROM THE NEARBY VILLAGE FARMERS. HE MAINTAINED BOOKS OF ACCOUNTS. ACCORDING TO HIS BOOKS OF ACCOUNTS, THE CREDIT BALANCES WERE SHOWN A T RS.4,85,106/- AND SUBMITTED THAT HE HAS PURCHASED PADDY FROM THE FARM ERS, PAYMENTS WERE MADE SUBSEQUENTLY. THE A.O. HAS MADE AN ENQUI RY THROUGH THE INSPECTOR AND THE FARMERS HAVE DENIED THE PAYMENTS RECEIVED FROM THE ITA NO.99/VIZAG/2013 & CO 65/VIZAG/2013 KOLLIPARA SUBRAHMANYAM, MACHILIPATNAM 7 ASSESSEE. THE A.O., BASED ON THE REPORT GIVEN BY T HE INSPECTOR, THE ENTIRE TRADE CREDITORS TO THE TUNE OF RS.4,85,106/- ADDED U/S 68 OF THE ACT. WE FIND THAT THE ASSESSING OFFICER WITHOUT GI VING OPPORTUNITY TO THE ASSESSEE TO REBUT THE REPORT OF THE ITI, ADDITION W AS MADE. THEREFORE, KEEPING IN VIEW OF THE ABOVE AND ALSO BY CONSIDERIN G THE FACTS AND CIRCUMSTANCES OF THE CASE, WE RESTRICT THE DISALLOW ANCE TO THE TUNE OF ` 2 LAKHS TO MEET THE ENDS OF JUSTICE. A.O. IS DIREC TED ACCORDINGLY. 12. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED AND THE C.O. FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 24 TH MAR16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 24.03.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO, WARD-1. MACHILIPATNAM 2. / THE RESPONDENT SHRI KOLLIPARA SUBRAHMANYAM, PR OP. KANAKADURGA RICE TRADERS, JAGANNADHAPURAM, MACHILIPATNAM. 3. ) / THE PRINCIPAL CIT-2, VISAKHAPATNAM 4. ) ( ) / THE CIT(A),VIJAYAWADA 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY //