COMMISSIONER OF INCOME TAX V. M/S LAKSHMI ENERGY & FOODS. LTD.

ITA/857/2010

AI Insights

The case involves the Commissioner of Income-Tax (Central), Ludhiana as the appellant and M/s Lakshmi Energy & Foods Ltd. as the respondent. The dispute centers on the disallowance of a claimed loss of Rs.18,21,20,035 by the assessee, which was attributed to the export of damaged wheat. The Assessing Officer initially rejected this claim, leading to an addition of the said amount to the declared income of the assessee for the assessment year 2006-07. The CIT(A) upheld the Assessing Officer's decision. However, the ITAT found that both the CIT(A) and the Assessing Officer had not adequately addressed the merits of the assessee's claim and thus remanded the matter back to the Assessing Officer for a detailed examination. The High Court, upon reviewing the ITAT's decision, agreed with the Tribunal's approach and dismissed the appeal, allowing the Assessing Officer to re-evaluate the claim based on a comprehensive assessment of the facts and evidence presented.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 719075 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 21-02-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: RAJESH KATOCH
• Keywords: Assessment Year 2006-07; Income Tax; Loss disallowance; Export of Damaged Wheat
• Section: 260A

Judgement Text

"Income-tax Appeal No.857 of 2010 -1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.857 of 2010 Date of decision: 21.2.2011 Commissioner of Income-Tax (Central), Ludhiana ...Appellant Versus M/s Lakshmi Energy & Foods Ltd. ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Rajesh Katoch, Senior Standing Counsel for the appellant. **** ADARSH KUMAR GOEL, J ( Oral) . This Appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 26.3.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (B), Chandigarh in ITA No.1140/Chd./09, for the assessment year 2006-07, claiming following substantial questions of law:- “i). Whether on the facts and in the circumstances of the case, the ITAT was correct in law in accepting the plea of the assessee and remanding the issue to the file of the Assessing Officer instead of remanding the matter to the CIT(A) whose order was challenged by the assessee? ii) Whether on the facts and in the circumstances of Income-tax Appeal No.857 of 2010 -2- *** the case, the ITAT was correct in law in remanding the issue of disallowance of loss of Rs.18,21,20,035/- to the file of the Assessing Officer on the basis that the CIT(A) did not adjudicate the ground no.2 raised before him by the assessee while as per record, the CIT(A) had duly adjudicated the said ground vide his order dated 14.1.2010? iii) Whether on the facts and in the circumstances of the case, the ITAT was correct in law in remanding the issue of disallowance of loss of Rs.18,21,20,035/- to the file of Assessing Officer when the Assessing Officer had clearly established that the said loss was not ascertained in Financial Year 2005-06 and therefore rightly not allowed in Assessment Year 2006-07 which was confirmed by the CIT(A)?” 2. The assessing officer rejected the claim of the assessee that on account of export of damaged wheat it suffered loss which was liable to be set off against the income. Accordingly, the assessing officer made addition of the said amount to the declared income. Appeal of the assessee was dismissed by the CIT(A). On further appeal, the Tribunal held that the CIT(A) had not gone into merits of the contention of the assessee and the assessing officer was also required to go into said issue afresh. The reasons given by the Tribunal as under:- Income-tax Appeal No.857 of 2010 -3- *** “In the context, we have examined the plea set-up by the assessee and find that while passing the order, the Assessing Officer has not culled out the relevant and complete facts so as to adjudicate the controversy in question. Certainly, it is the assessee who has put-forth the claim of loss and, therefore, the burden is on the assessee to substantiate the loss and also justify its allowability in the year under consideration. The observation of the Assessing Officer that the assessee failed to prove the shifting of wheat to Kandla Port under the custodianship of M/s Rishi Shipping Corporation, in our view, is devoid of factual support. Further more, the Assessing Officer proceeded on a wrong assumption that the wheat could not be exported by M/s PEC Ltd., as it was unfit for human consumption. Quite clearly, M/s PEC Ltd., has admitted of having exported the wheat and in any case, the wheat was to be exported as cattle feed, as clarified by the assessee that the wheat purchased was not meant for human consumption. Another plea of the Assessing Officer was that in the absence of FIR being lodged, the assessee could not be said to have evidenced the loss. On this aspect, we find that the objection of the Assessing Officer is quite superfluous. Merely Income-tax Appeal No.857 of 2010 -4- *** because the assessee has not chosen to pursue the matter by way of an FIR, cannot obviate the existence of loss, if any, suffered by the assessee. The dispute with M/s PEC Ltd., is quite evident and cannot be disregarded. We are only highlighting the aforesaid to point out that the Assessing Officer has failed to appreciate and cull out the entire material which has a bearing on the issue of the evidence of loss and its determination so as to consider the allowability of assessee's claim during the year under consideration. We also notice that on one hand, the Assessing Officer concludes that the assessee has failed to evidence the loss having been suffered and at the same timer infers that the loss cannot be said to be determined since the dispute was not settled in the period relating to the year under consideration. Seemingly, there is inconsistency in the inference drawn by the Assessing Officer. We may hasten to add here that in the aforesaid discussion we are not opining with regard to merits of the claim of the loss but are only trying to appreciate the plea set up by the assessee that the matter requires to be re-adjudicated by the Assessing Officer on the basis of the material on record. This plea of the appellant, in our view, is justified having regard to the material and evidence Income-tax Appeal No.857 of 2010 -5- *** on record and the manner in which the findings have been recorded by the Assessing Officer. It has also been pleaded by the appellant and to which there is no negation from the side of the revenue that subsequent to the receipt of the reply of the assessee dated 26.12.2008, no show cause notice appears to have been issued by the Assessing Officer intimating the points on the basis of which the claims of the assessee for loss was rejected by the Assessing Officer. In our view, had the Assessing Officer followed this approach, much of the issues would have been resolved as the assessee would have been allowed an opportunity to explain the situation so that the Assessing Officer could arrive at a considered judgment. Considering the entirety of circumstances, we are inclined to uphold the plea of the assessee to restore the matter back to the file of the Assessing Officer for adjudication afresh. Needless to mention, the burden shall be on the assessee to lead evidence and justification for the claim of impugned loss claimed in the export of wheat through M/s PEC Ltd. The Assessing Officer shall consider the material and evidence which the assessee would rely on and thereafter pass an order afresh on this aspect, in accordance with law. At the cost of repetition, we Income-tax Appeal No.857 of 2010 -6- *** may again clarify here that our decision to remand the matter for fresh adjudication has no reflection on the merits of the dispute and the Assessing Officer shall be free to adjudicate afresh on the basis of the material on record and in accordance with law uninfluenced by any of our observation in this order. As a result, with respect to ground no.2, the assessee succeeds for statistical purposes.” 3. We have heard learned counsel for the appellant. 4. The impugned order of the Tribunal merely requires further opportunity to be given to the assessee for the reasons extracted above. We are of the view that since reasons mentioned by the Tribunal for remand are plausible reasons, no interference is called for at this stage. The assessing officer will be at liberty to take a fresh decision in accordance with the order of the Tribunal. No substantial question of law arises. 5. The appeal is dismissed. (Adarsh Kumar Goel) Judge February 21, 2011 (Ajay Kumar Mittal) Pka Judge "