ITO, CHENNAI V. M/s. Metro Steel Rolling Mills Pvt Ltd., CHENNAI

ITA 1007/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58069 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2012
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 21-03-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 06-06-2011
• Court: TRIBUNAL
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENN AI BEFORE SHRI ABARAHAM P.GEORGE ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER .. ITA NO.1007/MDS./2011 ASSESSMENT YEAR:2003-04 INCOME TAX OFFICER, COMPANY WARD IV(1), CHENNAI 600 034. VS. M/S.METRO STEEL ROLLING MILLS PVT LTD., 18/7,KESAVA IYER STREET, CHENNAI -3. PAN AAACM 5238 R (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI YOGESH KAMAT JCIT ASSESSEE BY : NONE DATE OF HEARING : 21.03.12 DATE OF PRONOUNCEMENT : 21. 03.12 O R D E R PER ABARAHAM P GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY REVENUE AGAINST THE ORDE R DATED 17.02.2011 OF COMMISSIONER OF INCOME TAX (A) -V, CH ENNAI, IT HAS RAISED FOUR GROUNDS OF WHICH GROUNDS NOS.1 & 4 ARE GENERAL IN NATURE NEEDING NO ADJUDICATION. GRIEVA NCE OF THE REVENUE IN ITS GROUND NO.2 IS THAT THE COMMISSIONER OF INCOME TAX(A) DIRECTED THE ASSESSING OFFICER TO A LLOW THE ITA.1007 /MDS/11 2 CLAIM OF INTEREST PAYMENT TO LOAN CREDITORS OF ` 12,20,311/-. AS PER THE REVENUE, ASSESSEE DID NOT RESPOND TO ASSESS ING OFFICERS LETTER SEEKING THE DETAILS OF THE LOAN CR EDITORS AND PROVE THE GENUINENESS OF THE TRANSACTIONS. FURTHER , REVENUE IS ALSO AGGRIEVED THAT THERE WAS VIOLATION OF RULE -46A OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULE.). AS P ER THE REVENUE, BANK STATEMENTS PRODUCED BEFORE THE COMMIS SIONER OF INCOME TAX(A) WERE NEVER MADE AVAILABLE BEFORE T HE ASSESSING OFFICER. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD DURIN G THE COURSE OF THE RELEVANT PREVIOUS YEAR CLAIMED TO HAV E TAKEN LOANS OF ` 2,09,78,440/- FROM FIVE PARTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE FILED CONFIRMATION S FROM THESE PERSONS. ASSESSING OFFICER REQUIRED THE ASSES SEE TO PRODUCE THE CONCERNED PERSONS FOR VERIFYING THE GEN UINENESS OF THE CREDITS. OTHER REQUIREMENTS OF THE ASSESSIN G OFFICER WERE AS UNDER:- 1. PROOF OF IDENTITY AND PROOF OF RESIDENCE. 2. DETAILS OF BANK ACCOUNTS WITH STATEMENT OF ACCOUNTS /PASS BOOKS, SHOWING ENTRIES PERTAINING TO THE TRANSACTIONS, INCLUDING THE FIRST TRANSACTION. ITA.1007 /MDS/11 3 3. DETAILS OF SOURCES OF INCOME. 4. COPIES OF RETURNS OF INCOME WITH COMPLETE FINANC IAL STATEMENTS INCLUDING CAPITAL ACCOUNT, SCHEDULES TO PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. 5. COPIES OF LOAN AGREEMENTS /PROMOTES ETC. ALONG WITH THE ORIGINALS. 6. ANY OTHER PROOF IN SUPPORT OF THE GENUINENESS OF THEIR TRANSACTION WITH THE ASSESSEE COMPANY. AS PER ASSESSING OFFICER, DESPITE VARIOUS OPPORTUN ITIES, ASSESSEE COULD NOT FURNISH THESE DETAILS. ON SUCH LOANS, ASSESSEE HAD CLAIMED INTEREST PAYMENTS OF ` 12,20,311/-. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFI CER MADE AN ADDITION OF ` 12,20,311/- DISALLOWING THE CLAIM OF INTEREST. 3. BEFORE THE COMMISSIONER OF INCOME TAX(A), AR GUMENT OF THE ASSESSEE WAS THAT CONFIRMATIONS WERE PRODUCE D BEFORE THE ASSESSING OFFICER FROM ALL THE PARTIES AND SIN CE IT DID NOT TALLY WITH THE BALANCE AS PER THE BOOKS OF ACCOUNTS , IT HAD EVEN FILED RECONCILIATION FOR THE DIFFERENCES. ASS ESSEE HAD EXPLAINED THAT SUCH DIFFERENCES WERE ON ACCOUNT OF CHEQUES ISSUED, WHICH WERE AFTER DEDUCTION OF TDS. ACCORDI NG TO THE ASSESSEE, SUCH TDS WERE ACCOUNTED ONLY AFTER THE EN D OF THE ITA.1007 /MDS/11 4 RELEVANT PREVIOUS YEAR. FURTHER THE ARGUMENT OF TH E ASSESSEE WAS THAT THE LOAN CREDIORS WERE ASSESSED TO TAX, WE RE HAVING PAN AND THE ENTIRE TRANSACTIONS WERE CARRIED OUT T HROUGH ACCOUNT PAYEE CHEQUES. COPY OF THE BANK STATEMENTS WERE ALSO PRODUCED BY THE ASSESSEE IN SUPPORT. THE LD. COMMISSIONER OF INCOME TAX(A) WAS OF THE OPINION TH AT THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF THE CREDIT ORS AS ALSO PROVED GENUINENESS OF THE TRANSACTIONS. HE THEREFOR E, DELETED THE DISALLOWANCE OF INTEREST. 4. NOW BEFORE US, LD. DR STRONGLY ASSAILING THE OR DER OF THE COMMISSIONER OF INCOME TAX(A), SUBMITTED THAT T HE ASSESSEE COULD NOT PROVE THE CREDITS AND SIMPLY BAS ED ON THE BANK STATEMENTS, THE COMMISSIONER OF INCOME TAX(A) HAD ALLOWED THE CLAIM. AS PER LD. DR, SUCH BANK STATEM ENTS WERE NEVER PRODUCED BEFORE THE ASSESSING OFFICER AND THE CIT(A) DID NOT GIVE AN OPPORTUNITY TO THE ASSESSING OFFICE R FOR VERIFYING SUCH BANK STATEMENTS AND CORRECTNESS OF T HE ENTRIES THEREIN. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 5. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND HEARD THE CONTENTIONS OF THE LD. DR. IF THE CREDITORS ITA.1007 /MDS/11 5 WERE NOT GENUINE AND IF THE ASSESSING OFFICER CONSI DERED THE CREDITS TO BE NOT SUFFICIENTLY PROVED, THE FIRST TH ING HE SHOULD HAVE DONE WAS TO MAKE AN ADDITION FOR SUCH CREDITS. HOWEVER, IN THE ASSESSMENT ORDER, THE ONLY ADDITION S MADE TO THE RETURNED INCOME WAS THE INTEREST PAID TO LOAN CREDITORS AND NOTHING ELSE. IN OTHER WORDS, ASSESSING OFFICER FOUND THE CONFIRMATIONS, OBTAINED BY HIM DIRECTLY FROM THE CR EDITORS TO BE GENUINE AND ACCEPTABLE INSOFAR AS THE CREDITS WERE CONCERNED. ADMITTEDLY ALL THE LOAN CREDITORS WERE ASSESSES WHO WERE HAVING PAN. HAVING ACCEPTED THE CREDITS AS GENUINE, TO DISALLOW THE CLAIM OF INTEREST ON SUCH CREDITS WAS NOT JUSTIFIED. EVEN IF WE IGNORE THE BANK STATEMENT S, WHICH WERE NOT PRODUCED BY THE ASSESSEE BEFORE THE ASSESS ING OFFICER, IN OUR OPINION, ASSESSING OFFICER HAVING A CCEPTED THE LOAN CREDITS OUGHT NOT HAVE DISALLOWED THE CLAIM O F INTEREST ALONE, ESPECIALLY SO, SINCE THE TRANSACTIONS WERE A LL BY ACCOUNT PAYEE CHEQUES. IN OUR OPINION IN SUCH CIRCU MSTANCES COMMISSIONER OF INCOME TAX(A) WAS JUSTIFIED IN DELE TING THE DISALLOWANCE OF INTEREST. NO INTERFERENCE IS CALLED . GROUND NO.2 OF REVENUE IS DISMISSED. ITA.1007 /MDS/11 6 6. VIDE GROUND NO.3, GRIEVANCE OF THE REVENUE IS T HAT THE COMMISSIONER OF INCOME TAX(A) DIRECTED THE ASSESSIN G OFFICER TO GIVE CREDIT FOR TDS PF ` 2,12,381/-. AS PER THE REVENUE, THE TDS CERTIFICATE WAS IN THE NAME OF ONE M/S.GERMANISCHER LLOYD INDUSTRIAL SERVICES WHEREAS PAYMENTS WERE RECEIVED BY THE ASSESSEE FROM ONE M/S .AZTEC AUTO LTD. 7. SHORT FACTS APROPOS ARE THAT AGAINST A TDS CRED IT OF ` 2,12,381/- RECEIVED FROM M/S.AZTEC AUTO LTD., ASSE SSEE HAD FILED ONLY A DUPLICATE COPY OF THE TDS CERTIFICATE. ASSESSING OFFICER ADDRESSED A LETTER TO M/S.AZTEC AUTO LTD. R EQUIRING CONFIRMATION OF THE DEDUCTION OF TAX AT SOURCE. AS PER THE ASSESSING OFFICER, THE SAID COMPANY FURNISHED A COP Y OF TDS RETURN ACKNOWLEDGEMENT AND IN SUCH ACKNOWLEDGEMENT, THE REMITTERS NAME WAS MENTIONED AS M/S.GERMANISCHER L LOYD INDUSTRIAL SERVICES. NOTING THAT THE TAN NUMBER WAS ALSO DIFFERENT, ASSESSING OFFICER REFUSED TO GIVE CREDIT FOR THE TDS AMOUNT OF ` 2,12,381/-. 8. IN ITS APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A), ARGUMENT OF THE ASSESSEE WAS THAT TDS WAS DEDUCTED BY THE ITA.1007 /MDS/11 7 PAYER AND ASSESSEE HAD PRODUCED THE TDS CERTIFICATE . JUST BECAUSE WRONG TAN NUMBER WAS MENTIONED, CREDIT OUGH T NOT HAVE BEEN DENIED. COMMISSIONER OF INCOME TAX(A) WA S APPRECIATIVE OF THIS CONTENTION AND DIRECTED THE AS SESSING OFFICER TO VERIFY AGAIN AND ALLOW CREDIT. 8. NOW BEFORE US, LD. DR ARGUED THAT THE TAN OF T HE PAYER AND THE REMITTER WERE DIFFERENT AND ASSESSEE COULD NOT BE GIVEN CREDIT FOR THE SAME. 9. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND HEARD THE CONTENTIONS OF THE LD. DR. UNDISPUTE DLY, THE PAYMENT WAS EFFECTED BY M/S.AZTECH AUTO LTD. TO THE ASSESSEE BUT THE TDS CERTIFICATE PRODUCED BY THE A SSESSEE SHOWED THE NAME ONE M/S.GERMANISCHER LLOYD INDUSTRI AL SERVICES. AT THE SAME TIME, THE SAID TDS RETURN ACKNOWLEDGEMENT SHOWING THE NAME OF M/S. GERMANISCH ER LLOYD INDUSTRIAL SERVICES WAS FORWARDED TO THE ASSE SSING OFFICER BY M/S.AZGTECH AUTO LTD., IN REPLY TO ASSE SSING OFFICERS LETTER DATED 31.08.05. WE ARE THEREFORE, OF THE OPINION THAT THE MATTER REQUIRES A FRESH LOOK BY TH E ASSESSING OFFICER. THERE COULD HAVE BEEN SOME DISCREPANCY IN THE ITA.1007 /MDS/11 8 NAME OR IN THE TAN AND IF THIS WAS PROPERLY EXPLAI NED, THE CREDIT OUGHT HAVE BEEN GIVEN TO THE ASSESSEE. THE COMMISSIONER OF INCOME TAX(A) HAD DIRECTED ALLOWAN CE OF TDS, SUBJECT TO VERIFICATION BY THE ASSESSING OFFIC ER. WE ARE THEREFORE OF THE OPINION THAT THE ASSESSING OFFICER HAS TO TAKE A FRESH LOOK ON THIS ISSUE AND AFTER VERIFYING THE NECESSARY RECORDS AND AFTER GIVING AN OPPORTUNITY TO THE ASSE SSEE, ALLOW CREDIT FOR TDS IF THE AMOUNT HAS BEEN CREDITED TO THE GOVERNMENT AND IN SUCH TDS, THE BENEFICIARY IS ASS ESSEE. IN THE RESULT, WE SET ASIDE THE ORDERS TO THE AUTHO RITIES BELOW AND REMIT THIS ISSUE BACK TO THE ASSESSING OFFICER FOR CONSIDERATION OF FRESH. GROUND NO.3 OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 21 ST MARCH, 2012. SD/- SD/- ( VIKAS AWASTHY ) (ABRAHAM P. GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 21 ST MARCH, 2012. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA.1007 /MDS/11 9