Perumal Guruswamy, CHENNAI V. ACIT, CHENNAI

ITA 1066/CHNY/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4317 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 22-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2015
• Court: TRIBUNAL
• Department Lawyers: ANJANEYALU
• Assessee Lawyers: N V BALAJI
• Keywords: Opportunity of being heard; Principle of natural justice; Commercial expediency; Revised return; Revenue expenditure
• Section: 143(3); 54F; 54; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.1066/MDS/2015 / ASSESSMENT YEAR : 2010-11 SHRI PERUMAL GURUSWAMY , OLD NO.193/ NEW NO.258 LINGI CHETTY STREET MANNADY, CHENNAI 600 001 VS. THE ASSTT. COM MISSIONER OF INCOME-TAX NON-CORPORATE CIRCLE 11 CHENNAI [PAN AACPH 1372 L] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MR.N.V.BALAJI,ADVOCATE /RESPONDENT BY : MR.ANJANEYALU, CIT D.R / DATE OF HEARING : 22 - 05 - 2017 / DATE OF PRONOUNCEMENT : 02 - 06 - 2017 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE ADMINISTRATIVE COMMISSIONER-8, CHENNAI, DATED 2 7.2.2015 AND PERTAINS TO ASSESSMENT YEAR 2010-11. ITA NO.1066/MDS./15 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS FOR O UR ADJUDICATION. 1 ) THE ORDERS OF THE LEARNED CIT IS AGAINST THE LAW, THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PRINCIPLES OF EQU ITY AND NATURAL JUSTICE. 2) THE LEARNED CIT ERRED IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 143 (3) OF THE ACT AND DIRECT ING THE ASSESSING OFFICER TO PASS APPROPRIATE ORDER AFTER I NVESTIGATION/ ENQUIRY. 3) THE LEARNED CIT ERRED IN HOLDING THAT THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 143 (3) OF THE ACT IS BOTH ER RONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CI T FAILED TO NOTE THAT THE ORDER IS NEITHER ERRONEOUS FOR PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE HE DID NOT JURISDICTIO N TO REVISE THE ASSESSMENT UNDER SECTION 263 OF THE ACT. 4) THE LEARNED CIT ERRED IN HOLDING THAT NO APPLICA TION, NO ENQUIRY WHATSOEVER WAS CARRIED OUT BY THE ASSESSING OFFICER . THE CIT FAILED TO NOTE THAT BOTH THE ISSUES WERE CONSIDERED BY THE ASSESSING OFFICER BY SEEKING DETAILS AND CLARIFICAT ION FROM THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS. 5) THE LEARNED CIT ERRED IN SUBSTITUTING HIS OPINIO N ON ALLOWANCE OF CLAIMS FOR DEDUCTION WITH THAT OF ASSESSING OFFICER , WHO ALLOWED THE CLAIMS AFTER DETAILED ENQUIRY. IN VIEW THEREOF THE REVISION IS WITHOUT JURISDICTION. ITA NO.1066/MDS./15 :- 3 -: 6) THE LEARNED CIT ERRED IN HOLDING THAT THE LOSS O F ADVANCE OF ` 5,00,000/- SUFFERED BY THE ASSESSEE WHICH WAS ALLOW ED BY THE ASSESSING OFFICER AFTER EXAMINATION OF FACTS AND CI RCUMSTANCES IS A CAPITAL LOSS. 7) THE LEARNED CIT FAILED TO APPRECIATE THAT ON ACC OUNT OF COMMERCIAL EXPEDIENCY THE ASSESSEE ACCEPT THE LOSS OF ADVANCE AND IN VIEW THEREOF THE SAME IS REVENUE IN NATURE. FURTHER THE SAID SUBMISSION OF THE ASSESSEE WAS EXAMINED AND AC CEPTED BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT U NDER SECTION 143 (3) OF THE ACT. 8) THE LEARNED CIT ERRED IN HOLDING THAT THE ASSESS EES CLAIM UNDER SECTION 54 IS NOT IN ORDER. THE CIT FAILED TO NOTE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE BROUGHT TO THE ATTENTION OF THE ASSESSING OFFICER SECTION 54F OF THE ACT BEI NG THE CORRECT PROVISION UNDER WHICH THE CLAIM IS ALLOWABLE AND AF TER DUE CONSIDERATION THAT THE ASSESSEE HAD FULFILLED THE C ONDITIONS LAID DOWN UNDER THAT SECTION, THE DEDUCTION WAS ALLOWED. 9) THE LEARNED CIT ERRED IN RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS GOETZE INDIA LT D (284 ITR 329). HE FAILED TO NOTE THAT RATIO THE SAID DECISIO N DOES NOT APPLY TO THE FACTS OF THE CASE OF THE ASSESSEE. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN I NDIVIDUAL, CARRYING ON THE BUSINESS OF ROAD TRANSPORT AS A PROPRIETARY CONCERN UNDER THE NAME ITA NO.1066/MDS./15 :- 4 -: AND STYLE M/S AIM TRANSPORT, AND FILED HIS RETURNED AN INCOME OF ` 21,70,955/- FOR THE ASSESSMENT YEAR 2010-11 AFTER C LAIMING DEDUCTION U/S.54 OF THE ACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT VIDE HIS ORDER DATED 01.0 3.2013, DETERMINING THE TOTAL INCOME AT ` 26,60,160/-. IN COMPLETING THE ASSESSMENT, AMONGST OTHER CLAIMS, THE ASSESSING OFFICER HAD ALLOWED THE CLAIM OF THE ASSESSEE FOR THE DEDUCTION OF FORFEITED AMOUNT OF ` 5,00,000/-, PAID AS ADVANCE FOR PURCHASE OF VOLVO BUS AND ALSO ALLOWED DEDUCTION UNDER SECT ION 54F OF THE ACT, IN RESPECT OF REINVESTMENT OF CAPITAL GAINS ON SALE OF LAND, INTO RESIDENTIAL HOUSE. 3.1 THE COMMISSIONER OF INCOME TAX, CHENNAI ISSUED NOTICE DATED 31.12.2014 U/S 263 OF THE ACT, CONSIDERED THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF THE REVENUE, ON THE REASON THAT (I) THE FORFEITED AMOUNT PAID AS ADV ANCE FOR PURCHASE OF ASSET IS CAPITAL IN NATURE AND CLAIMED AS REVENUE EXPENDI TURE BY THE ASSESSEE AND (II) THE CLAIM MADE BY THE ASSESSEE WAS UNDER SECT ION 54 OF THE ACT AND DEDUCTION FOR THE SAME IS ALLOWABLE ONLY ON SALE OF HOUSE PROPERTY AND DEDUCTION FOR THE SAME IS ALLOWABLE ONLY SALE OF HO USE PROPERTY, BUT THE ASSESSEE HAD SOLD LAND, TO WHICH SECTION 54 OF THE ACT DOES NOT APPLY. BESIDES IT, THERE WAS NO REVISED RETURN OF INCOME F ILED BY THE ASSESSEE. THEREFORE, THE LD. CIT VIDE HIS ORDER DATED 27.02.2 015 U/S.263 OF THE ACT, HAD SET ASIDE THE ORDER OF THE AO, AND DIRECTED TH E AO TO PASS AN APPROPRIATE ORDER AFTER INVESTIGATING THE ABOVE SAI D REASONS AND AFFORDING ITA NO.1066/MDS./15 :- 5 -: REASONABLE OPPORTUNITY OF BEING HEARD. AGGRIEVED W ITH THE ORDER OF LD.CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, IT IS AN ADMITTED FACT THAT T HERE WAS AN ENQUIRY BY THE AO AT THE TIME OF ASSESSMENT ON THE ISSUE OF C LAIM OF LOSS OF RS.5 LAKHS AS BUSINESS LOSS, WHICH IS ON ACCOUNT OF FORF EITED ADVANCE PAID TO THE VOLVO BUS AND ALSO THERE IS AN ENQUIRY BY THE A O WITH REGARD TO CAPITAL GAINS. THE ASSESSEE FURNISHED THE DETAILS T O THE AO VIDE ITS LETTER DATED 18.12.2012 AND ALSO VIDE LETTER DATED 26.12.2012. THE ASSESSEE IN HIS LETTER STATED THAT THE ASSESSEE HAD BOOKED A VOLVO WITH A SPECIFIC DESIGN WITH VOLVO INDIA PRIVATE LTD., ON 21.12.2008 BY PAYING ` 5 LAKHS AS TOKEN ADVANCE BY CHEQUE NO.036524 DATED 18.11.2008. THE VOLVO INDIA MANUFACTURED THE VOLVO AND BILLED THE SAME ON ASSESSEE FOR VOLVO FM 340 X 4 TRACTOR. BUT THE SAID VOLVO WAS NOT ACCORDING TO ASSESSEES REQUIREMENT AND SPE CIFICATION AND THE ASSESSEE HAS ASKED THE M/S.VOLVO INDIA PVT LTD., T O MANUFACTURE ACCORDING TO THEIR REQUIREMENT AND NOT TO REGISTER THIS VEHICLE IN ASSESSEES NAME. THE ASSESSEE HAD WRITTEN NUMBER O F LETTERS AND E- MAILS WITH THEM BUT NOTHING TRUTHFUL CAME OUT. BUT FINALLY VOLVO AGREED TO MANUFACTURE OTHER TWO VEHICLES WHICH THE ASSESSE E BOUGHT DURING THE YEAR ON A CONDITION THAT THIS AMOUNT WILL BE FO RFEITED AS IT WILL BE A ITA NO.1066/MDS./15 :- 6 -: LOSS ON SALE TO OTHER BUYER. THE ASSESSEE WAS HAVI NG NO ALTERNATE RATHER THAN ACCEPTING THE TERM OF M/S.VOLVO INDIA P VT LTD. BEING A LOSS TO ASSESSEE, THE AMOUNT WAS DEBITED TO VOLVO EXPEND ITURE ACCOUNT. THE AO AFTER SATISFYING ABOUT THE CLAIM OF ASSESSEE , ALLOWED THE CLAIM OF ASSESSEE. 5. REGARDING THE CLAIM FOR DEDUCTION U/S.54 OF THE ACT, THE DEDUCTION U/S.54 OF THE ACT CLAIMED BY THE ASSESSEE WAS ENQUIRED BY THE LD. ASSESSING OFFICER. THE ASSESSEE CLARIFIED BEFORE THE LD. ASSESSING OFFICER THAT THE ASSESSEE SOLD THE LAND T O MR.B.SELVAMANI, REGISTERED ON 17.08.2009 AND RECEIVED A CASH AND UT ILIZED THE CONSIDERATION OF SALE OF PROPERTY FOR PURCHASE OF A RESIDENTIAL HOUSE WITH THE DUE DATE AND THE SAID CAPITAL GAINS IS EXE MPTED U/S.54F VIDE HIS LETTER DATED 26.12.2012. THE LD. ASSESSING OFF ICER, AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, THE AO A LLOWED THE CLAIM OF ASSESSEE U/S.54F OF THE ACT INSTEAD OF SEC.54 AS OR IGINALLY CLAIMED. 5.1 NOW, ON THIS ISSUE LD.CIT WANTS FURTHER ENQUIR Y FROM THE END OF THE LD. ASSESSING OFFICER. IN OUR OPINION, THE AO HAS ACCEPTED THE CLAIM OF ASSESSEE IN RESPECT OF LOSS ON ACCOUNT OF FORFEITED AMOUNT OF ` 5 LAKHS, ONLY ON THE BASIS OF SUBMISSIONS OF ASSESS EE WITHOUT CONDUCTING FURTHER ENQUIRY WITH REGARD TO THE GENUI NENESS AND NATURE ITA NO.1066/MDS./15 :- 7 -: OF THE LOSS. THE AO HAD NOT GATHERED ANY INFORMATI ON REGARDING THE NATURE OF LOSS WHETHER CAPITAL OR REVENUE AND THE E VIDENCE BROUGHT ON RECORD DOES NOT SUGGEST THE NATURE OF LOSS CLAIMED BY THE ASSESSEE. IT IS INCUMBENT ON THE PART OF THE AO TO COME TO AN IN DEPENDENT CONCLUSION THAT THE LOSS CLAIMED BY THE ASSESSEE IS REALLY A REVENUE LOSS OR A CAPITAL LOSS. THE AO ABSOLUTELY CLOSED H IS EYES FOR THE REASON BEST KNOWN TO HIM AND ACCEPTED THE SUBMISSIONS OF A SSESSEE AS IT IS MADE BY THE ASSESSEE. PERUSING THE SUBMISSIONS OF ASSESSEE, IT DOES NOT PROVE THE NATURE OF LOSS AS REVENUE EXPENDITURE . BEING SO, IT IS TO BE EXAMINED BY THE AO. AT THIS POINT, WE MAKE IT C LEAR THAT THE LD. CIT IN HIS ORDER CLEARLY MENTIONED THAT THERE IS NO PROPER ENQUIRY MADE BY THE AO AND HE IS REQUIRED TO CAUSE FURTHER ENQUIRY REGARDING THIS EXPENDITURE AS THE AO STOPPED THE ENQUIRY AFTE R RECEIVING THE SUBMISSIONS FROM THE ASSESSEE. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY ON THE FINDINGS OF THE LD.CIT WITH REFERE NCE TO THE CLAIM OF LOSS OF ADVANCE OF ` 5 LAKHS PAID TO M/S.VOLVO INDIA PVT LTD. 5.2 HOWEVER, OUR OPINION ON ALLOWABILITY OF DEDUCT ION U/S.54F OF THE ACT IS AN ALTERNATIVE CLAIM OF ASSESSEE AND NOT A FRESH CLAIM SO AS TO FILE THE REVISED RETURN. THE ASSESSEE HAS ALREAD Y FILED THE REVISED RETURN AND HAS MADE A CLAIM IN ITS RETURN UNDER WRO NG SECTION. AT THE TIME OF ASSESSMENT, THE ASSESSEE CLARIFIED THAT CL AIM OF DEDUCTION ITA NO.1066/MDS./15 :- 8 -: U/S.54 OF THE ACT IS WRONG AND IT SHOULD BE CLAIMED U/S.54F OF THE ACT AS THE ASSESSEE HAS USED THE CAPITAL GAINS OF SALE OF PROPERTY FOR PURCHASE OF RESIDENTIAL HOUSE WITHIN A DUE DATE. H ENCE, MENTIONING OF THE WRONG SECTION IN THE RETURN OF INCOME WHILE CLA IMING DEDUCTION CANNOT BE CONSIDERED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE ORDER OF LD.CIT IN INVOKING THE PROVISIONS OF THE SECTION 263 OF THE ACT ON THI S ISSUE. ACCORDINGLY, THE FINDINGS OF THE LD.CIT TO MAKE PROPER ENQUIRY B Y THE AO IS VACATED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED ON 02 ND JUNE, 2017, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 02 ND JUNE, 2017. K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF