Seyad Cotton Mills Ltd., Tirunelveli V. ITO, Tirunelveli

ITA 1260/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8099 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2016
• Court: TRIBUNAL
• Assessee Lawyers: T VASUDEVAN MR SHIVA SRINIVA
• Section: 263; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1260/MDS./2016 / ASSESSMENT YEAR : 2011-12 M/S.SEYAD COTTON MILLS LTD., HOUSE OF SEYAD, NORTH BYE PASS ROAD VANNARPETTAI, TIRUNELVELI 627 003. VS. INCOME TAX OFFICER, WARD NO.I(4), TIRUNELVELI. [PAN AADCS 9550 M ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : MR.T.VASUDEVAN,ADVOCATE /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT, D.R / DATE OF HEARING : 03 - 1 0 - 201 6 !' / DATE OF PRONOUNCEMENT : 16 - 11 - 2016 ' / O R D E R PER BENCH: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX, MADURAI-2 DATE D 07.03.2016 PERTAINING TO ASSESSMENT YEAR 2011-12. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WITH REGARD TO INVOKING THE PROVISIONS OF THE SECTION 263 OF THE A CT, THEREBY DIRECTING ITA NO. 1260/MDS./2016 :- 2 -: THE AO TO ENQUIRE THE FIXED DEPOSITS FROM VARIOUS P ERSONS AND THE LOANS RECEIVED FROM THREE DIRECTORS, THAT HAVE BEEN CONSIDERED AND CONCLUDED IN THE PROCEEDINGS U/S.143(3) OF THE ACT. 3. ACCORDING TO COMMISSIONER OF INCOME TAX, MADURA I, THE AO HAD NOT CONSIDERED THE FIXED DEPOSITS, WHICH WERE NOT C ONFIRMED BY THE PARTIES, WHO HAD MADE FIXED DEPOSITS. HE FURTHER O BSERVED THAT THOUGH FIXED DEPOSITS TO THE TUNE OF ` 2,70,000/- WAS NOT CONFIRMED BY THE PARTIES, THE AO DISALLOWED ONLY ` 60,000/- TO THE PRINCIPAL AMOUNT OF ` 70,641/- TOWARDS INTEREST AMOUNT. ACCORDING TO LD. CIT, THE ENTIRE PRINCIPAL AMOUNT OF ` 2,70,000/- AND INTEREST AMOUNT OF ` 10,641/- TO BE MADE AS AN ADDITION U/S.68 OF THE AC T. SIMILARLY, THERE WERE UNSECURED LOANS FROM THREE DIRECTORS AT ` 2,04,67,507/-, 2,04,67,507/- & ` 1,46,65,753/-. HOWEVER, THE AO HAD NOT ENQUIRED ABOUT THESE CREDITS AT THE TIME OF ASSESSMENT. HENC E, THE CIT SET ASIDE THE ASSESSMENT AND DIRECTED THE AO TO PASS FR ESH ORDER AFTER MAKING NECESSARY ENQUIRY. AGAINST THIS, THE ASSESS EE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THERE IS A LACK OF ENQUIRY BY THE AO AT THE TIME OF ASSESSMENT, WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE, AS SUCH CIT IS JUSTIFIED IN INVOKING THE JURISDICTION U/S.2 63 OF THE ACT. THE A.R RELIED ON THE JUDGEMENT OF IN THE CASE OF CIT VS. F INE JEWELLERY (INDIA) ITA NO. 1260/MDS./2016 :- 3 -: LTD.,(372 ITR 303(BOM.) ) WHEREIN HELD THAT IF QUER Y IS RAISED DURING ASSESSMENT PROCEEDINGS AND RESPONDED TO BY ASSESSE E, MERE FACT THAT IT IS NOT DEALT WITHIN AO WOULD NOT LEAD TO A CONCLUSION THAT NO MIND HAD BEEN APPLIED TO IT. FURTHER HE RELIED ON T HE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. L& T INFASTRUCTURE DEVELOPMENT PROJECTS LTD. REPORTED IN (2013) 357 IT R 0763(MAD.) WHEREIN HELD THAT UNLESS THE BASIS OF REVISION SATI SFYING THE TWIN CONDITIONS, NAMELY, ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE, ARE POINTED OUT BY THE CIT IN INVOKING SEC TION 263 OF THE INCOME TAX ACT, THE ASSESSEE IS ENTITLED TO RAISE T HE QUESTION OF JURISDICTION. 4.1 IN OUR OPINION, THESE JUDGEMENTS HAVE NO APPLI CATION TO THE FACTS OF THE PRESENT CASE ON HAND. SINCE THE AO, T HOUGH MADE ENQUIRY TO THE FIXED DEPOSITS, PARTIES NEITHER CONFIRMED TH E DEPOSITS NOR RECEIPT OF INTEREST AND THE AO INSTEAD OF SUSTAINING ADDITI ON OF ` 2,70,000/- TOWARDS FOXED DEPOSIT AND ` 10,641/- TOWARDS INTEREST PAYMENT ON FIXED DEPOSIT, HE MADE AN ADDITION ONLY ` 70,641/- ON ADHOC BASIS, WHICH IS NOT CORRECT. AS SUCH CIT IS JUSTIFIED IN I NVOKING THE JURISDICTION U/S 263 OF THE ACT AND GIVE DIRECTION TO THE AO TO PASS ORDER ENHANCING OR MODIFYING THE ASSESSMENT. WE DO NOT FI ND ANY INFIRMITY ON THIS ISSUE. FURTHER, THERE IS NO ENQUIRY REGARD ING THE LOAN CREDIT AVAILED FROM THE THREE DIRECTORS AND THAT THE ORDER OF AO IS SILENT ITA NO. 1260/MDS./2016 :- 4 -: ABOUT HIS ISSUE. THERE IS NO QUESTIONNAIRE ISSUED B Y THE AO AT THE TIME OF FRAMING ASSESSMENT U/S.143(3) OF THE ACT. SINCE THERE IS NO ENQUIRY FROM THE END OF THE AO REGARDING THIS ISSUE, THE CI T IS JUSTIFIED IN DIRECTING THE AO TO MAKE NECESSARY ENQUIRY AND FOR FRESH ASSESSMENT IN ACCORDANCE WITH LAW. ACCORDINGLY, WE CONFIRM TH E ORDER OF THE LD.CIT(A) PASSED U/S.263 OF THE ACT ON BOTH ISSUES AND DIRECT THE AO TO PASS FRESH ORDER AFTER CONSIDERING THE ISSUE RAI SED BY THE CIT IN HIS ORDER PASSED U/S.263 OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON WEDNESDAY, 16 TH NOVEMBER, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 16 TH NOVEMBER, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF