P.Ramesh, Salem V. ITO, Salem

ITA 1271/CHNY/2014

• Counselvise Citation: 127121714 RSA 2014
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: T VASUDEVAN
• Keywords: Peak credit
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1271/MDS/2014 ( )( / ASSESSMENT YEAR : 2009-10 SHRI P. RAMESH, NO.100, AMMAPET MAIN ROAD, SALEM 636 001. PAN : ADYPR 3290 C V. THE COMMISSIONER OF INCOME TAX, NO.3, GANDHI ROAD, SALEM 3 (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. T. VASUDEVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SH. PATHLAVATH PEERYA, CIT 1 / 2% / DATE OF HEARING : 09.04.2015 3') / 2% / DATE OF PRONOUNCEMENT : 24.04.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX, SALEM, UNDER SECTIO N 263 OF THE INCOME-TAX ACT, 1961, DATED 30.03.2014 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2 I.T.A. NO.1271/MDS/2014 2. SH. T. VASUDEVAN, THE LD.COUNSEL FOR THE ASSESSE E, SUBMITTED THAT THE COMMISSIONER FOUND THAT THE ASSE SSING OFFICER TREATED THE ASSESSEE AS A TRADER AND NOT A COMMISSI ON AGENT. HOWEVER, WHILE COMPLETING THE ASSESSMENT, AN ADDITI ON OF MUCH LOWER AMOUNT OF ` 40,50,000/- WAS ADDED TOWARDS PEAK CREDIT. THE COMMISSIONER FOUND THAT THE PAYMENT TO THE EXTENT O F ` 12,79,000/- WAS MADE TO ONE SHRI VENKATESH. HOWEVER, THE ASSE SSING OFFICER HAS NOT EXAMINED THE NATURE OF PAYMENT WHILE COMPLE TING THE ASSESSMENT. IN THE ABSENCE OF ANY EXAMINATION BY T HE ASSESSING OFFICER, ACCORDING TO LD. COUNSEL, THE COMMISSIONER CAME TO A CONCLUSION THAT THERE WAS ERROR IN THE ORDER OF THE LOWER AUTHORITY. THE COMMISSIONER FOUND THAT THE ASSESSEE IS A COMMI SSION AGENT AND NOT A TRADER. HOWEVER, THE ADDITION MADE TOWAR DS PEAK CREDIT WAS CONFIRMED BY THE COMMISSIONER. 3. WHILE COMING TO THE PAYMENT OF ` 12,79,000/- MADE TO ONE SHRI VENKATESH, THE COMMISSIONER REMANDED THE MATTE R BACK TO THE ASSESSING OFFICER FOR RE-EXAMINATION. REFERRING TO THE ASSESSMENT ORDER, THE LD. COUNSEL SUBMITTED THAT THE ASSESSING OFFICER HAS EXAMINED THE ISSUE ELABORATELY. THE ASSESSING OFFI CER FURTHER FOUND THAT ON 6 TH JUNE, 2008, A PAYMENT OF ` 4,00,000/- WAS MADE. THE PEAK CREDIT ASSESSED WAS ` 40,50,000/-. THEREFORE, ACCORDING 3 I.T.A. NO.1271/MDS/2014 TO LD. COUNSEL, THE ASSESSING OFFICER EXAMINED THE ISSUE ELABORATELY ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. HENCE, THERE IS NO JUSTIFICATION FOR EXERCISING JURISDICTI ON UNDER SECTION 263 OF THE ACT. 4. ON THE CONTRARY, SH. PATHLAVATH PEERYA, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASS ESSING OFFICER FOUND CASH CREDIT AT SALEM BRANCH OF AXIS BANK TO T HE TUNE OF ` 40,50,000/-. THE PEAK CREDIT OF ` 40,50,000/- WAS ASSESSED TO TAX IN THE ABSENCE OF PROPER EXPLANATION BY THE ASSESSE E. WITH REGARD TO PAYMENT OF ` 12,79,000/- TO ONE SHRI VENKATESH, THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION EVEN THOUGH THERE WAS A REFERENCE ABOUT THIS PAYMENT AT PAGE 18 OF THE ASSE SSMENT ORDER. THEREFORE, THERE WAS AN ERROR WHICH IS PREJUDICIAL TO THE INTERESTS OF REVENUE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE A LSO CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE COMMISSIONER FOUND THAT THE ASSESSING OFFICER MADE AN ADDITION OF ` 40,50,000/- TOWARDS PEAK CREDIT IN RESPECT OF CASH CREDIT FOR THE PERIOD MAY, 2008 TO OCTOBER, 2008. COMING TO THE P AYMENT OF ` 12,79,000/- MADE TO ONE SHRI VENKATESH, THERE WAS N O ADDITION 4 I.T.A. NO.1271/MDS/2014 MADE BY THE ASSESSING OFFICER EVEN THOUGH THERE WAS A REFERENCE IN THE ASSESSMENT ORDER. THEREFORE, TO THAT EXTENT THERE WAS AN ERROR WHICH IS PREJUDICIAL TO THE INTERESTS OF REVE NUE. WITH REGARD TO PEAK CREDIT OF ` 40,50,000/-, THE ASSESSEE HAS ALREADY FILED AN APPEAL BEFORE THE APPELLATE COMMISSIONER. THE MATT ER IS PENDING BEFORE HIM. THEREFORE, IN RESPECT OF THE MKKKATTER , WHICH IS PENDING BEFORE APPELLATE COMMISSIONER, THE ADMINISTRATIVE C OMMISSIONER CANNOT INITIATE ANY PROCEEDINGS UNDER SECTION 263 O F THE ACT. THE ADMINISTRATIVE COMMISSIONER, IN EXERCISE OF HIS JUR ISDICTION UNDER SECTION 263 OF THE ACT, DIRECTED THE ASSESSING OFF ICER TO EXAMINE THE PAYMENT MADE BY THE ASSESSEE TO ONE SHRI VENKAT ESH TO THE EXTENT OF ` 12,79,000/- AND ALSO TO INITIATE PENALTY PROCEEDING S UNDER SECTION 271A OF THE ACT. IN RESPECT OF PENALTY PRO CEEDINGS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ADMI NISTRATIVE COMMISSIONER CANNOT ISSUE ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS. THIS VIEW OF THE TRIBUNAL IS FORTIFIE D BY THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN CIT V. DR. SURESH G. SHAH (2007) 289 ITR 110 (GUJ). A SIMILAR VIEW WAS ALSO TAKEN BY TH E HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT V. SUBHASH KUMAR JAIN 2 010(9) TMI 772. THEREFORE THE ORDER OF THE COMMISSIONER WITH REGARD TO DIRECTION TO INITIATE PROCEEDINGS UNDER SECTION 271 A IS SET ASIDE. 5 I.T.A. NO.1271/MDS/2014 HOWEVER, THE DIRECTION TO MAKE ENQUIRY WITH REGARD TO PAYMENT OF ` 12,79,000/- MADE TO ONE SHRI VENKATESH IS CONFIRMED . 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON 24 TH OF APRIL, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !'# ! ) ( . . . ) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 24 TH APRIL, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 /CIT, SALEM 5. 7: -2 /DR 6. ;( < /GF.