M/s.Jayachandran Muralee & Associates, Trivandrum V. The ITO, Trivandrum

ITA 131/COCH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2530 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 11-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: T M SREEDHARANSR
• Section: 147; 263

Judgement Text

1 ITA NO.131/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO.131/COCH/2013 (ASSESSMENT YEAR 2006-07) M/S JAYACHANDRAN MURALEE & ASSOCIATES VS THE ITO, W D.1(4) TC/16/552, SAAI PRABHA TRIVANDRUM-3 EDPAZHANJI, THIRUVANANTHAPURAM-14 PAN : AACFJ0446P (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI T.M. SREEDHARAN, SR.COUNSEL RESPONDENT BY : SMT. S VIJAYAPRABHA DATE OF HEARING : 26-06-2013 DATE OF PRONOUNCEMENT : 28-06-2013 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A), TRIVANDRUM DATED 21-12-2012 AND PERTAINS TO ASSESSM ENT YEARS 2006-07. 2. SHRI T.M. SREEDHARAN, THE LD.SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADMINISTRATIVE COMMISSIONER IN E XERCISE OF HIS POWERS U/S 263 OF THE I.T. ACT FOUND THAT NO TAX WAS DEDUC TED IN RESPECT OF CONSULTANCY CHARGES PAID BY THE ASSESSEE. THE ADMI NISTRATIVE COMMISSIONER REJECTING THE ARGUMENT OF THE ASSESSEE THAT WHAT WAS PAID 2 ITA NO.131/COCH/2013 WAS DUE TO AN ARRANGEMENT REACHED TO OVERCOME THE D ISPUTE BETWEEN THE PARTNERS OF THE FIRM AND THAT IT IS NOT CONSULTATIO N FEES / CHARGES, FOUND THAT WHAT WAS PAID BY THE ASSESSEE IS ONLY CONSULTANCY C HARGES, THEREFORE, PROVISIONS OF SECTION 40(A)(IA) WERE APPLICABLE APP LICABLE. ACCORDINGLY, THE ADMINISTRATIVE COMMISSIONER DIRECTED THE ASSESSING OFFICER TO REVISE THE ASSESSMENT ORDER BY APPLYING THE PROVISIONS OF SECT ION 40(A)(IA) OF THE ACT IN RESPECT OF PAYMENT OF RS.3,88,457. THEREFORE, A CCORDING TO THE LD.SENIOR COUNSEL, THE ASSESSING OFFICER CAN ONLY D ISALLOW ONLY A SUM OF RS.3,88,457 AND NOT ANY FURTHER SUM. HOWEVER, IN T HE CONSEQUENTIAL ASSESSMENT ORDER, THE ASSESSING OFFICER DISALLOWED THE ENTIRE PAYMENT MADE BY THE FIRM ON THE GROUND THAT THE ASSESSEE HA S NOT MAINTAINED ANY VOUCHER. ACCORDING TO THE LD.SENIOR COUNSEL, THE A SSESSING OFFICER HAD JURISDICTION ONLY BY VIRTUE OF ORDER PASSED BY THE ADMINISTRATIVE COMMISSIONER U/S 263 OF THE ACT. THEREFORE, THE AS SESSING OFFICER HAD TO CONFINE HIMSELF ONLY TO THE DIRECTIONS OF THE ADMNI NISTRATIVE COMMISSIONER AND HE CANNOT TRAVEL BEYOND THE ORDER OF THE ADMINI STRATIVE COMMISSIONER. THE LD.SENIOR COUNSEL PLACED HIS RELIANCE ON THE JU DGMENT OF THE GUJARAT HIGH COURT IN THE CASE OF CIT VS D.N. DOSANI (2006) 280 ITR 275 (GUJ) AND THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CA SE OF N SEETHARAMAN VS CIT (2008) 298 ITR 210 (MAD). 3 ITA NO.131/COCH/2013 3. ON THE CONTRARY, SMT. S VIJAYAPRABHA, THE LD.DR SUBMITTED THAT WHEN THE ASSESSMENT ORDER WAS SET ASIDE U/S 263 FOR RE-ASSESSMENT, THE ASSESSING OFFICER HAS ALL THE POWERS TO EXAMINE THE ISSUE AFRESH. PLACING RELIANCE ON THE JUDGMENT OF THE MADRAS HIGH COURT I N CIT VS D VEERAPPAN (1995) 215 ITR 533 (MAD) AND THE JUDGMENT OF GAUHAT I HIGH COURT IN CIT VS HIGHWAY CONSTRUCTION CO PVT LTD (1997) 223 ITR 4 98 (GAU), THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER CAN EXAMINE TH E MATTER AFRESH. THE LD.DR HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF T HE APEX COURT IN THE CASE OF CIT VS SUN ENGINEERING WORKS (P) LTD 198 IT R 297 (SC). ACCORDING TO THE LD.DR, THE GENUINENESS OF THE PAYM ENTS MADE BY THE ASSESSEE WAS NOT EXAMINED AT THE TIME OF ORIGINAL A SSESSMENT, THEREFORE, IT WAS EXAMINED AFRESH IN THE REVISED ASSESSMENT PR OCEEDINGS AND FOUND THAT SOME OTHER PAYMENTS WERE NOT SUPPORTED BY VOUC HERS. THEREFORE, ACCORDING TO THE LD.DR, THE ASSESSING OFFICER WAS J USTIFIED IN DISALLOWING THE ENTIRE PAYMENTS MADE BY THE ASSESSEE WITHOUT DEDUCT ING TAX AT SOURCE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSING OFFICER WAS EMPOWERED TO DO THE ASSESSMENT AFRESH BY VIRTUE OF THE ORDER PASSED BY THE ADMINISTRATIVE COMMISSIONER U/S 263 OF THE ACT. THEREFORE, THE JURISDICTION OF THE ASSESSING OFFICER CANNOT TRAVEL BEYOND THE DIRECTIONS GIVEN BY THE ADMINISTRATIVE COMMISSIONER. 4 ITA NO.131/COCH/2013 5. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF T HE MADRAS HIGH COURT IN THE CASE OF D VEERAPPAN (SUPRA) AND THE JU DGMENT OF THE GAUHATI HIGH COURT IN HIGHWAY CONSTRUCTION CO (P) LTD (SUPR A). IN THOSE CASES THE MATTER WAS REMANDED BACK TO THE ASSESSING OFFICER T O MAKE FRESH ASSESSMENTS WITHOUT ANY RESTRICTION. THEREFORE, THE ASSESSING OFFICER RE- EXAMINED THE MATTER AFRESH. IN THE CASE BEFORE US, THERE WAS A SPECIFIC DIRECTION GIVEN BY THE ADMINISTRATIVE COMMISSIONER TO REVISE THE ASSESSMENT BY APPLYING THE PROVISIONS OF SECTION 40 (A)(IA) OF THE ACT ONLY IN RESPECT OF PAYMENT OF RS.3,88,457. THEREFORE, T HE JURISDICTION OF THE ASSESSING OFFICER WAS RESTRICTED ONLY TO DISALLOW A SUM OF RS.3,88,457. HENCE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION T HAT THE ASSESSING OFFICER HAD NO JURISDICTION TO EXAMINE THE GENUINENESS OF A NY OTHER PAYMENTS THAN PAYMENT OF RS.3,88,457. PROVISIONS OF SECTION 40(A)(IA) WOULD COME INTO OPERATION PROVIDED THE PAYMENTS ARE GENUINE. THE VERY FACT THAT THE ADMINISTRATIVE COMMISSIONER HAS DIRECTED THE ASSESS ING OFFICER TO DISALLOW RS.3,88,457 U/S 40(A)(IA) SHOWS THAT THE ADMINISTRA TIVE COMMISSIONER WAS SATISFIED ABOUT THE GENUINENESS OF THE PAYMENT. A SIMILAR VIEW WAS TAKEN BY THE MADRAS HIGH COURT IN N SEETHARAMAN (SUPRA) A ND THE GUJARAT HIGH COURT IN THE CASE OF D.N. DOSANI (SUPRA). 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN THE CASE OF SUN ENGINEERING WORKS (P) LTD (SUPRA ). IN THE CASE BEFORE 5 ITA NO.131/COCH/2013 THE APEX COURT, THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT. THE ASSESSEE MADE FRESH CLAIM IN THE RE-ASSESSMENT PROC EEDINGS. IN THOSE CIRCUMSTANCES, THE APEX COURT FOUND THAT THE RE-ASS ESSMENT U/S 147 IS ONLY FOR THE BENEFIT OF THE REVENUE, THEREFORE, THE ASSESSEE CANNOT MAKE ANY NEW CLAIM. IT WAS ALSO FOUND THAT IN THE COURS E OF RE-ASSESSMENT PROCEEDINGS IF THE ASSESSING OFFICER FOUND THAT SOM E OTHER INCOME HAS ALSO BEEN ESCAPED FROM ASSESSMENT OTHER THAN THE ONE FOR WHICH THE ASSESSMENT WAS REOPENED, THEN SUCH OTHER INCOME SO FOUND TO HAVE BEEN ESCAPED CAN ALSO BE ASSESSED IN THE RE-ASSESSMENT P ROCEEDINGS. IN THAT CASE, THE ASSESSMENT PROCEEDINGS WERE REOPENED BY T HE ASSESSING OFFICER AND THE PROVISIONS OF SECTION 147 CLEARLY SAYS THAT AFTER REOPENING THE ASSESSMENT, IF THE ASSESSING OFFICER CAME TO KNOW O F ANY OTHER INCOME WHICH HAS BEEN ESCAPED ASSESSMENT, THEN HE CAN BRIN G THE SAME FOR TAXATION. HERE THERE IS NO CASE OF ANY DIRECTION B Y A SUPERIOR AUTHORITY; THEREFORE, THIS JUDGMENT OF THE APEX COURT IN THE C ASE OF SUN ENGINEERING WORKS (P) LTD (SUPRA) MAY NOT BE OF ANY ASSISTANCE TO THE REVENUE. IN THE CASE ON HAND, THERE IS A SPECIFIC DIRECTION BY THE REVISIONAL AUTHORITY U/S 263 OF THE ACT, THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS TO RESTRICT HIS POWERS ONLY T O THE DIRECTIONS GIVEN BY THE REVISIONAL AUTHORITY AND THAT THE ASSESSING OFF ICER CANNOT TRAVEL BEYOND THE DIRECTION OF THE ADMINISTRATIVE COMMISSIONER. 6 ITA NO.131/COCH/2013 7. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE CONTENTIONS OF THE LD.DR. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO CONFINE HIMSELF ONLY TO THE DIRECTIONS ISSUED BY THE ADMINISTRATIVE COMMISS IONER IN THE ORDER PASSED U/S 263 OF THE INCOME-TAX ACT, 1961. AS A R ESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH JUNE, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 28 TH JUNE, 2013 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH