S.Radhakrishnan, CHENNAI V. DCIT, Cuddalore

ITA 1357/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95832 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR U ANJENEYULU
• Keywords: Principle of natural justice
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ , % ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO . 1357/MDS/2014 ( / ASSESSMENT YEAR: 2009-10) MR. S.RADHAKRISHNAN, 33/3, A-1, MAILAM ROAD, INDIRA NAGAR, TINDIVANAM-604 202. VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-II, CUDDALORE. PAN:AIDPR4858G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. PHILIP GEORGE, ADVOCATE /RESPONDENT BY : DR.U.ANJENEYULU, CIT /DATE OF HEARING : 17 TH JUNE, 2015 /DATE OF PRONOUNCEMENT : 12 TH AUGUST, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE ORDER OF THE COMMISSIONER OF INCOME TAX, PUDUCHERRY DATED 28.02.2014 PASSED UNDER SECTION 263 OF THE ACT IN I NVOKING PROVISIONS OF SECTION 263 AND HOLDING THAT ASSESSME NT ORDER PASSED UNDER SECTION 143(3) DATED 31.12.2011 FOR TH E ASSESSMENT YEAR 2009-10 IS ERRONEOUS AND PREJUDICIA L TO THE INTERESTS OF THE REVENUE AND SETTING ASIDE THE SAME WITH A DIRECTION TO DO THE ASSESSMENT DE NOVO . 2 ITA NO.1357/MDS/2014 2. BRIEF FACTS ARE THAT ASSESSEE, AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS FILED HIS RETURN OF INCOME ON 30.09.2009 ADMITTING INCOME OF ` 15,18,040/- . ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 31 .12.2011 DETERMINING THE INCOME AT ` 16,83,040/-. LATER, COMMISSIONER OF INCOME TAX, PUDUCHERRY ISSUED SHOW CAUSE NOTICE PROPOSING TO REVISE THE ASSESSMENT UND ER SECTION 263 OF THE ACT STATING THAT ASSESSING OFFIC ER FAILED TO EXAMINE VARIOUS ISSUES REGARDING CONTRACTS ENTERED INTO WITH M/S. IJM (INDIA) INFRASTRUCTURE LTD. AND MADRAS CE MENTS LTD., DIESEL EXPENSES INCURRED BY THE ASSESSEE IN R ESPECT OF EXCAVATOR, LEASE HIRE CHARGES PAID TO SMT. A.SARASW ATHI, PONDICHERRY, MR. K.S.SUBBARAMAN, TINDIVANAM AND MR. S.NAVANEETHAKRISHNAN, TINDIVANAM @ ` 6,00,000/- EACH AND ` 1,90,25,860/- DEBITED TO INCOME AND EXPENDITURE A CCOUNT BY THE ASSESSEE IN RESPECT OF HIRE CHARGES PAID BY THE ASSESSEE AND THE APPLICABILITY OF PROVISIONS OF SEC TION 40(A)(IA) ON SUCH PAYMENTS, EXCESS FUNDS FLOW OVER AND ABOVE THE FUNDS AVAILABLE ETC. THE ASSESSEE FURNISH ED EXPLANATION TO THE SHOW CAUSE NOTICE ISSUED BY COMMISSIONER OF INCOME TAX VIDE LETTERS DATED 11.1 1.2013 3 ITA NO.1357/MDS/2014 AND 11.02.2014 CLARIFYING THE ISSUES RAISED IN THE SHOW CAUSE NOTICE AND SUBMITTED THAT INVOKING PROVISIONS OF SE CTION 263 OF THE ACT IS NOT WARRANTED. CONSIDERING THE EXPLAN ATION FILED BY THE ASSESSEE, COMMISSIONER OF INCOME TAX PASSED ORDER UNDER SECTION 263 OF THE ACT DATED 28.02.2014 HOLD ING THAT THE ASSESSING OFFICER HAS NOT EXAMINED VARIOUS ISSU ES WHILE COMPLETING THE ASSESSMENT AND THEREFORE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT DATED 31.12. 2011 IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE AND THUS SET ASIDE THE ASSESSMENT WITH A DIRECTION TO R EDO THE ASSESSMENT DE NOVO EXAMINING ALL THE ISSUES RAISED IN THE SHOW CAUSE NOTICE AND ORDER PASSED UNDER SECTION 26 3 OF THE ACT. 3. COUNSEL FOR THE ASSESSEE BEFORE US CONTENDS THAT NECESSARY DETAILS IN RESPECT OF THE ISSUES RAISED I N THE SHOW CAUSE NOTICE WERE FURNISHED BEFORE THE ASSESSING OF FICER AND HE HAS EXAMINED ALL THE DETAILS AND COMPLETED THE ASSESSMENT BY MAKING DISALLOWANCE OF ` 1,65,000/-. THEREFORE, HE SUBMITS THAT THE ASSESSMENT ORDER PAS SED UNDER SECTION 143(3) IS NEITHER ERRONEOUS NOR PREJU DICIAL TO 4 ITA NO.1357/MDS/2014 THE INTERESTS OF THE REVENUE SO AS TO INVOKE THE PR OVISIONS OF SECTION 263 OF THE ACT. REFERRING TO PAGE 2 OF THE ASSESSMENT ORDER, COUNSEL FOR THE ASSESSEE SUBMITS THAT THE A SSESSING OFFICER IN FACT DISALLOWED ` 65,000/- OUT OF THE DIESEL EXPENSES INCURRED BY THE ASSESSEE IN RESPECT OF EXC AVATORS HIRED BY THE ASSESSEE FOR THE REASON THAT VOUCHERS SUBMITTED FOR DIESEL EXPENSES INCURRED ARE SELF-MADE VOUCHERS . COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSING OFF ICER IN FACT CALLED FOR ALL THE DETAILS IN RESPECT OF THE I SSUES RAISED AND HE HAS FORMED AN OPINION AND ALLOWED THE CLAIMS OF THE ASSESSEE THEREFORE THE ASSESSMENT ORDER PASSED IS N EITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. THE ASSESSING OFFICER HAS TAKEN ONE OF THE VIEWS POSSIB LE AND THE COMMISSIONER OF INCOME TAX IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. IN SUPPOR T OF HIS SUBMISSIONS, COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS:- I) CIT VS. FINE JEWELLERY (INDIA) LTD. IN ITA NO.2 63 OF 2013 DATED 03.02.2015 (BOMBAY) II) DEEPCHAND SURANA VS. CIT (163 TTJ 238) (JODHPUR ) III) M/S. MUDHOL LAND HOLDING CO.LTD. VS. CIT (166 TTJ (PUNE) 1) 5 ITA NO.1357/MDS/2014 4. ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDER OF THE COMMISSIONER O F INCOME TAX IN INVOKING PROVISIONS OF SECTION 263 OF THE ACT IN SETTING ASIDE THE ASSESSMENT FOR DE NOVO CONSIDERAT ION. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSING OFFICER HAS NOT CALLED FOR ANY DETAILS IN RESPECT OF VARIOU S ISSUES RAISED BY THE COMMISSIONER OF INCOME TAX IN THE ORD ER EXCEPT A PORTION OF DIESEL EXPENSES WAS DISALLOWED FOR WANT OF PROPER VOUCHERS. DEPARTMENTAL REPRESENTATIVE SUB MITS THAT NONE OF THE ISSUES WERE EXAMINED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS WHICH MAKES THE ASSESSMENT O RDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE AND THUS COMMISSIONER OF INCOME TAX HAS RIGHTLY INVOKED THE PROVISIONS UNDER SECTION 263 OF THE ACT. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. ON A PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT ASSESSING OFFICER DISALLOWED ` 65,000/- IN RESPECT OF DIESEL EXPENSES AS HE HAS FOUND THAT MANY OF THE VOUCHERS SUBMITTED ARE SELF-MADE VOUCHERS AND SOME VOUCHERS ARE MISSING. W E ALSO FIND THAT SINCE THERE IS A DIFFERENCE IN SUNDRY ADV ANCES WITH 6 ITA NO.1357/MDS/2014 REFERENCE TO THE BOOKS OF ACCOUNT AND BALANCE SHEET FILED IN RESPECT OF TRANSPORT BUSINESS FOR A DIFFERENCE OF ` 1,00,000/- WHICH WAS OFFERED TO TAX BY THE ASSESSEE. THERE IS NOTHING IN THE ASSESSMENT ORDER TO SUGGEST THAT ASSESSING OFF ICER HAS CALLED FOR DETAILS AND EXAMINED VARIOUS ISSUES RAIS ED BY THE COMMISSIONER OF INCOME TAX IN THE ORDER. EVEN BEFOR E US, THE ASSESSEE COULD NOT ESTABLISH THAT ASSESSING OF FICER HAS CALLED FOR DETAILS IN RESPECT OF VARIOUS ISSUES LIK E CONTRACTS ENTERED INTO WITH M/S. IJM (INDIA) INFRASTRUCTURE L TD. AND MADRAS CEMENTS LTD., DIESEL EXPENSES INCURRED BY TH E ASSESSEE IN RESPECT OF EXCAVATOR, LEASE HIRE CHARGE S PAID TO SMT. A.SARASWATHI, PONDICHERRY, MR. K.S.SUBBARAMAN, TINDIVANAM AND MR. S.NAVANEETHAKRISHNAN, TINDIVANAM @ ` 6,00,000/- EACH AND ` 1,90,25,860/- DEBITED TO INCOME AND EXPENDITURE ACCOUNT BY THE ASSESSEE IN RESPECT OF H IRE CHARGES PAID BY THE ASSESSEE AND THE APPLICABILITY OF PROVISIONS OF SECTION 40(A)(IA) ON SUCH PAYMENTS, EXCESS FUNDS FLOW OVER AND ABOVE THE FUNDS AVAILABLE ETC. AND THE ASSESSEE HAS SUBMITTED ALL THESE DETAILS IN THE COU RSE OF ASSESSMENT PROCEEDINGS. THEREFORE, SINCE THE ASSESS ING OFFICER HAS NOT CALLED FOR ANY SUCH DETAILS IN RESP ECT OF 7 ITA NO.1357/MDS/2014 VARIOUS ISSUES RAISED IN THE 263 ORDER AND IN THE A BSENCE OF ANY CLARIFICATION / SUBMISSIONS MADE IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT CANNOT BE HELD THAT ASSE SSING OFFICER HAS EXAMINED ALL THESE DETAILS AND FORMED A N OPINION AND ALLOWED THE CLAIMS OF THE ASSESSEE. THE COMMIS SIONER OF INCOME TAX CLEARLY STATED IN HIS ORDER THAT ASSE SSING OFFICER PASSED AN ERRONEOUS ORDER ALLOWING THE CLA IMS OF THE ASSESSEE WITHOUT PROPERLY INVESTIGATING OR EXAMININ G THE ISSUES WHICH MEANS, THE ASSESSING OFFICER HAS NOT A PPLIED HIS MIND AT ALL TO THE ISSUES WHILE COMPLETING THE ASSESSMENT. 6. IN THE CASE OF M/S. MALABAR INDUSTRIAL CO.LTD., (243 ITR 83), THE HONBLE SUPREME COURT HELD THAT AN INCORR ECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF L AW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOU S. SIMILARLY, ORDERS PASSED WITHOUT APPLYING THE PRINC IPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND ARE ALSO ERRONEOUS. IN THE INSTANT CASE, THE ASSESSING OFF ICER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) NE VER APPLIED HIS MIND TO VARIOUS ISSUES AS POINTED OUT B Y THE COMMISSIONER OF INCOME TAX IN HIS ORDER. THE ASSESS ING 8 ITA NO.1357/MDS/2014 OFFICER HAS PASSED THE ASSESSMENT ORDER ALLOWING TH E CLAIMS OF THE ASSESSEE WITHOUT CALLING FOR THE DETAILS AND EXAMINING THEM. THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER WITHOUT APPLICATION OF MIND IS CERTAINLY AN ERRONEO US ORDER AND IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF MANNUL AL MATADEEN VS. CIT (277 ITR 346) HELD THAT THE INCOME TAX OFFICER HAD NOT MADE NECESSARY ENQUIRIES BEFORE ALL OWING THE DEDUCTION OF INTEREST TO MANNULAL MATADEEN ON T HE CREDIT BALANCE AND THEREFORE, THE ORDER PASSED WAS ERRONEO US AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 7. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT VS.SESHASAYEE PAPER AND BOARDS LTD. (242 ITR 490) W HILE EXAMINING THE POWERS OF COMMISSIONER OF INCOME TAX UNDER SECTION 263 OBSERVED AS UNDER:- THAT THE COMMISSIONER FOUND THAT THE INCOME- TAX OFFICER WAS NOT CORRECT IN GRANTING RELIEF WIT H RESPECT TO SOME OF THE ITEMS CONSIDERED IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND FROM THE INSTANCES OR SPECIMENS OF SOME OF THE CASES EXAMINED BY HIM, HE CAME TO THE CONCLUSION THAT THE INCOME-TAX OFFICER HAD NOT COMPLETED THE ASSESSMENT BY FOLLOWING THE PROCEDURE EXPECTED OF HIM. IT WAS NOT NECESSARY FOR THE 9 ITA NO.1357/MDS/2014 COMMISSIONER TO EXAMINE EACH ITEM IN DETAIL AND RECORD A CLEAR FINDING THAT THE ORDER PASSED BY THE INCOME-TAX OFFICER WAS ERRONEOUS. 8. IN THE INSTANT CASE, FROM THE DETAILS FURNISHED BEFORE US, WE COULD SEE THAT THE ASSESSING OFFICER NEITHER CAL LED FOR ANY DETAILS WITH REGARD TO VARIOUS ISSUES RAISED BY THE COMMISSIONER OF INCOME TAX IN THE SHOW CAUSE NOTICE NOR MADE ANY ENQUIRIES BEFORE ALLOWING THE CLAIMS OF TH E ASSESSEE WHILE COMPLETING THE ASSESSMENT. 9. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER PASSED BY THE AS SESSING OFFICER UNDER SECTION 143(3) ALLOWING THE CLAIMS OF THE ASSESSEE WITHOUT APPLICATION OF MIND, WITHOUT EXAM INING THE CORRECT POSITION OF LAW IS CERTAINLY AN ORDER PASSE D ERRONEOUSLY AND PREJUDICIAL TO THE INTERESTS OF TH E REVENUE. THE CASE LAWS RELIED ON BY THE COUNSEL FOR THE ASS ESSEE ARE DISTINGUISHABLE ON FACTS AND HAVE NO APPLICATION TO THIS CASE. THEREFORE, WE HOLD THAT THE COMMISSIONER OF INCOME TAX RIGHTLY INVOKED THE PROVISIONS UNDER SECTION 263 O F THE ACT DIRECTING THE ASSESSING OFFICER TO DO THE ASSESSMEN T DE NOVO 10 ITA NO.1357/MDS/2014 EXAMINING ALL THE ISSUES. ACCORDINGLY, WE UPHOLD TH E IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TAX AN D DISMISS THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUG UST, 2015. SD/- SD/- ( # ) ( & (# ) ( CHANDRA POOJARI ) ( CHALLA NAGENDRA PRASAD ) * / ACCOUNTANT MEMBER ( * / JUDICIAL MEMBER ( /CHENNAI, , /DATED 12 TH AUGUST, 2015 SOMU ./ 0/ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 1 () /CIT(A) 4. 1 /CIT 5. / 5 /DR 6. /GF .