Mathew Cyriac aliasMathai Cyriac, Thiruvalla V. ITO, Thiruvalla

ITA 137/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65037 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-12-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 22-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: DANIEL P
• Keywords: Reasonable cause; Revised return
• Section: 143(3)

Judgement Text

1 ITA NO.137 & 138/COCH/2011 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. 137 & 138/COCH/2011 (ASSESSMENT YEAR 2002-03) MATHEW CYRIAC ALIAS MATHAI CYRIAC VS ITO, WD.2 NELLUVELIL HOUSE THIRUVALLA THIRUVALLA PAN : ADOPM4961B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DANIEL P RESPONDENT BY : SMT. S VIJAYAPRABHA DATE OF HEARING : 05-12-2012 DATE OF PRONOUNCEMENT : 05-12-2012 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE TAXPAYER RELATE TO ASSESSM ENT YEAR 2002-03. I.T.A NO.137/COCH/2011 IS THE APPEAL DIRECTED AGAIN ST ORDER OF THE ASSESSING OFFICER PASSED U/S 143(3) R.W.S. 263 OF T HE ACT WHEREAS ITA NO.138/COCH/2011 IS THE APPEAL AGAINST THE ORDER U/ S 263 OF THE ACT PASSED BY THE ADMINISTRATIVE COMMISSIONER. THEREFORE, WE HEARD BOTH THE APPEALS TOGETHER AND DISPOSE OF BY THIS COMMON ORDE R. 2 ITA NO.137 & 138/COCH/2011 2. THERE ARE DELAYS IN FILING THE APPEALS. IN RESP ECT OF ITA NO.138/COCH/2011 THERE IS A DELAY OF 391 DAYS WHERE AS IN RESPECT OF ITA NO.137/COCH/2011 THERE IS A DELAY OF 74 DAYS. AFT ER CONSIDERING THE REASONS STATED IN THE AFFIDAVIT FILED IN SUPPORT OF THE APPLICATION FOR CONDONATION OF DELAY, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THERE WAS A REASONABLE CAUSE IN NOT FILING THE APPEALS BE FORE THIS TRIBUNAL IN TIME. THEREFORE, THE DELAY IS CONDONED AND THE APPEALS AR E ADMITTED. 3. SHRI DANIEL P, THE LD.COUNSEL FOR THE TAXPAYER S UBMITTED THAT THE TAXPAYER HAS FILED A REVISED RETURN CLAIMING 25 LAK HS PAID TO THE TENANTS FOR VACATING THE PREMISES AS DEDUCTION WHILE COMPUTING THE CAPITAL GAIN. THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE TAXPAYER . HOWEVER, THE ADMINISTRATIVE COMMISSIONER IN EXERCISE OF HIS POWE RS U/S 263 OF THE INCOME-TAX ACT FOUND THAT THE RETURN FILED BY THE T AXPAYER ON 03-10-2007 WAS AN INVALID RETURN. THEREFORE, ACCORDING TO THE ADMINISTRATIVE COMMISSIONER, THE ASSESSING OFFICER COMMITTED AN ER ROR IN ENTERTAINING THE CLAIM MADE IN THE INVALID RETURN. THE ADMINISTRATI VE COMMISSIONER HAS ALSO FOUND THAT THE ASSESSING OFFICER HAS NOT MADE ANY E NQUIRY ASKING FOR EVIDENCE FOR THE CLAIM MADE. ACCORDINGLY, THE ADMI NISTRATIVE COMMISSIONER MADE ADDITION OF RS.25 LAKHS. CONSEQU ENT TO THE ORDER OF 3 ITA NO.137 & 138/COCH/2011 THE ADMINISTRATIVE COMMISSIONER, THE ASSESSING OFFI CER MADE THE ADDITION OF RS.25 LAKHS IN HIS ASSESSMENT ORDER FRAMED U/S 1 43(3) R.W.S. 263 OF THE ACT. ACCORDING TO THE LD.REPRESENTATIVE, RS.25 LAK HS WAS PAID TO THE TENANTS TO VACATE THE PREMISES. THEREFORE, THIS PAYMENT HA S TO BE REDUCED FROM THE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTING THE CAPITAL GAIN. AS SUCH, THE ADMINISTRATIVE COMMISSIONER IS NOT CORREC T IN DIRECTING THE ASSESSING OFFICER TO COMPUTE THE INCOME OF THE TAXP AYER ADDING THE AMOUNT OF RS.25 LAKHS CLAIMED BY THE TAXPAYER AS COMPENSAT ION PAID TO TENANTS TO VACATE THE PREMISES. 4. WE HEARD SMT. S VIJAYAPRABHA, THE LD.DR ALSO. T HE LD.DR SUBMITTED THAT THE CLAIM OF RS.25 LAKHS WAS MADE ONLY IN THE REVISED RETURN WHICH CANNOT BE TREATED AS A VALID RETURN. THEREFORE, TH E AMOUNT CLAIMED IN THE REVISED RETURN AS DEDUCTION HAS TO BE NECESSARILY A DDED BACK TO THE SALE CONSIDERATION. THEREFORE, THE ADMINISTRATIVE COMM ISSIONER IS RIGHT IN EXERCISING HIS JURISDICTION U/S 263 OF THE INCOME-TA X ACT. ON A QUERY FROM THE BENCH, WHEN THE ADMINISTRATIVE COMMISSIONER DIR ECTED THE ASSESSING OFFICER TO MAKE THE ADDITION OF RS.25 LAKHS WITHOUT ASKING THE ASSESSING OFFICER TO EXAMINE WHETHER THE TAXPAYER WAS ENTITLE D FOR SUCH DEDUCTION, DID THERE NO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE, THE LD.DR CLARIFIED THAT 4 ITA NO.137 & 138/COCH/2011 THE TAXPAYER HAD FULL OPPORTUNITY BEFORE THE COMMIS SIONER OF INCOME-TAX, THEREFORE, THERE IS NO NEED FOR THE ASSESSING OFFIC ER TO GIVE SUCH OPPORTUNITY TO THE TAXPAYER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ADMI NISTRATIVE COMMISSIONER FOUND THAT THE RETURN FILED BY THE TAX PAYER ON 03-10-2007 WAS INVALID, THEREFORE, THE DEDUCTION CLAIMED TOWAR DS PAYMENT OF COMPENSATION OF RS.25 LAKHS TO THE TENANTS FOR VACA TING THE PREMISES HAS TO BE ADDED TO THE SALE CONSIDERATION. NO DOUBT, SECT ION 263 OF THE INCOME- TAX ACT EMPOWERS THE COMMISSIONER OF INCOME-TAX TO REVISE THE ORDER OF THE ASSESSING OFFICER WHENEVER HE FEELS THAT THE AS SESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REV ENUE. HOWEVER, WHILE EXERCISING THAT POWER IT IS ALSO THE RESPONSIBILITY OF THE ADMINISTRATIVE COMMISSIONER TO SEE THAT SUFFICIENT OPPORTUNITY WAS GIVEN TO THE TAXPAYER TO PLACE ALL THE FACTS BEFORE THE CONCERNED AUTHORI TY. UNDER THE SCHEME OF THE INCOME-TAX ACT THE ASSESSING OFFICER HAS TO ORI GINALLY EXAMINE ALL THE MATERIALS. IF THE ASSESSING AUTHORITY HAS NOT EXAM INED THE SAME PROPERLY THEN THE ADMINISTRATIVE COMMISSIONER IN EXERCISE OF HIS POWERS CAN DIRECT THE ASSESSING AUTHORITY TO EXAMINE THE MATERIALS AV AILABLE ON RECORD IN 5 ITA NO.137 & 138/COCH/2011 ACCORDANCE WITH LAW. IN THE CASE BEFORE US, THE AD MINISTRATIVE COMMISSIONER HIMSELF HAS DIRECTED THE ASSESSING AUT HORITY TO MAKE ADDITION OF RS.25 LAKHS WITHOUT GIVING ANY OPPORTUN ITY TO THE ASSESSING OFFICER TO EXERCISE HIS POWERS CONFERRED IN HIM UND ER THE INCOME-TAX ACT. THE ASSESSING OFFICER BEING THE ORIGINAL AUTHORITY HAS TO EXAMINE WHETHER THE RETURN WAS VALID OR NOT AND WHETHER THE CLAIM M ADE BY THE TAXPAYER IS GENUINE OR NOT. IF THE COMMISSIONER OF INCOME-TAX FINDS THAT THE ASSESSING OFFICER HAS MADE NO PROPER ENQUIRY, AT THE BEST, TH E COMMISSIONER OF INCOME-TAX CAN DIRECT THE ASSESSING OFFICER TO EXAM INE WHETHER THE CLAIM IS GENUINE OR NOT AND THEN ALLOW OR DISALLOW THE CLAIM . WITHOUT DOING SO, THE ADMINISTRATIVE COMMISSIONER SIMPLY HAS DIRECTED THE ASSESSING OFFICER TO MAKE THE ADDITION. THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT THE ORIGINAL AUTHORITY HAS TO EXAMINE THE CLAIM OF THE TAXPAYER AT THE FIRST INSTANCE. HAVING AN OPPORTUNITY BEFORE THE ASSESSI NG OFFICER IS ONE THING AND PROVIDING OPPORTUNITY BY THE APPELLATE / REVISI ONAL AUTHORITY IS ANOTHER THING. WHEN THE TAXPAYER IS ENTITLED FOR OPPORTUNI TY BEFORE THE ORIGINAL AUTHORITY, THE DEPARTMENT CANNOT NOW CONTEND THAT T HE TAXPAYER WAS GIVEN OPPORTUNITY BEFORE THE REVISIONAL AUTHORITY. THERE FORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CLAIM OF THE TAXPAY ER HAS TO BE EXAMINED 6 ITA NO.137 & 138/COCH/2011 BY THE ASSESSING OFFICER. THE TAXPAYER HAS ALSO RE LIED UPON THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DY.CI T VS LAB INDIA INSTRUMENTS P LTD (2005) 277 ITR (AT) 39 (PUNE) AND THE JUDGMENT OF THE BOMBAY HIGH COURT IN COMMISSIONER OF INCOME-TAX VS PRUTHVI BROKERS & SHAREHOLDERS (P) LTD I.T. APPEAL NO.3908 OF 2010 JUD GMENT DATED JUNE 21, 2012 (COPY HAS BEEN FILED ON RECORD). IN VIEW OF T HE DECISION OF THE PUNE BENCH OF THIS TRIBUNAL AND THE JUDGMENT OF THE BOMBA Y HIGH COURT BOTH CITED SUPRA, THIS TRIBUNAL IS OF THE OPINION THAT T HE ASSESSING OFFICER HAS TO EXAMINE THE CLAIM OF THE TAXPAYER AT THE FIRST INST ANCE. THEREFORE, THE ORDER OF THE ADMINISTRATIVE COMMISSIONER IS MODIFIE D AND THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE CLAIM OF THE TAX PAYER TOWARDS PAYMENT OF RS.25 LAKHS TO THE TENANTS AFTER GIVING REASONABLE OPPORTUNITY TO THE TAXPAYER AND THEREAFTER DECIDE THE SAME IN ACCORDAN CE WITH LAW. WE MAY MAKE IT CLEAR THAT THE ASSESSING OFFICER SHALL EXAM INE THE CLAIM OF THE TAXPAYER WITHOUT BEING INFLUENCED BY ANY OF THE OBS ERVATIONS MADE BY THE ADMINISTRATIVE COMMISSIONER AND DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO T HE TAXPAYER. 6. NOW COMING TO ITA NO.137/COCH/2011 THIS APPEAL I S FILED DIRECTLY AGAINST THE ASSESSMENT ORDER WHICH WAS PASSED CONSE QUENT TO THE ORDER 7 ITA NO.137 & 138/COCH/2011 U/S 263 OF THE ACT. IN VIEW OF THE ORDER PASSED BY THIS TRIBUNAL IN ITA NO.138/COCH/2011 THE ASSESSING OFFICER SHALL RE-EXA MINE THE MATTER. THEREFORE, THE CONSEQUENTIAL ORDER HAS NO INDEPENDE NT LEG TO STAND. EVEN THOUGH THE ORDER PASSED BY THE ASSESSING OFFICER WA S CONSEQUENT TO THE ORDER OF THE ADMINISTRATIVE COMMISSIONER, AN APPEAL IS PROVIDED UNDER THE INCOME-TAX ACT BEFORE THE COMMISSIONER OF INCOME-TA X(A). THEREFORE, THE APPEAL FILED DIRECTLY BEFORE THIS TRIBUNAL WOULD NO T BE MAINTAINABLE. HOWEVER, IN VIEW OF THE ORDER OF THIS TRIBUNAL IN I TA NO.138/COCH/2011, THIS APPEAL OF THE TAXPAYER BECOMES INFRUCTUOUS. 7. IN THE RESULT, APPEAL IN ITA NO.138/COCH/2011 IS ALLOWED FOR STATISTICAL PURPOSE WHEREAS THE APPEAL IN ITA NO.13 7/COCH/2011 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05 TH DECEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 05 TH DECEMBER, 2012 PK/- 8 ITA NO.137 & 138/COCH/2011 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