DCIT, CHENNAI V. M/s. Matsushita Air-Conditioning India Ltd., Kancheepuram

ITA 151/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4843 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 28-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: B RAMAKRISHNAN
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NO. 151/MDS/2011 ASSESSMENT YEAR : 2004-05 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(1), CHENNAI 600 034. (APPELLANT) V. M/S MATSUSHITA AIR-CONDITIONING INDIA LTD., A-11 & 12, SIPCOT INDUSTRIAL PARK, IRUNGATTUKOTTAI, SRIPERUMBUDUR, KANCHEEPURAM, TAMIL NADU 602 105. PAN : AAACM7718E (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SHRI B. RA MAKRISHNAN O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, IT HAS RAISED FOUR GROUNDS IN TOTO, OUT OF WHICH, GROUND NOS.1 AND 4 ARE GENERAL NEEDING NO ADJUDICATION. I.T.A. NO. 151/MDS/11 2 2. VIDE ITS GROUND NO.2, GRIEVANCE OF THE REVENUE I S THAT LD. CIT(APPEALS) DELETED AN ADDITION OF ` 3,79,96,926/- MADE BY THE ASSESSING OFFICER FOR DIFFERENCE IN TURNOVER AS PER SALES TAX RECORDS AND AS PER THE ACCOUNTS OF THE ASSESSEE. AS PER TH E REVENUE, LD. CIT(APPEALS) ACCEPTED FRESH EVIDENCE IN VIOLATION O F RULE 46A OF INCOME-TAX RULES, 1962. 3. SHORT FACTS APROPOS ARE THAT ORIGINAL ASSESSMENT DONE ON THE ASSESSEE WAS SET ASIDE BY THE COMMISSIONER OF INCOM E TAX, CHENNAI-III, PRESUMABLY UNDER SECTION 263 OF THE AC T FOR THE FOLLOWING REASON:- IT IS OBSERVED FROM THE P&L A/C FOR THE YEAR ENDED O N 31.03.2004 ANNEXED TO THE RETURN OF INCOME THAT THE GROSS SALES TURNOVER WAS SHOWN AT RS.27,56,12,888/- (INCLUSIVE OF EXCISE DUTY ELEMENT OF RS.4,71,97,118/-) WHEREAS FROM THE COPY O F THE ASSESSMENT ORDER PASSED BY THE COMMERCIAL TAX DEPART MENT IT WAS FOUND THAT THE SALES TURNOVER OF THE ASSESSEE A S PER ACCOUNTS WAS RS.31,35,89,814/-. HENCE THERE IS DIF FERENCE OF RS.3,79,76,926/- IN THE SALES TURNOVER BETWEEN THE P&L A/C AND THE SALES TAX ASSESSMENT ORDER. DURING THE COURSE OF FRESH ASSESSMENT PURSUANT TO S UCH DIRECTIONS, ASSESSEE HAD TO RECONCILE THE DIFFERENCE IN SALES T URNOVER. ASSESSEE, IN ITS REPLY TO ASSESSING OFFICER, STATED AS FOLLOWS:- I.T.A. NO. 151/MDS/11 3 (I) THE TURNOVER IN THE FINANCIALS DOES NOT INCLUDE DISCOUNTS, DUTIES AND TAXES AND CERTAIN OTHER ITEMS WHICH ARE INCLUDED IN THE TURNOVER AS PER THE SALES TAX ORDER. THEREFORE , WE HAVE EXCLUDED SUCH ITEMS FROM THE TURNOVER AS PER SALES TAX ORDER. (II) THE SALES TAX ORDER CONTAINS TURNOVER RELATED TO SALE OF FIXED ASSETS AS WELL AS SCRAP SALES, WHICH ARE ACCO UNTED FOR SEPARATELY IN THE BOOKS OF ACCOUNTS. THEREFORE, THE SE ITEMS ARE EXCLUDED FROM THE TURNOVER AS PER THE SALES TAX ORD ER. (III) THE SALES TAX ORDER DOES NOT INCLUDE SALE MAD E AS STOCK TRANSFER AND EXPORTS. THEREFORE, THESE ITEMS ARE A DDED TO THE TURNOVER AS PER SALES TAX ORDER. (IV) THE TURNOVER IN THE SALES TAX ORDER IS AT EX-F ACTORY PRICE, WHEREAS OTHER ITEMS NEED TO BE INCLUDED IN ORDER TO ARRIVE AT THE TURNOVER AS PER THE FINANCIALS. THEREFORE, SUCH IT EMS HAVE BEEN ADDED TO THE TURNOVER AS PER THE SALES TAX ORDER. (V) AS A RESULT, THE RECONCILED AMOUNT OF TURNOVER STANDS AT RS.273764199/- AS AGAINST THIS, THE AMOUNT GIVEN IN THE FINANCIALS IS RS.275612888/-. ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE WAS UNABLE TO PROVE WITH DOCUMENTARY EVIDENCE AND REASONS FOR REC ONCILIATION DIFFERENCES AND FILE ANY STATEMENT OF RECONCILIATIO N. HE, THEREFORE, CONSIDERED THE DIFFERENCE IN TURNOVER AS PART OF IN COME OF THE ASSESSEE AND MADE THE ADDITION. 4. IN ITS APPEAL BEFORE LD. CIT(APPEALS), ARGUMENT OF THE ASSESSEE WAS THAT RECONCILIATION WAS FILED BEFORE THE ASSESS ING OFFICER VIDE ITS LETTERS DATED 29 TH OCTOBER, 2008 AND 28 TH MAY, 2009 AND THESE WERE I.T.A. NO. 151/MDS/11 4 SELF-EXPLANATORY. AS PER THE ASSESSEE, THE DIFFERE NCES WERE TRACEABLE TO THE AUDITED FINANCIAL ACCOUNTS. LD. C IT(APPEALS) WAS OF THE OPINION THAT RECONCILIATION STATEMENT FILED BY THE ASSESSEE BETWEEN THE TURNOVER AS PER THE ACCOUNTS AND TURNOV ER AS PER THE SALES TAX ORDER WERE SHOWN BY IT AND THE DIFFERENCE S IN TURNOVER WERE PROPERLY EXPLAINED. AS PER LD. CIT(APPEALS), THE T URNOVERS COULD NOT BE COMPARED FOR MAKING AN ADDITION WITHOUT CONSIDER ING THE RECONCILIATION. HE, THEREFORE, DELETED THE ADDITIO N MADE BY THE A.O. 5. NOW BEFORE US, LEARNED D.R. SUBMITTED THAT ASSES SEE HAD NEVER FILED ANY RECONCILIATION BEFORE THE ASSESSING OFFICER. ACCORDING TO HIM, ASSESSEE SIMPLY SUBMITTED A LETTER IN WHICH IT HAD GIVEN REASONS FOR THE DIFFERENCE BUT, NEVER SUBMITTED ANY PROOF OF RECONCILIATION IN THIS REGARD. 6. PER CONTRA, LEARNED A.R. FAIRLY SUBMITTED THAT T HE ASSESSEE WAS NOT HAVING ANY EVIDENCE FOR FILING THE RECONCILIATI ON BEFORE THE A.O. 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THE TURNOVER AS GIVEN IN THE SALES TAX RETURN AND T URNOVER AS PER FINANCIAL ACCOUNTS NEED NOT ALWAYS TALLY. THERE CO ULD BE A NUMBER OF I.T.A. NO. 151/MDS/11 5 REASON FOR DIFFERENCES. BUT, NEVERTHELESS, IT IS T HE ARDENT DUTY OF THE ASSESSEE TO RECONCILE THE DIFFERENCES PROPERLY AND PROVE TO THE SATISFACTION OF THE ASSESSING AUTHORITIES THE REASO NS FOR THE DIFFERENCES. THOUGH, AS PER THE ASSESSEE, IT HAD S UBMITTED A RECONCILIATION BEFORE THE ASSESSING OFFICER, THERE IS NO PROOF IN THIS REGARD. LD. CIT(APPEALS) ACCEPTED THE RECONCILIATI ON FILED BY THE ASSESSEE WITHOUT PUTTING IT TO ASSESSING OFFICER. WE ARE OF THE OPINION THAT THERE WAS VIOLATION OF RULE 46A OF INC OME-TAX RULES, 1962. IN THESE CIRCUMSTANCES, WE SET ASIDE THE ORD ERS OF THE AUTHORITIES BELOW IN THIS REGARD AND REMIT THE ISSU E BACK TO THE FILE OF THE A.O. ASSESSEE HAS TO PRODUCE BEFORE THE A.O. R ECONCILIATION AND EVIDENCE IN SUPPORT OF EACH ITEM OF DIFFERENCE BETW EEN THE TURNOVER IN SALES TAX ORDERS AND TURNOVER AS PER FINANCIAL A CCOUNTS. A.O. HAS TO PROCEED IN ACCORDANCE WITH LAW. GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. 8. VIDE ITS GROUND NO.3, REVENUE HAS RAISED THAT LD . CIT(APPEALS) HELD PENALTY PROCEEDINGS NOT INITIATABLE UNDER SECT ION 271(1)(C) OF THE ACT. WE HAVE ALREADY HELD AT PARA 7 ABOVE THAT THE MATTER ON ADDITION MADE NEEDS RE-VISIT BY THE A.O. IN SUCH C IRCUMSTANCES I.T.A. NO. 151/MDS/11 6 OPINION OF LD. CIT(APPEALS) THAT PENALTY PROCEEDING S COULD NOT BE INITIATED HAS BECOME INFRUCTUOUS. A.O. SHALL BE FR EE TO PROCEED IN ACCORDANCE WITH LAW IN THIS REGARD ALSO UNTRAMMELED BY THE OBSERVATIONS OF LD. CIT(APPEALS) IN THIS REGARD. G ROUND NO.3 OF REVENUE IS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED PRO TANTO . ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE TWENTY THIRD DAY OF JUNE, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 23 RD JUNE, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-V, CHENNAI-34 (4) CIT, CHENNAI-III, CHENNAI (5) D.R. (6) GUARD FILE