Sakthi Sugars Limited, CHENNAI V. DCIT, Coimbatore

ITA 1530/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8039 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-01-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 30-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIR B LAKSHMINARAYAN
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Reopening of assessment; Difference of opinion; Reason to believe; Change of opinion
• Section: 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! . ! ' # , $ #% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 1530/MDS/2015 $ & !'& / ASSESSMENT YEAR : 2005-06 M/S. SAKTHI SUGARS LIMITED, NO.180, RACE COURSE ROAD, RACE COURSE ROAD, COIMBATORE 641 018. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1, COIMBATORE [PAN AADCS 0651B ] ( / APPELLANT) ( /RESPONDENT) () * + / APPELLANT BY : SHRI. R. VIJAYARAGHAVAN, ADVOCATE ,-() * + /RESPONDENT BY : SHIR. B. LAKSHMINARAYAN, JCIT. ' ! * . / DATE OF HEARING : 13-01-2016 /0' * . / DATE OF PRONOUNCEMENT : 25-02-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, COIM BATORE IN ITA NO.292/13-14, DT 21.05.2015 FOR THE ASSESSMENT YEAR 2005-2006 ITA NO.1530/MDS/2015. :- 2 -: PASSED U/S.143(3) R.W.S. 147 AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS:- (I) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONCLUDING STATE TAX PAYMENTS HAVE NOT MADE AND ALSO STATEMENTS OF THE ASSESSEE WERE NOT CONSIDERED IN THE APPELLATE PROCEEDINGS WITH THE NECESSARY EVIDENCE. (II) THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONSIDERING LEGAL CONTENTION WERE THE ASSESSMENT REOPENED BEYOND A PERIOD OF FOUR YEARS. 3. THE BRIEF FACTS OF THE CASE, THE ASSESSEE IS IN TH E BUSINESS OF MANUFACTURE OF SUGAR, INDUSTRIAL ALCHOHOL AND GE NERATION OF POWER AND SOYA PRODUCTS. THE ASSESSEE FILED RETURN OF I NCOME ON 31.10.2005 ADMITTING NIL INCOME UNDER NORMAL COMPUT ATION AND AS PER THE PROVISIONS OF SEC.115JB OF THE ACT AFTER ADJUST MENT OF BROUGHT FORWARD BUSINESS LOSSES, ASSESSMENT WAS COMPLETED U /S.143(3) OF THE ACT ON 28.12.2007. THE LD. ASSESSING OFFICER NOTIC ED THAT ASSESSEE COMPANY HAS CLAIMED DEDUCTION ON ACCOUNT OF SALES T AX =35,68,758/- WHICH WAS NOT PAID BEFORE THE DUE DATE OF FILING OF THE RETURN AND ALSO LOSS ON SALE OF FIXED ASSETS AND PREPRODUCTION EXPE NSES ARE NOT DISALLOWED IN COMPUTATION OF INCOME AND THERE IS A REASON TO BELIEVE THE CONCEALMENT OF INCOME AND NOTICE U/S.148 OF THE ACT WAS ISSUED. IN COMPLIANCE TO NOTICE, THE ASSESSEE FILED LETTER DATED 02.04.2012 AND ITA NO.1530/MDS/2015. :- 3 -: ALSO SUBMITTED INFORMATION FROM TIME TO TIME AND RE LIED ON JUDICIAL DECISIONS IN RESPECT OF PROPOSED ADDITIONS. THE IS SUE IN DISPUTE BEING SALES TAX PAYMENTS AND LD. AUTHORISED REPRESENTATIV E SUBMITTED THAT THE ASSESSEE COMPANY CLAIMED DEDUCTION ON ACCOUNT O F SALES TAX PAID BEFORE DUE DATE OF FILING OF RETURN U/S.139(1) AND DEDUCTION WAS CLAIMED IN THE COMPUTATION OF INCOME. THE LD. AUTHO RISED REPRESENTATIVE ALSO SUBMITTED SUPPORTING DOCUMENTS CONTAINING THE PAYMENTS OF SALES TAX AND PRAYED FOR CONSIDERING TH E SAME. BUT THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS ON THE SALES TAX PAYMENTS HAS PRESUMED THAT THE ASSESSEE HAS NOT PRO VED WITH SUPPORTING DETAILS WITH EXACT PAYMENTS OF SALES TAX OF =35,68,758/- WITH THE SALES TAX DEPARTMENT. THE ASSESSING OFFIC ER FURTHER IGNORED THE SUBMISSIONS THAT PAYMENTS HAS BEEN MADE OUT OF OVERALL PAYMENTS. BUT THE ASSESSING OFFICER DUE TO NONAVAI LABILITY OF EXACT EVIDENCE MADE DISALLOWANCE ALONGWITH OTHER DISALLOW ANCES AND ALSO CONFIRMED THE RE-ASSESSMENT PROCEEDINGS AS VALID A ND RELIED ON VARIOUS JUDICIAL DECISIONS AND COMPLETED ASSESSMENT U/S.143(3) R.W.S.147 OF THE ACT ON 30.03.2013 WITH ASSESSED IN COME OF =15,08,49,515/- AND CALCULATED SET OFF OF LOSS IN THE ASSESSMENT ORDER. AGGRIEVED BY THE ORDER OF THE ASSESSING OFF ICER, THE ASSESSEE ASSAILED AN APPEAL BEFORE THE COMMISSIONER OF INCOM E TAX (APPEALS). ITA NO.1530/MDS/2015. :- 4 -: 4. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE S UBMITTED THAT ASSESSING OFFICER HAS ERRONEOUSLY CONCLUDED TH AT SALES TAX PAYMENTS HAS NOT BEEN MADE. THE PAYMENTS WERE MADE WITH OTHER PAYMENTS AND NECESSARY EVIDENCE WAS FILED AT THE TI ME OF HEARING AND SUCH PAYMENTS WERE MADE BEFORE DUE DATE OF FILING O F RETURN. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED DETAILS OF GROS S SALES, PURCHASES, TAX LIABILITY REFERRED AT PAGE NO.2 OF COMMISSIONER OF INCOME TAX (APPEALS) ORDER AS UNDER:- THE COMPANY HAD GROSS SALES AND PURCHASE TAX LIA BILITY FOR THE FINANCIAL YEAR 2004-05 TO THE TUNE OF =12,27,37 ,789/- AS DETAILED BELOW:- SALES TAX COLLECTION =7,23,16,596 PURCHASE TAX PROVISION =2,40,79,130 SC ON PURCHASE TAX PROVISION =11,80,900 ADDL. SALES TAX PROVISION =2,51,61,163 TOTAL PAYABLE FOR THE F.Y. 2004-05 =12,27,37,789 THE COMPANY HAS EFFECTED PAYMENTS TO THE TUNE OF =1 0,06,81,586/- WITHIN THE TIME AS PRESCRIBED UNDER SALES TAX. THE BALANCE AMOUNT IS = 2,20,56,203/-. OUT OF THE SAME A PAYMENTS OF =1, 25,00,000/- HAS BEEN MADE PIECEMEAL IN THE FOLLOWING MANNER:- DATE PAYMENTS ( =) 06.05.2005 25,0 0,000 11.05.2005 15,00,000 13.05.2005 10,00,000 20.06.2005 25,00,000 01.07.2005 25,00,000 15.07.2005 25,00,000 TOTAL PAYMENTS 1,25,00,000 ITA NO.1530/MDS/2015. :- 5 -: THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THOUGH CONSIDERED THE SUBMISSIONS BUT CONCURRED WITH THE FINDINGS OF THE ASSESSING OFFICER THAT NO EVIDENCE OF PROOF OF PAYMENTS OF SALES TAX WAS PRODUCED AND CONFIRMED THE ASSESSING OFFICER ORDER. THE LD. COM MISSIONER OF INCOME TAX (APPEALS) ON THE GROUND OF RE-OPENING OF ASSESSMENT BEYOND A PERIOD OF FOUR YEARS, CONSIDERED THE SUBMI SSIONS MADE BY THE LD. AUTHORISED REPRESENTATIVE AND RELIED ON THE FINDINGS OF KELVINATOR INDIA LTD 320 ITR 561(SC) REFERRED AT PAGE NO.4 OF COMMISSIONER OF INCOME TAX (APPEALS) ORDER:- 'ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO TH E WORDS 'REASON TO BELIEVE; FAILING WHICH SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICE R TO REOPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION; WHICH CANNOT BE PER SE REASON TO REOPEN . ONE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENC E BETWEEN POWER TO REVIEW AND POWER TO REASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW, HE HAS THE POWER TO REASSESS, BUT THE REASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE-CONDITIONS AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 01. 04.1989, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERI AL' TO COME TO CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. UNDER THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, THE PARLIAMENT NOT ONLY DELETED THE WORDS 'REASON T O BELIEVE' BUT ALSO INSERTED THE WORD 'OPINION' IN SE CTION 147. HOWEVER, ON RECEIPT OF REPRESENTATIONS FROM THE ITA NO.1530/MDS/2015. :- 6 -: COMPANIES AGAINST OMISSION OF THE4 WORDS 'REASON TO BELIEVE; THE PARLIAMENT RE- INTRODUCED THE SAID EXPRESSION AND DELETED THE WORD 'OPINION' ON THE GROUND THAT IT WOULD VEST ARBITRAR Y POWERS IN THE ASSESSING OFFICER . CONSIDERING DISALLOWANCE OF SALES TAX PAYMENTS OF =35,68,758/-, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CONFIRMED THE RE- ASSESSMENT AND ALSO DISALLOWANCE MADE BY THE ASSESS ING OFFICER AND DISMISSED THE APPEAL. AGGRIEVED THE ASSESSEE FILE D AN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE THE TRIBUNAL, THE LD. AUTHORISED REPRESENTAT IVE OF THE ASSESSEE REITERATED HIS SUBMISSIONS MADE BEFORE ASS ESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) BASED ON THE F ACTUAL INFORMATION AND JUDICIAL DECISIONS. THE LD. AUTHOR ISED REPRESENTATIVE FURTHER ARGUED THAT NECESSARY EVIDENCE WAS FILED BE FORE THE LOWER AUTHORITIES IN THE ASSESSMENT PROCEEDINGS AND THERE IS NO SUPPRESSION OF ANY INFORMATION FOR CLAIM OF SALES TAX LIABILITY . THE ASSESSEE HAS SUBMITTED DETAILS AS PER INCOME TAX RECORDS AND ALS O SUPPORTED THE SUBMISSIONS THAT THE DISALLOWANCE MADE IN THE COMPU TATION OF INCOME. THE LD.AR DREW OUR ATTENTION TO THE PAGE NO.1 & 2 W ITH ALL THE SUPPORTING PAPERS WITH THE DETAILS OF OUTSTANDING L IABILITIES OF SALES TAX AND ALSO PAYMENT BY BANK TRANSACTIONS AND ARGUED TH AT THERE IS NO DOUBLE CLAIM AND ALSO REFERRED TO THE ADJUSTMENT MA DE IN THE ITA NO.1530/MDS/2015. :- 7 -: COMPUTATION OF INCOME FOR SALES TAX PAYMENTS AND E XPLAINED THE SYSTEM OF CLAIM AND ALSO CHALLENGED THE FINDINGS OF THE ASSESSING OFFICER ON VALIDITY OF REOPENING OF ASSESSMENT BEYO ND THE PERIOD OF FOUR YEARS AND PRAYED FOR ALLOWING THE APPEAL. 6. CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES AND CONTESTED HEA VILY AGAINST THE GROUNDS RAISED BY THE ASSESSEE. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS CITED BEFORE US. THE LD. AUTHORISED REPRESENTATIVE CONTENTION BASED ON THE REASSESSMENT PROCEEDING BEFORE THE ASSESSING OFFICER AND THE COMMISSIONER O F INCOME TAX (APPEALS). WHERE THE COMMISSIONER OF INCOME TAX (A PPEALS) HAS DEALT AND EXAMINED THE ISSUE WITH THE JUDICIAL DECI SIONS TO WHICH THE ASSESSEE HAS ALSO SUBMITTED EXPLANATIONS. WE ARE OF THE OPINION THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DE ALT ON THE ISSUE OF RE-ASSESSMENT IN HIS ORDER. AT THE TIME OF ISS UE OF NOTICE U/SEC. 147 OF THE ACT, THE ASSESSING OFFICER HAS RELEVANT MATERIAL JURISDICTION AND PLACED REQUISITE BELIEF THAT THERE WAS ESCAPEME NT OF INCOME LIABLE TO BE TAXED. SO, WE ARE NOT INCLINED TO INTERFERE IN THE GROUND AND CONFIRM THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS). ITA NO.1530/MDS/2015. :- 8 -: 8. WITH REGARD TO DISALLOWANCE OF =35,68,758/-, THE LD . AUTHORISED REPRESENTATIVE REITERATED HIS SUBMISSION S WITH SUPPORTING DOCUMENTS THAT THE ASSESSEE HAS CLAIMED SALES TAX L IABILITY OUTSTANDING BY MAKING PAYMENTS BEFORE DUE DATE OF FILING OF RET URN AND ALSO MADE CLAIM BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL S) THAT THE CONSOLIDATED SALES TAX PAYMENTS HAS BEEN MADE. IN T HE HEARING PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE SUBM ITTED DETAILS OF SALES TAX PAYMENTS AMOUNTING TO 1,25,00,000/- WHERE THE PAYMENTS HAS BEEN MADE IN PIECEMEAL MANNER WHICH ALSO INCLUD ES SALES TAX PAYMENTS MADE FOR THE ASSESSMENT YEAR 2005-06. SO, CONSIDERING THE APPARENT FACTS AND EVIDENCE AND ALSO SUBMISSIONS MA DE BEFORE US, WE ARE OF THE OPINION THAT THE MATTER NEEDS TO BE RE-E XAMINED IN PARTICULAR TO SALES TAX WHERE CONSOLIDATED AMOUNT O F =1,25,00,000/- WAS PAID OVER A PERIOD. SO, WE REMIT THE ISSUE IN DISPUTE TO THE FILE OF ASSESSING OFFICER TO VERIFY THE PAYMENTS WHETHER RE LATING TO ASSESSMENT YEAR UNDER CONSIDERATION AND ALSO IT WAS MADE BEFORE DUE DATE OF RETURN AND ACCORDINGLY, THE APPEAL OF THE A SSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO.1530/MDS/2015. :- 9 -: 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1530/MDS/ 2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURSDAY, THE 25TH DAY OF FE BRUARY, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' # ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 1 / DATED:25.02.2016 KV 2 * ,$.34 54'. / COPY TO: 1 . () / APPELLANT 3. ' 6. () / CIT(A) 5. 4!9: ,$.$ / DR 2. ,-() / RESPONDENT 4. 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