M/s East Coast Metals & Minirals Pvt. Ltd., Visakhapatnam V. THE ACIT, CIRCLE - 2(1), Vijayawada

ITA 18/VIZ/2014

• Counselvise Citation: 1825314 RSA 2014
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 22-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D MANOJ KUMAR
• Keywords: Opportunity of being heard
• Section: 143(3); 263

Judgement Text

ITA NO.18/VIZ/2014 M/S. EAST COAST MET ALS & MINERALS PVT. LTD.,VIJAYAWADA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.18/VIZAG/2014 ASSESSMENT YEAR : 2005-06 M/S. EAST COAST METALS & MINERALS PVT. LTD. VIJAYAWADA VS. ACIT CIRCLE-2(1) VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.AABCE 1669B ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY: SHRI D. MANOJ KUMAR, ADDL. CIT DATE OF HEARING : 01.07.2014 DATE OF PRONOUNCEMENT : 01.07.2014 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORDE R DATED 13.11.2013 PASSED BY THE CIT(A), VIJAYAWADA PERTAINING TO THE ASSESSMENT YEAR 2005- 06. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE COMPANY IS E NGAGED IN THE BUSINESS OF EXECUTION OF TURN KEY PROJECTS FOR DESIGNING, FA BRICATION AND ERECTION OF COAL HANDLING PLANTS FOR THERMAL POWER STATIONS. F OR THE IMPUGNED ASSESSMENT YEAR, ASSESSEE FILED ITS RETURN OF INCOM E DECLARING TOTAL INCOME OF RS.12,19,240/-. ASSESSMENT IN CASE OF THE ASSESSEE WAS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT VIDE ORDER DATED 27.12 .2007 DETERMINING THE TOTAL INCOME AT RS.85,42,547/-. AFTER COMPLETION O F THE ASSESSMENT U/S 143(3) OF THE ACT, THE CIT CALLED FOR THE ASSESSMEN T RECORDS AND AFTER EXAMINING THE SAME WAS OF THE VIEW THAT THE ASSESSM ENT ORDER PASSED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AS THE ASSESSING OFFICER HAS NOT PROPERLY EXAMINED THE CASH CREDITS IN RESPECT OF 22 CREDITORS. ITA NO.18/VIZ/2014 M/S. EAST COAST MET ALS & MINERALS PVT. LTD.,VIJAYAWADA 2 ACCORDINGLY, HE REVISED THE ASSESSMENT ORDER U/S 26 3 OF THE ACT BY ISSUING THE FOLLOWING DIRECTION TO THE A.O.:- THEREFORE, THE AO IS DIRECTED TO TAKE UP A THOROUGH EXAMINATION OF THE LOAN CREDITORS BY I) TAKING STATEMENTS ON OATH II) OBTAINING COPIES OF BANK ACCOUNTS HELD BY THEM III) VERIFY THE CREDITS APPEA RING IN THEIR BANK ACCOUNTS ETC. 3. IN PURSUANCE TO THE DIRECTION OF THE CIT U/S 263 OF THE ACT, THE ASSESSING OFFICER TOOK UP THE ASSESSMENT PROCEEDING S AGAIN AND ISSUED LETTERS/NOTICES TO THE INDIVIDUAL CREDITORS TO ASCE RTAIN THE GENUINENESS OF THE CREDITS. AS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, SINCE NO REPLY WAS FURNISHED BY THE CREDITORS TO WHOM NOTICE S/LETTERS WERE ADDRESSED AND ASSESSEE ALSO DID NOT APPEAR AND EXPLAIN, THE A SSESSING OFFICER COMPLETED THE ASSESSMENT EX-PARTE BY TREATING THE CASH CREDIT S APPEARING IN THE BOOKS OF ACCOUNTS AS BOGUS AND ADDED AN AMOUNT OF RS.50 L AKHS WHICH RESULTED IN DETERMINATION OF TOTAL INCOME AT RS.77,65,240/- 4. BEING AGGRIEVED OF THE SAID ASSESSMENT ORDER, TH E ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). HOWEVER, THE CIT(A) DID NOT ENTERTAIN THE APPEAL OF THE ASSESSEE ON THE GROUND THAT SINCE THE ASSESS MENT ORDER HAS BEEN PASSED IN PURSUANCE TO THE DIRECTION OF THE CIT U/S 263 OF THE ACT, HE CANNOT ENTERTAIN ASSESSEES APPEAL ON MERIT. THE OBSERVAT ION OF THE CIT(A) IS EXTRACTED HEREIN FOR CONVENIENCE: AS THE COMMISSION OF INCOME TAX AND THE COMMISSIONER OF INCOME TAX (APPEALS) ARE THE EQUAL AUTHORITIES, AN APPEAL AGAINST THE ASSESSMENT COMPLETED AS PER THE DIRECTIONS OF THE COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT COULD NOT BE DECIDED BY THE COMMISSIONER OF INCOME TAX (APPEALS). ACCORDINGLY, THE APPEAL IS TREATED AS D ISMISSED FOR STATISTICAL PURPOSES. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN DI SMISSING THE APPEAL WITHOUT CONSIDERING THE MERITS OF THE ADDITION. IT WAS CONT ENDED THAT AS THE CIT IN HIS ORDER U/S 263 OF THE ACT HAS SIMPLY SET ASIDE T HE ASSESSMENT ORDER WITH A DIRECTION TO RE-DO THE SAME AFTER EXAMINING THE CAS H CREDITS, THERE IS NO SPECIFIC DIRECTION OF THE CIT FOR MAKING ADDITION. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. A.R., WE FIND FORCE IN SUCH CONTENTION. ON A PERUSAL OF ITA NO.18/VIZ/2014 M/S. EAST COAST MET ALS & MINERALS PVT. LTD.,VIJAYAWADA 3 THE DIRECTION OF THE CIT, IT IS CLEAR THAT HE HAS N OT ISSUED ANY SPECIFIC DIRECTION TO THE ASSESSING OFFICER TO MAKE ADDITION S OF THE CASH CREDITS. HE HAS SIMPLY DIRECTED THE ASSESSING OFFICER TO RE-EXA MINE THE CASH CREDITS BY CONDUCTING PROPER ENQUIRY. EVEN THE OBSERVATION MA DE BY THE ASSESSING OFFICER IN PARA-3 OF THE ASSESSMENT ORDER MAKES IT CLEAR THAT THE DIRECTION OF THE CIT U/S 263 OF THE ACT IS TO MAKE DE-NOVO ASSES SMENT. THAT BEING THE CASE, CIT(A) WAS NOT CORRECT IN DISMISSING THE APPE AL OF THE ASSESSEE WITHOUT CONSIDERING IT ON MERITS BY OBSERVING THAT THE ASSE SSMENT ORDER HAVING BEEN PASSED AT THE DIRECTION OF THE CIT, IT CANNOT BE EN TERTAINED BY THE FIRST APPELLATE AUTHORITY. IN AFORESAID VIEW OF THE MATTE R, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) AND REMIT THE MATTER B ACK TO THE CIT(A) FOR DECIDING IT ON MERITS AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE MATTER. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 1 ST JULY14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 1 ST JULY, 2014 COPY TO 1 M/S. EAST COAST METALS & MINERALS PVT. LTD., D.NO .59A-11-2, K.P. NAGAR, VIJAYAWADA, KRISHNA DISTRICT 2 ACIT CIRCLE-2(1), VIJAYAWADA 3 THE CIT, VIJAYAWADA 4 THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM