M/s. Erode Annai Spinning Mills Pvt. Ltd., CHENNAI V. ACIT, Coimbatore

ITA 2163/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96561 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 06-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Depreciation; Unabsorbed depreciation
• Section: 143(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2163/MDS/2013 ( )( / ASSESSMENT YEAR : 2008-09 M/S ERODE ANNAI SPINNING MILLS PVT. LTD., C/O SHRI S. SRIDHAR, ADVOCAE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI - 600 020. PAN : AAACE 4596 N V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, COIMBATORE. (+,/ APPELLANT) (-.+,/ RESPONDENT) ./ ITA NO.2181/MDS/2013 ( )( / ASSESSMENT YEAR : 2008-09 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. V. M/S ERODE ANNAI SPINNING MILLS PVT. LTD., 72, MUDALI THOTTAM, VEERAPPANCHATRAM, ERODE 638 004. (+,/ APPELLANT) (-.+,/ RESPONDENT) (/0 1 2 /ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE 3 1 2 /REVENUE BY : DR. B. NISCHAL, JCIT 4 1 0% / DATE OF HEARING : 06.10.2015 5') 1 0% / DATE OF PRONOUNCEMENT : 18.12.2015 2 I.T.A. NO.2163/MDS/13 I.T.A. NO.2181/MDS/13 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE ASSESSEE AND THE REVENUE HAVE FILED APP EALS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, COIMBATORE DATED 23.09.2013 AND PERTAIN TO ASSESSME NT YEAR 2008-09. THEREFORE, WE HEARD BOTH THE APPEALS TOGE THER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSEE CHALLENGED AN ADDITION OF ` 20 LAKHS UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') BEFORE THE CIT(APPEALS). HOWEVER, THE CIT(APPEALS) FOUND THAT THE ASSESSEE HAS NOT CONTENDED THE ADDITION OF ` 20 LAKHS AS UNEXPLAINED CASH CREDIT. ACCORDINGLY, HE CONFIRMED THE ADDITION MAD E BY THE ASSESSING OFFICER. REFERRING TO THE GROUNDS OF APP EAL RAISED BEFORE THE CIT(APPEALS), THE LD.COUNSEL SUBMITTED THAT VID E GROUND NO.3, THE ADDITION OF ` 20 LAKHS WAS CHALLENGED BEFORE THE CIT(APPEALS). THEREFORE, THE CIT(APPEALS) IS EXPECTED TO DISPOSE OF THE GROUND OF APPEAL ON MERIT. 3 I.T.A. NO.2163/MDS/13 I.T.A. NO.2181/MDS/13 3. ON THE CONTRARY, DR. B. NISCHAL, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT NO SPECIFIC GROUND W AS RAISED WITH REGARD TO THE ADDITION MADE BY THE ASSESSING OFFICE R UNDER SECTION 68 OF THE ACT TO THE EXTENT OF ` 20 LAKHS. GROUND NO.3 RAISED BEFORE THE CIT(APPEALS) IS ONLY IN RESPECT OF ADJUSTMENT O F CASH CREDIT OF ` 20 LAKHS AGAINST THE UNABSORBED DEPRECIATION OF PRE VIOUS YEARS. BY RAISING THIS GROUND, ACCORDING TO THE LD. D.R., THE ASSESSEE ADMITTED THAT ` 20 LAKHS IS THE UNEXPLAINED CASH CREDIT WHICH NEEDS TO BE SET OFF AGAINST UNABSORBED DEPRECIATION. THA T IS WHY, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) FOUND T HAT THE ASSESSEE HAS NOT CONTESTED THE ISSUE OF ADDITION OF ` 20 LAKHS BEFORE HIM. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSING OFFICER MADE THE ADDITION OF ` 20 LAKHS AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE ASSES SEE HAS RAISED FOLLOWING GROUND BEFORE THE CIT(APPEALS) AS GROUND NO.3:- 3. THE LEARNED ASSESSING OFFICER HAS ERRED IN THE INCOME COMPUTATION IN THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME-TAX ACT, 1961, WHERE AN AMOUNT OF ` 20,00,000/- TREATED AS UNEXPLAINED CASH CREDITS WERE NOT ADJUSTED 4 I.T.A. NO.2163/MDS/13 I.T.A. NO.2181/MDS/13 AGAINST THE UNABSORBED DEPRECIATION OF THE PREVIOUS YEARS. A BARE READING OF THIS GROUND SHOWS THAT THE ASSESS EE IS AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER REFUSING TO ADJUST THE UNEXPLAINED CASH CREDIT OF ` 20 LAKHS WITH UNABSORBED DEPRECIATION OF THE PREVIOUS YEARS. AS RIGHTLY SUBMITTED BY THE LD. D.R., NO SPECIFIC GROUND WAS RAISED CHALLENGING THE MERIT OF THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF T HE ACT. THEREFORE, THIS TRIBUNAL CANNOT BLAME THE CIT(APPEA LS) FOR OBSERVING THAT THE ASSESSEE HAS NOT CONTENDED THE A DDITION OF ` 20 LAKHS MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 5. HOWEVER, IT IS TO BE MENTIONED THAT THE ASSESSME NT PROCEEDING BEFORE THE ASSESSING OFFICER IS TO COMPU TE THE CORRECT TAXABLE INCOME. THE APPEAL IS NOTHING BUT CONTINUA TION OF ASSESSMENT PROCEEDING. EVEN THOUGH THE ASSESSEE HA S NOT RAISED ANY SPECIFIC GROUND WITH REGARD TO ADDITION OF ` 20 LAKHS UNDER SECTION 68 OF THE ACT, THE APPEAL BEFORE THIS TRIBU NAL IS ONLY IN RESPECT OF THE ADDITION MADE BY THE ASSESSING OFFIC ER UNDER SECTION 68 OF THE ACT TO THE EXTENT OF ` 20 LAKHS. THEREFORE, THIS TRIBUNAL IS 5 I.T.A. NO.2163/MDS/13 I.T.A. NO.2181/MDS/13 OF THE CONSIDERED OPINION THAT THE GROUND RAISED BY THE ASSESSEE BEFORE THIS TRIBUNAL NEEDS TO BE ADJUDICATED ON MER IT. IN OTHER WORDS, THE FIRST APPELLATE AUTHORITY HAS TO ADJUDIC ATE THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF T HE ACT ON MERIT. REMITTING THE MATTER TO THE CIT(APPEALS) WITH A DIR ECTION TO CONSIDER THE ISSUE OF UNEXPLAINED CASH CREDIT OF ` 20 LAKHS ON MERIT WOULD NOT PREJUDICE THE INTEREST OF REVENUE IN ANY WAY. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO EXPLAIN MERIT OF THE MATTER BEFORE THE CIT(APPEALS) WOULD PROMOTE THE CAUSE OF JUSTICE. THEREFORE, THE ORDER OF THE CIT(APPEALS) IS SET ASIDE AND THE ISSUE OF ADDITION OF ` 20 LAKHS AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT , IS REMITTED BACK TO THE FILE OF THE CIT(APPEALS). THE CIT(APPE ALS) SHALL RECONSIDER THE ISSUE ON MERIT AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY TO THE ASSESSEE. 6. NOW COMING TO REVENUES APPEAL, THE ONLY ISSUE A RISES FOR CONSIDERATION IS WITH REGARD TO DIRECTION OF THE CI T(APPEALS) TO SET OFF THE UNABSORBED DEPRECIATION AGAINST THE INCOME ASSESSED AS INCOME FROM UNDISCLOSED SOURCE UNDER SECTION 68 OF THE ACT. 6 I.T.A. NO.2163/MDS/13 I.T.A. NO.2181/MDS/13 7. SINCE THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT IS REMITTED BACK TO THE FILE OF THE CIT(APPEALS) IN THE EARLY PART OF THIS ORDER, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE CLAIM OF THE ASSESSEE WITH REGARD TO SET OFF OF UNABSORBED DEPRECIATION ALSO NEEDS TO BE RECONSIDER ED BY THE CIT(APPEALS). ACCORDINGLY, THE ORDER OF THE CIT(AP PEALS) IS SET ASIDE AND THE ISSUE OF ADJUSTMENT OF UNABSORBED DEP RECIATION AGAINST THE INCOME FROM UNDISCLOSED SOURCE IS ALSO REMITTED BACK TO THE FILE OF THE CIT(APPEALS). THE CIT(APPEALS) SHA LL RECONSIDER THE ISSUE AFRESH AND THEREAFTER DECIDE THE SAME IN ACCO RDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE . 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE AND THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 18 TH DECEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 18 TH DECEMBER, 2015. KRI. 7 I.T.A. NO.2163/MDS/13 I.T.A. NO.2181/MDS/13 1 -089 :9)0 /COPY TO: 1. ASSESSEE 2. ASSESSING OFFICER 3. 4 ;0 () /CIT(A)-II, COIMBATORE 4. 4 ;0 /CIT, CENTRAL-III, CHENNAI 5. 9< -0 /DR 6. ( = /GF.