S.Malar, Salem V. ITO, Salem

ITA 2167/CHNY/2014

• Counselvise Citation: 216721714 RSA 2014
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: G BASKAR
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL S M C BENCH, CHENNAI ... , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ ITA NO.2167/MDS/2014 ' #$' / ASSESSMENT YEAR : 2007-08 SMT. S. MALAR, SELVAKUMAR SAGO FACTORY, 136-A, MANIKAVASAKAR STREET, FAIRLANDS, SALEM 636 016. PAN : AJEPM 1809 Q V. THE INCOME TAX OFFICER, WARD I(4), 3, GANDHI ROAD, SALEM 636 007. (&'/ APPELLANT) (()&'/ RESPONDENT) &' * + / APPELLANT BY : SHRI G. BASKAR, ADVOCATE ()&' * + / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT , # * -. / DATE OF HEARING : 23.10.2015 /0$ * -. / DATE OF PRONOUNCEMENT : 13.11.2015 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DA TED 04.07.2014 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2 I.T.A. NO.2167/MDS/14 2. SHRI G. BASKAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MAN UFACTURING AND SALE OF SAGO, STARCH FROM TAPIOCA. IN THE COURSE O F HER BUSINESS ACTIVITY, THE ASSESSEE PURCHASED TAPIOCA FROM VARIO US FARMERS. THE ASSESSING OFFICER FOUND THAT THE NAME AND ADDRESS O F THE PERSONS FROM WHOM THE TAPIOCA WAS PURCHASED, WERE NOT AVAIL ABLE IN THE RECORD. THEREFORE, HE MADE AN ADDITION OF ` 8,81,960/-. ACCORDING TO THE LD. COUNSEL, THE TAPIOCA WAS PURCHASED THROU GH BOUGHT NOTE FROM AGRICULTURISTS FROM VARIOUS VILLAGES. ACCORDI NG TO THE LD. COUNSEL, ALL THE PURCHASES WERE MADE ON CREDIT BASI S AND THE PAYMENTS WERE MADE AT A LATER STAGE. THE LD.COUNSE L FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED THE NAME AND ADDRESS OF THE MIDDLEMEN THROUGH WHOM THE PURCHASES WERE MADE. THE ASSESSEE HAS ALSO FURNISHED THREE LISTS OF 21 CLOSI NG CREDIT BALANCES. THE ASSESSING OFFICER ACCEPTED THE QUANT ITY AND COST OF PURCHASES MADE BY THE ASSESSEE. THE CIT(APPEALS) R EJECTED THE CLAIM OF THE ASSESSEE ONLY ON THE GROUND THAT THERE IS NO REFERENCE ABOUT THE MIDDLEMEN FOR PURCHASING TAPIOCA. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE IN FACT FURNIS HED NAME AND ADDRESS OF THE MIDDLEMEN ENGAGED BY HER IN PURCHASI NG TAPIOCA. IN FACT, ONE R. MANI AND K. SHANMUGAM APPEARED BEFORE THE 3 I.T.A. NO.2167/MDS/14 ASSESSING OFFICER AND THEY WERE EXAMINED BY THE ASS ESSING OFFICER. THESE TWO PERSONS CONFIRMED THE ROLE PLAY ED BY THEM AS MIDDLEMEN FOR PURCHASING TAPIOCA FOR THE ASSESSEE. SINCE THE PURCHASE WAS MADE FROM AGRICULTURISTS THROUGH AGENT S, ACCORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY ADDITION. SIN CE THE PURCHASES WERE NOT DOUBTED, THE QUANTITY IS ALSO ADMITTED, AC CORDING TO THE LD. COUNSEL, THERE CANNOT BE ANY ADDITION. 3. ON THE CONTRARY, SHRI A.V. SREEKANTH, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED PURCHASE OF TAPIOCA TO THE EXTENT OF ` 8,81,960/- FROM THE AGRICULTURISTS. THE ASSESSEE NEVER CLAIMED BEFORE THE ASSESSING OFFICER THAT THE PURCHASES WERE MADE THROUGH MIDDLEMEN. THE ASSESSI NG OFFICER FOUND THAT THE TRANSACTION WAS NOT GENUINE, THE ASS ESSEE HAS FAILED TO ESTABLISH IDENTITY OF THE CREDITORS, CREDITWORTH INESS OF CREDITORS AND GENUINENESS OF THE TRANSACTION. IN THE ABSENCE OF VERIFIABLE DETAILS, ACCORDING TO THE LD. D.R., THE ASSESSING O FFICER MADE ADDITION UNDER SECTION 68 OF THE INCOME-TAX ACT, 19 61 (IN SHORT 'THE ACT'), WHICH WAS RIGHTLY CONFIRMED BY THE CIT(APPEA LS). 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHE R SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. FROM THE ORDER OF THE 4 I.T.A. NO.2167/MDS/14 CIT(APPEALS) IT APPEARS THAT THE CIT(APPEALS) CALLE D FOR REMAND REPORT FROM THE ASSESSING OFFICER. IN FACT, THE CI T(APPEALS) REPRODUCED THE REMAND REPORT IN HIS ORDER. AFTER R EPRODUCING THE REMAND REPORT AND THE REPLY GIVEN BY THE ASSESSEE T O THE REMAND REPORT, THE CIT(APPEALS) WITHOUT MUCH OF DISCUSSION , REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESS ING OFFICER HAS COME TO A CONCLUSION THAT THE CLAIM OF PURCHASE THR OUGH MIDDLEMEN IS NOT ACCEPTABLE. THEREFORE, HE REJECTED THE CLAI M OF THE ASSESSEE. SIMILARLY, OTHER ISSUES ARE ALSO CONFIRMED WITHOUT ANY DISCUSSION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) BEING THE FIRST APPELLATE AUTHORITY, HE HAS TO RE-A PPRECIATE THE MATERIAL AVAILABLE ON RECORD. THE CIT(APPEALS) HAS TO APPRECIATE THE REMAND REPORT FILED BY THE ASSESSING OFFICER AN D THEREAFTER EXAMINE THE REPLY GIVEN BY THE ASSESSEE AND HAS TO RECORD A FINDING WHY HE IS NOT ACCEPTING THE EXPLANATION OF THE ASSE SSEE. MERELY BECAUSE THE ASSESSING OFFICER CONCLUDED THAT ENGAGE MENT OF MIDDLEMEN IS NOT ACCEPTABLE TO HIM, THAT CANNOT BE A REASON FOR THE CIT(APPEALS) TO ACCEPT THE CONCLUSION REACHED BY TH E ASSESSING OFFICER. THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE CIT(APPEALS) HAS TO EXAMINE THE MATERIAL FACTS AVAI LABLE ON RECORD AND RECORD HIS OWN REASONS FOR ARRIVING AT HIS CONC LUSION. IN THIS 5 I.T.A. NO.2167/MDS/14 CASE, THE CIT(APPEALS) HAS NOT RECORDED ANY OF HIS REASONING FOR THE CONCLUSION REACHED IN HIS ORDER. THE ORDER OF THE CIT(APPEALS) BEING A QUASI-JUDICIAL ORDER, THE APPLICATION OF MI ND SHALL REFLECT IN THE ORDER ITSELF. REPRODUCING THE REMAND REPORT AN D REPLY AND THEREAFTER SIMPLY REJECTING THE CLAIM OF THE ASSESS EE ON ONE LINE CANNOT BE APPRECIATED BY THE APPELLATE AUTHORITY. THEREFORE, THE ORDER OF THE CIT(APPEALS) IS SET ASIDE AND THE MATT ER IS REMITTED BACK TO HIS FILE. THE CIT(APPEALS) SHALL RE-EXAMIN E THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPO RTUNITY TO THE ASSESSEE. IT IS MADE CLEAR THAT THE CIT(APPEALS) S HALL PASS A SPEAKING ORDER AND THE ORDER SHALL REFLECT THE APPL ICATION OF MIND ON MATERIAL FACTS AVAILABLE ON RECORD. 5. WITH THE ABOVE OBSERVATION, THE APPEAL OF THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 13 TH NOVEMBER, 2015 AT CHENNAI. SD/- ( ... ) (N.R.S. GANESAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED, THE 13 TH NOVEMBER, 2015. KRI. 6 I.T.A. NO.2167/MDS/14 * (-34 54$- /COPY TO: 1. &' /APPELLANT-+ 2. ()&' /RESPONDENT 3. , 6- () /CIT(A), SALEM 4. , 6- /CIT, SALEM 5. 4#7 (- /DR 6. 8' 9 /GF.