M/s. Dharani Sugars & Chemicals Ltd., CHENNAI V. ACIT, CHENNAI

ITA 217/CHNY/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95847 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 18-06-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 25-02-2010
• Court: TRIBUNAL
• Department Lawyers: N RENGARAJ
• Assessee Lawyers: N DEVANATHAN
• Keywords: Revision of order
• Section: 43B; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.217/MDS/2010 / ASSESSMENT YEAR : 2004-05 M/S DHARANI SUGARS & CHEMICALS LTD 57, STERLING ROAD NUNGAMBAKKAM CHENNAI 600 034 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE I CHENNAI [PAN AAACD 1281F] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI N. DEVANATHAN, ADVOCATE /RESPONDENT BY : SHRI N. RENGARAJ, CIT / DATE OF HEARING : 18 - 06 - 2015 ! / DATE OF PRONOUNCEMENT : 14 - 08 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE ADMINISTRATIVE COMMISSIONER DATED 26.3.2009 PAS SED U/S 263 OF THE ACT AND PERTAINS TO ASSESSMENT YEAR 2004-05. 2. SHRI N. DEVANATHAN, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ASSESSEE DEDUCTED PURCHASE TAX AND CESS F ROM THE TAXABLE ITA NO.217/10 :- 2 -: INCOME AS THEY HAVE BEEN ALLOWED IN THE EARLIER ASS ESSMENT YEARS BUT ACTUALLY PAID DURING THE FINANCIAL YEAR 2002-04. A FTER VERIFYING THE DETAILS FILED BY THE ASSESSEE, THE PROVISION MADE TO THE EXTENT OF ` 2,04,64,475/- WAS REVERSED DURING THE FINANCIAL YEA R 2003-04 DUE TO WAIVER BY THE STATE GOVERNMENT UNDER SAMADHAN SCHEM E. HOWEVER, THE ADMINISTRATIVE COMMISSIONER FOUND THAT IT IS A CESSATION OF LIABILITY AND THE ASSESSEE HAS NOT ACTUALLY INCURRED THIS EX PENDITURE TO CLAIM DEDUCTION U/S 43B OF THE ACT. ACCORDINGLY, THE C OMMISSIONER SET ASIDE THE ORDER OF THE ASSESSING OFFICER WITHOUT RE CORDING ANY SATISFACTION OR REASON HOW THE ORDER OF THE ASSESSI NG OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. REFERRING TO SECTION 263 OF THE ACT, THE LD. COUNSEL SUBMITTED T HAT UNLESS AND UNTIL THE COMMISSIONER CAME TO THE CONCLUSION THAT THE OR DER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE, HE CANNOT EXERCISE REVISIONAL JURISDICTION U/S 263 OF THE ACT. THE LD. COUNSEL PLACED HIS RELIANCE ON THE DECISION OF RAJASTHAN HIGH COURT IN CIT VS JAI MEWAR WINE CONTRACTORS [2001] 2 51 ITR 785. 3. ON THE CONTRARY, SHRI N. RENGARAJ, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ONLY BECAUSE OF SAMAD HAN SCHEME, THE STATE GOVERNMENT WAIVED THE PURCHASE TAX PAYABLE BY THE ASSESSEE. THERE WAS NO ACTUAL PAYMENT, THEREFORE, THE EXPENDI TURE CANNOT BE ALLOWED U/S 43B OF THE ACT. ON A QUERY FROM THE B ENCH WHETHER THE ITA NO.217/10 :- 3 -: COMMISSIONER SATISFIED HIMSELF THAT THE ORDER OF TH E ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE, THE LD. DR VERY FAIRLY SUBMITTED THAT SUCH A FINDING WAS NO T RECORDED WHILE SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 263 OF THE A CT. THE COMMISSIONER MAY CALL FOR THE RECORDS AND IF HE IS SATISFIED THAT ANY ORDER PASSED BY THE ASSESSING OFFICER IN ANY PROCEE DING IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY, AFTER GIVIN G AN OPPORTUNITY TO THE ASSESSEE, PASS SUCH ORDER AS HE DEEMS FIT. I N THIS CASE, THE COMMISSIONER CALLED FOR THE RECORDS AND FOUND THAT THE ORDER OF THE ASSESSING OFFICER ALLOWING THE CLAIM OF THE ASSESS EE TOWARDS PURCHASE TAX COULD NOT BE VERIFIED FROM THE RECORDS WHETHER THE ASSESSEE HAS CREDITED/WRITTEN BACK THE AMOUNT IN THE PROFIT & LO SS ACCOUNT TO CLAIM IT AS A DEDUCTION IN THE COMPUTATION STATEMENT. HO WEVER, THE COMMISSIONER HAS NOT RECORDED ANY SATISFACTION WHET HER THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE. JUST TO VERIFY WHETHER THE ASSESSEE HAS CREDITED OR WRITTEN BACK THE AMOUNT IN THE PROFIT & LOSS ACCOUNT, THE C OMMISSIONER SET ASIDE THE ORDER OF THE ASSESSING OFFICER. IN FACT, THE RAJASTHAN HIGH COURT IN JAI MEWAR WINE CONTRACTORS(SUPRA) EXAMINED THIS ISSUE AND ITA NO.217/10 :- 4 -: FOUND THAT UNLESS A FINDING WAS RECORDED THAT THE A SSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE, THE COMMISSIONER CANNOT REVISE THE ORDER OF THE ASSESSI NG OFFICER. THE RAJASTHAN HIGH COURT HAS OBSERVED AS FOLLOWS AT PAG E 789 OF THE ITR: THE VERY FACT THAT THE COMMISSIONER IS REQUIRED TO MAKE AN ORDER AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE INGRAINS IN THE PROCESS THE REQUIREMENT OF RECORDING REASONS FOR HIS CONCLUSION, AS IS NECESSARY FOR ANY QUASI- JUDICIAL ORDER REQUIRED TO BE MADE BY A QUASI-JUDIC IAL AUTHORITY. IT CANNOT BE DOUBTED NOR IT HAS BEEN QUE STIONED THAT ORDERS UNDER SECTION 263 BEAR THE STAMP OF QUASI- JUDICIAL NATURE AND REQUIRE TO BE SUPPORTED BY REAS ONS FOR THEIR CONCLUSION. THE NECESSARY CONSEQUENCE IS THAT WHILE PASSING THE ORDER REVISING AN ORDER PASSED BY A SUB ORDINATE OFFICER OF THE RANK OF THE INCOME-TAX OFFICER OR ASS ISTANT COMMISSIONER OF INCOME-TAX, THE COMMISSIONER MUST RE CORD REASONS IN SUPPORT OF HIS CONCLUSION THAT THE ORDER IS REVISED BEING ERRONEOUS AND THAT IT WOULD BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE DUE TO SUCH ERRONEOUSNESS. IF THE ORDER IS TESTED ON THE AFORESAID ANVIL, IT IS APPARENT THAT THE COMMISSIONER HAS RECORDED HIS SATISFACTION BEFORE ISSUANCE OF NOTICE TO THE ASSESSEE, THAT HAVING BEL IEVED THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTER ESTS OF THE REVENUE, HE ISSUED TO THE ASSESSEE NOTICE FOR GIVIN G AN OPPORTUNITY OF HEARING BUT THE ORDER IS UNEQUIVOCAL LY SILENT AFTER NOTICE WAS GIVEN TO THE ASSESSEE AND HE WAS H EARD, TO RECORD ANY FINDING AS A RESULT OF SUCH HEARING WHET HER THE ORDER OF THE INCOME-TAX OFFICER HOLDING THE FIRM TO BE GENUINE IS ERRONEOUS IN ANY MANNER OR IT IS PREJUDI CIAL TO THE INTERESTS OF THE REVENUE. WHEN NO FINDING HAS BEEN RECORDED, IT IS VERY DIFFICULT TO ASSUME THAT THE C OMMISSIONER MUST HAVE ARRIVED AT A FINDING AS TO THE ERRONEOUS NATURE OF THE ORDER SOUGHT TO BE REVISED OR IF SUCH ORDER IS ALLOWED TO STAND, IT WOULD BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ITA NO.217/10 :- 5 -: 5. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE RAJASTHA N HIGH COURT AND FOR THE REASONS STATED THEREIN, THE ORDER OF THE ADMINISTRATIVE COMMISSIONER IS SET ASIDE AND ACCORD INGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2015, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 14 TH AUGUST, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF