M/s. Abad Exports Ltd, Cochin V. The ACIT, Cochin

ITA 253/COCH/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3887 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: A SATYANARAYANAN
• Keywords: Earning of tax free income
• Section: 142(1); 14A; 263

Judgement Text

ITA NO. 2 53/C/2016 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH KOCHI BEFORE S/ SH RI ABRAHAM P GEORGE , A M & GEORGE GEORGE K, JM ITA NO 253/COCH/2016 ( A SST YEAR 2011 - 12 ) ABA D EXPORTS PVT LTD JEW TOWN ROAD KOCHANGADI KOCHI 2 VS THE ASST COMMR OF INCOME TAX CIRCLE 1 (1) KOCHI ( APP ELLANT ) (RESPONDENT) PAN NO. AABCA9685R ASSESSEE BY SH A SATYANARAYANAN REVENUE BY SRI A DHANARAJ, SR DR DATE OF HEARING 27 TH JULY 2017 DATE OF PRONOUNCEMENT 27 TH JULY 2017 OR D ER PER ABRAHAM P GEORGE . AM : THE ASSESSEE , THOUGH THIS APPEAL , ASSAILED AN ORDER DATED 23.3.2016 OF THE PRIN CIPAL COMMISSIONER OF INCOME T A X, U/S 263 OF THE INCOME TAX ACT, 1961. 2 THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT ORDER WHICH WAS REVISED BY THE LD PRINCIPAL COMMISSIONER OF INC OME TAX , INVOKING POWERS VESTED ON HIM U/S 263 OF THE ACT, WAS NEITHER ERRONEOUS N OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. AS PER LD AR, LIABILITY OF SALES TAX, WHICH WAS ALLOWED BY THE ASSESSING OFFICER HAD CRYSTALLIZED DURING THE RELEVANT PREVIOUS YEAR AND IT WAS DUE TO THIS REASON ASSESSEE CLAIMED IT AS EXPENDITURE. V IS - - VIS , APPLICATION U/S 14A IS CONCERNED, THE LD AR SUBMITTED THAT THE ITA NO. 2 53/C/2016 2 ASSESSEE HAD NO EXEMPT INCOME AND THEREFORE , THERE W A S NO QUESTION APPLICA TION OF SECTION 14A OF THE A CT. AS PER LD AR , CIT HAD REVISED THE ASSESSMENT ORDER FOR THE ABOVE TWO REASONS. SINCE THE ASSESSMENT ORDER WAS IN ACCORDANCE WITH LAW, AS PER LD AR, SECTION 263 C OULD NOT HAVE BEEN INVOKED. PER CONTRA, LD DR SUPPORTED THE ORDER OF THE CIT. 3 WE HAVE H EARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ASSESSEE I S ENGAG ED IN THE BUSINESS OF PROCES SING AND EXPORTING OF SEA FOOD AND OPERATING COLD STOR E. A SSESSEE HAD FILED RETURN FOR THE IMPUGNED ASSESSMENT YEAR DECLARING LOSS OF RS. 56,31,177/ - . HOW THE RETURN HAS BEEN DEALT WITH , IS CLEAR FROM THE ORIGINAL ASSESSMENT ORDER DATED 10.2.2014, WHICH IS REPRODUCED BELOW: 1. THE ASSESSEE COMPANY M /S ABAD EXPORTS PRIVATE LIMITED IS ENGAGED IN THE BUSINESS OF PROCESSING AND EXPORTING OF SEA FOOD AND OPERATING COLD STORE. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2011 - 12 ON 06 - 01 - 2011, DECLARING TOTAL INCOME OF RS. NIL AND CURRENT YEAR LOSS OF RS. 56,31,177/ - . 2. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND A NOTICE U/S 143(2), DATED 31107/2012 ISSUED AND SERVED ON ASSESSEE ON 08108/2012. 3. A NOTICE U/S 142(1) DATED 02/07/2013 WAS ISSUED, CALLING FOR DETAILS. IN RESPONSE TO THE NOTICES AS WELL AS ON SUBSEQUENT POSTING DATES, MR. RADHESH L BHAT, FCA, A.R. OF THE ASSESSEE ATTENDED THE HEARINGS ON VARIOUS DATES AS PER ORDER SHEET AND THE CASE WAS DISCUSS ED WITH HIM. HENCEFORTH THE ASSESSMENT IS COMPLETED AS ACCEPTING THE RETURNED LOSS. 4. ASSESSMENT COMPLETED AS UNDER: TOTAL LOSS AS PER RETURN (RS.56,31,177/ - ) ROUNDED OFF TO (U/S 288A) (RS.56,31,180/ - ) AS ASSESSEE HAS BOOK LOSS OF (RS. 69,86, 398/ - ) TAX PAYABLE UNDER MAT IS NIL . ASSESSED U / S 143(3). ISSUED DEMAND NOTICE. ITA NO. 2 53/C/2016 3 4 IN OUR OPINION, THERE IS NOTHING ON RECORD TO SHOW THAT ASSESSING OFFICER HAD EVER ENQUIRED INTO THE CLAIM OF THE ASSESSEE WITH REGARD TO SALES TAX . HE HAD ALSO NOT CONSIDERED THE QUESTION OF ANY DISAL LOWANCE U/S 14A OF THE AC T. IT MAY BE TRUE THAT THE ASSESSEE WHEN IT DID NOT HAVE ANY EXEMPT INCOME, COULD NOT BE VISITED WITH THE REGO URS OF SECTION 14A BY VIRTUE OF THE JUDGMENT OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF REDIGNTON (INDIA) LTD VS ADIT (392 ITR 633). HOWEVER, O N A PLA I N READING OF THE ASSESS MENT ORDER , IT IS CLEAR THAT THERE WAS ABSOLUTELY NO ENQUIRY ON THE POINTS POINTED OUT BY THE LD CIT IN HIS ORDER. LACK OF ENQUIRY ITSELF, IN OUR OPINION , IS AN ERROR, WHICH IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN TAKING THIS VIEW WE ARE FORTIFIED BY THE JUDGMENT OF THE HON BLE JURISDICTIO NAL HIGH COURT IN THE CASE OF RAJA & CO VS CIT (3 35 ITR 381). THEREFORE, IN OUR OPINION, L D CIT IS JUSTIFIED IN INVOKING HIS POWERS VESTED ON HIM U/S 263 OF THE I T A CT AND NO INTERFERENCE IS REQUIRED ON THE ORDER OF THE LD CIT. 5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF JU LY 2017 . SD/ - SD/ - ( GEORGE GEORGE K ) ( ABHARAM P GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJ* COCHIN: DATED 27 TH JU LY 2017 ITA NO. 2 53/C/2016 4 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN