Sri.K.Ravindranathan Nair, Kollam V. ADCIT, Kollam

ITA 287/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69062 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 11-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2013
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: T V HARIHARAN
• Keywords: Principle of natural justice; Assessment record
• Section: 143(3); 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 287/COCH/2013 ASSESSMENT YEAR : 2008-09 SHRI K. RAVINDRANATHAN NAIR, PROP. VIJAYAKLAXMI CASHEW CO., KOCHUPILAMMOODU, KOLLAM-691 001. [PAN:AEJPP 9867M] VS. THE ADDITIONAL COMMISSIONER OF INCOME-TAX, KOLLAM RANGE, KOLLAM. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI T.V. HARIHARAN, CA REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 11/09/2013 DATE OF PRONOUNCEMENT 13/11/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE VALIDITY OF REVISION ORDER PASSED BY LD CIT, TRIVANDRUM U/S 263 OF THE ACT IN HIS HANDS AND IT RELATES TO THE ASSESSMENT YEAR 2008-09. 2. THE FACTS THAT LED TO THE INITIATION OF REVISION PROCEEDINGS ARE STATED IN BRIEF. THE ASSESSMENT IN THE HANDS OF THE ASSESSEE FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION WAS COMPLETED U/S 143(3) OF THE ACT ON 29.12.2010. ON EXAMINATION OF ASSESSMENT RECORD, THE LD CIT NOTICED THAT (A) THE ASSESSEE HAS DECLARED PROFIT FROM SALE OF DEPB/VKUY AT RS.18,43,773/- AGAINST THE GROSS RECEIPTS OF RS.3,68,75,462/-. TH E WORKING OF PROFIT WAS NOT AVAILABLE IN THE RECORD. (B) THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB OF THE ACT ON ESTIMATED BASIS IN RESPECT OF ITS VADISSILERU UNIT LOCATED IN ANDHR A PRADESH. I.T.A. NO.287./COCH/2013 2 HENCE, THE LD CIT CONSIDERED THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE AND ACCORDINGLY INITIATED REVI SION PROCEEDINGS. 3. BEFORE LD CIT, THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS (342 ITR 49) AND CONTENDED THAT ITS CLAIM WAS IN ORDER. HOWEVER, THE LD CIT NOTICED THAT THE ASSESS EE HAS DECLARED PROFIT FROM DEPB/VKUY SALES ON ESTIMATED BASIS @ 5% OF THE SALES VALUE, WHICH IS NOT IN ACCORDANCE WITH THE DECISION RENDERED BY HONBLE SU PREME COURT IN THE CASE OF TOPMAN EXPORTS (SUPRA). WITH REGARD TO THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT, THE ADDL. COMMISSIONER HAD REPORTED THAT THE ASSESSEE D ID NOT MAINTAIN SEPARATE BOOKS OF ACCOUNT FOR THE UNIT LOCATED IN ANDHRA PRADESH. HE NCE, THE LD CIT SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO REDO THE AS SESSMENT. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. THE LD. AR CONTENDED THAT THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER AFTER VERIFICATION OF ALL DETAILS. HENCE, THE VIEW TAKEN BY THE ASSESSING OFFICER IS ONE OF THE POSSIBLE VIEWS AND HENCE, THE LD. CIT WA S NOT JUSTIFIED IN INVOKING THE REVISION PROCEEDINGS. THE LD A.R PLACED RELIANCE O N THE FOLLOWING CASE LAW IN THIS REGARD. (A) MALABAR INDUSTRIAL COMPANY VS. CIT (2000)(243 ITR 87) (B) PATEL COTTON COMPANY LTD VS. ACIT (1998)(64 IT D 273) (C) CIT VS. GOYAL PRIVATE FAMILY SPECIFIC TRUST (1 998)(171 ITR 698) 5. ON THE OTHER HAND, THE LD. DR CONTENDED THAT THE ASSESSING OFFICER DID NOT APPLY HIS MIND AND DID NOT EXAMINE THE ISSUES POINT ED OUT BY LD CIT. HENCE, THE IMPUGNED ASSESSMENT ORDER IS ERRONEOUS AND PREJUDIC IAL TO THE INTERESTS OF THE REVENUE AND ACCORDINGLY, THE LD. CIT WAS JUSTIFIED IN PASSI NG THE REVISION ORDER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WE NOTICE FROM THE ASSESSMENT ORDER THAT THE AO DID NOT DISCUSS ANYTHI NG ABOUT THE ISSUES THAT WERE POINTED OUT BY LD CIT. IT IS WELL SETTLED PROPOSIT ION OF LAW THAT THE ASSESSMENT ORDER WOULD BE RENDERED ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF THERE IS I.T.A. NO.287./COCH/2013 3 LACK OF ENQUIRY ON THE PART OF THE ASSESSING OFFICE R ON ANY OF THE ISSUES HAVING TAX IMPACT. FOR THIS PROPOSITION, A GAINFUL REFERENCE MAY BE MADE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. VS. CIT (243 ITR 83). WE FEEL IT PERTINENT TO REFER TO THE DECISION RENDERED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GRASIM INDUSTRIES LTD. V CIT (321 ITR 9 2), WHEREIN THE COURT HAS DISCUSSED ABOUT THE SCOPE OF PROVISIONS OF SECTION 263 AS UND ER: SECTION 263 OF THE INCOME-TAX ACT, 1961 EMPOWERS TH E COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN, BY THE ASS ESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER A N ENQUIRY AS IS NECESSARY, ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE KE Y WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORDER MUST BE CONSIDERE D BY THE COMMISSIONER TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THIS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMENTS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83, THE SUPREME COURT HELD THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ON LY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. THE SUPREME COURT HELD THAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APP LICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE OR W ITHOUT APPLICATION OF MIND, WOULD BE AN ORDER FALLING IN THAT CATEGORY . THE EXPRESSION PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE SUPREME COURT HELD, IT IS OF WIDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX. W HAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMEN T OF THE SUPREME COURT (HEAD NOTE) : THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A SSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE O F THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF T HE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE I N LAW. THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR I NDUSTRIAL CO. LTD. [2000] 243 ITR 83 (SC) HAS BEEN FOLLOWED AND EXPLAI NED IN A SUBSEQUENT I.T.A. NO.287./COCH/2013 4 JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA L TD. [2007] 295 ITR 282. THERE MAY NOT BE ANY DISPUTE THAT THE REVISION PROC EEDING SHALL NOT LIE ON THE ISSUES ON WHICH THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE V IEW AFTER EXAMINING AND APPLYING HIS MIND ON IT. IF THE AO DID NOT MAKE ANY ENQUIRY ON ANY OF THE PERTINENT ISSUE, IT WILL RESULT IN LACK OF APPLICATION OF MIND. 7. THE HONBLE DELHI HIGH COURT, IN THE CASE OF TOYOTO MOTOR CORPORATION (306 ITR 49), HAS HELD THAT THE PROCEEDINGS BEFORE THE AO AR E QUASI JUDICIAL PROCEEDINGS AND A DECISION TAKEN BY THE AO IN THIS REGARD MUST BE SUP PORTED BY REASONS. IN THE CASE BEFORE THE DELHI HIGH COURT, THE ASSESSING OFFICER PASSED A CRYPTIC ORDER DROPPING THE PENALTY PROCEEDINGS WITHOUT GIVING ANY REASON AND H ENCE THE SAID ORDER WAS REVISED BY THE LD CIT U/S 263 OF THE ACT. THE ASSESSEE CHALLE NGED THE REVISION ORDER BEFORE THE TRIBUNAL AND COULD SUCCEED. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE HONBLE DELHI HIGH COURT, WHICH UPHELD THE REVISION ORDER PASSED BY LD CIT U/S 263 OF THE ACT FOR THE REASONS STATED ABOVE. THE SAID ORD ER OF THE DELHI HIGH COURT HAS BEEN APPROVED BY THE HONBLE SUPREME COURT IN THE CASE O F TOYOTO MOTOR CORPORATION (306 ITR 52) WITH THE OBSERVATION THAT THE ASSESSING OFF ICER SHOULD PASS A REASONED ORDER. THESE DECISIONS CLEARLY BRING OUT THAT THE ASSESSME NT ORDER SHOULD BE PASSED WITH OR CONTAIN PROPER REASONS ON VARIOUS ISSUES. 8. THE VARIOUS ISSUES POINTED OUT BY LD CIT WOULD HAVE IMPLICATION ON THE TAX COMPUTATION IF THEY ARE DECIDED AGAINST THE ASSESSE E, IN WHICH CASE THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WO ULD BECOME PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 9. IN VIEW OF THE FOREGOING DISCUSSIONS, IN OUR VIEW, THE REVISION ORDER PASSED BY LD CIT IS SUSTAINABLE AS THE SAME IS IN ACCORDANCE WIT H THE LAW. ACCORDINGLY, WE UPHOLD HIS ORDER. I.T.A. NO.287./COCH/2013 5 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 13-1 1-2013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 13TH NOVEMBER, 2013 GJ COPY TO: 1. SHRI K. RAVINDRANATHAN NAIR, PROP. VIJAYAKLAXMI CASHEW CO., KOCHUPILAMMOODU, KOLLAM-691 001. 2. THE ADDL. COMMISSIONER OF INCOME-TAX, KOLLAM RAN GE, KOLLAM. 3.THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN I.T.A. NO.287./COCH/2013 6