The ACIT, Vijayawada V. M/s East Cost Metals & Minerals Pvt., Ltd., Vijayawada

ITA 29/VIZ/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6780 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 12-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Assessment record
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 2 9 / VIZ /201 5 (ASST. YEAR : 20 05 - 0 6 ) ACIT , CIRCLE - 2(1), VIJAYAWADA. V S . M/S. EAST COAST METALS & MINERALS PVT. LTD., 59A - 11 - 2, K.P. NAGAR, VIJAYAWADA. PAN NO. AABCE 1669 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI D.J.P. ANAND SR. DR DATE OF HEARING : 09 / 0 8 /201 7 . DATE OF PRONOUNCEMENT : 18 / 0 8 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , VIJAYAWADA , DATED 30 / 1 0/201 4 FOR THE ASSESSMENT YEAR 200 5 - 0 6 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXECUTION OF T U RN KEY PROJECTS FOR DESIGNING, FABRICATION AND ERECTION OF COAL HANDLING PLANTS FOR THERMAL POWER STATIONS. THE ASSESSEE FILED A RETURN OF INCOME UNDER THE ASSESSMENT YEAR 2005 - 06 ADMITTING TOTAL INCOME OF 12,19,240/ - . THE ASSESSMENT W AS COMP LETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 2 ITA NO. 29/VIZ/2015 ( M/S. EAST COAST METALS & MINERALS PVT. LTD. ) (HEREINAFTER REFERRED TO AS THE 'ACT') AND DETERMINED TOTAL INCOME AT 85,42,547/ - . 3 . ON APPEAL BEFORE THE LD. CIT(A) , THE ASSESSEE GOT SOME RELIEF AND THE TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION IS FINALIZED AT 27,65,240/ - . H OWEVER, THE LD. COMMISSIONER , VIJAYAWADA HAS EXAMINED THE RECORDS AND HELD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE ASSESSING OFFICER HA S NOT PROPERLY EXAMINED THE CASH CREDITS IN RESPECT OF 22 CREDITORS. THEREFORE, THE LD. COMMISSIONER PASSED AN ORDER UNDER SECTION 263 AND DIRECTED THE ASSESSING OFFICER TO TAKE - UP EXAMINATION OF THE LOAN CREDITORS BY TAKING STATEMENTS ON OA T H; OBTAINING COPIE S OF BANK ACCOUNTS HELD BY THEM; VERIFY THE CREDITS APPEARING IN THEIR BANK ACCOUNTS ETC. AS PER THE DIRECTIONS OF THE LD.COMMISSIONER, THE ASSESSING OFFICER HAS ISSUED A NOTICE TO THE ASSESSEE ON 16/12/2010 DIRECTING THE ASSESSEE TO APPEAR BEFORE HIM, HOWEVER, NEITHER ASSESSEE APPEARED NOR FILED ANY EXPLANATION. IN THE ABSENCE OF PERSONAL APPEARANCE AND NECESSARY EVIDENCE, THE ASSESSING OFFICER HAS TREATED THE ENTIRE CREDITS AS A BOGUS CREDIT AND THE ASSESSMENT IS COMPLETED EXPARTE BY DISA LLOWING THE ENTIRE SHARE APPLICATION MONEY. 4 . ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE HAS FILED COPIES OF THE CONFIRMATION LETTERS AND AFFIDAVITS OF THE CREDITORS . THE 3 ITA NO. 29/VIZ/2015 ( M/S. EAST COAST METALS & MINERALS PVT. LTD. ) LD.CIT(A) HAS FORWARDED THE SAME TO THE ASSESSING OFFICER AND CALLED THE REMAND REPORT. THE ASSESSING OFFICER ADDRESSED THE REMAND REPO R T TO THE RANGE HEAD (ADDL. CIT) DATED 28/02/2013, 04/04/2013 & 17/04/2013. THE RANGE HEAD (ADDL. CIT) ON GOING THROUGH THE REMAND REPORT, HE FOUND THAT THE ASSESSING OFFICER DID NOT FOLLOW THE DIRECTIONS AS SPECIFIED IN THE ORDER PASSED UNDER SECTION 263 AND HENCE, DIRECTED THE ASSESSING OFFICER VIDE LETTER S DATED 01/03/2013, 27/03/2013, 05/04/2013 & 19/04/2013 TO CARRYOU T PROPER INVESTIGATION AND TO SUBMIT REPORT. THEREFORE, THE ASSESSING OFFICER WAS UNABLE TO FORWARD THE REMAND REPORT TO THE LD. CIT(A). MEANWHILE, THE LD. CIT(A) ISSUED A REMINDER TO THE ASSESSING OFFICER CALLING REMAND REPORT AND THE REPORT FROM THE AS SESSING OFFICER WAS RECEIVED BY THE LD. CIT(A) ON 22/09/2014 WHICH CONTAINS ONLY PART INFORMATION. HOWEVER, THE LD.CIT(A) AFTER CONSIDERING THE REMAND REPORTED DATED 28/02/2013 , WHICH IS AVAILABLE ON ASSESSMENT RECORD , HAS DECIDED THE APPEAL AND GR A NTED RELIEF TO THE ASSESSEE. 5. LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT THE ASSESSEE NEITHER APPEARED BEFORE THE ASSESSING OFFICER NOR FILED ANY INFORMATION. THEREFORE, THE FINDING GIVEN BY THE LD. CIT(A) THAT THE ASSESSEE HAS FILED THE AFFIDAVI T S AND ALSO CONFIRMATION LETTERS FROM THE CREDITORS IS NOT CORRECT. HE ALSO POINTED OUT THAT THE LD. CIT(A) DECIDED THE ISSUE , BASED ON THE INCOMPLETE REMAND REPORT DATED 28/ 02/2013 WHICH IS NOT CORRECT. THEREFORE, HE PRAYED THAT THE ISSUE MAY BE 4 ITA NO. 29/VIZ/2015 ( M/S. EAST COAST METALS & MINERALS PVT. LTD. ) REMITTED BACK TO THE ASSESSING OFFICER TO DECIDE DENOVO IN ACCORDANCE WITH LAW. 6 . PER CONTRA , L EARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LD. CIT(A) BY CONSIDERING THE CONFIRMATION LETTERS , AFFIDAVITS AND ALSO REMAND REPORT OF THE ASSESSING OF FICER, THE APPEAL HAS BEEN DECIDED. THEREFORE, THE ORDER PASSED BY THE LD. CIT(A) MAY BE UPHELD. 7 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . IN THIS APPEAL, THE ASSESSMENT IS COMPLETED ORIGINALLY , UNDER SECTION 143(3) ON 17/12/2007 . THEREAFTER, LD. COMMISSIONER B Y EXERCISING HIS POWERS CONFERRED UNDER SECTION 263, HAS DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT . AS PER THE DIRECTIONS, THE ASSESSING OFFICER HAS IS SUED A NOTICE TO THE ASSESSEE TO APPEAR BEFORE HIM. THE ASSESSEE NEITHER APPEAR ED NOR FILED ANY INFORMATION BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT EXPARTE BY TREATING THE ENTIRE CREDITS AS BOGUS. BEFORE THE LD. CIT(A) THE ASSESSEE HAS FILED AFFIDAVITS AND CONFIRMATION LETTERS FROM THE CREDITORS. WE FIND THAT THE ASSESSEE HAS NOT AT ALL COOPERATED WITH THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT. THE A SSESSMENT ORDER IS VERY CLEAR THAT NEITHER ASSESSEE APPEARED NOR FILED ANY DETAILS. FURTHER , LD.CIT(A) , BASED ON THE AFFIDAVITS AND CONFIRMATION LETTERS FILED BY THE ASSESSEE, CALLED THE REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER PREPARED A REMAND REPORT AND 5 ITA NO. 29/VIZ/2015 ( M/S. EAST COAST METALS & MINERALS PVT. LTD. ) THE SAME IS ADDRESSED TO THE RANGE HEAD (ADDL. CIT) AND THE RANGE HEAD (ADDL. C IT) AFTER GOING THROUGH THE REMAND REPORT, HE FOUND THAT REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER IS NOT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE LD. COMMISSIONER IN 263 PROCEEDINGS AND DIRECTED THE ASSESSING OFFICER VIDE LETTERS DATED 01/03/ 2013, 27/03/2013, 05/04/2013 & 19/04/2013 TO CARRYOUT PROPER INVESTIGATION AND RESUBMIT THE REPORT. THEREFORE, THE RANGE HEAD (ADDL. CIT) DID NOT FORWARD THE ASSESSING OFFICERS REPORT TO THE LD. CIT(A). THE LD. CIT(A) HAS CALLED THE REMAND REPORT AND ON THE BASIS OF INCOMPLETE REPORT, DATED 28/02/2013 DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE. WE FIND TH A T WHEN RANGE HEAD (ADDL. CIT) HAS FOUND THAT THE ASSESSING OFFICER HAS NOT CARRIED OUT THE INVESTIGATION AS DIRECTED BY THE LD.COMMISSIONER WHILE PASSING THE ORDER UNDER SECTION 263 AND DIRECTED THE ASSESSING OFFICER TO MAKE PROPER ENQUIRY . WHEN IT IS IN THE PROCESS, THE LD. CIT(A) CALLED THE REMAND REPORT AND DECIDED THE ISSUE. WE FIND THAT LD. CIT(A) IS NOT CORRECT IN DECIDING THE APPEAL BASED O N INCOMPLETE REMAND REPORT DATED 28/02/2013. AS PER SUB - SECTION (4) TO SECTION 250, T HE COMMISSIONER (APPEALS) MAY, BEFORE DISPOSING OF ANY APPEAL, MAKE SUCH FURTHER INQUIRY AS HE THINKS FIT, OR MAY DIRECT THE ASSESSING OFFICER TO MAKE FURTHER INQUIRY AN D REPORT THE RESULT OF THE SAME TO THE COMMISSIONER (APPEALS) . FROM THE ABOVE, IT IS CLEAR CRYSTAL CLEAR THAT LD. COMMISSIONER HAS A POWER TO MAKE ENQUIRY INDEPENDENTLY OR ENQUIRY MAY CARRY OUT THROUGH ASSESSING OFFICER. IN 6 ITA NO. 29/VIZ/2015 ( M/S. EAST COAST METALS & MINERALS PVT. LTD. ) THE PRESENT CASE, BASED ON THE INCOMPLETE ENQUIRY BY THE ASSESSING OFFICER, THE LD. CIT(A) DECIDED THE APPEAL WHICH IS CONTRARY TO LAW AND IS NOT PERMISSIBLE. THEREFORE, IN OUR OPINION, THE ORDER PASSED BY THE LD.CIT(A) HAS TO BE SET ASIDE. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND DIRECTED THE ASSESSING OFFICER TO DECIDE THE ENTIRE APPEAL DENOVO ON THE BASIS OF DIRECTIONS GIVEN BY THE LD.COMMISSIONER UNDER SECTION 263. 9. I N THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON TH IS 1 8 T H DAY OF AUGUST , 201 7 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 8 T H AUGUST , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE - M/S. EAST COAST METALS & MINERALS PVT. LTD., 59A - 11 - 2, K.P. NAGAR, VIJAYAWADA. 2. THE REVENUE - ACIT, CIRCLE - 2(1), VIJAYAWADA. 3. THE CIT , VIJAYAWADA . 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R . 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.