ITO, CHENNAI V. Annachi Enterprises Pvt Ltd., CHENNAI

ITA 3445/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4544 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 22-12-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . , !.. $ , ) BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3445/MDS/2016 * * /ASSESSMENT YEAR: 2011-12 THE INCOME TAX OFFICER, CORPORATE WARD-1(1), CHENNAI-600 034. VS. M/S.ANNACHI ENTERPRISES PVT. LTD., NO.155A, THIRUGNANA SAMBANDAR STREET, THIRUVALEESWARAR NAGAR, CHENNAI-600 101. [PAN: AAFCA 7401 F ] ( - /APPELLANT) ( ./- /RESPONDENT) - 0 / APPELLANT BY : MR.A.V.SREEKANTH, JCIT ./- 0 /RESPONDENT BY : NONE 0 /DATE OF HEARING : 09.03.2017 0 /DATE OF PRONOUNCEMENT : 26.05.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 17.10.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 1, CHENNAI, IN ITA NO.51/14-15 (NEW NO.ITA216/CIT(A)-1/2014-15 FOR THE AY 2011-12 AND RAISED THE FOLLOWING GROUNDS: ITA NO.3445/MDS/2016 :- 2 -: 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LA W, FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO N MADE WITH REGARD TO THE ISSUE OF DIFFERENCE IN PURCHASES AS PER THE P & L ACCOUNT AN D VAT RETURN, TO THE TUNE OF RS. 28.90 LAKHS? 2.2 THE LEARNED CIT(A) FAILED TO CONSIDER THE ISSUE THAT THE DIFFERENCE IN PURCHASES AS QUANTIFIED BY THE ASSESSING OFFICER WILL HAVE A CON SEQUENT BEARING ON SALES ALSO, AND A MERE RECONCILIATION OF FIGURES, WOULD NOT SUFFICE T O FIND OUT THE EXACT DIFFERENCE, ON SALES AND PURCHASES? 3.1 THE LD. CIT(A) ERRED IN ADMITTING FRESH EVIDENCE IN TERMS OF RECONCILIATION OF PURCHASES AND SALES WITH VAT RETURNS, WITHOUT ADHERING TO THE PROVISIONS OF RULE 46A, AND ON THIS ACCOUNT ALSO THE ORDER OF THE CIT(A) IS BAD IN LAW? 3.2 THE LD.CIT(A) ERRED IN NOT CALLING FOR A REMAND REPORT FROM THE ASSESSING OFFICER, AS MANDATED UNDER RULE 46A, SINCE NO RECONCILIATION WA S FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEREAS THE SAME WAS FURNISHED DURING THE APPELLATE PROCEEDINGS ONLY ? 4. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASID E AND THAT OF THE ASSESSING OFFICER RESTORED. 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO TH E ADDITION OF RS.28.90 LAKHS REPRESENTING THE DIFFERENCE IN PURCHASES ACCO UNT AS PER THE PROFIT & LOSS A/C AND THE VAT RETURN. THE ASSESSEE FILED R ETURN OF INCOME ADMITTING TOTAL INCOME OF RS.12,26,470/- ON 17.09.2 010 FOR THE AY 2011- 12. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUN D THAT THE ASSESSEE HAS ADMITTED THE PURCHASES OF OF RS.8,53,46,285/- IN THE PROFIT & LOSS A/C AND AS PER THE VAT RETURNS, THE PURCHASES WERE DECLARED AT RS.8,24,55,300/- AND THERE WAS A DIFFERENCE OF RS.2 8,90,985/- WHICH WAS ADDED BACK TO THE INCOME. 3.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESS EE WENT ON APPEAL BEFORE THE CIT(A). THE LD.CIT(A) DELETED THE ADDIT ION OBSERVING THAT THE AO HAS MISSED/NOT CONSIDERED THE CLARIFICATIONS SUB MITTED BY THE ASSESSEE ITA NO.3445/MDS/2016 :- 3 -: VIDE LETTER DATED 12/03/2014 AS THE ASSESSMENT WAS PASSED ON 10/03/2014. THE RELEVANT PART OF THE CIT(A) IS REPR ODUCED AS UNDER: 7. ADDRESSING THE ISSUES RAISED WITH REGARD TO PURC HASES, IN PARA 2.3 OF THE ASSESSMENT ORDER THE AO HAS WORKED OUT A DIFFERENTIAL OF RS.28,9 0,985/- AS BEING EXCESS PURCHASE CLAIMED BY THE APPELLANT. THIS HAS BEEN DONE AFTER ADOPTING PURCHASES DEBITED TO P & L A/C AT RS.8,53,46,285/- AND PURCHASES AS PER VAT RETURN S AT RS.8,24,55,300/-. IN THIS REGARD THE APPELLANT HAS CLARIFIED THAT THE AO HAS ERRED IN ADOPTING CORRECT FIGURES. IT WAS EXPLAINED THAT THE AO HAS TAKEN THE FORM-I VALUE, BE ING THE FIRST, PAGE OF THE RETURN, WHEREAS, THE PURCHASE ANNEXURES SHOW THE PURCHASES TO BE ACCOUNTED AT RS.8,31,01,461/- WHICH THE AO HAS IGNORED OR MISSED TO HAVE TAKEN. TH E BALANCE OF RS.22,44,828 (RS.8,53,46,285 RS.8,31,01,461) WAS INTIMATED TO T HE VAT DEPARTMENT BY THE APPELLANT VIDE ITS LETTER AND REVISED VAT RETURN FILED ON 17. 9.2012 ON WHICH CONSEQUENTLY INPUT TAX CREDIT (ITC) WAS DENIED. AO HAS ALSO BEEN INFORMED OF THIS BY THE APPELLANT VIDE ITS LETTER FILED IN TAPAL ON 12.3.2014 WHICH MISSED THE ATTENT ION OF THE AO, THE ASSESSMENT ORDER BEING DATED 10.03.2014. 4.0 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE DE PARTMENT IS ON APPEAL BEFORE US. APPEARING FOR THE REVENUE, THE LD.DR ARGUED THAT A T THE TIME OF ASSESSMENT, THE ASSESSEE HAS NOT FURNISHED THE RECO NCILIATION STATEMENT AND THE ASSESSEE HAS FURNISHED THE FRESH EVIDENCE I N THE FORM OF RECONCILIATION OF PURCHASE OF SALES WITH VAT RETURN S. THE SAME INFORMATION WAS NOT PLACED BEFORE THE AO. THEREFOR E, THE INFORMATION SUBMITTED BEFORE THE AO WOULD CONSTITUTE A FRESH EV IDENCE AND AN OPPORTUNITY SHOULD BE GIVEN TO THE AO BUT THE LD.CI T(A) ALLOWED THE APPEAL OF THE ASSESSEE WITHOUT GIVING OPPORTUNITY A S REQUIRED UNDER RULE 46A OF INCOME TAX RULES. THEREFORE, THE LD.DR VEHE MENTLY ARGUED THAT THE CASE SHOULD GO BACK TO THE FILE OF AO FOR VERIF ICATION AND RECONCILIATION OF THE DIFFERENCE IN PURCHASES. 5.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. ITA NO.3445/MDS/2016 :- 4 -: THE ASSESSEE HAS DEBITED A SUM OF RS.8,53,46,285/- IN PROFIT & LOSS ACCOUNT AND IT WAS NOTICED BY THE AO THAT AS PER TH E VAT RETURN, THE PURCHASES WERE RS.8,24,55,300/- AND THERE WAS A DIF FERENCE OF RS.28,90,985/- WHICH IS NOT RECONCILED BY THE ASSES SEE BEFORE THE AO. BEFORE THE LD.CIT(A) THE ASSESSEE STATED THAT THE A O HAS ERRONEOUSLY TAKEN THE FORM-I VALUE IN THE VAT RETURN WHICH IS B EING FIRST PAGE OF THE VAT RETURN WHEREAS IN ANNEXURES PURCHASES WERE ACCO UNTED AT RS.8,31,01,461/- AFTER REDUCING THE ADJUSTMENTS AND THE DIFFERENCE OF RS.22,44,828/- WAS INTIMATED TO THE VAT DEPARTMENT BY THE ASSESSEE AND CONSEQUENTLY INPUT TAX CREDIT WAS DENIED AND THE AO HAS ALSO BEEN INFORMED VIDE LETTER DATED 12.03.2014 FILED IN TAPA L. IN THIS CASE FROM THE ORDER OF THE LD.CIT(A), IT IS CLEAR THAT THE ASSESS EE HAS NOT CLARIFIED/RECONCILED THE DIFFERENCE IN PURCHASES BE FORE THE AO. THE ASSESSMENT WAS COMPLETED IN THIS CASE ON 10.03.2014 AND THE ASSESSEE HAS SUBMITTED INFORMATION ON 12.03.2014 I.E. AFTER COMPLETION OF THE ASSESSMENT AND THE A.O. COULD NOT CONSIDER THE SAME . THE LD.CIT(A) ALSO HAS NOT CALLED FOR THE REMAND REPORT. THEREFORE, W E ARE OF THE CONSIDERED OPINION THAT THE CASE SHOULD GO BACK TO THE FILE OF THE AO FOR RECONCILIATION AND VERIFICATION OF THE DIFFERENCE I N PURCHASES ACCOUNT WITH THE VAT RETURN. THEREFORE, WE REMIT THE MATTER BAC K TO THE FILE OF THE AO WITH A DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSE SSEE TO SUBMIT EXPLANATION AND RECONCILIATION OF THE DIFFERENCE IN PURCHASES AND DECIDE THE ISSUE AFRESH ON MERITS. ITA NO.3445/MDS/2016 :- 5 -: 6.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! . . $ ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 26 TH MAY, 2017. TLN 0 .$6 76 /COPY TO: 1. - /APPELLANT 4. 8 /CIT 2. ./- /RESPONDENT 5. 6 . /DR 3. 8 ( ) /CIT(A) 6. * /GF