DCM Hyundai Limited, CHENNAI V. ACIT, CHENNAI

ITA 394/CHNY/1998

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61047 (ITAT-CHENNAI)
• Duration Of Justice: 14 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 1995-1996
• Appeal Filed On: 16-03-1998
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA IRS
• Keywords: Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO.394/MDS/1998 ASSESSMENT YEAR : 1995-1996 DCM HYUNDAI LIMITED, 104, POLLIVAKKAM VILLAGE, THIRUVALLUR TALUK, M.G.R., CHENGALPATTU DIST.,CHENNAI. PAN AAACD2712K VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-IV(1), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : DR. S. MOHARA NA, IRS, CIT DATE OF HEARING : 2 ND MAY, 2012 DATE OF PRONOUNCEMENT : 2 ND MAY, 2012 O R D E R PER DR. O.K.NARAYANAN, VICE PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVAN T ASSESSMENT YEAR IS 1995-96. THE APPEAL IS DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I V AT CHENNAI DATED 19.1.1998 AND ARISES OUT OF THE ASSESSMENT CO MPLETED UNDER SEC.143[3] READ WITH SEC.147 OF THE INCOME-TA X ACT, 1961. ITA 394/98 :- 2 -: 2. THE ASSESSEE COMPANY IN THE PRESENT CASE HAD INV ESTED ITS FUNDS RAISED IN SHORT TERM DEPOSITS, SINCE THE FUND S WERE NOT REQUIRED IMMEDIATELY FOR THE PURPOSE OF BUSINESS. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD EARNED INTEREST OF ` 13,57,508/- ON SUCH SHORT TERM DEPOSITS AND THE SAM E HAD TO BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHER SO URCES, AS THE INTEREST INCOME WAS EARNED PRIOR TO THE COMMENCEMEN T OF BUSINESS. WHEN THE MATTER WAS TAKEN IN FIRST APPEA L, THE COMMISSIONER OF INCOME-TAX(APPEALS) RELYING ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF TUTICORIN ALKALINE CHEMICALS FERTILISERS LTD. VS. CIT [227 ITR 172] UP HELD THE ORDER OF THE ASSESSING OFFICER. THE ASSESSEE TOOK UP THE MATTER BEFORE THE TRIBUNAL IN SECOND APPEAL. THE TRIBUNAL HELD T HAT THERE WAS SOME BUSINESS ACTIVITY IN THE SHAPE OF SALES DURING THE RELEVANT PREVIOUS YEAR AND THE LOWER AUTHORITIES ERRED IN HO LDING THAT THE ASSESSEE HAS NOT COMMENCED ITS BUSINESS. THE TRIBU NAL, ACCORDINGLY ALLOWED THE PRAYER OF THE ASSESSEE. 3. AGGRIEVED BY THE ABOVE ORDER, THE REVENUE FILED THE APPEAL BEFORE THE HONBLE HIGH COURT OF MADRAS. THE HONB LE HIGH COURT FOUND THAT THE ASSESSEE HAD FURNISHED FOR THE FIRST TIME BEFORE THE ITA 394/98 :- 3 -: TRIBUNAL CERTAIN DETAILS REGARDING THE SALES AND OT HER ACTIVITIES STATED TO HAVE BEEN CARRIED ON BY THE ASSESSEE IN T HE RELEVANT PREVIOUS YEAR. THE HONBLE HIGH COURT ALSO OBSERVE D THAT IN THE AUDIT REPORT FILED ALONG WITH THE ORIGINAL RETURN, IT WAS SUBMITTED THAT NO PROFIT AND LOSS ACCOUNT WAS DRAWN, AS THE A SSESSEE COMPANY HAD NOT COMMENCED ITS BUSINESS. IT WAS STA TED THEREIN THAT THE ENTIRE EXPENDITURE DURING THE RELEVANT PER IOD WAS SHOWN AS PRE-OPERATIVE EXPENDITURE. THE HONBLE HIGH COU RT FOUND THAT THERE IS AN APPARENT CONTRADICTION IN THE FINDING O F FACTS MAINLY ON THE BASIS OF THE ADDITIONAL EVIDENCE PLACED BEFORE THE TRIBUNAL FOR THE FIRST TIME. 4. IN THAT CIRCUMSTANCES, THE HONBLE HIGH COURT SE T ASIDE THE ORDER OF THE TRIBUNAL AND REMANDED THE MATTER BACK TO THE TRIBUNAL FOR DECIDING THE MATTER AFRESH THROUGH THE ORDER OF THEIR LORDSHIPS DATED 30.1.2012 PASSED IN TAX CASE (APPEA L) NO. 974 OF 05. 5. IT IS THUS, THIS MATTER IS PLACED BEFORE US FOR THE SECOND TIME. 6. NOW, WE HAVE TO MAKE A FINDING OF FACT WHETHER I N FACT THE ASSESSEE HAD CARRIED OUT ANY OPERATIONAL ACTIVITY D URING THE ITA 394/98 :- 4 -: RELEVANT PREVIOUS YEAR OR NOT. AS FAR AS THE RECOR DS AND SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER ALONG WITH RETURN OF INCOME, IT IS TO BE SEEN THAT THE ASSESSEE HAD N OT CARRIED OUT ANY OPERATIONS TO INCUR LOSS OR EARN PROFIT AT THE SAME TIME. MATERIALS PLACED BEFORE THE TRIBUNAL IN THE FIRST I NNING SHOW THAT THE ASSESSEE HAD SOME ACTIVITIES OF BUSINESS NATURE . THEREFORE, IT REQUIRES A PROPER VERIFICATION OF THE ACCOUNTS, DOCUMENTS AND OTHER PARTICULARS OF THE ASSESSEE COMPANY. IF ALL THESE THINGS ARE TO BE EXAMINED BY THE TRIBUNAL, THE ASSESSING OFFIC ER ALSO SHOULD BE GIVEN AN EFFECTIVE OPPORTUNITY. THEREFORE, WE F IND IT CONVENIENT AND PROPER THAT THE MATTER BE RE-EXAMINED BY THE AS SESSING AUTHORITY. THE ASSESSING AUTHORITY IS HAVING ALL T HE BASIC FACTS OF THE CASE, HE MAY ISSUE NOTICE TO THE ASSESSEE TO PR ODUCE ALL THE EVIDENCES AND DETAILS WHICH IT HAD RELIED ON BEFORE THE TRIBUNAL IN THE FIRST ROUND SO THAT THE ASSESSING AUTHORITY CAN EXAMINE THE BONA FIDE OF THE CONTENTION OF THE ASSESSEE COMPANY THAT IT HAD CARRIED OUT CERTAIN BUSINESS OPERATIONS IN THE RELE VANT PREVIOUS YEAR. THE ASSESSING AUTHORITY MAY COME TO A LAWFUL AND APPROPRIATE DECISION AFTER CARRYING OUT THE VERIFIC ATION AS DIRECTED ABOVE. ITA 394/98 :- 5 -: 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THIS MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING AUTHORIT Y FOR FRESH CONSIDERATION AND PASSING DE NOVO ASSESSMENT ORDER. THE ASSESSEE IS TO BE GIVEN AN EFFECTIVE OPPORTUNITY OF BEING HEARD. 8. IN RESULT, THE APPEAL FILED BY THE ASSESSEE IS T REATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON WEDNESDAY, THE 2 ND OF MAY, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (DR. O.K.NARAYANAN) VICE-PRESIDENT CHENNAI, DATED THE 2 ND MAY, 2012 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR