M/S US TECHNOLOGY INTERNATIONAL PRIVATE LIMITED, Trivandrum V. CIT, Trivandrum

ITA 403/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58340 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 20-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: VENKATESH N
• Keywords: Non passing of speaking order; Set aside
• Section: 10B; 263

Judgement Text

1 ITA NO.403/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKARA N(AM) I.T.A NO. 403/COCH/2011 (ASSESSMENT YEAR 2006-07) M/S US TECHNOLOGY INTERNATIONAL PVT LTD VS ITO, W D.1(1) 721, NILA TECHNOPARK CAMPUS TRIVANDRUM KARIAVATTOM, KAZHAKUTTOM TRIVANDRUM-695 581 PAN : AAACU5628B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VENKATESH N RESPONDENT BY : SMT. VIJAYAPRABHA DATE OF HEARING : 20-03-2012 DATE OF PRONOUNCEMENT : 20-03-2012 O R D E R PER N.R.S. GANESAN (JM) BEING AGGRIEVED BY THE ORDER OF THE ADMINISTRATIVE COMMISSIONER U/S 263 OF THE INCOME-TAX ACT, 1961, DATED 16-03-2011 THE ASSE SSEE FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. 2. THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ADMINISTRATIVE COMMISSIONER FOUND THAT THE ORDER OF THE ASSESSING OFFICER MAY BE ERRONEOUS AND MAY BE PREJUDICIAL TO THE INTEREST OF THE REVEN UE. THE ADMINISTRATIVE COMMISSIONER HAS NOT COME TO A DEFINITE CONCLUSION THAT THE ASSESSING OFFICERS 2 ITA NO.403/COCH/2011 ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, THE EXERCISE OF POWER U/S 263 OF THE ACT IS NOT JUSTIFI ED. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE ADMINISTRATIVE COMMISSIONER HAS NOT COME TO ANY CONCLUSION THAT THE EXEMPTION GRANTED U/S 10B OF THE ACT WAS N OT CORRECT. THE ADMINISTRATIVE COMMISSIONER WITHOUT COMING TO ANY D EFINITE CONCLUSION HAS SIMPLY SET ASIDE THE ORDER OF THE ASSESSING OFFICER FOR REDOING THE ASSESSMENT. ACCORDING TO THE LD.REPRESENTATIVE WITHOUT COMING T O A DEFINITE CONCLUSION ABOUT THE EXEMPTION U/S 10B, THE ADMINISTRATIVE COMMISSIO NER CANNOT SET ASIDE THE ORDER OF THE ASSESSING OFFICER. REFERRING TO THE M ERIT OF THE CLAIM MADE BY THE ASSESSEE U/S 10B, THE LD.REPRESENTATIVE SUBMITTED T HAT THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 10B OF THE ACT. THEREFORE, IT IS THE BOUNDEN DUTY OF THE COMMISSIONER TO EXAMINE THE CASE ON MERIT BEFORE RE MANDING BACK THE MATTER FOR RECONSIDERATION. THE LD.REPRESENTATIVE PLACED HIS RELIANCE ON THE DECISION OF THIS TRIBUNAL IN KUTTUKKARAN TRADING VENTURES VS DY.CI T IN ITA NO.286/COCH/2010 ORDER DATED 04 TH OCTOBER, 2011. THE LD.REPRESENTATIVE HAS ALSO PLA CED HIS RELIANCE ON THE UNREPORTED JUDGMENT OF THE DELHI HI GH COURT IN THE CASE OF ITO VS DG HOUSING PROJECTS LTD IN ITA NO.179/2011 ORDER DAT ED 01 ST MARCH, 2012 AND SUBMITTED THAT IN THE ABSENCE OF ANY REASON FOR OBS ERVING THAT THE ORDER MAY BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, THE C.I.T. IS NOT JUSTIFIED IN INVOKING HIS JURISDICTION U/S 263 OF THE ACT. 3. ON THE CONTRARY, SMT. VIJAYAPRABHA, THE LD.DR SU BMITTED THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE CASE OF THE ASSESSEE O N MERIT WITH REGARD TO EXEMPTION U/S 10B OF THE ACT. THE LD.DR HAS ALSO P OINTED OUT THAT THE ADMINISTRATIVE COMMISSIONER HAS SIMPLY SET ASIDE TH E ORDER OF THE ASSESSING OFFICER FOR REDOING THE ASSESSMENT SINCE THE ASSESS ING OFFICER HAS NOT MADE ANY ENQUIRY WHILE GRANTING EXEMPTION U/S 10B OF THE ACT . THE LD.REPRESENTATIVE 3 ITA NO.403/COCH/2011 PLACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COU RT IN THE CASE OF RAMPYARI DEVI SARAOGI VS C.I.T. (1968) 67 ITR 84 (SC); C.I.T . VS MCMILLAN & CO (1958) 33 ITR 182 (SC) AND MALABAR INDUSTRIAL CO LTD VS C.I.T. (2 000) 243 ITR 83 (SC). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAR EFULLY GONE THROUGH THE ORDER OF THE ADMINISTRATIVE COMMISSIONER U/S 263 OF THE I NCOME-TAX ACT AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. FOR THE PURPOSE OF CLARITY WE REPRODUCE THE ORDER OF ASSESSMENT HEREUNDER: THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THE A SSESSEE FILED ITS RETURN OF INCOME ON 30/11/2006 DISCLOSING A TOTAL INCOME OF RS.2542228/-. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1). THE CASE WAS SELECTED FOR SCRUTINY AND ISSUED A NOTICE UNDER SECTION 143(2). NONE APPEARED IN RESP ONSE TO THE ABOVE NOTICE. IN RESPONSE TO THE POSTING NOTICE, S MT. BINDU M.A., COMPANY SECRETARY AND B. RAJESH, FCA APPEARED AND T HE CASE WAS DISCUSSED WITH HIM. 2. THE REPRESENTATIVE WHO APPEARED BEFORE ME ON 26/ 6/`2008 WAS ASKED TO FURNISH EVIDENCES IN SUPPORT OF THE EXP ENSES CLAIMED UNDER VARIOUS HEADS AND BOOKS OF ACCOUNTS. THE ASSE SSEE PRODUCED THE BOOKS OF ACCOUNTS BUT HAS NOT PRODUCED THE EXPEN SE VOUCHERS FOR VERIFICATION. HENCE IT IS VERY DIFFICULT TO VE RIFY THE GENUINE (SIC) OF THE EXPENSES CLAIMED. SINCE THE ASSESSEE HAS NO T PRODUCED THE EXPENSE VOUCHERS FOR VERIFICATION, A LUMP SUM DISAL LOWANCE OF RS.500000/- TO THE EXPENSES IS MADE. DISALLOWANCE R S.5,00,000/-. 3. THE ASSESSMENT IS COMPLETED AS UNDER:- TOTAL INCOME RS.25,42,228/- ADDITION AS PER PARA 2 RS. 5,00,000/- TOTAL INCOME RS.30,42,228/- TAX COMPUTATION IS AS PER ANNEXURE 4 ITA NO.403/COCH/2011 5. THE ADMINISTRATIVE COMMISSIONER FOUND THAT THE U NBILLED RECEIPT OF RS.2.56 CRORES WAS NOT BROUGHT TO TAX. THE EXEMPTI ON U/S 10B WAS WRONGLY ALLOWED. THE SALE PROCEEDS OF EXPORT WERE NOT BROU GHT TO INDIA. THE ADMINISTRATIVE COMMISSIONER FOUND THAT THE ASSESSIN G OFFICER HAS NOT CALLED FOR ANY DETAILS AND HE HAS NOT CONDUCTED ANY ENQUIRY WI TH REGARD TO CLAIM OF THE ASSESSEE. THE ADMINISTRATIVE COMMISSIONER FOUND TH AT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND IN RESPECT OF THE CLAIM MADE B Y THE ASSESSEE. THEREFORE, THE ADMINISTRATIVE COMMISSIONER FOUND THAT THE ORDER OF THE ASSESSING OFFICER IS AN ERROR. THIS RESULTED PREJUDICE TO THE INTEREST OF THE REVENUE. A BARE READING OF THE ORDER OF THE ADMINISTRATIVE COMMISSIONER CLEARL Y SHOWS THAT THE ADMINISTRATIVE COMMISSIONER CAME TO A DEFINITE CONC LUSION THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE. NOWHERE THE ADMINISTRATIVE COMMISSIONER HAS USED TH E WORD MAY. THE ADMINISTRATIVE COMMISSIONER CAME TO A DEFINITE CONC LUSION THAT THE FAILURE OF THE ASSESSING OFFICER TO CONDUCT ENQUIRY RESULTED IN ER ROR AND IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, WE ARE UNABLE TO APPRECIATE THE CONTENTION OF THE ASSESSEE THAT THE ADMINISTRATIVE COMMISSIONE R HAS NOT COME TO ANY DEFINITE CONCLUSION. THIS TRIBUNAL IS OF THE OPINI ON THAT THE ADMINISTRATIVE COMMISSIONER HAS COME TO A DEFINITE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE. AS EXTRACTED ABOVE, THE ASSESSING OFFICER HAS NOT DISCUSSED ANYT HING ABOUT THE UNBILLED RECEIPT AND THE ALLOWANCE OF EXEMPTION U/S 10B IN THE ASSES SMENT ORDER. THOUGH THE ASSESSING OFFICER IS NOT A JUDICIAL OFFICER, THE PR OCEEDING BEFORE THE ASSESSING OFFICER IS ADMITTEDLY A JUDICIAL PROCEEDING. THERE FORE, THE ORDER OF THE ASSESSING OFFICER SHALL EXPRESSLY DISCLOSE THE REASONS FOR TH E CONCLUSIONS ARRIVED AT IN THE ORDER. THE JUDICIAL ORDER SHALL SPEAK ITSELF FOR IT S CONCLUSION. WHEN THE ASSESSEE CLAIMED UNBILLED RECEIPT OF RS.2.56 CRORES AND EXEM PTION U/S 10B IT IS THE 5 ITA NO.403/COCH/2011 OBLIGATION ON THE PART OF THE ASSESSING OFFICER TO DISCUSS IN THE ORDER AS TO HOW THE ASSESSEE IS ENTITLED FOR THE CLAIM. THIS TRIBU NAL IS OF THE OPINION THAT THE JUDICIAL ORDER SHALL CONTAIN THE REASON FOR THE CON CLUSION IN THE ORDER ITSELF. OTHERWISE, THE VERY SYSTEM WOULD FAIL. THE LEGISLA TURE HAS PROVIDED REVISION U/S 263 OF THE INCOME-TAX ACT AND FURTHER APPEAL BEFORE THE TRIBUNAL AND HIGHER FORUMS. UNLESS AND UNTIL, THE ASSESSING OFFICER DI SCLOSED THE REASONS FOR THE CONCLUSION ARRIVED AT, IT IS DIFFICULT FOR THE REVI SIONAL AUTHORITY / APPELLATE AUTHORITY TO APPRECIATE THE ORDER OF ASSESSMENT IN THE RESPECTIVE JUDICIAL PROCEEDING. THE ASSESSING OFFICER IS BOUND TO APPL Y HIS MIND TO THE FACTS OF THE CASE AND EXPRESSLY STATE HIS REASONS FOR COMING TO THE CONCLUSION SO AS TO ENABLE THE REVISIONAL / APPELLATE AUTHORITY TO APPRECIATE THE ISSUE DECIDED IN THE ASSESSMENT ORDER. OTHERWISE, THE ENTIRE SYSTEM CRE ATED UNDER THE INCOME-TAX ACT FOR APPEAL AND REVISION WOULD BE DEFEATED. 6. IN THIS CASE, THE ASSESSING OFFICER ALLOWED THE CLAIM OF THE ASSESSEE WITHOUT ANY REASONING. THEREFORE, THE ASSESEE MAY NOT BE A GGRIEVED. LET US ASSUME A SITUATION WHERE THE ASSESSING OFFICER DISALLOWED TH E CLAIM OF THE ASSESSEE WITHOUT RECORDING ANY REASONS, THEN, THE VERY SAME ASSESSEE MIGHT HAVE COME BEFORE THIS TRIBUNAL AND CONTENDED THAT THE ASSESSING OFFICER P ASSED A NON SPEAKING ORDER WITHOUT ANY APPLICATION OF MIND. THEREFORE, THE JU DICIAL PRINCIPLE APPLICABLE FOR THE ASSESSEE IS EQUALLY APPLICABLE FOR THE REVENUE ALSO. IN OTHER WORDS, FOR ALLOWING OR DISALLOWING A CLAIM OF THE ASSESSEE, TH E ASSESSING OFFICER IS BOUND TO RECORD HIS REASONS EXPRESSLY IN THE ASSESSMENT ORDE R. SPEAKING ORDER OTHERWISE MEANS THAT IT CONTAINS THE REASONS FOR THE CONCLUSI ON ARRIVED AT IN THE ORDER ITSELF. IT IS ALSO WELL SETTLED PRINCIPLES OF LAW THAT JUDI CIAL / QUASI JUDICIAL ORDER SHALL CONTAIN THE REASONS FOR THE CONCLUSION ARRIVED AT I N THE ORDER ITSELF. THE REASONING FOR THE CONCLUSION IN THE JUDICIAL / QUAS I JUDICIAL ORDER CANNOT BE 6 ITA NO.403/COCH/2011 SUPPLEMENTED OR SUBSTITUTED BY WAY OF AFFIDAVIT OR OTHER DOCUMENTARY EVIDENCE IN THE REVISIONAL / APPELLATE PROCEEDINGS. SINCE T HE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY ABOUT THE CLAIM MADE BY THE A SSESSEE AND THE ASSESSMENT ORDER DOES NOT DISCLOSE ANY REASONS FOR THE CONCLUSION OR DOES NOT DISCLOSE THE APPLICATION OF MIND BY THE ASSESSING O FFICER, THE ADMINISTRATIVE COMMISSIONER HAS RIGHTLY FOUND THAT THE ORDER OF TH E ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THEREFORE, THIS TRIBUNAL DOES NOT FIND ANY INFIRMITY IN THE ORDER OF THE ADM INISTRATIVE COMMISSIONER. 7. WE HAVE CAREFULLY GONE THROUGH THE DECISION OF T HIS TRIBUNAL IN KUTTUKKARAN TRADING VENTURES (SUPRA) AND THE UNREPORTE D JUDGMENT OF THE DELHI HIGH COURT, COPIES OF WHICH ARE FILED BY THE ASSESS EE. IN VIEW OF THE ABOVE DISCUSSION, THE DECISION OF THIS TRIBUNAL AND THE J UDGMENT OF THE DELHI HIGH COURT MAY NOT BE APPLICABLE TO THE FACTS OF THIS CASE. I N OUR OPINION, THE JUDGMENT OF THE APEX COURT IN MALABAR INDUSTRIAL CO LTD VS COMM ISSIONER OF INCOME-TAX (SUPRA) IS APPLICABLE TO THE FACTS OF THE CASE. 8. IN FACT, THE APEX COURT IN THE CASE OF MALABAR I NDUSTRIAL CO LTD VS COMMISSIONER OF INCOME-TAX (SUPRA) HAS EXAMINED THE ISSUE ELABORATELY AND OBSERVED AS FOLLOWS: IN THE INSTANT CASE, THE COMMISSIONER NOTED THAT THE INCOME- TAX OFFICER PASSED THE ORDER OF NIL ASSESSMENT WITH OUT APPLICATION OF MIND. INDEED, THE HIGH COURT RECORDED THE FINDI NG THAT THE INCOME-TAX OFFICER FAILED TO APPLY HIS MIND TO THE C ASE IN ALL PERSPECTIVE AND THE ORDER PASSED BY HIM WAS ERRONEO US. IT APPEARS THAT THE RESOLUTION PASSED BY THE BOARD OF THE APPE LLANT-COMPANY WAS NOT PLACED BEFORE THE ASSESSING OFFICER. THUS, THERE WAS NO MATERIAL TO SUPPORT THE CLAIM OF THE APPELLANT THAT THE SAID AMOUNT REPRESENTED COMPENSATION FOR LOSS OF AGRICULTURAL I NCOME. HE 7 ITA NO.403/COCH/2011 ACCEPTED THE ENTRY IN THE STATEMENT OF THE ACCOUNT FILED BY THE APPELLANT IN THE ABSENCE OF ANY SUPPORTING MATERIAL AND WITHOUT MAKING ANY INQUIRY. 9. THE ADMINISTRATIVE COMMISSIONER HAS DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT AFTER EXAMINING THE MATERIALS O N RECORD. THIS DIRECTION OF THE ADMINISTRATIVE COMMISSIONER IS IN NO WAY PREJUD ICE THE INTEREST OF THE ASSESSEE. WE MAKE IT CLEAR THAT THE ASSESSING OFFIC ER SHALL EXAMINE THE MATERIAL ON RECORD INDEPENDENTLY WITHOUT BEING INFLUENCED BY ANY OF THE OBSERVATIONS MADE BY THE ADMINISTRATIVE COMMISSIONER IN THE IMPU GNED ORDER OR BY THIS TRIBUNAL IN THIS ORDER AND SHALL DECIDE THE ISSUE A FRESH IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESS EE. 10. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MARCH, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 20 TH MARCH, 2012 PK/- COPY TO: 1. M/S US TECHNOLOGY INTERNATIONAL PVT LTD, 721, NILA TECHNOPARK CAMPUS, KARIAVATTOM, KAZHAKUTTOM, TRIVANDRUM 695 581 2. THE ITO, WD.1(1), TRIVANDRUM 3. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM 4. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH 8 ITA NO.403/COCH/2011 1. DATE OF DICTATION : 20-03-2012 2. DATE OF PLACING THE DRAFT ORDER BEFORE THE MEMBER : 21-03-2012 3. DATE OF PLACING THE PROPOSED ORDER BEFORE THE OTHER MEMBER: 4. DATE OF RETURN OF THE ORDER TO PS AFTER APPROVAL : 5. DATE OF PRONOUNCEMENT : 6. DATE ON WHICH THE FILE ALONG WITH THE ORDER SENT TO BC :