The ACIT, Circle - 2(1), Indore V. M/s. Mittal Cold Storage Pvt. Ltd., Indore

ITA 497/IND/2013

• Counselvise Citation: 49722714 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-09-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 24-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: C P RAWKA
• Keywords: Reopening of assessment
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO. 497/IND/2013 A.Y. : 2000-01 ACIT, M/S.MITTAL COLD STORAGE PVT.LTD., CIRCLE 2(1), VS GURUKUL COLONY RAO, INDORE. INDORE APPELLANT RESPONDENT P.A.N. NO A AA CM1882E APPELLANT BY SHRI R.A.VERMA, SR. DR RESPONDENT BY SHRI C.P.RAWKA, C. A. DATE OF HEARING : 0 2 .0 9 .2015 DATE OF PRONOUNCEMENT : 22 .09.2015 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-III, BARODA, (CONCURRENT JURISDICTION OVE R THE CHARGE OF CIT(A)-I, INDORE), DATED 20.03.2013 FOR THE ASSE SSMENT YEAR 2000-01. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS :- 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE ID. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 11,18,358/- MADE BY THE AO AFTER HOLDING THAT THE RELEVANT DETAILS OF CHARGING OF INTEREST WERE FURNISHED BY THE ASSESSEE BEFORE THE AO AGAINST AO'S FINDING THAT THE ASSESSEE DID NOT CHARGE INTEREST FROM POTATO GROWERS. 1.1 WHILE HOLDING SO THE LD. CIT(A) FAILED TO APPRECIATE THAT ASSESSEE CHARGED INTEREST OF RS. -: 3: - 3 7,62,995/-(INCLUSIVE OF INTEREST ON REFUND OF RS. 3402/-) FROM CUSTOMERS @ 18 % AS PER THE LETTER OF ASSESSEE DATED 26.09.2006 AND NOT FROM THE POTATO GROWERS AS HELD BY THE AO. 1.2 WHILE HOLDING SO THE LD. CIT(A) ERRED IN RELYING UPON THE CONTENTS OF LETTER OF ASSESSEE DT. 24.11.2006 WITHOUT REMANDING IT BACK TO THE AO. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE FINDINGS OF THE LD. CIT(A) ARE IN COMPLETE JUXTAPOSITION TO THE FINDINGS OF THE AO THAT ASSESSEE CHARGED INTEREST FROM THE CUSTOMERS AND NOT FROM THE POTATO GROWERS AND GOING BY THE RATE OF INTEREST @ 18 % CHARGEABLE ON ADVANCES OF RS. 1,11,93,355/- TO POTATO GROWERS, THE INCOME CHARGEABLE TO TAX WHICH ESCAPED ASSESSMENT WAS MORE THAN THE FIGURE OF INTEREST DEBITED LEADING TO ADDITION OF NET INTEREST DEBITED BY ASSESSEE AT RS. 11,18,358/-. -: 4: - 4 GROUND NOS. 1 & 2 : 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.11.2000 DECLARING TOTAL INCOME OF RS. 6,40,370/-. THIS RETURN WAS PROCESSED U/S 143(1)(A). SUBSEQUENTLY THE ASSESSMENT WAS REOPENED U/S 147 BY ISSUING NOTICE U/S 148 ON 29.03.2006. THE REASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961, DETERMINING TOT AL INCOME AT RS.18,08,730/-. 4. THE ASSESSEE TOOK OBJECTIONS AGAINST REOPENING OF ASSESSMENT BEFORE THE AO STATING THAT ON THE PERUS AL OF THE REASONS RECORDED IT WAS SEEN THAT REASONS FOR RE-OP ENING WAS INTEREST INCOME ON ADVANCE ON ESCAPED ASSESSMENT AT RS. 20,14,904/-. HOWEVER, THERE WAS NO MENTION AS TO HO W THIS AMOUNT OF ESCAPED INCOME ARRIVED AT. THE AO STATED AS FOLLOWS IN HIS ORDER REGARDING THIS OBJECTION :- THE OBJECTION TAKEN BY THE ASSESSEE ARE NOT CORRECT. THE INTEREST HAS BEEN CALCULATED @18 % ON THE AMOUNT RS.L,11,93,355/- AND ESCAPEMENT OF INCOME RS.20,14,814/- WAS DETERMINED. THE -: 5: - 5 ASSESSEE'S NEXT OBJECTION THAT NOTICE FOR REOPENING WAS ISSUED AFTER FOUR YEARS FROM THE END OF ASSESSMENT YEAR IS ALSO NOT CORRECT, THE NOTICE HAS BEEN ISSUED AFTER OBTAINING PRIOR APPROVAL OF ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2, INDORE IS PROVIDED U/S 152(2) OF THE IT ACT, 1961. THE THIRD OBJECTION OF THE ASSESSEE THAT ESCAPEMENT OF INCOME IS A MERE A GUESS WORK OR ESTIMATION IS ALSO NOT CORRECT AS MENTIONED ABOVE. THE ASSESSEE'S SUBMISSION THAT ASSESSEE'S COMPANY IS DISCLOSED ALL THE FACT IN THE BALANCE SHEET FILED ALONG WITH THE RETURN IS CORRECT. HOWEVER, THE DEPARTMENT HAS 110 POWER TO MAKE AN ADDITION/DELETION WHILE PROCESSING THE RETURN U/S 143(1)(A). HENCE TO ASSESS THE INCOME ESCAPED, NOTICE U/S 148 HAS BEEN PROPERLY ISSUED. THE ASSESSEE HAS FILED COPY OF DEPARTMENTAL CIRCULAR NO:549 AND DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KELVINATOR INDIA -: 6: - 6 LIMITED IS RELATED TO ASSESSMENT YEAR 1987-88 I.E. PRIOR TO AMENDMENT IN THE INCOME TAX ACT, BY THE FINANCE ACT 1987 WITH EFFECT FROM 01. 04 .1988 AND FURTHER AMENDMEN T MADE BY THE DIRECT TAX LAW (AMENDMENT) ACT, 1989 W.E.F. 1.4.1989. THEREFORE, THE DECISION OF HON'BLE COURT IS NOT APPLICABLE IN THE ASSESSEE'S CASE THE ASSESSEE FILED COPY OF CIRCULAR NO:539 IN SUPPORT OF HIS CONTENTION . THE CIRCULAR MENTIONED BY THE ASSESSEE SAYS THAT: 'INCOME ESCAPING ASSESSMENT (THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, AND THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989) ............ THE NEW PROVISIONS IN THIS RESPECT, AS CONTAINED IN EXPLANATION 2 TO NEW SECTION 147, ARE MORE ELABORATE AND COVER THOSE CASES WHERE -: 7: - 7 ASSESSMENTS HAVE BEEN COMPLETED (CALLED AS SCRUTINY CASES) AS WELL AS THOSE CASES WHERE ASSESSMENTS HAVE BEEN COMPLETED (CALLED AS NON-SCRUTINY CASES). THUS, THE NEW EXPLANATION 2 TO THE SECTION CLARIFIES THAT FOLLOWING SHALL BE DEEMED TO BE CASES OF INCOME ESCAPING ASSESSMENT: WHERE A RETURN OF INCOME HAS BEEN FURNISHED, BUT NO ASSESSMENT HAS BEEN MADE (I.E., IN A NON-SCRUTINY CASES- IF THE ASSESSEE IS FOUND TO HAVE UNDERSTATED HIS INCOME OR CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN ALLOWED.' -: 8: - 8 5. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) DE LETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE CONSIDERED AO'S OBSERVATIONS AND THE APPELLANT'S SUBMISSIONS. THE APPELLANT HAS SUBMITTED THAT IT HAD CHARGED INTEREST FROM THE POTATO DEALERS. THE APPELLANT HAS FILED DETAILS OF INTEREST PAID AND INTEREST RECEIVED FROM THE POTATO DEALERS. THE DETAILS OF INTEREST RECEIVED HAD ALSO BEEN FILED BEFORE THE AO. THE AO HAS GIVEN A FINDING THAT THE APPELLANT HAD RECEIVED TOTAL INTEREST OF RS. 7,62,995/- AND AT THE SAME TIME PAID INTEREST TO CREDITORS AMOUNTING TO RS. 18,81,353/-. DIFFERENCE OF THESE TWO AMOUNTS I.E. RS. 11,18,358/ - WAS ATTRIBUTED BY THE APPELLANT TO THE NON-CHARGING OF INTEREST FROM POTATO GROWERS. ACCORDINGLY THIS AMOUNT WAS ADDED TO THE TOTAL INCOME OF THE APPELLANT. THE AO HAS ALSO STATED THAT THE APPELLANT HAD NOT -: 9: - 9 CHARGED INTEREST FROM POTATO GROWERS. IT IS SEEN FROM COPY OF LETTER DATED 24.11.2006 SUBMITTED BY THE APPELLANT TO THE AO THAT THE APPELLANT HAD CLEARLY STATED THAT IT CHARGED INTEREST FROM PERSONS TO WHOM ADVANCES HAD BEEN GIVEN AT THE MARKET RATE AND PREVAILING TRADE PRACTICES. THE DETAILS OF SUCH INTEREST CHARGE HAD ALREADY BEEN SUBMITTED BEFORE THE AO. THE AO HAS NOT MENTIONED ANY REASON TO DISREGARD THIS SUBMISSION MADE BY THE APPELLANT. HE HAS NOT MENTIONED DETAILS OF PERSONS FROM WHOM INTEREST WAS NOT CHARGED DESPITE THE FACT THAT THE APPELLANT HAD PROVIDED FULL DETAILS TO HIM. UNDER SUCH CIRCUMSTANCES, THE ADDITION MADE BY THE AO CANNOT BE UPHELD. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED AND ADDITION MADE BY THE AO IS DIRECTED TO BE DELETED. 6. THE LD. SENIOR D.R. RELIED UPON THE ORDER OF AO. -: 10: - 10 7. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT ON REQUEST, THE AO PROVIDED REASONS FOR REOPENING OF ASSESSMENTS. HOWEVER, THE SAID OBJECTIONS WERE DISP OSED OF BY COMPLETING THE ASSESSMENTS. THE ASSESSEE WAS FOLLOW ING MERCANTILE SYSTEM OF ACCOUNTING AND AS SUCH INTERES T NOT CHARGED ON LOANS AND ADVANCES. THE ASSESSEE COMPANY DISCHARGED THE INTEREST FROM FARMERS AND SUCH INFOR MATION WAS ALSO PROVIDED TO AO VIDE SUBMISSIONS DATED 12.9 .2006, L7.9.2006 AND 26.9.2006, WHICH ARE ON RECORD. THUS, THE ASSESSMENT REOPENED WAS TOTALLY WRONG IN VIEW OF TH E FACTS STATED ABOVE AS VERY BASE OF REOPENING STANDS MET O UT AND THIS FACT ALSO EVIDENTLY CLEAR FROM SCHEDULE TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE LD. SENIOR D.R. COULD NOT BRING AN YTHING -: 11: - 11 CONTRARY TO THE FINDING OF THE LD. CIT(A). WE HAVE NO OPTION BUT TO ENDORSE THE ACTION OF THE LD. CIT(A). 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 22 ND SEPTEMBER, 2015. CPU* 215