M/s. Sumukha Synthetics, Coimbatore V. ACIT, Coimbatore

ITA 504/CHNY/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2492 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB IRS
• Assessee Lawyers: R VIJAYARAGHAVAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A.NO. 504/MDS/2010 ASSESSMENT YEAR : 2005-06 M/S. SUMUKHA SYNTHETICS 101E, 2 ND FLOOR, BVA KALAMANSION BUILDING, D.B.ROAD, R.S.PURAM, COIMBATORE. PAN AAXFS3967M VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-II, COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. VIJAYARAGHAVAN, AD VOCATE RESPONDENT BY : SHRI SHAJI P. JACOB, IRS, ADDL. CIT DATE OF HEARING : 20 TH JUNE, 2013 DATE OF PRONOUNCEMENT : 20 TH JUNE, 2013 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2005-06. THE APPEAL IS DIRECTE D AGAINST THE REVISION ORDER PASSED BY THE COMMISSIONER OF INCOME -TAX-I, COIMBATORE UNDER SEC.263 OF THE INCOME-TAX ACT, 196 1. THE SAID ORDER WAS PASSED ON 23.2.2010. ITA 504/10 :- 2 -: 2. ON GOING THROUGH THE RECORDS OF THE CASE, THE COMMISSIONER OF INCOME-TAX OBSERVED THAT THE ASSESS ING OFFICER HAS FAILED TO TAKE A NOTE OF INSTANCES, WHERE THE A SSESSEE HAD MADE CASH PAYMENTS IN CONTRAVENTION OF SEC.40A(3). HE ALSO OBSERVED THAT THE ASSESSEE HAD NOT EXPLAINED ANY CI RCUMSTANCE BEFORE THE ASSESSING OFFICER SO THAT THE PAYMENTS M IGHT BE COVERED UNDER RULE 6DD OF THE INCOME-TAX RULES, 196 2. HE, THEREFORE, HELD THAT 20% OF THE PAYMENTS OF ` 3,06,62,382/- MADE TO M/S. SITALAKSHMI MILLS LTD. IN CASH, AS CONVERSI ON CHARGES SHOULD HAVE BEEN DISALLOWED BY THE ASSESSING OFFICE R UNDER SEC.40A(3). HE FURTHER HELD THAT DUE TO THIS ERRON EOUS ORDER, WHICH WAS ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IT WAS NECESSARY TO SET ASIDE THE ASSESSMENT ORDER PASSED UNDER SEC.143(3). HE ACCORDINGLY, SET ASIDE THE ASSESSME NT ORDER AND DIRECTED THE ASSESSING OFFICER TO RE-DO THE ASSESSM ENT AFRESH AFTER INVOKING THE PROVISIONS OF SEC.40A(3) ON THE PAYMENTS MADE TO M/S. SITALAKSHMI MILLS LTD. IT IS AGAINST THE A BOVE THAT THE ASSESSEE HAS COME IN APPEAL BEFORE US. 3. WE HEARD BOTH SIDES IN DETAIL. IT IS TRUE THAT T HE ASSESSING OFFICER HAS NOT CONSIDERED THE APPLICABILITY OF SEC .40A(3) ON CASH PAYMENTS MADE BY THE ASSESSEE TO M/S. SITALAKSHMI M ILLS LTD. ITA 504/10 :- 3 -: THE TOTAL PAYMENTS MADE BY THE ASSESSEE TO M/S. SIT ALAKSHMI MILLS LTD. AGAINST CONVERSION CHARGES AMOUNTED TO ` 3,06,62,382/- THE AMOUNT OF PAYMENTS BEING HUGE, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO EXAMINE WHETHER THE PROVISIONS OF SEC.40A(3) SHOULD APPLY OR NOT. SUCH AN ATTEMPT HA S NOT BEEN MADE BY THE ASSESSING OFFICER IN HIS ORDER. THEREF ORE, WE FIND THAT THE ASSESSMENT ORDER IS ERRONEOUS TO THE ABOVE EXTENT WHICH LEADS TO REVENUE LOSS AND THEREFORE, IT IS PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. IN THESE CIRCUMSTANCES, WE UPHOLD THE REVISION ORDER PASSED BY THE COMMISSIONER OF INCOME -TAX. 4. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON THURSDAY, THE 20 TH OF JUNE, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR.O.K.NA RAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 20 TH JUNE, 2013 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.