Kerala State Civil Supplies Corporation Ltd, Cochin V. The ACIT, Cochin

ITA 52/COCH/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8646 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-05-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 29-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RADHESH BHATT
• Section: 143(3); 263

Judgement Text

ITA NO . 52/COCH/2016 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO . 52/COCH/2016 (ASST YEAR 2011 - 12 ) KERALA STATE CIVIL SUPPLIES CORPORATION LTD GANDHI NAGAR KOCHI 20 VS THE ASST COMMR OF INCOME TAX CIR 1 (2), KOCHI ( APPELLANT) (RESPONDENT) PAN NO. AAACK6767F ASSESSEE BY SH RADHESH BHATT REVENUE BY SH K P GOPAKUMAR, SR DR/ SH SHANTOM BOSE, CIT - DR DATE OF HEARING 9 TH MAY 2016 DATE OF PRONOUNCEMENT 10 TH , MAY 2016 OR D ER PER GEORGE GEORGE . K. J M: THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT U/S 263 OF THE I T ACT (ORDER DATED 10.11.2015). THE RELEVANT ASSESSMENT YEAR IS 2011 - 12. 2 THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 1 . THE LEA RNED COMMISSIONER OF INCOME TAX (C I T) ERRED IN REOPEN I NG U/S . 263 OF THE IT ACT, THE ASSESSMENT COMPLETED VIDE PROCEEDINGS OF SEC. 143(3) OF THE IT ACT AFTER DULY VERIFYING THE RELEVANT FACTS. THERE IS NO ERROR WHICH IS PREJUDICIAL TO THE INTEREST OF REVENU E WHICH REQUIRES REVISION. 2 . THE LEARNED CIT ERRED IN STATING THAT THE LEARNED ASSESSING OFFICER (AO) DID NOT EXAMINE THE PRIOR PERIOD EXPENSES IN PROPER PERSPECTIVE . THE LEARNED CIT OUGHT TO HAVE NOTED THAT THE LEARNED AO HAD, DURING ITA NO . 52/COCH/2016 2 THE COURSE OF ASSESSM ENT PROCEEDINGS , SPECIFICALLY SOUGHT EXPLANATION REGARDING THE PRIOR PERIOD EXPENSES AND THE REPLIES FURNISHED THEREON BY THE APPELLANT HAD BEEN CONSIDERED APPROPRIATELY. HENCE THERE IS NO ERROR PREJUDICIAL TO THE INTEREST OF REVENUE AND THE REOPENING OUGH T NOT TO HAVE BEEN MADE U/S.263 OF THE IT ACT. 3 . THE LEARNED CIT OUGHT TO HAVE NOTED THAT, SINCE THE APPELLANT HAS OFFERED NET AMOUNT OF PRIOR PERIOD INCOME TO TAX, ON PRINCIPLES OF EQUITY AND JUST I CE, THE PRIOR PERIOD EXPENSES SHOULD BE ALSO ALLOWED. HENCE THERE IS NO ERROR PREJUDICIAL TO THE INTEREST OF REVENUE . 4 . FOR THESE AND OTHER GROUNDS THAT MAY BE FURTHER ADDUCED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED COMMISSIONER REQUIRES TO BE MODIFIED TO BE EXTENT APPEALED AGAINST. 3 THE BRIEFLY STATED FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A STATUTORY CORPORATION. IT IS ENGAGED IN THE BUSINESS OF WAREHOUSING AND OTHER ALLIED ACTIVITIES. FOR THE RELEVANT ASSESSMENT YEAR, RETURN OF INCOME WAS FILED ON 30.9.2011 AND THE ASSESSMENT U/S 143(3) WA S COMPLETED ON 30.3.2014. 4 SUBSEQUENTLY THE ASSESSMENT U/S 143(3) WAS SET ASIDE U/S 263 OF THE AC T BY THE CIT FOR THE REASONS THAT PRIOR PERIOD EXPENSES AMOUNTING TO RS. 23.24 LACS WAS ALLOWED AS DEDUCTION IN THE A SSESSMENT COMPLETED U/S143(3). THE CI T WAS OF THE VIEW THAT THE PRIOR PERIOD EXPENSE WAS ALLOWED BY THE AO WITHOUT PROPERLY EXAMINING THE ISSUE AND HENCE, HE DIRECTED THE AO TO PASS A FRESH ORDER IN ACCORDANCE WITH LAW AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE. ITA NO . 52/COCH/2016 3 5 AGGRIEVED, THE ASS ESSEE IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS EXAMINED THE ISSUE OF PRIOR PERIOD EXPENSES DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAS ALLOWED THE CLAIM OF THE ASSESSEE IN THE ORDER COMPLETED U/S 143(3) OF THE ACT AND HENCE, THE CIT DOES NOT HAVE JURISDICTION TO INVOKE HIS REVISIONARY POWERS U/S 263 OF THE ACT. FURTHER, IT WAS SUBMITTED THAT PRIOR PERIOD EXPENSES ARE ALLOWABLE ON MERITS. 5.1 THE LD DR , ON THE OTHER HAND , SUBMITTED THAT THE IN ASSESSMENT ORDER THERE IS NO DISCUSSION ABOUT THE PRIOR PERIOD EXPENSES CLAIMED BY THE ASSESSEE AND HENCE, THE CIT IS WELL WITHIN HIS JURISDICTION TO INVOKE HIS REVISIONARY POWERS U/S 263 OF THE ACT. 6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIA L ON RECORD. THE ASSESSMENT ORDER DATED 30.3.2014 WHICH WAS SET ASIDE BY THE CIT U/S 263, ADMITTEDLY HAS NOT EXAMINED THE ISSUE OF PRIOR PERIOD EXPENSES CLAIMED BY THE ASSESSEE. NO DOUBT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED SPECIFIC QUEST ION WITH REGARD TO PRIOR PERIOD EXPENSES WHICH READ AS UNDER: 5. PRIOR PERIOD EXPENSES OF RS. 23.24 LAKS HAVE BEEN CLAIMED IN P&L ACCOUNT. FURNISH DOCUMENTARY EVIDENCE TO PROVE THAT THE SAME GOT CRYSTALLIZED DURING THE FY 2010 - 11. 6 .1 FOR THE ABOVE QUE STION ASKED BY THE AO, THE ASSESSEE HAS REPLIED VIDE LETTER DATED 25.2.2014 WHICH READ AS UNDER: ITA NO . 52/COCH/2016 4 THIS REPRESENTS RECTIFICATION MADE DURING THE YEAR FY 2010 - 11 RELATING TO AN ACCOUNTING ERROR OCCURRED DURING FY 2009 - 10, WHICH HAS BEEN POINTED OUT BY C&AG D URING THEIR SUPPLEMENTARY AUDIT OF 2009 - 10. 5.2 THE ABOVE ANSWER OF THE ASSESSEE IS VAGUE AND DOES NOT REPLY TO THE SPECIFIC QUESTION POSED BY THE AO . IN THAT SENSE OF THE MATTER, THE AO HAS NOT PROPERLY NOR CORRECTLY EXAMINED THE ISSUE. EVEN BEFORE US , THE ASSESSEE HAS NOT PROVED THAT P RIOR PERIOD EXPENSES HAVE CRYSTALLIZED IN THE RELEVANT ASSESSMENT YEAR BY FURNISHING NECESSARY DOCUMENTS. MOREOVER, WE FIND THAT THE CIT, IN HER ORDER U /S 263 HAD ONLY SET ASIDE THE ASSESSMENT FOR THE AO FOR MAKING DE - N OVO ASSESSMENT IN ACCORDANCE WITH LAW AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE. THE CIT, IN THE ORDER U/S 263 HAS N OT GIVEN ANY SPECIFIC DIRECTION TO DISALLOW THE PRIOR PERIOD EXPENSES. THE ASSESSEE BEFORE THE AO HAS AMPLE OPPORTUNITY TO PROVE THA T PRIOR PERIOD EXPENSES HAVE, IN FACT CRYSTALLIZED IN THE RELEVANT AY. FOR THIS REASON TOO, WE REFRAIN FROM INTERFERING WITH THE ORDER OF THE CIT. IT IS ORDERED ACCORDINGLY. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON THIS 10 TH DAY OF MA Y 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 10 TH M AY 2016 RAJ* ITA NO . 52/COCH/2016 5 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN