DCIT, Kumbakonam V. M/s. Kumbakonam Mutual Benefit Fund Ltd., Kumbakonam

ITA 660/CHNY/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1332 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B BEFORE DR.O.K.NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NOS. 660/MDS/2010 ASSESSMENT YEARS : 2005- 06 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, KUMBAKONAM VS. M/S KUMBAKONAM MUTUAL BENEFIT FUND LTD. 145, TSR BIG STREET KUMBAKONAM (PAN : AADFT 0308 D) (APPELLANT) (RESPONDENT) C.O. NOS. 43/MDS/2010 [A/O I.T.A. NO. 660/MDS/2010] ASSESSMENT YEARS : 2005- 06 M/S KUMBAKONAM MUTUAL BENEFIT FUND LTD. 145, TSR BIG STREET KUMBAKONAM VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE I, KUMBAKONAM (PAN : AADFT 0308 D) (CROSS OBJECTOR) (APPELLANT IN APPEAL) DEPARTMENT BY : SHRI P.B. SEKARAN CROSS-OBJECTOR BY : SHRI N. DEVANATHAN ITA NO. 660/MDS/10 & CO NO. 43/MDS/10 :- 2 -: O R D E R PER DR. O.K.NARAYANAN. VICE-PRESIDENT : THIS APPEAL IS FILED BY THE REVENUE AND CROSS OBJE CTION IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEA R IS 2005-06. THE APPEAL AND CROSS OBJECTIONS ARE DIRECTED AGAINS T THE ORDER OF THE CI.T(APPEALS), AT TIRUCHIRAPALLI, DATED 23.2.20 10 AND ARISE OUT OF THE ASSESSMENT COMPLETED UNDER SEC.143(3) OF THE I.T. ACT, 1961. 2. THERE IS ONLY ONE ISSUE RAISED IN THE PRESENT AP PEAL FILED BY THE REVENUE. THE ASSESSING OFFICER HAD MADE AN ADD ITION OF RS. 80.27 LAKHS TO THE INCOME OF THE ASSESSEE ON THE GR OUND THAT THE SAID AMOUNT WAS NOT RECOGNIZED AS REFLECTED IN THE ANNUAL REPORT OF THE ASSESSEE. THE AMOUNT RELATED TO THE WRITE O FF OF STICKY LOANS. IN THE FIRST APPEAL, THE LD. CIT(A) ACCEPTE D THE CONTENTION OF THE ASSESSEE TO THE EXTENT OF RS. 40.75 LAKHS ON THE GROUND THAT THOSE AMOUNTS WERE OUTSTANDING FOR A PERIOD OF THREE YEARS. ITA NO. 660/MDS/10 & CO NO. 43/MDS/10 :- 3 -: IN RESPECT OF THE SUM OF RS. 31.25 LAKHS, THE ADDIT ION WAS UPHELD BY THE LD. CIT(A). IT IS THE CASE OF THE REVENUE TH AT THE RELIEF HAS BEEN GRANTED BY THE LD. CIT(A) ON THE BASIS OF FRES H MATERIALS FILED BY THE ASSESSEE BEFORE HIM IN VIOLATION OF RULE 46A OF THE I.T. RULES, 1962. 7. WE HEARD SHRI P.B. SEKARAN, LD. COMMISSIONER OF INCOME- TAX APPEARING FOR THE REVENUE AND SHRI N. DEVANATHA N, LD. COUNSEL APPEARING FOR THE RESPONDENT-ASSESSEE. 8. ON GOING THROUGH THE FACTS OF THE CASE, WE FIND THAT WHILE GIVING RELIEF TO THE EXTENT OF RS. 40.75 LAKHS, THE LD. CIT(A) HAS EXAMINED ONLY THE ACCOUNTING ENTRIES REFLECTED IN T HE LEDGERS OF THE ASSESSEE; BUT HE HAS NOT EXAMINED THE LEGAL DOC UMENTS AVAILABLE WITH THE ASSESSEE ALONG WITH LOAN PAPERS. THERE IS NO FINDING ON RECORD THAT WHETHER THE BORROWERS HAVE A CKNOWLEDGED THOSE STICKY AMOUNTS AND THEREBY THOSE AMOUNTS HAVE BECOME LEGALLY ENFORCEABLE OR NOT. THEREFORE, WE FIND THA T THE DECISION OF THE LD. CIT(A) ON THIS ISSUE IS ALMOST INCOMPLETE A ND PREMATURE. LIKEWISE, THE PAPERS AND MATERIAL EXAMINED BY THE L D. CIT(A) ALSO WERE NOT SEEN PRODUCED BEFORE THE ASSESSING AUTHORI TY FOR HIS VERIFICATION AND CONVICTION. ITA NO. 660/MDS/10 & CO NO. 43/MDS/10 :- 4 -: 9. THEREFORE, WE FIND THAT THERE IS A SERIOUS PROCE DURAL LAPSE ON THE PART OF THE LD. CIT(A) IN VERIFYING THE RELE VANT DETAILS FURNISHED BY THE ASSESSEE BEFORE HIM. 10. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE ISSUE BACK TO THE ASSESSING OFFICER TO EXAMINE THE NECESSARY DETA ILS TO ARRIVE AT A CONCLUSION IN RESPECT OF THE CLAIM OF DEDUCTIO N MADE BY THE ASSESSEE. WHILE APPRECIATING THE EVIDENCES, THE AS SESSING OFFICER WILL ALSO LOOK INTO THE MATERIALS PLACED BY THE ASSESSEE BEFORE THE LD. CIT(A) IN THE FIRST ROUND OF APPEAL. ASSESSEE SHALL NATURALLY BE GIVEN AN EFFECTIVE OPPORTUNITY OF BEIN G HEARD BEFORE PASSING CONSEQUENTIAL ORDERS. 11. AS THE ORDER OF THE LD. CIT(A) HAS BEEN SET ASI DE AND THE MATTER HAS BEEN REMITTED BACK TO THE ASSESSING AUTH ORITY, THE CROSS OBJECTION FILED BY THE ASSESSEE HAVE BECOME I NFRUCTUOUS AND, THEREFORE, LIABLE TO BE REJECTED IN LIMINE. B UT IT HAS TO BE SEEN THAT THE ASSESSEE HAS THE RIGHT TO AGITATE ON ALL HIS GRIEVANCES BEFORE THE ASSESSING OFFICER. ITA NO. 660/MDS/10 & CO NO. 43/MDS/10 :- 5 -: 12. IN RESULT, THE APPEAL FILED BY THE REVENUE IS T O BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJE CTION FILED BY THE ASSESSEE TO BE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 10 TH DAY OF JANUARY, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) JUDICIAL MEMBER ( DR.O.K.NARAYANAN) VICE-PRESIDENT CHENNAI : 10 TH JANUARY, 2011. VL. COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR