DCIT, CHENNAI V. Shri E. Amul Prakash & Others, CHENNAI

ITA 692/CHNY/2007

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3980 (ITAT-CHENNAI)
• Duration Of Justice: 11 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 09-03-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SARATH KUMAR RAHA
• Assessee Lawyers: S SRIDHAR
• Keywords: Block assessment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , ! ' # , % #& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.692/CHNY/2007 ) *) / ASSESSMENT YEAR : 2000-01 ./ I.T.(SS) A. NO.117/CHNY/2002 BLOCK ASSESSMENT PERIOD : 1988-89 TO 1998-99 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE X, CHENNAI - 600 006. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(1), CHENNAI - 600 034. V. SHRI K. ESWARAPPA (DECEASED), L/H SHRI AMUL PRAKASH & OTHERS, (1) 41, NAVAL HOSPITAL ROAD, CHENNAI - 600 003. (2) NO.1, BALAR KALVINILAYAM AVENUE, CHENNAI - 600 007. PAN : AAAPE 2538 B (,-/ APPELLANT) (./,-/ RESPONDENT) ./ I.T.(SS) A. NO.66/CHNY/2002 BLOCK ASSESSMENT PERIOD : 1988-89 TO 1998-99 SHRI K. ESWARAPPA (DECEASED), L/H SHRI AMUL PRAKASH & OTHERS, 41, NAVAL HOSPITAL ROAD, PERIAMET, CHENNAI - 600 003. V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL II(1), CHENNAI - 600 034. (,-/ APPELLANT) (./,-/ RESPONDENT) 01 2 /REVENUE BY : SHRI SARATH KUMAR RAHA, JCIT )341 2 /ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE 5 1 4% / DATE OF HEARING : 16.01.02019 67* 1 4% / DATE OF PRONOUNCEMENT : 06.02.2019 2 I.T.A. NO.692/CHNY/07 I.T.(SS) A. NO.117/CHNY/02 I.T.(SS) A. NO.66/CHNY/02 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : ALL THE ABOVE APPEALS OF THE REVENUE AND ASSESSEE WERE DISPOSED OF EARLIER BY THIS TRIBUNAL BY AN ORDER DA TED 07.07.2003. ON APPEAL BY THE REVENUE, ONE OF THE ISSUES WHICH R ELATES TO INTEREST PAID ON THE TERM LOAN, WAS REMITTED TO THE TRIBUNAL FOR RECONSIDERATION. ACCORDINGLY, ALL THE THREE APPEAL S WERE TAKEN UP FOR HEARING. 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE HIGH COURT REMITTED BACK THE ISSUE ONLY WI TH REGARD TO DISALLOWANCE OF INTEREST ON THE BORROWED LOAN. ACC ORDING TO THE LD. COUNSEL, THE OTHER ISSUES RAISED BY THE ASSESSEE AS WELL AS THE REVENUE BEFORE THIS TRIBUNAL ATTAINED FINALITY. RE FERRING TO THE JUDGMENT OF HIGH COURT, MORE PARTICULARLY PARA 4 AN D 5, THE LD.COUNSEL SUBMITTED THAT THE HIGH COURT FOUND THAT THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE WAS NOT DECIDED EITHER BY THE ASSESSING OFFICER OR BY ANY OF THE AUTHORITIES, THE REFORE, THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE HAS TO BE DEC IDED FIRST BEFORE GOING INTO THE MAIN ISSUE OF DISALLOWANCE OF INTEREST ON THE 3 I.T.A. NO.692/CHNY/07 I.T.(SS) A. NO.117/CHNY/02 I.T.(SS) A. NO.66/CHNY/02 BORROWED LOAN. ON A QUERY FROM BENCH WHETHER THE A SSESSEE IS REGULARLY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING OR CASH SYSTEM OF ACCOUNTING? THE LD.COUNSEL COULD NOT CLARIFY THE METHOD ACTUALLY FOLLOWED BY THE ASSESSEE. THE LD.COUNSEL SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING O FFICER FOR RECONSIDERATION AFTER DECIDING THE METHOD OF ACCOUN TING ADOPTED BY THE ASSESSEE. 3. WE HEARD SHRI SARTATH KUMAR RAHA, THE LD. DEPART MENTAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., IT IS NOT KNOWN WHAT METHOD WAS ACTUALLY FOLLOWED BY THE ASSESSEE IN THE REGULAR COURSE OF BUSINESS FOR EARLIER ASSESSMENT YEARS AND DURING THE RELEVANT ASSESSMENT YEAR ALSO. THEREFORE, ACCORDING TO THE LD. D.R., THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. FOR THE PURPOSE OF DECIDING THE DISALLOWANCE OF INTEREST ON THE BOR ROWED LOAN, THE HIGH COURT FOUND THAT METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE WAS NOT CONSIDERED BY THE ASSESSING OFFICE R AS WELL AS THE CIT(APPEALS). THEREFORE, HIGH COURT HAS ALSO O BSERVED THAT 4 I.T.A. NO.692/CHNY/07 I.T.(SS) A. NO.117/CHNY/02 I.T.(SS) A. NO.66/CHNY/02 THIS TRIBUNAL ALSO HAS NOT CHOSEN TO DEAL WITH THE METHOD OF ACCOUNTING FOR THE BLOCK PERIOD UNDER CONSIDERATION . HENCE, IT IS NECESSARY TO ASCERTAIN THE METHOD OF ACCOUNTING FOL LOWED BY THE ASSESSEE DURING THE BLOCK PERIOD UNDER CONSIDERATIO N AND ALSO DURING THE EARLIER ASSESSMENT YEARS. BOTH, THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. D.R. COULD NOT CLARIFY THE MET HOD OF ACCOUNTING ACTUALLY ADOPTED BY THE ASSESSEE. THERE FORE, THIS TRIBUNAL IS UNABLE TO RECORD ANY FINDING. IN THE A BSENCE OF ANY MATERIAL AND CLARIFICATION FROM THE LD.COUNSEL FOR THE ASSESSEE AND THE LD. D.R., THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFF ICER. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BEL OW ARE SET ASIDE AND THE ISSUE OF DISALLOWANCE OF INTEREST ON THE BO RROWED LOAN IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AND BRING ON RE CORD THE METHOD OF ACCOUNTING ACTUALLY FOLLOWED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW, AFTER GIVI NG A REASONABLE OPPORTUNITY TO THE ASSESSEE. 5. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A ND THE APPEAL OF THE ASSESSEE STAND ALLOWED FOR STATISTICA L PURPOSES. 5 I.T.A. NO.692/CHNY/07 I.T.(SS) A. NO.117/CHNY/02 I.T.(SS) A. NO.66/CHNY/02 ORDER PRONOUNCED IN THE COURT ON 6 TH FEBRUARY, 2019 AT CHENNAI. SD/- SD/- ( ! ' # ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 9 /DATED, THE 6 TH FEBRUARY, 2019. KRI. 1 .4:; <;*4 /COPY TO: 1. )34 /ASSESSEE 2. ./,- /RESPONDENT 3. 5 =4 () /CIT(A) 4. 5 =4 /CIT, 5. ;> .4 /DR 6. ?) @ /GF.