Southern Metals & Alloys, CHENNAI V. ACIT, CHENNAI

ITA 702/CHNY/2011

• Counselvise Citation: 70221714 RSA 2011
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NO.702/MDS/2011 ASSESSMENT YEAR : 2006-07 M/S. SOUTHERN METALS & ALLOYS, NO.6, MADHAVARAM HIGH ROAD, PERAMBUR, CHENNAI-600 011. PAN: AACFS0515L VS. THE ASSISTANT COMMISSIONER OF INCOME TAX-IX, CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. LAKS HMICHAND NAHATA, CHARTERED ACCOUNTANT RESPONDENT BY : MR. SHAJI P .JACOB, IRS., COMMISSIONER OF INCOME TAX DATE OF HEARING : 8 TH DECEMBER, 2011 DATE OF PRONOUNCEMENT : 12 TH DECEMBER, 2011 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2006-07. THE APPEAL IS DIRECTED AGAINST THE REVISION ORDER PASSED UNDER SECTION 263 OF INCO ME TAX ACT, 1961 THROUGH THE PROCEEDINGS OF COMMISSIONER O F INCOME TAX-IX AT CHENNAI ON 24.03.2011. ITA NO.702/ MDS/2011 2 2. THE ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3). LATER, ON VERIFICATION OF THE RECOR DS OF THE CASE, THE COMMISSIONER OF INCOME TAX FOUND THAT THA T THE ASSESSING AUTHORITY HAS NOT EXAMINED THE GENUINENES S OF CERTAIN TRADE CREDITORS WHICH WAS OF MUCH IMPORTANC E TO THE ASSESSMENT. HE ACCORDINGLY HELD THE ASSESSMENT ORD ER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE ASSESSMENT ORDER WAS SET ASIDE ON THIS POINT THAT A SSESSING AUTHORITY SHALL INVESTIGATE THE ISSUE AFRESH AND DE CIDE THE MATTER DE NOVO. THE ASSESSEE IS AGGRIEVED AND THERE FORE THIS APPEAL BEFORE US. 3. WE HEARD BOTH SIDES AND CONSIDERED THE ISSUE. TH E COMMISSIONER OF INCOME TAX HAS IDENTIFIED TRADE CRE DITORS IN WHOSE CASE THE ASSESSING OFFICER IS DIRECTED TO MAK E INVESTIGATION. THOSE TRADE CREDITORS ARE M/S. SUNDA RAM CLAYTON LTD.-BD, M/S.SUNDARAM CLAYTON LTD., M/S. AL CAST INDIA LTD., M/S. HINDUSTAN PETROLEUM CORPORATION LTD., M/ S.TVS MOTOR COMPANY LTD. AND M/S.TALLURI FLURIDES & CHEMI CALS. ITA NO.702/ MDS/2011 3 4. THE ASSESSING AUTHORITY HAD ASKED FOR DETAILS IN RESPECT OF VARIOUS CREDITORS AND IN RESPECT OF THE ABOVE ST ATED TRADE CREDITORS. THE ASSESSEE HAD NOT FURNISHED ANY PARTI CULARS BEFORE THE ASSESSING AUTHORITY. NO CONFIRMATIONS WE RE MADE BY CREDITORS ALSO. ON AN EXAMINATION OF THE RECORDS OF THE CASE, WE FIND THAT EVEN THOUGH THE ASSESSING AUTHOR ITY HAD INITIATED THE PROCESS OF VERIFYING THE GENUINENESS OF THE TRADE CREDITORS, HE HAS NOT BROUGHT THAT PROCESS TO A LOG ICAL END. EVEN THOUGH HE HAS RAISED THE ISSUE OF TRADE CREDIT ORS IN THE COURSE OF ASSESSMENT PROCEEDINGS, HE HAS NOT VERIFI ED THE CREDITS IN AN OBJECTIVE MANNER SO AS TO CONFIRM THE GENUINENESS OF THOSE CREDITS. IT IS NOT POSSIBLE T O DRAW ANY INFERENCE AGAINST THE ASSESSEE. BUT, AT THE SAME TI ME, WE FIND THAT THE ORDER OF THE ASSESSING AUTHORITY IS E RRONEOUS. THE ISSUE OF TRADE CREDITORS WHICH WAS VERY MUCH AL IVE IN THE COURSE OF ASSESSMENT PROCEEDINGS WAS NOT AT ALL PU RSUED AND EXAMINED BY THE ASSESSING AUTHORITY WHILE COMPL ETING THE ASSESSMENT. THIS HAS RENDERED THE ASSESSMENT ORDER ERRONEOUS. WHEN THE TRADE CREDITS HAVE NOT BEEN EXA MINED WHY IT WAS NECESSARY, THE OMISSION ON THE PART OF T HE ITA NO.702/ MDS/2011 4 ASSESSING AUTHORITY HAS DEFINITELY MADE OUT A CASE OF PRIMA- FACIE PREJUDICE CAUSING TO THE REVENUE. THEREFORE I T IS TO BE SEEN THAT FOR THE PURPOSE OF SECTION 263, THE ASSES SMENT ORDER IS PREJUDICIAL, TOO. IN THESE CIRCUMSTANCES T HERE IS NO GROUND FOR US TO INTERFERE IN THE REVISION ORDER PA SSED BY THE COMMISSIONER OF INCOME TAX. 5. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 12 TH DECEMBER, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 12 TH DECEMBER, 2011. SOMU COPY TO: (1) APPELLANT ( 4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.