ACIT, CHENNAI V. M/s. Shree Mother Plast India P Ltd., CHENNAI

ITA 771/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58055 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 28-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T S SIVA RAMAKRISHNAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD , JUDICIAL MEMBER I.T.A.NO. 771/MDS/2011 (ASSESSMENT YEAR : 2007-08) THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-VI(2), CHENNAI 600 034. VS. M/S. SHREE MOTHER PLAST INDIA PVT. LIMITED, 2 ND FLOOR, 337/6,2 ND AVENUE, NEW SUNSHINE APARTMENT, ANNA NAGAR, CHENNAI 40. PAN AAACB 2740 H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, IRS, ADDL. COMMISSIONER OF INCOME-TAX RESPONDENT BY : SHRI T.S.SIVARAMAKRISHNAN , CA DATE OF HEARING : 15 TH MARCH , 2012 DATE OF PRONOUNCEMENT : 22 ND MARCH , 2012 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE REVENUE RELATES TO THE ASS ESSMENT YEAR 2007-08. THE APPEAL IS DIRECTED AGAINST THE O RDER OF THE CIT(A)-V AT CHENNAI DATED 6.1.2011 AND ARISES OUT O F THE ITA 771/11 :- 2 -: ASSESSMENT COMPLETED UNDER SEC.143(3) OF THE INCOME -TAX ACT, 1961. 2. THE FIRST GROUND RAISED BY THE REVENUE IN THE PR ESENT APPEAL IS THAT THE COMMISSIONER OF INCOME-TAX(APPEA LS) HAS ERRED IN DELETING THE ADDITION OF ` 44,66,633/- WHICH WAS ADDED BY THE ASSESSING OFFICER AGAINST THE CESSATION OF LIAB ILITY. 3. WE CONSIDERED THIS ISSUE. ACCORDING TO THE ASSE SSING AUTHORITY, THE ASSESSEE WAS MAKING AN EXCESS CLAIM OF ` 44,66,633/- TOWARDS PURCHASE OF ASSETS AND CREATING FICTITIOUS LIABILITY. AS THE LIABILITY DID NOT IN FACT EXIST, THE AMOUNT WAS ADDED BACK TO THE INCOME OF THE ASSESSE, TREATING T HE SAME AS CESSATION OF LIABILITY. IN FIRST APPEAL, THE COMMI SSIONER OF INCOME- TAX(APPEALS) HAS EXAMINED THE DETAILS OF THE TRANSA CTIONS ON WHICH THE ASSESSING OFFICER MADE AN ADDITION OF ` 44,66,633/-. THE TRANSACTIONS WERE ENTERED INTO WITH M/S. SOBA S OLES PVT. LTD. FOR ALL THE PURCHASES MADE FROM M/S. SOBA SOLES PVT . LTD., THE ASSESSEE HAS MAINTAINED ONLY ONE LEDGER ACCOUNT. B UT THE TRANSACTIONS WERE RELATED TO PURCHASE OF ASSETS AS WELL AS PURCHASE OF COMPONENTS AND AVAILING JOB WORKS. ON THE OTHER HAND, M/S. SOBA SOLES PVT. LTD. HAS MAINTAINED TWO LEDGER ITA 771/11 :- 3 -: ACCOUNTS IN THE NAME OF THE ASSESSEE, ONE TO RECORD THE TRANSACTIONS RELATING TO SALE OF ASSETS AND THE OTH ER, TO RECORD THE TRANSACTIONS RELATING TO SALE OF COMPONENTS AND JOB WORK CHARGES. THE ASSESSING AUTHORITY HAS NOT LOOKED INTO THE TWO LEDGER ACCOUNTS MAINTAINED BY THE M/S. SOBA SOLES PVT. LTD . AND CAME TO A CONCLUSION THAT THE ENTIRE SUM OF ` 2,61,21,753/- REFLECTED IN THE ACCOUNTS OF THE ASSESSEE WAS DISBURSED FOR PURC HASE OF ASSETS. 4. ONCE THE COMMISSIONER OF INCOME-TAX(APPEALS) COM PARED THE TOTAL OF THE LEDGER ACCOUNT MAINTAINED BY THE A SSESSEE WITH COMBINATION FIGURE OF TWO LEDGER ACCOUNTS MAINTAINE D BY M/S. SOBA SOLES PVT. LTD., HE FOUND THAT THERE WAS NO IN FLATION OF ANY PURCHASE OR CONSEQUENT LIABILITY. HE ACCORDINGLY, DELETED THE ADDITION OF ` 44,66,633/-. 5. THE DEPARTMENT HAS NO CASE AGAINST THE ASSESSEE ON THE FACTS STATED ABOVE. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS EXAMINED THE ACCOUNTS OF THE ASSESSEE AS WELL A S M/S. SOBA SOLES PVT. LTD. AND HAS COME TO A FINDING THAT THE TOTAL AMOUNT OF TRANSACTIONS ENTERED INTO BETWEEN THE ASSESSEE AND M/S. SOBA SOLES PVT. LTD. TALLIED EACH OTHER AND THERE IS NO BASIS FOR THE ITA 771/11 :- 4 -: ALLEGATION POINTED OUT BY THE ASSESSING AUTHORITY. THE DISCRETION MADE BY THE COMMISSIONER OF INCOME-TAX(APPEALS) IN HIS ORDER IS SELF SPEAKING. WE AGREE WITH HIS ORDER. THIS ISSU E IS DECIDED AGAINST THE REVENUE. 6. THE NEXT ISSUE RAISED BY THE REVENUE IS THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 48,31,050 MADE BY THE ASSESSING AUTHORITY UNDER SEC.40(A)(IA) AGAINST NON PAYMENT OF TDS UNDER SEC.194C, WITHIN DUE DATE. IT IS THE CAS E OF THE REVENUE THAT THE TOTAL TAX DEDUCTED UP TO FEBRUARY 2007 WAS ` 2,01,783/- WHEREAS THE ACTUAL REMITTANCE WAS ONLY ` 96,544/-. IT IS THE CASE OF THE REVENUE THAT THE COMMISSIONER OF INCOME- TAX(APPEALS) OUGHT TO HAVE OBSERVED THAT THE ASSESS EE HAD ADDED BACK ONLY A SUM OF ` 6,53,155/- WHEREAS ADD BACK SHOULD HAVE BEEN ` 48,31,050/- AS DISALLOWANCE UNDER SEC.40(A)(I)(A). IT IS ALSO THE GRIEVANCE OF THE REVENUE THAT THE COMMI SSIONER OF INCOME-TAX(APPEALS) HAS ADMITTED FRESH EVIDENCES AG AINST THE PROVISIONS OF RULE 46A. 7. THIS ISSUE IS CONSIDERED BY THE COMMISSIONER OF INCOME- TAX(APPEALS) IN A DETAILED MANNER IN HIS ORDER IN P AGES 4 TO 7. HE ITA 771/11 :- 5 -: FOUND THAT IN RESPECT OF TDS ACCOUNTABLE UNDER SEC. 194J, THE ASSESSEE ITSELF HAS OFFERED ` 3 LAKHS AGAINST NON PAYMENT OF TDS. HE ALSO FOUND THAT ` 16,830/- WAS PAID WITHIN THE DUE DATE. HE FOUND THAT THE DETAILS IN ANNEXURE 15 TO FORM 3C D WERE FILED BY THE ASSESSEE ALONG WITH RETURN OF INCOME. HE, T HEREFORE, FOUND THAT A SECOND TIME ADDITION OF ` 2,14,960/- WAS UNCALLED FOR. 8. IN RESPECT OF TDS UNDER SEC.194C, THE COMMISSION ER OF INCOME-TAX(APPEALS) FOUND THAT THE ASSESSING OFFICE R HAS OVERLOOKED THE PAYMENTS MADE BY THE ASSESSEE ON 7.3 .2007, 29.3.2007 AND 31.3.2007 AMOUNTING TO ` 50,677/-, ` 2,32,407/-, ` 16,830/-, ` 56,100/- AND ` 31,276/-. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ALSO VERIFIED THE PAYMENT C HALLANS PRODUCED BY THE ASSESSEE. THESE PAYMENTS MADE BY T HE ASSESSEE DISCHARGE ITS LIABILITY TOWARDS TDS. ACCO RDINGLY, THE COMMISSIONER OF INCOME-TAX(APPEALS) DELETED THE ADD ITION. 9. THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS EXAM INED THE DATE OF DEDUCTION AS WELL AS THE REMITTANCE OF THE TAX MONTH- WISE AND AMOUNT-WISE. ALL THESE DETAILS ARE AVAILA BLE ON RECORD. THE DETAILS ARE FURTHER AVAILABLE IN THE ANNEXURE F ILED BY THE ITA 771/11 :- 6 -: ASSESSEE ALONG WITH FORM 3CD BEFORE THE ASSESSING O FFICER. IT IS NOT THE CASE THAT THESE DETAILS WERE NOT AVAILABLE AT THE TIME OF ASSESSMENT. WE CAN ONLY SAY THAT THE ASSESSING OFF ICER SEEMS TO HAVE OVERLOOKED THESE MATERIALS. BUT THE COMMIS SIONER OF INCOME-TAX(APPEALS) VERIFIED THE CHALLANS AND ACCEP TED THE CONTENTIONS OF THE ASSESSEE. WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS). THE CONTENTION OF THE REVENUE THAT THE COMMISSIONER OF INCOME- TAX(APPEALS) HAS VIOLATED RULE 46A IS NOT SUSTAINAB LE IN LAW, AS THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS NOT ADM ITTED ANY NEW EVIDENCES AT ALL. HE WAS ONLY REEXAMINING THE ACCOUNTS IN THE LIGHT OF THE EVIDENCES AVAILABLE ON RECORD. TH IS GROUND IS ALSO DECIDED AGAINST THE REVENUE. 10. THE THIRD ISSUE RAISED BY THE REVENUE IS THAT T HE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DE LETING THE DISALLOWANCE OF INTEREST ON DIVERSION OF INTEREST B EARING FUNDS OF ` 10,78,607/-. 11. THE ASSESSING OFFICER HIMSELF HAS AGREED THAT T HE INCREMENTAL LOANS AND ADVANCES GIVEN DURING THE YEA R AMOUNTING TO ` 84,69,034/- WERE FOR BUSINESS PURPOSES. THE ASSESS EE HAD ITA 771/11 :- 7 -: NOT MADE ANY INVESTMENT. THERE WERE ALSO NO OTHER LOANS AND ADVANCES EXCEPT THOSE ITEMS WHICH THE ASSESSING AUT HORITY HIMSELF HAS HELD TO BE LOANS GIVEN FOR BUSINESS PUR POSES. ALL THESE DETAILS ARE AVAILABLE ON RECORD. THE ASSESSI NG OFFICER WAS NOT JUSTIFIED IN MAKING ANY DISALLOWANCE. THEREFOR E, THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS RIGHTFULLY DECIDED THAT THE DISALLOWANCE OF ` 10,78,607/- WAS NOT CALLED FOR. 12. IN RESULT, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 22 ND OF MARCH , 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 22 ND MARCH , 2012 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR