Vinayaga Fireworks Industries, Sivakasi V. DCIT, Madurai

ITA 910/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73631 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: V RAJASEKARAN
• Keywords: Unexplained expenditure; Search and seizure
• Section: 143(3); 153A; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI (BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ) .. I.T.A. NO.910/MDS/2013 ASSESSMENT YEAR : 2006-07 M/S.VINAYAGA FIREWORKS INDUSTRIES, ,VELAYUTHAM ROAD, SIVAKASI. 626 123 PAN : AABFV 9425 H (APPELLANT) V. DCIT, CENTRAL CIRCLE III, MADURAI. (RESPONDENT) APPELLANT BY : SHRI V.RAJASEKARAN C.A. RESPONDENT BY : SHRI S.DAS GUPTA, JCIT D.R/ DATE OF HEARING : 16.12.13 DATE OF PRONOUNCEMENT : 17.01.14 O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (CENTRAL)-II , CHENNAI DATED 07.03.2013 IN C. NO.2744/C.II/2012-13/3 PASSED U/S. 263 OF THE ACT. ITA NO.910/MDS/13 2 2. THE ASSESSEE HAS RAISED SIX GROUNDS IN ITS APPE AL; HOWEVER THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRI EVED BY THE ORDER OF THE LD. CIT PASSED UNDER SEC.263 OF THE ACT WHEREI N HE DIRECTED THE LD. ASSESSING OFFICER TO REVISE THE ASSESSMENT ORDE R BY ADDING AN AMOUNT OF `. 1,62,830/- TOWARDS UNEXPLAINED EXPENDITURE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A FIRM ENGAGED IN MANUFACTURING AND TRADING OF FIRE-WORKS, FILED ITS RETURN OF INCOME ON 21.10.2006 DISCLOSING TOTAL INCOME OF `. 2,33,490/-. THEREAFTER, THE ASSESSMENT WAS COMPLETED U/S. 143(3 ) OF THE ACT ON 31.07.2008 WHEREIN THE INCOME OF THE ASSESSEE WAS A SSESSED AT `. 3,96,320/- BY MAKING AN ADDITION OF `. 1,62,830/- FOR UNEXPLAINED EXPENSES. SUBSEQUENTLY SEARCH AND SEIZURE ACTION U/ S. 132 WAS CARRIED ON 21.10.2008 IN THE ASSESSEES GROUP OF CO MPANIES AND FINALLY, ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S 153A IN THE CASE OF THE ASSESSEE ON 27.12.2010 WHEREIN AN ADDITION O F `. 1,09,145/- WAS MADE TOWARDS RECEIPTS OF MAHAMAI AND THE ADD ITION OF `. 1,62,830/- MADE AT THE TIME OF ORIGINAL ASSESSMENT ORDER WAS ITA NO.910/MDS/13 3 OMITTED. THEREFORE THE LD. CIT OBSERVED THAT THE O RDER PASSED ON 27.12.2010 IS PRIMA FACIE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SUBSEQUENTLY, LD. CIT GAVE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. THE ASSESSEE FURNISHED D ETAILS OF THE EXPENDITURE TO THE EXTENT OF `. 95,340/- AND OBJECTED TO THE PROPOSED REVISION U/S. 263 OF THE ACT. HOWEVER, THE LD. CIT INVOKED SECTION 263 OF THE ACT AND DIRECTED THE LD. ASSESSING OFFIC ER TO REVISE THE ASSESSMENT ORDER BY ADDING AN AMOUNT OF `. 1,62,830/- TOWARDS UNEXPLAINED EXPENDITURE BECAUSE THE ASSESSEE HAD NO T CONTESTED THIS ADDITION MADE IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT. 4. LD. A.R. ARGUED BEFORE US STATING THAT THE ASS ESSEE HAD PRODUCED ALL THE NECESSARY VOUCHERS AND EXPLANATION S BEFORE THE LD. LD. LD. CIT FOR THE EXPENDITURE INCURRED, HOWEVER THE LD. CIT, WITHOUT VERIFYING THE SAME, DIRECTED THE LD. ASSESS ING OFFICER FOR MAKING SUCH ADDITION ONLY FOR THE REASON THAT THE A SSESSEE HAD NOT CONTESTED THE ADDITION IN THE ORIGINAL ASSESSMENT P ASSED U/S. 143(3) ITA NO.910/MDS/13 4 OF THE ACT. LD. D.R RELIED ON THE ORDER OF THE LD. CIT AND REQUESTED FOR CONFIRMING THE SAME. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. LD. CIT HAS RIGHTLY OBSERVED THAT THE SUBSEQUENT ORDER PASSED U/S. 143(3) R.W.S 153A ON 2 7.12.2010 WOULD HAVE THE EFFECT OF THE EARLIER ASSESSMENT ORD ER PASSED U/S. 143(3) DATED 31.07.2008 BEING MERGED WITH THE ORDE R PASSED ON 27.12.2010. MOREOVER, ORDER PASSED U/S.143(3) R.W. S 153A OF THE ACT ON 27.12.2010 IS A REASSESSMENT WHEREIN THE ORI GINAL ASSESSMENT PASSED U/S. 143(3) IS ABETTED. THEREFOR E, THE LD. CIT SHOULD HAVE EXAMINED ALL THE RELEVANT MATERIALS BEF ORE ARRIVING AT A CONCLUSION THAT THERE WAS ACTUALLY AN OMISSION OF T HE ADDITION OF RS.1,62,830/- WHICH WAS MADE IN THE ORIGINAL ASSES SMENT ORDER IN ORDER TO INVOKE SEC.263 OF THE ACT. IN THIS GIVEN CASE, LD. CIT HAS FAILED TO DO SO, EVEN AFTER THE ASSESSEE PRODUCED T HE RELEVANT VOUCHERS AND OTHER MATERIALS TO ESTABLISH THE GENUI NENESS OF THE EXPENDITURE CLAIMED. THEREFORE, WE DO NOT FIND ANY MERIT IN THE ORDER ITA NO.910/MDS/13 5 PASSED BY THE LD. CIT INVOKING SEC.263 OF THE ACT. HENCE, WE HEREBY QUASH THE ORDER OF THE LD. CIT . 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON 17 TH JANUARY, 2014 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 17 TH JANAURY, 2014. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE