Shri A. Senthil Murugan, Tirupattur V. ACIT, Vellore

MA 406/CHNY/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5187 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR ADD L
• Assessee Lawyers: P RANGA RAMANUJAM
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , . !' , # $ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER %% / M.P. NO.406/CHNY/2017 (IN I.T.A. NO.3139/MDS/2016) & '& / ASSESSMENT YEAR : 2010-11 SHRI A. SENTHIL MURUGAN, NO.68, KRISHNAGIRI MAIN ROAD, TIRUPATTUR 635 601. PAN : AFPPA 0318 D V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1, VELLORE. ()*& /PETITIONER) ()+*,/ RESPONDENT) )*& . / /PETITIONER BY : SHRI P. RANGA RAMANUJAM, CA )+*, . / / RESPONDENT BY: SHRI R. CLEMENT RAMESH KUMAR, ADD L.CIT 0 . 1# / DATE OF HEARING : 05.10.2018 2!' . 1# / DATE OF PRONOUNCEMENT : 11.10.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE PRESENT MISCELLANEOUS PETITION ON THE GROUND THAT THERE IS AN ERROR IN THE ORDER O F THIS TRIBUNAL DATED 12.04.2017. 2. SHRI P. RANGA RAMANUGAM, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE OPENING CREDIT OF 55 LAKHS IN THE 2 M.P. NO.406/CHNY/17 BOOKS OF THE ASSESSEE IN THE ACCOUNTS OF M/S YOGA L AKSHMI BLUE METAL INDUSTRIES WAS BY WAY OF JOURNAL ENTRY FOR TA KING OVER ASSETS AND LIABILITIES OF SRI MYTHILI AGENCIES AND AGS CON STRUCTION AS ON 31.03.2009. ACCORDING TO THE LD. REPRESENTATIVE, T HE OPENING CREDIT WAS INCORPORATED BY WAY OF A JOURNAL ENTRY DEBITED IN THE CAPITAL ACCOUNT AND CREDIT IN THE PARTY ACCOUNT TO GIVE EFF ECT FOR TAKING OVER OF THE FIRM. ACCORDING TO THE LD. REPRESENTATIVE, THE ORDER OF THE CIT(APPEALS) WAS IN CONFORMITY WITH THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. PANDIAN DISTRIBUTORS (259 ITR 428) AND CIT V. TAJ BOREWELLS (291 ITR 232). THIS FACT WAS NOT CONSIDE RED BY THE TRIBUNAL WHILE REMITTING BACK THE MATTER TO THE FIL E OF THE ASSESSING OFFICER. REFERRING TO PAGE 22 OF THE CIT(APPEALS) S ORDER, THE LD. REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER IN HIS REMAND REPORT FILED BEFORE THE CIT(APPEALS) CLARIFIED THAT 29,59,375/- WAS CREDIT BALANCE OF M/S YOGALAKSHMI BLUE METAL INDUST RIES IN THE BOOKS OF THE ASSESSEE-COMPANY AND 57,90,000/- WAS THE BALANCE OF THE ASSESSEE IN THE BOOKS OF M/S YOGALAKSHMI BLU E METAL INDUSTRIES. THEREFORE, ACCORDING TO THE LD. REPRES ENTATIVE, IT IS NOT CORRECT TO SAY THAT THE ENTIRE AMOUNT WAS CREDIT EN TRY AND THE PROVISION OF SECTION 68 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IS APPLICABLE. 3 M.P. NO.406/CHNY/17 3. SHRI P. RANGA RAMANUGAM, THE LD. REPRESENTATIVE FOR THE ASSESSEE, FURTHER SUBMITTED THAT THE CIT(APPEALS) B Y CONSIDERING THE REMAND REPORT FILED BY THE ASSESSING OFFICER AN D THE LEDGER MAINTAINED BY THE ASSESSEE, FOUND THAT THERE ARE TH REE CREDITS IN THE ACCOUNTS OF M/S YOGALAKSHMI BLUE METAL INDUSTRIES T OTALLING TO 85,04,400/- AND SIX DEBITS TOTALLING TO 55,45,025/- LEAVING A NET CREDIT BALANCE OF 29,59,375/-. ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) FOUND THAT FOR THE PURPOSE OF MAKI NG ADDITION UNDER SECTION 68 OF THE ACT, EACH CREDIT NEEDS TO B E CONSIDERED AND NOT THE CREDIT BALANCE IN THE BOOKS OF ACCOUNT. IF THE BALANCE IS REQUIRED TO BE CONSIDERED, THEN THE ASSESSEE MAY NU LLIFY THE CREDIT BALANCE ARISING OUT OF CASH CREDIT BY MAKING DEBITS IN THE BOOKS. OBSERVING THUS, ACCORDING TO THE LD. REPRESENTATIVE , THE CIT(APPEALS) ULTIMATELY FOUND THAT THIS BEING A JOU RNAL ENTRY, IT CANNOT BE CONSIDERED TO BE CASH CREDIT UNDER SECTIO N 68 OF THE ACT. EVEN ASSUMING FOR ARGUMENT SAKE THAT THE JOURNAL EN TRY IS REQUIRED TO BE EXPLAINED, ACCORDING TO THE LD. REPRESENTATIV E, THIS WAS THE BALANCE STANDING AS ON 31.03.2009 IN THE BOOKS OF A GS CONSTRUCTION WHICH DULY REFLECTED IN THE BOOKS. AC CORDING TO THE LD. REPRESENTATIVE, 55 LAKHS APPEARING IN THE OPENING BALANCE IN THE ACCOUNT OF M/S YOGALAKSHMI BLUE METAL INDUSTRIES IS NOTHING BUT JOURNAL ENTRY, THEREFORE, THERE IS NO QUESTION OF A NY ADDITION. 4 M.P. NO.406/CHNY/17 MOREOVER, THE CREDIT OF 57,90,000/- IS NOT IN THE BOOKS OF THE ASSESSEE, IT WAS IN THE BOOKS OF M/S YOGALAKSHMI BL UE METAL INDUSTRIES. THEREFORE, ACCORDING TO THE LD. REPRES ENTATIVE, THE CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THIS TRIBUNAL, HOWEVER, HAS NOT CONSIDERED 57,90,000/-. THE FACT THAT IT WAS ONLY JOURNAL ENT RY IS NOT CONSIDERED BY THE TRIBUNAL AT ALL. THEREFORE, ACCO RDING TO THE LD. REPRESENTATIVE, TO THAT EXTENT, THERE IS AN ERROR I N THE ORDER OF THIS TRIBUNAL. 4. WE HEARD SHRI R. CLEMENT RAMESH KUMAR, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. THIS TRIBUNAL FO UND THAT OPENING BALANCE DIFFERENCE HAS TO BE BROUGHT FOR TA XATION. HOWEVER, THE FACT THAT IT WAS ONLY BY WAY OF JOURNA L ENTRY WHILE TAKING OVER THE ASSETS AND LIABILITIES OF THE FIRM IS NOT CONSIDERED BY THIS TRIBUNAL. THEREFORE, THIS TRIBUNAL FOUND THAT WHEN THERE IS A DIFFERENCE IN THE OPENING BALANCE, IT HAS TO BE CON SIDERED AS CREDIT UNDER SECTION 68 OF THE ACT. THE EFFECT OF JOURNAL ENTRY WAS NOT CONSIDERED BY THIS TRIBUNAL. THE JUDGMENT OF MADRA S HIGH COURT IN TAJ BOREWELLS (SUPRA) AND PANDIAN DISTRIBUTORS (SUP RA) WERE NOT TAKEN INTO CONSIDERATION BY THIS TRIBUNAL. THEREFO RE, AN ERROR HAS CREPT IN THE ORDER OF THIS TRIBUNAL WHICH NEEDS TO BE RECTIFIED. THE 5 M.P. NO.406/CHNY/17 NON-CONSIDERATION OF THE JUDGMENT OF MADRAS HIGH CO URT, WHICH IS AVAILABLE ON THE DATE OF HEARING, IS AN ERROR WITHI N THE MEANING OF SECTION 254(2) OF THE ACT AS HELD BY THE APEX COURT IN HONDA SIEL POWER PRODUCTS LTD. V. CIT (2007) 295 ITR 467. THE REFORE, THE ORDER OF THIS TRIBUNAL DATED 12.04.2017 AS FAR AS I T RELATES TO ADDITION UNDER SECTION 68 OF THE ACT TO THE EXTENT OF 87,49,375/- IN THE NAME OF M/S YOGALAKSHMI BLUE METAL INDUSTRIES, AS DISCUSSED BY THIS TRIBUNAL AT PARAGRAPHS 7 TO 10 OF ITS ORDER DATED 12.04.2017 IS TO BE RECALLED. THEN WHAT REMAINS IS THE ADDITI ON OF 25 LAKHS BEING A CREDIT IN THE BOOKS OF M/S YOGALAKSHMI BLUE METAL INDUSTRIES. AS OBSERVED EARLIER, THE NON-CONSIDERA TION OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT, WHICH IS AVA ILABLE ON THE DATE OF HEARING THE APPEAL IS AN ERROR WITHIN THE MEANIN G OF SECTION 254(2) OF THE ACT. HENCE, THIS ERROR ALSO NEEDS TO BE RECTIFIED. THESE ERRORS CAN BE EFFECTIVELY RECTIFIED ONLY AFTE R HEARING THE APPEAL. ACCORDINGLY, ORDER OF THIS TRIBUNAL DATED 12.04.2017 IS HEREBY RECALLED AND THE APPEAL OF THE REVENUE IS RE STORED ON THE FILE OF THIS TRIBUNAL. THE REGISTRY IS DIRECTED TO POST THE APPEAL FOR FINAL DISPOSAL BEFORE THE REGULAR BENCH ON 24.12.20 18. 5. WITH THE ABOVE OBSERVATION, THE MISCELLANEOUS PE TITION FILED BY THE ASSESSEE IS ALLOWED. 6 M.P. NO.406/CHNY/17 ORDER PRONOUNCED IN THE COURT ON 11 TH OCTOBER, 2018 AT CHENNAI. SD/- SD/- (. !' ) ( ... ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 11 TH OCTOBER, 2018. KRI. . )15% 6%'1 /COPY TO: 1. )*& / PETITIONER 2. )+*, /RESPONDENT 3. 0 71 () /CIT(A) 4. 0 71 /CIT 5. %8 )1 /DR 6. 9& : /GF.