ITO, Madurai V. Sri S.Palanivelu, Madurai

MA 99/CHNY/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6810 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY V R DESHMUK H IRS J
• Assessee Lawyers: C MARUTHAP
• Keywords: Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER M.A.NO.99/MDS/2011 (IN I.T.A.NO. 729/MDS/2011 (ASSESSMENT YEAR : 2006-07) THE INCOME-TAX OFFICER, WARD-II(2), MADURAI. VS. SHRI S. PALANIVELU, 28, LIC COLONY, MALLIGAI STREET, SHANTHI NAGAR, MADURAI 15. PAN AHKPP 2698 E (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI SANJAY V.R.DESHMUK H, IRS, JCIT-DR RESPONDENT BY : SHRI C. MARUTHAPPAN, FCA DATE OF HEARING : 16 TH SEPTEMBER, 2011 DATE OF PRONOUNCEMENT : 16 TH SEPTEMBER, 2011 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS MISCELLANEOUS PETITION IS FILED BY THE REVENUE . THE PETITION ARISES OUT OF THE ORDER PASSED BY THE INCO ME-TAX APPELLATE TRIBUNAL, CHENNAI B BENCH ON 23.7.2010 IN APPEAL, M A 99/11 :- 2 -: ITA NO.729/MDS/10 FILED BY SHRI S. PALANIVELU. THE RELEVANT ASSESSMENT YEAR IS 2006-07. 2. IN ORDER TO BRING OUT THE FACTS LEADING TO THE P RESENT MISCELLANEOUS PETITION, THE GROUNDS RAISED BY THE R EVENUE ARE EXTRACTED BELOW : 1. THE DEPARTMENT HAS FILED APPEAL BEFORE THE ITAT AGAINST THE ORDER OF THE CIT(A)-I, MADURAI DATED 16.03.2010 ON THE FOLLOWING GROUNDS : A) THE TOTAL PAYMENT MADE BY THE ASSESSEE AS AGAINS T THE CREDIT BILLS AS PER ITS DETAILS AVAILED FROM AI R IS ` 33,00,000/- BUT THE ASSESSEE COULD NOT PROVE HIS CAPACITY TO MAKE THE PAYMENT OF ` 33,00,000/- OUT OF INCOME RETURNED ORIGINALLY AND FAILED TO PRODUCE TH E SOURCES FOR THE SAID PAYMENT. B) THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT T O HAVE SEEN THAT THE ASSESSING OFFICER IN HIS REMAND REPORT HAS ACCEPTED THE EXPLANATION GIVEN BY THE ASSESSEE FOR DEPOSIT OF ` 10,00,000/- ONLY AND THE BALANCE TO BE CONFIRMED. M A 99/11 :- 3 -: C) THE CIT(A) OUGHT TO HAVE CONFIRMED ` 23,00,000/- LAKHS INSTEAD OF ADOPTING TO PEAK CREDIT METHOD SIN CE THE ASSESSEE COULD NOT FILE ANY EXPLANATION FOR THE AMOUNT OF ` 23,00,000/-. 2. IT IS SUBMITTED THAT A PERUSAL OF THE ITAT ORDE R IN ITA NO.729/MDS/2010 DATED 23.07.2010 FOR THE ASSESSMENT YEAR SHOWS THAT THE ITAT HAS HELD THAT I N THE EVENT THAT THE ASSESSEE IS UNABLE TO EXPLAIN TH E ENTRIES IN THE BANK ACCOUNT, THE ADDITION IF ANY SH ALL BE RESTRICTED TO THE MAXIMUM OF ` 5,41,740/- BEING THE PEAK CREDIT ENDORSED BY THE LEARNED CIT9A), BECAUSE THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE OR DER OF THE LEARNED CIT(A) REDUCING THE ADDITION FROM ` 33 LAKHS TO ` 5,41,740/- AND THUS ALLOWED ASSESSEES APPEAL FOR STATISTICAL PURPOSES. 3. IT IS HUMBLY SUBMITTED THAT THE TRIBUNAL HAS PAS SED THE ABOVE ORDER ON THE BASIS OF APPEAL FILED BY THE ASSESSEE ALONE. HOWEVER THE DEPARTMENT APPEAL WAS ALSO TAKEN IN D BENCH IN ITA NO.1035/MDS/2010 DATED 25.11.2010. M A 99/11 :- 4 -: 4. IT IS FURTHER SUBMITTED AS THE DEPARTMENT HAS FI LED APPEAL BEFORE THE ITAT AGAINST THE DELETION OF ADDI TION OF ` 33 LAKHS, BY THE CIT(A), THERE IS AN ERROR IN THE ORDER OF THE ITAT WHICH HAD HELD THAT THE DEPARTMEN T HAD NOT FILED ANY APPEAL ON THE ABOVE ISSUE, IT IS REQUESTED THAT THE ABOVE ORDER MAY BE RECALLED AND PASS RECTIFICATION U/S 254(2) OF THE INCOME-TAX ACT , 1961 AND DISPOSE OF IT ON MERIT AND THUS RENDER JUSTICE. 3. WE HEARD SHRI SANJAY V.R. DESHMUKH, THE LEARNED JOINT COMMISSIONER OF INCOME-TAX, APPEARING FOR THE REVEN UE AND SHRI C. MARUTHAPPAN, THE LEARNED CHARTERED ACCOUNTANT AP PEARING FOR THE RESPONDENT-ASSESSEE. 4. ON GOING THROUGH THE ORDER OF THE TRIBUNAL DATED 23.7.2010 PASSED IN ASSESSEES APPEAL, THE TRIBUNAL HAS HELD THAT WHEN THE ASSESSING AUTHORITY HAS ACCEPTED THE CREDIT OF ` 10 LAKHS, THE QUESTION OF MAKING A PEAK CREDIT ADDITION OF ` 5,41,740/- SHOULD NOT NORMALLY ARISE. AS IT WAS NOT CLEAR AS TO WHIC H ENTRIES WERE ACCEPTED BY THE ASSESSING AUTHORITY AS FOUND IN THE BANK ACCOUNT OF THE ASSESSEE, THE TRIBUNAL SET ASIDE THE MATTER TO THE M A 99/11 :- 5 -: ASSESSING OFFICER TO RECONSIDER THE ISSUE. THE TR IBUNAL ALSO GAVE A DIRECTION THAT IN ANY CASE THE ADDITION MAY BE RESTRICTED TO A MAXIMUM OF ` 5,41,740/- BEING THE PEAK CREDIT ENDORSED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). WHILE COMING TO THE ABOVE CONCLUSION, THE TRIBUNAL HAS OBSERVED THAT TH E FINDING HAS BEEN ARRIVED AT ON THE GROUND THAT THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INC OME-TAX (APPEALS) REDUCING THE ADDITION FROM ` 33 LAKHS TO ` 5,41,740/-. BUT IT IS TO BE SEEN THAT THE REVENUE HAS ALREADY F ILED AN APPEAL IN ITA NO.1035/MDS/11. 5. IT IS VERY INTERESTING TO NOTE THAT THE SAID APP EAL FILED BY THE REVENUE WAS HEARD BY THE I.T.A.T., CHENNAI D BENC H AND PASSED ITS ORDER ON 25.11.2010 DISMISSING THE APPEA L FILED BY THE REVENUE. THE APPEAL FILED BY THE ASSESSEE WAS DISP OSED OF ON 23.7.2010 AND THE APPEAL OF THE REVENUE WAS DISPOSE D OF ON 25.11.2010, BUT BY TWO DIFFERENT BENCHES OF THE TRI BUNAL AT CHENNAI. IT WAS NOT BROUGHT TO THE NOTICE OF THE B ENCHES THAT A CROSS APPEAL WAS PENDING BEFORE ANOTHER BENCH. TH EREFORE, THE TRIBUNAL BENCHES HAD NO OCCASION TO CONSIDER THESE CROSS APPEALS IN A CONSOLIDATED MANNER. M A 99/11 :- 6 -: 6. BUT AS ALREADY STATED, THE TRIBUNAL WHILE PASSIN G THE ORDER IN APPEAL FILED BY THE ASSESSEE HAS ARRIVED AT ITS CONCLUSION ALSO ON THE GROUND THAT THE REVENUE HAS NOT FILED AN APP EAL WHICH IS FACTUALLY INCORRECT. THEREFORE, THERE IS A MISTAKE APPARENT ON THE FACE OF THE ORDER OF THE TRIBUNAL. THIS NEEDS TO B E RECTIFIED. AS THESE ARE CROSS APPEALS, THE RECTIFICATION AFFECTS NOT ONLY THE APPEAL FILED BY THE ASSESSEE BUT ALSO THE APPEAL FI LED BY THE REVENUE. THEREFORE, IN THE INTERESTS OF JUSTICE, I T IS NECESSARY TO RECALL BOTH THE ORDERS PASSED BY THE TRIBUNAL BENCH ES, SO THAT THE CROSS APPEALS CAN BE HEARD AFRESH BY A DULY CONSTIT UTED BENCH. 7. ACCORDINGLY, WE RECALL THE ORDER OF B BENCH DA TED 23.7.2010 IN ITA NO.729/MDS/10 AND THE ORDER OF D BENCH DATED 25.11.2010 IN ITA NO.1035/MDS/10 AND REINSTATE ON T HE ROLLS OF THE TRIBUNAL FOR FRESH HEARING AND DISPOSAL. 8. THE ASSESSEE AS WELL AS THE REVENUE WILL BE HEAR D AFRESH BEFORE DISPOSING OF THE ABOVE STATED RECALLED APPEA LS. 9. THESE TWO APPEALS, IN ITA NO.729/MDS/2010 AND IT A NO.1035/MDS/2010 ARE POSTED FOR HEARING ON 20 TH OCTOBER, 2011 BEFORE D BENCH. BOTH PARTIES MAY TAKE NOTICE. M A 99/11 :- 7 -: 10. IN RESULT, THE MISCELLANEOUS PETITION FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING, ON FRIDAY, THE 16 TH OF SEPTEMBER, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 16 TH SEPTEMBER, 2011 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR