NATIONAL ALUMINIUM CO. LTD.,BBSR V. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2, BBSR

WP(C)/841/2023

AI Insights

The case revolves around a dispute concerning the denial of a transportation loss claim by the National Aluminium Company Limited (NALCO) for the assessment year 2009-10. The ITAT had initially reversed the decision of the Commissioner, who had allowed the claim after finding that NALCO had maintained proper records of the coal shortage. The ITAT, however, opined that NALCO must have claimed the loss from the transporters, a point which was not substantiated by any evidence during the proceedings. The High Court, upon reviewing the matter, found that the ITAT's decision was based on an erroneous assumption and lacked a factual basis, leading to the quashing of the ITAT's order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 747527 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 30-08-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: TUSHAR KANTI SATAPATHY
• Assessee Lawyers: S K SINGH
• Keywords: Coal; Error apparent; Income Tax; Rectification; Transportation loss
• Section: 254

Judgement Text

" Page 1 of 8 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 841 of 2023 National Aluminium Company Limited, Bhubaneswar …. Petitioner -versus- Assistant Commissioner of Income Tax, Circle 2 (2), Bhubaneswar and another …. Opposite Parties Advocates appears in the case: For petitioner: Mr. S.K. Singh, Advocate For Opp. Parties: Mr. Tushar Kanti Satapathy Senior Standing Counsel (Revenue) CORAM: JUSTICE ARINDAM SINHA JUSTICE SANJAY KUMAR MISHRA ---------------------------------------------------------------------------------------------- Date of Hearing and Judgment: 30th August, 2023 ---------------------------------------------------------------------------------------------- ARINDAM SINHA, J. 1. Mr. Singh, learned advocate appears on behalf of petitioner- assessee and submits, impugned is order dated 19th August, 2022 made by the Income Tax Appellate Tribunal (ITAT), Cuttack Bench in Miscellaneous Application no.04/CTK/2021 arising out of ITA // 2 // W.P.(C) no. 841 of 2023 Page 2 of 8 no.331/CTK/2017 pertaining to assessment year 2009-10. He submits, the order was made invoking power under sub-section (2) in section 254 of Income Tax Act, 1961. 2. Drawing attention to impugned order he demonstrates, contention of his client in the rectification proceeding was that in the appeal the Tribunal had made error apparent in its order by saying transportation loss in respect of coal was not accepted. Its opinion was, the assessee must have claimed the same on the responsible transporter, which has not been shown in the case. 3. He points out from order dated 28th October, 2020 of the Tribunal disposing of the appeal, in paragraphs 43 to 46 the point was dealt with. His client’s contention of fact was it suffered transportation loss of coal valued at Rs.3,23,22,664/-. It amounted to 0.498% of entire consignments transported. Before the Assessing Officer (AO) relevant details of the loss on account of shortage of coal supplied by Mahanadi Coal Field (MCL) through ‘linkage coal’ and ‘open auction’ were filed. The Commissioner found the details were filed before the AO and on examination of those details, filed also in the appeal before the Commissioner, the authority found his client to have kept proper records on account of shortage of coal. Hence, the Commissioner deleted the addition. This was reversed by the Tribunal on expression of opinion as a // 3 // W.P.(C) no. 841 of 2023 Page 3 of 8 finding of fact, an apparent error. Relied upon passage in paragraph 46 is reproduced below. “As per our considered opinion and looking to the facts of the case, the assessee must have claimed to the responsible transporters which is lack in this case. The ld. AR of the assessee was unable to explain about the shortage during the course of hearing before us. What is the internal control system adopted by the assessee is also not explained before us by the assessee. Therefore, the shortage of the coal claimed by the assessee of Rs.3,33,22,664/- is not accepted. Thus, CIT(A) is not justified in deleting the addition made in this regard. Accordingly, we allow the ground No.3 raised by the Revenue.” (emphasis supplied) He seeks interference. 4. Mr. Satapathy, learned advocate, Senior Standing Counsel appears on behalf of revenue and submits, the Tribunal found on facts, on approach by the assessee for it to invoke its power under section 254(2). The Tribunal refused to do so. The matter remains in the domain of facts ascertained by the Tribunal, the last forum to find on facts. In event petitioner is aggrieved, statutory remedy of appeal is available under // 4 // W.P.(C) no. 841 of 2023 Page 4 of 8 section 260-A. In the circumstances, the writ petition is not maintainable and be dismissed. 5. Sub-section (2) in section 254, without the provisos, is set out below. “(2) The Appellate Tribunal may, at any time within [six months from the end of the month in which the order was passed], with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub- section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing] Officer:” 6. We accept contention of revenue that the Tribunal is the last forum to ascertain on facts. Question raised by contention of petitioner is that in the ascertainment there has been error apparent in order dated 28th October, 2022, whereby the ITAT disposed of revenue’s appeal. It appears from the order of the Commissioner, before the AO petitioner had filed relevant details of the loss on account of shortage of coal supplied by MCL on ‘linkage coal’ and ‘open auction’. Those details were again filed in the appeal preferred by petitioner before the Commissioner. This was not disputed by revenue before the Tribunal, in its appeal. Contention of revenue was not that the details were not filed // 5 // W.P.(C) no. 841 of 2023 Page 5 of 8 either before the AO or before the Commissioner. It is on allegation that either there was no shortage or the shortage was not proved. 7. The Tribunal, while dealing with revenue’s appeal against allowing of the loss also said as would appear from a passage in paragraph-46 of its order. “On perusal of the above observations of the CIT(A), we find that the assessee has purchased coal from Mahanadi Coal Field Limited which is Government of India Enterprises and the assessee after purchasing coal it is transported upto the destination where the coal measurements are taken by the assessee and shortages are also properly recorded but the CIT(A) has not observed as to whether the shortage are claimed by the assessee to the transporters and without examining the above facts the CIT(A) deleted the addition made by the AO, which in our opinion is not plausible. Neither the assessee has made any effort with regard to the above fact nor he has filed any supporting documents or evidence before us. The assessee has just explained before us that the shortage of coal worked out to 0.498% of the total coal purchased and simply accepted that the above percentage of shortage is very reasonable nor the auditors have made any adverse comments. Stating this fact, the assessee company has kept itself mum. It is also a fact that the coal is not an evaporated item, rather it is solid items for which, the quantity dispatched from the // 6 // W.P.(C) no. 841 of 2023 Page 6 of 8 weighbridge at the loading point should be received with the same weight at the weighbridge of the destination point.” (emphasis supplied) 8. On perusal of the two passages from appellate order made by the Tribunal, quoted in paragraphs 3 and 6 above, as aforesaid, we do not find any dispute raised regarding details of loss on account of shortage of coal supplied as were filed before the AO and thereafter also before the Commissioner. Assessee’s contention is, the Tribunal opined on it having claimed from the transporter(s). Revenue’s contention is there was no loss. This contention was upheld by the Tribunal on a finding that the Commissioner had not observed as to whether the shortage was passed on by the assessee to the transporter(s) and without examining that, the Commissioner deleted the addition. The passage relied upon by assessee is an expression of opinion in support of held omission of the Commissioner to observe as to whether the shortage was passed on to the transporter(s). The Tribunal opined the assessee must have passed it on. 9. There is nothing in impugned order to show that the AO had made an inquiry or verification regarding the coal as not actually lost. A fact can be proved on a positive assertion. The assessee cannot prove // 7 // W.P.(C) no. 841 of 2023 Page 7 of 8 existence of coal, when it says it has been lost. The AO in asserting it was not lost, could have demonstrated existence of the coal. 10. In view of aforesaid we are satisfied that in the fact situation the Commissioner correctly came to the conclusion that proper internal control system for accounting and finances of assessee had resulted in the details filed before the AO and thereafter before the Commissioner. The details explained and accounted for the shortage of coal. This finding was overturned by the Tribunal in revenue’s appeal on saying that the Commissioner had not observed whether the shortage had been passed on to the transporter(s). The Commissioner could have had no occasion to so observe as the authority was sitting in appeal over the assessment order. Neither in the appellate order of the Tribunal nor in its rectification order there is any reference to the AO having made a finding on passing on the loss to the transporter(s). 11. It follows from our discussion as above that the Tribunal being the last forum to find on facts, purported to find a fact on surmise. It is an error apparent. We therefore set aside and quash impugned order. Mr. Satapathy submits, we record we have not entered into merits of the case. Needless to mention we have passed our judgment based on the orders made by the Tribunal, in the appeal of revenue and thereafter on the miscellaneous application for rectification made by the assessee. // 8 // W.P.(C) no. 841 of 2023 Page 8 of 8 12. The writ petition is disposed of. (Arindam Sinha) Judge (S.K. Mishra) Judge Sks Digitally Signed Signed by: SISIR KUMAR SETHI Designation: PERSONAL ASSISTANT Reason: Authentication Location: ORISSA HIGH COURT Date: 31-Aug-2023 11:15:02 Signature Not Verified "