Shree Balaha Chemical Agencies, CHENNAI v. ACIT, CHENNAI

MA 127/CHNY/2011 | 1997-1998
Pronouncement Date: 09-09-2011 | Result: Dismissed

Appeal Details

RSA Number 12721724 RSA 2011
Assessee PAN AAAFS1639P
Bench Chennai
Appeal Number MA 127/CHNY/2011
Duration Of Justice 1 month(s) 25 day(s)
Appellant Shree Balaha Chemical Agencies, CHENNAI
Respondent ACIT, CHENNAI
Appeal Type Miscellaneous Application
Pronouncement Date 09-09-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 09-09-2011
Date Of Final Hearing 26-08-2011
Next Hearing Date 26-08-2011
Assessment Year 1997-1998
Appeal Filed On 14-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER .. M.P. NOS. 127 128 & 129/MDS/2011 (IN I.T.A. NOS. 1236 TO 1239/MDS/2006) ASSESSMENT YEARS : 1997-98 1998-99 AND 2001-02 M/S SHREE BALAHA CHEMICAL AGENCIES CISIONS COMPLEX ROOM NO.12 4 TH FLOOR 50 MONTIETH ROAD EGMORE CHENNAI 600 008. PAN : AAAFS1639P (PETITIONER) V. THE ASSISTANT COMMISSIONER OF INCOME TAX BUSINESS CIRCLE IX CHENNAI 600 034. (RESPONDENT) PETITIONER BY : SHRI S. SRIDHAR ADVOCATE RESPONDENT BY : SHRI T.N. B ETGERI JCIT DATE OF HEARING : 26.08.2011 DATE OF PRONOUNCEMENT: 09.09.2011 O R D E R PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : THROUGH THESE MISCELLANEOUS PETITIONS ASSESSEE PL EADS FOR RECTIFICATION OF CONSOLIDATED ORDER DATED 15 TH JUNE 2007 OF THE TRIBUNAL IN I.T.A. NO. 1236 TO 1239/MDS/2006. M.P. NOS. 127 128 & 129/MDS/11 2 2. AS PER THE ASSESSEE THERE WAS MISCARRIAGE OF JU STICE SINCE CRUCIAL AND RELEVANT SUBMISSIONS AFFIDAVIT CITED CASE LAWS SWORN STATEMENT RECORDED UNDER SECTION 133A OF INCOME-TAX ACT 1961 (IN SHORT THE ACT) AS ALSO REMAND REPORT OF THE ASSES SING OFFICER WERE NOT CONSIDERED. FURTHER AS PER THE ASSESSEE THE SERVICE OF NOTICE UNDER SECTIONS 148 AND 143(3) OF THE ACT WAS ON A P ERSON NOT AUTHORIZED TO RECEIVE STATUTORY NOTICES AND THE TRI BUNAL RELIED ON A DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF M/S AREVA T & D INDIA LTD. V. ACIT (TCA NO.2278 OF 2006) ON W HICH FACTS WERE QUITE DIFFERENT. FURTHER AS PER THE ASSESSEE THE COMMISSION PAYMENTS WHICH WERE DISALLOWED FOR THE IMPUGNED ASS ESSMENT YEARS WERE ALLOWED FOR THE INTERVENING ASSESSMENT YEARS ON AN IDENTICAL SET OF FACTS AND THIS WAS OVERLOOKED BY T HE TRIBUNAL. AS PER THE ASSESSEE THIS TRIBUNAL DISMISSED IN ONE SWEEP ALL THE CASE LAWS RELIED ON BY IT. IN SUPPORT OF ITS MISCELLANEOUS P ETITIONS ASSESSEE HAS RELIED ON THE FOLLOWING DECISIONS:- (1) 256 ITR 685 (BOM) ANUSAYABEN A. DOSHI V. JCIT (2) 257 ITR 235 (MP) AGARWAL WAREHOUSING & LEASING V. CIT (3) 257 ITR 460 (GUJ) RAMESCHANDRA M. LUTHRA V. ACI T (4) 265 ITR 526 (KER) CIT V. TRAVANCORE TITANIUM PR ODUCTS LTD. (5) 265 ITR 560 (KAR) MUNIBYRAPPA V. CIT (6) 273 ITR 160 (ALL) CIT V. MOOL CHAND SHYAM LAL M.P. NOS. 127 128 & 129/MDS/11 3 (7) 84 TTJ 513 (DEL) RATI RAM GOTEWALS V. DCIT (8) 94 TTJ 133 (CHENNAI) M. ASHOK KUMAR PORWAL V. A CIT (9) 95 TTJ 139 (CHENNAI) ALSTOM LTD. V. DCIT (10) 95 TTJ 329 (ASR) (TM) B. KARAMCHAND PIARELAL V . ITO (11) 95 TTJ 944 (MUMBAI) DATAMATICS FINANCIAL SERVI CES LTD. V. JCIT IN ADDITION TO THE ABOVE LEARNED A.R. HAS ALSO PLA CED RELIANCE ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF ACIT V. SAURASHTRA KUTCH STOCH EXCHANGE LTD. (305 ITR 227). 3. ONE OF THE CHALLENGES IN THE APPEAL OF THE ASSES SEE WAS THAT THERE WAS NO SERVICE OF NOTICE UNDER SECTION 143(2) AND SECTION 148 OF THE ACT. ASSESSEE HAD ALSO ASSAILED THE REOPENI NG THOUGH ORIGINAL RETURNS WERE ALL PROCESSED UNDER SECTION 143(1) OF THE ACT. IT WAS HELD BY THE TRIBUNAL AT PARAS 3 TO 5 OF THIS ORDER AS UNDER:- 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FIRST CONTENTION OF THE AS SESSEE IS THAT THERE WAS NO SERVICE OF NOTICE UNDER SEC.143(2) OF THE ACT. HENCE THE ASSESSMENT IS INVALID. THIS CONTENTION CANNOT BE ACCEPTED IN VIEW OF THE JUDGEMENT OF THE HON'BLE JU RISDICTIONAL HIGH COURT IN THE CASE OF M/S AREVA T&D INDIA LTD. V. ACIT (TC NO.2278 OF 2006) WHEREIN IT WAS HELD THAT THE ASSES SMENT ORDER PASSED WITHOUT NOTICE UNDER SEC.143(2) DOES NOT INV ALIDATE THE ASSESSMENT. IN THE PRESENT CASE THERE WAS SERVICE OF NOTICE UNDER SEC.148 AND 143(2) ON 31.3.2004 AND 10.2.2005 RESPECTIVELY TO N. UMASHANKAR WHO IDENTIFIED HIMSELF AS THE MANA GER OF THE ASSESSEE COMPANY. ONE MORE PLEA OF THE ASSESSEE IS THAT THERE WAS CHANGE OF OPINION FOR REOPENING OF THE ASSESSME NT. THIS PLEA ALSO CANNOT BE ACCEPTED AS THERE WAS NO FORMATION O F OPINION. THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SEC.143 (1) IN THIS M.P. NOS. 127 128 & 129/MDS/11 4 CASE. THE HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF SRI KRISHNA MAHAL V. ACIT (250 ITR 333) WHEREIN IT WAS HELD THAT:- THOUGH THE ASSESSING OFFICER HAD NOT CALLED UPON T HE ASSESSEE TO SUBMIT FURTHER RECORDS BY USING HIS POWE RS UNDER SEC.143(2) THAT WOULD NOT DISENTITLE HIM TO RESORT TO SEC.148 AFTER THE RECEIPT OF THE VALUATION REPORT WHICH PRI MA FACIE SHOWED THAT THE COST OF CONSTRUCTION HAD BEEN UNDER STATED BY THE ASSESSEE. RELIANCE PLACED BY THE ASSESSING OFFI CER ON THE REPORT OF AN EXPERT REGARDING THE COST OF CONSTRUCT ION OF THE BUILDING COULD NOT BE SAID TO BE IMPROPER NOR COUL D IT BE SAID THAT THE REPORT WOULD NOT PROVIDE SUFFICIENT JUSTIFICATI ON FOR THE BELIEF THAT THERE HAD BEEN ESCAPEMENT OF INCOME AS THE REPORT SHOWED SUBSTANTIAL DIFFERENCE BETWEEN WHAT HAD BEEN ESTIMATED BY THE VALUER AND WHAT HAD BEEN RETURNED BY THE ASSES SEE AS COST OF CONSTRUCTION. THE NOTICE WAS VALID. THIS VIEW WAS FORTIFIED BY THE HON'BLE PUNJAB AND HA RYANA HIGH COURT IN THE CASE OF PUNJAB TRACTORS LTD. V. JCIT ( 254 ITR 242) WHEREIN IT WAS HELD THAT IF THE ASSESSING OFFICER H AS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT WHILE IS SUING NOTICE UNDER SEC.148 HE CAN PROCEED UNDER SECTION 148. T HE ABSENCE OF AN ORDER UNDER SEC.143(3) IS NO BAR. THE ASSESSEE MUCH RELIED ON THE JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF BAPALAL & CO. EXPORT P. LTD. V. JCIT (289 ITR 37) W HEREIN IT WAS HELD THAT WHEN THE RETURNS ARE PROCESSED UNDER SEC. 143(1) IN THE ABSENCE OF ANY NEW MATERIAL ASSESSMENT CANNOT BE REO PENED. RECENTLY THE CHENNAI BENCH OF THE TRIBUNAL CONSIDER ED SIMILAR ISSUE IN THE CASE OF M/S VKN TEXTILES IN ITA NO.2328/MDS/2004 AND THE TRIBUNAL VIDE ORDER DATED 7.3.2007 HAS DISTINGUISHED AND HELD THAT :- THE MAIN GROUNDS OF CHALLENGE IN THE WRIT PETITION WERE : (I) ASSESSMENT CANNOT BE REOPENED WITHOUT THERE BEI NG ANY FRESH MATERIALS (II) REASONS FOR REOPENING SHOULD BE GIV EN ALONG WITH NOTICE (III) ADEQUATE OPPORTUNITY SHOULD BE PROVIDE D TO THE ASSESSEE TO VERIFY FRESH MATERIALS AND (IV) IN THE A BSENCE OF NEW MATERIALS AO IS NOT EMPOWERED TO REOPEN THE ASSESSM ENT M.P. NOS. 127 128 & 129/MDS/11 5 IRRESPECTIVE OF THE FACT THAT WHETHER IT IS MADE UN DER SECTION 143(1) OF 143(3) OF THE ACT. IT IS EVIDENT THAT THE AFORESAID JUDGEMENT WAS NOT RENDERED IN THE CONTEXT OF THE APPLICABILITY OF PROV ISION TO SECTION 147. IN THIS PROVISO IT IS CLEARLY LAID DO WN THAT IT WILL APPLY IN THE CONTEXT OF ASSESSMENT MADE UNDER SECTIO N 143(3). AS SUCH IT CANNOT BE ASSUMED THAT THE PROVISO APPLI ED TO THE ASSESSMENTS WHICH ARE COMPLETED UNDER SECTION 143(1 ) OF THE ACT. UNDISPUTEDLY THE ASSESSMENT OF THE ASSESSEE W AS COMPLETED UNDER SEC. 143(1) AND AS SUCH IT FALLS BE YOND THE KEN OF THE PROVISO TO SECTION 147. IN THE PRESENT CASE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT EXCEEDED RS.50 000/-. THEREFORE UNDER SEC. 149(1)(B)(III) IT WAS POSSIBLE ON THE PART OF THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT WITHIN 10 YEARS. A S SUCH THE REOPENING WAS WITHIN THE TIME LIMIT AND THERE IS NO INFIRMITY ON THIS COUNT. WE THEREFORE DECIDE THIS ISSUE IN FA VOUR OF THE REVENUE AND AGAINST THE ASSESSEE. IN VIEW OF THE ABOVE WE ARE OF THE OPINION THAT TH E CIT(APPEALS) IS JUSTIFIED IN CONFIRMING THE VALIDITY OF REOPENING . 4. IN THE PRESENT CASE THE ASSESSMENT WAS REOPENED FOR THE FOLLOWING REASONS:- DURING THE COURSE OF ASSESSMENT FOR A.Y. 2001-02 I T CAME TO LIGHT THAT A SURVEY BY ITO IX(3) IN THE CASE OF SHRI D D VYAS HAD REVEALED THAT THE COMMISSIONS RECEIVED BY SHRI D .D. VYAS AND HIS SONS SRINIVASA VYAS AND MANOHAR VYAS AND THE AGENCIES OWNED AND RUN BY THEM VIZ. NAROTTAM AGENCIES PUSHPA K SALES CORPORATION AND SREENIVASA AGENCIES WERE NOT GENUIN E. SHRI D D VYAS HAS STATED IN HIS SWORN STATEMENTS RECORDED IN HIS CASE THAT HE IS MANAGING THE WHOLE COMMISSION BUSINESS F OR HIMSELF AS WELL AS FOR HIS SON. THE SURVEY REVEALED THAT SHRI VYAS AND HIS VARIOUS OUTFITS HAD NO INFRASTRUCTURE NO TECHNICAL KNOWLEDGE AND NO WORK FORCE TO HAVE RENDERED SERVICES. HIS SUB-A GENTS TURNED M.P. NOS. 127 128 & 129/MDS/11 6 OUT TO BE TEA STALL OWNERS AND SOAP SELLERS WHO HAD BEEN INTRODUCED BY SHRI D D VYAS FOR THE PURPOSE OF OPENIN G BANK ACCOUNTS. THESE ARE FRESH MATERIALS TO REOPEN THE ASSESSMENT . 5. WE HAVE GONE THROUGH THE FOLLOWING CASE LAW :- I) CIT V. SHITAL PRASAD KHARAG PRASAD 280 ITR 541 (ALL.) II) HIND BOOK HOUSE V. ITO 274 ITR 61(AT) (DEL.) III) DCIT V. SUPER TANNERY (INDIA) LTD. 274 ITR 338 (AL L.) IV) SUDEV INDUSTRIES LTD. V. ITO 98 TTJ 97 (DEL.) V) CIT V. LUNAR DIAMONDS LTD. 281 ITR 1 (DEL.) VI) DCIT V. SUPER TANNERY (INDIA) LTD. 274 ITR 338 (CA L.) THESE CASE LAW ARE NOT APPLICABLE TO THE FACTS OF T HE CASE BEFORE US AND HENCE NOT CONSIDERED. 4. ON THE MERITS OF THE CASE WHICH WAS ON DISALLOW ANCE OF COMMISSION THE TRIBUNAL HAD HELD AT PARA 7 OF ITS ORDER AS UNDER:- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THESE ASST YEARS THE PAYMEN T OF COMMISSION WAS DISALLOWED DOUBTING THE GENUINENESS OF PAYMENT OF COMMISSION. TO RENDER THE SERVICE THE PERSONS RECEIVING THE COMMISSION SHALL HAVE THE REQUISITE CAPACITY INFRAS TRUCTURE AND SKILL. BUT IN THE CASE OF THESE PARTIES THEY DO NO T HAVE BASIC INFRASTRUCTURE AND MEANS. MOREOVER THE PARTIES HA VE OPENED BANK ACCOUNT IN CHENNAI AND THE ASSESSEE DEPOSITED CHEQUES TO THESE ACCOUNTS AND IMMEDIATELY THEREAFTER THE AMOUNT WAS WITHDRAWN. THE ASSESSEE WAS AT NO POINT OF TIME AB LE TO SUBSTANTIATE THE SERVICES RENDERED BY THESE AGENTS. BECAUSE THE PAYMENTS WERE MADE BY CHEQUE AND THE RECEIVERS OF THE COMMISSION ARE ASSESSED TO TAX THIS REASON ALONE D OES NOT ENTITLE THE ASSESSEE TO CLAIM DEDUCTION TOWARDS THE EXPENDITURE. THE ASSESSEE SHALL SHOW THAT THE SERVICE WAS ACTUAL LY RENDERED AND EXPENDITURE IS EXCLUSIVELY AND WHOLLY INCURRED FO R THE M.P. NOS. 127 128 & 129/MDS/11 7 PURPOSE OF BUSINESS. FOR THIS PROPOSITION WE DRAW SUPPORT FROM THE JUDGEMENT OF HON'BLE KERALA HIGH COURT IN THE C ASE OF CIT V. PREMIER BREWERIES LTD. (275 ITR 51) WHEREIN IT WAS HELD THAT :- WE ARE OF THE VIEW MERE EXISTENCE OF AN AGREEMENT DOES NOT GIVE RISE TO CLAIM FOR PAYMENT OF COMMISSION AND THE INCOME-TAX AUTHORITIES CAN GO INTO THE QUESTION WHE THER THE COMMISSION PAID IS PROPERLY DEDUCTIBLE UNDER SEC .37 OF THE INCOME-TAX ACT 1961. IT WAS FURTHER RULED IN PARAGRAPH 8 AS UNDER:- 8. WE ARE IN FULL AGREEMENT WITH THE REASONING OF THE ASSESSING AUTHORITY. WE HAVE ALREADY INDICATED THAT THE BURDEN IS ENTIRELY ON THE ASSESSEE TO PROVE THOSE TRANSACTIONS. AGREEMENT ENTERED INTO BETWEEN RJ ASSOCIATES AND GOLDEN ENTERPRISES BY ITSELF WOULD NO T ADVANCE THE CASE OF THE ASSESSEE. IN THIS CONNECTI ON WE MAY REFER TO THE DECISION OF THE APEX COURT IN SWADE SHI COTTON MILLS CO. LTD. V. CIT (NO.1) [1967] 63 ITR 5 7 WHEREIN THE APEX COURT DEALT WITH THE QUESTION WHET HER AMOUNT CLAIMED AS EXPENDITURE WAS LAID OUT OR EXPEN DED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE ASSESSE ES BUSINESS PROFESSION OR VOCATION HAS TO BE DECIDED ON THE FACTS AND IN THE LIGHT OF THE CIRCUMSTANCES OF EACH CASE. THE SAID PRINCIPLE HAS BEEN REITERATED BY THE APEX C OURT IN LACHMINARAYAN MADAN LAL V. CIT [1972] 86 ITR 439. T HE APEX COURT IN THE ABOVE CASE HELD AS FOLLOWS: THE MERE EXISTENCE OF AN AGREEMENT BETWEEN THE ASSESSEE AND ITS SELLING AGENTS OR PAYMENT OF CERTAI N AMOUNTS AS COMMISSION ASSUMING THERE WAS SUCH PAYMENT DOES NOT BIND THE INCOME-TAX OFFICER TO HOLD THAT THE PAYMENT WAS MADE EXCLUSIVELY AND WHOLLY FOR THE PURPOSE OF THE ASSESSEES BUSINESS. ALTHOUGH THERE MIGHT BE SUCH AN AGREEMENT IN EXISTENCE AND THE PAYMENTS MIGHT HAVE BEEN MADE IT IS STILL OPEN TO THE INCOME-TAX OFFICER TO CONSI DER M.P. NOS. 127 128 & 129/MDS/11 8 THE RELEVANT FACTS AND DETERMINE FOR HIMSELF WHETHER THE COMMISSION SAID TO HAVE BEEN PAID TO THE SELLING AGENTS OR ANY PART THEREOF IS PROPERLY DEDUCTIBLE UNDER SECTION 37 OF THE ACT. EVEN BEFORE US THE ASSESSEE HAS FAILED TO FURNISH ANY PIECE OF EVIDENCE TO PROVE THE GENUINENESS OF PAYMENT OF COMM ISSION. HENCE PAYMENT OF COMMISSION CANNOT BE ALLOWED. IN V IEW OF THIS WE ARE INCLINED TO CONFIRM THE ORDER OF THE CIT(APP EALS). 5. IT IS CLEAR FROM THE ABOVE THAT THE SERVICE OF N OTICE DONE ON SHRI UMA SHANKAR WAS CONSIDERED SUFFICIENT BY THE TRIBUN AL AFTER CONSIDERING ALL THE RELEVANT FACTS. IT IS ALSO CLE AR FROM THE ABOVE THAT ASSESSEE WAS UNABLE TO FURNISH ANY EVIDENCE FOR PRO VING GENUINENESS OF PAYMENTS OF COMMISSION. FOR THIS RE ASON THE DISALLOWANCE WAS SUSTAINED. WE DO NOT FIND ANY MIS TAKE IN THE ORDER OF THE TRIBUNAL MUCH LESS ANY MISTAKE APPARENT FROM THE RECORD. AS FOR THE RELIANCE PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON VARIOUS DECISIONS CITED AT PARA 2 ABOVE IN OUR OPI NION NONE OF THESE WOULD HELP THE CASE OF THE ASSESSEE SINCE HERE THER E IS NO GLARING MISTAKE WHICH IS APPARENT FROM THE RECORD. THERE IS NO MISTAKE WHICH IS SUCH THAT IT COULD BE DISCERNED WITHOUT LO NG DEBATED ARGUMENTS. ONCE IT IS HELD BY THIS TRIBUNAL THAT A LL THE RELEVANT JUDGEMENTS RELIED ON BY THE ASSESSEE HAVE BEEN CONS IDERED AND FOUND NOT APPLICABLE TO THE FACTS IN ASSESSEES CAS E WE CANNOT SAY M.P. NOS. 127 128 & 129/MDS/11 9 THAT THERE IS AN OMISSION TO CONSIDER SUCH JUDGEMEN TS. THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE TRIBUNAL. ASSESSEE IS SEEKING A REVIEW OF THE ORDER IN THE GU ISE OF RECTIFICATION APPLICATION. THIS TRIBUNAL IS NOT HAVING ANY POWER TO REVIEW UNDER SECTION 254(2) OF THE ACT. 6. IN THE RESULT THE MISCELLANEOUS PETITIONS FILED BY THE ASSESSEE STANDS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 9 TH SEPTEMBER 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 9 TH SEPTEMBER 2011. KRI. COPY TO: (1) PETITIONER (2) RESPONDENT (3) CIT(A) (4) CIT (5) D.R. (6) GUARD FILE