Income Tax Appellate Tribunal - Chennai
Thriveni Earth Movers Private Ltd, ... vs Acit Central Circle, Salem on 31 August, 2018
आयकर अपील य अ
धकरण, 'सी', यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'c'' BENCH : CHENNAI
ी अ ाहम पी. जॉज , लेखा सद य एवं
ी ध#ु व$
ु आर.एल रे %डी, या(यक सद य के सम* ।
[BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER]
S.P. No.237/Mds/2018
(in I.T.A. No.1774/CHNY/2018)
नधा रण वष /Assessment year : 2013-2014.
Thriveni Earthmovers Pvt. Ltd, Vs. The Assistant Commissioner of
22/11, Greenways Road, Income Tax,
Fairlands, Central Circle,
Salem 636 016. Salem.
[PAN AABCT 6759R]
Petitioner Respondent
Petitioner by : Shri. T. Banusekar, C.A.
Respondent by : Shri.R. Clement Ramesh Kumar,
Addl. CIT.
सन
ु वाई क तार ख/Date of Hearing : 31.08.2018
घोषणा क तार ख /Date of Pronouncement : 31.08.2018
आदे श / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:
Assessee through this stay petition pleads for stay of proceedings pursuant to an order dated 22.03.2018 of ld. Principal Commissioner of Income Tax, Central-2, Chennai u/s.263 of the :- 2 -: S.P. No.237/2018.
Income Tax Act, 1961 (in short ''the Act'') for the impugned assessment year.
2. Ld. Counsel for the assessee submitted that assessee was a contractor in providing mine development and operation services to various iron ore mine owners. As per the ld. Authorised Representative for the impugned assessment year, assessee had admitted a sum of B25,58,96,671/- as contract receipts, which were in substance reversal of provisions made for assessment years 2011-12 and 2012-
13. As per the ld. Authorised Representative, the provisions made in the earlier years against contract receipts were found to be no longer required. According to the ld. Authorised Representative, assessee was obliged to provide end-to-end services to its clients, who were mine owners, from mining to processing of iron ores, based on commercial arrangements with such mine owners. Its revenue, as per the ld. Authorised Representative was fixed as a small percentage of income realized on sale of crushed iron ore lumps, iron ore fines and calibrated lumpy ore. Contention of the ld. Authorised Representative was that the State Government demanded higher royalty on iron ore fines, which was a residual product and by virtue of this demand, there was huge increase in quantum of royalty. Contention of the ld. Authorised Representative was that mine owners could not recover the additional royalty demanded by the Government :- 3 -: S.P. No.237/2018.
from its end customers and therefore assessee who was doing work for the mine owners had to share the loss. As per the ld. Authorised Representative, mine owners proposed to deduct the part of the loss arising on account of additional royalty demand, from the payments due to the assessee. Thus, according to the ld. Authorised Representative for assessments years 2011-12 and 2012-13, assessee was constrained to make provisions for such loss. However, as per ld. Authorised Representative, the State Government thereafter did not insist on the additional royalty and therefore mine owners did not deduct any amounts for additional royalty while making the payment to the assessee. This as per the ld. Authorised Representative required the assessee to reverse the provisions made in the earlier years. Such reversal of provisions as per the ld. Authorised Representative came to B25,58,96,671/-. As per the ld. Authorised Representative in the assessment order for the impugned assessment year, ld. Assessing Officer had categorically stated that the sum of B25,58,96,671/- was to be reduced from assessee's income since the said sum was taxed in the assessment years 2011-12 and 2012-2013.
3. Further, as per the ld. Authorised Representative, during the relevant previous year, assessee had claimed a deduction of B14.6 :- 4 -: S.P. No.237/2018.
Crores towards claims for low quality. According to the ld, Authorised Representative, the ld. Assessing Officer had called for details of the said claim and assessee had filed all necessary details. Contention of the ld. Authorised Representative was that the said amount was allowed by the ld. Assessing Officer considering the details filed by the assessee.
4. Continuing his submissions, ld. Authorised Representative submitted that ld. Principal Commissioner of Income Tax (in short ''PCIT'') however invoked powers vested on him u/s.263 of the Act taking a view that ld. Assessing Officer order were erroneous and prejudicial to the interests of the Revenue. As per the ld. Authorised Representative, the ld. PCIT took a mistaken view that the sum of B25,58,96,671/- showed have been reduced from the contract receipts for the impugned assessment year. On the question of claim for low quality of supplies, as per the ld. Authorised Representative, the ld. PCIT erroneously took a view that it was not allowable. Contention of the ld. Authorised Representative was that there was proper application of mind by the ld. Assessing Officer during the course of original assessment proceedings on both these issues and the ld. PCIT was exercising revisionary powers vested on him for substituting a lawful view taken by the ld. Assessing Officer. As per the ld. Authorised Representative, this Tribunal was having inherent :- 5 -: S.P. No.237/2018.
powers to grant stay even on proceedings pursuant to an order u/s.263 of the Act. Reliance was placed on the judgment of Hon'ble Andhra Pradesh High Court in the case of ITO vs. Khalid Mehdi Khan, 110 ITR 179 and host of other judgments. According to him, if Assessing Officer proceeded with a fresh assessment pursuant to the directions of the ld. PCIT, assessee would be put to irreparable damage and inconvenience. Further, according to him, it would also result in avoidable litigation and excessive tax demand.
5. Ld. Departmental Representative, on the other hand submitted that assessee could not show any good reason for grant of a stay of the proceedings.
6. We have heard both the parties, perused the orders of lower authorities and the stay petitions filed by the assessee. It is true that ld. PCIT had invoked the jurisdiction vested on him u/s.263 of the Act, taking a view that the ld. Assessing Officer erroneously allowed the sum of B25,58,96,671/- to be reduced from the contract receipts and incorrectly the allowed the claim of B14.6 Crores on low quality supplies. Claim of the assessee before us is that both these issues were duly considered by the ld. Assessing Officer during the course of the assessment proceedings. However a perusal of the order of the ld. PCIT clearly show that the sum of B25,58,96,671/- was admitted as receipts by the assessee itself for the relevant assessment year, but :- 6 -: S.P. No.237/2018.
still the ld. Assessing Officer had reduced such amount from contract receipts. Ld. PCIT clearly observed that even if the provisions were considered on accrual basis for assessment years 2011-12 and 2012- 13, ld. Assessing Officer should have considered such amount in the impugned assessment year also as a protective measure. Viz-a-viz the claim for low quality allowance, ld. PCIT had noted that role of the assessee company was limited in scope and the quality aspects concerned mine owners. Ld. PCIT has also observed that the ld. Assessing Officer had not considered the agreement entered by the assessee with sub-contractors. It may be true that this Tribunal is having inherent powers to grant a stay of proceedings pursuant to order u/s.263 of the Act. But the question here is whether this is a case where such inherent powers are be used. These are powers which are to be used sparingly and where there is a gross miscarriage of justice. If we look at the arguments of ld. Authorised Representative, here, his contention is that ld. PCIT was trying to substitute his view with the lawful view taken by the ld. Assessing Officer. We are afraid, we cannot accept this contention. Ld. Assessing Officer had not made proper verification of the claim for reversal of provisioning done during the earlier years and also failed to verify the agreements entered by the assessee with sub contractors. We cannot say that order of the ld. Assessing Officer was :- 7 -: S.P. No.237/2018.
not erroneous and prejudicial to the interest of the Revenue. In any case, we find that assessee is not put to any gross inconvenience, if the ld. Assessing Officer initiate and /or continues with the fresh assessment proceedings, as per the direction of the ld. PCIT. In our opinion, balance of convenience rests with the Revenue. There is also no immediate threat of recovery of tax for the impugned assessment years, arising from the order of the ld. PCIT. We therefore do not find any good reason to grant the stay sought by the assessee or to invoke the inherent powers vested in this Tribunal.
7. In the result, we dismiss the stay petition filed by the assessee.
Order pronounced in the open court on Friday, the 31st day of August, 2018, at Chennai.
Sd/- Sd/-
(ध#ु व$
ु आर.एल रे %डी) (अ ाहम पी. जॉज )
(DUVVURU RL REDDY) (ABRAHAM P. GEORGE)
या(यक सद य/JUDICIAL MEMBER लेखा सद य /ACCOUNTANT MEMBER
चे नई/Chennai
दनांक/Dated:31st August, 2018
KV
आदे श क त ल प अ#े षत/Copy to:
1 Petitioner 3. आयकर आयु%त (अपील)/CIT(A) 5. वभागीय त न+ध/DR
2. ,यथ./Respondent 4. आयकर आयु%त/CIT 6. गाड फाईल/GF :- 8 -: S.P. No.237/2018.