Income Tax Appellate Tribunal - Chennai
Shri A. Senthil Murugan, Tirupattur vs Acit, Vellore on 11 October, 2018
आयकर अपील य अ धकरण, 'ए' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं
ी ए. मोहन अलंकामणी, लेखा सद य केसम$
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
%व%वध या चका सं / M.P. No.406/Chny/2017
(in I.T.A. No.3139/Mds/2016)
नधा&रण वष& / Assessment Year : 2010-11
Shri A. Senthil Murugan, The Assistant Commissioner of
No.68, Krishnagiri Main Road, v. Income Tax,
Tirupattur - 635 601. Circle - 1,
Vellore.
PAN : AFPPA 0318 D
()ाथ&क/Petitioner) ()+यथ,/Respondent)
)ाथ&क क. ओर से /Petitioner by : Shri P. Ranga Ramanujam, CA
)+यथ, क. ओर से/Respondent by: Shri R. Clement Ramesh Kumar, Addl.CIT
सन
ु वाई क. तार ख/Date of Hearing : 05.10.2018
घोषणा क. तार ख/Date of Pronouncement : 11.10.2018
आदे श /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 of 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 Lakshmi Blue Metal Industries was by way of journal entry for taking over assets and liabilities of Sri Mythili Agencies and AGS Construction as on 31.03.2009. According to the Ld. representative, the opening credit was incorporated by way of a journal entry debited in the capital account and credit in the party account to give effect 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 considered by the Tribunal while remitting back the matter to the file 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 Industries in the books of the assessee-company and ₹57,90,000/- was the balance of the assessee in the books of M/s Yogalakshmi Blue Metal Industries. Therefore, according to the Ld. representative, it is not correct to say that the entire amount was credit entry 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) by considering the remand report filed by the Assessing Officer and the ledger maintained by the assessee, found that there are three credits in the accounts of M/s Yogalakshmi Blue Metal Industries totalling 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 making addition under Section 68 of the Act, each credit needs to be considered and not the credit balance in the books of account. If the balance is required to be considered, then the assessee may nullify 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 journal entry, it cannot be considered to be cash credit under Section 68 of the Act. Even assuming for argument sake that the journal entry is required to be explained, according to the Ld. representative, this was the balance standing as on 31.03.2009 in the books of AGS Construction which duly reflected in the books. According 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 any 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 Blue Metal Industries. Therefore, according to the Ld. representative, 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 entry is not considered by the Tribunal at all. Therefore, according to the Ld. representative, to that extent, there is an error in the order of this Tribunal.
4. We heard Shri R. Clement Ramesh Kumar, the Ld. Departmental Representative also. This Tribunal found that opening balance difference has to be brought for taxation. However, the fact that it was only by way of journal 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 considered as credit under Section 68 of the Act. The effect of journal entry was not considered by this Tribunal. The judgment of Madras High Court in Taj Borewells (supra) and Pandian Distributors (supra) were not taken into consideration by this Tribunal. Therefore, 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 Court, which is available on the date of hearing, is an error within 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. Therefore, the order of this Tribunal dated 12.04.2017 as far as it 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 addition of ₹25 lakhs being a credit in the books of M/s Yogalakshmi Blue Metal Industries. As observed earlier, the non-consideration of the judgment of jurisdictional High Court, which is available on the date of hearing the appeal is an error within the meaning of Section 254(2) of the Act. Hence, this error also needs to be rectified. These errors can be effectively rectified only after hearing the appeal. Accordingly, order of this Tribunal dated 12.04.2017 is hereby recalled and the appeal of the Revenue is restored on the file of this Tribunal. The Registry is directed to post the appeal for final disposal before the regular Bench on 24.12.2018.
5. With the above observation, the Miscellaneous Petition filed by the assessee is allowed.
6 M.P. No.406/Chny/17
Order pronounced in the court on 11th October, 2018 at Chennai.
sd/- sd/-
(ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन)
(A.Mohan Alankamony) (N.R.S. Ganesan)
लेखा सद य/Accountant Member या यक सद य/Judicial Member
चे नई/Chennai,
th
4दनांक/Dated, the 11 October, 2018.
Kri.
आदे श क. ) त5ल%प अ6े%षत/Copy to:
1. )ाथ&क/Petitioner 2. )+यथ,/Respondent 3. आयकर आयु7त (अपील)/CIT(A)
4. आयकर आयु7त/CIT 5. %वभागीय ) त न ध/DR 6. गाड& फाईल/GF.