Income Tax Appellate Tribunal - Chennai
International Agricultural ... vs Assessee on 26 September, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH : CHENNAI
BEFORE Dr. O.K. NARAYANAN, VICE PRESIDENT &
SHRI VIKAS AWASTHY, JUDICIAL MEMBER
I.T.A. No. 1638/Mds/2013
Assessment Year : 2008-09
M/s. International Agricultural Asst. Commissioner of
Processing (P) Ltd., Income Tax,
332/5-A, Peranai Road, Company Circle-III,
Musuvanathu, Vs
MADURAI
MADURAI - 624 219
[PAN: AAACI 3593 B]
(Appellant) (Respondent)
Appellant by : Shri V. Jagadisan, FCA
Respondent by : Shri Shaji P. Jacob, Addl. CIT
Date of Hearing : 26-09-2013
Date of Pronouncement : 30-10-2013
ORDER
PER VIKAS AWASTHY, JUDICIAL MEMBER:
The appeal has been filed by the assessee impugning the order of the Commissioner of Income Tax-II, Madurai dated 26-12-2012 relevant to the Assessment Year (AY) 2008-09 passed u/s. 263 of the Income Tax Act, 1961 (herein after referred to as 'the Act'). :2:
I.T.A. No. 1638/Mds/2013
2. The assessee is engaged in the business of processing Gherkins, onions and other vegetables. Assessee filed its return of income for the AY. 2008-09 on 30-09-2008 declaring its income as 'NIL' under the normal provisions. The case of the assessee was re-opened u/s.147 on the issue of deduction u/s.10B. The Assessing Officer in his assessment order dated 30-12-2011 passed u/s.143(3) r.w.s 147 of the Act observed that though assessee is eligible for claiming deduction u/s.10B for ten AYs i.e., from AY. 2000-2001 to 2009-10, it has opted out of deduction u/s. 10B from AY. 2008-09 to claim benefit of another scheme 'Vishesh Krishi Gram Udyog Yojana (VKGUY). The assessee is eligible to take the benefit under the special scheme only if the assessee opts out of deduction u/s.10B of the Act. The Income of the assessee was computed under the provisions of section 115JB by the Assessing Officer.
3. The CIT issued show cause notice dated 11-10-2012 u/s.263 of the Act for the following reasons:
"2. For the assessment year 2008-09 the return of income was filed by the assessee-company, engaged in processing of Gherkins, Onions & other vegetables, on 30-09-2008 admitting nil total income. The same was processed u/s.143(1) of the IT Act on 22-03-2010.:3:
I.T.A. No. 1638/Mds/2013 2.1 The case was reopened u/s.147 of the IT Act on the issue of disallowance of deduction u/s.10B of the IT Act. The reopened assessment was completed by the Assessing Officer on 30-12-2011 determining the total income at `61,73,222/- and a demand of `70,528/- was raised.
It is seen from the Miscellaneous Records that while completing the re-opened assessment, the total income was arrived at without excluding 'other incomes' of `96,40,634/- as detailed below, and deduction u/s.10B of the IT Act was allowed:
Interest on deposit : `1,54,083/-
Transport Subsidy : `22,70,315/-
Sale of import license : `60,29,867/-
Managing Consultant Service `10,00,000/-
Other Income : `1,86,369/-
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`96,40,634/-
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2.2 It is also seen that the genuineness of the expenditure claimed in the P&L Account were not verified.
2.3 Also, the Balance Sheet items and details of Annexures were not examined".
The CIT vide impugned order directed the Assessing Officer to redo the assessment keeping in view the points raised in the show cause notice. The CIT further observed that the AR of the assessee has produced :4: I.T.A. No. 1638/Mds/2013 un-authenticated statement of accounts, without any supporting documents, bills and vouchers etc., Aggrieved against this order of the CIT, the assessee has come in appeal before us.
4. Shri V. Jagadisan, FCA appearing on behalf of the assessee submitted that the very first ground on which show cause notice u/s.263 has been issued, that is, the assessee has claimed deduction u/s.10B is factually incorrect. The assessee has not claimed deduction u/s.10B for the AY. 2008-09. This fact has been recorded by the Assessing Officer in the assessment order dated 30-12-2011 which is at page Nos. 6 to 9 of the Paper Book. The ld. AR contended that the impugned order is cryptic. It is not mentioned in the order as to what is the loss caused to the Government Exchequer and what is the error in assessment order. All relevant documents were produced before the Assessing Officer at the time of assessment. The Assessing Officer vide notice dated 21-12-2011 issued u/s.142(1) had directed the assessee to produce Profit & Loss A/c and Balance Sheet relevant to the AY. 2008-09, evidence for expenditure claimed in the Profit & Loss A/c etc., The assessee had already filed Balance Sheet for the year ended 31-03-2007 and Profit & Loss A/c for the FY. 2006-07 along with the :5: I.T.A. No. 1638/Mds/2013 return of income filed in e-mode yet again the assessee furnished all the documents as called for. Therefore, the observations of the CIT that the AR of the assessee had produced un-authenticated statement of accounts is erroneous.
5. On the other hand, Shri Shaji P. Jacob, appearing on behalf of the Revenue submitted that the notice u/s.142(1) issued by the Assessing Officer asking the assessee to produce Profit & Loss A/c, Balance Sheet and evidence for expenditure claimed for the Profit & Loss A/c was issued on 21-12-2011 and within a short span of one week, assessment order was passed by the Assessing Officer on 30-12-2011. This clearly shows that the Assessing Officer has not gone in to details of books of account. The ld. DR further submitted that the assessee had filed certain details before CIT vide letter dated 20-12-2012 which is at page No. 40 to 42 of the paper book relating to sundry creditors and debtors, details of sale of import licenses, exchange fluctuation etc. The said information was not shared by the assessee during the assessment proceedings. Therefore, the impugned order of the CIT is justified and well reasoned. In order to support his contentions, the ld. DR relied on the judgment of Hon'ble Madras High Court in the case of TTK LIG Ltd. Vs. ACIT reported as 51 DTR (Mad) 228 , judgment of Karnataka High :6: I.T.A. No. 1638/Mds/2013 Court in the case of CIT. Vs. Infosys Technologies Ltd., reported as 341 ITR 293 and the judgment of the Hon'ble Delhi High Court in the case of CIT. Vs. Ashok Logani reported as 342 ITR 228 (Del).
6. We have heard the submissions made by the representatives of both the sides. We have also perused the impugned order and the decisions relied upon by the ld. DR. Proceedings u/s. 263 have been initiated by the CIT for the reasons recorded in para No.3 herein above. The first reason cited in the show cause notice is that deduction u/s.10B has been allowed without excluding 'other incomes' to the tune of `96,40,634/-. The ld. AR has placed on record the copy of assessment order dated 30-12-2011 passed u/s.143(3) r.w.r.147 wherein the Assessing Officer has categorically stated that the assessee has not claimed deduction u/s.10B. The relevant extract of the assessment order is re-produced herein below:
"3. Assessee Company was incorporated on 24.03.1998. The Assessee Company is a 100% export oriented unit and had claimed deduction u/s.10B of the Income Tax Act, 1961 from AY.2000-01 to AY. 2007-08. Though Assessee is eligible to claim deduction u/s.10B for 10 Assessment Years i.e. from AY: 2000-01 to AY: 2009- 10, it opted out of deduction u/s.10B from 2008-09. Assessee moved over to another scheme 'Vishish Krish Gram Upaj Yojana (VKGUY)' from AY: 2008-09. Assessee is eligible for benefits under :7: I.T.A. No. 1638/Mds/2013 VKGUY only if it relinquishes its claim of deduction u/s.10B of the IT Act, 1961".
Therefore, the observation of the CIT that the assessee has claimed deduction u/s.10B is factually incorrect.
7. The other two reasons for review as mentioned in the show cause notice are that the genuineness of the expenditure claimed in the Profit & Loss A/c were not verified by the Assessing Officer and the Balance Sheet items and details of annexure were not examined at the time of assessment. From the perusal of the impugned order, it is not clear as to how the CIT has come to the conclusion that the genuineness of the expenditure claimed in the Profit & Loss A/c were not verified and what are the items in the balance sheet which were not examined at the time of assessment. The CIT has also not mentioned the expenditure claimed in Profit & Loss A/c which needs verification. The CIT cannot direct the Assessing Officer to conduct roving enquiry without any specific directions with regard to specific expenditure or income claimed or suppressed by the assessee. The DR has relied on judgment of Hon'ble Madras High Court in the case of TTK LIG Ltd. Vs. ACIT (supra), judgment of Karnataka High Court in the case of CIT. Vs. :8: I.T.A. No. 1638/Mds/2013 Infosys Technologies Ltd., (supra) and the judgment of the Hon'ble Delhi High Court in the case of CIT. Vs. Ashok Logani (supra). We find that the ratio laid down by the Hon'ble High Courts in the aforesaid judgments do not apply on the facts and circumstances of the present case. The impugned order is a non-speaking and cryptic. No valid reason has been given as to in what manner, the order of Assessing Officer is erroneous and prejudicial to the interest of the Revenue and what is the basis or material for forming such an opinion. The CIT has leveled general allegations which is not permissible under the provisions of the Act for initiating revision proceedings u/s.263.
Therefore, the impugned order is set aside and the appeal of the assessee is allowed.
Order pronounced on Wednesday, the 30th October, 2013 at Chennai.
Sd/- Sd/- (Dr. O.K. NARAYANAN) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER Dated: 30th October, 2013 TNMM
Copy to: Appellant/Respondent/CIT(A)/CIT/DR