M/S.COASTAL ENERGY PVT LTD., vs. The Deputy Commissioner Of Income Tax

T.C.A.No.140 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 20.08.2024 CORAM: THE HONOURABLE MR.JUSTICE R.SURESH KUMAR and THE HONOURABLE MR.JUSTICE C.SARAVANAN T.C.A.No.140 of 2024 M/s.Coastal Energy Private Limited, No.4, Buharia Towers, 5th Floor, Moores Road, Chennai – 600 006. PAN:AAACC4160A ... Appellant / Appellant Vs. The Deputy Commissioner of Income Tax, Corporate Circle 1(2), Chennai. ... Respondent / Respondent Prayer: Appeal under Section 260A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal, “A” Bench, Chennai dated 6th September 2023 in I.T.A.No.1337/Chny/2018. For Appellant : M/s.Vandana Vyas for Mr.R.Sivaraman For Respondent : Mr.Karthik Ranganathan Senior Standing Counsel 1/10 https://www.mhc.tn.gov.in/judis T.C.A.No.140 of 2024 JUDGMENT (Judgment of the Court was delivered by C.SARAVANAN, J.) At the admission stage, this appeal was admitted on the following substantial questions of law: i. Whether on the facts and circumstances of the case, the order of the Appellate Tribunal is perverse, inasmuch as the Tribunal has held that the decision of this Court in ACIT Vs. Seshasayye Paper and Board Limited, (2023) 148 taxmann.com 432 (Madras) is not applicable to the facts of the appellant's case especially when neither the notice under Section 148 of the Income Tax Act, 1961, nor the reasons for reopening has a finding that the income escaped assessment by the reason of the failure on the part of the appellant to make true and full disclosure of all materials facts necessary and hence the extended period beyond four years is applicable to reopen the assessment? ii. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in law in not appreciating the fact that the entire reassessment is based on the annual report which was already available with the Assessing Officer while framing the assessment under Section 143(3) dated 31.03.2013 and hence there is no fresh tangible material to show that income has escaped assessment? 2. This appeal has been filed by the appellant/assessee against order dated 06.09.2023 passed by the Income Tax Appellate Tribunal, Chennai “A” Bench, in I.T.A.No.1337/Chny/2018. 3. By the impugned order dated 06.09.2023, the Appellate Tribunal 2/10 https://www.mhc.tn.gov.in/judis T.C.A.No.140 of 2024 has rejected the appeal filed by the appellant in I.T.A.No.1337/Chny/2018 as well as the appeal filed by the respondent in I.T.A.No.1354/Chny/2018. 4. This appeal is confined only to the appellant/assessee alone. The appellant/assessee has raised the following questions of law as substantial questions of law: i. Whether on the facts and circumstances of the case, the order of the Appellate Tribunal is perverse, inasmuch as the Tribunal has held that the decision of this Court in ACIT Vs. Seshasayee Paper and Board Limited, (2023) 148 taxmann.com 432 (Madras) is not applicable to the facts of the appellant's case especially when neither the notice under Section 148 of the Income Tax Act, 1961, nor the reasons for reopening has a finding that the income escaped assessment by the reason of the failure on the part of the appellant to make true and full disclosure of all material facts necessary and hence the extended period beyond four years is applicable to reopen the assessment? ii. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in law in stating that the question of change of opinion does not arise especially when the appellant had provided the ledger of foreign exchange during the assessment proceedings and it is not the case that the assessing officer had asked further details and the appellant had failed to provide them? iii. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in law in not 3/10 https://www.mhc.tn.gov.in/judis T.C.A.No.140 of 2024 appreciating the fact that the entire reassessment is based on the Annual Report which was already available with the Assessing Officer while framing the assessment under Section 143(3) dated 31.03.2013 and hence there is no fresh tangible material to show that income has escaped assessment? iv. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in law in confirming the disallowance of provision for foreign exchange loss of Rs.31,18,92,950/- especially when the appellant had provided all the invoices and stated that the average rate of Rs.50.22 was used to arrive at the said year-end loss? v. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in law in confirming the disallowance of Forex Loss on Forward Contract amounting to Rs.41,31,84,609/- especially when the appellant had provided the purchase invoice and stated that the spot area was used to arrive at the year-end Forex Loss on Forward Contract? 5. The case of the appellant/assessee is that the order rejecting the appeal of the appellant/assessee against the order of the Commissioner of Income Tax (Appeals)-1, Chennai dated 16.01.2018 affirming the decision of the respondent dated 30.03.2016 under Section 143(3) read with Section 147 of the Income Tax Act, 1961 was liable to the interfered in the light of the decision of the Division Bench of this Court in ACIT Vs. Seshasayee Paper and Board Limited, (2023) 148 Taxmann.com 432 4/10 https://www.mhc.tn.gov.in/judis T.C.A.No.140 of 2024 (Madras). 6. The learned counsel for the appellant has relied on the following decisions of this Court and that of the Hon'ble Supreme Court: i. Durr India (P.) Ltd., Vs. Assistant Commissioner of Income-tax (OSD), [2023] 152 taxmann.com 303 (Madras). ii. Assistant Commissioner of Income-tax (OSD) Vs. Durr India (P.) Ltd., [2023] 157 taxmann.com 391 (SC). 7. We have heard the learned counsel for the appellant and the learned Senior Standing Counsel for the respondent. 8. In our view, no substantial question of law arises for consideration in this appeal. 9. The Appellate Tribunal is the ultimate fact finding authority and has given a finding that the appellant/assessee has not furnished the informations required for completing the assessment under Section 143(3) of the Income Tax Act, 1961 and has thus, justified the decision of the 5/10 https://www.mhc.tn.gov.in/judis T.C.A.No.140 of 2024 Assessing Officer for reopening the assessment. Paragraphs 6.1, 6.2, 6.3, 6.4, 6.5, 6.7 and 7 of the Appellate Tribunal Order clearly bring out the conduct of the appellant/assessee. It reads as follows:- “6.1 The Id. CIT(A) has considered the issue of reopening of assessment and also application of relevant proviso in depth and came to a conclusion that the assessee has not fully and truly disclosed all material facts before the Assessing Officer during the course of original assessment proceedings. Therefore, he came to a conclusion that the Assessing Officer has rightly reopened the assessment by issue of notice under Section 148 of the Act. We have gone through the orders of authorities below as well as reasons recorded by the Assessing Officer for reopening of assessment. From the reasons recorded, it is very clear that the assessee has not disclosed fully and truly all the relevant materials and facts to complete the assessment. Particularly, no details are filed in respect of loss on restatement of foreign exchange during the course of 143(3) proceedings. Therefore, the Assessing Officer has rightly invoked the provisions of Section 147 of the Act. 6.2 In so far as disallowance of loss on forward contract, the assessee has not filed any details during the original assessment proceedings under Section 143(3) of the Act. Therefore, the Assessing Officer has rightly issued notice under Section 148 of the Act. 6.3 As per the proviso to Section 147 of the Act, it is the duty of the assessee to disclose all the material facts fully and truly to complete the assessment. In this case, we find that the assessee has not filed any details in respect of claim made by the assessee. Therefore, the Assessing Officer, by issuing notice under Section 148 of the Act dated 18.03.2015, reopened the assessment, which is in accordance with law. So far as paper book page 132 is concerned, some details are filed and those are not the details actually required to complete 6/10 https://www.mhc.tn.gov.in/judis T.C.A.No.140 of 2024 the assessment under Section 143(3) of the Act and not only that, the details filed by the assessee cannot be said that those are the material facts to complete the assessment. Therefore, we are of the opinion that the Assessing Officer has rightly reopened the assessment by issuing notice under Section 148 of the Act. Thus, we hold that the reopening is valid. 6.4 The ld. Counsel for the assessee has also submitted that there is change of opinion and relied on the decision in the case of CIT Vs. Kelvinator of India Ltd. [2010] 187 Taxman 312 (SC). In the present case, the assessee has not filed relevant details and therefore, application of mind by the Assessing Officer has not arises at all. Thus, change of opinion does not arise in this case and the decision in the case of CIT Vs. Kelvinator of India Ltd. (supra) has no application. 6.5 On perusal of the reasons recorded by the Assessing Officer, we find that the assessee has not filed fully and truly all the relevant material facts for completing the assessment. Therefore, there is no need to record separately that there is a failure on the part of the assessee to file fully and truly all the materials for completing the assessment. Therefore, the arguments of the ld. Counsel are rejected. 6.6 ..... 6.7. In view of the above, we find that the Assessing Officer has rightly reopened the assessment under Section 147 of the Act, which is in accordance with law and the same was upheld by the ld. CIT(A) by passing detailed order on this issue. Thus, we find no reason to interfere with the order passed by the ld. CIT(A). The ground raised by the assessee is dismissed. 7. With regard to the disallowance of provision for foreign exchange losses, the Assessing Officer has observed that during the previous year the assessee has created a total provision of Rs.40,98,03,268/- towards restatement of the liability in foreign currency. In this connection, before the Assessing Officer, the assessee has produced two ledger accounts – one for a provision of Rs.31,57,41,203/- and the 7/10 https://www.mhc.tn.gov.in/judis T.C.A.No.140 of 2024 other account creating a provision to the extent of Rs.9,40,62,064/-. The two amounts aggregate to the sum of Rs.40,98,03,268/-. The assessee has further provided a break- up of the amount in a table. As per the details submitted by the assessee, the Assessing Officer has noted that a provision of Rs.31.57 Crores has been created for 20 transactions, out of which 4 transactions are in respect of purchases or which there are no forward cover whereas the balance 16 transactions are in respect of purchases for which there is a forward cover. In Mumbai branch, there are in all 4 transactions, all of which are not covered by any forward cover. It was explained before the Assessing Officer that their method of accounting required the transactions which are not supported by any forward contract to be restated at the rate of exchange prevailing on the last day of the relevant previous year. As regards transactions that are covered by forward contracts, they are to be restated at the rate agreed in the forward cover agreement. This is the method of accounting disclosed by the assessee in its annual accounts also. After considering the submissions of the assessee, the Assessing Officer has observed that the assessee has failed to establish before him how the provision was calculated on a scientific basis in accordance with the method of accounting disclosed by the assessee. Accordingly, the Assessing Officer disallowed the sum of Rs.40.98 Crores created as provision and brought to tax. On appeal, after considering the submissions of the assessee, the ld. CIT(A) sustained the addition to the extent of Rs.31,18,92,950/- and granted relief of Rs.9,79,10,317/-.” 10. The finding given by the Appellate Tribunal cannot be disturbed in an appeal under Section 260A of the Income Tax Act, 1961 as the scope of Section 260A of the Income Tax Act, 1961 is confined only to substantial questions of law. Further, the Appellate Tribunal is the ultimate 8/10 https://www.mhc.tn.gov.in/judis T.C.A.No.140 of 2024 fact finding authority. 11. As such, no substantial question of law falls for consideration in the present appeal under Section 260A of the Income Tax Act, 1961. Therefore, the present appeal is not maintainable. 12. This Tax Case Appeal is therefore liable to be dismissed and is accordingly dismissed. No costs. Connected Miscellaneous Petition is closed. [R.S.K., J.] [C.S.N., J.] 20.08.2024 Index : Yes/No Internet : Yes/No Speaking Order/Non-Speaking Order Neutral Citation : Yes/No arb R.SURESH KUMAR, J. and C.SARAVANAN, J. 9/10 https://www.mhc.tn.gov.in/judis T.C.A.No.140 of 2024 arb To The Deputy Commissioner of Income Tax, Corporate Circle 1(2), Chennai. T.C.A.No.140 of 2024 and C.M.P.No.14560 of 2024 20.08.2024 10/10 https://www.mhc.tn.gov.in/judis