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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:
the Order of the Commissioner of Income Tax (Appeals)-1, Chennai, in (New No.ITA6/CIT(A)-1/2014-15) dated 10.02.2016 for the AY 2008-09 & ITA No.1544/Mds/2016 is an appeal filed by the Revenue against the Order of the Commissioner of Income Tax (Appeals)- 1, Chennai, in ITA No.28/14-15 (New No.ITA214/CIT(A)-1/2014-15) dated 10.02.2016 for the AY 2011-12. & 1544/Mds/2016 :- 2 -:
Smt. Ruby George, CIT represented on behalf of the Revenue and Shri R.Sivaraman, Adv., represented on behalf of the assessee.
At the time of hearing, it was submitted by the Ld.AR that the issues in both the appeals are squarely covered by the decision of the Co- ordinate Bench of this Tribunal in the assessee’s own case for the AYs 2007-08 & 2009-10 in & 1469/Mds/2013 dated 21.01.2014.
The Ld.DR submitted that the appeals of the assessee had originally been disposed off by a common order dated 07.04.2017, wherein the issues had been restored to the file of the AO for re-adjudication.
In reply, it was submitted by the Ld.AR that the order the Co- ordinate Bench of this Tribunal in respect of the relevant appeals being disposed on 07.04.2017, had been recalled vide MP Nos.195 & 196/Mds/2017 dated 27.10.2017 as the assessee had not been granted an opportunity of being heard.
We have considered the rival submissions. At the outset, on perusal of the order of the Co-ordinate Bench of this Tribunal in MP Nos.195 & 196/Mds/2017 dated 27.10.2017 shows that the order of the Tribunal in respect of the present appeals passed on 07.04.2017, has been recalled and the appeals stand restored, as the assessee had not been heard at the time of passing the order dated 07.04.2017. As the order dated 07.04.2017 has been recalled, the same no more survive. & 1544/Mds/2016 :- 3 -:
In the Revenue’s appeal, the Revenue has raised the following grounds, which are identical for both the AYs except for the figures:
The order of the learned CIT(A) is contrary to law, facts and circumstances of the case.
2. The learned CIT(A) erred in directing the AO to delete the disallowance claimed as business expenditure under the head ‘Repairs & Maintenance’ to the tune of Rs.40,00,002/- . 2.1 The learned CIT(A) ought to have appreciated the fact that the expenses were mainly incurred for purchase of building materials like cement, bricks, bathroom fittings, tiles etc. in large quantities which gives enduring benefit to the assessee and hence the same should be treated a capital expenditure.
3.1 The learned CIT(A) erred in restricting the disallowance made by the Assessing Officer u/s.14A r.w.Rule 8D(ii) & (iii) to the extent of exempt income earned by the assessee.
3.2 The learned CIT(A) ought to have appreciated the Board’s Circular No.5/2014 dated 11- 02-2014 wherein it is stated that disallowance u/s.14A can be made even in cases where the taxpayer has not earned exempt income in any particular.
3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.
On perusal of the decision of the Co-ordinate Bench of this Tribunal in the assessee’s own case for the AYs 2007-08 & 2009-10 dated 21.01.2014 shows that the Co-ordinate Bench of this Tribunal has held as follows:
We have heard both sides, perused the materials on record and gone through the orders of authorities below. The assessee had filed its return of income of Rs.1,88,761/-. The Assessing Officer completed the assessment by determining the total income of the assessee at Rs.1,12,05,020/- by rejecting the books of accounts on the ground that the electric power consumed by the assessee is not proportionate to the production and on the basis of report submitted to the bank for obtaining bank loan. In appeal, the ld. CIT(Appeals), by calling remand report from the Assessing Officer and also reply from the assessee, gave a categorical finding that the Assessing Officer has not found out any defect in the profit and loss account and the balance sheet submitted by the assessee. He has also observed that the turnover of the assessee was certified by the Sales Tax assessment order issued by the Sales Tax Department. Further, the ld. CIT(Appeals) has observed that the assessee has given a technical and decisive factors for electrical consumption. The electrical charges are totally verifiable by way of electricity bills issued by the Tamil Nadu Electricity Board [TNEB] and the sales of the assessee are also verifiable. By taking into consideration of the above factors and also various case law relied on by the assessee, the ld. CIT(Appeals) has held that the Assessing Officer was not justified in invoking the provisions of section 145(3) rejecting the books of accounts and estimating the turnover and income on the basis of project report submitted for obtaining bank loan.
In so far as the report submitted to the bank for obtaining loan is concerned, the Coordinate Bench of the Tribunal in for the assessment year 2002-03 in the case of ACIT v. Shri Shaikh Usman Ali vide order dated 27.11.2013 has followed the order of the another Coordinate Bench in I.T.A. No. 2013/Mds/2005 decided on 27.07.2007, wherein the Tribunal has observed as under:
& 1544/Mds/2016 :- 4 -:
9. We find that the facts in the present case are identical to the one dealt by this Tribunal in for assessment year 2002-03·in the case of Shri Mitesh Dugar Vs. Income Tax Officer. In this case (to which both of us were party) following was concluded:-
"Upon a careful consideration of the issue, we find that the authorities below have not detected any mistake or omission in the books of accounts or stock records of the assessee. It is also not the case that bank authorities have verified the assessee's stock in relation to the position as at the close of the year. Under such circumstances; as expounded by the Hon'ble jurisdictional High Court in the case of crr Vs. N. Swamy 241 ITR 363, the burden was upon Revenue to prove that the stock submitted to the Revenue authorities was erroneous. This burden could not be discharged by merely referring to the statement of the assessee to third parties. Under the circumstances and respectfully following the precedent, we set aside the orders of authorities below and decide the issue in favour of the assessee.”
Considering the present case on the prism of aforesaid, in our opinion, there was no cogent material before the Assessing Officer to conclude that the stock statement submitted to bank was sacrosanct and actual representative of assessee's stock. In this view of the matter, we delete the addition on account of suppression of stock. Since the addition on account of suppression of stock has been deleted, the question of addition of Gross Profit thereon does not arise. In the background of aforesaid discussion and precedents, we decide both the issues raised in favour of the assessee and against the Revenue.”
By following the above decision of the Tribunal, we are of the opinion that based on the report submitted by the assessee to the bank for obtaining loan cannot be a basis for making the addition.
In the case of CIT v. Sakuntala Devi Khetan (supra), the Hon’ble Jurisdictional High Court has observed that where the sales tax return was filed by the assessee to the Commercial Tax Department and accepted by them, the Assessing Officer has no jurisdiction to go beyond the closing stock declared by the assessee and accepted by the Commercial Tax Department. In the present case, the ld. CIT(Appeals) has given a categorical finding that the turnover of the assessee was certified by the Sales Tax assessment order issued by the Sales Tax Department. Therefore, once the Sales Tax Department has accepted the turnover of the assessee, the Assessing Officer has no jurisdiction to go beyond the value of the closing stock as declared by the assessee and accepted by the Sales Tax Department by following the same ratio on the decision of the Hon’ble Jurisdictional High Court in the case of CIT v. Sakuntala Devi Khetan (supra).
So far as consumption of electricity is concerned, in the case of CIT v. Sulabh Marbles (P) Ltd., the Hon’ble Rajasthan High Court has held that in the absence of any defect in assessee’s books of account, the same could not be rejected merely on the basis of the quantum of electricity expenses shown by the assessee.
Keeping in view of the specific findings given by the ld. CIT(Appeals), following the decisions of the Hon’ble Jurisdictional High Court as well as Hon’ble Rajasthan High Court and also by following the decision of the Coordinate Bench of the Tribunal, we find no reason to interfere with the order of the ld. CIT(Appeals). Accordingly, the grounds raised by the Revenue are dismissed.
For the assessment year 2009-2010 also, the Revenue has raised similar ground except change of figures on same set of identical facts and circumstances. Accordingly, for the assessment year under consideration also, we find that the ld. CIT(Appeals) was fully justified in deleting the addition made by the Assessing Officer. Therefore, the appeal filed by the Revenue for the assessment year 2009-10 is dismissed.
& 1544/Mds/2016 :- 5 -:
On perusal of the order of the Ld.CIT(A) shows that the Ld.CIT(A) has followed the judicial discipline in following the decision of the Tribunal in the assessee’s own case for the AYs 2007-08 & 2009-10. This is evident from Para No.7 of the order of the Ld.CIT(A). As the Revenue has not been able to dislodge the findings of this Tribunal in the assessee’s own case for the AYs 2007-08 & 2009-10 and also as it is noticed that the AO in the Assessment Order in Para No.5 has followed the consistent stand taken by the Revenue for the AY 2007-08, respectfully following the decision of the Co-ordinate Bench of this Tribunal, the findings of the Ld.CIT(A) on these issues stand confirmed.
In the result, the appeals filed by the Revenue stand dismissed.
Order pronounced in the Open Court on December 20, 2017, at Chennai.