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Before: Shri M. Balaganesh & Shri Duvvuru RL Reddy
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
The appeal in filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 8, Chennai, dated 21.01.2016 relevant to the assessment year 2002-03 and the appeal in I.T.A. No. 1179/Mds/2013 is filed against the order of the ld. CIT, Chennai I, Chennai dated 25.03.2013 for the assessment year 2007-08 passed under section 263 of the Income Tax Act, 1961 [“Act” in short].
2 & I.T.A. No. 1179/M/13 I.T.A. No. 890/Mds/2016 2. The assessee has raised the following grounds: “
(a) The order of the Commissioner of Income-tax (Appeals), dated 21.01.2016 is opposed to law, facts and circumstances of the case. (b) The Commissioner of Income-tax (Appeals) erred in confirming the initiation of proceedings for re-assessment. The re-opening barred by limitation and is liable to be cancelled in full. The re-assessment is based on a change of opinion and does not satisfy the conditions of the proviso to s. 147 of the Income Tax Act. (c) The Commissioner of Income-tax (Appeals) ought to have noted that the action u/s 147 emanates admittedly from an objection by the Audit and is thus barred in law and by judicial precedent. (d) The Commissioner of Income-tax (Appeals) erred in rejecting the reliance upon the position that on identical facts and legal position the disallowance u/s 43B stood cancelled by the Income-tax authorities. There is thus no basis for the impugned proceedings for re-assessment. (e) Without prejudice, the Commissioner of Income-tax (Appeals) ought to have cancelled the disallowance u/s 438 and erred in confirming the same. (f) The Commissioner of Income-tax ought to have noted that on similar facts, the assessment for A.Y. 2001-02 has been rectified u/s 154 of the Act accepting the submission of the Appellant that the sales tax refund exceeded the liability payable. (g) The Commissioner of Income-tax (Appeals) erred in not holding that the Appellant had discharged the statutory liability u/s 43B of the Act. Reliance on the judgement of the Supreme Court in the matter of Mauriti Udyog is misplaced and distinguishable on facts and in law. (h) Any other ground that may be raised at the time of personal hearing either on the aspect of jurisdiction or merits.”
2. Brief facts of the case are that the assessee has filed its return on 30.10.2002 declaring an income of ₹.7,97,50,881/-. The return filed by the assessee was processed under section 143(1) of the Income Tax Act, 1961
3 & I.T.A. No. 1179/M/13 [“Act” in short] on 31.03.2003. The assessment in this case was reopened for the following reasons: (i) As per Schedule 16 of Form 3CD, the sales tax due/payable as at 31.03.2002 is ₹.15,49,509/-. As per the provisions of Sec. 43B, the unpaid liability of sales tax is not an allowable deduction. (ii) Provision for warranty made on estimated basis is not an allowable deduction. Based on the above, notice under section 148 of the Act was issued o the assessee on 26.03.2009 for which the assessee has complied and filed a reply dated 23.04.2009 stating that the return filed originally on 30.10.2002 may be treated as the return filed in response to the notice under section 148 of the Act. Before the Assessing Officer, the AR of the assessee has requested to drop the proceedings under section 147 of the Act as well as on merits. It was submitted before the Assessing Officer that the sales tax liability will be adjusted against the sales tax TDS and therefore, there will not be any liability for sales tax. However, the Assessing Officer has not accepted the submissions of the assessee on the ground that the provisions of section 43B of the Act stipulates that the assessee can claim deduction of tax, duty, cess or fee paid on or before the due date applicable in its case for furnishing the return of income under section 139(1) of the Act. Since the assessee has not produced any evidence having paid the sales tax liability, the outstanding amount shown as liability of ₹.15,49,509/- was disallowed and added to the total income of the assessee.
4 & I.T.A. No. 1179/M/13 3. The assessee carried the matter in appeal before the ld. CIT(A). After considering the submissions of the assessee and provisions of section 43B of the Act, the ld. CIT(A) dismissed the ground raised by the assessee.
Aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that in respect of assessment for assessment year 2001-02, the Assessing Officer has rectified under section 154 of the Act accepting the submission of the assessee that the sales tax refund exceeded the liability payable and accordingly, the assessment year under consideration also can be verified. On the other hand, the ld. DR strongly supported the orders of authorities below.
We have heard both sides, perused the materials available on record and gone through the orders of authorities below. With regard to the first issue of assessment under section 147 of the Act, before us, the ld. Counsel for the assessee has submitted that the assessee is not pressing this ground and sought for permission to withdraw the same. Accordingly, the ground raised by the assessee is dismissed as not pressed.
With regard to sales tax liability, the Assessing Officer has observed that since the assessee has not produced any evidence having paid the sales tax liability of ₹.15,49,509/-, the same was added to the total income of the assessee. Before the ld. CIT(A) also, the assessee has not produced 6.1 Similar addition was made for the assessment year 2001-02 and subsequently, by passing rectification order under section 154 of the Act, the claim of the assessee was agreed upon for the assessment year 2001-02. Thus, we direct the Assessing Officer to verify as to whether the assessee has furnished any details of payment of sales tax liability made with evidences either in the relevant assessment year or subsequent assessment year and allow the claim of the assessee in the assessment year in which it was actually paid. If the assessee has not produced any evidence, the disallowance made by the Assessing Officer stands sustained. Thus, the appeal filed by the assessee is partly allowed for statistical purposes.
With regard to the appeal filed for the assessment year 2007-08 against the order of the ld. CIT passed under section 263 of the Act, the ld. Counsel for the assessee has submitted that in pursuance to the order under section 263 of the Act, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 263 of the Act by accepting the income returned by the assessee. Thus, the appeal filed by the assessee becomes infructuous.
After hearing both the parties, we find that the assessment was completed under section 143(3) r.w.s. 263 of the Act by accepting the 6 & I.T.A. No. 1179/M/13 income returned by the assessee. Against the order under section 263 of the Act dated 25.03.2013, the assessee preferred an appeal before the Tribunal on 29.05.2013. However, in pursuance to the order under section 263 of the Act, the Assessing Officer has completed the assessment by accepting the income returned by the assessee vide his order dated 31.03.2014. Once the Assessing Officer has accepted the income returned by the assessee in line with the order of the ld. CIT, there would not be any ground for the assessee to contest the same before the Tribunal. Accordingly, the appeal filed by the assessee has no legs to stand and thus, the appeal is dismissed as not maintainable.
In the result, the appeal filed by the assessee in is partly allowed for statistical purposes and the appeal in I.T.A. No. 1179/Mds/2013 is dismissed.
Order pronounced on the 13th February, 2017 at Chennai.