SAKTHI SUGARS LIMITED,CHENNAI vs. DCIT, COIMBATORE

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

ITA No.1530/Mds/2015. :- 2 -: passed u/s.143(3) r.w.s. 147 and 250 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’).

The assessee has raised two substantive grounds:- 2.

(i) The Commissioner of Income Tax (Appeals) erred in concluding state tax payments have not made and also statements of the assessee were not considered in the appellate proceedings with the necessary evidence.

(ii) The Commissioner of Income Tax (Appeals) erred in considering legal contention were the assessment reopened beyond a period of four years.

The Brief facts of the case, the assessee is in the business 3. of manufacture of sugar, industrial alchohol and generation of power and soya products. The assessee filed Return of income on 31.10.2005 admitting Nil income under normal computation and as per the provisions of Sec.115JB of the Act after adjustment of brought forward business losses, Assessment was completed u/s.143(3) of the Act on 28.12.2007. The ld. Assessing Officer noticed that assessee company has claimed deduction on account of sales tax �35,68,758/- which was not paid before the due date of filing of the return and also loss on sale of fixed assets and preproduction expenses are not disallowed in computation of income and there is a reason to believe the concealment of income and notice u/s.148 of the Act was issued.

In compliance to notice, the assessee filed letter dated 02.04.2012 and ITA No.1530/Mds/2015. :- 3 -: also submitted information from time to time and relied on judicial decisions in respect of proposed additions. The issue in dispute being sales tax payments and ld. Authorised Representative submitted that the assessee company claimed deduction on account of sales tax paid before due date of filing of return u/s.139(1) and deduction was claimed in the computation of income. The ld. Authorised Representative also submitted supporting documents containing the payments of sales tax and prayed for considering the same. But the Assessing Officer after considering the submissions on the sales tax payments has presumed that the assessee has not proved with supporting details with exact payments of sales tax of �35,68,758/- with the sales tax department. The Assessing Officer further ignored the submissions that payments has been made out of overall payments. But the Assessing Officer due to nonavailability of exact evidence made disallowance alongwith other disallowances and also confirmed the re-assessment proceedings as valid and relied on various judicial decisions and completed assessment u/s.143(3) r.w.s.147 of the Act on 30.03.2013 with assessed income of �15,08,49,515/- and calculated set off of loss in the assessment order. Aggrieved by the order of the Assessing Officer, the assessee assailed an appeal before the Commissioner of Income Tax (Appeals).

ITA No.1530/Mds/2015. :- 4 -:

The ld. Authorised Representative of the assessee submitted 4. that Assessing Officer has erroneously concluded that sales tax payments has not been made. The payments were made with other payments and necessary evidence was filed at the time of hearing and such payments were made before due date of filing of return. The ld. Authorised Representative submitted details of gross sales, purchaseS, tax liability referred at page no.2 of Commissioner of Income Tax (Appeals) order as under:-

‘’ The company had gross sales and purchase tax liability for the financial year 2004-05 to the tune of �12,27,37,789/- as detailed below:-

Sales Tax Collection �7,23,16,596 Purchase tax provision �2,40,79,130 SC on purchase tax provision �11,80,900 Addl. Sales Tax provision �2,51,61,163 Total payable for the F.Y. �12,27,37,789 2004-05

The company has effected payments to the tune of �10,06,81,586/- within the time as prescribed under sales tax. The balance amount is � 2,20,56,203/-. Out of the same a payments of �1,25,00,000/- has been made piecemeal in the following manner:-

Date Payments (�) 06.05.2005 25,00,000 11.05.2005 15,00,000 13.05.2005 10,00,000 20.06.2005 25,00,000 01.07.2005 25,00,000 15.07.2005 25,00,000 Total payments 1,25,00,000

ITA No.1530/Mds/2015. :- 5 -:

The ld. Commissioner of Income Tax (Appeals) though considered the submissions but concurred with the findings of the Assessing Officer that no evidence of proof of payments of sales tax was produced and confirmed the Assessing Officer order. The ld. Commissioner of Income Tax (Appeals) on the ground of re-opening of assessment beyond a period of four years, considered the submissions made by the ld. Authorised Representative and relied on the findings of Kelvinator India Ltd 320 ITR 561(SC) referred at page no.4 of Commissioner of Income Tax (Appeals) order:-

"One needs to give a schematic interpretation to the words 'reason to believe; failing which section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of 'mere change of opinion; which cannot be per se reason to reopen. One must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review, he has the power to reassess, but the reassessment has to be based on fulfillment of certain pre-conditions and if the concept of 'change of opinion' is removed as contended on behalf of the department, then in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, after 01. 04.1989, the Assessing Officer has power to reopen, provided there is 'tangible material' to come to conclusion that there is escapement of income from assessment. Under the Direct Tax Laws (Amendment) Act, 1987, the Parliament not only deleted the words 'reason to believe' but also inserted the word 'opinion' in Section 147. However, on receipt of representations from the ITA No.1530/Mds/2015. :- 6 -: companies against omission of the4 words 'reason to believe; the Parliament re- introduced the said expression and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the Assessing Officer’. considering disallowance of sales tax payments of �35,68,758/-, the Commissioner of Income Tax (Appeals) has confirmed the re- assessment and also disallowance made by the Assessing Officer and dismissed the appeal. Aggrieved the assessee filed an appeal before the Tribunal.

The ld.AR drew our attention to the page no.1 & 2 with all the supporting papers with the details of outstanding liabilities of sales tax and also payment by bank transactions and argued that there is no double claim and also referred to the adjustment made in the ITA No.1530/Mds/2015. :- 7 -: computation of income for sales tax payments and explained the system of claim and also challenged the findings of the Assessing Officer on validity of reopening of assessment beyond the period of four years and prayed for allowing the appeal.

Contra, the ld. Departmental Representative relied on the 6. findings of the lower authorities and contested heavily against the grounds raised by the assessee.

We heard the rival submissions and perused the material on 7. record and judicial decisions cited before us. The ld. Authorised Representative contention based on the reassessment proceeding before the Assessing Officer and the Commissioner of Income Tax (Appeals). Where the Commissioner of Income Tax (Appeals) has dealt and examined the issue with the judicial decisions to which the assessee has also submitted explanations. We are of the opinion that the ld. Commissioner of Income Tax (Appeals) has dealt on the issue of re-assessment in his order. At the time of issue of notice u/sec.

147 of the Act, the Assessing Officer has relevant material jurisdiction and placed requisite belief that there was escapement of income liable to be taxed. So, we are not inclined to interfere in the ground and confirm the order of Commissioner of Income Tax (Appeals).

ITA No.1530/Mds/2015. :- 8 -:

With regard to disallowance of �35,68,758/-, the ld. 8.

Authorised Representative reiterated his submissions with supporting documents that the assessee has claimed sales tax liability outstanding by making payments before due date of filing of return and also made claim before the Commissioner of Income Tax (Appeals) that the consolidated sales tax payments has been made. In the hearing proceedings, the ld. Authorised Representative submitted details of sales tax payments amounting to 1,25,00,000/- where the payments has been made in piecemeal manner which also includes sales tax payments made for the assessment year 2005-06. So, considering the apparent facts and evidence and also submissions made before us, we are of the opinion that the matter needs to be re-examined in particular to sales tax where consolidated amount of �1,25,00,000/- was paid over a period. So, we remit the issue in dispute to the file of Assessing Officer to verify the payments whether relating to assessment year under consideration and also it was made before due date of return and accordingly, the appeal of the assessee is partly allowed for statistical purpose.

ITA No.1530/Mds/2015. :- 9 -:

In the result, the appeal of the assessee in ITA 9. No.1530/Mds/ 2015 is partly allowed for statistical purpose.

Order pronounced on Thursday, the 25th day of February, 2016, at Chennai.