Commissioner Of Income-Tax (Central), Ludhiana v. M/S Lakshmi Energy & Foods Ltd

Income-tax Appeal No.857 of 2010-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income-tax Appeal No.857 of 2010Date of decision: 21.2.2011 Commissioner of Income-Tax (Central), Ludhiana ...Appellant Versus M/s Lakshmi Energy & Foods Ltd. ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Rajesh Katoch, Senior Standing Counsel for the appellant. **** ADARSH KUMAR GOEL, J ( Oral). This Appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 against order dated26.3.2010 passed by the Income Tax Appellate Tribunal, ChandigarhBench (B), Chandigarh in ITA No.1140/Chd./09, for the assessmentyear 2006-07, claiming following substantial questions of law:- “i).Whether on the facts and in the circumstances ofthe case, the ITAT was correct in law in acceptingthe plea of the assessee and remanding the issueto the file of the Assessing Officer instead ofremanding the matter to the CIT(A) whose orderwas challenged by the assessee? ii) Whether on the facts and in the circumstances of *** the case, the ITAT was correct in law in remanding the issue of disallowance of loss ofRs.18,21,20,035/- to the file of the AssessingOfficer on the basis that the CIT(A) did notadjudicate the ground no.2 raised before him by theassessee while as per record, the CIT(A) had dulyadjudicated the said ground vide his order dated14.1.2010? iii) Whether on the facts and in the circumstances ofthe case, the ITAT was correct in law in remandingthe issue of disallowance of loss ofRs.18,21,20,035/- to the file of Assessing Officerwhen the Assessing Officer had clearly establishedthat the said loss was not ascertained in FinancialYear 2005-06 and therefore rightly not allowed inAssessment Year 2006-07 which was confirmed bythe CIT(A)?” 2.The assessing officer rejected the claim of the assesseethat on account of export of damaged wheat it suffered loss whichwas liable to be set off against the income. Accordingly, theassessing officer made addition of the said amount to the declaredincome. Appeal of the assessee was dismissed by the CIT(A). Onfurther appeal, the Tribunal held that the CIT(A) had not gone intomerits of the contention of the assessee and the assessing officerwas also required to go into said issue afresh. The reasons given bythe Tribunal as under:- *** “In the context, we have examined the plea set-upby the assessee and find that while passing theorder, the Assessing Officer has not culled out therelevant and complete facts so as to adjudicate thecontroversy in question. Certainly, it is theassessee who has put-forth the claim of loss and,therefore, the burden is on the assessee tosubstantiate the loss and also justify its allowabilityin the year under consideration. The observation ofthe Assessing Officer that the assessee failed toprove the shifting of wheat to Kandla Port under thecustodianship of M/s Rishi Shipping Corporation, inour view, is devoid of factual support. Further more,the Assessing Officer proceeded on a wrongassumption that the wheat could not be exported byM/s PEC Ltd., as it was unfit for humanconsumption. Quite clearly, M/s PEC Ltd., hasadmitted of having exported the wheat and in anycase, the wheat was to be exported as cattle feed,as clarified by the assessee that the wheatpurchased was not meant for human consumption.Another plea of the Assessing Officer was that inthe absence of FIR being lodged, the assesseecould not be said to have evidenced the loss. Onthis aspect, we find that the objection of theAssessing Officer is quite superfluous. Merely *** *** because the assessee has not chosen to pursuethe matter by way of an FIR, cannot obviate theexistence of loss, if any, suffered by the assessee.The dispute with M/s PEC Ltd., is quite evident andcannot be disregarded. We are only highlighting theaforesaid to point out that the Assessing Officer hasfailed to appreciate and cull out the entire materialwhich has a bearing on the issue of the evidence ofloss and its determination so as to consider theallowability of assessee's claim during the yearunder consideration. We also notice that on onehand, the Assessing Officer concludes that theassessee has failed to evidence the loss havingbeen suffered and at the same timer infers that theloss cannot be said to be determined since thedispute was not settled in the period relating to theyear under consideration. Seemingly, there isinconsistency in the inference drawn by theAssessing Officer. We may hasten to add here thatin the aforesaid discussion we are not opining withregard to merits of the claim of the loss but are onlytrying to appreciate the plea set up by the assesseethat the matter requires to be re-adjudicated by theAssessing Officer on the basis of the material onrecord. This plea of the appellant, in our view, isjustified having regard to the material and evidence *** on record and the manner in which the findingshave been recorded by the Assessing Officer. Ithas also been pleaded by the appellant and towhich there is no negation from the side of therevenue that subsequent to the receipt of the replyof the assessee dated 26.12.2008, no show causenotice appears to have been issued by theAssessing Officer intimating the points on the basisof which the claims of the assessee for loss wasrejected by the Assessing Officer. In our view, hadthe Assessing Officer followed this approach, muchof the issues would have been resolved as theassessee would have been allowed an opportunityto explain the situation so that the Assessing Officercould arrive at a considered judgment. Consideringthe entirety of circumstances, we are inclined touphold the plea of the assessee to restore thematter back to the file of the Assessing Officer foradjudication afresh. Needless to mention, theburden shall be on the assessee to lead evidenceand justification for the claim of impugned lossclaimed in the export of wheat through M/s PEC Ltd.The Assessing Officer shall consider the materialand evidence which the assessee would rely on andthereafter pass an order afresh on this aspect, inaccordance with law. At the cost of repetition, we *** may again clarify here that our decision to remandthe matter for fresh adjudication has no reflection onthe merits of the dispute and the Assessing Officershall be free to adjudicate afresh on the basis of thematerial on record and in accordance with lawuninfluenced by any of our observation in this order.As a result, with respect to ground no.2, theassessee succeeds for statistical purposes.” 3.We have heard learned counsel for the appellant. 4.The impugned order of the Tribunal merely requiresfurther opportunity to be given to the assessee for the reasonsextracted above. We are of the view that since reasons mentionedby the Tribunal for remand are plausible reasons, no interference iscalled for at this stage. The assessing officer will be at liberty to takea fresh decision in accordance with the order of the Tribunal. Nosubstantial question of law arises. 5.The appeal is dismissed. February 21, 2011Pka (Adarsh Kumar Goel) Judge (Ajay Kumar Mittal) Judge