Commissioner Of Income Tax Chennai Iii v. Sri Sudarshan Kumar Rungta

DATED : 20.07.2009 CORAM : THE HONOURABLE MR.JUSTICE F.M.IBBRAHIM KALIFULLA andTHE HONOURABLE MR.JUSTICE B.RAJENDRAN Tax Case (Appeal) No.630 of 2009 Commissioner of Income TaxChennai III. .. Appellant -vs- Sri Sudarshan Kumar RungtaProp.Raunaq Steel Industries. .. Respondent Appeal against the order of the Income Tax Appellate Tribunal Madras 'C' Bench dated 21.10.2008in I.T.A. No.864/Mds/2008 for the assessment year 2003-2004.* * * * * For Appellant : Mr.K.Subramanian* * * * * J U D G M E N T(Delivered by F.M.IBRAHIM KALIFULLA, J.) The revenue has come forward with this appeal raising the following substantial question of law:-"Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right inholding that the order of the Commissioner of Income Tax under section 263 was not valid on theground that the Assessing Officer had taken only one of the possible views regarding theassessability of credits appearing in the books of the assessee, when the Assessing Officer has failedto make necessary enquiries regarding the assessability of the said amount in the hands of theassessee under the provisions of section 68 of the Income Tax Act ?" 2. The brief facts are that the assessee herein is a proprietory concern. The assessment relates tothe assessment year 2003-2004. The assessment order came to be made on 28.3.2006. At the timewhen the assessment order came to be passed, the assessing authority himself has noted that theassessee's proprietory concern was converted into a private limited company named " Raunaq SteelTrading Pvt. Ltd.". As a proprietory concern, since sale suppression was found out, the assessmentwas taken up for scrutiny as a survey related assessment. Be that as it may, when the assessee'sreturn of income dated 28.11.2003 was analysed, a notice under Section 143 (2) was issued on16.12.2003. The assessee's representative was heard. A sum of Rs.2,94,16,923/- was reflected in theaccounts by way of credit entries under the caption 'sundry creditors'. At that point of time, therewas no response from the assessee for producing the person, who extended such credit in the formof security deposit to the tune of Rs.2 crores and another credit of Rs.42,71,373/-. The assessingauthority also noted that by proceedings dated 22.3.2006, the assessment of the company wasreopened for the very same assessment year 2003-2004 for considering the investment of sharecapital. The assessing authority, therefore, held that the issue can be considered as and when theassessment for the assessment year 2003-2004 for the company is completed. As far as the remaining sum of Rs.51,45,550/- was concerned, the same was added, as the assessee failed to provethe same as unsecured loans. The income was thus arrived at a sum of Rs.58,10,980/-. 3.The Commissioner of Income-tax, by invoking his revisional power under Section 263 of theIncome-tax Act, suo moto took up the order of assessment dated 28.3.2006 for consideration and byhis order dated 27.3.2008, held that the assessing authority, shall call for further records, examinethe same and pass a fresh order of assessment. Aggrieved against the same, the assessee wentbefore the Tribunal. By the time the matter was taken up by the Tribunal, the assessment of thecompany came to be concluded and in the assessment, the amounts with reference to which theCommissioner of Income-tax has passed the order under revision by invoking his power underSection 263 of the Act, came to be fully assessed and the tax liability was also fastened on thecompany. The Tribunal has, therefore, held as under in its order in paragraph 6:- "6.Learned counsel for the assessee, in order to counter the submission of Learned D.R., has pleadedthat firstly, assessing officer has adopted one of the 2 possible views and assessing officer did notprobe further cause of the reasons mentioned in the assessment order that since he is the assessingofficer for the creditors company also and company's assessment has already been reopened by thesame assessing officer and reassessment orders passed, which was before the CIT at the time ofpassing the impugned order so there cannot be double taxation, when the assessing officer hasalready reopened the assessment of the Company and taxed the impugned amounts, therefore actionof the CIT is unjustified and uncalled for and not proper and as such pleaded for settingaside/quashing of the impugned order." 4.When once the proprietory concern admittedly got merged with the company in the very sameassessment year 2003-2004 and the credit entries in the name of the company in the accounts of theassessee came to be assessed to tax at the hands of the company, the Tribunal, in our consideredopinion, rightly held that there cannot be a further liability fastened on the proprietory concern forthat assessment year, viz., 2003-2004, which had already suffered tax in the hands of the companywith which the proprietory concern got merged. 5.In such circumstances, we do not find any scope to entertain this appeal on any question of law,much less substantial question of law sought to be raised in this appeal. Accordingly, the appeal failsand the same is dismissed. No costs. sra To 1.The Assistant Registrar,Income Tax Appellate TribunalMadras Bench "C".2.The Secretary, Central Boardof Direct Taxes, New Delhi. 3.The Commissioner of Income- Tax (Appeals), Chennai.4.The Income-tax Officer (OSD),Company Circle-V(3),Chennai