Ita/110/2016 Of M/S. Kip Construction Company v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN THURSDAY, THE 6TH DAY OF OCTOBER 2016/14TH ASWINA, 1938 ITA.No. 110 of 2016 ----------------------- AGAINST THE ORDER IN ITA 353/Coch/2014 of I.T.A.TRIBUNAL,COCHIN BENCH, DATED 16.11.2015 APPELLANT/RESPONDENT:-------------------- M/S. KIP CONSTRUCTION COMPANY KAVIKUNNEL, KUNNACKAL P.O, MUVATTUPUZHA 682 316. BY ADVS.SRI.ANIL D. NAIR KUM.MEKHALA M.BENNY SRI.R.SREEJITH KUM.SOUMYA PRAKASH RESPONDENT/APPELLANT: -------------------- THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1, ALUVA 683 101. BY ADV.SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT ADV.SRI.CHRISTOPHER ABRAHAM, SC THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 06-10-2016,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No. 110 of 2016 APPENDIX APPELLANT'S EXHIBITS: ANNEXURE-A: TRUE COPY OF THE ASSESSMENT ORDER DTD.16.11.2011 FOR THEYEAR 2009-10 ISSUED TO THE APPELLANT. ANNEXURE-B: TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) FOR THE YEAR 2009-10 DT.18.3.2014 ISSUED TO THE APPELLANT. ANNEXURE-C: CERTIFIED COPY OF THE ORDER OF THE INCOME TAX APPELLATETRIBUNAL, COCHIN BENCH DT.16.11.2015 AND PHOTO COPY. ANNEXURE-D: TRUE COPY OF THE PAPER BOOK FILED BEFORE THE INCOME TAXAPPELLATE TRIBUNAL, COCHIN BENCH. ANNEXURE-E: TRUE COPY OF THE AFFIDAVIT OF SRI.P.I.GEORGE ANNEXURE-F: TRUE COPY OF THE AFFIDAVIT OF SRI.PRADHEEP KUMAR ANNEXURE-G: TRUE COPY OF THE AFFIDAVIT OF SRI.P.V.SIVADASAN ANNEXURE-H: TRUE COPY OF THE AFFIDAVIT OF SRI.NARAYANAN V.V. RESPONDENT'S EXHIBITS: NIL //TRUE COPY// ami/ P.A.TO JUDGE THOTTATHIL B.RADHAKRISHNAN & DEVAN RAMACHANDRAN, JJ. ----------------------------------------------- I.T.Appeal No.110 of 2016 -----------------------------------------------Dated this the 6[th] day of October, 2016 J U D G M E N T Thottathil B.Radhakrishnan, J. 1.We have heard the learned counsel for the appellant and thelearned counsel for the Department. This appeal is filed by theassessee under Section 260-A of the Income Tax Act,challenging the decision of the Income Tax Appellate Tribunalinterfering with the decision of the CIT (Appeals), confirmingthe Assessing Authority's decision which went, on the questionin dispute, in favour of the assessee. The Tribunal allowed theDepartment's appeal and interfered with the decision of theCIT (Appeals) and the Assessing Authority, however on aparticular point that the assessee had not placed evidencebefore the Assessing Authority or before the Tribunal to provethat the assessee had made payments directly to the labourersin cash. Equally, the Tribunal noted that no evidenceregarding labour expenses was produced before the authoritiesbelow. I.T.Appeal No.110 of 2016 :-2-: I.T.Appeal No.110 of 2016 :-2-: 2.Though the CIT (Appeals) had made certain observationsregarding the evidentiary value of any such material, even ifproduced, we think that the Appellate Tribunal having acted onthe appeals of the Department ought to have given a betteropportunity to the assessee to produce materials in support ofthe claim relying on the so called expenditure for paymentdirectly to labourers in cash. This, we think, would have donecomplete justice between the parties before the Tribunal, whichis the 'last fact finding authority', bestowed with thejurisdiction to decide on all issues of fact and law arising fordecision in an appeal before it under the Income Tax Act. Inthis view of the matter, we hold that the Appellate Tribunal haderred in law and in the matter of exercise of jurisdiction indeciding the appeal in the manner in which it has been done.Therefore, a substantial question of law in that regard wouldarise for decision in this appeal. This is particularly as towhether the Tribunal was justified in law and in terms ofjurisdiction in having interfered at the instance of the Revenuewith the decisions of the CIT (Appeals) and the AssessingAuthority without affording a further and reasonable I.T.Appeal No.110 of 2016 :-3-: opportunity to the assessee to place materials as it wanted toevidence the payment directly to the labourers in cash and alsoany other claims which would make it eligible for deductions.We say this in the particular facts and circumstances of thiscase, having regard to the crucial fact that the assesseesucceeded before the Assessing Authority and the CIT(Appeals) on that issue. However, a further opportunity toadduce evidence could be extended to the assessee only onterms as to cost. In the result, this appeal is allowed, setting aside the impugneddecision of the Income Tax Appellate Tribunal, Cochin Bench inI.T.Appeal No.353/Coch/2014 and remitting the matter for re-consideration by the Tribunal, on condition that the appellantpays the Revenue an amount of `50,000/- (Rupees fiftythousand only) as costs payable within a period of two weeks.If such an amount is paid and the evidence of payment isproduced before the Tribunal, the Tribunal will extend furtheropportunity to the assessee to produce materials and decide onall issues de novo untrammelled by anything stated in its I.T.Appeal No.110 of 2016 :-4-: earlier order. Let this be done within six months from the dateof commencement of further proceedings before the Tribunal.Parties are directed to mark appearance before the Tribunal on2.11.2016. Whatever documents the assessee desires toproduce shall be produced before the Tribunal without failbefore 25.11.2016 which will be taken as a last opportunity. Sd/- THOTTATHIL B.RADHAKRISHNAN JUDGE Sd/- DEVAN RAMACHANDRAN JUDGE ami/6.10.16 //True copy//P.A. to Judge