Ita/284/2019 Of Dimond Food Products v. The Commissioner Of Income Tax

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI FRIDAY, THE 1 DAY OF APRIL 2022/11TH CHAITHRA, 1944 I.T.A. NO.278 OF 2019 (AGAINST THE ORDER DATED 13.11.2018 IN ITA 51/COCH/2017 OF I.T.A.TRIBUNAL, COCHIN BENCH) APPELLANT/RESPONDENT/APPELLANT/ASSESSEE: M/S.DAIMOND FOOD PRODUCTS,PAVIZHAM BUILDING, KOOVAPADY P.O., PERUMBAVOOR, ERNAKULAM, KOCHI - 683 544, REPRESENTED BY ITS MG.PARTNER N.P.GEORGE. BY ADVS.SRI.KMV.PANDALAISMT.S.HEMALATHA RESPONDENTS/APPELLANTS/RESPONDENT/REVENUE: 1THE COMMISSIONER OF INCOME TAX, KOCHI - 2, C.R.BUILDING, I S PRESS ROAD, ERNAKULAM, KOCHI - 682 018. 2THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-I, KAP COMPLEX, RAILWAY STATION ROAD, ALUVA - 683 101. SRI.CHRISTOPHER ABRAHAM, SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSIONON 01.04.2022, ALONG WITH ITA.284/2019, THE COURT ON THESAME DAY DELIVERED THE FOLLOWING: IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI FRIDAY, THE 1 DAY OF APRIL 2022/11TH CHAITHRA, 1944 I.T.A. NO.284 OF 2019 (AGAINST THE ORDER DATED 13.11.2018 IN CO 21/COCH/2017 IN ITA No.51/COCH/2017 OF I.T.A.TRIBUNAL, COCHIN BENCH) APPELLANT/CROSS OBJECTOR/APPELLANT/ASSESSEE: M/S.DIAMOND FOOD PRODUCTS,PAVIZHAM BUILDING, KOOVAPADY P.O, PERUMBAVOOR, ERNAKULAM, KOCHI -683 544, REPRESENTED BY ITS MG.PARTNER N.P. GEORGE. BY ADVS.SRI.KMV.PANDALAISMT.S.HEMALATHA RESPONDENTS/RESPONDENTS/RESPONDENTS/REVENUE: 1THE COMMISSIONER OF INCOME TAX,KOCHI -2, C.R.BUILDING, I S PRESS ROAD, ERNAKULAM, KOCHI- 682 018. 2THE ASSISTANT COMMISSIONER OF INCOME – TAX,CIRCLE-I, KAP COMPLEX, RAILWAY STATION ROAD, ALUVA - 683 101 SRI.CHRISTOPHER ABRAHAM, SC FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSIONON 01.04.2022, ALONG WITH ITA.278/2019, THE COURT ON THESAME DAY DELIVERED THE FOLLOWING: JUDGMENT (Dated: 1[st] April, 2022) Basant Balaji, J. I.T.A. No.278 of 2019 is filed against the orderdated 13.11.2018 in I.T.A. No.51/Coch/2017 on thefiles of the Income Tax Appellate Tribunal, CochinBench for the Assessment Year 2013-2014. I.T.A. No.284of 2019 is filed against the order dated 13.11.2018 inCrossObjectionNo.21/Coch/2017inI.T.A.No.51/Coch/2017 on the files of the Income TaxAppellate Tribunal, Cochin Bench for the AssessmentYear 2013-2014. 2.The appellant is a partnership firm engagedin the business of production of rice from paddy. Forthe year 2013-14, the appellant filed his return ofincome on 30.09.2013, declaring a total income ofRs.71,15,290/-. The assessee during the year have madepurchase from unregistered dealers to the extent ofRs.15,95,46,806/-, out of the total purchase of Rs.68,01,32,694/-, which amounted to 23.45% of thepurchases. The appellant was requested to furnish thedetails of the purchase of paddy from unregistereddealers including their names and addresses. Theappellant furnished a list on 28.01.2016. Though thepurchase of unregistered dealers amounted toRs.1,59,46,806/-, the assessee furnished the detailsto the extent of Rs.66,18,529/- only. Thereafter theassessee furnished names and details of 8503 personsfrom whom they have made purchases. 3.The assessing officer randomly selected 200persons from the list and letters were sent to themrequesting details with regard to the sale of paddy,details of land owned and details of receipt of money.81 letters out of 200 letters sent were returned backby the postal authorities shown as 'un-served'. On10.03.2016, 39 persons to whom letters were issuedresponded and only five persons confirmed that theyhave paid the assessment fee. Thereafter, theassessing officer, by Annexure-A order, assessed the income under Section 143 of the Income Tax Act and theclaim of deduction of Rs.5,53,20,069/- was disallowedunder Section 40 A(3) of the Income Tax Act. Theappellant challenges the same before the Commissionerof Income Tax Appeals and by Annexure-B order, thefirst appellate authority allowed the appeal in part.The appellant as well as the revenue filed appealsbefore the Income Tax Appellate Tribunal, challengingthe order of the first appellate authority. TheTribunal, by the impugned order, allowed the appealfiled by the revenue and the Cross Objection filed bythe assessee was dismissed. 4.Following substantial questions of law areraised for consideration in these appeals: ITA No.278/2019 a) Had not the tribunal exceeded its powers byremitting an issue to the Assessing Officer forreconsideration, by allowing a 'ground' whichwas not raised by the Revenue before thetribunal. b) Had not the tribunal erred in remanding thecase to the Assessing Officer directing him to examine whether each purchase is from thefarmers and each payment is more thanRs.20,000/- so as to attract the provisions ofSection 40A(3) of the IT Act, admittedly whenthe disallowance of expenses was made by theAssessing Officer on account of 'purchases notproved' and not u/s 40A(3) of the IT Act?c) On the facts and in the circumstances of thecase and in law, was not the order of thetribunal remitting an issue to the AssessingOfficer for reconsideration, by allowing a'ground' which was not raised by the Revenuebefore the tribunal and directing the AssessingOfficer to examine whether each purchase isfrom the farmers and each payment is more thanRs.20,000/- so as to attract the provisions ofsection 40A(3) of the IT Act, amounts toenhancement of assessment which is beyond thepowers of the tribunal? d) Had not the tribunal erred in notconsidering, on the facts and in thecircumstances of the case, the decision of thisHon'ble Court in Keerthi Agro Mills P.Ltd{[2018] 405 ITR 192(Ker)} which confirmed thedecision of the tribunal and had reachedfinality? ITA No.284/2019 a) Had not the tribunal erred in dismissing thecross objection merely on the ground that it has become infructuous on the disposal of theRevenue's appeal which was for a differentissue? b) Had not the tribunal erred in remanding thecase to the Assessing Officer directing him toexamine whether each purchase is from thefarmers and each payment is more thanRs.20,000/- so as to attract the provisions ofsection 40A(3) of the IT Act. Without anydirection regarding the issue raised in thecross objection. c) On the facts and in the circumstances of thecase and in law in, has not tribunal byremitting an issue to the Assessing Officer forreconsideration, erred in appreciating that theissues involved in the Revenue's appeal andthat involved in the Cross Objection filed bythe Appellant were entirely different and hadto be separately considered? 5.Heard Sri.K.M.V.Pandalai, learned counsel forthe appellant and Sri.Christopher Abraham, learnedcounsel for the respondents. 6.The main contention raised by the counsel forthe appellant is that, the ground raised by therevenue before the Tribunal was not available as the same was not raised before the first appellateauthority or invoked by the assessing officer. He alsosubmitted that, remitting the case back to theassessing officer to examine whether purchase is fromthe farmers and each payment is more than Rs.20,000/-,so as to attract the provisions of Section 40 A(3) ofthe IT Act is opposed the law, facts and circumstancesof the case. The dis-allowance made to the tune ofRs.5,53,20,069/- was made by the assessing officer notunder 40 A(3) of the IT Act. 5.Heard Sri.K.M.V.Pandalai, learned counsel forthe appellant and Sri.Christopher Abraham, learnedcounsel for the respondents. 6.The main contention raised by the counsel forthe appellant is that, the ground raised by therevenue before the Tribunal was not available as the same was not raised before the first appellateauthority or invoked by the assessing officer. He alsosubmitted that, remitting the case back to theassessing officer to examine whether purchase is fromthe farmers and each payment is more than Rs.20,000/-,so as to attract the provisions of Section 40 A(3) ofthe IT Act is opposed the law, facts and circumstancesof the case. The dis-allowance made to the tune ofRs.5,53,20,069/- was made by the assessing officer notunder 40 A(3) of the IT Act. 7.The counsel for the revenue, on the otherhand, submitted that, it is well within the powers ofthe Tribunal to remit the issue back to the assessingofficer for fresh consideration and to examine whetherthe purchase made by the appellant from the farmers isgenuine and that the payment is more than Rs.20,000/-to attract the provisions of Section 40 A(3) of theAct. The Tribunal has remitted the issue back to theassessing officer and the appellant is given ampleopportunity to substantiate his contentions before the assessing officer, hence no interference is warranted.8.The main contention raised by the counsel forthe appellant is that, the Tribunal has allowed theappeal and remitted on a ground which has not beenraised before it by any of the parties to the appealand hence it is beyond the jurisdiction of theTribunal. 9.We take note of the fact that the said aspecthas not been dealt with by the Tribunal. The Tribunalhas remitted the issue to the assessing officer forfresh consideration. The Tribunal ought to have takennote of the contention raised by the appellant thatthe said ground was not available to the revenue asthe same was not raised before the first appellateauthority. Taking into the consideration of the factsand circumstances of the case, we deem it appropriatethat the order needs to be set aside and remitted tothe Tribunal for fresh consideration and disposal.Substantial questions of law are answered as indicatedabove. In the result, appeals are allowed and the order of the Tribunal in I.T.A.No.51/Coch/2017 andCO No.21/Coch/2017 are set aside and the Tribunal isdirected to dispose of the same afresh, after givingopportunity to the revenue and the assessee, not onlyto file additional materials but also to raiseadditional grounds available to them in support oftheir contentions. The Tribunal shall take all stepsto dispose of the same at any rate, within a period ofsix months from the date of receipt of the certifiedcopy of the judgment. Sd/- S.V.BHATTI, JUDGE ss Sd/- BASANT BALAJI, JUDGE APPENDIX OF ITA 284/2019 PETITIONER ANNEXURESANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER DATED30.03.2016 ANNEXURE B TRUE COPY OF THE APPELLATE ORDER DATED14/12/2016 PASSED BY THE COMMISSIONEROF INCOME TAX (APPEALS) ANNEXURE C TRUECOPYOFCROSSOBJECTIONNO.21/COCH/2017 FILED BY THE APPELLANT.TRUE COPY OF THE ORDER DATED 13.11.2018PASSED BY THE INCOME TAX APPELLATETRIBUNAL. ANNEXURE D APPENDIX OF ITA 278/2019 PETITIONER ANNEXURESANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER DATED30/03/2016. ANNEXURE B TRUE COPY OF THE APPELLATE ORDER DATED14/12/2016 PASSED BY THE COMMISSIONEROF INCOME TAX (APPEALS). ANNEXURE C TRUECOPYOFAPPEALNO.ITANO.51/COCH/2017FILEDBYTHERESPONDENT. ANNEXURE D CERTIFIED COPY OF THE ORDER DATED13/11/2018 PASSED BY THE INCOME-TAXAPPELLATE TRIBUNAL.