Tca/238/2014 Of Commissioner Of Income Tax v. M/S Kalai Constructiion Pvt

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE R.SUDHAKARAND THE HONOURABLE MR.JUSTICE R.KARUPPIAH Tax Case (Appeal) Nos.238 to 241 of 2014 Commissioner of Income TaxCentral Circle IICoimbatore .. Appellant in all the T.C.(A)'s/Respondent-vs- M/s Kalai Construction Private Limited72, Mudali ThottamVeerappanchatramErode 638 004.. .. Respondent in all the T.C.(A)'s/Appellant Memorandum of Grounds of Tax Case Appeals under Section 260A ofthe Income Tax Act, 1961 against the order of the Income TaxAppellate Tribunal, Chennai 'C' Bench dated 17.9.2013 made inI.T.A.Nos.1308, 1309, 1310 & 1311/Mds/2012 for the assessment years2005-06, 2006-07, 2007-08 & 2008-09 respectively against the order ofthe Assistant Commissioner of Income Tax, Central Circle-II,Coimbatore dated 31.12.2009 in PAN/GIR No.AACCK 2359C of theAssessment years 2005- 2006 2006-2007, 2007-2008 & 2008-2009, and against the order of the Commissioner of Income Tax (Appeals)-II Coimbatore dated 28.03.0212 and made in PAN/TA No.AACCK 2359C,Assessment years 2005-06, 2006-07, 2007-08, 2008-09 The Revenue has filed these four appeals challenging the orderof the Income Tax Appellate Tribunal in remanding the matter to theassessing officer for de novo consideration of the respondent-assessee's statement that the purchase of raw materials forconstruction of the building complex in question was made fromgenuine parties. The assessment relates to the period from 2005-06 to2008-09. https://hcservices.ecourts.gov.in/hcservices/ 2. The facts leading to the filing of the appeals are that therespondent-assessee is a developer and builder of residential units.A search and seizure under Section 132 of the Income Tax Act was conducted in the business premises of the assessee on 13.3.2008 andthe materials inventorised as SN/B&D/S-1, S-2, S-3, S-5, S-8, S-9, S-10, S-11, S-12 dated 6.5.2008, namely, cash receipts / vouchers forpurchase of raw materials, were seized. Though the assessing officerdirected the assessee to produce the parties viz., M/s Sivaparvathi &Company, Coimbatore, Sri Shanmuga Traders, Coimbatore & Sri RamAgency, Erode for enquiry, none turned up. However, the assessingofficer, taking into account the sworn statement given by oneMr.P.K.Duraisamy, the Managing Director of the company, treated thepurchases made from the above parties as bogus and passed theassessment order dated 31.12.2009, as detailed below:- 3. Aggrieved by the said order, the assessee went on appeal before the Commissioner of Income Tax (Appeals). The appellateauthority, while confirming the order of the assessing officer, heldthat the assessee failed to produce any documentary evidence, namely,PAN cards, income tax returns or the circles or wards to which theparties are being assessed to, to prove the genuineness of thetransactions. The appellate authority also held that even in theappellate proceedings, the assessee expressed his inability toproduce sufficient evidence to prove that the purchase transactionswere genuine with the parties aforesaid. Holding so, the appellateauthority dismissed the appeals by order dated 28.3.2012. 4. Aggrieved by the order of the Commissioner of Income Tax(Appeals), the assessee preferred further appeals before the IncomeTax Appellate Tribunal and by the impugned order dated 17.9.2013, theTribunal has remitted the matter to the assessing officer to examineand decide the issue de novo in accordance with law after affordingsufficient opportunity to the assessee for all the assessment years.Hence, the Revenue has preferred these appeals before us. 4. Aggrieved by the order of the Commissioner of Income Tax(Appeals), the assessee preferred further appeals before the IncomeTax Appellate Tribunal and by the impugned order dated 17.9.2013, theTribunal has remitted the matter to the assessing officer to examineand decide the issue de novo in accordance with law after affordingsufficient opportunity to the assessee for all the assessment years.Hence, the Revenue has preferred these appeals before us. 5. At the time of arguments, the learned counsel for therespondent-assessee primarily stated that since the de novoproceedings are going on before the jurisdictional AssistantCommissioner of Income Tax, Circle-I, Erode, he pleaded that theappeals need not be entertained, but could be disposed of allowingthe department to go through the materials that may be submitted bythe assessee. 6. Per contra, the learned counsel for the department pleadedhttps://hcservices.ecourts.gov.in/hcservices/that the findings of the original authority and the appellateauthority, based on the statement made by the Managing Director of the company during the course of enquiry and his inability to furnishsufficient material, clearly go to show that such an exercise by wayof remand is only a futile attempt to fill up the lacuna, if any, andthe same should not be allowed. 7. We have given our anxious consideration to the above pleas.Since the Tribunal has made an open remand for de novo considerationof the materials that may be placed by the assessee, we hold credenceto the findings of the original authority as well as the appellateauthority that no material was produced by the assessee at the firstinstance. Therefore, on remand, it is incumbent on the part of theofficer to verify the genuineness of any document that may beproduced by the assessee, in the light of what has been recordedearlier by the original authority and the appellate authority. The denovo proceedings should not be taken as a ruse by the assessee tofill up the lacuna and create records to supplement for what wasmissing earlier. The original authority, on remand, should go intothe explanation submitted by the assessee on merits and thegenuineness of the purchases alleged to have been made and thereafterdecide the issue for the relevant assessment years. Therefore, we donot find any reason to entertain these appeals, except confirming theorder of the Tribunal. With these observations, the tax case appealsare disposed of. Consequently, M.P.Nos.1 of 2014 are closed. Nocosts. Sd/-Assistant Registrar //True Copy// Sub Assistant Registrar ssTo1. The Assistant Registrar, Income Tax Appellate Tribunal IIIrd Floor, Rajaji Bhavan, Chennai 'C' Bench Nagar, Chennai-90 Chennai 2. The Commissioner of Income Tax Central Circle II Coimbatore. 3. The Commissioner of Income Tax (Appeals)-II Coimbatore. 4. The Assistant Commissioner of Income Tax Central Circle-II, Coimbatore. + 1 cc to M/s. M. Swaminathan, Advocate SR.55064+ 1 cc to Mr.S. Sridhar, Advocate Sr.55075