The Commissioner Of Income Taxchennai v. M/S.rasi Exports Pvt Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE Mr.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE Mrs.JUSTICE V.BHAVANI SUBBAROYAN T.C.(A) No.987 of 2019 The Commissioner of Income TaxChennai. .. Appellant / Appellant Vs. M/s.Rasi Exports Pvt Ltd.,No.68, C.P.Ramaswamy Road Alwarpet Chennai – 600 018...Respondent/ Respondent Prayer : Tax Case (Appeal) filed under Section 260A of theIncome Tax Act, 1961 against the order of the Income TaxAppellate Tribunal, Madras 'A' Bench, Chennai, dated 18.07.2019,passed in ITA.No.2099/Chny/2017, Assessment Year : 2006-2007. As per against the order at the Commissioner of IncomeTax (Appeals)-3, Room No.215, Main Building 2[nd] Floor, 121,Mahatma Gandhi Road, Chennai, PAN No. assessment year2006-07 order dated 28/04/2017. As per against the order of the Income Tax Officer,Corporate Ward 5(4) Room No.403, Aayakar Bhavan, Main Building,121 MG Road, Nungambakkam, Chennai. For Appellant : Ms.Hemalatha, Senior Standing Counsel for Income Tax Department For Respondent : Mr.A.S.Sriraman JUDGMENT [Judgment of the Court delivered by T.S.SIVAGNANAM,J.] This appeal by the Revenue filed under Section 260A ofthe Income Tax Act, 1961 [the 'Act' for brevity] is directedagainst the order dated 18.07.2019, passed by the Income TaxAppellateTribunal,Madras'A'Bench,ChennaiinI.T.A.No.2099/Chmy/2017, for the Assessment Year 2006-2007. 2.The Tax Case appeal was admitted on 05.12.2019, on thefollowing substantial questions of law : 1.Whether on the facts and in the circumstances of thecase, the Tribunal was right in holding that since theexports were not in dispute and the Assessee could haveexported the goods without any purchases especiallywhen the Assessing Officer had clearly established thatthe export sales was not commensurate with the openingstock and the purchases? 2.Is not the finding of the Tribunal bad, especiallywhen stock that was available on the date of sale wereless than the available stock especially when theassessee failed to prove with documentary evidencewhile granting relief? 3. Whether, on the fact and in the circumstances of thecase, the Tribunal was right in holding that no freshevidences was produced before the CIT (Appeals) whichfact is factually wrong, when the fact remains that theevidences were placed before CIT (Appeals) and noopportunity was granted to the department beforepassing the order which clearly violates Rule 46A? 4. Whether on the facts and in the circumstance of thecase, the Tribunal was right in not considering thefact that the matching principle in terms of income andexpenditure is not applicable when cash method ofaccounting is followed as sine qua non for allowabilityof expenditure there should be nexus between the incomeand expenditure reported for the year in question asapplicable in terms of Section 36 and 37 of the IncomeTax Act? 3. We have heard Ms.Hemalatha, learned Senior StandingCounsel for the Revenue and Mr.A.S.Sriraman, learned counsel forthe Assessee. 4. Whether on the facts and in the circumstance of thecase, the Tribunal was right in not considering thefact that the matching principle in terms of income andexpenditure is not applicable when cash method ofaccounting is followed as sine qua non for allowabilityof expenditure there should be nexus between the incomeand expenditure reported for the year in question asapplicable in terms of Section 36 and 37 of the IncomeTax Act? 3. We have heard Ms.Hemalatha, learned Senior StandingCounsel for the Revenue and Mr.A.S.Sriraman, learned counsel forthe Assessee. 4. The Assessee is an exporter of cotton garments,cotton fabrics, made-ups and silk fabrics and goods and filedits return of income for the assessment year 2006-2007 on27.11.2006, admitting the loss of Rs.6,90,20,428/-. TheAssessee's case was selected for scrutiny under Section 143(3)of the Act, and the assessment was completed by disallowingsample expenses and addition of undisclosed stocks in relevantto purchases. The Assessee filed an appeal before CIT(Appeals)which was allowed partly, aggrieved which, the Department filedan appeal before the Tribunal. The Tribunal, vide order dated08.05.2015 remanded the matter back to the Assessing Officer toreconsider the expenditure for made-ups. The Assessing Officersought details from the Assessee and by order dated 27.12.2016,the Income Tax Department held that the Assessee could notproduce the Inventory register to verify the correctness of theclaim; the Assessee had not incurred any expenses on lorryreceipt in the books and claimed that goods were received on “Paid Lorry Receipt” basis; and that the Assessee could notproduce all the lorry receipts to verify the subsequent entriesfor the goods received; and there were no fresh submissions fromthe Assessee to prove its claim, and accordingly the assessmentwas completed. 5. The Assessee preferred an appeal before theCommissioner of Income Tax (Appeals)-III, Chennai, who, by anorder dated 28.04.2017 partly allowed the Assessee's appeal.Aggrieved by the same, the Revenue filed an appeal before theTribunal. The Tribunal once again examined the factual positionplaced by the Assessee before the Assessing Officer, at thefirst instance when the assessment was completed, and alsoverified the details which were culled out during the assessmentproceedings after the remand order of the Tribunal in theearlier round of litigation and dismissed the Revenue's appeal. 6. We have carefully examined the order of CIT(A) aswell as the Tribunal. As mentioned above, this is the secondround of litigation and the first round culminated with theorder of the Tribunal, remanding the matter to the AssessingOfficer. The Assessing Officer has done some factual exercises.This test was corrected by the CIT(A). The CIT(A) examined thematter and rendered a finding by partly allowing the Assess'sappeal. Thereafter, the matter was taken before the Tribunal inthe way of appeal by the Revenue, wherein, the findings of CIT(A) was re-examined by the Tribunal, and the Tribunal, afterassigning independent reasons, affirmed the order of the CIT(A).Thus, we are of the considered view that there is no question of law, much less the substantial questions of law arises inthis appeal.7. Accordingly, this Tax Case appeal is dismissed andthe order of the the Income Tax Appellate Tribunal, Madras 'A'Bench,Chennai,dated18.07.2019,passedinITA.No.2099/Chny/2017, is hereby confirmed. No costs. Sd/-Assistant Registrar(CS-VIII) ds //True copy// Sub Assistant Registrar To:1.The Commissioner of Income Tax (Appeals)3Chennai. 2. The Income Tax Appeals Tribunal, Madras 'A'Bench, Chennai. Madras 'A'Bench, Chennai. 3. The Income Tax Officer, Corporate Ward 5(4) Room No.403, Aayakar Bhavan Main Building, 121, MG Road, Nungambakkam, Chennai. Room No.403, Aayakar Bhavan Main Building, 121, MG Road, Nungambakkam, Chennai. T.C.(A) No.987 of 2019 of law, much less the substantial questions of law arises inthis appeal.7. Accordingly, this Tax Case appeal is dismissed andthe order of the the Income Tax Appellate Tribunal, Madras 'A'Bench,Chennai,dated18.07.2019,passedinITA.No.2099/Chny/2017, is hereby confirmed. No costs. Sd/-Assistant Registrar(CS-VIII) ds //True copy// Sub Assistant Registrar To:1.The Commissioner of Income Tax (Appeals)3Chennai. 2. The Income Tax Appeals Tribunal, Madras 'A'Bench, Chennai. Madras 'A'Bench, Chennai. 3. The Income Tax Officer, Corporate Ward 5(4) Room No.403, Aayakar Bhavan Main Building, 121, MG Road, Nungambakkam, Chennai. Room No.403, Aayakar Bhavan Main Building, 121, MG Road, Nungambakkam, Chennai. T.C.(A) No.987 of 2019 PP(CO)GMY(22/10/2020)