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2016 Supreme(Mad) 2563
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. MANIKUMAR & D. KRISHNA KUMAR, JJ.
M/s. Miller Knits, Tirupur – Appellant
Vs.
The Income Tax Officer, Tirupur – Respondent
T.C.A. No. 428 of 2016
Decided On : 10-08-2016
For the Petitioner: Mr. K. Ravi.
For the Respondent: Mr. T.R. Senthil Kumar.
The main legal point established in the judgment is that the appellant's ability to prove the existence of the liability through documentary evidence influenced the court's decision to remit the matter back to the Tribunal for further consideration.
Headnote:
Income Tax - Assessment - Section 143(3) - Section 234A - Section 234B - Section 234C
Fact of the Case:
The appellant, a firm, filed its return for the Assessment Year 2011-2012 admitting a total income of Rs.1,35,480/-. The Assessing Officer completed assessment under Section 143(3) of the Income Tax Act, 1961, disallowing certain expenses and adding them to the total income returned. The appellant filed an appeal, which was dismissed by the Commissioner of Income Tax (Appeals)-3, Coimbatore, and confirmed by the Income-Tax Appellate Tribunal, 'A' Bench, Chennai.
Finding of the Court:
The court found that the appellant was able to prove the existence of the liability in respect of Rs.31,65,284/- through a letter from the State Bank of India, Tiruppur Branch, and remitted the matter back to the Tribunal for further consideration.
Issues: The substantial questions of law raised in the appeal were related to the disallowance of expenses and the liability in respect of Rs.31,65,284/-.
Ratio Decidendi: The court held that the appellant was able to prove the existence of the liability in respect of Rs.31,65,284/- through the letter from the State Bank of India, Tiruppur Branch, and remitted the matter back to the Tribunal for further consideration.
Final Decision: The Tax Case Appeal was disposed of, setting aside the impugned order only insofar as the issue of the liability in respect of Rs.31,65,284/- was concerned, and remitting the matter back to the Tribunal for further consideration.
1. Challenge in this appeal is to an order in I.T.A. No. 1942/Mds/2015, dated 27.11.2015, for the Assessment year 2011-2012.
2. Facts leading to the appeal are that the appellant, a firm, filed its return for the Assessment Year 2011-2012 on 06.03.2013 admitting a total income of Rs.1,35,480/-. The income reported was processed, under Section 143(1). The case was taken up for scrutiny through CASS and notice under Section 143(2) of the Income Tax Act, 1961 was issued on 16.08.2013. The appellant's authorised representative appeared and submitted the details and records. The Assessing Officer completed assessment under Section 143(3) of the Income Tax Act on 17.02.2014, as hereunder:
(i) The vouchers/bills were produced, for the expenses claimed under the heads "General Expenses" and "wages" out of which some of them were self made. Hence, a sum of Rs.1,00,000/- and Rs.2,00,600/- respectively are disallowed and added to the total income returned.
(ii) The confirmation for advance given in the case of M/s. Yogesh Clothing Company to the tune of Rs.31,65,284/- is called for. The authorised representative of the assesse expressed his inability to produce the confiration for the same and offered the same for taxation.
The Assessing Officer by disallowing the above, arrived at the gross total income of Rs.36,01,364/-. Tax payable was determined at Rs.16,40,340/-, including interest, under Section 234A to the tune of Rs.1,95,534/-, interest under Section 234B to the tune of Rs.3,80,205/- and interest under Section 234C to the tune of Rs.565/-. Thus accordingly, the Assessing Officer passed an order on 17.02.2014, under Section 143(3) of the Income Tax Act, 1961.
3. The assessee/appellant filed an appeal, in I.T.A. No. 9/14-15 before the Commissioner of Income Tax (Appeals)-3, Coimbatore. After hearing the parties, vide order dated 24.06.2015, the Commissioner of Income Tax (Appeals)-3, Coimbatore, dismissed the appeal and that the same was confirmed by the Income-Tax Appellate Tribunal, "A" Bench, Chennai, vide I.T.A. No. 1942/MDS/2015, dated 27.11.2015.
4. Aggrieved by the same, the assessee has filed instant Tax Case Appeal No. 428/2016 on the following substantial questions of law:
1. Whether in the facts and circumstances of the case the Appellate Tribunal was right in holding that the appellant is not entitled to be allowed the expenditure incurred during the year on General expenses and wages to the tune of Rs.3,00,600/- on the reason that some of the vouchers being self generated may not be genuine.
2. Whether in the facts and circumstances of the Appellate Tribunal was right in holding that the appellant's claim of the liability in respect Rs.31,65,284/- was not established as genuine, while accepting the existence of the liability.
5. Though the assessee has raised the aforesaid two questions of law, during arguments, Mr. K. Ravi, learned counsel for the appellant submitted that he is not pressing substantial question of law No. 1. Submission of the learned counsel is placed on record.
6. However, seeking for an answer, in favour of the assessee, on the 2nd substantial question of law, learned counsel for the appellant submitted that the Tribunal has erred in law and on facts, in confirming the disallowance of advance given in the case of M/s. Yogesh Clothing Company, to the tune of Rs.31,65,284/-, without properly adverting to the evidence produced, by way of letter, dated 30.10.2015, issued by the State Bank of India, Trippur Branch, addressed to the assessee, which proves the genuineness of existence of creditors, and payments made.
7. According to learned counsel for the appellant, before the Tribunal, the appellant had contended that the assessee was having regular trade transactions, with M/s. Yogesh Clothing Company, Tiruppur and to support the same, filed a letter, dated 30.10.2015 of State Bank of India, Tiruppur Branch, addressed to the assessee, confirming that a letter of credit was opened on 10.04.2010, for the valu
