Scorpion Industrial Polymers (P) Ltd. v. The Commissioner of Income-tax, Chennai – III, Chennai
[Citation -2017-LL-1115-7]

Citation 2017-LL-1115-7
Appellant Name Scorpion Industrial Polymers (P) Ltd.
Respondent Name The Commissioner of Income-tax, Chennai – III, Chennai
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 15/11/2017
Judgment View Judgment
Keyword Tags carry forward and set off • carry forward of loss • revision petition • audit report
Bot Summary: Though the respondent would state that notice under Section 139(9) was issued on 15.06.1994 and 17.10.1995 calling upon the petitioner to rectify the defect, the petitioner would state that no such notice was received by them. The petitioner's case is that no such 3 communication was received by the petitioner dated 13.08.1996. The petitioner had filed revision petition initially for the assessment year 1996-1997 against the order of the Assessing Officer dated 23.01.2002 disallowing the carry forward and set off of loss claimed by the petitioner company for the assessment years 1993-1994 and 1994-1995. The petitioner filed a revision petition before the respondent praying for an opportunity as well as a relief by way of carry forward benefit. In so far as the revision petitions filed for the assessment years 1993-1994 and 1994-1995 are concerned, the respondent has passed an order dated 31.03.2005 rejecting the petitioner's revision petitions. In respect of the revision petition filed for the year 1996-1997, the respondent passed a separate order dated 27.11.2003 holding that the disallowance of setting off of the losses for the assessment year 1996-1997 is only consequential, as the main grievance of the assessee arises for the assessment years 1993-1994 and 1994-1995 and there is nothing to revise the assessment for the year 1996-1997 under Section 264 of the Act. 5.The petitioner's specific case is that they have never received any such communication and they came to know about it only when they received the assessment order dated 23.01.2002 for the assessment year 1996-1997 which was an order giving effect to the order of the CIT(Appeals) in ITA.No.


1 IN HIGH COURT OF JUDICATURE AT MADRAS DATED :15.11.2017 CORAM HONOURABLE Mr. JUSTICE T.S.SIVAGNANAM W.P.Nos.4464 to 4466 of 2006 and W.P.M.P.Nos.4785 to 4790 of 2006 M/s.Scorpion Industrial Polymers (P) Ltd., 30, Sri Venkateswara Colony, Nehru Nagar, Chennai 600 041. ... Petitioner in all WPs Vs. Commissioner of Income Tax, Chennai III,121, Mahatma Gandhi Road, Chennai 600 034. ... Respondent in all WPs Prayer in WPs.4464 & 4465/2006: Petitions filed under Article 226 of Constitution of India praying for issuance of Writ of Certiorari to call for records and quashing impugned order bearing C.No.3032/50&51/III/2003-04 dated 31.03.2005 for assessment years 1993-94, 1994-95 respectively passed by respondent under Section 264 of Income Tax Act, 1961. Prayer in WP.4466/2006: Petition filed under Article 226 of Constitution of India praying for issuance of Writ of Certiorari to call for records and quashing impugned order bearing C.No.3032/36/III/2002-03 dated 27.11.2003 for assessment year 1996-97 respectively passed by respondent under Section 264 of Income Tax Act, 1961. For Petitioner : Mr.V.S.Jayakumar For Respondent : Mr.A.P.Srinivas Senior Panel Counsel http://www.judis.nic.in COMMON ORDER 2 Heard Mr.V.S.Jayakumar, learned counsel for petitioner and Mr.A.P.Srinivas, learned Senior Standing Counsel appearing for respondent. 2.The petitioner is Private Limited Company carrying on business in manufacturing and trading of rubber products. petitioner filed its return of income for assessment year 1993- 1994 on 31.12.1993. This return was not accompanied by Auditor's Report. Though respondent would state that notice under Section 139(9) was issued on 15.06.1994 and 17.10.1995 calling upon petitioner to rectify defect, petitioner would state that no such notice was received by them. 3.Though these writ petitions are pending from 2006, no counter affidavit has been filed denying said averment. For first time, petitioner came to know that his return was rejected as being defective only when order of assessment dated 23.01.2002 for assessment year 1996-1997 was passed wherein there is reference that returns filed for assessment years 1993-1994 and 1994-1995 were treated as defective and as assessee has not rectified mistake, it was treated as invalid by Assessing Officer and communicated to http://www.judis.nic.in petitioner on 13.08.1996. petitioner's case is that no such 3 communication was received by petitioner dated 13.08.1996. petitioner had filed revision petition initially for assessment year 1996-1997 against order of Assessing Officer dated 23.01.2002 disallowing carry forward and set off of loss claimed by petitioner company for assessment years 1993-1994 and 1994-1995. This revision petition was dismissed stating that issue related only to assessment years 1993-1994 and 1994- 1995 and denied benefit for assessment year 1996-1997 and also for earlier years 1993-1994 and 1994-1995. As against action of Assessing Officer in treating return of income as invalid, petitioner filed revision under Section 264 of Income Tax Act, 1961 for assessment year 1993-1994. This was dismissed by respondent, by common order dated 31.03.2005 for assessment years 1993-1994 and 1994-1995 stating that disallowance of carry forward loss in year 1993-1994 is proper. 4.The petitioner's grievance is that Assessing Officer did not give any opportunity to petitioner with regard to defective returns which has to be cured by petitioner for assessment year 1993-1994 and petitioner came to know about it only when order of Assessing Officer giving effect to order of CIT(A) was passed for assessment year 1996-1997 http://www.judis.nic.in 4 on 23.01.2002. Therefore, petitioner filed revision petition before respondent praying for opportunity as well as relief by way of carry forward benefit. petitioner placed reliance on decisions of Hon'ble Supreme Court in case of CIT V. Dharma Reddy 73 ITR 751, CIT V. Jaipuria China Clay Mines Limited, 59 ITR 555(SC) and CIT V. Veeramani Industries Private Limited, 216 ITR 607 (SC). In support of contention that relevant year for consideration of carry forward of loss and depreciation and set off of same is year in which losses are to be set off and not in any earlier years. Thus, three orders were passed by respondent. In so far as revision petitions filed for assessment years 1993-1994 and 1994-1995 are concerned, respondent has passed order dated 31.03.2005 rejecting petitioner's revision petitions. This order is impugned in W.P. Nos.4464 and 4465 of 2006. In respect of revision petition filed for year 1996-1997, respondent passed separate order dated 27.11.2003 holding that disallowance of setting off of losses for assessment year 1996-1997 is only consequential, as main grievance of assessee arises for assessment years 1993-1994 and 1994-1995 and there is nothing to revise assessment for year 1996-1997 under Section 264 of Act. Thus, net result is assessee has been shut out from availing any benefit under provisions of Act. In my considered view, http://www.judis.nic.in 5 assessee cannot be left remedy-less. In other words, assessee cannot be wrong on both counts. first and foremost issue that respondent should have considered is as to whether communication dated 13.08.1996 was received by petitioner. This communication is stated to be communication sent by Assessing Officer to petitioner stating that returns for assessment years 1993-1994 and 1994-1995 are defective and accordingly treated as invalid. 5.The petitioner's specific case is that they have never received any such communication and they came to know about it only when they received assessment order dated 23.01.2002 for assessment year 1996-1997 which was order giving effect to order of CIT(Appeals) in ITA.No.375/1999-00 dated 17.02.2000. petitioner's case is that on being informed that return filed for 1993-1994 and 1994-1995 were not accompanied by Audit Reports, they had filed their Audit Reports on 31.10.1995 well before end of assessment year i.e. 31.03.1996. However, respondent in impugned order dated 31.03.2005 shifts burden on petitioner. If according to petitioner, they had filed Audit Report and same is received by Assessing Officer across his table and invariably acknowledgments are not given, then, easiest procedure would be to call for remand http://www.judis.nic.in 6 report from Assessing Officer. If that had been done, factual discrepancy could have been set right and respondent could have taken decision on merits especially when petitioner relies upon decisions of Hon'ble Supreme Court to state that they are entitled to carry forward loss for assessment year 1996- 1997. 6.Thus, I find that there has not been examination of merits of matter, rather petitioner has been shut out on technicalities. If petitioner's contention that they had filed Audit Report on 31.10.1995 had been verified by either for calling for them before Assessing Officer or calling for assessment file, factual dispute would have been cleared and decision could have been taken on merits of matter. Thus, I am of considered view that matters require to be re-examined by respondent by calling for assessment files, examining correctness of stand taken by petitioner that tax Audit Reports were filed vide their letters dated 30.10.1995 and also examine legal issue placed by petitioner and pass fresh orders on merits. 7.For above reasons, these Writ Petitions are allowed and impugned orders are set aside and matter is remanded to http://www.judis.nic.in 7 respondent for fresh consideration to take decision in matter, in light of observations made in this regard. No costs. Consequently, connected miscellaneous petitions are closed. 15.11.2017 Speaking /Non Speaking Order Index : Yes/No Internet : Yes/No Sgl To Commissioner of Income Tax, Chennai III, 121, Mahatma Gandhi Road, Chennai 600 034. http://www.judis.nic.in 8 T.S.SIVAGNANAM, J. Sgl W.P.Nos.4464 to 4466 of 2006 15.11.2017 http://www.judis.nic.in Scorpion Industrial Polymers (P) Ltd. v. Commissioner of Income-tax, Chennai III, Chennai
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