M/s. Mathex Chemicals Pvt.Ltd., Vapi V. The Income tax Officer,Vapi Ward-3, Vapi

CO 16/AHD/2009

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4378 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 06-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 24/03/2010 DRAFTED ON: 24/0 3/2010 ITA NO.20/AHD/2009 ASSESSMENT YEAR : 2005-06 THE ITO VAPI WARD-3 VAPI VS. MATHEX CHEMICALS PVT.LTD. C-1,6020/1, IVTH GIDC VAPI PAN/GIR NO. : AACCM 4410 H (APPELLANT) .. (RESPONDENT) AND CO NO.16/AHD/2009 (ARISING OUT OF ITA NO.20/AHD/2009) FOR ASSESSMENT YEAR 2005-06 MATHEX CHEMICALS PVT.LTD. VS. THE ITO, VAPI WA RD-3 VAPI VAPI (CROSS OBJECTOR ) .. ( RESPO NDENT ) ASSESSEE BY : SHRI R.M. UPADHYAY, ADV. REVENUE BY: SHRI RAJEEV AGARWAL, CIT-DR O R D E R PER SHRI T.K.SHARMA, JUDICIAL MEMBER :- THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJ ECTION FILED BY THE ASSESSEE ARE AGAINST THE ORDER DATED 28/09/200 8 OF THE LEARNED CIT(APPEALS)-VALSAD FOR ASSESSMENT YEAR 2005-06. 2. THE ONLY GROUND RAISED BY THE REVENUE IN ITS APP EAL IS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED LEARNED CIT(APPEALS)-VALSAD HAD ERRED IN DELETING T HE ADDITION OF ITA NO.20/AHD/2009 (BY REV ENUE) AND CO NO.16/AHD/2009 (BY ASSESSEE) ASST.YEAR 2005-06 - 2 - RS.12,00,000/- ON ACCOUNT OF MANUFACTURING, SELLING AND ADMINISTRATIVE OVERHEADS AT RS.1 LAC PER MONTH. 2.1. THE GROUND RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION ARE AS UNDER:- 1. LR.A.O. HAS ERRED IN LAW AND ON FACTS TO PASS O RDER U/S.144 OF I.T. ACT, 1961 AND LR. CIT(APPL.), VALSAD HAS ALSO ERRED IN CONFIRMING ITOS ORDER. 2. LR.A.O. HAS ERRED IN LAW AND ON FACTS TO COMPUT E NET PROFIT AT RS.71,22,915/- AS AGAINST NET PROFIT SHOWN BY THE A PPELLANT AT RS.14,04,580/-. LR. CIT(APPL.), VALSAD HAS ALSO E RRED IN RESTRICTING SUCH ADDITION TO RS.59,22,915/- INSTEAD OF DIRECTING THE A.O. TO ACCEPT NET PROFIT SHOWN BY THE APPELLANT CO MPANY. 3. LR.A.O. HAS ERRED IN LAW AND ON FACTS TO ADD AN AMOUNT OF RS.1,27,30,958/- U/S.68 OF I.T. ACT, 1961. LR. CI T(APPLS.), VALSAD HAS ALSO ERRED IN CONFIRMING SUCH ADDITION MADE BY THE A.O. 4. LR. A.O. HAS ERRED IN LAW AND ON FACTS TO ADD A N AMOUNT OF RS.6,53,261/- BALANCE OUTSTANDING AT THE END OF THE YEAR. LR. CIT(APPLS.), VALSAD HAS ALSO ERRED IN CONFIRMING SU CH ADDITION MADE BY THE A.O. 5. LR. A.O. HAS ERRED IN LAW AND ON FACTS TO DISALL OW DEPRECIATION OF RS.90,43,519/-. LR. CIT(APPEALS), VALSAD HAS AL SO ERRED IN CONFIRMING SUCH ADDITION MADE BY THE A.O. 6. LR. A.O. HAS ERRED IN LAW AND ON FACTS TO PASS BEST JUDGEMENT ASSESSMENT CONTRARY TO ITS WORTH. LR.CIT(APPLS.), VALSAD HAS ALSO ERRED IN SUSTAINING THE ASSESSMENT MADE BY THE A.O. , THOUGH THE SAID ASSESSMENT IS NOT A BEST JUDGEMENT ASSESSMENT WITHIN THE MEANING OF INCOME TAX LAW. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING ALUMINIUM CHLORIDE . THIS IS THE FIRST ITA NO.20/AHD/2009 (BY REV ENUE) AND CO NO.16/AHD/2009 (BY ASSESSEE) ASST.YEAR 2005-06 - 3 - YEAR OF THE BUSINESS OF ASSESSEE. FOR THE ASSESSM ENT YEAR UNDER APPEAL, THE ASSESSEE FILED ITS RETURN OF INCOME ON 14.11.20 05 DECLARING TOTAL INCOME AT RS.14,04,580/-. THE ASSESSING OFFICER F RAMED THE ASSESSMENT U/S.144 OF THE I.T. ACT, 1961 ON 31/03/2005 AT TOTA L INCOME OF RS.2,95,50,650/-. BEFORE THE LEARNED CIT(APPEALS) , ONE OF THE GROUNDS RAISED WAS THAT THE ASSESSING OFFICER ERRED IN LAW AND ON FACTS IN PASSING EX-PARTE ASSESSMENT U/S.144 OF THE I.T. ACT, 1961. BEFOR E THE LEARNED CIT(APPEALS), IT WAS CONTENDED THAT FIRE HAD OCCURR ED IN THE FACTORY PREMISES OF THE ASSESSEE AND, THEREFORE, THE MANUFA CTURING ACTIVITY HAS COME TO STANDSTILL. THE LEARNED CIT(APPEALS) REFU SED TO REMAND THE MATTER TO THE FILE OF ASSESSING OFFICER BECAUSE, AC CORDING TO HIM, ASSESSEE HAS NOT FILED ANY EVIDENCE REGARDING FIRE OCCURRED IN THE FACTORY PREMISES. HE ACCORDINGLY, UPHELD THE ACTION OF THE ASSESSING OFFICER COMPLETING THE ASSESSMENT U/S.144 OF THE I.T. ACT, 1961. THE LEARNED CIT(APPEALS) ALLOWED THE PARTIAL RELIEF AND AGGRIEV ED BY THE ORDER OF THE LEARNED CIT(APPEALS), BOTH THE PARTIES ARE IN APPEA L(S) BEFORE US. 4. AT THE TIME OF HEARING, FOR THE REVENUE, SHRI RA JEEV AGARWAL, LEARNED DEPARTMENTAL REPRESENTATIVE APPEARED AND CO NTENDED THAT ASSESSING OFFICER FRAMED THE ASSESSMENT U/S.144 OF THE I.T. ACT, 1961 AND THE LEARNED CIT(APPEALS) ERRED IN GRANTING THE RELIEF OF RS.12 LAKHS UNDER THE HEAD OF MANUFACTURING OVERHEADS. HE SUBM ITTED THAT BEFORE THE ASSESSING OFFICER, ASSESSEE NEITHER PRODUCED THE BO OKS OF ACCOUNT NOR PRODUCED BILLS/VOUCHERS. IN THE ABSENCE OF EVIDENC E, IN SUPPORT OF THE BOOKS AND BILLS/VOUCHERS, ETC. THE ASSESSING OFFICE R WAS HAVING NO OPTION BUT TO MAKE THE ADDITION AND ASSESSED INCOME AT RS.2,95,50,650/- ITA NO.20/AHD/2009 (BY REV ENUE) AND CO NO.16/AHD/2009 (BY ASSESSEE) ASST.YEAR 2005-06 - 4 - 5. ON THE OTHER HAND, ON BEHALF OF THE ASSESSEE, S HRI P.M. UPADHYAY, LD. COUNSEL FOR THE ASSESSEE APPEARED AND SUBMITTED THAT THERE WAS A FIRE ACCIDENT IN NEARBY FACTORY IN THE MONTH OF JUNE-200 7 AND VESSELS CONTAINING CHEMICAL BURNT OUT OR BLOWN OUT AND FELL ON ASSESSEES FACTORY SHED WHICH CRACKED OUT ASBESTOS ROOFING-SHEETS AND ALSO DAMAGED ASSESSEES MACHINES. DUE TO THIS MISHAP, ASSESSE ES MANUFACTURING ACTIVITY CLOSED TILL TODAY. BOTH THE DEPARTMENTAL AUTHORITIES BELOW DISBELIEVED THE AFORESAID REASON FOR NON-COMPLIANCE ON DOUBT AND SUSPICION WITHOUT ANY REASON. HE ACCORDINGLY SUBM ITTED THAT ASSESSEE CAN PRODUCE COMPLETE BOOKS OF ACCOUNT, VOUCHERS OR ANY OTHER DETAILS WHICH ASSESSING OFFICER MAY ASK. THEREFORE, IN THE INTEREST OF JUSTICE, THE ORDER OF THE LEARNED CIT(APPEALS) BE SET ASIDE AND ASSESSING OFFICER BE DIRECTED TO RE-FRAME THE ASSESSMENT, AFTER PROVI DING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE L D. COUNSEL FOR THE ASSESSEE, FURTHER SUBMITTED THAT ASSESSEE UNDERTAKE S TO COMPLY ALL THE NOTICES BEFORE THE ASSESSING OFFICER AND FURNISH AL L THE DETAILS AND DOCUMENTS WHICH ASSESSING OFFICER MAY ASK. THEREF ORE, IT MAY BE HELD THAT ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN PRODUCING NECESSARY DOCUMENTS AND DETAILS BEFORE THE ASSESSING OFFICER. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NO TE THAT THIS IS THE FIRST YEAR OF ASSESSEES BUSINESS. THE LEARNED CIT(APPEALS) D ISBELIEVED THE EXPLANATION OF THE ASSESSEE REGARDING THE FIRE ACCI DENT ON DOUBT AND SUSPICION WITHOUT ANY REASON. KEEPING IN VIEW THE FACT THAT NOW ASSESSEES COUNSEL HAS ASSURED THAT COMPLETE BOOKS OF ACCOUNT, ITA NO.20/AHD/2009 (BY REV ENUE) AND CO NO.16/AHD/2009 (BY ASSESSEE) ASST.YEAR 2005-06 - 5 - BILLS/VOUCHERS WILL BE PRODUCED, WE SET ASIDE THE ORDER OF THE LEARNED CIT(APPEALS) AND RESTORE THE MATTER BACK TO THE FIL E OF ASSESSING OFFICER WITH THE DIRECTION THAT ASSESSEE SHALL PRODUCE ALL THE BOOKS OF ACCOUNT, BILLS/VOUCHERS, ETC. THE ASSESSING OFFICER MAY ALS O ASK ANY OTHER DETAILS OR DOCUMENTS WHICH MAY DEEM FIT. THE ASSESSEE SHA LL FURNISH THE SAME AND ASSESSING OFFICER WILL EXAMINE AND RE-COMPUTE THE INCOME OF THE ASSESSEE IN ACCORDANCE WITH LAW. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, APPEAL OF THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE TREATED A S ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 26/03/2010. SD/- SD/- ( D.C. AGRAWAL ) ( T.K.SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED 26/ 03 /2010 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VALSAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD