ITO, Ward - 9(1), Kolkata, Kolkata V. M/s Trident Merchandise Pvt. Ltd., Kolkata

CO 30/KOL/2012

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0566 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 05-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-03-2012
• Court: TRIBUNAL
• Department Lawyers: SANJAY
• Assessee Lawyers: CROSS OBJECTOR N O N E
• Keywords: Opportunity of being heard; Additional evidence
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 298 /KOL/20 1 2 ASSESSMENT YEAR : 200 7 - 0 8 INCOME - TAX OFFICER, WD - 9 ( 1 ), KOLKATA VS. TRIDENT MERCHANDISE PVT. LTD. (PAN: AA A C T9877F ) ( APPELLANT ) ( RESPONDENT ) & C.O. NO. 30 /KOL/2012 IN I.T.A NO. 298 /KOL/20 12 ASSESSMENT YEAR : 2007 - 08 TRIDENT MERCHANDISE PVT. LTD. VS. INCOME - TAX OFFICER, WD - 9 ( 1 ), KOL. (CROSS OBJECTOR) (RESPONDENT) DATE OF HEARING: 2 1 .0 5 .2015 DATE OF PRONOUNCEMENT: 27 . 0 5 . 2015 FOR THE REVENUE : SHRI SANJAY, ADDL. CIT , SR. DR FOR THE ASSESSEE/CROSS OBJECTOR : N O N E ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE AND CROSS OBJECTION BY ASSESSEE ARE ARISING OUT OF ORDER OF CIT(A) - VI I I , KOLKATA IN APPEAL NO. 320 / CIT(A) - VIII/KOL/09 - 10 DATED 04 . 0 1 .20 1 2 . ASSESSMENT W AS FRAMED BY ITO, WARD - 9 ( 2 ), KOLKATA U/S. 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 7 - 0 8 VIDE HIS ORDER DATED 2 3 .1 2 .20 0 9 . 2. FIRST WE TAKE UP REVENUE S APPEAL. THE FIRST ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO ON ACCOUNT OF UNDERSTATEMENT OF SALES AMOUNTING TO RS.13,99,666/ - . THE REVENUE HAS RA ISED THE ISSUE THAT THE CIT(A) DELETED THE ADDITION BY ADMITTING THE NEW EVIDENCE WITHOUT PROVIDING OPPORTUNITY TO THE AO IN VIOLATION OF RULE 46 OF THE I. T. RULE, 1962 (HEREINAFTER REFERRED TO AS THE RULES ). FOR THIS, REVENUE HAS RAISED FOLLOWING GROU ND NO.1: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - VIII ERRED IN LAW IN DECIDING THE APPEAL IN FAVOUR OF THE ASSESSEE BY DELETING THE ADDITION OF RS.13,99,666/ - ON ACCOUNT OF UNDER - STATEMENT OF SALE. THE LD. CIT(A) - VIII DECID ED 2 ITA NO . 298 /K/201 2 & C.O. NO. 30 /K/2012 M/S. TRIDENT MERCHANDISE P. LTD. AY 2007 - 08 ON THE BASIS OF NEW DOCUMENTS SUBMITTED BY THE ASSESSEE WITHOUT GIVING OPPORTUNITY TO AO AS PER PROVISION OF RULE 46A OF THE I. T. RULE 1962. 3 . WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A) THAT THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT, SALES RECONCILIATION AND BANK STATEMENT BEFORE THE AO BUT BEFORE THE CIT(A), ASSESSEE PRODUCED COMPLETE RECONCILIATION AND BANK STATEMENT. IN THIS REC ONCILIATION, THE ASSESSEE HAS DECLARED THE ADVANCES RECEIVED FROM DEBTORS DURING THE PERIOD FROM 01.04.2006 TO 31.03.2007 I.E. FROM SNEHJYOTI DISTRIBUTOR (P) LTD. AMOUNTING TO RS.6.65 LAKH AND SAMRAJ VINIMAY (P) LTD. AMOUNTING TO RS.6.65 LAKH. ACCORDING T O LD. SR. DR, THESE DOCUMENTS WERE NEVER PLACED BEFORE THE AO FOR VERIFICATION AND CIT(A) ACCEPTED TH ESE EVIDENCE S IN VIOLATION OF RULE 46 OF THE RULES. WE HAVE GONE THROUGH THE ORDER OF CIT(A), WHICH READS AS UNDER: I HAVE GONE THROUGH THE SUBMISSION O F THE A/R ALONG WITH THE SUPPORTING DETAILS SUCH AS DETAILS OF SALES EFFECTED AS PER THE INVOICES DURING THE RELEVANT ASSESSMENT YEAR AND THE CORRESPONDING ENTRIES IN THE BANK STATEMENT. I FIND FORCE IN THE ARGUMENT OF THE A/R OF THE APPELLANT. IN FACT, T HE AO HAS CONSIDERED ALL THE DEPOSIT ENTRIES IN THE BANKS AS THE SALE PROCEEDS RECEIVED FROM THE EXPORTS INSTEAD OF CONSIDERING THE ACTUAL SALES OF THE CONCERN BASED ON THE SALES INVOICES RAISED BY THE APPELLANT. IN ANY CASE, THE AMOUNT RECEIVED AS ADVANCE CANNOT BE TREATED AS THE SALE PROCEEDS OF THE APPELLANT. THEREFORE, THE ADDITION MADE BY THE AO ON ACCOUNT OF ADVANCE RECEIVED FROM DEBTORS CANNOT BE CONSIDERED AS SALE PROCEEDS OF THE CONCERN UNLESS AND UNTIL SALES ARE EFFECTED AND SUBSTANTIATED BY THE S ALE INVOICES ISSUED/RAISED. IN VIEW OF THE FACTUAL POSITION AND CONSIDERING THE ENTIRETY OF THE FACTS, I AM OF THE OPINION THAT THE ADDITION MADE BY THE AO IS UNWARRANTED AND NOT JUSTIFIED, THEREFORE THE ADDITION MADE ON THIS ACCOUNT IS DELETED. 4. WE FIND THAT THE SUPPORTING DETAILS IN RESPECT TO ADVANCE AND SALES EFFECTED AS PER THE INVOICES WERE NEVER BEFORE THE AO. HENCE, THERE IS A VIOLATION OF RULE 46 OF THE RULES. IN TERMS OF THE ABOVE , WE HAVE NO ALTERNATIVE EXCEPT TO SET ASIDE THE ISSUE TO THE FILE OF THE AO. THE AO AFTER CONSIDERING THE SUBMISSION AND DETAILS RE - ADJUDICATE THE ISSUE. THIS ISSUE OF REVENUE S APPEAL IS SET ASIDE FOR REDOING TO AO . 5 . THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION OF ELECTRICITY EXPENSES AMOUNTING TO RS.2,07,165/ - . FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.2: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) - VIII ERRED IN LAW IN DECIDING THE APPEAL IN FAVOUR OF THE ASSESSEE BY D ELETING THE ADDITION OF 3 ITA NO . 298 /K/201 2 & C.O. NO. 30 /K/2012 M/S. TRIDENT MERCHANDISE P. LTD. AY 2007 - 08 RS.2,07,165/ - WITHOUT VERIFYING TOWARDS ELECTRICITY EXPENSES AND WITHOUT GIVING OPPORTUNITY TO AO AS PER PROVISION OF RULE 46A OF THE I. T. RULE, 1962. 6 . WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CA SE. HERE ALSO REVENUE HAS CONTENDED THAT THE FRESH D OCUMENTS WERE FILED BEFORE CIT(A ), WHO ADJUDICATED THE MATTER AFTER ADMITTING ADDITIONAL EVIDENCE WITHOUT ALLOWING OPPORTUNITY OF BEING HEARD TO THE AO. FINDING OF CIT(A) READS AS UNDER: 5.2 GROUND NO .2: THIS GROUND OF APPEAL IS AGAINST THE ADDITION OF RS. 2,07,165/ - ON ACCOUNT OF DISALLOWANCE OF ELECTRICITY EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT. BEFORE ME, IT IS EXPLAINED THAT THE APPELLANT COMPANY DID NOT OWN PREMISES OF ITS OWN AND THE UNIT FUNCTIONED FROM THE BUSINESS PREMISES OWNED BY ANOTHER COMPAN Y , NAMELY, V - THREE FASHIONS PVT. LTD. IT IS FURTHER EXPLAINED FOR SUCH OBLIGATION, THE APPELLANT USED TO PAY A CERTAIN AMOUNT ALONG WITH FUEL USED FOR RUNNING THE GENERATOR TO V - THREE FASHIONS P VT. LTD. IT IS FURTHER EXPLAINED THAT AS THE PLACE DID NOT BELONG TO THE APPELLANT COMPANY AND THE ELECTRIC CONNECTION HAVING NOT BEEN IN ITS NAME, THE APPELLANT COULD NOT PRODUCE ELECTRICITY BILLS IN SUPPORT OF THE PAYMENTS MADE. IT IS CONTENDED ON BEHAL F OF THE APPELLANT THAT THE REQUISITE EVIDENCE REGARDING THE PAYMENT TO THE LAND - LORD WAS DULY FURNISHED BEFORE THE ASSESSING OFFICER AND THAT FOR THE REASON BEST KNOWN TO THE ASSESSING OFFICER, THE CLAIM WAS DISALLOWED AND THE IMPUGNED ADDITION MADE. THE APPELLANT PRODUCED BEFORE ME THE RELEVANT COPY OF AGREEMENT, AND COPY OF LEDGER ACCOUNT DULY CONFIRMED AS ALSO EVIDENCE REGARDING ELECTRICITY BILLS BEING PAID BY THE COMPANY, NAMELY, V - THREE FASHIONS PVT. LTD., FOR THE ELECTRIC CONNECTION INSTALLED IN THE PREMISES USED BY THE APPELLANT COMPANY. KEEPING IN VIEW THE EXPLANATION OFFERED AND EVIDENCE PRODUCED, I AM OF THE CONSIDERED OPINION THAT THE EXPENDITURE HAS BEEN WHOLLY AND EXCLUSIVELY LAID OUT FOR THE BUSINESS PURPOSES OF THE APPELLANT IN ACCORDANCE WIT H PROVISIONS OF SEC. 37(1) OF THE ACT. THE ADDITION ON ACCOUNT OF THE DISALLOWANCE IS, THUS, HELD TO BE UNJUSTIFIED AND UNWARRANTED AND, THEREFORE, SAME IS HEREBY DELETED. THE APPELLANT GETS RELIEF OF RS. 2,07,165/ - ON T HIS GROUND. FROM THE ABOVE PARA OF CIT(A) S ORDER, WE FIND THAT THE ASSESSEE HAS FILED COPY OF AGREEMENT, LEDGER COPY, ELECTRICITY BILLS ETC. IN RESPECT TO V - THREE FASHION PVT. LTD. FOR WHICH ELECTRIC CONNECTION WAS INSTALLED. AS THESE DETAILS WERE NEVER BEFORE THE A O, WE SET ASIDE THE ORDER OF CIT(A) IN THIS REGARD AND RESTORE THIS ISSUE TO THE FILE OF THE AO. THE AO AFTER CONSIDERING THE SUBMISSION AND DETAILS RE - ADJUDICATE THE ISSUE. THIS ISSUE OF REVENUE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) DELETING THE RENT EXPENSES. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.3: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)0VIII ERRED IN LAW IN DECIDING THE APPEAL I N FAVOUR OF THE ASSESSEE BY DELETING THE ADDITION OF RS.70,030/ - WITHOUT VERIFYING TOWARDS RENT EXPENSES AND WITHOUT GIVING OPPORTUNITY TO AO AS PER PROVISION OF RULE 46A OF THE I. T. RULE 1962. 8. WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRC UMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS WRONGLY DEBITED THE EXPENSES ON ACCOUNT OF 4 ITA NO . 298 /K/201 2 & C.O. NO. 30 /K/2012 M/S. TRIDENT MERCHANDISE P. LTD. AY 2007 - 08 REPAIR AND MAINTENANCE UNDER THE HEAD FACTORY RENT AMOUNTING TO RS.70,300/ - . THE ASSESSEE FURNISHED DETAILS OF EXPENDITURE UNDER THE HEAD REPAIRS AND MAINTENA NCE BEFORE THE CIT(A) AND ALSO FURNISHED CERTIFICATE FROM CONCERNED COMPANY REGARDING NON - PAYMENT OF RENT. ALL THESE DOCUMENTS ARE FRESH EVIDENCE FILED FOR THE FIRST TIME BEFORE CIT(A) , WHO ADJUDICATED THE MATTER AFTER ADMITTING ADDITIONAL EVIDENCE WITHOU T ALLOWING OPPORTUNITY OF BEING HEARD TO THE AO. FINDING OF CIT(A) READS AS UNDER: THIS GROUND OF APPEAL IS AGAINST DISALLOWANCE OF RS.70,030/ - OUT OF RENT PAYMENT. IN THIS REGARD, IT IS SUBMITTED THAT THE APPELLANT COMPANY DID NOT HAVE ANY ASSETS OR ANY PLACE REGISTERED UNDER ITS NAME OR ON RENT SO THE QUESTION OF PAYING RENT DID NOT ARISE. IT IS EXPLAINED THAT THE AMOUNT IN QUESTION SHOULD HAVE BEEN DEBITED UNDER THE HEAD REPAIRS & MAINTENANCE . BUT THE SAME HAS BEEN WRONGLY DEBITED UNDER THE HEAD FACTORY RENT . THE APPELLANT FURTHER EXPLAINED THAT AS THE CONCERNED COMPANY PAID RENT UPTIL, 2006 AND AFTER WHICH THE COMPANY DID NOT HAVE THE AUTHORITY, SO PAYMENT OF RENT WAS NOT REQUIRED . THE APPELLANT HAS FURNISHED DETAILS OF THE EXPENDITURE INCU RRED UNDER THE HEAD REPAIRS AND MAINTENANCE . THE APPELLANT HAS ALSO FURNISHED A CERTIFICATE FROM THE CONCERNED COMPANY REGARDING THE NON - PAYMENT OF RENT. IT IS SUBMITTED THAT THE EXPENDITURE HAS BEEN INCURRED ON ACCOUNT OF REPAIRS AND MAINTENANCE, BUT ONLY DUE TO MISTAKE ON THE PART OF THE ACCOUNT, THE SAID AMOUNT HAS BEEN DEBITED UNDER THE HEAD FACTORY RENT . SINCE THE EVIDENCE NOW PRODUCED FLOWED FROM THE GROUNDS OF APPEAL ORIGINALLY RAISED, THE ADDITIONAL EVIDENCE NOW RAISED IN THE SHAPE OF CONFIRM ATION FROM THE CONCERNED COMPANY, NAMELY, V - THREE FASHIONS PVT. LTD., THE AMOUNT OF RS.70,030/ - IS CONSIDERED TO HAVE BEEN SPENT WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. 9. FROM THE ABOVE PARA OF CIT(A) S ORDER, WE FIND THAT THE ASSESSEE HAS FILED DETAILS OF EXPENDITURE UNDER THE HEAD REPAIRS AND MAINTENANCE BEFORE THE CIT(A) AND ALSO FURNISHED CERTIFICATE FROM CONCERNED COMPANY REGARDING NON - PAYMENT OF RENT. AS THESE DETAILS WERE NEVER BEFORE THE AO, WE SET ASIDE ORDER OF CIT(A) IN THIS REGARD AND RESTORE THE ISSUE BACK TO THE FILE OF THE AO. THE AO AFTER CONSIDERING THE SUBMISSION AND DETAILS RE - ADJUDICATE THE ISSUE. THIS ISSUE OF REVENUE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 10. NOW, COMING TO THE CROSS OBJECTION OF THE ASSESSEE. THE AS SESSEE HAS RAISED THE ISSUE THAT THE CIT(A) HAS WRONGLY CONFIRMED THE ADDITION OF UNPROVED LOAN LIABILITY OF RS.2,25,000/ - . FOR THIS, ASSESSEE HAS RAISED FOLLOWING SOLE GROUND: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN CONFIRMIN G THE ADDITION OF RS.2,25,000/ - MADE BY LD. ASSESSING OFFICER ON ACCOUNT OF ALLEGED UNPROVED LOAN LIABILITY. 11. AT THE OUTSET, IT IS SEEN THAT THE ASSESSEE HAS FILED APPLICATION FOR ADMISSION 5 ITA NO . 298 /K/201 2 & C.O. NO. 30 /K/2012 M/S. TRIDENT MERCHANDISE P. LTD. AY 2007 - 08 OF ADDITIONAL EVIDENCE IN RESPECT TO FOLLOWING DOCUMENTS: 1 . AFFIDAVIT DATED 09.11.2012 OF A DIRECTOR OF RESPONDENT COMPANY 2. STATEMENT SHOWING DEPOSITS IN HSBC A/C IN YEAR ENDED 31.03.2007 3. STATEMENT SHOWING DEPOSITS IN SBI A/C IN YEAR ENDED 31.03.2007 4. SUMMARY OF TOTAL DEPOSITS IN BANK ACCOUNTS IN YEAR ENDED 31.03.2007. 1 2 . ON QUERY FROM THE BENCH, LD. SR. DR HAS NOT OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE S . HE ALSO STATED THAT AS THE MAIN APPEAL IS GOING BACK TO THE FILE OF AO, THIS WILL ALSO GO BACK TO THE FILE OF AO FOR FRESH ADJUDICATION. IN TERMS OF THE ABOVE, WE ADMIT TH ESE EVIDENCE S AND SEND THE SAME TO THE AO FOR VERIFICATION AND FRESH ADJUDICATION. CROSS OBJECTION OF ASSESSEE IS, THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, BOTH THE APPEAL OF REVENUE AS WELL AS CR OSS OBJECTION OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 1 4 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 27.05.2015 SD/ - SD/ - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 27TH MAY , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT - ITO, WARD - 9 ( 1 ), KOLKATA. 2 RESPONDENT M/S. TRIDENT MERCHANDISE PVT. LTD., P - 81, KASBA INDUSTRIAL ESTATE, PHASE - II, KOLKATA - 700 107 3 . THE CIT (A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .